The Orissa High Court refused to grant bail to a person accused of wrongfully availing ITC without actual supply of Goods and Services.
The petitioner, Santosh Kumar Gupta is alleged to have created about ten Firms and was generating fake bills, invoices in the name of said Firms facilitating the availment of the benefit of Input Tax Credit (ITC) without actually supply/ receipt of goods and services which were credited in the name of those Firms in the Bank Accounts and that he in fact was actually handling all those accounts having taken signed blank cheques from said Account-Holders.
Mr.A. Pattanaik, counsel for the Petitioner submitted that it is not the case in the complaint that in reality, such proprietors of those Firms were not there and the materials against the Petitioner are the statements of those persons who in order to get rid of the rigors of law have implicated this Petitioner. He submitted that materials on record do not indicate the indulgement of the Petitioner in the business affairs of all those Firms. According to him, the entire cast of the prosecution is based on documentary evidence, by now all such documents which according to the prosecution are incriminating have been seized and the statements of the material witnesses have been recorded. He submitted that the quantum of ITC based upon all those fraudulent transactions as alleged stated to have been taken, has been highly inflated in order to place gravity on the case. He further submitted that no such direct material has been collected to show that this Petitioner had passed on the ITC to the tune as above for having unlawful gain unto himself when the fact remains that in the meantime, the Department has issued summons to all those entities for the payment of ITC availed by them.
However, Mr. Ch. S. Mishra, Senior Standing Counsel for the CGST opposed the move. Referring to the written objection, he submitted that here the Petitioner is involved in the commission of Economic Offences and the materials collected so far reveal that the Petitioner is the kingpin and has defrauded the State Exchequer to the tune of a huge amount around Rs.40.66 crore by availing the ITC simply by managing to have transactions reflected on papers without a supply of goods or services in reality and for the purpose, he has created enormous fake documents such as invoices, bills, etc., besides creating fake Firms and opening Bank accounts in the name of those entities which have no real existence in the Commercial World.
The Single Judge Bench of Justice D.Dash while refusing to grant bail said that the Petitioner is said to have been involved in the commission of the above Economic offenses which are considered to be grave. Such dubious activities in committing offenses for making huge unlawful gain by causing huge loss to the State Exchequer is a step towards not only scuttling the process of development in the country but also in standing as a developed country in the globe in which our march is on.
“This introduction of the GST is for simplification and harmonization of Indirect Tax Regime in reducing the cost of production, reducing inflation and making Indian trade and Industry more competitive, domestically as well as internationally and with seamless transfer of Input Tax Credit (ITC) from one stage to another in the chain of value addition; in creating in-built mechanism in the design of goods and services tax is with an aim to incentivize tax compliance by the taxpayers so as to finally broaden its base in lowering the tendency of evasion. Such roles alleged to have been played by the Petitioner stands in the direction of making unlawful financial gain by putting up the show that for such sincere involvement in business and carrying out the same, his entitlement to the huge sum as an incentive in the form of Input Tax Credit (ITC) flowed which he received having the tendency of foiling the entire move in introducing this new Tax Regime,” the court said.
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The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved an MoU(Memorandum of Understanding) between the Institute of Cost Accountants of India (ICMAl) and the Association of Chartered Certified Accountants (ACCA), United Kingdom (UK).
It will provide mutual advanced entry to the members of both the Institutes through exemptions from appearing in the majority of papers to acquire the qualification of the other professional body and undertake joint research by continuing professional development activities.
This Memorandum of Understanding will lead towards the exchange of information, research, and publications, which will promote good governance practices in both jurisdictions. Both parties will embark on joint research related to the profession of cost accountancy, which may include collaboration in technical areas. This MoU will also facilitate the movement of professionals in both jurisdictions and will enhance the employability of cost accountants in India and abroad.
The MoU will lead to focused attention towards the exchange of knowledge and exchange of research and publications which will strengthen good governance practice in both jurisdictions.
The MoU will enable members of one institute to seek full membership status of the other institute by successfully passing the minimum number of subjects of professional level.
With the advent of robust bilateral mechanisms such as the India-UK Education Forum, UK-India Education and Research Initiative (UKIERI), Joint Working Group on Education, Newton-Bhabha Fund, and Scholarship programs during the last ten years, the relationship has developed significantly. The UK has also lent its support to the Skills India Mission.
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The Goods and Service Tax Networks (GSTN) in its endeavor to provide a smooth and hassle-free experience to the taxpayers and simplify the process of meeting GST compliances, a few changes were recently deployed or would be deployed shortly.
In view of the spread of pandemic COVID-19 across many parts of India, vide Notification No 14/2021-CT, dated 1st May 2021, read with vide Notification No 24/2021-CT, dated 1st June 2021, the Government had extended the date for filing of various applications falling during the period from the 15th April 2021 to 29th June 2021, till 30th June 2021 .
In addition to this, the timeline for filing of Application for Revocation of Cancellation of Registration, which was due on 15th of April 2021, had also been extended till 30th June 2021 on the GST Portal has been deployed on 1st July, 2021.
Accordingly, these extensions have now ceased to be effective w.e.f. 1st July 2021, and timelines for filing of an application for revocation of cancellation is now changed to 90 days (as was earlier) on the GST Portal, from the date of Order of Cancellation of Registration in Form GST REG-19.
Taxpayers whose registration is canceled, at the time of filing of last return in Form GSTR-10, will now be provided with details of late fee payable by them, for the delayed filing of any of the previous returns/ statements in a table, for their assistance in filing of said return by them. This information can be viewed by clicking on a hyperlink provided under the column “Late Fee Payable” in the online Form GSTR- 10.
