No Property Tax on Electricity Poles, Transformer, Substations etc in Maharashtra

The Maharashtra State Cabinet has decided to exempt power infrastructure like electricity poles, transformers, substations etc from property tax.

The state cabinet has amended Section 128 (a) (2) of Maharashtra Municipal Corporations Act, 1949 to exempt electricity poles and infrastructure from property tax.

In a note issued by State Cabinet said that, “Maharashtra State Electricity Distribution Company Ltd (MSEDCL), its power franchisees and Maharashtra State Electricity Transmission Company Ltd (MSECTCL) lay electricity lines, poles, transformers etc for providing power supply in municipal corporation areas. Power generation and distribution are essential services. Power tariff will increase and ultimately it will be recovered from consumers in case of additional tax on electricity system,”.

ICAI waives Condonation Fee on all Application Forms for Last Three Months

The Institute of Chartered Accountants of India ( ICAI ) has waived the condonation fee on all application forms with transaction dates between 01st April 2019 to 30th June 2019 and submitted online by 31st July 2019.

Recently, the ICAI’s Members and Student services have been made online, in digitized form on a new platform which works on a Self Service Mode on the Self Service portal (SSP). Application forms are available online now barring a few which will also be available shortly. Kindly visit e-services on www.icai.org.

“ICAI has decided to waive off delay condonation fee on all application forms with transaction dates between 01st April 2019 to 30th June 2019 and submitted online by 31st July 2019,” the ICAI said in a statement.

“The platform stabilization is underway & progressing to provide a user friendly interface. In the interim, all stakeholders are requested to kindly bear with us and continue to extend their support. We are thankful to ICAI family for understanding the implementation challenges…. The members and students are re-assured that SSP life Cycle Portal will be in full stream in next few days time and we regret for inconvenience caused to you,” it added.

In case of query may call on 0120-4648888 or email to ssp.support@icai.in and ssp.student@icai.in.

SEBI bars Prannoy Roy and Radhika Roy from NDTV Director board for 2 Years [Read Order]

The Securities Exchange Board of India ( SEBI ) has barred Prannoy Roy and his wife Radhika Roy from holding any directorship in New Delhi Television Ltd. (NDTV) for a period of two years.

The SEBI also restrained Prannoy and Radhika from occupying the position as any Key Managerial personnel in any other listed company for a period of one (1) year.

The order is passed in a 2017 case filed by Quantum Securities Ltd, an NDTV shareholder, alleging that RRPR Holdings, Prannoy Roy and Radhika Roy didn’t disclose information about loan agreements entered into by them with Vishvapradhan Commercial Private Ltd (VCPL) and ICICI.

The S.K Mohanty observed that, “the Noticee no. 2 (Mr Roy) and 3 (Ms Roy) had this avowed duty to act in a fair and transparent manner to protect the interest of their minority shareholders and not to indulge in any fraudulent activity or any activity detrimental to the interest of the shareholders of NDTV”.

“However, contrary to the same, in the present case, the Noticees i.e. the promoters and directors of NDTV have been found to have indulged in fraudulent acts wherein they have bartered away the interests of NDTV...,” it added.

Allahabad High Court upholds FIR filed against GST Evaders [Read Order]

The Allahabad High Court has recently upheld a First Information Report (FIR) against GST evaders under the Criminal Procedure Code.

An FIR was lodged against the petitioner alleging that the dealer fraudulently, with a dishonest intention, by submitting false documents, with an intention to evade taxes, obtained registration, thereafter, took inward supply and passed on the goods to end users, without generating outward supply bills, received money in cash and deposited the same in bank account which was not declared at the time of seeking registration. It further alleged that a bogus firm was got registered by showing false and bogus addresses of business; and, by taking advantage of such registration, inward e-way bills were generated to make purchase of goods worth Rs.35 odd crores and, thereafter, without generating outward supply bills, huge amount of money was deposited in cash in undisclosed bank account, suggesting that goods were sold without proper documentation, with a view to evade taxes.

Before the High Court, the petitioner contended that till date no case had been registered under the provisions of the U.P. Act or under the CGST Act and no recovery demand has been raised and, therefore, lodging of the first information report under the provisions of the Indian Penal Code is not legally sustainable.

