GST: CBEC Lays down Norms for Manual Disbursal of Budgetary Support [Read Circular]
Read more at: http://www.taxscan.in/gst-cbec-lays-norms-manual-disbursal-budgetary-support/14437/
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CBEC Circular 6/2017-Cus on IGST on sale of in-bond goods - More questions than answers -
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CBEC Circular 6/2017-Cus on IGST on sale of in-bond goods - More questions than answers -
ON import of goods into India, customs duty is levied which normally comprises of two components viz., (i) Basic Customs Duty and Cess etc. and (ii) Additional Duties (CVD, SAD etc.). The basis for levying these additional duties is to counter balance the impact of domestic duties or taxes leviable on such goods (like goods) in India. The power to levy these additional duties does not flow from the respective Acts but are levied under the Customs Tariff Act. For example: Additional Duty under Section 3 (1) of the Customs Tariff Act is leviable in lieu of Central Excise duty leviable on such goods when manufactured in India and similarly under Section 3(5) a special additional duty (SAD) is levied in lieu of Sales Tax/VAT leviable on such goods when sold in India. None of these Acts (Central Excise and Central Sales Tax) levied any duty on goods imported into India as the transaction of import into India did not qualify as a taxable event under such domestic laws pertaining to Central Excise or VAT.
On introduction of GST, the Customs Tariff Act and Customs Act have been amended to align with GST. Accordingly, provision has been made under Section 3 of the Customs Tariff Act through clauses (7) and (9) for the levy of integrated tax (IGST) and GST Compensation Cess at such rate as is leviable on supply of like articles in India under respective GST Acts. Thus, IGST under Customs Tariff Act is leviable on import of goods in India.
Simultaneously, the GST law also contains provisions with regard to levy of GST on import of goods in India. Under IGST Act, as per Section 5, which is the provision for levy and collection of IGST, integrated tax (IGST) is leviable on all inter-State supplies of goods or services or both. Supply of goods imported into the territory of India, till they cross the customs frontier of India, is treated to be a supply in the course of inter-State trade or commerce. Thus, on import of goods, IGST would also become leviable under IGST Act if the transaction satisfies the other conditions. However, the proviso to Section 5 carves out the situation of import of goods and says that IGST on goods imported into India shall be levied and collected in accordance with the provisions of Section 3 of the Customs Tariff Act. Thus by virtue of the proviso to Section 5, no IGST is payable under IGST Act on the import of goods and tax under Customs Tariff Act would only be leviable.The situation of double taxation as GST on import of goods, separately under both Customs and GST law has consequently been avoided.
Now let us analyse the implications on the transactions of high sea sales and in-bond sales of goods after their entry into the territory of India.
High Sea Sales
'High Sea Sales' is a common trade practice whereby the original importer sells the goods to a third person before the goods are entered for customs clearance. After high sea sale of the goods, the Customs declarations i.e. bill of entry, etc.,are filed by the person who buys the goods from the original importer during the said sale.
Thus, IGST under Customs Tariff Act would be leviable on such goods when the high seas buyer gets the imported goods cleared from Customs after filing bill of entry. The question arises about the applicability of IGST under Section 5 of the IGST Act on the sale of imported goods by original importer. Here again, the applicability of the proviso to Section 5 of the IGST Act comes into play. As per the proviso, IGST on such sale transaction which pertains to goods imported into India, would be leviable only under Customs Tariff Act.
This issue has been specifically deliberated by the GST Council also and as clarified by CBEC through its Circular 33/2017-Cus dated 1.8.2017, IGST shall be payable only once at the time of customs clearance under Customs Tariff Act.
In-bond sale of imported goods
There are instances when the importer does not want clearance of the imported goods immediately due to factors such as market price, saleability, requirement in the factory of production, paucity of funds etc. The importer would prefer to warehouse such goods till the time such goods are required. Customs Act contains provisions to allow temporary warehousing of such goods in customs bonded premises by filing in-bond Bill of Entry without payment of customs duty. Customs duty is paid at the time of clearance of said goods from such bonded premises. The importer is also allowed to sell the goods at the time when they are lying in bonded premises and in such cases bill of entry for clearance from the bonded premises is filed by such buyer. As per Customs Valuation provisions the Customs duty is payable in such situation only on the value at the time of import i.e. the value declared while filing in-bond bill of entry. Therefore, IGST as part of the customs duty shall be leviable on such goods when these are cleared from the bonded premises but only on the original import value not covering the margin, if any, realized by the importer through in-bond sale.
