File Content -
TAX CONNECT – 62 nd
Issue JAV & ASSOCIATES
(03 Apr. 2016 – 09 Apr. 2016) Page 1 Chartered Accountants
TAX CONNECT
62nd
Issue
03 ApR 2016 – 09 APr 2016
INCOME TAX
CENTRAL EXCISE SERVICE TAX
GST
CUSTOMS
STATE TAXES
JAV & ASSOCIATES
Chartered Accountants
Kolkata:
1, Old Court House Corner
^Toao House_ 1 st
Floor
Room No.-13 (North)
Kolkata-70001
West Bengal
Vadodara:
Quarter no. 3/174
Gujarat Refinery Township
Jawaharnagar
Vadodara-391320
Gujarat
Contact:
+919331042424; +91931594980;
+918697575185; +913322625203 Email:
tb.chatterjee@dic.co.in;
tb.chatterjee@yahoo.co.in; cavivekjalan@gmail.com; vivek.jalan@icai.org
TAX CONNECT – 62 nd
Issue JAV & ASSOCIATES
(03 Apr. 2016 – 09 Apr. 2016) Page 2 Chartered Accountants
Friends
On 31 st
March the hearts of Kolkatans sank when a part
of the Ganesh Talkies Flyover came crashing down. Any
figure of casualty which we will get would only be an
under estimate considering Ganesh Talkies is a primary
business place and the incident happened during peak
business Hour. We pray for the families of those who
have lost their lives or are injured. A lot has been said on
the dire need to cleanse our system, so we will not add
on but only pray that someday our administrators will do
some soul searching. It has to be top down!
In Service Tax, There has been change in liability to pay
tax incase of Three Types of Services w.e.f. 1 st
April –
1. For Services provided by Mutual Fund Agents to
AMCs – from AMCs to Mutual Fund Agents
2. Services provided by Senior Advocates – from
recipient to Senior Advocates
3. Certain Services by Govt./Local Authority - from
Govt./Local Authority to recipient
W.r.t. this change N No 21/2016 has been published on
30/3/2016 whereby Rule 7 of the Point of Taxation
Rules, 2011 has been amended and it has been specified
that where the service has been provided and invoice
has been issued before the date of such change,
however, the payment has not been made as on such
date, the point of taxation shall be the date of issuance
of invoice. This has created more confusion than clarity.
Just to clarify the same by means of examples :
Eg. 1 : For commission paid to Mutual Fund Agents by
AMCs, which is accrued before 01.04.2016 and paid on/after 01.04.2016, the
liability to pay tax is on the
AMCs. It is important to note here that as per practice
Mutual Fund Agents generally do not raise invoice. This
may please be taken note of by Mutual Fund Agents as
generally in this industry it is difficult to track the
commission with the services.
Eg 2 : Where a senior advocate has raised a bill &
rendered services before 1.4.2016 and payment has
been made on/after 1.4.2016, there is a shift of
responsibility from the senior advocate to the recipient.
Eg 3 : Where a Govt Authority has raised a bill &
rendered services (which have now come under reverse
charge) before 1.4.2016 and payment has been made
on/after 1.4.2016, there is a shift of responsibility from
the recipient to the Govt. Authority.
Just to note that The Hon’ble Gujarat High Court has
vide order dated 30.03.2016 in Percy Cawas Kavina vs.
UOI, directed an ad-interim stay on levy of Service Tax
on Senior Advocates. Further, The Hon’ble Delhi High
Court has also stayed the levy of Service Tax on Senior
Advocate in the Writ Petition filed by Delhi High Court
Bar Association.
Further, many changes in Indirect Taxes and Direct
Taxes as proposed in the Budget, have come into
effect from 1.4.2016. Our budget publication may
please be referred for the same.
Just to reiterate that we remain available over a
telecom or e-mail.
