Direct & Indirect Taxes Updates- June 2020

DIRECT TAXES UPDATES

Recent circulars/ notifications/ rules/ clarifications/News

♣ Extension of due dates w.r.t. ITR filing for FY2018-19, TDS/ TCS returns due dates for Q4- FY 19-20. Details given below-

Particulars Earlier due date Updated due date
ITR filing for FY 18-19 30th June 2020 31st July 2020
TDS/ TCS return (Q4) FY 19-20 30th June 2020 31st July 2020
Issue of Form 16/ 16A – FY 19-20 30th June 2020 15th August 2020
Deduction under Chapter VIA- FY 19-20 30th June 2020 31st July 2020
Aadhar & PAN linking date 30th June 2020 31st March 2021
Refer Notification no. 35/2020 dated 24.06.2020 for details)

♣ CBDT notifies the Cost Inflation Index for the FY 2020-21 – Cost inflation Index 301 (Notification no. 32/2020- Income Tax dated 12th June 2020

♣ CBDT notifies that a salaried person who opts for new Concessional Tax Regime can claim certain exempt allowances under section 10(14), such as Tour/ transfer Allowance, Daily allowance when travel, Conveyance Allowance for duties, Transport Allowance for Handicapped etc. (Notification no. 38/2020 dated 26th June 2020)

Income Tax Compliance calendar – July 2020

Things to remember
Due Date Particulars
7th July 2020 • Due date for deposit of Tax deducted/collected for the month of June, 2020. 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

• Due date for deposit of TDS for the period April 2020 to June 2020 when Assessing Officer has permitted quarterly deposit of TDS under section 192, 194A, 194D or 194H

15th July 2020 • Due date for furnishing of Form 24G by an office of the Government where TDS/TCS for the month of June, 2020 has been paid without the production of a challan

• Due date for issue of TDS Certificate for tax deducted under section 194-IA in the month of May, 2020

• Due date for issue of TDS Certificate for tax deducted under Section 194-IB in the month of May, 2020

• Due date for issue of TDS Certificate for tax deducted under Section 194M in the month of May, 2020

• Quarterly statement in respect of foreign remittances (to be furnished by authorized dealers) in Form No. 15CC for quarter ending June, 2020

• Quarterly statement of TCS deposited for the quarter ending 30 June, 2020

• Upload the declarations received from recipients in Form No. 15G/15H during the quarter ending June, 2020

• Due date for furnishing statement in Form no. 3BB by a stock exchange in respect of transactions in which client codes been modified after registering in the system for the month of June, 2020

30th July 2020 • Quarterly TCS certificate in respect of tax collected by any person for the quarter ending June 30, 2020

• Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194-IA for the month of June, 2020

• Due date for issue of TDS Certificate for tax deducted under Section 194-IB in the month of June, 2020

• Due date for issue of TDS Certificate for tax deducted under Section 194M in the month of June, 2020

31st July 2020 • Quarterly statement of TDS deposited for the quarter ending June 30, 2020

• Annual return of income for the assessment year 2020-21 for all assessee other than (a) corporate-assessee or (b) non-corporate assessee (whose books of account are required to be audited) or (c) working partner of a firm whose accounts are required to be audited or (d) an assessee who is required to furnish a report under section 92E.

• Quarterly return of non-deduction of tax at source by a banking company from interest on time deposit in respect of the quarter ending June 30, 2020

• Statement by scientific research association, university, college or other association or Indian scientific research company as required by rules 5D, 5E and 5F (if due date of submission of return of income is July 31, 2020)

• Application in Form 9A for exercising the option available under Explanation to section 11(1) to apply income of previous year in the next year or in future (if the assessee is required to submit return of income on or before July 31, 2020)

• Statement in Form no. 10 to be furnished to accumulate income for future application under section 10(21) or 11(1) (if the assessee is required to submit return of income on or before July 31, 2020)

• Due date for claiming foreign tax credit, upload statement of foreign income offered for tax for the previous year 2019-20 and of foreign tax deducted or paid on such income in Form no. 67. (If the assessee is required to submit return of income on or before July 31, 2020.)

