The Ministry of Finance, in a press release issued today, has explained the applicability of Goods and Services Tax (GST) on Skill Development, Start-Ups, and Tourism etc.
All kinds of representations received from the trade and industry (including start-ups) regarding GST rates on services have been deliberated in the Fitment Committee. The government has exempted various kinds of services in relation to skill development. Decision pertaining to rates of GST and exemption on skill development, start-ups, and tourism is taken after due deliberation in GST Council.
There are several services which have been exempt from GST. The details are as given below.
Exemptions in relation to Skill development and start-ups
Taxable services, provided or to be provided, by a Technology Business Incubator or a Science and Technology Entrepreneurship Park recognised by the National Science and Technology Entrepreneurship Development Board of the Department of Science and Technology, Government of India or bio-incubators recognised by the Biotechnology Industry Research Assistance Council, under the Department of Biotechnology, Government of India.
Any services provided by, (a) the National Skill Development Corporation set up by the Government of India; (b) a Sector Skill Council approved by the National Skill Development Corporation; (c) an assessment agency approved by the Sector Skill Council or the National Skill Development Corporation; (d) a training partner approved by the National Skill Development Corporation or the Sector Skill Council, in relation to-
Services of assessing bodies empaneled centrally by the Directorate General of Training, Ministry of Skill Development and Entrepreneurship by way of assessments under the Skill Development Initiative Scheme is exempt from GST.
Services provided by training providers (Project implementation agencies) under Deen Dayal Upadhyaya Grameen Kaushalya Yojana implemented by the Ministry of Rural Development, Government of India by way of offering the skill or vocational training courses certified by the National Council for Vocational Training are exempt from GST.
Services provided to the Central Government, State Government, Union territory administration under any training programme for which total expenditure is borne by the Central Government, State Government, Union territory administration.
Exemptions in relation to Tourism
Services by a specified organization in respect of a religious pilgrimage facilitated by the Government of India, under the bilateral arrangement is exempt.
Further, the supply of tour operators services attracts the concessional rate of GST @ 5%, subject to fulfillment of specified conditions.
This was stated by Shri Shiv Pratap Shukla, Minister of State for Finance in a written reply to a question in Rajya Sabha.
The Government has received various representations from Association of Exporters as well as Corporate Bodies seeking clarity on the e-way bill regarding the movement of goods from dry-ports to seaports and from SEZs within the zone. Some of the queries regarding the applicability of e-way bill provisions are as below:
i. Exemption for export consignments during custom bonded movement from one airport o another;
ii. Movement from SEZ/FTWZ (Free Trade Warehousing Zone) to port and vice versa;
iii. Parity in the movement of export cargo with import cargo.
To clarify this issue the Central Goods and Services tax Rules, 2017 (CGST Rules) have been amended vide notification No. 12/2018-Central Tax dated 07.03.2018. As per sub-clauses (c) and (h) of sub-rule (14) of rule 138 of the CGST Rules, no e-way bill is required to be generated where the goods are being transported:
This was stated by Shri Shiv Pratap Shukla, Minister of State for Finance in written reply to a question in Rajya Sabha.
The Kerala High Court recently permitted the assessee, M/s Vajra Rubber Products (P) Ltd to release goods detained by the State GST department by furnishing a bond. While disposing of the writ petition, Justice P B Suresh Kumar also directed the authorities to complete adjudication within seven days in terms of section 129 of the Act.
Earlier, the goods were seized by the GST authorities by finding that there was no nexus between the documents accompanied and the actual goods under transport.
Aggrieved by the action of the authorities, the assessee filed a writ petition before the High Court by invoking Article 226 of the Constitution.
The Court noted that, in Madhu M.B v. CTO, a two-judge bench of the Court, while dealing with a similar issue, directed expeditious completion of the adjudication of the matter and permitting release of the goods detained pending adjudication, in terms of Rule 140(1) of the Kerala Goods and Services Tax Rules, 2017.
In that case, the division bench comprising Justices Antony Dominic and Dama Seshadri Naidu also observed that the provisions of the Kerala GST Act provide a mechanism for adjudication following the detention of goods including for the provisional release thereof pending adjudication. “When the statute itself provides for such a mechanism, a deviation therefrom cannot be ordered. If that be so, the provisional release in the manner as is ordered in the judgment under appeal cannot be sustained,” the bench observed.
In the light of the decision of the Division Bench in the above case, the bench directed the competent authority to complete the adjudication provided for under Section 129 of the statutes referred to above, within a week from the date of production of a copy of the judgment. It was also directed that if the petitioner complies with Rule 140(1) of the Kerala Goods and Services Tax Rules, 2017, the goods detained shall be released to them forthwith.
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In the case, Deputy Commissioner of Income Tax vs Saifee Jubiee High School & Madressa Yusufiyan Society, Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) recently ruled that sale price approved by charity commissioner had to be followed in case of Trust’s sales deed.
The assessee in the instant case is a public trust registered under the Bombay Public Trust Act. It has transferred a capital asset for a consideration of Rs. 12.50 lakhs by way of the registered sale deed during the financial year.