Truly Yours
Timir Baran Chatterjee
M.Com, FCS, MBA (International Business)-IIFT, ACMA
Vivek Jalan
FCA, CIDT (ICAI), B. Com
EDITORIAL
TAX CONNECT – 62 nd
Issue JAV & ASSOCIATES
(03 Apr. 2016 – 09 Apr. 2016) Page 3 Chartered Accountants
S.
NO. TOPICS
PAGE
NO.
1] COMPLIANCE CALENDAR 4
2] GOODS & SERVICE TAX (GST) - REPORT OF SUB COMMITTEE - II ON MODEL GST ACT, 2016 – AUDIT 5
3] CENTRAL TAXES
a) SERVICE TAX 6
Notification/Circular Point of Taxation (Second Amendment) Rules, 2016: Amendment in Rule 7
Case Law Acting as Manager for sharing of resources and cost / expenses with the group comp anies under a cost
sharing arrangement is not a taxable service.
b) CENTRAL EXCISE 7
Case Law Complete food tray bearing the brand-name of the caterer and served to the passe ngers on board the
aircraft is not liable to central excise duty.
Case Law Pre-delivery inspection charges cannot be included in the assessable val ue.
c) CUSTOMS 8
Notification/Circular Basic custom duty of 25% on import of wheat extended beyond 31.03.2016 upto 30.06. 2016 and of
40% on import of ghee butter and butter oil extended beyond 31.03.2016 upto 30.09.2016
Notification/Circular Instruction to strictly follow the provisions for review under section 129A (2) or section 129D of the
Customs Act, 1962, section 35B (2) or section 35E of the Central Excise Act, 1944 and sec tion 86 (2A) or
section 86 (2) of Finance Act, 1994
Case Law Show cause notice issued with a pre-judged mind is not valid.
d) INCOME TAX 9
Notification/Circular Amendment in rule 114E for inserting the words ^or Statement of financial transactions _ after the
words ^Information Return _
Notification/Circular M/S . Ascendas IT Park (Chennai) ltd. notified as an industrial park for the purposes of s ection 80-IA(4)
Notification/Circular The functionality for online correction of Form 26 QB has been enabled
Notification/Circular The online TMS functionality is being enabled from 15.03.2016 for processing of retu rns filed in FY 2014-
15 getting time barred
4] STATE TAXES 10
Notification/Circular
Delhi: Assessment of enforcement survey/seizure cases by respectiv e ward officers
Sealing and de-sealing of the premises
Haryana: Amendment of Rule 42 – Ap proval authority for refund above Rs. 25 lacs
Nagaland: Exemption of entry tax to motor vehicles
INDEX
TAX CONNECT – 62 nd
Issue JAV & ASSOCIATES
(03 Apr. 2016 – 09 Apr. 2016) Page 4 Chartered Accountants
Due date COMPLIANCES FROM 03rd April,
2016 to 09th April, 2016
STATUTE
5th April, 2016 Deposit of WCT of previous month Kerala VAT Act
7th April, 2016 Deposit of WCT of previous month Assam VAT Act
Tripura VAT Act
Manipur VAT Act
Deposit 15G/15H Forms Income Tax Act
COMPLIANCE CALENDAR
TAX CONNECT – 62 nd
Issue JAV & ASSOCIATES
(03 Apr. 2016 – 09 Apr. 2016) Page 5 Chartered Accountants
REPORT O
F SUB COMMITTEE - II ON MODEL GST ACT,
2016 : AUDIT
The provisions relating to ^Audit _ covered in CHAPTER
XI of the model GST Act can be summarized as follows:
Audit
An audit may be conducted by the Commissioner
of CGST or of SGST or any officer authorised by
him at the place of business of the taxable
person and/or in their office by giving a notice
(not less than 15 working days) in advance.
The audit shall be completed within 3 months
and if required, the period can be extended for
another 3 months.
If the audit results in detection of tax not paid or
short paid or erroneously refunded, or input tax
credit erroneously availed, the proper officer
may initiate action under section 20 of the Act.
