SEBI cracks down on WhatsApp and Telegram groups in which Stock-tips were being shared to Inflate Share Prices [Read Order]

The Market Regulator, Securities, and Exchange Board of India (SEBI) have cracked down on WhatsApp and Telegram groups in which stock-tips were being shared to inflate share prices. The genesis of the present proceedings can be traced to two undated complaints that were received by the Securities and Exchange Board of India on July 30,…

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AAR Weekly Round Up

This weekly round-up analytically summarizes the key stories related to the Authority of Advance Ruling (AAR) reported at Taxscan.in during the previous week from January 3 to January 8, 2022. M/s. Golconda Hospitality Services and Resorts Limited The Telangana Authority of Advance ruling (AAR) held that the GST payable on services of boarding and lodging…

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Supreme Court and High Court Weekly Round Up

This weekly round-up analytically summarizes the key stories related to the Supreme Court and High Court reported at Taxscan.in during the previous week from December 27, 2021 to January 1, 2022.

N. Raghavender Vs. State of Andhra Pradesh

The Supreme Court has held that the Money deposited in a bank not held by it as Trustee but it becomes part of banker’s fund payable on-demand with agreed interest rate.

Healthcubed India Private Limited Vs. Assistant Commissioner

The Madras High Court directed the GST Authority to immediately transport goods if no case is made out. The single bench of Justice C.Saravanan held that the show cause notices details and articulates the case of the respondent. It is for the petitioner to reply to the show-cause notices to have the goods cleared. If the goods were really meant to be sent to Karnataka for which the petitioner had allegedly paid IGST amounting to Rs.38,79,019/- under the provisions of IGST Act, 2017, no useful purpose will be served by quashing the show cause notices by directing the respondents to issue a fresh show-cause notice. It would only further delay the clearance of the imported consignments.

Reliance Industries Vs. CIT

The Bombay High Court held that the Reliance Industries conspired to commit offences under Prevention of Corruption Act, casting shadow on monies sought to be offered to Income tax.

Rohan Tanna Vs. UOI

The Chhattisgarh High Court granted bail to the person accused of wrongful availment of Input Tax Credit (ITC).

Murli Industries Limited Vs. ACIT

The Bombay High Court quashed the show cause notice  to Corporate Debtor, to submit return for assessment year falling prior to approval of Resolution Plan under IBC.

Kabir Kumar Vs. DGGI

The Delhi High Court restored the Bail to persons accused of repeatedly indulging wrongfully passing of ITC subject to deposit of Rs.1 lakh.

Tapas Kumar Dutta Vs. UOI

The Jharkhand High Court refused to discharge the PCIT for alleged Corruption and recovery of cash worth Rs. 3.715 crore.

CGST Commissioner Vs. Hindustan Petroleum Corporation

In a major relief to the Hindustan Petroleum Corporation Ltd (HPCL), Bombay High Court held that Revenue cannot invoke extended periods of limitation for recovery of excise duty.

Bennett Coleman Vs. DCIT

In a major setback to Bennett Coleman, the Bombay High Court held that the assessee required to pay interest where advance tax  paid is less than 75% of the assessed tax.

Solar Industries Vs. Commissioner

The Bombay High Court disallowed the Cenvat Credit as bus transport services were mere personal service to employees.

Aarcity Builders Vs. UOI

The Punjab & Haryana High Court has allowed the assessee to file application for Revocation of Cancellation of Registration wherein GST Registration was cancelled before March 1, 2020 due to non-furnishing of returns for six months, extending the benefits of notifications dated August 29, 2021.

Ram Prasad Ganga Prasad Vs. Assistant Commissioner

The Calcutta High Court held that the writ petition not maintainable as Statutory Alternative Remedy available for challenging GST Order passed in violation of principle of natural justice.

G. Victor Devasahayam Vs. ACIT

The Madras High Court while dismissing a plea challenging Alternation of charges on persons accused of non-payment of Income Tax arrears held that Charges can be altered even after reversing Judgement.

Sudhir Kumar Hasija vs. ACIT

The Madras High Court while quashing the proceedings alleging willful default in filing ITR held that it is the Department’s Duty to verify and issue PAN cards.

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Govt. extends validity of FCRA Registration Certificates [Read Circular]

The Ministry of Home Affairs has issued the public notice regarding the extension of the validity of FCRA registration certificates expiring between the period 29th September 2020 and 31st March 2022 of those entities who have applied for renewal on the FCRA portal in accordance with rule 12 of the Foreign Contribution (Regulation) Rules, 2011 before the expiry of the validity of their certificates of registration.

In continuation to the Ministry of Home Affairs’ Public Notice dated 30th September 2021 regarding extension of the validity of FCRA registration, the Central Government, in the public interest, has decided to extend the validity of FCRA registration certificates up to 31st March 2022 or till the date of disposal of the renewal application, whichever is earlier, in respect of only those entities who fulfill the following criteria:

“FCRA registration certificates of such entities is expiring between the period 29th September, 2020 and 31st March, 2022; and (ii) Such entities have applied/apply for renewal on FCRA portal before the expiry of the certificate of registration in accordance with rule 12 of the Foreign Contribution (Regulation) Rules, 2011,”

All FCRA registered associations are therefore advised to take note of the fact that in case of refusal of the application for renewal of the certificate of registration, the validity of the certificate shall be deemed to have expired on the date of the refusal of the application or renewal and the association shall not be eligible either to receive the foreign contribution or utilize the foreign contribution received. This issues with the approval of the Competent Authority. All concerned may take note of the above decision and take appropriate action in the matter.

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Charges can be altered even after reversing Judgement: Madras HC dismisses Plea challenging Alternation of Charges on person accused of Non-Payment of Income Tax Arrears [Read Order]

The Madras High Court while dismissing a plea challenging Alternation of charges on persons accused of non-payment of Income Tax arrears held that Charges can be altered even after reversing Judgement.