Here again the question arises about the applicability of GST under IGST Act on sale of imported goods by such importer. This issue again got represented to CBEC which has now issued a Circular 46/2017-Cus dated 24.11.2017. This circular which is addressed to the Officers of Customs does not refer to any deliberation of the issue by GST Council though it examines the applicability of IGST on the goods imported into India in addition to the IGST levied on the same goods under Customs Tariff Act. As per this Circular, such sale of goods while they remain deposited in customs bonded warehouse would qualify as supply under GST Act and the provisions of IGST would apply in terms of Section 7 of IGST Act. Section 7 says that supply of goods imported into the territory of India, till they cross the customs frontier of India, is treated to be a supply in the course of inter-State trade or commerce. Customs frontier of India is defined under Section 2(4) of IGST Act to mean the limits of a customs area as defined in Section 2 of the Customs Act, 1962. Section 2(11) of Customs Act has recently been amended by the Taxation Laws (Amendment) Act, 2017 to include "warehouse" in the scope of "customs area".
Thus, any sale before the goods are cleared from such bonded warehouse would be governed by IGST Act being treated as a sale in the course of inter-State trade or commerce. Now the only question which arises is as to whether the proviso to Section 5 applies to this transaction to rule out the liability of IGST under the GST law.
As per the said proviso, GST on goods imported into India shall be levied and collected under Customs Tariff Act on the value as determined under the said Act at the point when duties of customs are levied on the said goods under Customs Act. Thus, it is possible to say that as the duties of customs are levied on the said imported goods only when these are cleared from the warehouse, IGST under IGST Act should not apply on any transaction of supply before such clearance from the warehouse.
The CBEC circular 46/2017-Cus on this subject while saying that IGST would be independently leviable on such sale of imported goods has not discussed or considered the applicability of the proviso to Section 5. The circular has primarily gone with the reasoning that margin between the import price and the sale price would escape the levy of IGST under Customs Valuation. Another reasoning appears to be that customs duty is payable on filing of in-bond bill of entry and such payment is merely deferred because of warehousing under bond. Therefore, sale of goods while they remain in warehouse being a subsequent transaction of supply would attract IGST separately.
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*ICAI: Draft Bank Branch Auditors Panel* of Chartered Accountants/firms for the Year 2017-18 available - Draft Panel at http://meficai.org/draftpanel.jsp
*Empanelment:* Application for empanelment of Stock Auditors with Indian Overseas Bank - Last Submission Date- 30/11/2017.
*Case Study:* Accommodation entry: Reassessment based on mere inquiry in case of 3rd party not justified - M/s Sharmilee Furnishing P. Ltd Vs. I.T.O (ITAT Delhi)
NIRC: Join *Seminar on Corporate Law, FEMA and FCRA*- 2 Dec 9.30 am at Hotel The Park, Parliament Street, Delhi. Register at www.nircseminars.org.
*DISA-ICAI: The Question/answer Database for DISA/CISA* Exam (Covering 700 plus QA) - http://www.casango.org/qa_for_disa/
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Companies Act :
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Companies Act :
It is held that an application which is barred by limitation cannot be held to be res judicata for the purpose of subsequent claim and once a claim has been dismissed on the ground of limitation or on the ground of delay and laches, such prayer cannot be made thereafter, in the absence of fresh cause of action. *Vijay Vasant Dhavle vs. Dolce Pharmaceuticals Private Limited and Ors. MANU/NL/0179/2017*
IBC :
Since CPC is not applicable for filing application under the Insolvency Code, Order 3 of the CPC which provides for recognised agents and pleaders, cannot be invoked. *Palogix Infrastructure Pvt. Ltd. vs. ICICI Bank Ltd. MANU/NL/0095/2017*
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GST UPDATE ON ADMISSIBILITY OF CREDIT ON RETENTION MONEY
In normal parlance, there are cases where the service recipient retains a certain portion of payments to be made to the service provider. The amount so retained is paid to the service provider only after the provision of service is complete. This update seeks to take an insight into various provisions for ascertaining whether the credit will be allowed of the GST portion pertaining to the said retention money.
