GST Audit -Important Update
*As per section 16(4) of the GST Act a registered person shall not be eligible to take adjustment of any input tax credit in respect of any invoice pertaining to FY 2017-18 after the due date of filing GSTR3B for the month of September 2018 i.e 20th October 18*
*Assesses should start with their GST Reconciliation and Audit as soon as possible to avoid any kind of input and ouptut losses*
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SEBI has decided to discontinue with the registration of Sub-Brokers as a market intermediary. The registered Sub-Brokers shall have time till March 31, 2019 in order to migrate to act as an AP and / or Trading Member (TM).
Govt. is likely to hike import duty on about 300 textile products to boost domestic manufacturing and create employment opportunities, sources said. Foreign direct investment norms for the sector may also be relaxed. The duties could be enhanced to 20 per cent from the current level of 5-10 %.
Prime Minister On August 21 will launch India Post Payments Bank (IPPB) that will have at least one branch in every district and focus on financial in rural areas. Two branches of the bank are already operational. Rest of the 648 branches will be launched across country in ever district.
The Ministry of Law & Justice has notified the Specific Relief (Amendment) Act, 2018, shall come into force on such date as the Central Government may, by notification in the Official Gazette, notify.
Govt. has extended e-visa facility for citizens of 165 countries at 25 airports and five seaports; the Lok Sabha was informed by Tourism Minister K J Alphons.
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*Reverse Charge Mechanism Extended till 30th September 2019* [Read Notification]
Read more at: http://www.taxscan.in/reverse-charge-extended-september-2019/26957/
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GST Migration : CBIC lays down Special Procedure* [Read Notification]
Read more at: http://www.taxscan.in/gst-migration-cbic-special-procedure/26950/
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MCA NEWS & IMPORTANT UPDATE
Companies (Significant Beneficial Ownership) Rules, 2018:
Every Individual holding 10% or more beneficial interest in the share capital of the company shall file a declaration in Form No. BEN-1 to the company within 90 days from commencement such rules and within 30 days in case of any change in his significant beneficial ownership. Therefore the due date of filing form BEN-1 is on or before 12th Sep 2018.
Thereafter, the company shall file a return in Form No. BEN-2 with the ROC, within 30 days from the date of receipt of BEN-1. Therefore the due date of filing form BEN-2 is on or before 11th Oct 2018.
Meaning of Significant Beneficial Owner
‘Significant Beneficial Ownership’ in case of member of the Company is not an individual or natural person:
(i) where the member is a company, the significant beneficial owner is the natural person, who holds not less than 10%. share capital of the company or who exercises significant influence or control in the company through other means;
(ii) where the member is a partnership firm, the significant beneficial owner is the natural person, who holds not less than 10% of capital or has entitlement of not less than ten per cent. of profits of the partnership;
(iii) where no natural person is identified under (i) or (ii), the significant beneficial owner is the relevant natural person who holds the position of senior managing official;
(iv) where the member is a trust (through trustee), the identification of beneficial owner(s) shall include identification of the author of the trust, the trustee, the beneficiaries with not less than 10% interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership.
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What the Delhi HC held on search and seizure under Section 132 of Income Tax Act Income tax act
There Delhi High Court has recently held that a warrant of authorization issued under Section 132 of the Income Tax Act, 1961 (IT Act) can be continued to search another premise either on the same date as the date issuance of the warrant or immediately thereafter in close proximity.
However, if an immediacy for carrying out the search does not arise, the concerned officer ought to obtain a fresh warrant of authorization.
“If as a consequence of information in possession of the concerned officer, he has reason to believe that any person is in possession of money, bullion, jewellery or other valuable articles or things, which represents, either wholly or partly, the income or property which is not being or would not be disclosed, then the concerned officer can authorize the officer referred under the provisions of Section 132, to enter and search, inter alia, any building or place where he has reason to suspect that such money, bullion, jewellery or other valuable articles or things are kept…(such warrant of authorization) could be continued either on that date or immediately thereafter in close proximity to the said date of the warrant of authorization.”