During the course of assessment proceedings, the Assessing Officer (AO) has received AIR information that the price was taken for stamp purposes was Rs.74,87,400 and accordingly, the AO has adopted the value of the land on the basis of the value shown by the Stamp Valuation Authority. Further, the AO has taken the full consideration of the property to be Rs.74,87,400 and cost of acquisition is held to be Rs.71,640 as per the book value of the Assessee and Long-Term Capital Gain is worked out at Rs.70,34,635 by relying on the AIR information and added the same to the total income of the Assessee.
On appeal, the CIT(A) granted relief to the Assessee by deleting the addition made by the AO and held that the transaction of sale of the property has been made with the prior approval of the Charity Commissioner. Thereafter, a written order was passed permitting the Assessee to sell the said property for Rs.12,50,000. As the transaction took place under the supervision and directions of an Authority then the Stamp Authority need not to arrive at the value of Rs.74,87,400 but the AO has worked out such amount on the basis of details furnished.
The authority also observed that the Charity Commissioner has stated in the order of approval passed that the said property could not be used for commercial purpose and the same has to be put to use for the objects of the purchaser trust, the valuation of the property could not be the same as any unrestricted property.
Aggrieved by the order of the authority the Revenue approached the Tribunal by appeal and contended that the CIT(A) has violated the provision contained in Rule 46A of the Income Tax Rules in admitting assessee’s additional evidence in the nature of its registered valuer’s report that the above-mentioned capital assets’ fair market value was Rs.12.4lakhs only.
After considering the above narrated facts and circumstances of the case the Tribunal bench comprising of Judicial Member S.S.Godara and Accountant Member Amarjit Singh observed that while perusing the available materials on records it is clear that the Charity Commissioner had passed his order as per the provisions of the Bombay Trust Act and Rules approving the impugned sale at a price of Rs.12.50lakhs which ultimately culminated in the sale deed, therefore, it would be the market value of the property.
While concluding the issue the division bench further held that whatever sale price Charity Commissioner had approved had to be followed in assessee’s impugned sale deed and also upheld the order of the lower authority and accordingly dismissed the appeal of the Revenue.
Subscribe Taxscan Premium to view the JudgmentDelhi CESTAT, while upholding the service tax demand against Indian Institute of Planning & Management, ( IIPM ) held that the activities undertaken by them would come under the ambit of “Commercial Training or Coaching Centre”.
The bench was hearing an appeal filed by the Revenue against the order of the first appellate authority wherein the service tax demand against the Assessee-Institute was dropped.
Indian Institute of Planning & Management engaged in providing management course and also MBA, BBA Degrees of International Management Institute. Upon Investigation Directorate General of Central Excise Intelligence found that IIPM was not paying Service Tax on the fees collected for the various academic courses like MBA, BBA, FIIPM, AFIIPM and also various training courses being organized by them.
Department issued show cause notice after collecting various documents and recording the statements of various persons connected with IIPM. The said show cause notice mentioned the allegations like IIPM were charging huge amounts from each student for distinct courses and also added that IIPM does not result in award of any certificate then the activity will fall under the category of Section 65 (105) (zzc) of the Finance Act and is a taxable service liable to payment of Service Tax.
On the first appeal, the Adjudicating authority while invoking section 65 (26) of the Act concluded that the way in which IIPM giving training program is distinct from the ambit of Commercial Training or Coaching and the authority dropped the demand of Service Tax on the fees collected by IIPM towards such courses.
Aggrieved with this decision Revenue appeared before CESTAT. On behalf of the Revenue, the counsel, Amresh Jain contended that the exclusion provided in the statutory definition is not applicable to IIPM since the institution not affiliated to any university and do not possess approval from AICTE or UGC.
The revenue also argued that only those centers which are covered under the exclusions provided in Section 65 (27) will fall outside the Service Tax ambit.
The bench comprising judicial member S.K. Mohanty and Techincal Member V. Padmanabhan heard the submissions of both the parties and also pressed the importance of statutory definitions mentioned in the tribunal.
The Tribunal reproduced the definition as “commercial training or coaching” means any training or coaching provided by a commercial training or coaching Centre” and also added that the object of such activities meant for imparting skill or knowledge or lessons on any subject or field other than the sports.
The bench after hearing both the sides held that there is no scope to exclude the Academic Courses conducted by IIPM from the purview of Service tax levy. The CESTAT bench further observed that “The exclusion provided in Section 65 (27) is available to any institute or establishments which issue any certificate or any educational qualification recognized by law for the time being in force. But it is an admitted position that the certificates and degrees awarded by IIPM and also by IMI, Europe do not enjoy the recognition from AICTE or UGC”.
Therefore bench admitted that IIPM clearly falls under the definition of Commercial Training or Coaching Centre as defined in law Section 65 (27) and the services rendered by them are liable to Service Tax.
Subscribe Taxscan Premium to view the JudgmentWhile admitting a petition challenging the provisions of Gujarat Goods and Services Tax (GGST) Act, the Gujarat High Court has issued notices to GST Council, GSTN, State Government and Central Government and observed that the transitional credit is vested right which cannot be denied by the Government.
The petitioners, M/s Willowood Chemicals Pvt. Ltd filed the writ petition before the Gujarat High Court challenging the Constitutional validity and vires of Rule 117 of the Gujarat Goods and Services Tax Rules, 2017 and Form GST Tran-1 issued in relation thereto vis-à-vis Section 140(3), Section 164 of the Central Goods and Services Tax Act, 2017.
