Tuesday, 19 March 2019

No coercive action against payee if payer failed to deposit TDS collection with Govt.: HC

Pushkar Prabhat Chandra Jain v. Union of India - [2019] 103 106 (Bombay)

The petitioner had sold an immovable property for Rs. 9 crores. The purchasers made a net payment of Rs. 8 crores 91 lakhs to the petitioner after deducting tax at source at 1 per cent of the payment in terms of section 194-IA.The petitioner filed the return of income and claimed credit of TDS of Rs. 10.71 lakhs. 

The Income-tax department noticed that only an amount of Rs. 1.71 lakh was deposited and thus demand of Rs. 10.36 lakhs was raised against the petitioner comprised of the principal tax and interest payable thereon.

The Bombay High Court held that section 205 carries the caption 'Bar against direct demand on assessee'. The section provides that where tax is deducted at the source under the provisions of Chapter XVII, the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income.

It is always open for the department and in fact the Act contains sufficient provisions, to make coercive recovery of such unpaid tax from the payer whose primary responsibility is to deposit the same with the Government.If the payer after deducting the tax fails to deposit it in the Government account, measures can always be initiated only against such payers.

Thursday, 14 March 2019

Penalty imposed by GST Dept. for not displaying board outside business premises

Clarification on various doubts related to treatment of sales promotion schemes under GST vide Circular No. 92/11/2019-GST Dated 7th March 2019

1. Free samples and gifts: - 

It is clarified that samples which are supplied free of cost, without any consideration, do not qualify as "supply" under GST, except where the activity falls within the ambit of Schedule I of the said Act.

It is Further clarified that input tax credit shall not be available to the supplier on the inputs, input services and capital goods to the extent they are used in relation to the gifts or free samples distributed without any consideration

2. Buy one get one free offer:-

It can at best be treated as supplying two goods for the price of one. 

Taxability of such supply will be dependent upon as to whether the supply is a composite supply or a mixed supply and the rate of tax shall be determined as per the provisions of section 8 of the said Act. 

It is also clarified that ITC shall be available to the supplier for the inputs, input services and capital goods used in relation to supply of goods or services or both as part of such offers.

3. Discounts including 'Buy more, save more' offers and Volume Discount At Year End Or at Periodic Interval- 

i. It is clarified that discounts offered by the suppliers to customers (including staggered discount under "Buy more, save more" scheme and post supply / volume discounts established before or at the time of supply) shall be excluded to determine the value of supply.

Provided they satisfy the parameters laid down in sub-section (3) of section 15 of the said Act, including the reversal of ITC by the recipient of the supply as is attributable to the discount on the basis of document (s) issued by the supplier. 

Installing & Maintaining Surveillance system to be treated as composite supply of works contract under GST

Allied Digital Services Ltd. In re - [2019] 103 123 (AAR - MAHARASHTRA)

    The dealer has entered into agreement with Government of Maharashtra to set-up comprehensive CCTV based surveillance system on 28.10.2013 for development, implementation and maintenance of the system for the city of Pune and Pimpri-Chinchwad. 

The issues before authority are –whether there is a liability to pay GST on the amount received post- GST for supply of services as per contract executed prior to GST implementation and if the amount is held to be taxable, then at what rate tax should be paid?   

To answer both the questions it is necessary to determine the nature of activity carried out by the applicant. 

The liability of the contractor-applicant does not end with supply of goods but it extends to the successful testing, commissioning and maintenance of the system. 

The set-up of a comprehensive CCTV based city surveillance system for the city does result into installation/commissioning of immovable property wherein transfer of property in goods is involved in the execution of the contract and, thus, the 'Surveillance Project' is a works contract as defined in Sub-Section 119 of Section 2 of the GST Act and the supply of services as per 6(a) of Schedule II of the GST Act and, therefore, the amount received for the supply of services post -GST is taxable under the provisions of GST Act.   

The activity of the applicant is a composite supply of Works Contract, not being original work which is covered under Notification 11/2017 dated 28.06.2017 as amended by Notification No. 1/2018 dated 25.01.2018 and would attract 18% GST (9% each of CGST and MGST)
Secured creditor under SARFAESI Act would have priority over rights of Govt. in respect of mortgaged properties

Bank of Baroda v. Deputy Director, Directorate of Enforcement, Mumbai - [2019] 103 30 ((PMLA-AT), NEW DELHI)

Friday, 22 February 2019

Geotagging of the Companies incorporated on or before 31st December 2017

Geotagging of the Companies incorporated on or before 31st December 2017

The Ministry of Corporate Affairs (MCA) on 21st February 2019 has issued the notifications in which the MCA has notified that the Companies incorporated on or before 31st December 2017 shall have to file E-form ACTIVE (Active Company Tagging Identities and Verification) vide Form INC 22A. The said notifications shall come into effect from 25th February 2019 and the companies shall have to file the form by 25th April 2019. The following companies whose due Financial statements or Annual Return or both are not filed will not be able to file the Form.