Special audit
If during scrutiny, enquiry, investigation or any
other proceedings, any officer (not below the
rank of Deputy/Assistant Commissioner) is of the
opinion that the value has not been correctly
declared or the credit availed is not within the
normal limits, he may require the taxable person
to get his records examined and audited by a
chartered accountant or a cost accountant
nominated by the Commissioner in this behalf.
The same shall be affected even if the accounts
of the taxable person have been audited under
any other provision of this Act.
The chartered accountant or cost accountant
shall submit his report within 90 days and if
required, the period can be extended for another
90 days.
The taxable person shall be given an opportunity
of being heard in respect of any audit findi ng
proposed to be used in any proceedings under
this Act or rules made there under.
The expenses of examination and audit including
the remuneration of chartered accountant or
cost accountant shall be determined and paid by
the Commissioner.
GOODS & SERVICE TAX (GST)
THIS SPACE HAS BEEN
INTENTIONALLY KEPT VACANT
TAX CONNECT – 62 nd
Issue JAV & ASSOCIATES
(03 Apr. 2016 – 09 Apr. 2016) Page 6 Chartered Accountants
SERVICE TAX
NOTIFICATIONS/CIRCULARS
POINT OF TAXATION (SECOND AMENDMENT) RULES,
2016: AMENDMENT IN RULE 7
OUR COMMENTS :
The Dept. of Revenue, Ministry of
Finance, Government of India vide Notification No.
21/2016-Service Tax dated 30.03.2016 has amended
rule 7 of the Point of Taxation Rules, 2011. These rules
may be called the Point of Taxation (Second
Amendment) Rules, 2016
Rule 7 contains provision for determination of point of
taxation in case of specified services or persons
The amendment has inserted a provision which states
that if there is change in the liability of a person required
to pay tax as recipient of service [notified under sub-
section (2) of section 68 of the Act], the service has been
provided and the invoice has been issued before the date
of such change, however, the payment has not been
made as on such date, the point of taxation shall be the
date of issuance of invoice.
COURT DECISIONS
RELIANCE ADA GROUP PVT LTD VERSUS
COMMISSIONER OF SERVICE TAX, MUMBAI- IV [CESTAT
MUMBAI]
BRIEF: Acting as Manager for sharing of resources and
cost / expenses with the group companies under a cost
sharing arrangement is not a taxable service.
OUR COMMENTS : In the above case, the assessee has
entered into contractual agreements with its
participating Group Companies to procure certain
services on their behalf and to share the cost. His role is
to monitor and coordinate the arrangement for all
participants. The expenses incurred by the assessee in
this respect will be reimbursed by the Group Companies.
The cost of the services procured will be allocated on the
estimated use by each of the Group Companies.
The Revenue demanded Service tax on the service
rendered
by the assessee to the Participating Group
Companies under taxable category "Support Services of
Business or Commerce" under Section 65(105)(zzzq) of
the Finance Act, 1994.
The Hon’ble CE“TAT held that the assessee is merely
acting as a manager/trustee to incur expenses on behalf
of the Participating Group Companies. The object of the
cost sharing arrangement is to reduce the cost of
operation by sharing the common services, the best
available talent and resources required for carrying out
their business activities. The assessee here is not
rendering any taxable service.
Therefore, the demand of Service tax is not sustainable.
[Decided in favour of assessee ]
CENTRAL TAXES
THIS SPACE HAS BEEN
INTENTIONALLY KEPT VACANT
TAX CONNECT – 62 nd
Issue JAV & ASSOCIATES
(03 Apr. 2016 – 09 Apr. 2016) Page 7 Chartered Accountants
CENTRAL EXCISE
COURT DECISIONS
TAJ SATS AIR CATERING LTD. VERSUS CCE, DELHI- II
[CESTAT NEW DELHI]
BRIEF: Complete food tray bearing the brand-name of
the caterer and served to the passengers on board the
aircraft is not liable to central excise duty.