The UIN holders file details of their inward supplies in Form GSTR-11 on a quarterly basis. They can subsequently file for a refund (if required) in Form GST RFD- 10, for the quarter, in which a summary of the documents is auto-populated from their Form GSTR-11, in an editable mode
Form GSTR-11 of the UIN holder would be generated with details of their inward supplies, on basis of Forms GSTR-1 / 5 filed by their suppliers, which will subsequently help them in filing their refund claims
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The Goods and Service Tax Network (GSTN) deployed the new Functionality for Taxpayers on the GST Portal in June 2021.
In respect of Returns, the GSTN has enabled the moving of records saved in IFF, to later months of the same Quarter, by taxpayers under QRMP Scheme and the Auto population of GSTR-3B liability, for taxpayers under QRMP Scheme, from their IFF and GSTR 1.
In case of moving of records saved in IFF, to later months of same Quarter, by taxpayers under QRMP Scheme the taxpayers under QRMP Scheme have been provided with an optional Invoice Furnishing Facility (IFF), to furnish details of their B2B Invoices and amendments thereto, for first two months of a quarter. Taxpayers can now move the records saved in their IFF of the first month of a quarter (if the time for filing it has expired) to IFF of the second month of the quarter. Taxpayers can also move the records saved in IFF of the first month & second month of the quarter (if the time for filing it has expired) to their quarterly Form GSTR-1 (of the same quarter). Please note that the records can be moved only within a quarter. While preparing IFF/GSTR-1 (of later months of the same quarter) online, in case of saved records, taxpayers will get a pop-up prompting them to either MOVE the records by selecting YES or delete them by selecting ‘No’.
In case of the Auto population of GSTR-3B liability, for taxpayers under QRMP Scheme, from their IFF and GSTR 1, a taxpayer under QRMP Scheme can declare their liability through optional IFF for Month 1 and Month 2 of a quarter & Form GSTR-1 for Month 3 of the quarter. Declaration of liability in these forms would now be auto-populated in their Form GSTR-3B (Quarterly) of that quarter, based on their filed Form GSTR-1 and IFF.
In case of Refund, Filing for a refund of accumulated ITC by taxpayers making exempt/ nil-rated supplies, by selecting an option of not having a LUT number in the refund application. A taxpayer is required to enter a valid LUT number, while applying for a refund of accumulated ITC, on account of exports of goods and services without payment of tax and supplies made to SEZ without payment of tax. To enable a taxpayer making exempt and/or nil-rated supplies, without LUT, to file a refund application (as they don’t have a valid LUT number to enter in the refund application), the Form RFD-01 has now been modified. At the time of refund filing, such taxpayers would now be asked to select one of the options namely I have a valid LUT number, I don’t have a valid LUT number, since I am making only exempt/ nil rated supplies. Such taxpayers can now select the second option to proceed with filing their refund applications.
In respect of Ledgers, Facility to view ledger for 12 months and its download, Taxpayers have now been provided with a facility to view their ledgers (viz. Electronic Credit Ledger, Electronic Cash Ledger, and Electronic Liability Register (Part-I & II)) on their dashboard, for a period of 12 months, instead of 06 months earlier. The details can now also be downloaded in pdf and Excel formats.
The Temp ID holders and unregistered applicants have also now been provided with the functionality, to transfer the amount within the cash ledger from one major/minor head to another major/minor head, through Form GST PMT-09.
In case of a negative liability in any tax period of a composition taxpayer (and if no amount is required to be paid by the taxpayer (during that period)), the said negative liability will be maintained in the Negative liability statement. This negative balance lying in the negative liability statement will be automatically adjusted against the liabilities of the subsequent tax period(s). The statement would be accessible to them, post-login, by navigating to Services > Ledgers > Negative Liability Statement.
The currently available HSN Master has been updated on the GST Portal and it now includes product names commonly used in Trade corresponding to a particular HSN code. A download facility for the entire HSN directory in Excel Format has also been provided to the taxpayers under the link “Download HSN in Excel Format”. This facility is available as a part of the ‘Search HSN’ functionality, available both in Pre and Post Login, on the GST Portal.
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The Income Tax Appellate Tribunal (ITAT), Delhi Bench ruled that once a bogus purchase is sold than the entire amount cannot be added as Unexplained cash credits.
The assessee, Brij Resources Pvt. Ltd. is a private limited company and had filed its return of income on 20th September 2010 declaring the total income at Rs.7,380/-. The return was processed u/s 143(1) of the IT Act. Subsequently, information was received from the Investigation Wing that during the course of search and survey action in the case of Jain brothers, namely, Virendra Jain and Surendra Kumar Jain, it was found that they were engaged in the business of providing accommodation entries by providing RTGS/cheques/PO/DD in lieu of cash to a large number of beneficiary companies floated and controlled by them. Information was received that the assessee M/s Brij Resources Pvt. Ltd., had received accommodation entry in the form of sale of investment of Rs.10 lakh during the F.Y. 2009-10 relevant to A.Y. 2010-11 from M/s Shalini Holdings Pvt. Ltd., a company controlled and managed by S.K. Jain Group of companies.
The AO asked the assessee to explain why the sale transaction of Rs.10 lakh should not be treated as non-genuine and taxed within the provisions of the Act. Since the assessee could not explain to the satisfaction of the AO regarding the above transaction, the AO, relying on various decisions, made an addition of Rs.10 lakh to the total income of the assessee u/s 68 of the Act. Similarly, the AO also made an addition of Rs.20,000/- being 2% commission on Rs.10 lakh for arranging the accommodation entry.