However, the following companies are not required to file the Form:-

  1. Struck off companies
  2. Under the process of striking off companies
  3. Under Amalgamation companies
  4. Under Liquidation companies
  5. Dissolved companies
Particulars required to be filled in the Form
  1. CIN of the Company
  2. Address of the Company
  3. Longitude and latitude of the Address of Company
  4. Email ID of the Company
  5. List of Directors
  6. Detail of Statutory auditors
  7. Detail of Cost auditor, if applicable
  8. Detail of MD or CEO or Manager or WTD of Company
  9. Detail of Company Secretary, if applicable
  10. Detail of CFO, if applicable
  11. Detail of SRN of AOC 4 and MGT 7 filed for FY 2017-18
  12. Photograph of registered office showing external building and inside photo of office showing therein atleast 1 Director / KMP whose DSC has been affixed

Consequences of Late filing / Non Filing

  1. The fee of Rs. 10,000/- shall be levied if the form has been filed after 25th April 2019.
  2. The Company shall be marked as "ACTIVE non-compliant" in the MCA database.
  3. The Company shall be barred from filing the following e-forms:-
    • Form SH-7
    • Form PAS-3
    • Form DIR-12
    • Form INC 22
    • Form INC 28

N.K. Goel & Bros.
Chartered Accountants
CA Yashu Goel

Tuesday, 29 May 2018

Petitioner Entitled to C-Form under CST in respect of High Speed Diesel as Central Government didn’t notify it under CGST: Chhattisgarh HC

In Shree Raipur Cement Plant vs. State of Chhattisgarh Finance Department & Ors., the Chhattisgarh High Court held that the petitioner is entitled to be issued C Form under the Central Sales Tax Act, 1956 read with the Central Sales Tax (Registration and Turnover) Rules, 1957 in respect of high speed diesel purchased by it in the course of inter-State trade and used by it in the course of manufacturing of cement, after the promulgation of the Central Goods and Services Tax Act, 2017 with effect from 1-7-2017.

In the instant case, the Petitioner is a registered company under the Central Sales Tax (CST) Act, 1956 read with the Central Sales Tax (Registration and Turnover) Rules, 1957. It manufactures cement from mining limestone. For using the mining equipments, the petitioner requires High Speed Diesel. The petitioner Company was permitted to purchase goods in the course of inter-State trade at the rates specified in Section 8(1) of the CST Act, 1956.

Source: Taxscan

N.K. Goel & Bros.
Chartered Accountants
CA Yashu Goel

Friday, 4 May 2018

GST Council approves principles for filing of new return design based on the recommendations of the Group of Ministers on IT simplification

Ministry of Finance

GST Council today in its 27thmeeting approved principles for filing of new return design based on the recommendations of the Group of Ministers on IT simplification. The key elements of the new return design are as follows –


*One monthly Return*:All taxpayers excluding a few exceptions like composition dealer shall file one monthly return. Return filing dates shall be staggered based on the turnover of the registered person to manage load on the IT system. Composition dealers and dealers having nil transaction shall have facility to file quarterly return.


*Unidirectional Flow of invoices*: There shall be unidirectional flow of invoices uploaded by the seller on anytime basis during the month which would be the valid document to avail input tax credit by the buyer. Buyer would also be able to continuously see the uploaded invoices during the month.There shall not be any need to upload the purchase invoices also. Invoices for B2B transaction shall need to use HSN at four digit level or more to achieve uniformity in the reporting system. 


*Simple Return design and easy IT interface*: The B2Bdealers will have to fill invoice-wise details of the outward supply made by them, based on which the system will automatically calculate his tax liability. The input tax credit will be calculated automatically by the system based on invoices uploaded by his sellers.   Taxpayer shall be also given user friendly IT interface and offline IT tool to upload the invoices.


*No automatic reversal of credit*: There shall not be any automatic reversal of input tax credit from buyer on non-payment of tax by the seller. In case of default in payment of tax by the seller, recovery shall be made from the seller however reversal of credit from buyer shall also be an option available with the revenue authorities to address exceptional situations like missing dealer, closure of business by supplier or supplier not having adequate assets etc.


*Due process for recovery and reversal*: Recovery of tax or reversal of input tax credit shall be through a due process of issuing notice and order. The process would be online and automated to reduce the human interface. 


*Supplier side control*: Unloading of invoices by the seller to pass input tax credit who has defaulted in payment of tax above a threshold amount shall be blocked to control misuse of input tax credit facility. Similar safeguards would be built with regard to newly registered dealers also. Analytical tools would be used to identify such transactions at the earliest and prevent loss of revenue.


*Transition*: There will be a three stage transition to the new system. Stage I shall be the present system of filing of return GSTR 3B and GSTR 1. GSTR 2 and GSTR 3 shall continue to remain suspended. Stage I will continue for a period not exceeding 6 months by which time new return software would be ready. In stage  2, the new return will have facility for invoice-wise data upload and also facility for claiming input tax credit on self declaration basis, as in case of GSTR 3B now.


During this stage 2, the dealer will be constantly fed with information about gap between credit available to them as per invoices uploaded by their sellers and the provisional credit being claimed by them. After 6 months of this phase 2, the facility of provisional credit will get withdrawn and input tax credit will only be limited to the invoices uploaded by the sellers from whom the dealer has purchased goods. 


*Content of the return and implementation*: Return shall be simplified also by reducing the content/information required to be filled in the return. The details of the design of the return form, business process and legal changes would be worked out by the law committee based on these principles. Government is keen to introduce the simplified return design at the earliest to reduce the compliance burden on the trade in keeping with the philosophy of ease of doing business.