Counsel for the Petitioners, Mr. Vinay Shraff, Mr. Vishal J Dave and Mr.Nipun Singhvi submitted before the Court that under the existing Central Sales Tax Act, 1956, for non-submission of the statutory declaration in Form C, F, H, I etc., the differential tax is demanded which further subject to appeal/revision. The input tax credit already earned under the Gujarat Value Added Tax Act, 2003 is allowed to be retained and utilized for payment of VAT/CST and neither under the Gujarat Value Added Tax Act, 2003 nor under Central Sales Tax Act, 1956 there is any provision to deny input tax credit in case of failure to furnish statutory declaration. It was also submitted that Section 140 of the Gujarat GST Act is a transitional provision.
The Petitioners further submitted that under the value added tax mechanism no one to one co-relation was mandated between the inputs tax credit on one hand and the type of sale/clearances/dispatches and output on the other; tax liabilities under the Gujarat Value Added Tax Act, 2003/Central Sales Tax Act, 1956.
For that, the Petitioners submitted that the Central Sale Tax Act, 1956 read with the Central Sales Tax (Gujarat) Rules, 1957 provides for the mechanism for assessment of tax etc. in the event of non-compliance with provisions. The form GST Tran-1 Sr. No.5(c) is adjusting the differential tax liability attributable to pending declaration forms against tax carried forward ITC of VAT.
It was also submitted that they will remain liable to pay differential tax, interest and penalty under Central Tax Act for non-submission of forms C/F/H/I, therefore disallowance of carrying forward of acquired accrued/acquired right of input tax credit under VAT Act even before assessment under the Central Sales Tax Act, 1956, is wholly arbitrary and confiscatory. This will also result in double jeopardy and double taxation without any consequential remedy. It was further submitted that it is an established principle of law that taxing the same property or subject-matter twice, for the same purpose, for the same period and in the same territory is ultra vires to the constitution. This double taxation would result in unjust enrichment in favour of the Government. This is also violative of Article 300A of the Constitution and is confiscatory in nature.
CA Abhishek Chopra, GST Consultant to the petitioner opined that “The GST is a value-added tax and Cenvat credit or Value added tax are the vested right of an assessee is which acquired under existing law. Further, there were specific provisions under Central Sale Tax Act, 1956 read with the Central Sales Tax (Gujarat) Rules, 1957 which provides for the mechanism for assessment of tax etc. in the event of non-compliance with provisions including non-submission of forms. Therefore disallowance of carry forward of the acquired right of input tax credit under VAT Act that too before assessment under the Central Sales Tax Act, 1956, is wholly arbitrary and confiscatory. In the disguise of Section 140(1) of Gujarat GST Act, the government is adjusting future liability against current credit.Further, Section 140(1) of the Gujarat GST Act is ultra vires to the Article 279A of the Constitution of India inasmuch as the Article 279A of the Consultation of India does not empower the Goods and Services Tax Council to make recommendation for adjustment of a tax liability which may arise in future under Central Sales Tax Act, 1956, which is a Central legislation, against a accrued/ acquired right under the scheme of Value Added Tax Act, which is a state legislation.”
Subscribe Taxscan Premium to view the JudgmentOne more arrest of GST Officer reported. As per a report published by the Times of India, the state anti-corruption bureau (ACB) on Wednesday arrested a class-I officer of the goods and services tax (GST) department for allegedly demanding and accepting Rs 30,000 bribe from a government contractor for not taking action against the latter in a case of payment of a lesser value-added tax for works executed in 2013.
“A team headed by the superintendent of police (ACB, Pune) Sandeep Diwan and assistant commissioner Jagdish Satav nabbed assistant commissioner (GST) Prasad Purushottam Patil red-handed while accepting the bribe on the premises of the GST office canteen,” TOI reported.
The contractor paid 5% VAT as per the government rules at that time for the work that he had executed. In 2013-14, the office of issued a notice to the contractor stating that he was supposed to pay 8% VAT instead of 5%, ACB said.
However, the Government rules mandate the contractor to pay only 5% VAT for a government work executed. This was fulfilled by the contractor, ACB said. Adhering to the notice, the GST office asked him to pay the fine of Rs 6.35 lakh with interest of Rs 5 lakh and other fees. The total amount calculated by the GST office was Rs 17 lakh.
Last month, the Central Bureau of Investigation (CBI) arrested Goods and Services Tax (GST) Commissioner Sansar Chand, posted in Kanpur, along with eight others in a bribery case. In that case, the Commissioner, along with two superintendents of the department, one personal staff, and five private people were nabbed by the CBI in a late-night operation spread across Kanpur and Delhi.
Sources told PTI that it’s alleged that the commissioner was a “habitual” offender, taking bribes from businessmen on a monthly and weekly basis, and it was during one such collection of Rs 1.5 lakh last night that he was nabbed.
The Government of India and the Hong Kong Special Administrative Region (HKSAR) of People’s Republic of China has signed an Agreement for the Avoidance of Double Taxation ( DTAA ) and the Prevention of Fiscal Evasion with respect to taxes on income.
In so far as India is concerned, the Central Government is authorized under Section 90 of the Income Tax Act, 1961 to enter into an Agreement with a foreign country or specified territory for avoidance of double taxation of income, for exchange of information for the prevention of evasion or avoidance of income tax chargeable under the Income Tax Act, 1961.