The assessee submitted that the assessee has sold the investment during the year which is appearing in the balance sheet at the beginning of the assessment year and the shares so sold are not in the nature of penny stock. He submitted that the nature of the transaction was not verified by the AO and he had not seen the movement of the assets from the balance sheet. Therefore, the entire reassessment proceedings have become null and void.
The assessee submitted that the investments were made in the preceding assessment year and were released during this year by the sale of the same. Therefore, provisions of section 68 cannot be applied to the facts of the present case.
On the other hand, the department heavily relied on the orders of the AO and the CIT(A). He submitted that the assessee has made only verbal arguments and there is no mention of the sale of an investment. Therefore, the contention of the assessee cannot be accepted. So far as the validity of reassessment proceedings is concerned, the CIT(A) while deciding the issue has given justifiable reasons as to why the reassessment proceedings are valid. He accordingly submitted that the order of the CIT(A) be upheld.
The coram of Accountant Member, R.K. Panda ruled that if the sale of shares is bogus, then the purchase of the same shares is also bogus. If the case of the Revenue is that the assessee’s own money has come back to the assessee in the shape of accommodation entry, then, the money of the assessee had gone in the preceding year in the shape of purchase of the shares which were sold during the year. No action appears to have been taken in the preceding assessment year treating the purchase of the shares as bogus. Therefore, once such a bogus purchase is sold than the entire amount cannot be added under section 68 of the Income Tax Act, 1961.
“I, therefore, set aside the order of the CIT(A) on this issue and direct the AO to delete the addition. Similarly, the commission of Rs.20,000/- disallowed by the AO and sustained by the CIT(A) is also deleted in view of the discussion above,” the ITAT observed.
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The Supreme Court while imposing the costs of Rs. 25,000 on Customs Authorities held that the bureaucratic delays can not be excused for filing appeal beyond the limitation period.
The petitioner, Custom Commissioner has approached the court with an application for condonation of delay.
The division bench of Justice Sanjay Kishan Kaul and Justice Krishna Murari perused the application for condonation of delay and noted that no doubt some time period was spent in the High Court, but the High Court ultimately held that the appeal would not be maintainable but will lie to this Court vide order dated December 6, 2019.
The bench said that the petitioner has approached this Court in a casual manner without any cogent or plausible ground for condonation of delay.
The court has repeatedly discouraged State Governments and public authorities in adopting an approach that they can walk into the Supreme Court as and when they please ignoring the period of limitation prescribed by the Statutes as if the Limitation statute does not apply to them.
“We have also categorized such kinds of cases as “certificate cases” filed with the only object to obtain a quietus from the Supreme Court on the ground that nothing could be done because the highest Court has dismissed the appeal. The objective is to complete a mere formality and save the skin of the officers who may be in default in following the due process or may have done it deliberately. We have deprecated such practice and process and we do so again. We refuse to grant such certificates and if the Government/public authorities suffer losses, it is time when concerned officers responsible for the same, bear the consequences,” the Apex Court said.
The Bench while looking to the period of delay and the casual manner in which the application has been worded, considered it appropriate to impose costs on petitioners of Rs.25,000/- for wastage of judicial time which has its own value and the same be deposited with the Supreme Court Advocates on Record Welfare Fund within four weeks. The amount to be recovered from the officers responsible for the delay in filing the Special Leave Petition and a certificate of recovery of the said amount be also filed in this Court within the same period of time.
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While granting the relief to GAIL India, the Andhra Pradesh High Court ruled that any dealer affected by the ruling of the Authority of Advance Ruling (AAR) is entitled to seek review, amendment, or revocation of such a ruling.
The petitioner, M/s GAIL India Ltd. is a Government of India Enterprise dealing with natural gas i.e., buying and selling of natural gas as per the directives of the Government of India from time to time. It obtained VAT registration. In the matter of purchasing of natural gas during the period as per the guidelines issued by the Ministry of Petroleum and Natural Gas (MOPNG), GOI, the petitioner claimed Input Tax Credit (ITC) of Rs.16,70,84,426/- against the tax payable for the month of November 2016 and disclosed in the Form VAT-200 for that month and paid the balance tax. The petitioner wanted to clarify the correctness of its claim of ITC and thus submitted an application seeking clarification through the advance ruling. Since no order was passed, the petitioner filed another application seeking advance ruling, and finally, an order was passed by ACAR and served to vide letter of the Additional Commissioner (ST) DMU, VAT which was received by the petitioner.
The ACAR in its order held that the clarification application was filed with a design to avoid the payment of tax due to the State of Andhra Pradesh and on that ground alone the clarification application was liable to be rejected. On merits also, it held that the natural gas and relevant tax invoices were received at least two years earlier to the month of November 2016 and therefore, the claim of ITC made in the month of November 2016 was belated one in violation of Section 13(1) of AP VAT Act. The Authority observed, the ITC claim is legally impermissible and unsustainable.
Mr. A. Sarsweswara Row, counsel for the petitioner submitted that due to vacancy of the post of Chairman of the Tribunal, learned Principal District and Sessions Judge, Visakhapatnam has been officiating as Full Additional Charge of the post of Chairman, A.P. VAT Appellate Tribunal and taking up the matters only half a day on every Friday and in those circumstances his appeal could not be taken up and hence in order to get speedy justice, the petitioner filed review application and submitted a request letter to the respondent to direct the ACAR to hear the petitioner on a priority basis.
On the other hand, Government Pleader for Commercial Taxes argued that the review petition is not maintainable since the petitioner has already filed an appeal against the order of the ACAR and the same is pending.
