DIRECT TAXES UPDATES

Recent circulars/ notifications/ rules/ clarifications/News

CBDT extends limitation dates for passing of assessment or reassessment orders under the IT Act, that are getting time barred on 31st March, 2021 due to extension of limitation date by the notification dt. 31st December, 2020 has been extended to 30th April, 2021 (Notification No. 10/2021-Income Tax/S.O. 966(E) dated 27/02/2021)

CBDT further extends the date for filing of declarations under the Vivad Se Vishwas (VSV) Act, 2020 to 31st March, 2021. Date for payment without additional amount under VSV extended to 30th April, 2021 (Notification No. 09/2021/S.O. 964(E) dated 26/02/2021)

CBDT notifies revised procedure for Faceless Assessment(Notification No. 08/2021-Income Tax /S.O. 813(E)dated 22/02/2021)

Income Tax Compliance calendar – March 2021

Things to remember

Due Date Particulars
7th March 2021 Payment of TDS/TCS deducted /collected in February 2021
31st March 2021 Extended due date to file TDS return for AY 2020-21(Extended due date)

-Filing ITR for AY 2020-2021 with penalty for both audit and non-audit cases.

-Payment of Tax under Vivad se Vishwas act, 2020

-Last date to revise ITR for the financial year 2019-20

-Last date to link Aadhar with PAN

Important cases decided

♦ ITAT restricts addition for on-money received on sale of flats to 12% (M/s. Bhalchandra Trading P. Ltd. Vs DCIT (ITAT Mumbai)

♦ Provision for actual delays and defaults is ascertained liability & allowable (Huawei Telecommunications (India) Pvt. Ltd.Vs. DCIT (ITAT Delhi)

♦ AO can look into ESOP sale income, based on form 16 during IT return process (Dr. S. Muthian Vs ACIT (ITAT Chennai)

♦ An independent building having multiple residential units can be treated as one residential house for section 54F (Halesh K.C. Vs ITO (ITAT Bangalore)

♦ Section 271(1)(c ) is not leviable if there is no concealment in ITR (Balee Plastics Pvt. Ltd. Vs ITO (ITAT Mumbai)

INDIRECT TAXES UPDATES

GST Compliance Calendar – Returns  to be filed in the M/O March 2021

GST Return Form Name Filing Period Due Dates in March 2021
GSTR-1 (Outward return) Monthly (February 2021)      11th  March  2021
GSTR 3B (Tax summary return) February ‘2021 20th March 2021 ( In case Aggregate turnover more  than or equal to Rs 5 crore in the previous Year)

22nd  / 24th  March 2021 (in case Aggregate turnover less than or equal to Rs 5 crore in the previous financial year registered in X /Y category respectively.

GSTR 5A (online information & data access) February ‘2021 20th March 2021
GSTR 05 (by non taxable resident persons) February 2021 20th   March 2021
GSTR 06 (ISD) February ‘2021 13th  March  2021
GSTR 07 (TDS) February’2021 10th  March 2021
GSTR 08 (TCS) February 2021 10th  March 2021
Annual Returns   FY 2019-20 31st  March 2021

Annual Retunes (GSTR-9 and GSTR(C) for FY 2019-20 has been extended to 31st March 2021- Department of revenue  update this vide  Press Note dated 28th Feb ‘2021 that in view of the difficulties expressed by the taxpayers in the meeting time limit to file by 28th Feb’2021.

Suspension/Cancellation of GST registration – CBIC notifies SOPs for CGST Rule 21A(2A) Central Board of Indirect Taxes and Customs (‘CBIC’) has notified standard operating procedures for implementation of the provision of suspension of registrations under sub-rule (2A) of Rule 21A of the Central Goods and Services Tax Rules, 2017. Said Rule provides for suspension of the GST registration when on comparison of GSTR-3B and GSTR-1, significant differences or anomalies are seen indicating contravention of the provisions of the CGST Act or the rules made thereunder. Circular No. 145/01/2021-GST, dated 11 February 2021, issued for the purpose provides guidelines for implementation of the provision till the time an independent functionality for Form REG-31 is developed on the portal

