DIRECT TAXES UPDATES

 Recent circulars/ notifications/ rules/ clarifications/News

♦ CBDT issues directions for disposal of appeals under Faceless Appeal scheme 2020 (Notification no. 77/2020 dated 25.09.2020)

♦ CBDT notifies the Faceless Appeals Scheme, 2020 (Notification no. 76/2020 dated 25.09.2020)

♦ CBDT notifies for 15C for Application by Banking Company or Insurer for receipt of sum without deduction of Tax (Notification no. 75-2020 dated 22.09.2020)

♦ Govt Introduces Taxation Law amendment bills in Lok Sabha (Bill no. 116 of 2020) 

♦ All Income Tax Return Preparation Software for AY 2020-21 are now available for e-Filing. 

Taxes Updates

Income Tax Compliance calendar – October 2020

Things to remember
Due Date Particulars
7th October 2020 – Due date for deposit of tax deducted/collected for the month of September, 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 July 2020 to September 2020 when Assessing Officer has permitted quarterly deposit of TDS under section 192, 194A, 194D or 194H

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

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

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

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

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

-Quarterly statement of TCS deposited for the quarter ending September 30, 2020

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

30th October 2020 -Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194-IA in the month of September, 2020

-Due date for furnishing of challan-cum-statement in respect of tax deducted under Section 194-IB in the month of September, 2020

-Due date for furnishing of challan-cum-statement in respect of tax deducted under Section 194M in the month of September, 2020

​-Quarterly TCS certificate (in respect of tax collected by any person) for the quarter ending September 30, 2020

31st October 2020 -Intimation by a designated constituent entity, resident in India, of an international group in Form no. 3CEAB for the accounting year 2019-20.

-Quarterly statement of TDS deposited for the quarter ending September 30, 2020

-Due date for furnishing of Annual audited accounts for each approved programmes under section 35(2AA)

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

-Copies of declaration received in Form No. 60 during April 1, 2020 to September 30, 2020 to the concerned Director/Joint Director

Important cases decided 

♦ No section 14A disallowance if there is no exempt income (Tata Sky Limited Vs. ACIT (ITAT Mumbai)

♦ Keyman Insurance Policy Maturity Value taxable as Income from Other Sources (Ravjibhai L. Kakadia Vs. ACIT (ITAT Mumbai))

♦ No penalty on additional income admitted though there is no evidence (ACIT Vs Deccan Jewellers Pvt. Ltd. (ITAT Visakhapatnam))

♦ ITAT allows section 80IB deduction on Pro rata basis 

INDIRECT TAXES UPDATES

GST

GST Compliance Calendar – Returns to be filed in the M/O October 2020 

GST Return Form Name Filing Period Due Dates in October 2020
GSTR-1 (Outward return) Monthly (September 2020) 11th October 2020
GSTR 3B (Tax summary return) September ‘2020 20th October 2020 ( In case Aggregate turnover more than or equal to Rs 5 crore in the previous Year)

22nd / 24th October 2020 (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) September ‘2020 20th October 2020
GSTR 05 (by non-taxable resident persons ) September ‘2020 20th October 2020
GSTR 06 (ISD) September ‘2020 13th October 2020
GSTR 07 (TDS) September ‘2020 10th October 2020
GSTR 08 (TCS) September ‘2020 10th October 2020
CMP-08 (Quarterly challan-cum-statement to be furnished by composition dealers ) July-September’2020 18th October 2020

 Important points to be considered for Correction of 2019-20 Transactions in Sep-20 GST Return:

a) Pending ITC claim – Reconcile ITC Claimed with GSTR-2A and other data and claim ITC, if pending or reduce ITC if already availed and not reflected in GSTR-2A as per the Rule 36(4).

b) Pending RCM Liability and ITC thereof – Pay RCM liability if any pending for the year 2019-20 and also avail ITC thereof

c) Correction from Supplier – If any correction is required in GSTR-2A of the whole year then ask the same to the supplier to amend the same in the month of Sep-20. After Sep-20, corrections cannot be done.

d) Issue Credit Notes – Find out discount, sales returns, disputed amount for which credit notes are to be issued as it will not be possible after Sep-20 GST return for the year 2019-20.

e) GSTR-9 and GSTR-9C – Due date to file GSTR-9 and GSTR-9C for the year 2018-19 is 30-09-2020.