The two-judge bench comprising Justices Manoj Misra and Suresh Kumar Gupta held that the contention of the petitioner that no first information report can be lodged against the petitioner under the provisions of the Code of Criminal Procedure for offences punishable under the Indian Penal Code, as proceeding could only be drawn against him under the U.P. Goods and Services Tax Act, 2017, is liable to be rejected.

“Upon perusal of the impugned FIR, we find that prima facie, necessary ingredients of an offence of cheating, by submitting false information and documents, are clearly spelt out. Because, according to the allegations a bogus firm was got registered by showing false and bogus addresses of business; and, by taking advantage of such registration, inward e-way bills were generated to make purchase of goods worth Rs.35 odd crores and, thereafter, without generating outward supply bills, huge amount of money was deposited in cash in undisclosed bank account, suggesting that goods were sold without proper documentation, with a view to evade taxes. It cannot, therefore, be said that a bare reading of the impugned FIR does not disclose the commission of cognizable offences punishable under the Penal Code. Hence, the impugned FIR is not liable to be quashed.”

Soon Govt may bring GST Offences under PMLA

With a view to make GST offences a predicate offence punishable with rigorous imprisonment and fine, the Central Government may soon bring such offences under the stringent Prevention of Money Laundering Act.

The proposal regarding the same is likely to be discussed at the GST Council meeting scheduled on 21^st June.

The proposal had been made by the Central Economic Intelligence Bureau (CEIB) to the tax department to consider treating the GST frauds under the ambit of the PMLA.

The tax department working under the Finance Ministry has unearthed over Rs 8,000 crore of GST evasion till April.

Among others, a case has been booked by the DGGI’s Pune zonal office against the Indian Oil Corporation, Mumbai for evading central excise duty to the tune of Rs 4,000 crore on sale of ethanol blended oil. The DGGI has also booked a case against the Haryana Vidyut Prasaran Nigam Ltd, Panchkula for service tax evasion of Rs 760 crore and Hindustan Petroleum Corporation Ltd for central excise evasion of Rs 346 crore, among other cases.

According to a report in TOI, the investigative agency said, up to April it has detected total GST evasion of Rs 8,095 crore, of which the evasion towards central excise is estimated to be Rs 4,946 crore, service tax of Rs 2,771 crore and Rs 378 crore in GST.

Significantly, the CEIB has also linked many big banking frauds where thousands of crores of loans have turned bad with entities engaged in fake input tax credit using shell companies. Since these shell companies are merely paper entities with no real business activity or assets, banks find it difficult to recover losses.

Issues on filing GSTR-9 and 9C: GST Portal issues Advisory

The Goods and Services Tax ( GST ) portal has issued advisories for resolving the issued faced by the taxpayers and tax professionals in filing their Form GSTR 9.

Regarding the filing of GSTR 9, the GST portal issued the following clarification.

1. Some taxpayers have reported that figures of Input Tax Credit (ITC), as pre-populated in table 8A of Form GSTR-9, do not match with the figures as appearing in their Form GSTR-2A. Please note that this may happen due to following reasons:
2. Figures in GSTR-2A are auto populated based on filed/ saved / submittedForm GSTR-1 of the supplier taxpayer. But figures in table 8A of Form GSTR-9 are auto-populated only on the basis of filed Form GSTR-1 by the supplier taxpayer. In case, Form GSTR -1 is not filed by your supplier, then credit related to those invoices will not appear in table 8A of your Form GSTR-9.
3. Figures in table 8A of Form GSTR 9 are auto populated onlyfor those Form GSTR-1, which are filed by the supplier taxpayer by due date of its filing i.e. 30th April, 2019. Thus, ITC on supplies of the financial year 2017-18, if reported beyond 30th April, 2019, will not get auto-populated in table 8A of Form GSTR-9.
4. In table 8A of Form GSTR-9, only latest values have been auto-populated based on filed Form GSTR-1, taking into account all the amendments made, if any. Suppose an invoice with taxable value of Rs 100/- with tax of Rs. 18/- was filed in Form GSTR-1 in the month of January, 2018 and same was amended to Rs 90 as taxable value in the month of March, 2018, then
5. the Form GSTR-2A of January, 2018 will show ITC of Rs. 18
6. the Form GSTR-2A of March, 2018 will show ITC of Rs 16.20 &

iii. the table 8A of Form GSTR-9 will contain ITC of Rs 16.20.