The High Court’s observation came in a writ petition filed by one Anju Goyal against the Central Board of Direct Taxes (CBDT) seeking to quash a search and seizure operation carried out against her husband under the provisions of the IT Act.
A warrant of authorization was issued by the Income Tax Department against the husband of the petitioner on November 5, 2014, to conduct a search at his residential premises.
During the course of the search of the said premises on November 11, 2014, the authorized officer came across information which gave him reason to believe that the husband was, perhaps, in possession of money, bullion, jewellery, incriminating documents and other material in a bank locker with the Standard Chartered Bank, which would represent his undisclosed income for the purpose of the IT Act.
The said bank locker was, however, in the petitioner’s name.
Consequently, on November 11, 2014, the bank was restrained by an order of the court from removing or parting with or otherwise dealing with the said bank locker, in order to facilitate the search and seizure.
A search was carried out on December 8, 2014 after obtaining a fresh warrant against the husband, which resulted in seizure of Rs. One lakh cash and jewellery worth over Rs. 14 lakh.
CBDT, however, conceded that the recovery did not make any addition to the income of the assessee husband.
Quashing this second round of search and seizure, Justice Rajiv Shakdher held that in the absence of immediacy for carrying out the search in the light of the order freezing any dealings with the bank locker, the concerned officer ought to have obtained a fresh warrant of authorization against the petitioner.
Clarifying that in the present case, the husband and wife are assessees under the IT Act in their own individual right, the High Court said, vinay
“To have a warrant of authorization issued on December 12, 2104 for the locker against the husband did not confer jurisdiction to search the locker which was occupied by/allocated to the petitioner…..especially so when the fact that the locker belonged to and was occupied by the petitioner was known to the Deputy Director Income Tax (Investigation)-I.”
The petitioner was represented by Advocate Giriraj Subramaniam and Simarpal Singh Sawhney.
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The Company Law Appellate Tribunal in the case of Shah Brothers Ispat P Ltd Vs Mohanraj Company Appeal No.306 of 2018 vide orders dated 31.7.2018 has held that moratorium granted under Section 14 of Insolvency and Bankruptcy Code shall not bar continuance of proceedings under Section138 of NI Act for dishonour of cheque. This is a landmark judgement.
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Landmark Judgment: Karnataka HC Interprets Powers of ITAT, says Tribunal can give directions for Fresh Enquiry on any Grounds* [Read Judgment]
Read more at: http://www.taxscan.in/landmark-judgment-karnataka-hc-interprets-powers-itat-tribunal-directions-fresh-enquiry-grounds/26963/
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CBEC - GST
The Central Board of Indirect Taxes and Customs has extended the time limit for furnishing the return by an Input Service Distributor in FORM GSTR-6 under Section 39(4) of the Act read with Rule 65 of the Central Goods and Services Tax Rules, 2017, for the months of July, 2017 to August, 2018 till the 30th day of September, 2018. GSTR 6 is a monthly return that has to be filed by an Input Service Distributor. It contains details of ITC received by an Input Service Distributor and distribution of ITC. GSTR 6 contains details of all the documents issued for distribution of Input Tax Credit and the manner of distribution of credit and tax invoice on which credit is received. GSTR 6 is required to be filed by every Input Service Distributor even if it is a nil return by 13th of next month.
CBEC - GST
The Central Government, on the recommendations of the Council, allows all Provisional Identification Number (PID) to apply for the Goods and Services Tax Identification Number (GSTIN) by 31st August, 2018. Persons who did not file the complete FORM GST REG-26 of the Central Goods and Services Tax Rules, 2017 but received only a Provisional Identification Number (PID) till the 31st December, 2017 may now apply for Goods and Services Tax Identification Number (GSTIN). The special procedure as prescribed, to be followed for registration of such taxpayers. The details should be furnished by such taxpayers to the jurisdictional nodal officer of the Central Government or State Government on or before the 31st August, 2018. Upon receipt of the above information from such taxpayers, GSTN shall complete the process of mapping the new GSTIN to the old GSTIN and inform such taxpayers.