The Agreement will stimulate the flow of investment, technology and personnel from India to HKSAR & vice versa, prevent double taxation and provide for the exchange of information between the two Contracting Parties. It will improve transparency in tax matters and will help curb tax evasion and tax avoidance. The Agreement is on similar lines as entered into by India with other countries.
As the Government has decided to implement e-assessment from the next financial year onwards, the Central Board of Direct Taxes (CBDT) has directed the Assessing Officers to use the revised format of notice under section 142(1)(ii)&(iii) of the Income Tax Act, 1961.
The concept of electronic assessment proceeding was introduced last year and its scope was gradually enlarged. The e-assessment proceeding is now facilitated through e-filing portal. The CBDT Instruction No. 01/2018, dated 12-02-2018 has mandated that except for search-related assessments and exceptional circumstance mentioned therein all other pending scrutiny assessment cases shall be conducted only through the ‘E-Proceedings’ functionality in ITBA/E-filing.
To facilitate the conduct of e-assessment proceedings, the CBDT vide F.No. 225/157/2017/ITA-II dated 23-06-2017 had issued revised the format of notices under section 143(2) of the Act so that the language of notices are in accordance with the requirement of electronic proceedings and the same has already been provided in the system.
Under the new scheme, the need to produce documents and to be present in person has been done away with except as provided in the aforementioned Instruction.
A CBDT missive issued on Monday said that “however, notice u/s 142(1) was not amended in conformity with e-assessment procedures and old format has been continued. To correct this inconsistency, the format of notice u/s 142(1)(ii)&(iii) has been revised and the same is enclosed herewith. This revised format now incorporates the same language as in the 143(2) notice to facilitate the taxpayer to submit the documents and respond electronically and the requirement to visit the office has been removed. This has also been implemented in ITBA system. Therefore, all the assessing officers are requested to use this format for the cases in e-assessment proceedings.”
It further clarified that any compliance of the assessee through his e-filing account in response to the notice issued in old format should be considered valid.
Subscribe Taxscan Premium to view the JudgmentThe Central Government, today notified the rules relating to appointment of chairperson and members of National Financial Reporting Authority (NFRA) with effect from 21.03.2018.
The establishment of National Financial Reporting Authority (NFRA) and creation of one post of Chairperson, three posts of full-time Members and one post of Secretary for NFRA.
The provision will initially apply to all listed companies and unlisted large companies. For others, the existing disciplinary mechanism under the Institute of Chartered Accountants of India (ICAI) will continue.
Section 132 of the Companies Act, 2013 provides for the establishment of National Financial Reporting Authority. However, the provision has not been notified yet. Under the provisions of the Companies Act, 1956, the Centre was to prescribe accounting standards prepared by ICAI in consultation with the National Advisory Committee on Accounting Standards (NACAS).
Such powers are to be transferred to NFRA under the Companies 2013 Act. Consequently, NFRA would have taken away several powers that are currently vested with ICAI.
The decision aims at the establishment of NFRA as an independent regulator for the auditing profession which is one of the key changes brought in by the Companies Act, 2013. The inclusion of the provision in the Act was on the specific recommendations of the Standing Committee on Finance (in its 21st report).
The jurisdiction of NFRA for investigation of Chartered Accountants and their firms under section 132 of the Act would extend to listed companies and large unlisted public companies, the thresholds for which shall be prescribed in the Rules. The Central Government can also refer such other entities for investigation where the public interest would be involved.
The inherent regulatory role of ICAI as provided for in the Chartered Accountants Act, 1949 shall continue in respect of its members in general and specifically with respect to audits pertaining to private limited companies, and public unlisted companies below the threshold limit to be notified in the rules.
The Quality Review Board (QRB) will also continue quality audit in respect of private limited companies, public unlisted companies below the prescribed threshold and also with respect to the audit of those companies that may be delegated to QRB by NFRA. Further, ICAI shall continue to play its advisory role with respect to accounting and auditing standards and policies by making its recommendations to NFRA.
The need for establishing NFRA has arisen on account of the need felt across various jurisdictions in the world, in the wake of accounting scams, to establish independent regulators, independent from those it regulates, for enforcement of auditing standards and ensuring the quality of audits to strengthen the independence of audit firms, quality of audits and, therefore, enhance investor and public confidence in financial disclosures of companies.
Subscribe Taxscan Premium to view the JudgmentA division bench of ITAT Delhi, comprising Judicial Member H.S. Sidhu, and Accountant Member L.P. Sahu, while granting relief to Shabad Foundation, held that Activity of promoting the Universal teaching of Shri Guru Granth Sahib and other religious “Granths” among the general public is Charitable in nature.
The main object of the trust mentioned in the deed of Assessee society is “to promote awareness of universal teaching of SGGS (Shri Guru Granth Sahib) and other religious “Granths” among the general public and in the younger generation.”
The CIT(E) made several observations from the documentary evidence regarding the corpus donations and mostly received through cash and their purposes are being used only for specific charitable purposes or not. CIT(E) further observed that the activities of the trust don’t lend themselves to the general public utility as well.