The allegation in the complaint, G. Victor Devasahayam filed in 1991 that the petitioner was in the trade of manufacturing and sale of Pesticides and Chemicals for agricultural purposes and was also engaged in Research activities. On 30.06.1983, the petitioner filed return of Income for the Assessment year 1983-84 claiming a loss of Rs.5,74,033/- wherein a Capital Expenditure of Rs.1,24,10,880/- was claimed on Scientific Research relating to his business. The above sum included a claim of Rs.59,88,893/- being the cost of purchase of Land.

The First accused Company was having their Research and Development wing at Padappai and Thiruvottiyur and was recognized by the Indian Council of Agricultural Research (ICAR) under Section 25(1) (2) of the Income Tax Act, 1961. As suggested by the study team of ICAR, the accused Company wanted to have a Centralised Laboratory within the City of Madras for its Process and Development work and accordingly the above mentioned property was purchased. But the said claim was rejected by the Assessing Officer mainly on the ground that the property was purchased barely 4 days before the completion of the Assessment year and therefore, it could not have been used for the Scientific Research as claimed. The accused submits that disallowing the said claim, the assessment was completed by adding the aforesaid sum of Rs.59,88,893/- as income and apart from the levying tax of Rs.39,41,253/- levied a sum of Rs.63,19,208/- as penalty. Thereafter, notices were issued for the tax arrears and assets of the first accused were attached.

It is not disputed that sanction under Section 279 (1) of Income Tax Act has already been granted and sanctioned for the offence under Section 276(C)(1) and other offences. Since the expression “unless the sanction had been already obtained for a prosecution on the same facts as those on which the altered or added charge is found”, new or fresh sanction is not required, as contemplated under Section 216(5) of Cr.P.C., is present.

The single bench of Justice Rmt. Teekaa Raman while relying on the supreme court in the case of Dr.Nallapareddy Sridhar Reddy Vs. The State of Andhra Pradesh & Ors. has held that the stage of the proceedings is irrelevant for alteration of the charge and hence, no illegality or irregularity in the impugned order passed by the learned Sessions Judge.

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Cabinet approves MoU between ICAI and The Polish Chamber of Statutory Auditors

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, today has approved the signing of Memorandum of Understanding (MoU) between the Institute of Chartered Accountants of India(ICAI) and the Polish Chamber of Statutory Auditors (PIBR) to establish mutual co-operation in the areas of Member Management, Professional Ethics, Technical Research, CPD, Professional Accountancy Training, Audit Quality Monitoring, Advancement of Accounting Knowledge, Professional and Intellectual Development.

Implementation Strategy and Targets:

The proposed MoU aims to strengthen co-operation in the matters of study and application of new innovative methods in the field of audit and accounting including application of blockchain, smart contract system, transition from Traditional Accounting to Cloud Accounting etc. ICAI and PIBR also intend to share information through exchange of books, magazines and other publications published by professional organizations, mutual publication of articles on audit and accounting on the magazines and websites of both parties and to undertake joint co-operation in the fight against corruption and money laundering.

Impact:

The MoU between ICAI and PIBR, Poland, is expected to strengthen its foot prints in Europe by providing prospects for the ICAI Members to get professional opportunities in Poland in short to long term future. The aim of MoU is to work together to develop a mutually beneficial relationship for the members of ICAI and PIBR. With MoU, ICAI would be able to strengthen the partnership with Poland by providing the Export of Services in the accountancy profession.

ICAI members are holding middle to top level positions in various organisations across the countries and can influence the decision/policy making strategies of respective organizations of a country. ICAI through its vast network of Chapters and Representative Offices in 73 cities of 47 countries of the world is committed to play an important role by sharing the prevalent practices in these countries so that the Government of India can adopt the best practices being followed by them to attract foreign investment and to encourage them to establish their setup in India. This MoU will benefit Ministry of Corporate Affairs, Institute of Chartered Accountants of India and The Polish Chamber of Statutory Auditors (PIBR).

Background:

The Institute of Chartered Accountants of India (ICAI) is a statutory body established under the Chartered Accountants Act, 1949 for regulating the profession of Chartered Accountants in India. ICAI has contributed immensely in the field of education, professional development, maintenance of high accounting, auditing and ethical standards in furtherance of the profession of Chartered accountants, which is recognized globally. The Polish Chamber of Statutory Auditors (PIBR) a self-government of Statutory Auditors was established in accordance with the Act of October 1991 on auditing and publishing financial statements and on statutory auditors which came into force on 1 January 1992 to regulate the audit profession in Poland.

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Know Top 10 changes in GST Law effective from January 1st, 2022

The Central Board of Indirect Taxes and Customs (CBIC) has notified various changes in GST Law effective from January 1st, 2022. Here are the top 10 changes you need to know.

  1. New GST Burden On E-Commerce Operators Zomato, Swiggy, Ola, Uber

On September 17, it was decided at the Goods and Services Tax Council meeting that e-commerce operators be made liable to pay tax on services provided through them namely transport of passengers, by any type of motor vehicles restaurant services or restaurant services provided, with some exceptions This will become effective January 1, 2022, said a statement issued by the Finance Ministry after the GST Council meeting.

  1. Correction in Inverted Duty structure in Footwear and Textiles sector

The GST Council decided to introduce GST rate changes from January 2022 in order to correct the inverted duty structure in the Footwear and Textile Sector. All footwear, irrespective of prices will attract GST at 12 percent while barring cotton, all textile products including readymade garments will have GST at the rate of 12 percent.

  1. Blocking of GSTR-1 for non filing of GSTR 3B

From 1st January 2022, the GSTR-1 return filing facility will be blocked if you have not submitted the return in FORM GSTR-3B for the previous two return periods. For example, if a taxpayer has not filed GSTR-3B for October 2021 and November 2021, the GSTR-1 filing facility will be blocked from the 1st January 2022.

  1. Rules related to Mandatory Aadhaar authentication for GST Refund & Revocation application

The Central Board of Indirect Taxes and Customs (CBIC) has notified that Rules related to Mandatory Aadhaar authentication for GST Refund and Revocation application are to be effective from 1 January 2022.

  1. GST Provision related to communication of Details of invoice or debit note to the recipient

Section 109  of the Finance Act, 2021 seeks to amend section 16 of the CGST Act wherein sub-section (2), after clause (a), the clause shall be inserted, namely “(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37.