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Employees can’t be Penalized if they are not benefitted / incentivized by any act of Evasion of Duty by Company: CESTAT* [Read Order]
Read more at: http://www.taxscan.in/employees-penalized-benefitted-incentivized-evasion-duty-company-cestat/26974/
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*Payment of Tax before issue of SCN not a bar to Impose Penalty: Delhi HC* [Read Judgment]
Read more at: http://www.taxscan.in/payment-tax-issue-scn-bar-impose-penalty-delhi-hc/26970/
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1. Supreme Court stays Bombay HC order granting relief to disqualified directors*.As a result of the Supreme Court order, other orders issued by various high courts in around 2,000 cases of disqualification of directors have also been stayed.
2. DIR 3 KYC:* Form DIR-3 KYC is likely to be revised on MCA21 portal w.e.f. 9th AUG 2018. As per the revised form, stakeholders may kindly note that ‘Aadhaar’ shall now be mandatory only for applicants who are ‘Residents of India’.
3. *Migration window re-opened once again upto 31 Aug. 2018 at GST Portal as a final chance for Taxpayers to migrate, notifies CBIC*
4. *RBI Press Release on Audit of Bank* -
http://pib.nic.in/PressReleaseIframePage.aspx?PRID=1541981#.W2massPGxko.twitter
5. Status of Membership with CABF (Chartered Accountants Benevolent Fund):*
*To know if you are a Life Member or Annual Member or not a Member of CABF,* click on the following link *https://www.icai.org/new_post.html?post_id=1812&c_id=92*
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CBDT has specified ‘Director General, Central Economic Intelligence Bureau (CEIB)’ for the purpose of section 138. The CBDT has also directed that in respect of info. received from foreign jurisdiction, confidentiality clause to be adhered and the information couldn’t be shared with other agencies till prior permission of sharing foreign jurisdiction is received.
The Central Board of Direct Taxes’ (CBDT) latest Central Action Plan, for instance, seeks to incentivise the CIT (Appeal), the first appellate forum, to pass ‘quality’ orders with additional credit of two units per order.
Extension of RCM applicability on procurement from Unregistered Vendor vide notification no. 22/2018-Central Tax (Rate); Dated 6th August 2018, till 30 September, 2019.
CBEC -The Central Government, on the recommendations of the Council, allows all Provisional Identification Number (PID) to apply for the Goods and Services Tax Identification Number (GSTIN) by 31st August, 2018.
Foreigners coming to India may not get GST refunds on goods purchased and carried back by them as the government has not invoked relevant provisions of the Integrated Goods and Services Tax Act yet, the Finance Ministry has said in reply to an RTI query.
SEBI barred Inventure Growth and Securities as well as its directors and other senior officials from the capital markets for four years for concealing "material information" and making false and inadequate disclosures in the IPO documents.
ICAI - Empanelment of Members to act as Observers at The Examination Centres for The Chartered Accountants Examinations November / December 2018 - (03-08-2018)
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*👉🏻MCA wins SC backing in disqualified directors’ case*
(MCA has received the Supreme Court’s backing against 300,000 disqualified directors for their failure to file financial statements and annual returns for three consecutive years)
👇🏻 👇🏻 👇🏻
https://goo.gl/1VqTiF
*👉🏻Govt appointed CA S Gurumurthy and Satish Marathe to RBI Board*
(Govt appointed CA S Gurumurthy and Satish Marathe patron of Sahakar Bharathi as part-time directors on the Reserve Bank of India's Board)
👇🏻 👇🏻 👇🏻
https://goo.gl/11T3hj
*👉🏻Govt proposes eight special courts under NCLT to deal with insolvency cases*
(Corporate Affairs Ministry is planning to set up eight special courts under the NCLT to deal with insolvency cases)
👇🏻 👇🏻 👇🏻
https://goo.gl/x7STpF
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*Computer Printouts can’t be admissible as evidence If Conditions u/s 36B-(2) & (4) of the Central Excise Act are not Satisfied: CESTAT* [Read Order]
Read more at: http://www.taxscan.in/computer-printouts-admissible-evidence-conditions-central-excise-act-satisfied-cestat/26984/
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GST Evasion: First Arrest reported in Kerala*
Read more at: http://www.taxscan.in/gst-evasion-arrest-kerala/27003/
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MCA Updates:
MCA replaced the section 42 and rules for Private Placement
Major changes in provisions and rules are as follows:
