A. DIRECT TAXES UPDATES
i) Income Tax circulars/ notifications/ rules/ clarifications/News- December 2019
♦ CBDT has notified revised FORM NO. 10DA (Report under section 80JJAA- Deduction in respect of employment of new employees, of the Income-tax Act, 1961). Section 80JJAA is applicable if In case of an assessee opting to provision to sec 115BAA or Sec. 115BAB. (Notification No. 104/2019- dated 18th December 19).
♦ CBDT notifies 31st Jan 2020 as the Last date for payment of pending amount under Income Declaration Scheme (IDS) 2016 (Notification No. 103/2019 – dated 13th December 19)
♦ Notification for assent of the president on taxation Laws (Amendment) Act, 2019 (Notification No. 46 of 2019 dated 11th December 19)
♦ Government designates special court under Black money law ([Notification No. 102/2019-Income Tax- dated 04th December 19)
♦ Notification for taxation Laws (Amendment) Act, 2019 passed by Lok Sabha (Bill No. 362-C of 2019 dated 02nd December 19)
♦ CBDT extends due date for payment of TDS under section 194M (TDS @5% for contractual or professional payment, by a person who is not subject to tax audit) and consequently, the due date of furnishing of the certificate of deduction of tax in Form 16D has also been extended for the tax deducted during the month of September, 2019 and October, 2019 to 15.01.2020. (Circular no. 31/2019-Income Tax dated 19th December 19)
♦ Annuities payable to NRI (non Resident Indian)/ OCI (Overseas citizen of India) are subject to TDS at rates applicable as per the DTAA (Double Taxation Avoidance Agreements) of the country where the annuitant resides (Circular No: PFRDA/ 2019/24/ PDES/5 dated 17th December 19)
♦ Extension of time limit for filing of response to notices issued under section 142(1) of the Income-tax Act, 1961 under E-assessment Scheme-2019 from 24.12.2019 to 10.01.2020 (F. No. Pr.CCIT(NeAC)/2019-20/61 dated 24th December 19)
♦ Due date for Audit/ ITR filing extended for J&K and Ladakh to 31st January 2020 (F. No CIT-ITBA/Misc.TB/2019-20 dated 24th December 19)
ii. Income Tax Compliance calendar – January 2020
|Date||Things to remember|
|7th January||Due date for deposit of Tax deducted/collected for the month of December, 2019. However, all sum deducted/collected by an office of the government shall be paid to the credit of the Central Government on the same day where tax is paid without production of an Income-tax Challan|
|10th January||Time limit for filing of response to notices issued under section 142(1) of the Income-tax Act, 1961 under E-assessment Scheme-2019|
|14th January||Issue of TDS Certificate u/s 194IA and IB for the month of Nov 2019.|
|15th January||– Due date of furnishing of the certificate of deduction of tax in Form 16D has also been extended for the tax deducted during the month of September, 2019 and October, 2019 to 15.01.2020|
|30th January||Issue of TCS certificates|
|31st January||-Last date for payment of pending amount under Income Declaration Scheme (IDS) 2016
– Due date for Audit/ ITR filing for J&K and Ladakh
-Quarterly statement of TDS deposited
iii. Important Income TAx cases decided by Various Courts in December 2019
♦ In absence of failure to disclose fully & truly all material facts- reassessment notice invalid (Usha Exports Vs ACIT (Bombay High Court)- 12/12/19)
♦ Statue cannot have any retrospectivity unless expressly provided therein (Ganpati Dealcom Pvt. Ltd. Vs Union of India & Anr. (Calcutta High Court)- 12/12/19)
♦ If assesse fails to establish genuineness of expenses than AO can compute income on estimate basis (ACIT Vs Raghavendra Constructions (ITAT Visakhapatnam)- 20/12/19)
♦ Interest payable on refund of tax which was paid pursuant to a special order of AO (Universal Cables Ltd Vs CIT (Supreme Court)- 12/12/19)
♦ Addition to be done only for difference in Gross Profit on Normal & Bogus Purchase (Hemant M Mehta HUF Vs ACIT (ITAT Mumbai)- 06/12/19)
♦ No addition if margin between the value of sale consideration by assesee and Departmental value was less than 10% (Geetika Sachdev Vs ITO (ITAT Delhi)- 02/12/19)
♦ Limted scrutiny cannot be expanded without prior approval of appropriate authority (Late Smt. Gurbachan Kaur Vs DCIT (ITAT Jaipur)- 05/12/19)
B. GST Updates
i. GST Compliance Calendar – Returns for the M/O December 2019 to be filed in January 2020
|GSTR-1||Outward supply for the month of December 2019||11th January 2020|
|GSTR-5||Non-resident foreign taxpayers return for the month of December 2019||20th January 2020|
|GSTR-6||Input service distributor for the month of December 2019||13th January 2020|
|GSTR-7||Tax Deducted at Source for December 2019||10th January 2020|
|GSTR-8||Tax Collected at Source by e-commerce operator for December 2019||10th January 2020|
|GSTR-3B||Summary return tax payment for the month of December 2019||20th January 2020|
|GSTR- 9 & 9C||Annual return for F.Y. 17-18||31st January 2020|
ii. Major announcements in 38th GST council meeting dated 18th December, 2019
iii. Grievance Redressal and check on tax evasion
iv. E-Invoice System mandatory for business with Rs. 100 crores turnover from April 1st, 2020
The Central Board of Indirect Taxes and Customs (CBIC) has notified E-Invoice System mandatory for business with Rs. 100 crores turnover from April 1st, 2020. The basic aim behind the adoption of the e-invoice system is to facilitate convenience to the taxpayers by further simplifying the GST Return system including reconciliations. Taxpayers who wish to start early can generate e-invoices from 1 January 2020 onwards.