The division bench of Justice Durga Prasad Rao and Justice Uma Devi relied on the decision of the Division Bench of High Court of Andhra Pradesh in Tirupati Chemicals and Ors. V. The Deputy Commercial Tax Officer and Ors wherein it was held that On a literal construction thereof, it cannot be said that the power of review under Section 67(5) can only be exercised by the ARA suo motu or at the instance of the applicant-dealer, for the words used therein are “affected parties”. Any dealer who is affected by the ruling/ clarification of the ARA would also be entitled to seek review, amendment or revocation of such a ruling. As Section 67(4)(ii) also binds dealers, other than the applicant, they would fall within the ambit of “affected parties” under Section 67(5) of the Act.
The court held that it is clear that the review petition is maintainable at the instance of the dealer who is affected by the ruling of ACAR.
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The Kerala High Court issued the notice to the Government in a plea seeking to quash circular mandating Petroleum Traders to pay entire sale consideration to Oil Companies thereby defying TDS deduction Provision.
The petitioner, Petroleum Traders Welfare and Legal Service Society submitted that Section 190 of the Income Tax Act mandates deduction of tax at source and Section 194G of the said Act also provides for deduction of tax at source by the buyer having turnover of more than Rs.10 crores per annum. However, according to the learned counsel for the petitioner, countering the scheme of the Income Tax Act, the respondent-Oil Companies have Issued Impugned circulars directing the buyers to remit the entire sales consideration to them and in addition to that, to deposit 0.1% of the tax with the concerned department of the Central Government with an assurance that the same would be reimbursed to the buyers in due course by the Oil Companies.
According to the petitioner, the Income Tax Department has clarified the newly introduced provision of Section 194Q of the Act by their communication which unequivocally states that buyers are supposed to deduct tax at source within the sale consideration payable to the Oll Companies. Therefore, according to the learned counsel for the petitioner, the impugned circulars of the Oil Companies are in direct conflict with the statutory provisions of the Income Tax Act. It is further argued that even if the buyer fails to remit the tax deducted at source to the Income Tax Department of the State, then the buyer can be prosecuted by the State resorting to the penal provisions of Section 276B of the Income Tax Act and therefore, the respondent-Oil Companies ought not to have harbored under the apprehension that the buyers may not deposit the tax deducted at source with the Income Tax Department of the State.
The Single Judge Bench of Justice issued the notice to the Union of India and CBDT returnable after 6 weeks.
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The Rajasthan High Court issued the notice to revenue for framing Assessment Order on issues that were not confronted to the assessee.
Mr Mahendra Gargieya, the counsel for the assessee, Devgiri Exports contended that the assessee has not been given any fair opportunity to put up its submissions and defence while show cause notice was given to the petitioner, and the petitioner submitted its reply, the order impugned passed goes beyond the contents of the show cause notice and several new aspects have been dealt with which could only have been allowed after giving an opportunity of hearing to the petitioner.
Mr Gargieya relied on judgements passed by the High Court of Delhi, Madras and Bombay to submit that the faceless assessment done under section 144B of Income Tax Act, 1961 has been examined by the High Court without insisting upon the filing of an appeal which is not only cumbersome but also virtually is in the same perspective as there is no personal hearing provided.
The counsel for the assessee also relied on the judgement passed in Whirlpool Corporation Vs. Registrar of Trade Marks Mumbai reported in 1998 (8) SCC 1, to submit that the said remedy cannot be said to bar this Court from hearing the writ as against the assessment order.
The single Judge Bench of Justice Sanjeev Prakash Sharma while staying the assessment order issued the notice of the writ petition as well as the stay application, returnable within eight weeks.
Additionally, the court also directed notices to be served via email also.
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The Goods and Service Tax Networks (GSTN) have enabled the Request for an adjournment for Personal Hearing (PH) in the Goods and Service Tax (GST) portal.
Adjourns the personal hearing already fixed and enables the next personal hearing. The officer has to select the date and time and issue a personal hearing notice. Adjournments are limited to a maximum of three times.
The taxpayers can not file an online request for an adjournment for PH in the GST portal.
The request can be filed by logging in the GST portal and filling up the details namely date of hearing and time of hearing for personal hearing, request for an adjournment for personal hearing, the due date to reply to the Show Cause Notice, request for extension of the due date for replying to the Show cause notice and upload the supporting documents.
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The Central Board of Indirect Taxes and Customs (CBIC) issued the measures for expediting Customs clearances so as to improve in Faceless Assessment.
The CBIC has recently comprehensively reviewed the implementation of Faceless Assessment and deliberated on the further measures required for expediting the pace of assessment and Customs clearance of imported goods. Board finds that by and large the objectives of Faceless Assessment in terms of expeditious assessments, anonymity in assessments, and uniformity in assessments have been met.
However, Board observes that there is even now scope for improvement which would potentially lead to a substantial increase in the pace of assessments and Customs clearance, while further enhancing the uniformity in assessments and anonymity with a view to reducing interface with the trade.
The Board has decided that w.e.f. July 15, 2021, the facilitation level across all Customs stations would be increased to 90% relating to RMD. It is clarified that the element of randomness in the interdiction of any Bill of Entry would be retained by RMS. This measure is expected to enable faster clearance of non-risky imports with an enhanced focus on risky imports so that revenue remains safeguarded. The aforementioned circular stands are modified accordingly.
With a view to facilitating faster decisions and, in turn, faster verification of self-assessment as well as to promote specialization and enhance uniformity in assessment, Board has decided to implement changes in the assessment procedure.
Firstly, the working hours of all FAGs shall be uniform from 10 AM till 8 PM on any working day.
Secondly, NACs and jurisdictional Pr. Commissioners/Commissioners of Customs shall administratively monitor that FAGs communicate the ‘first decision’ on the Bill of Entry within 3 working hours after its allocation.