  1. Self-assessed tax shall include the tax payable in respect of details of outward supplies

Section 114  of the Finance Act, 2021 seeks to Amend section 75, in sub-section (12), the Explanation shall be inserted, namely “For the purposes of this subsection, the expression “self-assessed tax” shall include the tax payable in respect of details of outward supplies furnished under section 37, but not included in the return furnished under section 39.”

  1. Commissioner empowered to attach provisionally, any property, including bank account

Section 115 of the Finance Act, 2021 seeks to Amend section 83, for sub-section (1), the sub-section shall be substituted, namely “(1) Where, after the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue it is necessary so to do, he may, by order in writing, attach provisionally, any property, including bank account, belonging to the taxable person or any person specified in sub-section (1A) of section 122, in such manner as may be prescribed.

  1. No appeal to be filed against section 129(3) order, unless a sum equal to 25% of the penalty is paid

Section 116 of the Finance Act, 2021 seeks to Amend section 107, in sub-section (6), the proviso shall be inserted, namely “Provided that no appeal shall be filed against an order under sub-section (3) of section 129, unless a sum equal to twenty-five percent of the penalty has been paid by the appellant.”

  1. Commissioner’s Power to call for information

Section 119 of the Finance Act, 2021 seeks to Substitute of new section for section 151 namely “Power to call for information: The Commissioner or an officer authorized by him may, by an order, direct any person to furnish information relating to any matter dealt with in connection with this Act, within such time, in such form, and in such manner, as may be specified therein.”

  1.  Proper officer detaining or seizing goods or conveyance to issue notice within 7 days of such detention or seizure

The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty.

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E-Commerce Operators to Online Food Delivery aggregators won’t be able to Save Card information on their platforms as per new RBI Guidelines from Jan 2022: All you need to Know

From January 1, 2022, from the E-Commerce Operators like Amazon, Flipkart, Myntra, Nayka, etc., etc. to Online Food Delivery aggregators like Swiggy and Zomato will not be able to save Card information on their platforms as per new guidelines issued by the Reserve Bank of India (RBI).

Impact on Customers
  1. Unable to save debit or credit card

With effect from  January 1, 2022, the customers of E-Commerce Operators and Food Delivery aggregators would not be able to save their debit or credit cards on any platform, consequently, they may have to re-enter the details on every online transaction.

  1. Tokenise cards

The Reserve Bank of India brought in card on file (CoF) tokenization guidelines that mandate replacing actual card data with encrypted digital tokens to facilitate and authenticate transactions. The use of one’s credit or debit cards while shopping on any online platform such as Flipkart, Amazon, Myntra, Nayka, etc., will change. One will not have to save one’s 16-digit card number along with the card’s expiry date on the website. As per RBI’s new rules, the only way one can avoid the hassle is by making a card payment repeatedly is through the process called ‘tokenization.’

In March 2020, the RBI said that payment aggregators and their onboarded merchants must not save the card details of users. Therefore, the RBI has allowed card issuers to offer card tokenization services as Token Service Providers (TSPs). This will be facilitated through consumer consent and will require an ‘Additional Factor of Authentication (AFA)’. With tokenization, the entities involved in the transaction do not have to memorise what the card entails on either end since it is converted into a unique ‘token’ that facilitates the payment.

The word token means replacing a real card number with an optional code that will be converted into a token. Token card data can be used in place of the actual card number for future online purchases as directed by card users. A token card is safer than real card details to make payments and share with online merchants. You don’t need to provide details like card number, expiry date, CVV, such as debit/credit card transactions when using tokens.

  1. Cards which can be Tokenised

As per RBI guidelines, only card networks like Visa, Mastercard, American Express, RuPay, and others can use the tokenization technology.

  1. Chances of reduction in online fraud

With online banking, online fraud has also increased drastically. Therefore, to make online payments more secure, the Reserve Bank of India (RBI) has asked all merchants and payment gateways to remove sensitive details of customers’ debit cards and credit cards that they have saved.

  1. Non-applicability of Guidelines on International Transaction

The new guidelines are not applicable to international transactions. Only domestic cards and transactions fall under the gamut of the new RBI guidelines.

  1. No Extra Charge for Token

There is no extra charge for the tokenization of cards.

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‘GST: Amendment to CGST Act and Rules, notified

Vide Notification 39/2021 Central Taxes Dt. 21.12.2021, the following sections of the Finance Act, 2021 have been notified to take effect from 01.01.2021.

108. Amendment of section 7. — In the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred as the Central Goods and Services Tax Act), in section 7, in sub-section (1), after clause (a), the following clause shall be inserted and shall be deemed to have been inserted with effect from the 1st day of July, 2017, namely :—

“(aa) the activities or transactions, by a person, other than an individual, to its members or constituents or vice versa, for cash, deferred payment or other valuable consideration.

Explanation. — For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another;”.

(Retrospective amendment to overcome the effect of SC judgement in Calcutta Club case)

109. Amendment of section 16. — In section 16 of the Central Goods and Services Tax Act, in sub-section (2), after clause (a), the following clause shall be inserted, namely :—

“(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37;”.

(Amendment to make GSTR 2 A mandatory to avail ITC)

113. Amendment of section 74. — In section 74 of the Central Goods and Services Tax Act, in Explanation 1, in clause (ii), for the words and figures “sections 122, 125, 129 and 130”, the words and figures “sections 122 and 125” shall be substituted.

(Deemed conclusion of proceedings will not apply to Section 129 and 130)

114. Amendment of section 75. — In section 75 of the Central Goods and Services Tax Act, in sub-section (12), the following Explanation shall be inserted, namely :—

Explanation. — For the purposes of this sub-section, the expression “self-assessed tax” shall include the tax payable in respect of details of outward supplies furnished under section 37, but not included in the return furnished under section 39.’.

(Tax declared in GSTR 1 can directly be recovered without issue of any SCN)

115. Amendment of section 83. — In section 83 of the Central Goods and Services Tax Act, for sub-section (1), the following sub-section shall be substituted, namely :—

“(1) Where, after the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue it is necessary so to do, he may, by order in writing, attach provisionally, any property, including bank account, belonging to the taxable person or any person specified in sub-section (1A) of section 122, in such manner as may be prescribed.”.