Important cases decided

  • Only dividend bearing securities should be considered for purpose of disallowance under rule 8D(2)(iii) of Income Tax Rules (Price water house Coopers (P) Ltd vs ACIT (ITAT Kolkata)
  • Capital gain on Sale of Shares cannot be treated as Income from Other Sources (New Delhi Television Ltd Vs. ACIT (ITAT Delhi)
  • Multiple independent residential units in same building can be treated as one residential unit for Section 54F exemption (Shri. Navin Jolly Vs ITO (Karnataka High Court)
  • Penalty cannot be levied for making a claim which may be erroneous or wrong (Ventura Textiles Ltd vs CIT (Bombay High Court)
  • No conversion from limited to Complete scrutiny on mere suspicion (Dev Milk Foods (P) Ltd vs ACIT (ITAT Delhi)

INDIRECT TAXES UPDATES

GST

GSTR-1 & GSTR3B Forms for taxpayers having turnover exceeding 5 crores for the months of February to June ‘2020 can be filed as under

Month Form GSTR-1 Form GSTR-3B
Due date earlier without late fee Due date Now without late fee Due date without late fee & interest (No Change) Due date with interest @ 9% (No Change)
Feb’20 11th March 2020 NA 4th April 2020 24th June 2020
March’20 30th June 2020 10th July 2020 5th May 2020 24th June 2020
April’20 30th June 2020 24th July 2020 4th June 2020 24th June 2020
May’20 30th June 2020 28th July 2020 27th June 2020 NA
June’20 11th July 2020 5th Aug 2020 20th July 2020 NA

(Refer notifications 29/2020-CT 31/2020-CT 32/2020-CT 36/2020-CT 51/2020-CT 52/2020-CT)

  • No late fees if return is filed up till these specified date. Thereafter late fee shall be applicable for full period
  • In case of GSTR3B filed post 24th June 2020 interest @18% shall be applicable for the period afterwards

Others returns can be filed as

Return Period Date
Form GSTR-6 (ISD) March 2020 to July 2020 31st August 2020
Form GSTR-7 (TDS)
Form GSTR-8 (TCS)
Form ITC04 (Job work) Jan 2020 to March 2020

Apr 2020 to June 2020

31st August 2020

GSTR3B form- For taxpayers having an aggregate turnover up to INR 5 crores in the preceding FY

Tax period Specified date for taxpayers having Place of business in category 1 Specified date for taxpayers having Place of business in category 2 Relief in respect of interest Relief in respect of late fee
Feb’20 30th June 2020 30th June 2020 Nil – Up to specified date

9% p.a.– After the specified date till September 30, 2020 (for further period of

delay)

18% p.a. – After

September 30, 2020 (for further period of delay)

No late fees if return is filed up to specified date

• Late fee shall be payable from the due date of return in case the return is not filed till the specified date

March’20 3rd July 2020 5th July 2020
April’20 6th July 2020 9th July 2020
May’20 12th September 2020 15th September 2020
June’20 23rd September 2020 25th September 2020
July’20 27th September 2020 29th September 2020
Aug’20 1st October 2020 3rd October 2020 None

Waiver in late fees for delay in filing of return in Form GSTR-3B for all categories of taxpayers

For the tax period July 2017 to January 2020, late fees will be levied as under:

Nil – If there is no tax liability

Maximum INR 500 (CGST+SGST) for a tax period – If there is any tax liability (Above rate will be applicable only for GSTR-3B filed between July 1, 2020 to September 30, 2020) (Refer notifications 31/2020-CT 32/2020-CT 51/2020-CT 52/2020-CT)

GSTR-1 form- For taxpayers having an aggregate turnover up to INR 5 crores in the preceding FY

Tax Period Original date Specified date Relief in respect of late fee
March’20 11th April 2020 10th July 2020 No late fees if return is filed up to specified date

Late fee shall be payable from the due date of return in case the return is not filed till the specified date

April’20 11th May 2020 24th July 2020
May’20 11th June 2020 28th July 2020
June’20 11th July 2020 5th Aug 2020
Qtr Jan – March 2020 30th April 2020 17th July 2020
Qtr Apr- June 2020 31st July 2020 3rd Aug 2020

(Refer Notification 28/2020-CT 33/2020-CT 46/2019-CT 53/2020-CT)

Eway Bills Extension of validity: Validity period for e-way bills which were generated on or before 24-03-2020 and whose validity has expired on or after 20-03-2020 has been extended till 30-06-2020. . It may be noted that earlier, the validity of e-way bills generated on or before 24-03-2020 and expiring between 20-03-2020 to 15-04 2020 was extended till 31-05-2020 (Notification No. 47/2020-Central Tax, dated 09-06-2020)