1. Identified Persons: The persons to whom the private placement is to be made shall be first identified by Board.
2. Utilization of Money: As per new provision, money raised through Private placement can not be utilized unless allotment is made and return of allotment is filed with ROC.
3. Return of Allotment: Return of Allotment (Form PAS-3) shall be filed within 15 days from the date of allotment (earlier, it was 30 days).
4. Non-convertible debentures: Private placement for non-convertible debentures can be made by board resolution, if such offer amount is not exceeding the limit specified in Section 180(1)(c) of Companies Act, 2013.
5. Issue of Private placement offer letter: The Private Placement offer-cum-application letter shall be filed only after the relevant special resolution or board resolution shall be filed with ROC in Form MGT-14.
6. Replacement of document: Form PAS-4 is replaced in the new rules.
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AAR Appellate Authority Upholds denial of Krishi Kalyan Cess paid Pre-GST rollout* [Read Order]
Read more at: http://www.taxscan.in/aar-appellate-authority-upholds-denial-krishi-kalyan-cess-pre-gst-rollout/26991/
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.GST Amendment Bills introduced in Lok Sabha*
Read more at: http://www.taxscan.in/gst-amendment-bills-introduced-lok-sabha/27016/
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A technical error by chartered Accountant can’t be treated as Professional Misconduct: AA* [Read Order]
Read more at: http://www.taxscan.in/technical-error-chartered-accountant-professional-misconduct-aa/27033/
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GST Rules on Refund of Input Tax Credit on account of Inverted Duty Structure challenged before HC* [Read Petition]
Read more at: http://www.taxscan.in/gst-rules-refund-input-tax-credit-hc/27040/
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GST not Simple: IMF recommends for a Dual Rate Structure*
Read more at: http://www.taxscan.in/gst-not-simple-imf-recommends-dual-rate-structure/27023/
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ICAI group studying circumstances leading to auditor resignations"
Amid rising instances of auditors quitting audit work at companies, chartered accountants' apex body ICAI has set up a group to look into the circumstances leading to their resignations.
In a communication to members, ICAI President Naveen N D Gupta also said the panel would also analyse the recent circular issued by the Reserve Bank on enforcement framework for statutory auditors of commercial banks.
The Institute of Chartered Accountants of India (ICAI) has more than 2.80 lakh members and many of the institute conduct audit works for various companies.
A group has been formed to "examine the circumstances leading to the resignation of auditors, and also to analyse the recent circular of RBI on enforcement action framework", Gupta said in his latest monthly message posted on the ICAI website.
The group would also suggest a suitable mechanism to address the issues/ concerns for guidance of the members, he noted.
In June, the Reserve Bank of India (RBI) came out with a circular titled 'Enforcement action framework in respect of statutory auditors for lapses in statutory audit of commercial banks'.
"... it has been decided to put in place a graded enforcement action framework to enable appropriate action by the RBI in respect of the banks statutory auditors for any lapses observed in conducting a statutory audit," RBI had said.
It also came against the backdrop of increasing non-performing assets in the banking system.
Besides, the ICAI has constituted a group to look into the consultation paper issued by markets regulator Sebi on fiduciaries in the securities market.
Under the norms for fiduciaries proposed by Sebi, defaulters would face stringent penal actions, including ban from securities markets and disgorgement of fees.
Those found guilty of providing wrong audit or valuation reports would have to cough up any unlawful gains they might have made in the process, as per the proposals.
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Government to hold talks with RBI to leave more capital with banks
The government will hold talks with the Reserve Bank of India (RBI) on relaxing capital norms for banks and bringing them in line with less stringent Basel III guidelines, said a senior government official.