Thirdly, the total number of queries that can be raised by an Appraising Officer in respect of a Bill of Entry would now be restricted to 3.
The Board has decided to create separate FAGs for certain commodities, which also contribute appreciably to revenue. The new FAGs would become operational from July 15, 2021.
The Board has decided that, as a general principle, all the advanced Bills of Entry that are fully facilitated (do not require assessment &/or examination) would be granted the facility of DPD. It is clarified that this facility is over and above the present system of entity-based DPD extended to AEO clients.
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The Income Tax Appellate Tribunal (ITAT), Delhi Bench ruled that mere account opening in absence of other corroborative evidence of beneficial ownership over an asset cannot lead to taxability.
The assessee, Jatinder Mehra is an individual and is earning a salary from Essar Services India Ltd. A search was conducted in the case of Rakesh Agarwal Group Baroda. Posting such inquiries and information obtained from foreign tax authorities under the Double Taxation Avoidance Agreement, six trust companies were found involved in the transaction. One trust Rajvin Ltd is settled by the assessee is a revocable trust on 15th of April 2005 with Merrill Lynch bank and trust company (Cayman) Ltd as a settler /trustee. The ultimate beneficiaries of the trust include Shri Rajneesh Mehra, Mr. Vineet Mehra (Sons), and Hans Mehra (Grandson). The trust deed was revoked and on the revocation of the trust funds were sought to be transferred to the bank account of Clariden Leu Ltd, Singapore, account number 806694 held in the name of Watergate Advisors Ltd, a company incorporated in the British Virgin Islands.
This appeal is filed by The Additional Commissioner Of Income Tax, Range – 70, New Delhi (the learned AO) against the order dated 16.09.2020 passed by the CIT (A) for the assessment year 2016-17 wherein the appeal filed by the assessee against the assessment order dated 29th of March 2019 passed u/s 10 (3) of under Black Money (Undisclosed Foreign Income And Assets) And Imposition Of Tax Act, 2015 passed by the learned AO is allowed in favor of the assessee.
The senior departmental representative vehemently supported the order of the assessing officer and submitted that name of the assessee is clearly reflected in the column of beneficiary owner of an account in the account opening form. Details of his passport are mentioned as the identification document in the account and therefore the contention of the assessee cannot be accepted that he has not signed any document and the account is not maintained by him.
The coram consisted of Judicial Member, Sudhanshu Srivastava, and Accountant Member, Prashant Maharishi held that merely mentioning the name of the assessee in the account opening form which is rebutted by the assessee by filing an affidavit and complete details of the ownership of the bank account, the assessee cannot be held the beneficial owner of such sum. Therefore, such a solitary fact cannot lead to an addition in the hence of the assessee where there is no other evidence available with respect to the ownership or beneficial ownership over such a bank account. In view of this it is apparent that the mere account opening form where the assessee is mentioned as the beneficial owner of the account mentioning is details of his passport as an identification document, does not necessarily, in absence of any other corroborative evidence of the beneficial ownership of the assessee over that for an asset cannot lead to taxability in the hands of the assessee Under the Black Money Act.
“Assessee does not have beneficial ownership of the amount deposited in Watergate Advisors Limited, the assessee also do not hold that asset. The learned CIT – A has also held so giving the detailed reasons as reproduced above. The learned departmental representative could not show us any evidence that the assessee is the owner or beneficial owner of the sum lying in the bank account of Watergate Advisors Limited. The assessee has given the overwhelming evidence of the fact that money belongs to the son of the assessee which was not at all controverted by the learned assessing officer. In view of this we hold that the learned CIT – A is correct in deleting the addition of ₹ 56,647,000/– in the hands of the assessee,” the ITAT ruled.
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The Central Board of Indirect Taxes & Customs (CBIC) Chairman Shri M. Ajit Kumar here today inaugurated the online filing of Authorised Economic Operators (AEO) T2 and T3 applications. The AEO web application is accessible at URL www.aeoindia.gov.in.
The new version (V 2.0) of the web application is designed to ensure continuous real-time and digital monitoring of physically filed AEO T2 and AEO T3 applications for timely intervention and expedience.
The AEO application processing for AEO T1 on the web-based portal www.aeoindia.gov.in has been functional since December 2018. To make this endeavor for digitization forward, in line with the government’s Digital India initiative, the CBIC Board has launched a new version (V2.0) for on-boarding of AEO T2 and AEO T3 applicants for online filing, real-time monitoring, and digital certification.
For further details, refer to CBIC Circular No. 13/2021-Customs dated 01.07.2021.
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The Central Bureau of Investigation (CBI) moved to the Ahmedabad Court seeking a 5 Days Remand of the Enforcement Directorate (ED) Officials involved in the alleged Bribery Case.
A CBI official said Deputy Director P K Singh and Assistant Director Bhuvnesh Kumar of ED’s Ahmedabad zonal office were held while allegedly accepting a bribe of Rs 5 lakh from a trader, Pareshbhai Patel.
The Complainant alleged that they had demanded Rs 75 lakh and then brought the amount down to Rs 5 lakh. They were nabbed while accepting cash.
Two Enforcement Directorate officials of the agency’s Ahmedabad zonal office in Gujarat were arrested by the Anti Corruption Wing of the CBI for alleged bribery.
The CBI has sought 5 Days Remand on the grounds that during verification proceedings on 29.06.2021, Shri Purna Kam Singh, Deputy Director, and Shri Bhuvnesh Kumar, Assistant Director, both from Enforcement Directorate, Ahmedabad were found involved in demand of huge undue advantage of Rs. 75,00,000 from the complainant Shri Pareshbhai Patel. It is required to ascertain/ unearth a larger / entire conspiracy.