Before Point of Taxation Rules, 2011 were introduced, service tax was payable on receipt basis. Therefore, cenvat credit of the service tax paid was allowed upon partial payment along with service tax, on the basis of invoice raised. After Point of Taxation Rules, 2011, point of taxation was shifted to date of invoice or date of receipt of payment, whichever is earlier. Thus, CENVAT credit was allowed on accrual basis.
Rule 4(7) of the CENVAT Credit Rules, 2004 was amended with effect from 01.09.2014 providing that Credit of Service tax is to be taken on receipt of invoice, however if no payment of supplier invoice is made within 3 months, then such CENVAT Credit was to be reversed and was allowed subsequently after the payment was made.
Thus, under existing laws credit was to be reversed if not paid within 3 months and credit could be re-availed on subsequent payment.
Under GST regime, there are ample confusions regarding the admissibility of credit on the retention money. One school of thoughts is of opinion that the entire credit will be disallowed even if some amount of bill is not paid while other school of thoughts claim that only proportionate credit will be disallowed as pertaining to the amount not paid. While there are some experts who are of the view that the entire credit will be allowed even if some part of the bill is not paid to the supplier.
In this regard, the admissibility of ITC is determined by section 16 of CGST Act, 2017. Second proviso to section 16(2) reads as follows:-
"Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed:"
The language of this proviso uses the words "amount towards value of supply alongwith tax payable". This indicates that the amount can be any portion of value of supply (as it does not says that the entire bill should not be paid) and tax payable thereon. As such, it can be inferred that the ITC alongwith interest shall be required to be reversed only to the portion of bill not paid to the supplier.
There is one view that the entire credit will be allowed even if some portion of bill is retained as the amount of GST is totally paid and the supplier has also paid the GST to the government exchequer when the invoice was raised. However, if this view is considered, the very basic purpose of this proviso will be defeated as the GST will be paid in every case. It is worthwhile to mention here that the return cannot be filed unless the tax is paid. Therefore, if this contention is accepted, there was no need of drafting this proviso at all.
Therefore, in our view, the interpretation that only the proportionate credit should be reversed seems justified; all the other interpretations does not commensurate with the intention of the law makers.
The content of this GST update is for educational purpose only and not intended for solicitation.
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#Economy:The I-Tax Dept has slapped notices on 1.16 lakh individuals and firms who made cash deposits of more than Rs 25 lakh in bank accounts post note ban, but failed to file returns by the due date. Besides, large cash deposit by people who have filed I-T returns are also under close scrutiny.
#Finance:The Govt has introduced schemes for financial assistance of up to 90% under the Pradhan Mantri Credit Scheme for powerloom weavers. The Govt will provide margin money subsidy to the extent of 20% of the project cost, with a ceiling of Rs 1 lakh, as well as interest subvention at 6% per annum, both for working capital and term loans up to Rs 10 lakh for a maximum of five years.
#The I-Tax dept conducted searches at over 25 locations in Delhi and the National Capital Region in connection with its tax evasion probe into the Panama Papers leak cases. The I-T teams swooped down on three business groups, which had interests in metals and food processing, financial services and tyres. The CBDT, which frames the policies of the IT dept, had recently said that the probe into the Panama Papers leak cases had led to the detection of undisclosed wealth of Rs 792 crore and that the probe was on in "full swing".
