DIRECT TAXES UPDATES

Recent circulars/ notifications/ rules/ clarifications/News

♦ Due to the outbreak of Novel Covid-19, Finance Minister has announced several relief measures on 24th March 2020

√ Extend last date for income tax returns for (FY 18-19) from 31st March, 2020 to 30th June, 2020.

√ Aadhaar-PAN linking date to be extended from 31st March, 2020 to 30th June, 2020.

√ Vivad se Vishwas scheme – no additional 10% amount, if payment made by June 30, 2020.

Due dates for issue of notice, intimation, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports, any other documents and time limit for completion of proceedings by the authority and any compliance by the taxpayer including investment in saving instruments or investments for roll over benefit of capital gains under Income Tax Act, Wealth Tax Act, Vivad Se Vishwas law etc where the time limit is expiring between 20th March 2020 to 29th June 2020 shall be extended to 30th June 2020

√ For delayed payments of Advanced tax, Self-assessment tax, Regular tax, TDS, TCS, made between 20th March 2020 and 30th June 2020, reduced interest rate at 9% instead of 12 % / 18 % per annum ( i.e. 0.75% per month instead of 1/1.5 percent per month) will be charged for this period. No late fee/penalty shall be charged for delay relating to this period.

Necessary legal circulars and legislative amendments for giving effect to the aforesaid relief shall be issued in due course

♦ Pr. DGIT(Systems) issued Notification on procedure to filing online Form 1 and Form 2 under Direct Tax Vivad Se Vishwas scheme (Notification no. 12 of 2020- dated 19th March 2020)

Lok Sabha passed numerous amendments in Finance Bill 2020 vide notice dated 23.03.2020, without any discussion, due to shortened parliament session considering Corona Virus Threat.

♦ CBDT notifies Direct Tax Vivad se Vishwas Rules 2020 including relevant forms (Notification no. 18 of 2020-18th March 2020)

♦ As per notification issued by CBDT, certain transactions not regarded as transfers, in securities such as foreign currency denominated bond, unit mutual fund, unit of business trust, foreign currency denominated equity share of company, unit of alternative investment fund. (Notification no. 16 of 2020- 5th March 2020)

Direct tax Vivad se Vishwas bill 2020 passed by Lok Sabha on 04.03.2020

♦ FAQs question on Vivad se Vishwas scheme issued (Circular no. 7 of 2020- dated 04/03/2020)

Income Tax Compliance calendar – April 2020

Date Things to remember
7th April
  • Due date for deposit of Tax deducted by an office of the government for the month of March, 2020. However, all sum deducted 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
14th April
  • Due date for issue of TDS Certificate for tax deducted under section 194-IA in the month of February, 2020
  • Due date for issue of TDS Certificate for tax deducted under section 194-IB in the month of February, 2020
  • Due date for issue of TDS Certificate for tax deducted under section 194M in the month of February, 2020
15th April
  • Quarterly statement in respect of foreign remittances (to be furnished by authorized dealers) in Form No. 15CC for quarter ending March, 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 March, 2020
30th April
  • Due date for furnishing of Form 24G by an office of the Government where TDS/TCS for the month of March, 2020 has been paid without the production of a challan
  • Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194-IA in the month of March, 2020
  • Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194-IB in the month of March, 2020
  • Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194M in the month of March, 2020
  • Due date for deposit of Tax deducted by an assessee other than an office of the Government for the month of March, 2020.
  • Due date for e-filing of a declaration in Form No. 61 containing particulars of Form No. 60 received during the period October 1, 2019 to March 31, 2020.
  • Due date for uploading declarations received from recipients in Form. 15G/15H during the quarter ending March, 2020.
  • Due date for deposit of TDS for the period January 2020 to March 2020 when Assessing Officer has permitted quarterly deposit of TDS under section 192, 194A, 194D or 194H
Note- Above timelines stands extended- As due to Covid-19 outbreak, anytime timelines w.r.t. Due dates for issue of notice, intimation, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports, any other documents etc expiring between 20th March 2020 to 29th June 2020 shall be extended to 30th June 2020.