(Applicability of Section 83 extended)

116. Amendment of section 107. — In section 107 of the Central Goods and Services Tax Act, in sub-section (6), the following proviso shall be inserted, namely :—

“Provided that no appeal shall be filed against an order under sub-section (3) of section 129, unless a sum equal to twenty-five per cent of the penalty has been paid by the appellant.”.

(For appeals against orders passed under Section 125, 25 % of the penalty shall be paid as pre deposit. 129 deals with detention and seizure)

117. Amendment of section 129. — In section 129 of the Central Goods and Services Tax Act, —

(i) in sub-section (1), for clauses (a) and (b), the following clauses shall be substituted, namely :—

“(a) on payment of penalty equal to two hundred per cent of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such penalty;

(b) on payment of penalty equal to fifty per cent of the value of the goods or two hundred per cent of the tax payable on such goods, whichever is higher, and in case of exempted goods, on payment of an amount equal to five per cent of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such penalty;”;

(ii) sub-section (2) shall be omitted;

(iii) for sub-section (3), the following sub-section shall be substituted, namely :—

“(3) The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of sub-section (1).”;

(iv) in sub-section (4), for the words “No tax, interest or penalty”, the words “No penalty” shall be substituted;

(v) for sub-section (6), the following sub-section shall be substituted, namely :—

“(6) Where the person transporting any goods or the owner of such goods fails to pay the amount of penalty under sub-section (1) within fifteen days from the date of receipt of the copy of the order passed under sub-section (3), the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise, in such manner and within such time as may be prescribed, to recover the penalty payable under sub-section (3) :

Provided that the conveyance shall be released on payment by the transporter of penalty under sub-section (3) or one lakh rupees, whichever is less :

Provided further that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of fifteen days may be reduced by the proper officer.

(Various changes in the procedures relating to detention and seizure of goods and conveyances)

118. Amendment of section 130. — In section 130 of the Central Goods and Services Tax Act, —

(a) in sub-section (1), for the words “Notwithstanding anything contained in this Act, if “, the word “Where” shall be substituted;

(b) in sub-section (2), in the second proviso, for the words, brackets and figures “amount of penalty leviable under sub-section (1) of section 129”, the words “penalty equal to hundred per cent of the tax payable on such goods” shall be substituted;

(c) sub-section (3) shall be omitted.

(Various changes in the procedures relating to confiscation and levy of penalties)

119. Substitution of new section for section 151. — For section 151 of the Central Goods and Services Tax Act, the following section shall be substituted, namely : —

151. Power to call for information. — The Commissioner or an officer authorised by him may, by an order, direct any person to furnish information relating to any matter dealt with in connection with this Act, within such time, in such form, and in such manner, as may be specified therein.”.

(Scope of the power to call for information widened)

120. Amendment of section 152. — In section 152 of the Central Goods and Services Tax Act, —

(a) in sub-section (1), —

(i) the words “of any individual return or part thereof” shall be omitted;

(ii) after the words “any proceedings under this Act”, the words “without giving an opportunity of being heard to the person concerned” shall be inserted;

(b) sub-section (2) shall be omitted.

(Procedural changes in the provisions relating to bar on disclosure of information)

121. Amendment of section 168. — In section 168 of the Central Goods and Services Tax Act, in sub-section (2), —

(i) for the words, brackets and figures “sub-section (1) of section 44”, the word and figures “section 44” shall be substituted;

(ii) the words, brackets and figures “sub-section (1) of section 151,” shall be omitted.

(Consequential amendments relating to Power to issue instructions or directions)

122. Amendment to Schedule II. — In Schedule II of the Central Goods and Services Tax Act, paragraph 7 shall be omitted and shall be deemed to have been omitted with effect from the 1st day of July, 2017.

(In view of the retrospective amendment in Sec. 7, this provision is not required and hence deleted)

Section 110 and 111 of the Finance Act, 2021 deals with taking away the requirement of obtaining Chartered Accountant Certification for Annual returns. These have already been notified to take effect from 01.08.2021 vide Notification 29/2021 Central Tax Dt. 30.07.2021.

Section 112 of the Finance Act, 2021 has introduced a proviso in Section 50 of the CGST Act, to provide that interest for delayed payment of tax shall be applicable only on the net tax liability paid in cash. This amendment has already been notified to take effect from 01.06.2021 vide Notification16/2021 Central Tax Dt. 01.06.2021.

Amendment to CGST Rules, notified.

Vide Notification 35/2021 Central Tax Dt. 24.09.2021 various amendments have been made in CGST Rules. Some of these amendments will take effect only from the date to be notified.  Now, vide Notification 38/2021 Central Tax Dt. 21.12.2021, the following amendments have been notified to take effect from 01.01.2022.

(2) After rule 10A of the said rules, with effect from the date as may be notified, the following rule shall be inserted, namely :-

“10B. Aadhaar authentication for registered person. – The registered person, other than a person notified under sub-section (6D) of section 25, who has been issued a certificate of registration under rule 10 shall, undergo authentication of the Aadhaar number of the proprietor, in the case of proprietorship firm, or of any partner, in the case of a partnership firm, or of the karta, in the case of a Hindu undivided family, or of the Managing Director or any whole time Director, in the case of a company, or of any of the Members of the Managing Committee of an Association of persons or body of individuals or a Society, or of the Trustee in the Board of Trustees, in the case of a Trust and of the authorized signatory, in order to be eligible for the purposes as specified in column (2) of the Table below :

S. No.Purpose
(1)(2)
1.For filing of application for revocation of cancellation of registration in FORM GST REG-21 under Rule 23
2.For filing of refund application in FORM RFD-01 under rule 89
3.For refund under rule 96 of the integrated tax paid on goods exported out of India

Provided that if Aadhaar number has not been assigned to the person required to undergo authentication of the Aadhaar number, such person shall furnish the following identification documents, namely :-

(a) her/his Aadhaar Enrolment ID slip; and
(b) (i) Bank passbook with photograph; or
(ii) Voter identity card issued by the Election Commission of India; or
(iii) Passport; or
(iv) Driving license issued by the Licensing Authority under the Motor Vehicles Act, 1988 (59 of 1988) :
Provided further that such person shall undergo the authentication of Aadhaar number within a period of thirty days of the allotment of the Aadhaar number.”;

(3) In rule 23 of the said rules, in sub-rule (1), with effect from the date as may be notified, after the words “on his own motion, may”, the words, figures and letter “, subject to the provisions of rule 10B,” shall be inserted;

(6) In rule 89 of the said rules, –

(i)         in sub-rule (1), with effect from the date as may be notified, after the words “may file”, the words “, subject to the provisions of rule 10B,” shall be inserted;

(7) In rule 96 of the said rules, in sub-rule (1), after clause (b), with effect from the date as may be notified, the following clause shall be inserted, namely :-

(c) the applicant has undergone Aadhaar authentication in the manner provided in rule 10B.