GSTR-1 Verification through Electronic Verification Code CGST Rules amended: Registered persons registered under the provisions of the Companies Act, 2013 have been allowed to furnish the details of outward supplies in Form GSTR-1 verified through Electronic Verification Code (“EVC”), during the period from 27-05-2020 to 30-09-2020. As per sixth amendment to the Central Goods and Services Tax Rules, 2017, effective from 27-05-2020, period during which Form GSTR-3B has been allowed to be verified through EVC has also been revised. The new period is from 21-04-2020 to 30-09-2020 instead of from 21-04-2020 to 30-06-2020 as notified earlier on 05-05-2020 and effective from 21-04-2020 (Notification No 48/2020-Central Tax, dated 19-06-2020)

Nil GSTR-3B can be filed through short message service (SMS) w.e.f. 08-06-2020: Form GSTR-3B for a month having nil or no entry in all the Tables can be filed through a SMS using the registered mobile number and the said return shall be verified by a registered mobile number based One Time Password facility. This facility introduced vide Rule 67A of the Central Goods and Services Tax Rules, 2017 has been made effective w.e.f. 08-06-2020.

GST liability on director’s renumeration clarified: The CBIC has clarified various circumstances when the renumeration paid to the director is liable/not liable to GST under reverse charge. According to Circular dated 10-06-2020, GST is not payable on employee director’s renumeration paid as ‘salaries’ where the same is subjected to TDS under Section 192 of the Income Tax Act, 1961. Such consideration for services by an employee to the employer in the course of or in relation to his employment is in terms of Schedule III of the Central Goods and Services Tax Act, 2017 and is not taxable. However, GST is liable to be paid by the company on employee director’s renumeration paid as ‘fees for professional/technical services’. The Circular states that where a part of employee Director’s remuneration is declared separately other than ‘salaries’ in the Company’s accounts and is subjected to TDS under Section 194J of the Income Tax Act as ‘Fees for Professional or Technical Services’, it becomes a consideration for providing services which is outside the scope of Schedule III of the CGST Act. GST in this case has to be paid on reverse charge basis under Sl. No. 6 of Notification No. 13/2017-Central Tax (Rate). Similarly, GST is liable on reverse charge basis on renumeration paid to independent directors (not employees) as the said service is also outside the scope of Schedule III. (Circular No. 140/10/2020-GST, dated 10-06-2020)

Cases Law

TRAN-1 Delhi High Court decision in Brand Equity stayed by Supreme Court: A 3-Judge Bench of the Supreme Court has stayed the Delhi High Court decision in the case of Brand Equity Treaties Ltd. The High Court had held that an assessee can avail Input Tax Credit of the accumulated Cenvat credit as on 30-06-2017 by filing GST Form TRAN-1 beyond the period of limitation prescribed under Rule 117 of Central Goods and Services Tax Rules, 2017. Allowing the assessee to file the said return by 30-06-2020, the High Court had observed that there was no specific provision providing for the time limit under the Central Goods and Services Tax Act, 2017. The High Court had read down Rule 117 as being directory in nature, insofar as it prescribed the time-limit for transitioning of credit. It held that the same would not result in the forfeiture of the rights, in case the credit is not availed within the period prescribed. (Union of India v. Brand Equity Treaties Ltd. Order dated 19-06-2020 in SLP Nos. 7425-7428/2020, Supreme Court)

Proceedings for Recovery of interest cannot be initiated without adjudication: Jharkhand High Court has held that though the liability of interest specified under Section 50 of the Central Goods and Services Tax Act, 2017 is automatic, but in case the assessee disputes the computation or leviability of interest, adjudication proceedings should be initiated under Section 73 or 74 by way of notice of recovery of interest under Section 50. The Court was of the view that till such adjudication is completed by the proper officer, the amount of interest cannot be termed as an amount payable under the CGST Act or the Rules. Further, it was also held that recovery proceedings under Section 79 cannot be initiated without initiation of adjudication proceedings. The decision of the Madras High Court in the case of Assistant Commissioner v. Daejung Moparts Pvt. Ltd., was relied upon. (Mahadeo Construction Co. v. Union of India – 2020 VIL 185 JHR)