Important cases decided

INDIRECT TAXES UPDATES

GST

-GST Compliance Calendar – Returns for the M/O March 2020 to be filed in April 2020

Return Original Date Revised Date
GSTR-1 Outward supply for the month of March 2020 11th April 2020 30th June 2020 (Announced in post 39th GST council meeting)
GSTR-5 Non-resident foreign taxpayers return for the month of March 2020 20th April 2020
GSTR-6 Input service distributor for the month of March 2020 13th April 2020
GSTR-7 Tax Deducted at Source for March 2020 10th April 2020
GSTR-8 Tax Collected at Source by e-commerce operator for March 2020 10th April 2020
GSTR-3B Summary return tax payment for the month of March 2020 20th April 2020
Annual Return For the F.Y. 2018-19 31st April 2020 30th June 2020 notified through notification 15/2020 CGST

Finance Minister Announcement :- Concession in filing GSTR3B (Tax deposit) returns for the months of Feb to April 2020

Annual Turnover Tax period Due Date Concession
More than 5 Crores Feb’20 March’20 Option to file returns by last week of June’20 with interest but without penalty or late fee
March’20 April’20
April’20 May’20
Up to 5 Crores Feb’20 22/24 March’20 Option to file returns by last week of June’20 No interest ,penalty and late fee would be charged
March’20 22/24 April’20
April’20 22/24 May’20

39th Meeting of the GST Council Highlights The GST Council has in its 39th Meeting held on 14-3-2020 taken many major decisions in respect of both GST rates and those involving changes in law and procedures. Some of the important recommendations of the Council are highlighted below

  • Interest for delay in payment of GST to be charged on the net cash tax liability with effect from 1-7-201 GST law will be amended retrospectively.
  • E-invoicing and QR Code implementation to be postponed to 1-10- Notification Nos. 13 and 14/2020-Central Tax, both dated 23-3-2020 have been issued in this regard.
  • Insurance company, banking company, financial institution, non-banking financial institution, GTA, passenger transportation service, e, to be exempted from issuing e- invoices or capturing dynamic QR code. Notification Nos. 13 and 14/2020-Central Tax, both dated 23-3-2020 have been issued in this regard.
  • Existing system of GSTR-1 and GSTR-3B to continue till September, Notification Nos. 27, 28 and 29/2020-Central Tax, both issued in this context.
  • Mobile phones and specified parts – GST rates to be increased from 12% to 18%.
  • Matches (both handmade and others) to be taxed @ 12%.
  • Maintenance, Repair and Overhaul (MRO) services in respect of aircraft to be taxed @ 5% with full IT Further, the place of supply of B2B MRO services will be changed to the location of recipient
  • Restrictions to be imposed on passing of the ITC in case of new GST registrations, before physical verification of premises and Financial KYC of the registered perso
  • Know Your Supplier’ facility to be introduced to enable registered person to have some basic information about the supplier
Title Notification No. Date
Recommendations of 39th GST Council Meeting on IT Roadmap Press Release ID: 1606433 14/03/2020
Changes in GST rates on goods & services in 39th GST Council Meeting Press Release ID: 1606432 14/03/2020
39th GST Council recommendations on Law & Procedures Press Release ID: 1606430 14/03/2020

Apportionment of ITC in case of business reorganisation: CBIC has clarified that for apportionment of ITC pursuant to a demerger under Rule 41(1) of the CGST Rules, the value of assets of the new units should be taken at the State level (at the level of distinct person) and not at the all-India level. Clarifying on various other issues. (Circular No. 133/03/2020-GST, dated 23-3-2020)

Special procedure prescribed for corporate debtors undergoing CIRP under IBC where management is being undertaken by IRP/RP: CBIC has prescribed special procedure under Section 148 of the Central Goods and Services Tax Act, 2017 for the corporate debtors who are undergoing Corporate Insolvency Resolution Process (CIRP) under the provisions of the Insolvency and Bankruptcy Code and where the management of the affairs is being undertaken by the interim resolution professional or resolution professional.(Notification No. 11/2020-Central Tax, dated 21-3-2020Circular No. 134/04/2020-GST, also issued on 23-3-2020 clarifies on various issues in this regard)