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Top 8 Misconceptions about Loan against Property

When it comes to a big-ticket investment or long-term financing, a loan against property is considered as the safest option. It provides you with financial assistance and can be used for a variety of personal or business purposes. However, several myths about mortgage loans still exist. Today in this article, we are going to dispel all these myths associated with a loan against property

  1. High Income Requirement:

Have you given up on the thought of taking out a loan against your property because a close friend informed you that you needed a high income to qualify for this type of financing? If yes, then change your decision right away.  In the case of a mortgage loan, you need to submit the documents of your expensive land or building, and the lender takes possession of the property papers until the loan is repaid. Since you mortgage a high-worth property with the lender, the risk involved in lending is minimised to a great extent. As such, to obtain a loan against property, you don’t need to come under a high-income bracket. 

  1. You Can’t Use Your Mortgaged Property: 

Are you scared to apply for a loan against the property because you have heard that once the funds are disbursed, the financial institution won’t let you utilise the property until the loan is repaid? If yes, get rid of this thought right away. In a loan against property, the financial institution only takes possession of your property papers, and they do not occupy your mortgaged land or building. It means that you have complete freedom to utilise your property as you see fit, with no restrictions imposed by the financial institution. However, if you default on your loan, the financial institution has the complete right to auction your property to recover the outstanding dues. 

  1. Lender Considers the Purchase Price:

How would you feel if you acquired some land in 1980 for Rs 60,000 and a financial institution granted you a loan against property in 2021 based on the LTV calculated on Rs 60,000? You will feel frustrated. This scenario, however, is based on rumors circulated by people due to a lack of awareness. In reality, financial institutions compute LTV using the property’s current market value. In India, mortgage loans are available with a loan-to-value (LTV) of 40 to 75%. In addition to the value of your home, the financial institution considers your income, credit history, and a few other factors when determining the amount of your loan.

  1. Loan Against Property is Available Only Against Residential Property:

Many people believe that you can only get a loan against a property if it is residential land or a building. However, if you think about it, which lender will refuse to offer a loan against commercial property, considering the soaring price of commercial spaces? In fact, there are numerous lenders whose rate of interest on LAP against commercial spaces is lower than that of residential property. So, if you have any office space or a shop and are hesitant to apply for a LAP, put your fears aside and do so right now.

  1. Lender Charges High Interest Rate: 

Have you ever asked a representative from a financial institution why a lender charges a higher interest rate in case of some people and why all borrowers are not charged the same interest rate? The answer is the amount of risk involved in lending to different types of borrowers. In the case of a mortgage loan, you put your high-value property on the line, which ultimately lowers the risk involved in lending. This is why, when compared to other financing products, LAP interest rates are much lower. So, anyone spreading the myth that a loan against property is only available at a high-interest rate should first educate themselves.

  1. Loan Against Property is Available for Short Duration: 

Do you intend to apply for multiple loans at different intervals only because you heard that a loan against property can be taken out for a short period? If yes, reconsider your decision, and keep in mind that LAP is available for a maximum period of 15 years. When you compare mortgage loans to gold loans, personal loans, and business loans, you will notice that the LAP product has the longest repayment period.

  1. Loan Against Property is Rarely Approved:

A widespread misconception about mortgage loans is that the approval procedure is quite rigorous. This, however, is not the case. Due to the legal verification and appraisal of the property to be mortgaged, the lender takes a few days to approve your loan against the property. Once they successfully verify your documents, the funds are disbursed shortly to your account. 

  1. LAP Offers Low Loan Amount:

In the case of a loan against property, the property offered as collateral is of high market value. The loan is provided based on the current market value of the same. Given this, anyone who claims that LAP only gives out small loan amounts is simply propagating rumours.

To Conclude  

A loan against property is a great option to go for when you need a large sum of money at a low-interest rate and for a long period. Just make sure you have all the property documents handy before applying. Also, research and compare multiple lenders online before you decide to approach one. 

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DGFT notifies Amendment in SCOMET items to Schedule II of ITC (HS) Classification of Export and Import Items, 2018 [Read Notification]

The Director-General of Foreign  Trade (DGFT) has notified the amendment in SCOMET items to Schedule II of ITC (HS) Classification of Export and Import Items, 2018.

“In exercise of the powers conferred by Section 5 and Section 14A of the Foreign Trade (Development and Regulation) Act, 1992, as amended, read with Para 1.02 of the Foreign Trade Policy 2015-2020, the Central Government hereby makes the amendment in Appendix 3 (SCOMET Items) to Schedule -2 of ITC (HS) Classification of Export and Import Items 2018,” the notification read.

The updated Appendix 3 (SCOMET Items) to Schedule- 2 of ITC (HS) Classification of Export and Import Items, 2018 would be uploaded on the web portal of DGFT under the heading “Regulatory Updates” and Subheading “Import, Export and SCOMET policy”.

In order to provide transition time to the industry, this Notification shall come into effect after 30 days of the date of issuance i.e. 19th Jan, 2022.

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‘Landfill-pit is a Civil-Structure, not Plant and Machinery’, No ITC available, affirms AAAR [Read Order]

The Karnataka Appellate Authority of Advance Ruling (AAAR) while upholding the ruling of AAR held that the ‘Landfill-pit is a civil-structure, not plant and machinery’, no Input Tax Credit (ITC) is available.