9. In table 8A of Form GSTR-9, ITC related to all such invoices have been excluded in which place of supply lies in supplier’s taxpayers State, instead of State of the receiver taxpayer. These figures will be shown in Form GSTR-2A of the recipient. For example if a taxpayer of State A visits State B and stays in a hotel in State B, the tax paid by him to the hotel in State B will appear in his Form GSTR-2A, but the same will not be reflected in table 8A of Form GSTR-9.
10. The Figures in table 8A of Form GSTR-9 do not contain ITC for the period during which the recipient taxpayer was under composition scheme.
11. While filing Form GSTR 9 ‘Proceed to File’ button will be enabled only if ‘Compute Liability’ is clicked. This button is meant for computation of late fees only. Please note Form GSTR 9 once filed cannot be revised.

With regard to filing of GSTR 9C, the taxpayers have reported the following issues which are clarified below:

1. Turnover for filing Form GSTR- 9C: Form GSTR-9C is to be filed by all those taxpayers whose aggregate turnover has exceeded Rs 2 crore in a financial year. Turnover of complete year i.e. from 1st April, 2017 to 31st March, 2018 has to be taken into account for calculating the turnover. For example, if a taxpayer has a turnover of Rs. 2.1 Cr for the period 1st April, 2017 to 31st March, 2018 and a turnover of Rs. 1.9 Cr for the period 1st July, 2017 to 31st March, 2018, then the taxpayer is required to file form GSTR- 9C.
2. User getting error message while using Excel version : You are also advised to use Microsoft excel version higher than 2007 while preparing Form GSTR 9C.
3. Providing Membership Number by Auditor: While filing Part B of Form GSTR-9C, Auditors are advised to give their membership number without prefixing ‘0’ in their membership number. If membership number is ‘016’, then auditor should enter ‘16’ on the aforesaid part in the membership number field & not ‘016’.

Financial Difficulties not a Defense If Assessee failed to pay Service Tax Collected from Customers to Govt: Bombay HC [Read Judgment]

The Bombay High Court has recently ruled that the defense of financial difficulties cannot be invoked by the assessee when the assessee failed to remit the service tax amount collected from the customers to the Government exchequer.

The CESTAT had earlier held that the appellant was aware of his responsibility for payment of service tax and in fact, he was collecting the same from his clients but the same was kept with himself on the pretext that he was going through financial hardships.

The Tribunal, confirming the penalty proceedings, had observed that since the appellant was aware of his liabilities in the law as he was filing his returns indicating the tax liability and was wilfully not depositing the tax collected, his conduct is not of simple ignorance but of willful default to hold the tax money for personal gains.

On further appeal, the division bench of the High court comprising Justices M S Sanklecha and M S Sonak noted that it is an admitted position is that the extended period of limitation invoked for the purposes of service tax is not subject matter of challenge since the appellant had accepted its service tax liability.

Concurring with the findings of the Tribunal, the bench held that “In this case, it cannot be disputed that the appellant after having recovered the service tax from its customer had not paid over the amount to the State. Thus, undeniably they have contravened the Finance Act, 1994 and Rules made thereunder, which obliges the assessee to make over the payment to the Government before the specified date. This nonpayment was certainly with intent to evade the service tax as there was no justification for keeping the amounts recovered from the customer with itself and not passing it over to the Government on whose behalf it is collected. The financial difficulties faced by the appellant can never justify the nonpayment of tax to the Government. The above fact coupled with misrepresentation to its customers that the amount collected from them will be paid over to the Government, would clearly point to mala fide conduct on the part of the appellant. Therefore, we see no reason to interfere with the impugned order of the Tribunal.”

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CBDT issues Norms for Compounding of Offences under Direct Tax Law, 2019 [Read Guidelines]

The Central Board of Direct Taxes ( CBDT ) has issued a detailed guidelines for compounding offences under the direct tax law replacing the old guidelines issued in the year 2014.

The guidelines, issued on Friday have exclusion provisions, under which, offences done under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Act, 2015, the Benami Transactions (Prohibition) Act, 1988 cannot be compounded in normal cases. This includes money laundering cases. Compounding means that the authorities agree to not prosecute offenders in return for a consideration.

The latest guidelines classify offences into three categories. The first category of offences open to compounding include defaults under tax deducted or collected at source, failure to file return. The second category of offences, for which compounding will not be allowed, deal with willful evasion of tax, removal or concealment or transfer or delivery of property to thwart tax recovery in a search operation.