Such a move would free up an estimated Rs 60,000 crore of capital at state-owned lenders, allowing them to step up lending to fuel the reviving economy, bolster weaker banks and reduce pressure on the government to provide capital. This follows discussions by the finance ministry with Niti Aayog and other stakeholders.
Read more at:
//economictimes.indiatimes.com/articleshow/65300234.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
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MCA issues 'preliminary notices' to 272 cos for non-compliance with CSR norms
The Ministry of Corporate Affairs has issued "preliminary notices" to 272 companies for alleged non-compliance with CSR provisions under the companies law.
In a written reply to the Rajya Sabha, Minister of State for Corporate Affairs P P Chaudhary said that whenever violation of CSR provision is reported, the Registrar of Companies takes action after due examination of records.
Under the Companies Act, 2013, certain class of entities are required to spend at least two per cent of their three-year average net profit towards Corporate Social Responsibility (CSR) activities.
Read more at:
//economictimes.indiatimes.com/articleshow/65309113.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
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LoUs should be restored at earliest with proper safeguards: Parliament Panel to RBI
A parliamentary panel asked RBI to restore Letters of Undertaking (LoUs) -- banned after their misuse in the Rs 14,000 crore PNB scam -- at the earliest with proper safeguards in order to increase the availability of credit for traders.
The Parliamentary Standing Committee on Commerce said in its report that the ban of LoU/LoC has resulted in rise in the cost of credit by 2 to 2.5 per cent.
It said the move would certainly affect the cost competitiveness of country's trade and industry and have a cascading effect on jobs and the loss of jobs is something the country can ill-afford.
Read more at:
//economictimes.indiatimes.com/articleshow/65296266.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
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Undeclared NPAs in FY18 still at Rs 3 lakh crore
There are over Rs 3 lakh crore worth of undeclared non-performing assets in the books of banks as of March 2018. These are by borrowers who have defaulted to one lender but the loans are not classified as NPAs possibly because the other banks are not aware of defaulter’s financial position.
An analysis by TransUnion Cibil, which has thrown up this data, also revealed that the undeclared NPAs are in public sector banks (PSBs) that are not facing restrictions under prompt corrective action (PCA), and in private banks. TU Cibil has shared the data with the RBI and expects that banks will declare another round of bad loan provisions in the quarter ending September 2018. RBI norms require lenders to start NPA proceedings under the cross-default clause even if the delinquency is in respect of another loan.
Read more at:
//economictimes.indiatimes.com/articleshow/65287127.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
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Government planning to come out with its own cryptocurrency: Sources
With virtual currency gaining traction among investors, government is planning to come out with its own crypto currency sources told Zee Media.
Although Indian government has time and again reiterated that cryptocurrencies are not legal in India, sources told Zee Media that the government may come out with a framework on this by September this year.
Read more at:
http://zeenews.india.com/personal-finance/government-planning-to-come-out-with-its-own-cryptocurrency-sources-2130838.html
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Govt mulls to amend Passport Act to prevent borrowers from fleeing out
After recent passage of Fugitive Economic Offenders Bill, 2018, the government is now planning to amend Passport Act, 1967 to prevent economic offenders like Vijay Mallya and Nirav Modi from fleeing out of the country.
Read more at:
https://economictimes.indiatimes.com/news/economy/policy/govt-mulls-to-amend-passport-act-to-prevent-borrowers-from-fleeing-out/videoshow/65305195.cms
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RBI Set to Get Swadeshi Hand On Board as Centre Appoints S. Gurumurthy
The Modi government on Tuesday appointed S. Gurumurthy – a chartered accountant who is also convener of the Swadeshi Jagran Manch, a trade body that is affiliated to the right-wing Rashtriya Swayamsevak Sangh (RSS) – to the board of the Reserve Bank of India.
In a late evening announcement on Tuesday, the Centre also approved the appointment of Satish Marathe, a banking industry executive with decades of experience, to the RBI’s board. Both Marathe and Gururmurthy will serve as “part-time non-official directors” on the RBI’s central board.