The CBI further submitted that during verification proceedings on 29.06.2021, Shri Purna Kam Singh, Deputy Director asked the complaint Shri Pareshbhai Patel to deposit undue advantage of Rs. 50,00,000/- with the Angadiya firm and as such his connivance with the Angadiya firm is required to be investigated.
It was submitted that during Post-Trap Memorandum proceedings on 02.07.2021, the accused Shri Purna Kam Singh, Deputy Director was found involved in acceptance of undue advantage of Rs. 5,00,000/- towards 1st installment through his accomplice Shri Vijay and Shri Ravi Kant Tiwari and as such his connivance with them is required to be investigated.
“The custody of Shri Purna Kam Singh, Deputy Director is required to ascertain the facts and reveal the truth regarding involvement of other public servants in the case. Custody of Shri Puma Kam Singh, Deputy Director is required to ascertain the facts and reveal the truth regarding the acceptance of undue advantage from others in the past,” the CBI added.
Further, custody of Shri Purna Kam Singh, Deputy Director is required to ascertain the facts and reveal the truth regarding investment in movable or immovable properties, from the undue advantage, which he has received in the past. Additional oral and documentary evidence against Shri Puma Kam Singh, Deputy Director, CBI
and other public servants are required to be collected. Custody of Shri Purna Kam Singh, Deputy Director is required to know the quid pro quo of this case.
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The second wave of the Covid-19 pandemic has been more devastating than the first wave, adversely impacting millions of individuals and adding to the stress on healthcare services.
Consequently, the Central Board of Direct Taxes (CBDT) had recently made some provisions to help citizens claim tax deductions while filing the Income Tax Return (ITR) against coronavirus-related medical treatment expenses.
The government on Friday provided tax relief to those who received help from their employers or others for Covid-19 treatment and also offered concessions for ex-gratia payment received by family members of those who died due to the deadly virus.
There is no upper limit on this. In case family members of an employee receive ex-gratia payment from an employer, it will be tax-free while in case of others pay up to Rs.10 lakh will be tax-free.
The Board said that unfortunately, certain taxpayers have lost their lives due to COVID-19. Employers and well-wishers of such taxpayers extended financial assistance to their family members so that they could cope with the difficulties arising due to the sudden loss of the earning member of their family.
In order to provide relief to the family members of such a taxpayer, an income-tax exemption for ex-gratia payment received by family members from the employer on account of Covid-19 during FY 2019-20 and subsequent years will also be provided, the CBDT added.
“In order to provide relief to the family members of such taxpayer, it has been decided to provide an income-tax exemption to ex-gratia payment received by family members of a person from the employer of such person or from another person on the death of the person on account of Covid-19 during FY 2019-20 and subsequent years. The exemption shall be allowed without any limit for the amount received from the employer and the exemption shall be limited to ₹10 lakh in aggregate for the amount received from any other persons,” it added.
A tax exemption of up to Rs.25,000 can be claimed under Section 80D against the premium paid for a health insurance policy. Health insurance policies bought to cover any Covid-19 related health expenses are also covered under this deduction.
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The Goods and Services Tax Network ( GSTN ) has issued Few important changes related to QRMP Scheme implemented on the GST Portal for the taxpayers are as given below:
A.Auto population of GSTR-3B liability from IFF and Form GSTR 1: A taxpayer under QRMP Scheme can declare their liability through optional IFF for Month 1 and Month 2 of a quarter & Form GSTR-1 for Month 3 of that quarter. Declaration of liability in these forms would now be auto-populated in their Form GSTR-3B (Quarterly) for that quarter, based on their filed Form GSTR-1 and IFF. These fields are editable and in case their values are revised upwards or downwards, the edited field(s) would be highlighted in red colour and a warning message will be displayed to the taxpayer. However, the system would not prevent taxpayers from filing Form GSTR-3B with edited values.
B.Nil filing of Form GSTR-1 (Quarterly) through SMS: Nil filing of Form GSTR-1 (Qtrly) through SMS has been enabled for taxpayers under QRMP Scheme. They can now file it by sending a message in the specified format to 14409. The format of the message is < NIL > space < Return Type (R1) > space< GSTIN > space < Return Period (mmyyyy) > .
Example: NIL R1 07XXXXX1234H8Z6 062020 (where return period must be last month of the quarter)
However, NIL filing through SMS can’t be done in the following scenarios:
•If IFF for Month 1 or 2 of a quarter is in the Submitted stage, but not Filed.
•If invoices are Saved in IFF for Month 1 or 2 of a quarter, which was not submitted or filed by the due date.
C.Impact of cancellation of registration on liability to file Form GSTR-1: In case registration of a taxpayer under QRMP Scheme is cancelled, with an effective date of cancellation being any date after 1st day of Month 1 of a quarter, they would be required to file Form GSTR-1 for the complete quarter, as the last applicable return. For example, if the taxpayer’s registration is cancelled w.e.f. 1st of April, he/she is not required to file Form GSTR-1 for the Apr-June quarter and Form GSTR-1 for Jan-Mar Quarter shall become the last applicable return. However, if the registration is cancelled on a later date during the quarter, the taxpayer would be required to file Form GSTR-1 for the Apr-June quarter. In such cases the filing will become open on the 1st of the month following the month with cancellation date i.e. if the cancellation has taken place on 20th May, Form GSTR-1 for Quarter Apr-June can be filed anytime on or after 1st of June.
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The Income Tax Appellate Tribunal (ITAT), Banglore Bench Disallowance of depreciation on software purchase cannot be done on grounds of non-deduction of TDS.