Prior preparation of the same is necessary as it requires changes to be done in the present invoicing software. Important points of the e-invoicing mechanism are as below:
1. E-Invoice in the is mandatory for registered person, whose aggregate turnover in a financial year exceeds one hundred crore rupees(>100 crores) w.e.f 1st April, 2020
2. QR Code on B2C Invoice is mandatory for registered person, whose aggregate turnover in a financial year exceeds five hundred crore rupees(>500 crores) w.e.f 1st April, 2020
3. 10 different websites have been notified where the taxpayers can directly generate e-invoices.
4. Standard schema / template of e-invoice GST INV-1 has been issued by the GST department (attached herewith) which will be uploaded to Invoice reference Portal (IRP) of GST thru JSON files
5. Invoice Registration portal( IRP) of GST will check from Central Registry of GST system to ensure that same invoice from same supplier pertaining to same financial year is not being uploaded again.
6. On receipt of confirmation, it will generate a unique Invoice Reference Number( IRN) and digitally sign the invoice and also generate a QR Code. Portal will return the same to the taxpayer who generated the document. The IRP will also send the signed e invoice to the recipient of the document.
7. Signature on e-invoice: The e-invoice will be digitally signed by the IRP after it has been validated. Once it is registered, it will not be required to be signed by anyone else.
8. Printing of QR Code on invoice: The QR code will be provided to the seller once he uploads the invoice into the Invoice Registration system and the same is registered there. Seller can at his option may print the same on Invoice. For B2C invoices it will be mandatory to print the QR code on the invoice by the seller having turnover more than 500 crores
9. Validity of invoice: Invoice will be valid only if it has IRN.
10. Cancellation of e invoices :- The e-invoice mechanism enables invoices to be cancelled. This will have to be reported to IRN within 24 hours. Any cancellation after 24hrs could not be possible on IRN, however one can manually cancel the same on GST portal before filing the returns. E-Invoice can’t be partially cancelled. It has to be fully cancelled
11. Amendments to the e-invoice Amendments are allowed on GST portal as per provisions of GST law. All amendments to the e-invoice will be done on GST portal only.
12. E invoices for Exports:- The e-invoice schema also caters to the export invoices as well. The e-invoice schema is based on most common standard, this will help buyer’s system to read the e-invoice.
13. E-invoice schema for reverse charge mechanism:– E-invoice system has a reverse charge mechanism reporting as well.
14. Company LOGO on E-invoice :- The Logo will not be sent to IRP. It will not be part of JSON file to be uploaded on the IRP. However, software company can provide LOGO in the billing/accounting software so that it can be printed on invoice using the printer.
15. Printing of e -invoice:- It will be possible for both the seller as well as the buyer to print the invoice, using the QR code as well as signed e-invoice returned by the Invoice Registration Portal (IRP).
16. Amendments to the e-invoice :- Amendments are allowed on GST portal as per provisions of GST law. All amendments to the e-invoice will be done on GST portal only. (Notifications Nos. 68 to 72/2019-Central Tax, all dated 13-12-2019 have been issued.)
v. Standard Operating Procedure to be followed in case of non-filers of returns:
CBIC has issued guidelines to be followed by authorities (proper officer) in case of non- furnishing of return under Section 39, 44 or 45 of the Central Goods and Services Tax Act, 2017. Circular No. 129/48/2019-GST, dated 24-12-2019 in this regard observes that no separate notice is required to be issued for best assessment assessment under Section 62 in case of failure to file return within 15 days of issuance of notice in Form GSTR3A. According to the guidelines, an assessment order under Rule 100 of the CGST Rules in Form GST ASMT-13 would then be issued, which would be deemed to have been withdrawn in case the defaulter furnishes a valid return within 30 days of service of assessment order.