The guidelines specifically stated that the compounding of offences is not a matter of right and can be invoked on satisfaction of certain conditions prescribed in it.

Finance Minister holds Pre-Budget Consultation with Economists

The Union Minister of Finance & Corporate Affairs, Smt. Nirmala Sitharaman held here today her 6th Pre-Budget Consultation Meeting with the leading Economists in connection with the forthcoming General Budget 2019-20.

The main areas of discussion during the aforesaid Meeting included boosting Economic Growth, Job Oriented Growth, increased Macro-economic Stability, Fiscal Management including the ideal size of Public Sector Borrowing requirements and increase in investments among others.

Along with the Finance Minister, the said Meeting was attended by Shri Rajiv Kumar, Vice-chairman, NITI Aayog, Shri Subhash C. Garg, Finance Secretary, Shri Ajay Bhushan Pandey, Revenue Secretary, Shri Rajiv Kumar, Secretary, DFS Shri Girish Chandra Murmu, Expenditure Secretary, , Shri Atanu Chakraborty, Secretary, DIPAM, Shri Pramod Chandra Mody, Chairman, CBDT, Shri P.K Das, Chairman, CBIC, Dr K.V. Subramanian, CEA and other senior officials of the Ministry of Finance.

The Economists put forward their view that this Budget should set the tone for the next five years and is a unique opportunity to promote manufacturing through Make in India. Various other suggestions received from Economists related to tariff reforms, removing bottlenecks in supply-chain, EXIM policy for agriculture, removal of specific duties on textiles, maintaining fiscal consolidation, revival of Inter-State Councils for holistic domestic growth, boosting employment by focusing on skilling and giving fillip to services and manufacturing sector, macroeconomic stabilisation and structural reforms for long-term growth, stability of tax rates, reduction of tariffs, further simplification of GST, implementation of Direct Tax Code,  promoting labour-intensive sectors, constitution of independent fiscal policy committee, incentivising digital transactions, focusing on job-oriented growth, Insolvency & Bankruptcy Code (IBC) type framework for NBFCs sector, infusing capital in banks and tapping into e-commerce’s potential for job growth among others.

The major participants in the aforesaid Meeting included Shri Rathin Roy, CEO & Director, NIPFP; Shri Arvind Virmani, Economist; Shri S. Mahendra Dev, Vice Chancellor, Indira Gandhi Institute of Development Research; Shri Shekhar Shah, DG, National Council of Applied Economic Research; Shri Rakesh Mohan, Economist; Shri T.N. Ninan, Chairman, Business Standard Pvt. Ltd.; Shri Nitin Desai, Economist; Shri Surjit S. Bhalla, MD, O(X) US Investment; Shri Soumya Kanti Ghosh, Chief Economist, SBI; Shri Errol D’ Souza, Professor, Indian Institute of Management; Shri Ajit Ranade, Chief Economist, Aditya Birla Group; Shri E. Somanathan, Professor, Economics and Planning Unit; Shri Niranjan Rajadhyaksha, Director, IDFC Institute; Ms Pranjul Bhandari, Chief India Economist, HSBC; Shri Manoj Panda, Director, Institute of Economic Growth; Shri Balram Nandwani, Chairman, Global Village Foundation; Shri Atul Gupta, Vice Chairman, Indian Chartered Accountant Association; Shri Partham Mukhopadhyay, Senior Fellow, Centre for Policy Research; Shri Sunil Jain, Managing Editor, Financial Express among others.

Income Tax Dept to update ITR-5

The income tax department has announced that the ITR-5 for filing this year would be updated soon to compute long term capital gain on the sale of equity shares or unit of equity oriented fund or unit of business trust on which STT is paid.

“In case of long term capital gains (LTCG) arising on sale of equity shares or unit of equity oriented fund or unit of business trust on which STT is paid, separate computation of capital gains should be made for each scrip or units of mutual fund sold during the year and aggregated amount should be provided in item No. B4 (ITR 2)/B5( ITR 3) (in case of residents) or item No. B7 (ITR 2)/B8(ITR3)(in case of non-residents). The Utility has been updated and relevant validation rules are relaxed. Please download the latest utility available under Downloads. Updated utility of ITR-5 for the same change will be available shortly,” the department said in a statement.