The assessee, ‘Messrs UKN Properties Private Limited’ is in the Real Estate Industry and is involved in the development of Real Estate. However, the assessing officer of the Income Tax Department came to know the fact that the assessee has paid for the buying of software without deducting the tax at the source. He further noticed that the assessee has done the capitalization of the value of software and consequentially claimed the depreciation amounting to Rs 3,72,465. The assessee has not deducted the tax at the source from the payment that has been made for the purchase of the software, the assessing officer opined that the depreciation which has been claimed on the software is not allowable, as per the provisions of section 40(a)(ia) of the act. Consequently, he did not allow the claim of depreciation u/s 40(a)(ia) of the aforesaid act.
The CIT (A) was of the opinion that the payment that has been made for buying software falls within the domain of royalty as per the decision that has been rendered by the Honorable Karnataka High Court in the case of Samsung Electronics Company Limited. In consequence, the assessing officer was directed to treat the software buying as the revenue expenditure within the domain of royalty. It is given that the assessee has not deducted the tax at source from the payment that is made for buying of the software, it was directed by CIT(A) to the assessing officer to not allow the entire purchase cost of the software as per section 40(a)(ia) of the Act.
The come headed by the Vice President, N.V. Vasudevan and Accountant Member, B.R. Baskaran in the light of the decision of coordinate bench rendered in the case of ‘Kawasaki Microelectronics Inc. India branch Vs. DDIT’ held that the TDS liability cannot be fastened upon the assessee retrospectively and accordingly disallowance u/s 40(a)(i) is not called for even if the software purchases is treated as revenue expenditure.
The ITAT while setting aside the order passed by CIT(A) held that there is no reason to treat the cost of software capitalized by the assessee as revenue expenditure.
The Tribunal directed the AO to treat the cost of software as capital expenditure and delete the disallowance made on this issue.
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The Madras High Court recently ruled that a Deemed University deviated from the objects of the Trust deed cannot avail exemptions of Charitable Trust.
The respondent/assessee, M/s.Shanmuga Arts, Science, Technology & Research Academy (SASTRA) is a Trust registered under Section 12AA of the Income Tax Act, 1961. The Trust had filed the return of income and claimed exemption for Rs.6,65,60,886/- being the amount of donation made by it under Section 11 of the Act. The Assessing Officer had issued a notice u/s.143(2) of the Act through which the details of donations made during the period were called for and according to the Assessing Officer, there was no explanation offered for many donations made by the Trust as to whether they were for activities in conformity with the objects of the Trust. Therefore, all the donations were treated as not exempted and demand was reworked by the Assessing Officer.
Consequently, the capital expenditure claimed was not considered as the assessee was being taxed in the status of AOP (Association of persons) whereas an unclaimed depreciation was allowed for the same reason of status of AOP. It was also observed by the Assessing Officer that out of a total amount of Rs.6,70,21,273/- paid as donations, the assessee had claimed only Rs.6,65,60,886/- in its return explaining that two items of Rs.39,613/- and Rs.5,00,000/- were given to Charities for Tsunami and to political parties, individuals and others, out of which Rs.5,00,000/- was recovered back during the same financial year from the founder Mr.S.Ramachandra Iyer. The assessee Trust themselves had removed that amount from the list of donations.
According to the Commissioner of Income Tax (Appeals), it is immaterial whether the Charitable and religious purposes for which the Trust is created are confined to the objects of the Trust and what is required is that the income must be applied or accumulated for application or set apart for application as per the provisions of the Income Tax Act, 1961. Thus it was observed that even assuming that the objects of the Trust do not empower the Trustees to spend any part of the income of the Trust property for a particular purpose, still, if they do spend any part of the income for charitable or religious purposes in India, it would be entitled to exemption u/s.11 (1) (a) of the Act for that year. The Commissioner of Income Tax (Appeals) gave a verdict in favor of the assessee.
Mr. J. Narayaswamy, Senior Standing Counsel for the Appellant/Revenue argued that the Tribunal was wrong in holding that the assessee was entitled to the exemption u/s.11 of the Act. According to him, the Tribunal also erred in interpreting the contents of the Trust-Deed while declaring the Trust as Public Charitable Trust. Therefore, his contention was that the Assessing Officer was right in declaring the donations which were not in conformity with the objects of the Trust as not entitled for exemption u/s.11 of the Act. He also contended that the order of both Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal are perverse and liable to be set aside.
On the other hand, Ms.Pushya Sitaraman, counsel for the respondent/assessee contended that the Assessing Officer through in her original report had declared all the donations to the tune of Rs.6,65,60,886/- as not entitled for exemption took a complete u-turn in her remand report accepting most of the donations as permissible barring a few totaling to Rs.14,94,886/-.
The division bench of Justice M.Duraiswamy and Justice Hemalatha observed that the Assessing Officer had first disallowed the entire exemption and subsequently scaled it down to Rs.14,94,886/- though reiterating that the Respondent/Trust had acted in violation of its own object set out in the Trust deed. If the Assessing Officer had objection regarding the entire amount of donation, then her remand report should not have accepted any of the donations with valid reasons.
“Moreover, Charity is clearly defined as relief of the poor, education, yoga, medical relief, preservation of the environment, etc., Thus public charitable trust donating to activities other than education cannot be denied exemption u/s.11 of the Act. Therefore, the conclusion of the Assessing Officers totally unwarranted,” the court observed while rejecting the appeal of the revenue.