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Paradise Papers: Tax Advisors of Indians are under Scanner
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Paradise Papers: Tax Advisors of Indians are under Scanner
Read more at: http://www.taxscan.in/paradise-papers-tax-advisors-indians-scanner/14430/
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GST: CBEC Lays down Norms for Manual Disbursal of Budgetary Support [Read Circular]
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GST: CBEC Lays down Norms for Manual Disbursal of Budgetary Support [Read Circular]
Read more at: http://www.taxscan.in/gst-cbec-lays-norms-manual-disbursal-budgetary-support/14437/
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Madhya Pradesh HC Quashes Interest Demand on Indian Oil Corporation by VAT Authorities [Read Order]
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Madhya Pradesh HC Quashes Interest Demand on Indian Oil Corporation by VAT Authorities [Read Order]
Read more at: http://www.taxscan.in/madhya-pradesh-hc-quashes-interest-demand-indian-oil-corporation-vat-authorities/14393/
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Voluntary Disclosure in all cases can’t absolve the Assessee from Penal Liabilities: Bombay HC [Read Judgment]
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Voluntary Disclosure in all cases can’t absolve the Assessee from Penal Liabilities: Bombay HC [Read Judgment]
Read more at: http://www.taxscan.in/voluntary-disclosure-cases-cant-absolve-assessee-penal-liabilities-bombay-hc/14406/
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Assessment u/s 153C is without Jurisdiction When Documents Seized is not belonged to the Assessee: ITAT [Read Order]
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Assessment u/s 153C is without Jurisdiction When Documents Seized is not belonged to the Assessee: ITAT [Read Order]
Read more at: http://www.taxscan.in/assessment-u-s-153c-without-jurisdiction-documents-seized-not-belonged-assessee-itat/14400/
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Mistake of Auditor who has Wrongly given the Figures and Made Wrong Observation can’t be basis for Assessment: ITAT [Read Order]
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Mistake of Auditor who has Wrongly given the Figures and Made Wrong Observation can’t be basis for Assessment: ITAT [Read Order]
Read more at: http://www.taxscan.in/mistake-auditor-wrongly-given-figures-made-wrong-observation-cant-basis-assessment-itat/14422/
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*Customs*
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*Customs*
1. The dispute raised by the Revenue Department regarding the classification of goods stands failed, where the Appellant has filed the documents explaining the purpose of raw material imported by him. *2017-TIOL-4152-CESTAT-MUM*
2. The petitioners deposited the sums of Rs 10 Lakhs of redemption fine and provided for Bank Guarantees of Rs.10 Lakhs each to cover the penalty imposed on them, of which refund is claimed later. It is held that when refund is granted years later, it should be inclusive of interest. *2017- TIOL-2452-HC-AHM-CUS*
*MODVAT*
3) It is held that MODVAT Credit cannot be denied where there is no evidence to show that Appellant had used any other raw material other than the imported goods nor any diversion of imported raw material has been brought on record *2017-TIOL-4157-CESTAT- MUM*
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*Summary Assessment in certain special cases*
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*Summary Assessment in certain special cases*
The proper officer on the basis of evidence showing tax liability of any taxpayer issue his notice subject to permission of Assistant Commissioner / Joint Commissioner proceed to tax the liability of such person in the interest of revenue and issue a assessment order.
On application made by taxable person within 30 days from the date of receipt of order passed or on his motion , AC/JC consider that such order is erroneous may withdraw the order and follow the procedure laid u/s 73 and 74.
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Assessment of Non Filer of Return*
Where registered person fails to file the return prescribed u/s 39 and 45 even after serving notice u/s 46 , the proper officer may proceed to assess the tax on best of his judgement on the basis of information in his possession and frame assessment order within period of five years from the due date of filing the annual return under section 44.
Where the taxpayer files the return within 30 days of the service of assessment order, the said order shall be withdrawn. But the taxpayer need to pay interest u/s 50 and late fees u/s 47
*Scrutiny of Return*
The proper officer may scrutinize the return and related particulars furnished by taxable person and inform him the discrepancy if any and ask for explanation of the same. If he is satisfied with the explanation ,inform him about the same. If no satisfactory information has been furnished, proper officer may take the appropriate action including those under section 65, 66 and 67 and proceed to determine the tax under section 73 and 74.
Rule 99 of CGST Rules,2017 , under the proceeding of scrutiny where proper officer ask for any discrepancy will issue notice on Form ASMT-10. After the acceptance by registered person of such discrepancy, pay tax, interest and any other amount and furnish explanation on Form-ASMT
*Provisional Assessment*
Where the taxable person unable to determine the value of goods or services , may request to proper officer in writing to make payment of taxes on provisional basis.
Payment of tax on provisional basis may be allowed if taxable person execute bond with surety or security as may be prescribed. This is required for binding the person for payment of difference of tax between final and provisional assessment.