Ex-factory inter-State supply liable to IGST: Telangana AAR has held that ex-factory inter-State supplies would be liable to Integrated Goods and Services Tax (IGST). The goods are made available by the supplier to the recipient at the factory gate, but the recipient subsequently assumed the charge for transportation of the goods up to the destination in another State. The Authority observed that the movement of goods got terminated at the location (in a different State) to which the goods were consigned/destined and such movement was affected by the recipient or by any other person such as transporter authorized by the recipient. The Authority was of the view that in terms of Section 10(1)(a) of IGST Act, 2017, movement of goods in case of ex-factory inter-State sales does not conclude at factory gate but terminates at the place of destination where the goods finally are destined as per the billing address. (Penna Cement Industries Limited – 2020 TIOL 112 AAR GST)

Serving of ice cream and allied products at parlour is ‘restaurant service’: AAR Telangana has held that serving of ice cream and ice cream allied products, milk shakes in the parlour with or without adding ingredients like fruits or topping sauces, according to the customer taste or requirements, or selling ice cream products as such, falls under the definition of ‘restaurant service’ attracting GST at the rate of 5% without availability of ITC. The AAR also held that serving of ice creams as per the guest requirements or taste at customers premises during party events falls under Outdoor Catering services attracting 18% GST for period from 15-11-2017 to 30-09-2019 and 5% GST without ITC from 1-10 2019. It was also held that in sale of bulk ice creams to caterers as takeaway as party orders and to pushcart vendors who in turn sold to their customers, there was no element of service and hence Notification No. 11/2017-Central Tax (Rate) was not applicable. (Sri Venkateshwara Agencies – 2020 TIOL 111 AAR)

Customs

Faceless assessment First phase of All India roll-out launched at Bengaluru and Chennai: With the objective of speedy and uniform assessment practices, the Central Board of Indirect Taxes and Customs (“CBIC”) has launched Phase 1 of Faceless Assessment of bills of entry for goods imported primarily under Chapters 84 and 85 of the Customs Tariff Act, 1975 at Bengaluru and Chennai with effect from 08-06-2020. As per Circular dated 05-06-2020, this program launched under the umbrella of ‘Turant Customs’ will be rolled out in phases and would be implemented pan India by 31-12-2020. Accordingly, a Bill of Entry which is selected for verification of self-assessment would be assigned to an officer of the Faceless Assessment Group by the Customs Automated system randomly. (Circular No. 28/2020-Cus., dated 05-06-2020)

LEO and e-Gatepass copy of shipping bill to be electronically transmitted Printing of Shipping Bills discontinued: CBIC has from 22-06-2020 discontinued the practice of printing copies of Shipping Bill bearing the Final Let Export Order (“LEO”) for the exporters and for maintaining a docket in the Customs House. As per Circular No. 30/2020-Cus., dated 22-06-2020, the Final LEO copy of the Shipping Bill in PDF will be electronically transmitted to the exporter. The PDF version will bear a digitally signed and encrypted QR code which can be scanned to verify the authenticity of the document. Similarly, the Board has decided to do away with the printing of Transference copies of Shipping Bill. The Directorate General of Systems would henceforth communicate through email, the e-Gatepass PDF copy of the Shipping Bill to the customs broker and the exporter, if registered. The Principal Commissioners / Commissioners of Customs have been directed to take a decision on allowing printouts only in exceptional situations.

MEIS/SEIS Increase in duration of validity of scrips and relaxations in last date of filing applications: Duty Credit Scrips issued under Chapter 3 of the Foreign Trade Policy between 01-03-2018 and 30-06-2018 will be valid till 30-09-2020. Further, for MEIS applications which attracted a late cut as on 01-03-2020, the period between 01-03-2020 and 30-06-2020 shall not be counted. Consequently, the last date for submission of various categories of application attracting late cut and the applicable rate of late cut will be suitably re-determined. In respect of SEIS, in respect of application for services rendered in FY 2016-17, the last date of application with 10% late cut would be 30-06-2020 and thereafter it would be time barred. For services rendered in FY 2017-18, 5% late cut as was applicable on 31-03-2020 will continue to be applicable for applications submitted till 30-06-2020 and thereafter a late cut of 10% would be applicable for applications submitted till 31-03-2021. Amendment in this regard have been made in Chapter 3 and 9 of the Handbook of Procedures Vol. 1 by DGFT Public Notice No. 08/2015-20, dated 01-06-2020.