Accordingly, he declined the request to grant the registration under Section 12AA of the Income Tax Act to the applicant. The assessee challenged the said order before this Tribunal.
Before the Tribunal, the assessee submitted that the trust shall be styled as Religious and Educational Trust and also added that teaching to general public without any discrimination as to religion, caste creed or gender and making people at large to understand the contents of their religious granths also comes within the ambit of education as has been well explained in the write up on activities undertaken by the trust.
The bench heard both the recitals and perused the documents and observed from the deed that the benefit of the activities of the trust shall be availed to all, irrespective of any cast, creed or religion and not only to one segment as has been judged by the CIT (E).
The Tribunal cited a case law of High Court of Punjab & Haryana in CIT vs. Baba Kartar Singh Dukki Educational Trust has held that the object of section 12AA of the Act is to examine the genuineness of the objects of the trust.
The bench further noted that the assessee is doing the charitable work to promote the awareness of universal teaching of SGGS (Shri Guru Granth Sahib) and other religious “Granths” among the general public and in the younger generation, which is very much essential in these days for the betterment of the young generation.
Subscribe Taxscan Premium to view the JudgmentIn the case between Income Tax Officer (ITO) and M/s. Fine Developers, Mumbai bench of Income Tax Appellate Tribunal (ITAT) recently ruled that capital gain tax under section 45(4) of the Income Tax Act 1961 does not attract at the time of admission or retirement of partners.
Assessee firm in the present case M/s. Fine Developers is a builder and developer of land and buildings which were constituted vide original partnership deed. During the assessment year 2008-09 the Assessee firm admitted a new partner M/s. Housing Development and Infrastructure Limited to supplement the financial resource and for augmenting the work force for diverse commercial consideration, whereas in the assessment year 2009-10 certain partners of the firm were expressed their desire to retire from the firm. The Assessee firm purchased a land located Kurla from M/s. Bhandary Metallurgical Corporation Limited for Rs.28 crores and the same was shown in the annual accounts of the Assessee as stock-in-trade. On retirement of some partners, purpose of settlement of accounts of the Retiring Partners, the said piece of land was revalued as on 01.04.2008 and their accounts were settled in accordance with revalued credit balances lying in respective capital accounts.
During the assessment period the Assessing Officer (AO) noticed that section 45(4) of the Act stood attracted on account of reconstitution of the Assessee and the Assessee firm asked for explanation regarding the same.in response the Assessee proposed to submit the requisite and essential information and details as desired by the AO and expound on facts and laws as to show the proposed addition is untenable and unsustainable.
However, the AO refused to accept the proposed submission of the Assessee and held that provisions of 45(4) are applicable not only in case of dissolution but also to the cases of subsisting partnership transferring the assets in favour of retiring partner and the term “otherwise” in sec, 45(4) read with “transfer of capital assets” by way of distribution of capital assets includes the transactions relating to “retirement”. He concluded that as a result of retirement cum admission there was distribution of rights of erstwhile partners amongst the retiring partners, subsisting partners and the new partners. Accordingly he computed the capital gain at Rs.206,19,20,209 being partial surplus on revaluation and treating the balance Rs.15,51,99,020 towards business profits as not being an arms length transaction.
On appeal CIT(A) granted relief to the Assessee by deleting the addition made by the AO. Aggrieved by the order of the authority, Revenue approached the Tribunal on appeal.
After considering the above narrated facts deeply the Tribunal bench comprising of Judicial member Amarjith Singh and Accountant Member R.C.Sharma upheld the order passed by the CIT(A) and observed that there is no provision to substitute Notional market value for computing business income. kurla land surrender to SRA is taxed as business income than said income will become cost of sale of FSI or TDR and thus the ultimate taxable business will be sale consideration of FSI/TDR as disclosed by the Assessee. However, since provisions of section 45(4) cannot be invoked in respect of stock-in-trade and there is no justification in the order of AO.
The division bench further observed that “section 45(4) is not applicable in the two situations such as admission of new partner and retirement of certain partners. In the present case continuing partners had not transferred any rights of the plot of the land in question in favour of the retiring partners and hence there was no transfer of capital asset within the meaning of section 2(47] by the firm to the retiring/continuing partners.”
Subscribe Taxscan Premium to view the JudgmentWhile granting an interim order to M/S Seth Prasad Agro Private Limited, the Allahabad High Court held that the seizure of goods under the Uttar Pradhesh Goods and Services Tax Act involving an inter-State transaction is valid under the new tax regime as the similar provision is provided in the Central GST and IGST Act.
The petitioner was manufacturer of of ‘Tasla’ which is categorised as an agricultural implement. The goods and vehicles of the petitioner were seized by the GST department while transporting the same from one State to another.
Before the Court, the counsels for the petitioners, Mr Aditya Bhushan Singhal,Mr Aditya Pandey,Mr Bipin Kumar Pandey contended that the goods were being transported from one State to another and as such the transaction was inter-state covered by the Integrated Goods and Services Tax Act, 2017. Hence, it is not liable to be seized under the U.P.G.S.T. Act.
Rejecting the submissions, the bench comprising Justice Pankaj Mithal and Justice Saral Srivastava noted that the U.P.G.S.T Act makes provision for levy and collection of tax on intrastate supply of goods or services or both i.e. relating to transactions within the State, whereas IGST Act covers interstate transactions.