This income tax return, ITR-5 is meant for firms, LLPs, AOPs (Association of persons) and BOIs (Body of Individuals). Click here to view the latestITR-5 form from the Income Tax Department.

Punjab Government extends Last date of Filing Professional Tax Returns to June 30

The Punjab State Government has extended the last date of filing professional returns to June 30th, 2019.

The president of Punjab Tax Bar Association, Ashok Juneja reportedly said that “The Punjab government has imposed a new tax called the Punjab State Development Tax Act 2018 (PSDTA). This act came into effect on April 19 last year, by virtue of which several classes of people have to pay Punjab State Development Tax”.

“All such persons whose taxable income comes under the head ‘income from salaries, business, profession and/or wages’, as per the Income Tax Act 1961, are liable to pay Rs200 per month as professional tax. The last date for filing the annual PSDTA return has been extended to June 30, he added”.

Govt to constitute National Institute like ICAI for Valuers

The Government is looking to constitute a national institute for Valuers similar to the Institute of Chartered Accountants of India (ICAI). A similar attempt was made way back in 2008.

“We now feel that we have enough critical mass to once again make an attempt to have a national institute for the valuers’ profession on the lines of ICAI... It will require a lot of hardwork,” Corporate Affairs Secretary Injeti Srinivas said. Professional institutes like the ICAI, ICSI etc., have been set up under Acts of Parliament.

“We now feel that we have enough critical mass to once again make an attempt to have a national institute for the valuers’ profession on the lines of ICAI... It will require a lot of hardwork,” Corporate Affairs Secretary Injeti Srinivas said. Professional institutes like the ICAI have been set up under Acts of Parliament.

The Companies Act, 2013 provides a comprehensive framework for development Speaking at a national seminar on valuation here organised by the Insolvency and Bankruptcy Board of India, Srinivas stressed on the importance of professional competence, conduct and ethics of valuers.

He further said that the standards for valuation are likely to be finalised in the near future, adding that the immediate priority is that Registered Valuers Organisations should develop and further improve their code of conduct as each RVO is a frontline regulator.

In 2008, there was an initial attempt to have a bill on the lines of ICAI Act for having an institute for the valuers, he said, adding that now valuation profession cannot fly below the radar as the corporate affairs ministry is taking various steps.

“When we talk about any profession, whether it is a valuer, chartered accountant, cost accountant, company secretary, insolvency professional or whoever you refer to, the overall context is that when you have a market economy there are minimum prescriptions… there are minimum ingredients for a market economy to be successful.”

GST Council Meet: More Goods may be removed from Higher Slab

The GST Council meeting tentatively scheduled at 20^th June may remove more goods from the higher tax slab of 28% prior to Budget presentation next month.

The Council may also discuss to review the GST structure and to bring a new return filing system.

This GST council meeting will be the first meeting to be chaired by Nirmala Sitharaman since she took charge of the finance ministry.

There have been demands of rate cuts for items which are in the higher tax bracket of 28 per cent like Auto parts and cement. The council will also be focusing on merging the tax slabs of 12% and 18% tax in medium terms and it may also focus on ease of filing taxes, e-invoice so, some tweaks can be expected there.

The financial daily report quoted the state government official saying, “Something needs to be done urgently-demand slowdown is quite visible. It could get further entrenched… Jobs are getting impacted.”

Automobiles fall in the 28 per cent GST bracket which led to high product prices and this has impacted sales. In April, passenger vehicles sales witnessed the steepest decline in nearly 8 years with sales dropping by 17.07 per cent as weak customer sentiment led by liquidity crunch and high product prices hit sales.

There are also speculations that the GST Council meeting may be postponed to July 21^st due unknown reasons. however, this has not been confirmed by the official sources yet.

Tax Advocates on Strike against Head of GST Ludhiana

Against the alleged high-handedness of the GST Officer in Ludhiana, about 100 tax professionals (advocates) went on strike today.

The strike was against SK Garg, in-charge of the GST Ludhiana 1 alleging that ever since the officer joined the department about a month ago, the working has come to a standstill. About 70 advocates were on strike.

Arun Kawal, president of the Sale Tax Bar Association, said the in-charge of the GST Ludhiana 1 was the top authority here but he had not been clearing the files. Not only the traders were upset but tax professionals also were facing problems as there was so much pendency and people were not getting their GST returns, he added.