Cases Law

TRAN-1 Non-filing of Form Tran-1 by 27-12-2017 not fatal Supreme Court maintains Punjab & Haryana High Court Order: The Supreme Court has dismissed the Special Leave Petition filed by the department against the decision of the Punjab & Haryana High Court in the case Adfert Technologies v. UoI [Refer, November 2019 issue of Tax Amicus]. Observing that there was no intention to deny carry forward of unutilized credit of duty/tax already paid, on the ground of time limit, the High Court had in its impugned Order directed the Revenue department to allow petitioners to file or revise incorrect TRAN-1 either electronically or manually before 30-11-2019. Reiterating the findings in the Gujarat High Court and Delhi High Court decisions, the Punjab & Haryana Hig Court had observed that department was at liberty to verify genuineness of claim of petitioner, but nobody shall be denied to carry-forward legitimate claim of Cenvat credit / ITC on the ground of non-filing of TRAN-I by 27-12-2017. (Union of India v. Adfert Technologies Pvt. Ltd. – 2020 VIL 10 SC)

No detention of vehicle for alleged wrong destination’: Telangana High Court has set aside the detention of goods and vehicle on the allegation of ‘wrong destination’. According to the Court, this is not a ground to detain the vehicle carrying the goods or levy tax or penalty. It was held that the fact that the vehicle was found at another place does not automatically lead to any presumption that there was an intention on the part of the assessee-petitioner to sell the goods at the local market evading GST. Further, considering the fact that petitioner could not challenge detention and demand (due to certain other obligations) and paid the amount due to economic duress, it was held that the petitioner cannot be blamed for paying the same without protest, when he had no choice but to pay it. The amount collected was directed to be refunded with interest @ 6%. (Commercial Steel Company v. Asstt. Commissioner 2020 VIL 116 TEL)

GST applicable on transfer of title of title in moulds used for manufacturing goods supplied: The applicant entered into an agreement to supply certain automotive parts and moulds to an Indian buyer and placed an order for manufacturing said parts and moulds on a foreign supplier. The moulds manufactured by the foreign supplier were disposed as waste after being used for manufacturing the parts and the same were not imported into India. The foreign supplier raised two separate invoices for supply of parts and moulds. Similarly, the applicant raised separate invoices on the Indian buyer. The advance ruling was sought on whether GST will be applicable on the transfer of title in moulds from applicant to Indian buyer. (Automative Components Technology India Pvt. Ltd. – 2020 VIL 49 AAR)

ITC available on buses and not cars hired for transportation of employees: The applicant entered into an agreement for hiring of buses and cars for transportation of employees to its factory Advance ruling was sought on whether the applicant was eligible to take ITC of GST charged by the transporter. The AAR vide Order dated 11-7-2018 held that the applicant was not eligible to take ITC of such GST as per restriction on ‘rent a cab’ service specified in Section 17(5)(b)(iii) of the CGST Act, 2017.It held that the applicant was eligible to avail ITC on hiring of buses post enactment of CGST (Amendment) Act, 2018 as the seating capacity of buses was more than 13 persons. However, it was held that the applicant was not eligible to avail ITC on hiring of cars prior to as well as post enactment of CGST (Amendment) Act, 2018. (YKK India Private Limited – 2020 VIL 09 AAAR)

Customs

COVID-19 effect List of certain personal protection equipment and certain medical equipment freely exportable/prohibited revised: Ophthalmic instruments and appliances under sub-heading 901850 (except medical goggles), surgical blades, disposable non-woven shoe covers, specified breathing appliances, gas masks with chemical absorbent, HDPE or plastic tarpaulin, PVC conveyor belt and biopsy punch, are freely exportable. Notification No. 48/2015- 20, dated 25-2-2020 in this regard amends the earlier notification issued on 8-2-2020 which allowed free export of only surgical or disposable masks (2/3 ply) and all gloves (except NBR gloves). Personal protection equipment including clothing and masks were made prohibited for export on 31st of January by Notification No. 44/2015-20, dated 31-1-2020. However, it may be noted that as per the latest developments, now surgical/disposable masks (2/3 ply) have been prohibited from export along with ventilators and certain textile raw material for masks and coveralls. Notification No. 52/2015-20, dated 19-3-2020 has been issued for these prohibitions.

All-India implementation of automated clearance of Bills of Entry- Facility would available with effect from 5-3-2020. : The CBIC, vide Circular No. 05/2020 dated 27th January 2020, had implemented automated clearance facility in the Indian Customs EDI System (ICES) on pilot basis for Chennai Custom House and Jawaharlal Nehru Custom House (Mumbai). The automated clearance facility provides for automatic electronic clearance to Bill(s) of Entry on completion of Customs Compliance Verification (CCV) and payment of duty by the importer. The Board has now decided to extend the automated clearance facility on pan-India basis at all Customs EDI locations where RMS is enabled and functional. (Circular No. 15/2020-Cus., dated 28-2-2020).