“In this view of the matter, the transaction in question is treated to be covered by the IGST Act and the provisions of U.P. G.S.T. Act would not apply. However, a similar provision as Section 129 of the U.P. G.S.T. Act exists in the Central G.S.T. Act as well. Section 20 of the IGST Act provides that the provisions of Central G.S.T. Act would apply in respect of matters of inspection, search, seizure and arrest to the matters covered by the IGST Act. In other words, in the matter of seizure under the provisions of IGST Act the provisions of Central G.S.T. Act such as Section 129 would apply mutatis mutandis.”
“In this way the power of seizure under the IGST Act read with Central G.S.T. Act is analogues to that under Section 129 of the U.P. G.S.T. Act. In view of above, the impugned order of seizure cannot be held to be bad in law only for the reason that the wrong provision of Act has been mentioned while passing the same as the power of seizure is clearly traceable under the relevant Act as well.”
The bench further held that the impugned order is to be treated to have been passed under IGST Act read with Section 129 of the Central G.S.T. Act rather than the one passed under U.P.G.S.T. Act.
Subscribe Taxscan Premium to view the JudgmentA six-member Task force constituted by the Central Government on November 2017 to review the existing Income Tax Act, 1961 and to draft a new direct tax legislation, has released a questionnaire inviting suggestions from the general public.
The deliberations of the Task Force are in progress and has decided to interact with various stakeholders.
Further, Task Force shall be allowed to use the departmental website (www.incometaxindia.gov.in) for interactions with the general public.
During the Rajaswa Gyan Sangam held on 1st and 2nd September 2017, the Prime Minister Narendra Modi had observed that the Income Tax Act, 1961 was drafted more than 50 years ago and it needs to be re-drafted. Accordingly, in order to review the Act and to draft a new Direct Tax Law in consonance with economic needs of the country, the Government has constituted a Task Force with the following Members:
Dr Arvind Subramanian, Chief Economic Adviser (CEA) will be a permanent Special Invitee in the Task Force.
The Terms of Reference of the Task Force is to draft an appropriate Direct Tax Legislation keeping in view: (i) The direct tax system prevalent in various countries, (ii) The international best practices. (iii) The economic needs of the country and (iv) Any other matter connected thereto. The Task Force shall set its own procedures for regulating its work and shall submit its report to the Government within six months.
The Insolvency and Bankruptcy Code, 2016 ( IBBI ) provides for a class of regulated professionals, namely, Insolvency Professionals (IP), who constitute one of the four key pillars of the insolvency regime, other three being the Adjudicating Authority, the Insolvency and Bankruptcy Board of India (Board), and the Information Utilities.
The IPs play an important role in resolution, liquidation and bankruptcy processes of companies, LLPs, partnership firms and individuals. For example, when a company undergoes corporate insolvency resolution process (CIRP), an IP is vested with the management of its affairs and he manages the operations of the company as a going concern. He conducts the entire CIRP. Such responsibilities of an IP require the highest level of professional excellence and integrity.
Section 196(1)(d) and (e) of the Code vest the Insolvency and Bankruptcy Board of India (Board) with powers to specify by regulations standards for the functioning of IPs and lay down by regulations the minimum curriculum for the examination of the IPs for their enrolment as members of the insolvency professional agencies.
Section 207(2) empowers the Board to specify the categories of professionals or persons possessing such qualifications and experience in the field of finance, law, management, insolvency or such other field, as it deems fit. In exercise of its powers, the Board has notified the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 (IP Regulations).
These regulations provide that an individual with ten years of experience as a member of the Institute of Chartered Accountants of India, Institute of Company Secretaries of India, Institute of Cost Accountants of India or a Bar Council or with 15 years of experience in management is eligible for registration as an IP on passing the Limited Insolvency Examination.
Thus, an individual is eligible for registration as an IP if he has passed the Limited Insolvency Examination(Examination) subject to meeting other requirements. This examination is conducted daily from 100+ locations, online (computer-based in a proctored environment) with objective multiple-choice questions. The syllabus and the questions for the examination are finalized by an Examination Committee constituted by the Board. The Board commenced the examination on 31st December 2016.
The second phase of examination with revised syllabus and question bank commenced on 1st July 2017. The third phase with further revised syllabus and question bank commenced on 1st January 2018. The revisions accommodate the new knowledge that is being generated from ongoing processes under the Code and the emerging practices and evolving jurisprudence.
The Board believes that public consultation enables collective choice and imparts relevance and legitimacy to decisions. Accordingly, the Board invites comments and feedback on the draft syllabus of the Fourth Phase of Limited Insolvency Examination, which is placed at Annexure to this note.
The Comments and Feedback may please be mailed at exam@ibbi.gov.in latest by 15th April 2018.
Subscribe Taxscan Premium to view the JudgmentIn the recent ruling, Arsh Home Private Ltd v. Deputy Commissioner of Income-tax (DCIT), the Delhi bench of Income Tax Appellate Tribunal (ITAT) held that Memorandum of Understanding found during the search cannot be treated the same as ‘belong to Assessee’ since it does not contain the signature of the Assessee.
The Assessee in the instant case is a private limited company duly filed its return of income for the relevant Assessment year and declared loss of Rs. 13,869.