vi. Case Laws on GST decided recently
Seized goods to be released only as per mechanism prescribed under CGST Act and Rules: Setting aside the High Court Order directing release of seized goods subject to deposit of security other than cash or bank guarantee or indemnity bond, Supreme Court has held that High Court should not have entertained the writ petitions questioning the seizure of goods. The Apex Court was of the view that the High Court should not have issued directions to release the goods when a complete mechanism for release and disposal of seized goods is predicated under Section 67 of the CGST Act read with Rules 140 and 141 of the Central Goods and Services Tax Rules, 2017. According to the Supreme Court, the High Court should have relegated the assessees before the appropriate authority for complying with the procedure prescribed. The Court held that the orders passed by the High Court which are contrary to the stated provisions shall not be given effect to by the authorities. (State of Uttar Pradesh v. Kay Pan Fragrance (P) Ltd. – Civil Appeal No. 8941/2019 and Ors., decided on 22-11-2019, Supreme Court)
Rectification of TRAN-1 when credit accumulated in pre-GST regime and entitlement to distribute not disputed: Kerala High Court has directed the department to either permit the petitioner to file a rectified TRAN-1 Form electronically in favour of each of its branches in the country, or accept manually filed TRAN -1 Form with the appropriate corrections, on or before 30-12-2019. The application under Form TRAN-1 was earlier rejected by the department as the petitioner had erroneously shown the GSTIN pertaining to the input service distributor instead of the GSTIN of the assessee to whom the credit had to be transferred. The defect was stated to be non-rectifiable. Transfer of credit was also denied by the department as the assessee was unable to provide the details of the purchase invoices, on the strength of which credit was taken under the erstwhile regime. Directing filing of rectified form, the High Court observed that if the petitioner is permitted to file individual Form TRAN-1 in respect of each of the recipient branches, then the accumulated credit could be distributed to its various branches without having to furnish details of the invoices. Delhi High Court decision in the case of Blue Bird Pure Pvt.Ltd. was relied upon. (South Indian Bank Limited v. Union of India -2019 VIL 569 KER)
Detention of goods on ground that consignee was defaulter is not correct: Kerala High Court has held that detention claiming the consignee was a return defaulter for the last five months, is not a valid ground to justify detention under Section 129 of the CGST Act. The High Court quashed the detention notice observing that the reason cited in the detention notice cannot be a ground for detaining consignment of goods in transit. Unitac Energy Solution Pvt. Ltd. Vs Ass. STO (Kerala High Court)
Membership fees collected by club from its members when liable to GST: Applicant-respondent collected membership fees from their members in order to conduct social activities and meet their administrative costs. In addition, it also collected registration fees from its members for the training programs /workshops.The issue under consideration was whether it was liable to pay GST on the amount collected and consequently liable for taking registration under GST. The Advance Ruling Authority held that the respondent was not liable to pay GST and accordingly not liable for taking registration under GST law. AAAR Pune in its amended order however held that the membership fees collected by the respondent from its members would not be construed as consideration for levy of GST. However, the registration fees collected from members for organising skill-oriented workshops would be construed as consideration against the supply made by the respondent to its members and accordingly, the same will be leviable t (In RE: Lions Club of Poona Kothrud 2019 VIL 80 AAAR) [Note: The above order of AAAR modified the previous order of AAAR issued on 23-4-2019]
C. Customs Updates
Implementation of Auto Out of Charge under Express Cargo Clearance System (EECS): Courier Bills of Entry (CBE) filed for clearance of imported cargo under ECCS are subjected to Risk Management System, which either facilitates or interdicts a CBE. Based on a representation received from the Express Industry Council of India, the CBIC has stated that ECCS should automatically give out of-charge to goods covered under facilitated CBE which have been “cleared” on customs X-ray screening. This is based on the observation that sending a CBE after X-ray screening to the Shed Superintendent/ Appraiser, merely for giving out of charge order, adds an avoidable step in the automated clearance process. (Circular No. 40/2019-Cus., dated 29-11-2019)
Mandatory uploading of invoice and Bill of Lading declared in B/E and mention of document code and IRN in B/E: With effect from 02-12-2019, for every Invoice and Bill of Lading / Airway Bill declared in the Bill of Entry, the reference of IRN generated from eSANCHIT with the relevant document code must be provided. The reference of prescribed document codes from eSANCHIT in the Bills of Entry has been made mandatory. With regard to other supporting documents such as Country of Origin Certificate (COO), uploading through eSANCHIT either by the beneficiary or by the Participating Government Agency, is to be ensured administratively. The field offices have been directed to ensure that no physical copy of any supporting document is submitted, and every relevant document submitted only electronically via eSANCHIT. (Circular No. 42/2019-Cus., dated 29-11-2019)