Relief in Average Export Obligation under the EPCG Scheme to exporters of specified sectors: Para 5.19 of FTP-Handbook of Procedures provides for relief to exporters pertaining to sectors or product groups whose total exports have declined by more than 5% in comparison to exports of previous years. In case such reduction in total exports has taken place, the said para provides for reduction in Average Export Obligation, under the EPCG Scheme, in proportion to the decline in exports. In accordance with the terms of Para 5.19 of HBP, the DGFT has notified HS Code wise products where reduction in excess of 5% has taken place for the financial year 2018-19 as compared to financial year 2017-18. As per Policy Circular issued for the purpose, the DGFT has directed Regional Authorities to re-fix the Annual Average Export Obligation for EPCG Authorisations for the year 2018-19 in accordance with the export decline percentage mentioned in the (Circular. No 31/2015-20, dated 26-2-2020)

Cases law

Valuation Sponsorship and endorsement expenses borne by importer when not includible: CESTAT New Delhi has held that the sponsorship and endorsement expenses paid by the Indian importer to various athletes and players in India are not liable to be included in the assessable value of the goods imported by the importer. The department’s appeal which invoked Rule 10(1)(e) of the Customs Valuation (Determination of Value of Imported Goods) Rules 2007 for inclusion of said expenses was hence dismissed. It was also observed that according to Note to Rule 3 of Customs Valuation Rules, the activities undertaken by the buyer on his own account, other than those for which an adjustment is provided in Rule 10, are not to be considered as an indirect payment to the seller even though they may be regarded as of benefit to the seller. (Commissioner v. Adidas India Marketing Pvt. Ltd. – 2020 VIL 124 CESTAT DEL CU)

Valuation Department to prove undervaluation by evidence/information on comparable imports: CESTAT Chennai has held that that when undervaluation is alleged against the importer, the Department has to prove the same by evidence or information about comparable imports. Further, the Tribunal was of the view that if the department relies on declaration made in the exporting country, it has to show how such declaration was procured. It was held that if the department cannot establish as to how the declaration in exporting country was procured, the said information cannot be relied upon as evidence. Reliance in this regard was placed on Supreme Court decision in the case of South India Television P. Ltd. [2007 (214) ELT 3 (SC)]. (Auto Creators v. Commissioner – 2020 TIOL 420 CESTAT MAD)

Excise & Service Tax

Delayed payment of service tax Cenvat credit not deniable invoking Cenvat Rule 9(1)(bb): CESTAT Bangalore has held that delayed payment of service tax cannot be the basis to deny Cenvat credit by invoking the provisions of Rule 9(1)(bb) of the Cenvat Credit Rules, 2004. The Tribunal was also of the view that delayed payment of service tax voluntarily did not amount to suppression of fact with intent to evade payment of tax and hence denial of credit by invoking Rule 9(1)(bb) was not tenable in law. Allowing the appeals, the Tribunal also observed that once the payment of service tax and availment of credit resulted in revenue neutral situation, then the exception created by Rule 9(1)(bb) was not applicable to the facts of the present case where assessee had availed credit on delayed payment of service tax. (Bagalkot Cement and Industries Ltd. v. Commissioner – 2020 TIOL 429 CESTAT BANG)

Refund Limitation under Central Excise Section 11B not applicable for restoration of Cenvat credit: Madras High Court has held that limitation prescribed under Section 11B of the Central Excise Act, 1944 would not be applicable when instead of claiming the refund in cash, the assessee merely claimed restoration of Cenvat credit. Relying on judgements of High Courts of Madras, Allahabad and Calcutta, the Court observed that limitation under Section 11B was not applicable when only restoration of claim was only by way of reversal of that debit entry only upon returning of invoices and when the vendors had not availed any Cenvat credit. The High Court was also of the view that merely because the assessee laid its claim of refund by moving an application in prescribed Form under Rule 127 of the Central Excise Rules, being a procedural requirement of the law, the substantive right of assessee cannot be defeated. Fact that the assessee could itself credit the Cenvat account, if the goods were received back within the time frame of 180 days under Rule 4(5)(a)(iii) of the Cenvat Credit Rules, 2004, was also noted. (Hwashin Automative India Pvt. Ltd. v. Deputy Commissioner – 2020 VIL 97 MAD CE)

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