The Appellant, M/s Mother Earth Environ Tech Pvt. is engaged in the business of solid waste management. They provide services for treatment, storage and disposal of hazardous waste. They collect hazardous waste from various industries across Karnataka and dispose the same as per the guidelines of Central Pollution Control Board (CPCB) and Karnataka State Pollution Control Board (KSPCB). For processing and disposal of the solid waste, they have taken land on lease from the Government and constructed a land filling pit into which the solid waste is filled and closed and sealed for 30 years. The land fill pit has been capitalised in their books of accounts as an asset and they have claimed depreciation under Income Tax.

In order to obtain a ruling on the classification of the service provided by them, the Appellant approaches the Authority for Advance Ruling (AAR) seeking a ruling on the issue whether the land filling pit can be considered as ‘Plant and machinery’ and therefore eligible for input tax credit or; whether the landfilling pit is to be considered as ‘civil structure and therefore become ineligible for input tax credit.

The AAR ruled that landfilling pits used for treatment, storage, and disposal of hazardous waste cannot be called as plant and machinery even if capitalized as such owing to significant earthwork. It has been distinguished from apparatus or equipment as also structural support.

The coram of Ranjana Jha and Shikha C. while upholding the ruling of the lower authority observed that civil structures such as foundation and supporting structure for fastening of plant and machinery to earth has been included as part of plant and machinery. However, any other civil structure has clearly been excluded from the definition of plant and machinery’. The land filling pit comes within the ambit of the exclusion and hence is not eligible for input tax credit.

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No GST payable on Sale of Developed Land where Development Work is Limited to providing Common Amenities, No Development Work after Sale: AAR [Read Order]

The Madhya Pradesh Authority of Advance Ruling (AAR) ruled that no GST payable on sale of developed land where development work is limited to providing common amenities, no development work after sale.

The Applicant, Bhopal Smart City Development Corporation Ltd is a Public Sector Undertaking. The company is jointly owned by the Government of MP and is equally managed by Madhya Pradesh Urban Development Company Limited (MPUDCL) and Bhopal Municipal corporation (BMC). The sole objective of the Applicant is Planning and implementing the “Smart City Project” in Bhopal. Smart City Bhopal Mission and values: The smart city mission of the Government of India seeks to address the issue of urbanization through the transformation of selected cities. The intent is to create sustainable cities that can provide a good quality life to its citizens.

The applicant has sought the advance ruling on the issue of whether GST is applicable on sale of developed plot of land for which consideration is received before the issuance of completion certificate.

The Coram of Manoj Kumar Choubey and Virendra Kumar Jain ruled that regarding applicability of GST on sale of developed land (the applicant has declared that no completion certificate is required for the project), the sale of developed land, by the applicant as per the facts provided by him where the development work is limited to providing common amenities ( common drainage, water line, electricity line, land levelling, road and street light) and no development work will be done by the applicant after the sale of the developed land and if no advance from the customer for undertaking development activities is taken then it does not constitute a supply within the meaning of Section 7 of the GST Laws and therefore GST is not applicable on such sale.

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Bombay HC directs GST Authority to Unblock ITC of Rs. 1.17cr availed in its Electronic Credit Ledger after one year of restriction [Read Order]

The Bombay High Court directed the GST Authority to unblock ITC of Rs. 1.17 Crores availed in its electronic credit ledger after one year of restriction.

Mr. Prakash Shah advocate for the petitioner, Advent India PE Advisors Private Limited refers to the provisions of rule 86A of the Central Goods and Services Tax Rules, 2017 and in particular sub-rule (3) thereof, which provides that restriction imposed under sub-rule (1) would cease to have effect after expiry of one year from the date of imposition thereof. Drawing our attention to Exhibit A, he contends that the input tax credit was blocked on January 26, 2020 and since more than 20 months have lapsed by now, by operation of law, the petitioner is entitled to relief claimed in this writ petition.

Ms. Sangeeta Yadav for the respondents has placed before us the written instructions received by her from the respondent, the Deputy Commissioner wherein it was stated that This Department has consistently asked the taxpayer for submissions required for due verification of the Credit availed. However, the first submission which was incomplete, was received from the taxpayer on 17.03.2020. The Department was in communication with the taxpayer seeking reconciliation statements for the difference in their GST returns namely GSTR-2A and GSTR-3B from FY 2017-18 to 2020-21. The last letter from the department addressed to taxpayer was sent on 31.05.2021 asking for reconciliation between ITC stated in monthly returns and annual returns. However, the reply from the taxpayer is still awaited. Instead of furnishing the documents the taxpayer has filed a writ petition. Due process for verification and unblocking is being followed by this office on priority basis and after completion of the due verification, if any mismatch in the Credit availment is noticed a Show Cause Notice (SCN) will be issued to the taxpayer and the Input Tax Credit will be unblocked immediately.

It was the submission of Ms. Yadav that said that after the process of verification is complete, the input tax credit would be unblocked. The division bench headed by the Chief Justice Deepankar Dutta and Justice M.S.Karnik noted that having regard to the statutory mandate in sub-rule (3) of rule 86A, the petitioner is entitled to claim that the input tax credit ought to have been unblocked immediately after one year of the restriction being imposed under sub-rule (1) thereof. If indeed the respondents were of the view that the petitioner had not been cooperating with the department, they ought to have proceeded against it in a manner known to law. However, to say that reply is awaited and hence lifting of the restriction has not been resorted to is clearly illegal.

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CBIC issues Instructions on Testing of Coumarin in Imported Cinnamon [Read Circular]

The Central Board of Indirect Taxes and Customs (CBIC)  issues instructions regarding testing of coumarin in imported Cinnamon.

“Reference is invited to letter F.No.1-1403/FSSAI/Imports/2015 (part 1) dated November 30, 2021, issued by Food Safety and Standards Authority of India, New Delhi on the testing of coumarin in imported Cinnamon,” the CBIC.

It is requested that necessary action may be taken to sensitize officers under your jurisdiction hereby to ensure that all imported consignments of cinnamon get tested for coumarin content (on a dry basis), which should not be more than 0.3 percent by weight.