Read more at:
https://thewire.in/banking/rbi-board-s-gurumurthy-satush-marathe
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GST Rules on Refund of Input Tax Credit on account of Inverted Duty Structure challenged before HC
Rule 89(5) of the Central GST Rules, 2017 and Rajasthan GST Rules, 2017 relating to the refund of input tax credit on account of inverted duty structure has been challenged in theRajasthan High Court, Jodhpur Bench (Principal Seat) wherein High Court has issued notices to Union of India, Government of Rajasthan and GST Council and sough their reply within four weeks’ time.
Petitioner Shree Ram Products Private Limited through its advocate Sanjay Jhanwar and Prateek Gattani stated that proviso (ii) to sub section (3) of Section 54 provides that refund of any unutilized input tax credit (ITC) may be claimed by the registered person in case where credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies. However, Ministry of Finance, Government of India and Finance Department, Government of Rajasthan vide notification dated 18.04.2018 made an amendment in the definition of definition of Net ITC as envisaged under Rule 89(5) of the CGST / RGST Rules, with retrospective effect to restrict / not consider the input tax credit availed and accumulated on account of input services while computing the maximum amount of refund. Whereas, prior to said amendment definition of Net ITC includes the unutilized input tax credit availed on input as well as on input services.
Petitioner’s advocate argued that, provisions of Rule 89(5) of the CGST/ RGST Rules provides for refund of tax paid on input only without considering and appreciating the fact that the output supply is result of the input as well as input services. It is a reality that without use of input services in the manufacturing sector e.g. without availing services of Goods Transport Agency, Repair and maintenance of plant & machinery / factory building, legal and accountancy services, Job Work etc., it is not possible to supply output goods and services accordingly. Hence, allowing refund of only input tax as availed/charged on inputs per is unreasonable, irrational, discriminatory and defective in nature. Further, there is no apparent justification for excluding tax paid on input services from the purview of Net ITC for computing the refund amount under inverted duty structure.
Petitioners advocate further argued that Rule making power as envisaged by the Government under section 54(1) of the CGST / RHST Act is just to regulate the refund. No rules can be framed under the guise of such power which curtail the right of the Petitioner which is otherwise absolute in the Code. Petitioner advocate further relied on State of Mysore and Ors. vs Mallick Hashim & Co. (SC) (1974) 3 SCC 251.
Further, restraining the refund of input tax credit availed on input services would lead to result in blockage of funds / working capital in the form of tax paid on input services and affecting the cost competitiveness of small businesses and also paralyzing their working capital / liquidity which is an essential key for their survivor. The treatment of Input and Input Services on different yardsticks and making input tax credit on input eligible to be considered part of Net ITC and tax paid on Input Services ineligible for being considered as part of Net ITC, is against the principal of the fiscal neutrality and seamless flow of the credit which are the foundation principles of the GST.
Matter was heard by the bench consisting of Chief Justice and Justice Dinesh Ji Mehta. Notice have been issued by the Hon’ble High Court to the Respondents and sought their reply within a period of 4 weeks.
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Where the corporate debtor has entered into an undervalued transaction as referred to in sub-section (2) of section 45 and the Adjudicating Authority is satisfied that such
transaction was deliberately entered into by such corporate debtor—
(a) for keeping assets of the corporate debtor beyond the reach of any person
who is entitled to make a claim against the corporate debtor; or
(b) in order to adversely affect the interests of such a person in relation to the
claim,
the Adjudicating Authority shall make an order—
(i) restoring the position as it existed before such transaction as if the
transaction had not been entered into; and
(ii) protecting the interests of persons who are victims of such transactions:
Provided that an order under this section—
(a) shall not affect any interest in property which was acquired from a person
other than the corporate debtor and was acquired in good faith, for value and without
notice of the relevant circumstances, or affect any interest deriving from such an
interest, and
(b) shall not require a person who received a benefit from the transaction in good
faith, for value and without notice of the relevant circumstances to pay any sum unless
he was a party to the transaction