“He is not clearing the files. The staff visits to get the documents checked. If there are mistakes or discrepancies, tell us, we will rectify but at least clear the backlog. The traders come to us and complain and we feel helpless. He wants to take every decision. The SGST and CGST are two separate entities. But the official is intruding in the Central GST returns too, which is uncalled for, and refunds are being delayed. We had raised the issue to the DETC but to no avail. Today, seeing no other option, we went on strike,” said Kawal.

SK Garg, however, maintained that he had joined the office on May 1 and till May 24, all were busy with election duties. “I was virtually given around 10 working days and in those three days, we held meetings with these advocates. Now they want me to do the work wrongly and that too immediately. I will not succumb to their pressure. They also want my transfer. How can an official work under such pressure tactics?” said Garg.

ITAT allows Sec 54F Relief for Additional Floors of New House [Read Order]

The Income Tax Appellate Tribunal (ITAT), Bangalore has held that the deduction from capital gain under section 54F of the Income Tax Act is allowable on the cost of construction of the additional floors in the newly purchased residential house.

The assessee sold an industrial unit and invested the sale consideration for the purchase of the new residential house and for the construction of 2nd and 3rd floor on the same property because property purchased by the assessee was consisting of the ground floor and the first floor only.

Though the Assessing Officer accepted his claim for deduction under section 54F in respect of the purchase of property, he disallowed the deduction for construction of additional floors by holding that the provision does not allow the same.

On the first appeal, the CIT(A) upheld the order of the Assessing Officer and held that the additional 2nd and 3rd floors constitute separate residences.

Being failed to secure relief from the first appellate authority, the assessee approached the Tribunal.

The Tribunal found that it is observed by CIT(A) in this para that as per the provisions of section 54F, either the new asset is purchased or constructed within the time limit specified.

“Hence it is seen that as per this observation of CIT(A) in this para, as per him, cost of purchase and cost of construction of additional floors both cannot be considered for the purpose of allowing deduction u/s. 54F of IT Act. This objection of CIT(A) is not valid in the light of this judgment of Hon’ble Calcutta High Court. Regarding the delay in starting of the construction of 2nd and 3rd floors, it is seen that such delay is explained by giving proper reasons by saying that the assessee was having a health problem of himself and apart from that, both of his daughters as noted above had some problems. There is one more objection of CIT(A) that if this is allowed then the purchase cost of the new asset can be indefinitely increased through extension/additions to the new asset. In this regard, I would like to observe that the addition to the new asset can only be made during the prescribed period and not after that and this is not the case of the department that the claim of the assessee is for an extension outside the permitted time limit. In view of this discussion, it comes out that none of the objections of CIT(A) is valid and hence, by respectfully following the judgment of Hon’ble Calcutta High Court, I hold that the claim of the assessee for deduction u/s. 54F in respect of the amount incurred by the assessee for construction of 2nd and 3rd floors should also be allowed,” the Tribunal said.

CBIC enables Online Query Reply facility to IEC holders and Custom Brokers in ICEGATE Website

The Central Board of Indirect Taxes and Customs ( CBIC ) has informed that it has enabled the Online Query Reply facility for the IEC holders and Custom Brokers in ICEGATE portal.

“Online Query Reply facility is available to IEC holders and Custom Brokers under ICEGATE website login,” CBIC tweeted last day.

ICEGATE (Indian Customs Electronic Commerce/Electronic Data interchange (EC/EDI) Gateway) is a software working under the CBIC, the apex indirect tax body in the country.  At present, about 24000 users are registered with ICEGATE who are serving about 6.72 lacs importer/exporter.ICEGATE links about 15/broad types partners with Customs EDI through message exchanges enabling faster Customs clearance and in turn facilitating EXIM Trade.

ICEGATE is an infrastructure project that fulfils the department’s EC/EDI and data communication requirements. Through this facility the department offers a host of services, including electronic filing of the Bill of Entry( import goods declaration), Shipping Bills (export goods declaration) and related electronic messages between Customs and the Trading Partners using communication facilities (E-mail, Web-upload & FTP) using the communication protocols commonly used on the internet.

A few weeks ago, the CBIC, with a view to simplify auto registration, had provided the facility to IEC holders to register with the Goods and Services Tax Identification Number (GSTIN). It was said that no Digital Signature is required for the same. The facility is also available on www.icegate.gov.in.