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ITAT deletes Additions for Unexplained Cash Credit as it was not based on Incriminating Material found during course of Search Operations [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) deleted the addition for Unexplained Cash Credit as it was not based on incriminating material found during the course of search operations.

The assessee, Jasmin K. Ajmera raised a pertinent legal ground to submit that the impugned additions as made in the assessment order are not based on any incriminating material found during the course of search operations and this being non-abated year, the additions are not sustainable in law.

The assessee refuted the allegations of Ld. AO, inter-alia, by submitting that except for the statement, there was no evidence in support of the allegation. No incriminating documents / evidence were found from the possession of the assessee during the course of search action. The sole reliance on the statement was contrary to specific directions of CBDT and there was no corroborative evidence to support the addition.

No additions could be made merely on the basis of statement without there being any corroborative evidence on record. Further, the statement of the assessee was taken under coercion, pressure and undue influence and given under stress, Therefore, the statement was not a valid statement in the eyes of law. The entire statement stood fully retracted vide affidavits dated 02/08/2013 and 14/08/2015 explaining the entire chain of events. Therefore, the recorded statement would have no evidentiary value.

The coram of Judicial Member, C. N. Prasad and Accountant Member Manoj Kumar Aggarwal held that in the absence of any incriminating material, the additions could not be made in the hands of the assessee as per settled legal proposition. Accordingly, the impugned additions stand deleted.

“The surrendered income must be correlated with some incriminating material found during the course of search action so as to justify the addition. We find that there is no such incriminating material in the case of the assessee which would show that the transactions under consideration were sham transactions and there was any connection / nexus between the assessee and the group entities of Shri Shirish C. Shah,” the ITAT ruled.

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GST Evasion: Court grants Bail to person accused of wrongfully availing ITC from Non-existent Firms [Read Order]

The Sessions Court at Vapi granted bail to a person accused of wrongfully availing Input Tax Credit (ITC) from non-existent firms.

The applicant-accused, Rameshchandra Tulsidas was allegedly involved in some more availment of fraudulent ITC from non-existent firms and further utilization of fraudulently accumulated ITC. The existing evidence shows availability and utilization of fraudulent ITC which is more likely to increase once further investigation is carried out and all factors are unearthed. Further, in the statements recorded under Section 70 of the CGST Act, 2017, Shri Rameshchandra Tulsidas Agarwal also admitted that: The ITC amounting to Rs. 5,97,75,230/- was fraudulently passed by M/s. One Ten Steels, M/s. Prime Metals, M/s. Magnus Metals, M/s. Crystal Metals, M/s. R J Traders, M/s. Decent Steels & M/s. Global Traders and utilized by his firm M/s. Manish Scrap Traders for discharging their output tax liability”.

The 3rd Additional Sessions Judge, Dharmender Singh observed that the offence is punishable up to 5 years, compoundable and triable by the Court of Magistrate. Admittedly, the complaint against the applicant-accused is yet to be filed. Further, the allegations against the applicant-accused are yet to be established during the trial and trial will take a long time. Thus, seeing the quantum of sentence an accused is likely to face, gravity of the offence, severity of punishment, the liberty of an individual being involved, the period of custody of the accused, this court is of the considered opinion that the applicant / accused is entitled for concession of regular bail in this case.

The court ordered the applicant to be released on bail in connection with F No. XIV/516-28/2020 for the offence punishable under section 132(1)(B) & C of the CGST Act, 2017 on furnishing personal bond of Rs.15,000/- with one surety like amount to the satisfaction of Ld. Trial Court/ Illaqua Magistrate/concern court.

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Authorised Officer conducting Search, Seizure can’t retain Documents beyond 15 days, so officer can’t encash IVP without Documents: Kerala HC [Read Order]

The Kerala High Court held that Authorised officer conducting search, seizure cannot retain documents beyond 15 days, so officers cannot encash the (IVP).

The appellant, Dr. R.P.Patel was denied the benefit under the Kar Vivad Samadhan Scheme, 1998, (KVS), wholly for the assessment years 1994-95, 1995-96, and partially for the years 1992-93 and 1993-94. The reason for denying the benefit was stated as the non-existence of tax liability for the said years on the date of application under the scheme. Appellant however claimed in the writ petition that, tax arrears existed on the date of application and the encashments of the seized Indira Vikas Patras of the appellant were without authority and illegally adjusted against the tax liabilities of the appellant. Thus, the application of the appellant was rejected stating that there were no existing tax arrears. The Single Judge held that the encashment was valid and disposed of the writ petition with directions most of which were contrary to the appellant’s claim.

The scheme of section 132 as well as from the decisions stated above that the authorised officer who conducted the search and seizure cannot retain the documents or assets beyond 15 days. If the authorised officer cannot retain the assets or the documents, it is ineluctable that the said officer could not have encashed the IVP’s. The authorised officer could not have been in de facto or de jure possession of the assets or documents seized under section 132(1) of the Act after 15 days of seizure.

The division bench of Justice S.V.Thomas and Justice Bechu Kurian Thomas held that all encashments were done by the respondent without authority or jurisdiction and that too after he had become functus officio.

The court held that the encashments of the IVP’s were contrary to law and were void as having been carried out by a person without authority.

The court relied on a decision of the Supreme Court in the case of Commissioner of Income Tax and Others v. K.V.Krishnaswamy Naidu & Co. wherein it was observed that the authorised officer could not pass an order under section 132(5) and he cannot retain the documents beyond 15 days and hence such officer could not have mooted a proposal under section 132(8) for further retention.

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5% GST on Supply for Marine Engines used for Defense, Patrolling, Flood Relief, Rescue Operations: AAR [Read Order]

The Maharashtra Authority of Advance Ruling (AAR) ruled that the 5% GST on Supply for marine Engines used for defense, patrolling, flood relief, and rescue operations.

The applicant, M/s Ocean Blue Boating Pvt Ltd, the applicant is in the business of Importing Marine Propulsion RADIANCE RULIN Engine under HSN Code 8407, 8408 & spare parts of marine propulsion engines under HSN Code 8409, supplying the same in local market for use as a part of fishing vessels, Police, Defense department, Patrol, flood relief & rescue department and others.

