Weekly GST, Income Tax, Custom Duty & DGFT Updates dt. 17.07.2021

In this Volume of GST & Corporate Tax Tabloid dated 17.07.2021, I bring to you highlights of recent updates and important judgments of last week in the field of indirect taxation and direct taxation to keep you abreast of all the latest happenings.

1. GST Updates

• CBIC proactively put in place a COVID Response Plan (CRP) for speedy clearances of COVID-19 vaccines at all major airports
• A special GST Council meeting is likely to be held in later part of August after the monsoon session of Parliament concludes on 13th of the month, to discuss revenue shortfall compensation mechanism for states beyond June 2022 when the five year assured period comes to an end.
• Hotels forced to switch to plastic packaging vs biodegradable packaging since the former is taxed at lower GST rate
• CGST Zones and DGGI booked 8000 cases involving fake ITC over 35000 cr. in FY 2020-21
• Karnataka govt proposes to reimburse GST on movie tickets
• Import duty, GST to be waived for world’s most expensive drug for 2-year-old in Tamil Nadu
• GST to be levied on the difference between purchasing, selling price of second hand gold jewellery: Karnataka AAR
• Additional discount reimbursed by a company to its distributor will be added to the consideration payable by the customer to the distributor: Kerala AAR
  

2. Customs & DGFT

• CBIC notifies exchange rates of conversion of the foreign currencies into Indian currency or vice versa for import and export of goods e.f. July 16, 2021 vide Notification No. 59/2021-Customs (N.T.) dated July 15, 2021
• The DGFT issued Trade Notice No. 09/2021-22 dated July 16, 2021 for inviting suggestions regarding New Foreign Trade Policy (“FTP”) 2021-26
• Cabinet extends Rebate of Taxes & Levies on apparel exports till March 2024
• Govt has identified a host of customs exemptions for review; seeks industry views
• Importer not required to furnish quarterly returns w.r.t import of currency paper vide DGFT Notification No. 13/2015-2020, dated July 12, 2021
• The DGFT vide Public Notice No. 12/ 2015-2020 dated July 12, 2021 amended Forms ANF-2C to reduce exporter’s regulatory compliance burden
• The CBIC issued Circular No. 15 /2021-Customs dated July 15, 2021 w.r.t. implementation of Risk Management System for processing of Duty Drawback claims.
  

3. Income Tax

• Infosys COO UB Pravin Rao said many of the issues around the performance and stability of the income tax e-filing portal have been addressed.
• As users continue to face issues in accessing new income tax portal, Income tax department hosted webinar on revised tax functionalities on July 14, 2021. The process for filing Form 15CA/15CB on the new portal stands revised and additional requirement of assigning Form 15CB to chartered accountant has been introduced.
• Income tax (I-T) returns for 2021-22 cannot be filed through any software or directly by uploading JSON file because its functionality has not been enabled at the Income Tax Department portal.
• Due date for filing FLA returns with RBI stands extended to 31 July 2021.

4. Important Judgements of the week

i. GST applicable only on amount exceeding ₹7,500 collected by Residential Welfare Associations:

The Hon’ble Madras High Court in Greenwood Owners Association v. Union of India [ [2021] 128 taxmann.com 182 (Madras)] has ruled that only an amount in excess of ₹7,500/- per month per member collected by Residential Welfare Associations is taxable under the GST law. It also quashed a Circular issued by the CBIC that GST would be applicable on the entire maintenance amount if it exceeds ₹7,500 per month per person.

ii. Calcutta High Court stays TDS Collection under Section 194N Income Tax Act till September 30, 2021:

The Calcutta High Court passed an interim order in the case of Apeejay Tea Ltd. Anr. v. Union of India & Ors [WPA 10856 of 2021] restraining the Income Tax Department from collecting Tax Deduction at Source (TDS) under section 194N of the Income Tax Act, 1961 which mandates TDS on cash withdrawal from banks/post offices in excess of ₹ 1 crore 

iii. Penalty imposed on Revenue for lethargy delay in filing SLP:

The Hon’ble Supreme Court of India in Union of India & Ors. v. M/s Vishnu Aroma Pouching Pvt. Ltd. & Anr. [Special Leave Petition(Civil) Diary No(s). 1434/2021 dated June 29, 2021] has imposed penalty of 25000/- INR on the Revenue Department for delay in filing the Special Leave Petition ( “SLP” ) for wastage of judicial time. Further, directed to recover the amount from officers responsible for the delay in filing the SLP. 

iv. No Royalty on sale of software and no Fees for Technical Services on back-office services:

Bangalore ITAT in the case of QlikTech International AB [TS-537-ITAT-2021(Bang)] rules out royalty on distribution of software and holds that software payments are not taxable in India by placing reliance on landmark rulings in case of Engineering Analysis Centre of Excellence. It further held that back office services don’t qualify as Fees for Technical Services under India-Sweden tax treaty by invoking the benefit of the ‘make available clause’ contained India Portugal DTAA and India-US DTAA.

v. Police investigation into alleged GST offence cannot be ordered after taking cognizance under the Cr.P.C.

The Hon’ble Tripura High Court in Shri Sentu Dey v. State of Tripura [Criminal Petition No. 14/2021 dated May 28, 2021] quashed the order passed for police investigation by the Judicial Magistrate in a matter of alleged GST offence. Held that, once the cognizance of offences alleged in the complaint has been taken by the Magistrate, it was thereafter not open to change the course and revert back to the initial option of requiring police investigation and calling for police report.

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Disclaimer: The article is for informative purposes only.

The author can be reached at cajaybohra@gmail.com