J&K 100% GST linked incentive to be provided under New Central Sector Scheme for Industrial Development of Union Territory of J&K: The Ministry of Commerce and Industry has on 19 February 2021 notified a new Central Sector Scheme for Industrial Development of Union Territory of Jammu & Kashmir. The Scheme which will be effective from 1 April 2021 till 31 March 2037, provides for Capital Investment Incentive (CII), Capital Interest Subvention (CIS), Goods & Services Tax Linked Incentive (GSTLI) and Working Capital Interest Subvention (WCIS) to all manufacturing units (except those which manufacture certain products as provided in the negative list) and service sector units for services listed in the positive list. Under GSTLI, all eligible units will be granted Goods & Services Tax Linked Incentive equal to 100% of gross payment of GST, i.e. GST paid through cash and input tax credit for a maximum period of 10 years. However, it may be noted that GST paid on exported goods or services will not be counted towards eligible incentive amount. According to the Press Release of the Ministry, the scheme is not a reimbursement or refund of GST but gross GST is used to measure eligibility for industrial incentive to offset the disadvantages that the UT of J&K face.

Cases Law

Officers of CERA Cannot Audit a Private Entity under GST- Bombay High Court – The High Court was dealing with the question as to whether the officers of Central Excise Revenue Audit (‘CERA’) under the CAG Office can conduct special audit of a private entity under the Goods and Services Tax (‘GST’) Laws The Petitioner was served a notice by the GST Authorities intimating that its case is under scrutiny /audit by CERA. Aggrieved by such notice, the Petitioner filed the writ for quashing the said notice on the ground that CERA has no power to conduct audit of a private entity. The Hon’ble HC observed that the power to conduct audit by CERA cannot be traced to the GST Laws.

The Court held that that Section 16 of the CAG-DPCS Act does not authorize the CAG or any audit team under CAG to audit the accounts of a non-government company. Thus, the HC quashed the impugned notice of audit issued to the Petitioner. (Kiran Gems Private Limited (Writ Petition No. 1135 of 2019).

ITC not deniable if GSTR-3B is filed but TRAN-1 not filed: Relying on the Punjab & Haryana High Court decision of Adfert Technologies Pvt. Ltd. and Ors. v. Union of India and Ors, the Jammu & Kashmir High Court has held that the assessee-petitioner cannot be deprived of the benefit of claiming the credit lying in its account on the stipulated date only on the basis of procedural or technical wrangles that one form TRAN-1 was not filled by the petitioner particularly when the petitioner has reflected the said credit in its return GSTR-3B. The petitioner had instead of submitting TRAN-1 form for claiming transitional credit, submitted GSTR-3B within the prescribed period. The Court directed the department to permit the petitioner to submit the form TRAN-1 either electronically or manually. (Neptune Plastics v. Union of India & others – 2021 VIL 98 J&K)

Interest for delay in delivery covered under ‘toleration of an act’: The Haryana AAR has held that the consideration charged in the form of interest for delay in delivery of goods would qualify as supply under GST. The Authority noted that there was a written contract between the applicant and the supplier wherein the supplier was availing benefit of enhanced period for the delivery of goods. The activity was held as supply of service under the GST law by the virtue of Entry 5(e) of Schedule II of the CGST Act as the supplier was under an obligation to pay interest for such delayed delivery which was tolerated by the applicant. The Authority noted that for an activity to fall under the ambit of Entry 5(e) of Schedule II, there must be an agreement with benefit and obligation and there must be a toleration of an act. [In RE: Haryana State Warehousing Corporation – 2021 VIL 56 AAR]

