Hello Readers,
Greetings of the Day ! 🙏
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03 January 2018 Updates 📄📄📄
CBDT has issued a letter (F No. 225/423/2017-ITA.II, dated 29 Dec 2017 stating that appeal for restoration of name of the ‘struck off’ company with retrospective date from the date of being ‘struck off’ shall be made by income-tax Dept.
Govt will come up with a proper definition of what a shell company is by the end of this month. PMO had in February last year constituted a special task force to tackle malpractices by shell companies.
GST rate for Composition Dealers : manufacturers & traders has been reduced from 2% to 1% with effect from 01.01.2018. However, GST rate for Restaurants & Outdoor Caterers remains unchanged at 5%.
Total GST receipts of the central and state governments added up to Rs. 80,808 crores in Dec 2017, a 14% drop from the collections in Aug 2017.
Total no of GST returns filed has reduced from 5.87 million in Aug 2017 to 5.3 million in Dec 2017.
Supreme court has held that notice u/s 8 of IBC can be given by a lawyer including PCS also certificate u/s .9 (3) (c) from bank is not mandatory. Macquarie Bank Ltd Vs. Shilpi Cable Technology Ltd. MANU/SC/1609/2017.
Delhi High Court held that if a moratorium u/s 14 of IBC code has been granted in favour of Corporate Debtor, the order u/s 14 shall not prohibit or bar continuation of proceedings u/s 34 for setting aside of Arbitrarion award in which Corporate Debtor is a party.
Online Applications are invited from CA firms who desire to be empanelled with CAG for appointment as auditors of Government Companies for the year 2018-19.
. Visit www.saiindia.gov.in from 1 January 2018 to 15 February 2018.
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Income Tax Department has issued New Helpline for e-filing assesses No 18001030025. And Direct line is 8046122000.
Depreciation on assets allowable to trust despite treatment of same as Income Application : Case Name : Commissioner of Income tax Vs Rajasthan and Gujarat Charitable Foundation Poona (Supreme Court of India)
GSTN has provided facility to give details of supplies made by tax payers to a merchant exporter in Table 6A of GSTR-1. A new row for GST rate 0.1% has been added in the table. This was missing in GSTR-1 till now.
Tax Payers can now fill the data in TRAN-2 and upload using Offline Tool which has since been released by GSTN.
Tax Payers can now declare transfer of ITC in case of sale, merger, demerger, amalgamation, lease, or transfer of a business through ITC-02 on the GST Portal.
New Aadhaar linking form for Atal Pension Yojna from Jan 1 Regulator PFRDA has asked Atal Pension Yojna (APY) service providers to use a revised form to seek consent of subscribers' for seeding Aadhaar with their accounts from 1.1.2018.
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📺 *Updates*
➡1. Transactions carried out in violation of sec. 269SS aren’t void; loan advanced is fully recoverable: HC
Surinder Singh v. State of H.P.
➡2. SAP charges paid to AE for use of licensed software on intranet were taxable as royalty: Delhi ITAT.
SMS Iron Technology (P.) Ltd.