During the assessment period, the Assessing Officer (AO) noticed that the Assessee-Company was entered into transaction of bulk investment in flats or commercial space with M/s Ultra Home Construction Pvt. Ltd. it was found during the search a Memorandum of Understanding between the Assessee Company and M/s Ultra Home Construction Pvt. Ltd. which contained details of payments, including cash payment and assured return on investment. Only on the basis of the MoU, the AO recorded satisfaction and initiated proceedings under section 153C of the Income Tax Act 1961. However, the assessment was completed while declaring total income at Rs. 9,86,131 after making additions or disallowance as against the loss of Rs. 13,869 filed by the Assessee in its earlier returns.
On appeal, the CIT(A) dismissed the submissions of the Assessee and upheld the decision of the AO and confirmed the proceedings initiated by him. Thereafter the Assessee carried the matter before the Tribunal against the order of the authority.
Before the bench, the counsel for the Assessee advocate Anil Kumar Jain submitted that assessment proceedings under section 153C of the Act, on the basis of MoU seized during the course of search and seizure operation of the third party on the presumption that the same belonged to the Assessee is bad in law. Further, he argued that the MoU seized cannot be said to ‘belong to’ the assessee and being unsigned MoU, no proceedings under the said section of the Act can be initiated against the Assessee.
After considering the facts and circumstances of the case, the Tribunal bench consists of President G.D.Agarwal and Judicial Member Suchitra Kamble jointly objected the findings of the lower authorities and observed that “while perusing the available materials on records it is clear that the AO initiated the proceedings only on the basis of the aforementioned MoU. But the said MoU does not bear the signature of the assessee. Thus, finding of the document in the premises of M/s Ultra Home Constructions Pvt. Ltd does not constitute that the document to be belonging to the assessee”.
Subscribe Taxscan Premium to view the JudgmentThe Institute of Chartered Accountants of India (ICAI) has revised the fee payable for membership and Certificate of practice for the year 2018-19.
The amount becomes due for payment on 1st April 2018 and needs to be paid on or before 30th September 2018.
The ICAI, in a recent statement said that “Now, members have the option to pay advance Membership/COP fee in exact amount for 3 years (1+2 years) along with GST as a final payment and in case of any shortfall in case of revision of fee in future their Name/COP will not be removed from the Register of Members on account of such revision.”
An Associate Member shall pay Rs. 1770/- as Membership Fee and Rs.3,540/- for Certificate of Practice. A Fellow Member required to pay Rs.1770/- as membership fee and Rs.4,720/- for the certificate of practice.
Subscribe Taxscan Premium to view the JudgmentIn Laxmi Ice & Cold Storage and Income Tax Officer (ITO), the Lucknow bench of Income Tax Appellate Tribunal (ITAT) recently held that the provisions of section 50C of the Income Tax Act 1961 are not applicable to a cold storage building.
The return submitted by the assessee was accepted by the AO initially. However, the Principal Commissioner of Income Tax noticed that the Assessee has sold the assets including land and building and machinery. Further, he observed that the assessee has credited only Rs.1.50 crores as the sale value of assets in its accounts and not Rs.3,41,23,200 which is the full value of consideration as per stamp valuation authorities. Thus, the income of Rs.1,91,23,200 not credited by the assessee in its books of account has escaped taxation. Accordingly, notice under section 263 of the Act was issued to the Assessee and by applying the provisions of section 50C of the Income Tax Act.
Aggrieved by the order of the authority the Assessee preferred a further appeal before the Tribunal.
After considering the facts and circumstances of the case, the Tribunal bench consists of Judicial Member Partha Sarathi Chaudhuri and Accountant Member T.S.Kapoor observed that the sole issue in the present case is whether provisions of section 50C are applicable to the depreciable assets or not. Section 50C speaks about the transfer of land or building or both and the adoption of deemed valuation being the valuation of stamp purposes as the full value of consideration and it does not speak of the plant. The cold storage was sold as a whole and constituted plant under section 43(3) of the Act. The term “plant” has been interpreted as including cold storage building.
The division bench further observed that “provisions of section 50C of the Act is not applicable to the cold storage building so to substitute actual sale consideration by deemed sale consideration and the order of the Assessing Officer passed under section 147/143(3) of the Act cannot be a subject matter of section 263. While concluding the issue the bench has allowed the appeal filed by the Assessee.”
Subscribe Taxscan Premium to view the JudgmentWhile hearing the case between Ritu Bajaj and Assistant Commissioner of Income Tax, Delhi bench of Income Tax Appellate Tribunal (ITAT), while following a circular issued by the Central Board of Direct Taxes (CBDT), held that a family can possess up to 1450 gms gold jewellery.
The assessee in the instant case, the department conducted search proceedings in the business premises of the assessee, Mr.Ritu Bajaj under section 132 of the Income-tax Act 1961. As part of that, a search was also conducted in the residence of the Assessee.
During the course of search at the residence of the Assessee, gold jewellery of which some was fitted with Diamonds, was found from the possession of the assessee which was valued at Rs.4,43,491 and another gold jewellery weighing 723.100 gms was found in the bank locker of the Assessee on further search. As a result of the search total jewellery valued at Rs.25,16,327 was found from the possession of the assessee. During the assessment period, the Assessing Officer (AO) has noticed that the Assessee has failed to disclose the source of the said jewellery. Therefore, he made an addition of Rs.24,09,327 to the income of the Assessee under section 69A of the Income Tax Act 1961.