Revalidation of export authorization/license by DGFT (Hqrs.): Para 2.20(b) of the Handbook of Procedures Vol.1 has been amended to allow revalidation of the Export Authorization/license for Non-SCOMET and SCOMET items by DGFT (Hqrs). Prior to the amendment by DGFT Public Notice No. 10/2015-20, dated 08-06-2020, the Regional Authorities had the power of revalidation except for the cases covered by Para 2.16(b) of the HBP

Cases Law

Valuation Contemporaneous imports Transaction value when not to be rejected: Observing that the declared value of the imported goods matched with the lower accepted contemporary value, CESTAT Delhi has held that there was no ground for rejection of the transaction value of the goods. The Tribunal was of the view that since the declared value matched with the already accepted assessable value of the goods at different ICDs, only because two consignments of JNCH, Nhava Sheva were imported at higher prices, same cannot be taken as the contemporary import value of the imported items. It also noted that the show cause notice did not gave details as to why the transaction value was not acceptable. [Varaha Infra Ltd. v. Commissioner – 2020 VIL 274 CESTAT DEL CU]

Valuation Lower price from principal to compensate for marketing services, not wrong: In a case involving imports from the foreign principal and other foreign affiliates, CESTAT Bangalore has held that it is not correct to reject the transaction value just because there were imports by third parties at a higher price. Allowing the appeal, the Tribunal found justified, the objections that the principals

offered a lower price to compensate appellant for the services rendered in marketing the product and in obtaining orders and that profit percentage earned by the appellants cannot by itself be a matter of suspicion. It also noted that the goods were imported at pre-notified inter company price list and that the Appellate Authority while rejecting the declared value, did not discuss on the methodology to arrive at the import price and hence said Order could not be implemented. (Ebro Armaturen India Private Limited v. Commissioner – 2020 (6) TMI 95)

Advance authorisation Categorisation or re-categorisation cannot be done by DGFT Policy Circulars/Public Notices: The Delhi High Court has held that the Public Notice issued by the DGFT which puts restriction upon issuance of Advance Authorisation for Gold medallions and coins is in excess of power and jurisdiction of the DGFT. The Court was of the view that such categorisation or re-categorisation cannot be done by Policy Circulars which in effect amends the Foreign Trade Policy (“FTP”). It observed that such exercise must be undertaken by a specific amendment to the FTP under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992. The DGFT had vide Public Notice dated 26-09-2019 disallowed the issue of Advance Authorization for two export items namely ‘Gold Medallions and Coins’ or ‘Any Jewellery manufactured by fully mechanized process’. (M.D. Overseas Ltd. v. Union of India & Ors. – 2020 (6) TMI 140 Del HC)

Excise & Service Tax

Transfer of Know How not covered under Intellectual Property Rights service: CESTAT Delhi has held that grant of exclusive right to the assessee by a foreign company to use the ‘know how’ in any plant in accordance with the processes, specifications and recipes thereof in connection with the manufacture, marketing, sale and distribution of products is not covered in the definition of ‘intellectual property right’ so as to make it taxable under Section 65(105) (zzr) of the Finance Act, 1994. Department’s contention that since the items mentioned in the definition of ‘know how’ in the agreement were covered by the term ‘process’ contained in Section 2(l)(j) of the Patents Act 1970, ‘technical Know How’ would be covered by the Patents Act, 1970 and, therefore, would be ‘intellectual property right’, was thus rejected. The Tribunal was of the view that there should be an independent law that protects ‘know how’, if same is to be included in the residuary clause ‘or any other similar intangible property’ in the definition of ‘intellectual property right’. CESTAT Bengaluru decision in case of ABB Ltd and CESTAT Mumbai decision in case of Tata Teleservices Ltd., were relied upon. (Modi- Mundipharma Beauty Products Pvt. Ltd. v. Commissioner – 2020 VIL 256 CESTAT DEL ST)

Refund of Cenvat credit to be allowed if assessee not in position to utilise credit within‘ reasonable period’: CESTAT Ahmedabad has held that condition 5 of Notification No. 11/2002-C.E. (N.T.), relating to refund of accumulated Cenvat credit due to exports, does not mean that the appellant should not be able to utilize the credit at all. The Tribunal was of the view that the condition must be read harmoniously to mean that the refund should be allowed if the assessee is not in a position to utilize the Cenvat credit within a reasonable period. The refund claim was filed in 2004 and matter was under litigation for long time, during which the assessee utilised a substantial part of the credit. Department denied refund observing that assessee might have further utilised credit. (Koshambh Multitred Private Limited v. Commissioner – 2020 VIL 258 CESTAT AHM )

With Warm Regards & Jai Hind

CMA Rakesh Bhalla | 9779010685 | nancybhalla@yahoo.com

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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