Gifts – Prohibition on import of goods where Customs clearance sought as gifts: Import of goods including those purchased from e-commerce portals, through post or courier, where Customs clearance is sought as gifts, has been prohibited except for life saving drugs and rakhi. However, according to Explanation in Para 2.25 of Foreign Trade Policy 2015-20 as now revised by, import of goods as gifts with payment of full applicable duties will be allowed. The explanation also clarifies that Rakhi (but not gifts related to Rakhi) will be covered under Section 25(6) of Customs Act. (Notification No. 35/2015-20, dated 12-12-2019)
Jewellery exports – Submission of self-attested copy of exporter’s copy of shipping bill as proof of export: Self-attested copy of shipping bill is to be submitted as proof of export along with other documents instead of the Export Promotion copy of the shipping bill in respect of export of gold/ silver/ platinum jewellery and articles thereof. Para 4.68 of the Handbook of Procedures Vol.1 has been amended (Public Notice No. 48/2015-20, dated 18-12-2019)
ii. Case Laws on Custom Duty Recently
Ports specified in exemption notification not exhaustive – Exemption, when port notified subsequently: Madras High Court has allowed benefit of Notification No. 104/2009-Cus. (status holder incentive scheme) in a case where the imports were made before the addition of the name of the specific port in the said notification. It observed that the ports referred to in the exemption notification originally were not exhaustive as the notification was amended periodically by including other ports as well and one such inclusion was the specified port later. The Court was of the view that the list provided in the notification was only inclusive in view of the fact that the authorities included other ports by amending the said notification periodically. It also noted that the proviso in the said notification empowered the Commissioner of Customs to issue permission of import and export from other ports as well by issuing a special order. Contention of the Revenue department that power conferred on the Commissioner was only prospective and not retrospective, was also rejected by the High Court. Tube Investments of India Limited Vs Union of India (Madras High Court)
Export benefit not deniable because of technical lapse – MEIS benefit available even if concerned box not checked in shipping bill: In a case where the exporter did not check the concerned box in the shipping bill to read “Yes” against the query with regard to intention to claim MEIS benefit, but in the column meant for description had clearly indicated his intention to avail the benefit of the said export promotion scheme, Kerala High Court has directed the department to consider claim for benefit under MEIS. The Court was of the view that the denial of a claim for export benefit could not be done in a mechanical manner merely because there was a technical lapse on the part of the exporter concerned in not checking a particular box in the web portal. Anu Cashews Vs Commissioner of Customs (Kerala High Court)
D. Central Excise, Service Tax & VAT Updates
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 – Clarifications: CBIC has issued Circular 1074/07/2019-CX, dated 12-12- 2019 to clarify on certain issues raised in respect of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 [SVLDRS]. It has been clarified that the amount paid after issuance of SCN but before adjudication can be adjusted against the amount payable under the Scheme, however, there would be no question of refund of excess deposit even if such payment was made ‘under protest’. The circular also clarifies that eligibility under the Scheme will not undergo a change in case there is subsequent change of facts, and that status as on 30-6-2019 will prevail According to the Circular, in case where audit report contains more than one para, the option is available with the taxpayer to file separate declarations for each para or file a declaration for two or more paras together. It has also been clarified that ‘matter’ under Section 129 of the Finance (No.2) Act, 2019 means a case for which the taxpayer intends to file a declaration under the Scheme. (Circular 1074/07/2019-CX, dated 12-12- 2019)
Cenvat credit can be availed on tour expenses of dealers: CESTAT Allahabad has held that Cenvat credit for service tax paid on tour packages, provided by assessee to its dealers, was available to the assessee. The Tribunal in this regard observed that it was possible for the assessee to pay for tour expenses in cash yet they provided tour packages to dealers and that the same can be considered as dealer’s commission therefore qualifying to be in furtherance of business Tribunal’s decision in the case of Simbhaoli Sugar Ltd. v. CCE, where it was held that if commission was paid to sales commission agent for effecting sale of goods manufactured by the assesse then service tax paid on such commission would be available as input service credit to the manufacturer, was relied on. Merino Industries Ltd. Vs CCE (CESTAT Allahabad)
CMA Rakesh Bhalla – 9779010685 – firstname.lastname@example.org
Information Source – M/s LKS, CBIC.gov.in., various internet websites including Income tax website, Dailyhunt, Deloitte, livemint.com, related links and various notifications, circulars, orders, press releases and other sources-many thanks to all.