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The gross GST revenue collected in the month of June’ 2021 is₹92,849 crore of which CGST is ₹16,424 crore, SGST is ₹20,397, IGST is ₹49,079 crore (including ₹25,762 crores collected on import of goods) and Cess is ₹6,949 crores (including ₹809 crores collected on import of goods). The above figure includes GST collection from domestic transactions between 5th June to 5th July’2021 since taxpayers were given various relief measures in the form of waiver/reduction in interest on delayed return filing for 15 days for the return filing month June’21 for the taxpayers with the aggregate turnover uptoRs. 5 crore in the wake of the covid pandemic second wave.
During this month the government has settled ₹ 19,286 crores to CGST and ₹ 16,939 crores to SGST from IGST as regular settlement.
The revenues for the month of June 2021 are 2% higher than the GST revenues in the same month last year.
GST collection after posting above Rs. 1 lakh crore mark for eight months in a row, the collection in June’2021 dropped below Rs. 1 lakh crore. The GST collection for June’2021 is related to the business transactions made during May’2021. During May’2021, most of the States/UTs were under either complete or partial lockdown due to COVID. The e-way bill data for the month of May 2021 shows that during the month, 3.99 crore e-way bills were generated as compared to 5.88 crores in the month of April 2021, down by more than 30%.
However, with a reduction in caseload and easing of lockdowns, the e-way bills generated during June 2021 is 5.5 crore which indicates recovery of trade and business. The daily average generation of e-way bill for the first two weeks of April 2021 was 20 lakh, which came down to 16 lakh in the last week of April 2021 and further to 12 lakh in the two weeks between 9th to 22nd May. Thereafter, the average generation of e-way bills has been increasing and has reached again to 20 lakh level since the week beginning 20th June. Therefore, it is expected that while the GST revenues have dipped during the month of June, the revenues will see an increase again from July 2021 onwards.
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In a major relief to the PVR, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Delhi Bench held that no Service tax under Online Information Database Access and Retrieval services (OIDAR) for mere receiving of code for getting a printout of the ticket from the cinema hall.
The appellant, PVR is engaged in the business of exhibition of movies through various cinema halls located all over India. The appellant sells tickets for movies from the cinema ticket windows and also through its website which is accessible through computer and mobiles phones. The website gives information on movies that are currently being exhibited in its cinemas, upcoming movies, trailers of movies, and similar information.
According to the appellant, no price is charged for accessing this website and any individual can access this website and gain information on movies that are being exhibited or would be exhibited in PVR cinemas. The customers who book tickets online through the website or through mobile phones electronically are required to pay an amount of INR 5/- to INR 25/- per ticket over and above the value of tickets. When the tickets are booked electronically, the hard copies of the same can either be collected over the counter or be retrieved by way of a printout from a machine kept outside the counter of the movie hall.
The appellant received a show-cause notice dated 14.06.2012 for the period 01.04.2007 to 31.12.2011 alleging that the „convenience fee‟ charged by the appellant on its customers for booking the tickets online through the website is exigible to service tax under „OIDAR‟ but the appellant did not deposit service tax. The show-cause notice also invoked the extended period of limitation and created a demand of Rs. 1,70,93,379/- with penalty and interest.
The department submitted that since a booking code is provided to a user when an online booking facility is availed and the user has gone to a movie hall to get a printout of the ticket, would mean that there is access/retrieval of information that cannot, therefore, be accepted. The code received in the process is purely incidental and cannot be said to be the main object of the transaction.
The coram headed by President Justice Dilip Gupta and Technical Member P.V.Subba Rao ruled that the essential characteristic of the arrangement under consideration in these appeals is availing the facility of online booking of tickets and not accessing/retrieving any data/information. Service tax under the category of OIDAR, therefore, cannot be levied upon a user merely because he receives a code for getting a printout of the ticket from the cinema hall.
“Convenience fee is not charged by the appellant for any access/retrieval of information or database. Service tax under OIDAR cannot, therefore, be levied upon the appellant for the period prior to 01.07.2012. The appellant has stated that it started discharging service tax on convenience fees under the negative list regime after July 1, 2012, under the category of “other taxable services,” the CESTAT observed.
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In a major setback to the India franchise of KFC, Pizza Hut, the Delhi bench of the Income Tax Appellate Tribunal (ITAT) has upheld an Income Tax addition of Rs. 3,91,94,260/-.
The assessee, a Yumi Pvt. Ltd. Company was performing a marketing function of the business of ‘Pizza Hut’, ‘KFC; and ‘Taco Bell’. The holding company of the assessee sells the Pizza and this company markets the Pizza. The company, for the relevant year, filed its return of income showing the surplus of income over expenditure amounting to Rs. 3,91,94,261/- and the same was adjusted against the excess spent of earlier years. Thus, the return of income was ‘NIL’. According to the assessee, this income is not chargeable to tax because of the principles of mutuality and because of diversion of income by overriding title. However, the Assessing Officer rejected this contention and made an addition against the assessee.
The Tribunal bench comprising Judicial Member Suchitra Kamble and Accountant Member Prashant Maharishi held that the assessee’s claim with respect to the income of the assessee not chargeable to tax because of principles of mutuality has already been decided by the Supreme Court in the assessee’s own case.
“The Hon’ble Supreme Court dismissed the appeal of the assessee. Thus, the income of the assessee is chargeable to tax, and the principle of mutuality does not apply,” the bench said.
“Before parting, considering the request of the ld. AR and also the agreement of the ld. DR on the same, we direct the ld. Assessing Officer that when this income of Rs. 3,91,94,260/- is held to be chargeable to tax, the assessee is principally entitled for benefit of set-off of any carry forward losses of earlier years if determined in accordance with the law. The assessee is directed to produce the relevant details before the ld. Assessing Officer, ld. AO may examine and consider the claim of the assessee, in accordance with the law,” the bench concluded.
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