 GSTR-4 Reduction of late fee and extension of due date for filing by specified persons: The CBIC has once again extended the last date of filing GSTR-4 by specified persons, as required under Notification No. 21/2019-Central Tax, for the financial year 2019-2020, till 31-10-2020. Notification No. 64/2020-Central Tax, dated 31-08-2020 has been issued for the purpose. Further, the late fees payable by the registered person who had failed to furnish the GSTR-4 for the quarters from July, 2017 to March, 2020 by the due date but furnishes the said return between the period from 22-09-2020 to 31-10-2020, has been limited to INR 500 (250 each under CGST and SGST provisions). It may be noted that the late fee is fully waived if the tax payable in the said return is nil. (Notification No. 67/2020-Central Tax, dated 21-09-2020

GSTR-10 Late fee reduced if return furnished between 22-09-2020 till 31-12-2020: The CBIC has reduced the amount of late fees payable under Section 47 of the Central Goods and Services Tax Act, 2017 by registered persons who fail to furnish the return in Form GSTR-10 by the due date but furnishes the said return between 22-09-2020 to 31-12-2020 the late fee payable in such cases would be INR 250. (Notification No. 68/2020-Central Tax, dated 21-09-2020

Invoices under Section 31(7) Time limit extended till 31-10-2020: Section 31(7) of the Central Goods and Services Tax Act, 2017 provides that where the goods being sent or taken on approval for sale or return are removed before the supply takes place, the invoice shall Central Tax, dated 21-09-2020, any time limit for completion or compliance of any action, under said provision, which falls during 20-03-2020 till 30-10-2020, has been extended upto 31-10-2020. ( Notification No. 35/2020-Central Tax )

Cases Law 

SEZ unit entitled to claim refund of unutilized ITC distributed to it by ISD: The Gujarat High Court has allowed refund of unutilized Input Tax Credit (‘ITC’) to a SEZ unit to whom the credit was distributed by the Input Service Distributer (‘ISD’). Department’s contention that since Rule 89 of the Central Goods and Services Tax Rules, 2017 (‘CGST Rules’) prescribes that application for refund of tax must be filed by the supplier in respect of supplies to a SEZ unit, petitioner (SEZ unit) cannot file the refund application, was rejected. It was held that since it will not be possible, in the present case, for a supplier of goods or services to file a refund application to claim refund of ITC distributed by ISD, the SEZ unit would be entitled to claim such refund. (Britannia Industries Limited v. Union of India – Judgement dated 11-03-2200 in R/Special Civil Application No. 15473 of 2019, Gujarat High

Appeal Time period to file appeal starts only when impugned order is uploaded on GST portal: The Gujarat High Court has held that even when the physical copy of the adjudication order is handed over to the assessee earlier, the time-period to file appeal would start only when the impugned order is uploaded on the GST portal. The Court, on perusal of Section 107 of the CGST Act read with Rule 108 of the CGST Rules, stated that the order is required to be uploaded online so that appeal can be filed electronically. Holding that filing of the appeal and uploading of the order are intertwined activities, the High Court rejected the department’s contention that these are two different processes. It held that there was no failure on the part of the petitioner to file the appeal within the prescribed period of limitation, and that rejection of the manual appeal on the basis of limitation, was not sustainable. (Gujarat State Petronet Ltd. v. Union of India – 2020 VIL 426 GUJ)