The applicant sought the advance ruling whether GST rate of 5% can be charged on supply of marine engines of heading 8407 and heading 8408 and/or their spare parts of heading 8409 without considering its general tax rate as per the entry of schedule I, Sl. No. 252 of Notification No. 1/2017-Central Tax (Rate), Dated 28 06-2017, on the basis of its ultimate used as part of fishing vessel of heading 8902 and whether GST rate of 5% can be charged on supply of marine engines of heading 8407 and heading 8408 and/or their spare parts of heading 8409 when it is supplied for use of defense purpose, patrolling purpose, flood relief and rescue operations being part of heading 8901, 8904. 8905, 8906, 8907.

The coram of members, Rajiv Mango and T.R. Ramnani ruled that GST rate of 5% can be charged on supply of marine engines of heading 8407 and heading 8408 and/or their spare parts of heading 8409 covered under Sr. No. 252 of Notification No. 1/2017-C.T.(Rate), dated 28-6-2017 only when it is supplied for use in ships/vessels covered under headings 8901, 8902, 8904, 8905, 8906, 8907 of the GST Tariff, which may be used for defense purpose, patrolling purpose, flood relief and rescue operations. However, Goods which do not conform to “parts of marine engines” will not be covered under the said SA No. 252 of Notification No. 1/2017-C.T.(Rate), dated 28-6-2017.

“Marine engine of heading 8407 and heading 8408, and parts thereof of heading 8409 will be covered under Sr. No. 252 of Notification No. 1/2017-C.T.(Rate), dated 28-6-2017, when used in fishing vessels falling under HSN 8902 of the GST Tariff, as in the subject case. Goods which do not conform to “parts of marine engines” will not be covered under the said Sr. No. 252 of Notification No. 1/2017-C.T.(Rate), dated 28-6-2017,” the AAR said.

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Partial Relief to Volvo: Karnataka HC remands matter back to Authority as Disallowance of Deduction Expenditure not appreciated by ITAT [Read Order]

In a partial relief to Volvo India Pvt. Ltd., the Karnataka High Court remand the matter back to Authority as disallowance of deduction expenditure not appreciated by Income Tax Appellate Tribunal (ITAT).

The assessee, Volvo India Pvt. Ltd is engaged in the business of manufacturing/dealing in tractors, trailers, bus chassis, road machinery and trading in construction equipment and also provides software, product design and other support services. The assessee created provisions of expenses, head wise, on adhoc basis in respect of various services received to facilitate closing of the books without reference to any particular party. Such excess amounts of provisions created got reversed subsequently.

No tax deduction at source was made in respect of such provisions. The Income Tax Officer after noticing the said provisions disallowed by the appellant itself to be deducted from the expenditure while calculating for the purpose of taxation, which reflected in the statement of “Computation of Total Income Tax Liability as at 31st March 2012”, initiated proceedings under Section 201(1) or 201(1A) of the Act considering the appellant to be an assessee in default in respect of the amount of tax which was not deducted at source on such provisions. Being aggrieved by the same, the assessee preferred appeals before the Commissioner of Income Tax (Appeals), Bangalore which came to be dismissed for both the assessment years under consideration.

The coram of Justice S. Sujatha and Justice V.Shrishananda in the light of the judgment of the Apex Court in the case of Shree Choudhary Transport Company would not be of any assistance to the Revenue unless the material aspects are considered with respect to Section 40(a)(ia) of the Act read with Sections 194C, 194H, 194I, 194J – relevant Sections under which TDS was required to be deducted by the assessee. These factors necessarily need to be addressed by the Tribunal keeping in mind the provisions of the Act as well as the legal principles enunciated by the Hon’ble Courts. If the deduction is not claimed for the expenditures made in the provision even in the return submitted and the same is offered to tax in the subsequent year after reversing the entries pursuant to the receipt of the bills/invoices by the payees, the matter has to be analysed having regard to, whether income has accrued to the payees to deduct tax at source.

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GST: ITC not admissible on Construction of Immovable Property used for Business, rules AAR [Read Order]

The Uttar Pradesh Authority of Advance Ruling (AAR) ruled that Input Tax Credit (ITC) is not admissible on the construction of immovable property used for business.

The Applicant, Tianyin Worldtech India Private Limited is engaged in the manufacturing of Charger of Mobile Phone & its Parts or Sub-Parts. The Applicant has purchased an old Factory for Expansion of their business and in said factory applicant shall also make new construction to set up plant and machinery.

The Applicant has approached the authority of Advance ruling to determine the admissibility of input Tax Credit of Tax paid on cost proposed to be incurred in relation to Activity construction of immovable property used for business.

The Coram of Vivek Arya and Abhishek Chauhan ruled that the input Tax Credit of Tax paid on cost Proposed to be incurred in relation to Activity mentioned is not Admissible. When the goods or services are bought for the construction of immovable property which will be used in the course of business, the GST paid on such goods or service is also not eligible- to be claimed as an input tax credit if the immovable property is constructed for own purpose, as the owner will become the end user and he cannot avail ITC of the cost incurred on construction goods, as there is a break in the tax chain.

“We find that the applicant had submitted details of nature, function, use, the utility of different items on which admissibility of the input tax credit has been sought. We proceed to examine one by one,” the AAR said.

“The first Major head mentioned at Sl. No. 1 is Building Work wherein ITC availability on (1) Cement, iron, dust, sand, bricks, bonding chemicals, concrete used in building for construction and repairing of production floors (2) labour contractor payment (used in making of production area) (3) Painting of building (4) False sealing and lights (5) Wire Fitting on Production Floor (6) Furniture & Fixture for Production Floor (7) Furniture & Fixture for office and (8) Tiles used in production area have been sought by the applicant. According to the provisions of Sec. 17(5) read with the explanation to it, credit of civil structure is covered under blocked credit. Clause (c) and (d) of section 17(5) restrict ITC in respect of Works Contract services and goods or services used towards construction of immovable property As such, input tax credit (ITC) of GST paid in relation to building or any other civil structure is not available,” the AAR added.

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