E-way bill need not be cancelled if transportation of goods not takes place within 24 hours of its generation: The Allahabad High Court has held that the Rule 138(9) of the CGST Rules, 2017 does not prescribe that the dealer should necessarily cancel the e-way bill if no transportation is made within 24 hours of its generation. It noted that the said rule does not provide any consequence that may follow if such cancellation does not take place. The goods were transported 4 days after generation of the e-way bill and the department was of the view that the e-way bill was re-used. The High Court also held that if the e-way bill had not been cancelled within 24 hours of its generation, it would remain a matter of inquiry to determine on evidence whether an actual transaction had taken place The penalty was set aside observing that no inquiries were made by the tax authorities to establish evidence on whether the goods were transported on an earlier occasion with the same e-way bill. (Anandeshwar Traders v. State of U.P. and others – 2021 TIOL 240 HC ALL GST )

Penalty equivalent to tax not imposable for lapses in e-way bill of tax-paid goods: In a case where the validity of the e-way bill expired before the tax-paid goods could reach the destination and the petitioner-assessee did not approach the portal within the valid time, the Tripura High Court has held that the department exceeded its jurisdiction by imposing penalty equivalent to the tax payable. Observing that the assessee had already paid tax, the Court set aside the order of penalty. It was of the view that the breach which falls under Section 122(xiv) of the CGST Act, 2017, the penalty is fixed at INR 10,000 and that the penalty for an amount equivalent to tax is for the incidents when the tax is sought to be evaded or not deducted under Section 51, etc. The petitioner was directed to pay a sum of INR 10,000. (Sri Gopikrishna Infrastructure Pvt. Ltd. v. State of Tripura and others – 2021 TIOL 121 HC TRIPURA GST)

No detention on mere suspicion of mis-classification of goods: The Kerala High Court has held that mere suspicion of mis-classification of goods cannot be a basis for detention under Section 129 of the CGST Act, 2017. It was held that the inspecting authority can only detain the goods if the goods described in the transportation document are entirely different from the goods being transported, i.e., where the two goods can never be perceived as the same by ordinary persons endowed with reasonable skills of cognition and comprehension. The description of the goods in the invoice and the e-way bill was ‘fruit drinks’ whereas the department was of the view that it had to be actually described as ‘aerated soft drinks with added flavours’. The detention order was also set aside in another case where the goods were classified in the bill of supply and e-way bill as papad whereas the department considered the goods as un-fried fryums. (Podaran Foods India Private Limited v. State of Kerala and others – 2021 VIL 30 KER)

Customs  

Job work and out-sourcing for manufacture on job work allowed on goods imported under IGCR Rules, 2017: Central Board of Indirect Taxes (‘CBIC’) has issued Notification 9/2021-Cus. (N.T.), dated 1 February 2021 to give effect to the draft amendment of May 2019 to the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 (‘IGCR Rules, 2017’). The amended Rules allow job work activity on imported goods and out-sourcing for manufacture of goods on job-work. Rule 6A has been inserted explaining procedure for allowing job work on imported goods. The maximum period for which the goods can be sent to the job-worker is six months from the challan date. Further, imported capital goods can now be cleared after being used for the specified purpose on payment of duty, along with interest, on the depreciated value, following the straight-line method, at the specified rates.

IGST refund in case of mismatch between GSTR-1 and GSTR-3B Interim solution extended for shipping bills filed between 1 April 2019 till 31 March 2021: CBIC has extended the interim solution as stated in its Circular No. 12/2018-Cus., in respect of IGST refunds where there is a mis-match between GSTR-1 and GSTR-3B, to shipping bills filed from 1 April 2019 till 31 March 2021. As per Circular No. 4/2021-Cus., dated 16 February 2021,     the  corresponding  CA certificate evidencing that there is no discrepancy between the IGST amount refunded on exports in terms of the Circular and the actual IGST amount paid on exports of goods for the period April 2019 to March 2020 and April 2020 to March 2021 needs to be furnished by 31 March 2021 and 30 October 2021, respectively.