Refund of ITC on input services due to inverted duty structure, not available: The Madras High Court has held that Section 54(3)(ii) of the CGST Act, 2017 enables a registered person to claim a refund of unutilised input tax credit (‘ITC’) only to the extent that such credit output supplies. The Court was also of the view that the amended Rule 89(5) is in conformity with the statute i.e., Section 54(3)(ii), and that said section is not violative of Article 14 of the Constitution of India. It also held that classification by way of which benefit was extended to ITC on input goods while excluding input services, was valid, non arbitrary and far from invidious. Gujarat High Court’s decision in the case of VKC Footsteps, was not agreed with. (Tvl. Transtonnelstroy Afcons Joint Venture v Union of India – Judgement dated 21-09-2020 in Writ Petition Nos. 8596 and others, Madras High Court

Cash amount can be seized under Section 67 of the CGST Act: The Madhya Pradesh High Court has held that cash can be seized by the department under Section 67 of the Central Goods and Services Tax Act, 2017. The Court was of the view that cash is covered as ‘things’ under the said section and that a conjoint reading of Sections 2(17), 2(31), 2(75) and 67(2) makes it clear that money can also be seized by authorized officer. Assessees contention that once the word ‘money’ is not included under Section 67(2) and that the Investigating Agency / Department is not competent to seize the same was thus rejected. Further, considering the facts of the case, the Court was of the view that until the investigation was carried out and the matter is finally adjudicated, the question of releasing the amount does not arise. (Kanishka Matta v. Union of India – 2020 TIOL 1445 HC MP GST

No detention when e-way bill mentions consignee as unregistered: In a case where though the e-way bill showed the consignee as an unregistered person but the invoice that accompanied the goods referred to the GSTIN of the consignee, the Kerala High Court has held that the reason that consignee was shown as an unregistered person in the e-way bill, was insufficient to attract provisions of Section 129 of Central Goods and Services Tax Act, 2017. The assessee had also mentioned by mistake the tax amount in the delivery challan that was used for stock transfer of goods. (Abco Trades (P) Ltd. v. Assistant State Tax Officer – 2020 VIL 399 KER)

Customs

FTAs Bill of Entry formats revised to enforce requirements of CAROTA Rules: The Ministry of Finance has revised the formats for all 3 types of Bills of Entry – for home consumption for warehousing and for ex-bond clearance. The revised formats which are effective from 21-09-2020, now capture the new requirements as mandated by the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (‘CAROTA Rules’). As per the new formats, the country of origin and country of origin code is now required to be declared. Further, if the country of consignment is different from the country of origin, it must be specifically declared along with the country code. Certain declarations in respect of preferential duty claims have also been revised. (Notification No. 90/2020-Cus. (N.T.) 

Merchandise Export from India Scheme Ceiling limit and sunset notified: The Ministry of Commerce has fixed a ceiling limit of INR 2 crores per IEC for claiming the Merchandise Export from India Scheme (‘MEIS’) benefits against exports made between 01-09-2020 to 31-12-2020 (based on LEO date of shipping bill). According to the new para 3.04A of the Foreign Trade Policy 2015-20, as inserted by Notification No. 30/2015-20, dated 01-09-2020, the said ceiling limit is subject to further reduction to ensure that the total claim under MEIS for the said period does not exceed INR 5000 crores. Further, IEC holder who has not made any exports with LEO date between 01-09-2019 to 31-08-2020 or has obtained IEC on or after 01-09-2020 would not be entitled for MEIS claim against exports made from 01-09-2020 onwards. (New para 3.04B provides that MEIS Scheme will not be available for exports made from 01-01-2021)