Govt Reduces the Rate of ESI Contribution from 6.5% to 4%

The Government of India has taken a historic decision to reduce the rate of contribution under the ESI Act from 6.5% to 4%(employers’ contribution being reduced from 4.75% to 3.25% and employees’ contribution being reduced from 1.75% to 0.75%). Reduced rates will be effective from 01.07.2019. This would benefit 3.6 crore employees and 12.85 lakh, employees.

The reduced rate of contribution will bring about a substantial relief to workers and it will facilitate further enrollment of workers under the ESI scheme and bring more and more workforce into the formal sector. Similarly, reduction in the share of contribution of employers will reduce the financial liability of the establishments leading to improved viability of these establishments. This shall also lead to enhanced Ease of Doing Business. It is also expected that the reduction in the rate of ESI contribution shall lead to improved compliance of the law.

The Employees’ State Insurance Act 1948 (the ESI Act) provides for medical, cash, maternity, disability and dependent benefits to the Insured Persons under the Act. The ESI Act is administered by the Employees’ State Insurance Corporation (ESIC). Benefits provided under the ESI Act are funded by the contributions made by the employers and the employees.

Under the ESI Act, employers and employees both contribute their shares respectively. The Government of India through the Ministry of Labour and Employment decides the rate of contribution under the ESI Act. Presently, the rate of contribution is fixed at 6.5% of the wages with employers’ share being 4.75% and employees’ share being 1.75%. This rate is in vogue since01.01.1997.

The Government of India in its pursuit of expanding the Social Security Coverage to more and more people started a programme of special registration of employers and employees from December 2016 to June 2017 and also decided to extend the coverage of the scheme to all the districts in the country in a phased manner. The wage ceiling of coverage was also enhanced from Rs. 15,000/- per month to Rs. 21,000/- from01.01.2017.

These efforts resulted in a substantial increase in the number of registered employees i.e. Insured Persons and employers and also a quantum jump in the revenue income of the ESIC. The figures are as under: –

The Government of India is committed to the cause of welfare of employees as well asemployers.

It is also committed to improve the quality of medical services & other benefits being provided under the ESI scheme.

NAA dismisses Profiteering Charges against Bharati Telemedia [Read Order]

The National Anti Profiteering Authority ( NAA ) has dismissed profiteering charges against Bharati Telemedia Private Limited for not passing on GST rate cut benefits to its consumers.

The complainant filed an application before the Standing Committee on Anti-profiteering under Rule 128 of the CGST Rules, 2017, by the Applicant No. 1, against the DTH industry in general stating that the tax incidence on DTH services prior to GST implementation was subjected to Entertainment Tax which ranged between 10% to 25% in various States, in addition to 15% Service Tax, whereas on introduction of GST, the tax rate came down to 18%. However, Applicant No. 1 stated that the benefit of this reduction in the rate of tax was not passed on to the consumers by the DTH operators when the GST was introduced w.e.f. 01.07.2017. Thus, it was alleged that the Respondent had indulged in profiteering in contravention of the provisions of Section 171 of the CGST Act, 2017.

The NAA said that, the Entertainment Tax was neither allowed as ITC in pre-GST era nor has been allowed in the GST era, and that the cost of the entertainment tax was borne by the Respondent himself as is clear from the invoices produced by him. Accordingly, there is no ground to believe the contention of the above Applicant as no benefit of ITC has accrued to the Respondent which was required to be passed on.

The NAA also observed that “It is also apparent that the plans and packages post-GST had been changed and thus. there were no comparable prices for the old packages with that of the new ones and the prices of the packages charged by the Respondent in the pre GST era from all his customers across the country were the same and were inclusive of only Service Tax@ 15% (14% service tax + 0,5% SBC 0.5% KKC)T and hence the allegation made by the above Applicant is not established, that he had charged more price post implementation of GST”.

“In view of the above facts, it is evident that there is no evidence to prove that the Respondent had charged more price in the GST era and not passed on the benefit of tax reduction, as the tax rate had increased from 15% to 18%. Further, the above Applicant had also not availed the opportunities of hearings to establish his case. Therefore, the Authority is of the view that the DAP has rightly submitted that the allegation of profiteering is not established in the present case”, the bench also added.

TDS not applicable to Payment made for Reimbursement of Costs: Bombay High Court [Read Judgment]

A two-judge bench of the Bombay High Court comprising Justices Akil Kureshi and S J Kathawalla held that the provisions of TDS would not be applicable to payments made for the reimbursement of costs.