Cases Law

Correction of mistake or error in self-assessed bill of entry is permissible: The Bombay High Court has held that amendment in the self-assessed bill of entry is permissible under Section 149 read with Section 154 of the Customs Act, 1962 which deals with amendment of bill of entry and correction of clerical or arithmetical mistakes, respectively. According to the Court, the only condition in such scenario was that the amendment shall be allowed only on the basis of the documentary evidence which was in existence at the time of clearance of the goods. The High Court noted that the Supreme Court in the case of ITC Ltd. v. Commissioner had stated that in case any person is aggrieved by any order, including an order of self- assessment, he must get the order modified under Section 128 or ‘under other relevant provisions of the Customs Act’. (Dimension Data India Pvt. Ltd. v. Commissioner – 2021 TIOL 224 HC MUM CUS)

Demurrage charges not payable when goods seized/detained by Customs authorities Differing from the dictum of the Delhi High Court in the case Trip Communication Pvt. Ltd. v. UOI [2014 (302) ELT 321], the Madras High Court has held that an assessee is not liable to pay rent or demurrage charges when the goods are seized or detained by the Customs department. The Court was of the view that such charges should not be charged for the period of departmental proceedings in terms of Regulation 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009. The Customs department was also directed to issue detention certificate. It observed that it was the practice of the authority to issue certificate when the circumstances warrant and when directed by the Court. [MGG Trading Pvt. Ltd. v. Addl Commissioner  2021 (2) TMI 311-MAD HC] Section 110. (Goodmatric Export Pvt. Ltd. v. UOI – 2021 (1) TMI 871-BOM HC)

Valuation Related person Evidence of influence in declared price required before review: The CESTAT Chennai has held that the declared prices cannot be reviewed without any evidence to the effect that the relation between the appellant and the foreign supplier has influenced the declared price or to the effect that there was a flow back of money from the importer to the related foreign supplier. The Tribunal noted that where neither the reviewing authority nor the Commissioner (Appeals) produced evidence to show that the prices were influenced by their relation or there was certain amount of flowback to the foreign supplier, the transaction value could not be rejected. (Hanil Automotive India Pvt. Ltd. v. Commissioner – 2021 TIOL 61)

Excise & Service Tax Single transaction is covered under definition of ‘casual trader’: The Supreme Court has rejected the contention of the revenue department that since the definition of ‘casual trader’ envisages occasional transactions of business involving buying and selling of goods, i.e., the plurality of transactions was a condition precedent for treating a trader as a ‘casual trader’, a single transaction of purchase of a motor vehicle will not bring a person within the said definition. The Court was of the view that the Legislature could not have intended that a person making 2 or 3 transactions should be treated as a ‘casual trader’, but a person making only one transaction should be treated at par with regular traders. It noted that in construing a statutory provision, words in the singular are to include the plural and vice versa. Rajasthan Tax on Entry of Motor Vehicle into Local Areas Act, 1988 provided a lower limitation period for passing assessment order for casual traders. (Commercial Taxes Officer v. Bhagat Singh – 2021 VIL 15 SC)Single transaction is covered under definition of ‘casual trader’: The Supreme Court has rejected the contention of the revenue department that since the definition of ‘casual trader’ envisages occasional transactions of business involving buying and selling of goods, i.e., the plurality of transactions was a condition precedent for treating a trader as a ‘casual trader’, a single transaction of purchase of a motor vehicle will not bring a person within the said definition. The Court was of the view that the Legislature could not have intended that a person making 2 or 3 transactions should be treated as a ‘casual trader’, but a person making only one transaction should be treated at par with regular

Sabka Vishwas (LDR) Scheme Statement by Director during enquiry is admission of liability: The Bombay High Court has reiterated that for eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, the quantification need not be on completion of investigation by issuing show-cause notice or the amount that may be determined upon adjudication before the cut-off date. The Court observed that to be eligible under the under the category of investigation, enquiry or audit, all that is required is a written communication which will mean a written communication of the amount of duty payable including a letter intimating duty demand or duty liability admitted by the person concerned during inquiry, investigation or audit. It noted that the Director of the petitioner had made a statement before Superintendent (Prev.) CGST & C.Ex, about the liability which broadly corresponded to the figure disclosed in the declaration. (Jai Sai Ram Mech & Tech India P. Ltd. v. Union of India – 2021 VIL 122 BOM ST).

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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.  

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Disclaimer: The contents of this article are for information purposes only and do not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.

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