Faceless assessment for import of goods to be rolled out pan India from 31-10-2020: The Central Board of Indirect Taxes and Customs (‘CBIC’) has decided to roll-out the Faceless Assessment at all India level at all ports of import and for all imported goods by 31-10-2020. Circular No. 40/2020-Cus., dated 04-09-2020 issued for this purpose, provides various roll-out dates for different ports. According to the Circular, 11 National Assessment Centres, organised commodity-wise according to Schedule I to the Customs Tariff Act, 1975, will be constituted to monitor the assessment practice, study audit objections, etc. The working groups have been asked to virtually meet for a short duration every day at a scheduled time to review timeliness of assessment, identify bottlenecks and take measures to remove difficulties. It may be noted that Phase I of the faceless assessment was launched on 05-06-2020 at Chennai and Bengaluru for goods falling under Chapters 84 and 85 of the Customs Tariff Act, 1975. Phase II had begun on 03-08-2020 at Chennai, Bengaluru, Delhi, for goods covered under Chapters 50 to 71, 84, 85 and 86 to 92, and in Mumbai for goods under Chapter 29. (Circular No. 40/2020-Cus., dated 04-09-2020)

Cases Law

 No power to freeze bank account before amendment in Customs Section 110 in 2019: The Division Bench of the Rajasthan High Court has set aside the Order of the Deputy Commissioner of Customs (Preventive) directing for freezing of the bank account of the assessee in view of the investigation initiated against the petitioner company by Anti Evasion Wing of Central Goods and Service Tax. It observed that the impugned order was passed before the amendment of Section 110 of the Customs Act, 1962 by the Finance (No.2) Act, 2019 by way of insertion of sub-section (5), had come in operation. Setting aside the Order dated 04-06-2019, the Court also noted that as per the amendment also, the account could not be frozen beyond a period of one year. (Padmavati Industries v. Commissioner – Order dated 08-09 2020 in D.B. Civil Writ Petition No. 2366/2020

Customs cannot deny benefit where licensing authority not taking any action SFIS benefit available to golf carts: The CESTAT Mumbai has held that the Customs authorities cannot refuse exemption in a case where the licensing authority, i.e. the DGFT, had not taken any action against the assessee for availing the benefit under Served from India Scheme (‘SFIS’) while importing golf carts. The Tribunal noted that DGFT had issued various clarifications that golf carts do not come under the category of vehicles restricted under para 3.6.4.5 of the Foreign Trade Policy 2004-09 for benefit of SFIS. It also observed that the clarifications issued by the DGFT are binding on the Customs authorities. The department had denied benefit of SFIS scrips for import of golf carts, terming them as ‘vehicles’. The Tribunal while allowing the appeal also observed that the earlier order of the Commissioner (Appeals) remanding the matter to the adjudicating authority for decision as per DGFT guidelines, was not appealed by the department. (EIH Associated Hotels Ltd. v. Commissioner – 2020 TIOL 1358 CESTAT MUM) 

Excise & Service Tax

Supply of pipes and measurement equipment, charged as ‘gas connection charges’, liable to service tax under ‘Supply of Tangible Goods for Use’: The Supreme Court has held that supply of pipes and measurement equipment (SKID equipment) fulfils the taxable entry under Section 65(105)(zzzzj) of the Finance Act, 1994 and hence the ‘gas connection charges’ received therefor were leviable to service tax. Observing that the ingredient of not transferring the ownership, possession or effective control of the goods was satisfied, the Apex Court also held that the supply of the equipment was for the ‘use’ of the customers. It observed that the expression ‘use’ does not have a fixed meaning and that the content of the expression must be based on the context in which the expression is adopted. It held that the equipment served the contractual rights of both the seller and the purchaser of gas and Section 65(105)(zzzzj) did not require exclusivity of use. The argument that the gas connection charges constituted a refundable security deposit, was also rejected. The assessee was in the business of distributing CNG and PNG and had installed the equipment at their customers’ sites, which regulated the supply and recorded the quantity consumed. The ownership of the equipment was retained by the assessee and the customer had no control or any legal rights over the equipment. The period involved was from 16-05-2008 to 31-03-2009. (Commissioner v. Adani Gas Ltd. – Judgment dated 28-08-2020 in Civil Appeal No. 2633 of 2020, Supreme Court

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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