On appeal, the CIT(A) confirmed the addition made by the AO to the extent of Rs.13,47,827. Thereafter the Assessee carried the matter before the Tribunal.
After considering the facts and circumstances, the Tribunal bench comprising of Accountant Member B.P. Jain observed that “assessee’s family consists of 5 members as described in the reply. The quantity of jewellery found in the possession of the assessee and his family members is 847 gms whereas as per the CBDT vide instruction 1961 a family can be held up to 1450 gms gold Jewellery in case of married ladies 500 gms and in case of unmarried lady 250 gms and in case of male member 100 gms jewellery need not be seized”.
The division bench further held that in fact the Assessee can be possessed up to 1450 gms of jewellery as per the circular. Therefore, it can be concluded that the jewellery possessed by the assessee is quite reasonable and no addition on this account can be made and the addition made by the lower authorities are not sustained in the instant case. Hence, the bench directed the authorities below to delete the addition made by them while allowing the appeal filed by the Assessee.
Subscribe Taxscan Premium to view the JudgmentNotional ValueIn the case, Income Tax Officer vs. M/s National Engineering, Calcutta High Court recently held that Notional Value of building under construction cannot be taken for determining house property income.
The assessee in the present case M/s National Engineering Ltd has duly filed its return of income for the relevant assessment year.
During the course of the assessment year, the Assessing Officer (AO) noticed that the Assessee has a building and a part of the same was let out and another part thereof was under construction. While completing the assessment the AO added the income receivable to the total income of the Assessee under the head income from house property and also taxed the same by applying the provision of Section 23(1)(c) of the Income Tax Act, 1961.
Aggrieved by the order of the AO the Assessee approached the CIT(A) on appeal and contended that the building is under construction during the relevant previous year, the same could not be taxed applying the provision of Section 23(1)(c) of the Income Tax Act, 1961. Further, the Assessee submitted that service charges received from the occupiers/tenants ought to be taxed as business income and not income from house property and depreciation should have been allowed.
After analyzing the material facts on records the CIT(A) observed that in the event any part of the property was vacant then only actual rent had to be taken and not any amount received or receivable on the basis of annual valuation and accordingly the assessee was entitled to allowance, expenses and depreciation of assets used for rendering the service in connection with the property let out. The authority granted relief by allowing the appeal filed by the Assessee and the same was upheld by the Tribunal.
Thereafter the Revenue approached the High Court on further appeal against the order passed by the lower authorities.
The division bench comprising of Justice Anirudha Bose and Justice Amitabha Chatterjee observed that notional value of building under construction cannot be taken for computing the total income of the Assessee under the head income from house property for the purpose of computation of tax liability and also upheld the order passed by the authorities below.
While concluding the issue the Court further held that therefore the Assessee in the present case is eligible getting the deductions and allowances for rendering the service in connection with the said property which was let out.
Subscribe Taxscan Premium to view the JudgmentIn the Case, M/s Tata Teleservices Ltd vs. Income Tax Officer, Delhi bench of Income Tax Appellate Tribunal (ITAT) recently held that discount on prepaid products is in the nature of commission for which, tax deductible at source ( TDS ) under the provisions of section 194H of the Income Tax Act 1961.
The assessee in the instant case M/s Tata Teleservices Ltd engaged in the business of providing telecommunication services across the country and the Assessee providing post-paid and pre-paid telecommunication services through various channel partners under the agreements entered between them. The main business of the Assessee is selling its products Starter kits and pre-paid vouchers to distributors in bulk against advance payments.
During the course of assessment proceedings, the Assessing Officer (AO) noticed that the Assessee has sold some prepaid products such as recharge coupons and vouchers to its various distributors at a discount. The AO was of the view that the said discount should be termed as payment of commission to the distributors and the same was liable to TDS under section 194H of the Act. Accordingly, he brought the said amount into tax and treated the Assessee as Assessee in default.
On the other hand, the Assessee was of the view that starter kits and the recharge coupon vouchers are sold to its various distributors as per the terms of business agreements on principal to principal basis at a discounted price than MRP with the agreed rider that no product shall be sold at a price more than MRP and thus, such transactions are not liable for TDS under section 194H of the Income Tax Act. Therefore the Assessee approached the CIT(A) on appeal. The authority refused to accept the contention of the Assessee and accordingly upheld the order of the AO.
Aggrieved by the order of the lower authorities the Assessee carried the matter before the Tribunal on further appeal.
The Tribunal bench comprising of Judicial Member Bhavnesh Saini and Accountant Member L.P. Sahu observed that the transaction relating to the commission is agreed between the assessee and the channel partner/distributor, but the assessee has not been able to address as to for which segment of business, both the parties agreed to pay and receive commission.
The bench also observed that “Commission or Brokerage” includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities;
In the present case, it is clear that the Assessee has made such transactions and also made payment of commission to the distributors. Therefore, the bench held that discount on prepaid products offered by the appellant is in nature of “commission” which does attract rigors of section 194H. while concluding the issue the bench further held that discount on prepaid products is in the nature of commission and is required to pay TDS by relying on the decision of High Court in the similar issue.
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