v. Income-tax Officer, Ward- 2(2), International Taxation, New Delhi*
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Mistake of Sending Notice in the Name of Deceased Assessee cannot be Cured by invoking s. 292B: ITAT [Read Order]
Read more at: http://www.taxscan.in/mistake-sending-notice-name-deceased-assessee-cannot-cured-invoking-s-292b-itat/15667/
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ITAT allows Higher Depreciation since transportation business using Trailers, Dumpers & Motor Lorries is not incidental to Business [Read Order]
Read more at: http://www.taxscan.in/itat-allows-higher-depreciation-since-transportation-business-using-trailers-dumpers-motor-lorries-not-incidental-business-read-order/15620/
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CBDT Circular Restricting Amenities to Doctors is Prospective in nature: ITAT [Read Order]
Read more at: http://www.taxscan.in/cbdt-circular-restricting-amenities-doctors-prospective-nature-itat-read-order/15657/
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No Service Tax Payable on Construction Projects of Business School and Hostel for NIT Calicut: CESTAT Delhi [Read Order]
Read more at: http://www.taxscan.in/no-service-tax-payable-construction-projects-business-school-hostel-nit-calicut-cestat-delhi-read-order/15627/
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Royalty, License Fee or any other Payment for a Process must be included in the Assessable Value of Imported Goods: CESTAT [Read Order]
Read more at: http://www.taxscan.in/royalty-license-fee-payment-process-must-included-assessable-value-imported-goods-cestat-read-order/15633/
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*CBEC amends Composition rate for Traders & Manufacturers*
(Notification No. 1/2018- Central Tax, Dated 01/01/2018. Composition rate U/s 10 of CGST Act for Manufacturers is reduced from 2% to 1% to equate it with rate for traders.#casansaar)
👇🏻 👇🏻 👇🏻
https://goo.gl/HCjNA9
*👉🏻Income Tax Dept launches new e-Filing helpline for taxpayers.*
(The department issued an advisory and said: “Attention taxpayers: e-Filing help desk number has been changed. New Help desk number is: India Toll Free- 18001030025. Direct Number-+918046122000.”#casansaar)
👇🏻 👇🏻 👇🏻
https://goo.gl/Jr6Nvp
*👉🏻Make PAN mandatory for overseas package tours: ICAI to Govt.*
(ICAI has suggested the government to make PAN compulsory on air-ticket bookings for overseas package tours to bring high value transactions into the data system. #casansaar)
👇🏻 👇🏻 👇🏻
https://goo.gl/b1LbBN
*👉🏻Govt relaxes norms for rectification of returns under GST.*
(The Finance Ministry has permitted businesses to rectify mistakes in their monthly returns - GSTR-3B - and adjust tax liability, a move that will help them file correct returns without fear of penalty. #casansaar)
👇🏻 👇🏻 👇🏻
https://goo.gl/B1PJ1v
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Treatment of expired medicines
(Forwarded as Received)
Pharma sector is seeking clarification on various provisions of GST. Treatment of expired medicines at the time of return from retailer to whole seller and from whole seller to manufacturer needs clarification. Let us go into detail to understand the implication of various provisions.
Mechanism to book return of goods and time limit in GST:
Section 34 (1) of CGST Act provides for the mechanism for the return of goods by recipient. The section requires the supplier to issue a credit note. Let us have a look on the provisions of the in its own language.
“Section 34(1) Where a tax invoice has been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient a credit note containing such particulars as may be prescribed.”
Further section 34(2) put a limit on declaration of details of credit note on the return.
(2) Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than September following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed”
In GST law the way to claim reduction in outward tax liability corresponding to the amount of credit note pass through the route of matching. The data entered in GSTR 1 by the supplier is accepted by the recipient and then matched data is finalise and rest of data remains unmatched and is added to the output tax liability of the recipient till the final matching.
But due to this provision the supplier will not be able to show this credit note data in his GSTR 1 after September of the concerned financial year. In case of medicine their expiry date may vary from month to years. It may extend to 5-6 years. Sometimes government also instruct companies to pause the sale of any medicine if it is unfit for consumption. In this case how the benefit of sales return will be available. Also the supplier will not be able to go with credit note mechanism then whether the dealer will have to show it as fresh sales in place of purchase return. Then do they need to reverse the ITC they have taken on the purchase of those medicines? We will seek the answers of all these questions in the last part of this article. Let us elaborate more with the other relevant provisions.
Reversal of ITC for the goods destroyed as given in section 17(5)(h) of CGST Act
Apart from the provisions discussed above section 17 also require the reversal of credit in case of goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples. In the care of expired medicines the manufacturer is required to take them back from the market and then destroy them. Let us say if it is after five years do they need to reverse the credit on inputs used for those medicines. Also do they also need to pay interest on that ITC amount?
Practical issues with pharma companies
Pharma companies have various natures of products. There are different reasons for buy back of those products from the market. Let us understand some terms first.