Proper officer will pass the order within 90 days from the date of application.
Proper officer will pass the order within 90 days from the date of application.
The proper officer within period of six month from the date of order, pass the final order. This period of six months may be extended for another period of six months by Joint or Additional commissioner. Commissioner may extend the same for the period of four years.
Any difference payable as determined in final order over the provisional order, shall be subject to interest at the rate specified in section 50 from the due date of payment to actual date of payment.
Where difference as determined in final order over the provisional order is refund , the same shall be subject to interest as provided in section 56 of the act.
For making application for provision assessment, taxable person need to make application on Form-ASMT-01 under Rule -98 of the CGST Rules,2017.
In case of any clarification taxable person will apply on Form –ASMT-03.
Proper officer shall issue order on Form ASMT 04 indicating the value and rate on the basis of which assessment is to be allowed on provisional basis and the amount for which the bond to be executed. Security for the bond amount to be furnished which shall not exceed 25% of the bond amount.
The registered person shall execute bond on Form ASMT 05 along with security in the form of bank guarantee. Applicant will file Form ASMT 08 for release of security
Self Assessment*
_Every registered person shall self assess his taxable value and furnish return for each tax period under section 39 of the Act._
Kind of Assessment in GST*
➖Self Assessment
➖Provisional assessment
➖Scrutiny of Returns
➖Assessment of non filer. of returns
➖Assessment of unregistered person
➖Summary assessment in certain special cases
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Madhya Pradesh HC Quashes Interest Demand on Indian Oil Corporation by VAT Authorities [Read Order]
➖Provisional assessment
➖Scrutiny of Returns
➖Assessment of non filer. of returns
➖Assessment of unregistered person
➖Summary assessment in certain special cases
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Madhya Pradesh HC Quashes Interest Demand on Indian Oil Corporation by VAT Authorities [Read Order]
Read more at: http://www.taxscan.in/madhya-pradesh-hc-quashes-interest-demand-indian-oil-corporation-vat-authorities/14393/
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No Interim Relief to Google: Karnataka HC Asks Remit Rs. 26 Crores as Deposit [Read Order]
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No Interim Relief to Google: Karnataka HC Asks Remit Rs. 26 Crores as Deposit [Read Order]
Read more at: http://www.taxscan.in/no-interim-relief-google-karnataka-hc-asks-remit-rs-26-crores-deposit/14385/
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Maharashtra government to form panel to look into ownership rights of pagdi system tenants - http://m.hindustantimes.com/mumbai-news/maharashtra-government-to-form-panel-to-look-into-ownership-rights-of-pagdi-system-tenants/story-hsChGQre0imL5Y3uasmlwJ.html
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Maharashtra government to form panel to look into ownership rights of pagdi system tenants - http://m.hindustantimes.com/mumbai-news/maharashtra-government-to-form-panel-to-look-into-ownership-rights-of-pagdi-system-tenants/story-hsChGQre0imL5Y3uasmlwJ.html
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# *CBDT* has issued Directions related to some important issues which are to be considered by AO while framing scrutiny assessments pertaining to filing of revised/belated returns by assessee’s post-demonetisation.
# *MCA* has prepared the second list of 18 companies which deposited unusually large sums of cash in their bank accounts soon after DeMon.
# *IT*: The Supreme Court, in a recent order, has held that the higher monetary threshold limits prescribed for filing of appeals by the income-tax authorities would apply both to appeals filed after the date of the instruction revising the limits and also to all pending matters.
# *IT*: The Income Tax department may levy a fresh tax on the unsold inventories in the real estate sector from the financial year to curb hoarding.
# *IT*: The advance deposit of central excise duty (PLA) constitutes actual payment of duty - deduction allowed u/s 43B and, therefore, the assessee is entitled to the benefit of deduction of the said amount – CIT Vs Modipon Ltd. (2017 (11) TMI 1429 - SC).
# *IT*: Maintainability of appeal before CIT(A) against Levy of interest u/s 220(2) - enhanced assessment - AO directed that interest u/s 220(2) chargeable on the amount demanded u/s 156 - the order is appealable - Televista Electronics Ltd. Vs DCIT (2017 (11) TMI 1424 - Delhi HC).
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