Earlier, the Income Tax Appellate Tribunal had held that there is no requirement to deduct tax at source on reimbursement of cost in the absence of documentary evidence that income element is not involved in the reimbursement of expenses

The Tribunal observed that the Commissioner was not justified in enhancing revisional powers under Section 263 of the Income Tax Act, 1961 and further holding that even otherwise disallowance under Section 40A of the Act was not justified since the assessee had made payments for reimbursement of the cost and therefore, requirement of deducting tax at source did not arise.

The revenue relied on the earlier judgment of the Court dated 26.2.2019, wherein the Court dismissed the Revenue’s Income Tax Appeal No. 1742 of 2016 on the ground that the payment made for reimbursement of costs, deduction at source is not necessary.

In that decision, the Court held that “The Tribunal, however, held that, the amount in question was by way of reimbursement of costs. The Tribunal held that Assessee had paid such sums towards administrative costs such as the employee cost, rent, finance and legal corporate recharge etc. The Tribunal noted that, GSIPL had provided services to the assessee by deploying its employees for such work and the cost was for reimbursement for such expenses besides other related expenditure. Revenue was unable to dislodge these findings of fact recorded by the Tribunal. That being the position, we must proceed on the basis that the payment in question was in the nature of reimbursement of costs. As held by the Supreme Court in the case of Director of Income Tax v/s. A. P. Moller Maersk A. S. reported in 78 taxmann.com 287 and consistently followed by this Court in the number of decisions, liability to deduct tax at source in such a case, would not arise. No question of law arises.”

Following the above decision, the Court reiterated that TDS is not applicable to such cases.

Person nabbed with Charity Commissioner in Bribery Case is not CA: ICAI

While clarifying the rumors of arrest of a Chartered Accountant along with the Charity Commissioner in Surat is not a CA registered with ICAI, said the Surat branch of Western India Regional Council (WIRC) of Institute of Chartered Accountants of India.

The ICAI has clarified that Manish Pachhigar, the person caught accepting bribe along with the assistant charity commissioner, is not a chartered accountant as he claimed to be.

The President of Surat branch of WIRC-ICAI, Mihir Thakkar told TOI, “Pachhigar does not have a CA degree and he falsely represented himself as a CA. Even the police did not check credentials of the arrested person, which has caused irreparable damage to the CA community. There are over 3,000 chartered accountants registered with ICAI and only 800 are the practising CAs.”

Last day, the anti-corruption bureau (ACB) sleuths nabbed an assistant charity commissioner and a chartered accountant when they accepted a bribe of Rs75,000 here on Tuesday. The accused had demanded the bribe to approve changes in the names of working committee members and trustees of a registered trust.

The CAs affiliated with ICAI have asked the public, trade and industry, not to utilize services of persons impersonating as CA and are not members of the ICAI.

“We have also suggested to take strong action against non-members representing themselves as CAs and sought the amendment of Section 24 of the Chartered Accountant Act, 1949, by imposing exemplary penalty for falsely claiming to be a member and using the CA logo” said Thakkar.

Drainage of Channels and Riverbeds is Exempted from GST: AAR [Read Order]

The West Bengal Authority for Advance Rulings (AAR) has held that the drainage of channels and riverbeds is an exempt supply under the Goods and Services Tax ( GST ) regime.

The Applicant got a contract for resectioning of river Jamuna from the upstream of Charghat Bridge to the downstream of Ghonja Haspur Bridge. They approached the AAR for determining their tax liability under the new tax regime.

The Applicant submitted that the recipient is the State Government. According to them, a price schedule that describes the work and its value. They argued that the work involves earthwork in excavation and re-excavation of the drainage channels and riverbed, and is pure service or a composite supply where the supply of goods is negligible. They further claimed that the work is an activity in relation to a function entrusted to a panchayat under Article 243G and / or a municipality under Article 243W.

The AAR noted that “the recipient is engaged in the development of irrigation and waterways, which includes activities in relation to the function listed under Sl No. 5 of the Eleventh Schedule, and, therefore, entrusted to a panchayat under Article 243G of the constitution of India. The recipient certifies that the work awarded to the Applicant, involving drainage of channels and riverbeds, is an activity undertaken in relation to the function referred to above.”