Expired medicines: Every medicine has an expiry date aftr which it is not fit for consumption. Pharma companies are mandatorily required to mention their expiry date.
This expiry date is known already but it may be after the time limit allowed to make the sales return in GST. Now Pharma Company will have to get those medicines back and also they need to destroy it. It will be a hardship on them First they don’t get any benefit of tax on the sales return. They also need to incur some cost in destroying the medicines. Also they need to reverse the credit taken by them on the goods so destroyed. They will no doubt pass on this burden to the consumer and it will make the medicines even expensive. In a developing country like India medicines shall be given special exemption but then we have such a harsh provision for pharma industry.
Resolution provided by cbec and its analysis
All these issues were raised by the Pharma association before the CBEC and they also get reply via letter 349/57/2017-GST dated 26/12/2017. Many issues of pharma industry are resolved via that letter.
Main points cleared in the letter are:
Return on expired/damaged goods from distributor to manufacturer will be treated as return of goods and not as a fresh supply.A credit note may be issued at the time of return of expired medicines.If the goods are return within the prescribed limit (Sept of FY) tax can also be reversed but if they are returned after that limit no tax reversal will be available. But credit note can still be issued.The company will although be required to reverse their ITC which belongs to those expired goods
Conclusion and solution:👍
Based on the above provision we can say that most of issues are answered by this letter. Let us have a detail understanding of both issue and its solution now.
Whether the distributor is required to show his return as fresh supply?
Ans: No, because he can show it as a purchase return as he can issue a credit note.
Whether the manufacturer will get the tax reduction?
Ans: If goods are returned under the time limit given in section 34(2) then yes. But if the goods were returned after that limit then no, although credit note can be issued because this time limit is only for declaration of that credit note in return and not for issuance of credit note. That credit note will be accounted in books but will not be a part of GST return
Whether the distributor is required to reverse his ITC on the goods returned?
Ans: If goods were returned under the time limit then Yes. If goods were returned after the time limits then No, because the reversal of ITC is corresponding to the reduction in tax liability of seller. In case the tax liability is not reduced by the seller no need for reversal of ITC by buyer making the purchase return.
Whether the manufacturer is required to reverse the ITC on the goods destroyed?
Ans: Yes the manufacturer (Pharma company) will be required to reverse the ITC under the provisions of section 17(5)(h).
Whether the manufacturer is also required to pay the interest on the amount of reversal of ITC?
Ans: No, The interest on undue claim of ITC is twenty four percent. But in this case the ITC become reversible only when the goods were destroyed and is reversed at that time. No liability of interest payment will arise due to that reversal if made at the time of destroying the goods.
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The Calcutta bench of NCLT has passed specific orders if the RD OL and Income Tax does not file their affidavit within one months it shall be presumed that they have no objection in the case merger under Section 230 of Companies Act. Satyatej Commercial Company Ltd MANU/NC/2342/2017.
On a petition under Sec.252 of Companies Act for restoration of name Ahmedabad Bench of NCLT till the decision of petition allowed operation if bank account (which was freezed) for payment of salaries of employees and also for the purpose of receiving the amount. Shinde Human Resources p Ltd Vs.ROC MANU/NC/2343/2017.
The Bombay High Court has upheld constitutional validity of provisions of RERA and has held that the penalty, as provided under the Act for contravention of various provisions of RERA, shall be only perspective and not retrospective. The court further held that two member bench shall always have one Member Judicial. Neelkamal Realtors Suborban P Ltd Vs. Union of India MANU/MH/3135/2017.
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📺 *Updates*
➡1. Taxation of Cryptocurrencies in India
https://www.taxmann.com/topstories/105010000000014994/taxation-of-cryptocurrencies-in-india.aspx
➡2. Mere filing application to convert industrial land into residential land not to be treated as actual conversion
➡3. TPO couldn’t adopt TP method merely following judicial precedent without performing comparability analysis
Infineon Technologies India (P.) Ltd. v. Additional Commissioner of Income-tax, Circle 11 (3), Bangalore.
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Have a nice day