OUR COMMENTS : In the above case, the assessee is
engaged in the business of airline catering and supply
meal and food items in accordance with menu given by
the respective airline from time to time. In the complete
food tray served to the passengers some of the items like
dal, rice, curry, etc. are prepared by the assessee, some
like curd, pickles etc. are procured by the assessee and
the cutlery, crockery, soft drinks, juices and water are
provided by the airlines. As per the requirement of the
airlines a slip containing the name of the assessee
(caterer) is put inside the pouch containing cutlery.
The Revenue demanded duty on the complete food tray
from the assessee for being engaged in the manufacture
of excisable goods i.e. food preparations which also
contained a logo and name of the assessee by classifying
the same as ^branded food preparations _ under the
heading 2108 and 2106.
The Hon’ble CE“TAT noted that the duty was demanded
on the full value of the final complete food tray served to
the passengers on board. However, out of food
preparations in the food tray, the assessee only prepared
prepare dal, roti, rice, curry etc. which are not the items
on which Central Excise duty is sought to be demanded.
Also, regarding the brand-name, the food prepared by
the assessee is supplied without brand-name. It is only
the cutlery pouch which contains the logo and name of
the assessee and the same is also supplied separately.
The airline staff put everything together and serves the
food tray to the passengers.
Accordingly, the demand is not sustainable.
[Decided in favor of assessee]
M/S CLASSIC POLYTUBES PVT LTD VERSUS
COMMISSIONER OF CENTRAL EXCISE, LUCKNOW
[CESTAT ALLAHABAD]
BRIEF: P
re-delivery inspection charges cannot be
included in the assessable value
OUR COMMENTS : In the above case, the assessee is a
manufacturer. He use to get the goods inspected where
buyers want ed to get such inspection from a particular
agency. Initially, the assessee use to pay the inspection
charges and subsequently buyers reimbursed it.
The Revenue contended that these inspection charges
should be included in the assessable value of the goods
for the purpose of imposing excise duty.
The Hon’ble CE“TAT noted that inspections in the given
case are not mandatory inspections during the
manufacture of the goods. These additional inspections
are got done at the instance of the buyers.
Commissioner of Central Excise, Mysore Vs. M/s. TVS
Motors Company Ltd. (2015 (12) TMI 874 - SUPREME CO URT ) also held that pre-delivery inspection charges
cannot be included in the assessable value.
In view of the above observations and settled
proposition of law, it was held that optional inspection
charges at the instance of buyer cannot be included in
the assessable value under Section 4 of the Central
Excise Act, 1944.
[Decided in favor of assessee]
TAX CONNECT – 62 nd
Issue JAV & ASSOCIATES
(03 Apr. 2016 – 09 Apr. 2016) Page 8 Chartered Accountants
CUSTOMS
NOTIFICATIONS/CIRCULARS
BASIC CUSTOM DUTY OF 25% ON IMPORT OF WHEAT
EXTENDED BEYOND 31.03.2016 UPTO 30.06. 2016 AND
OF 40 % ON IMPORT OF GHEE BUTTER AND BUTTEROIL
EXTENDED BEYOND 31.03.2016 UPTO 30.09.2016
OUR COMMENTS :
The Dept. of Revenue, Ministry of
Finance, Government of India vide Notification No.
24 /2016-Customs dated 28.03.2016 has amended
Notification No. 12/2012-Customs, dated the 17th
March, 2012 and extended the basic custom duty of 25%
on import of wheat beyond 31.03.2016 upto 30.06.2016
and of 40% on import of Ghee Butter and Butter oil,
beyond 31.03.2016 upto 30.09.2016.
INSTRUCTION TO STRICTLY FOLLOW THE PROVISIONS
FOR REVIEW UNDER SECTION 129A (2) OR SECTION
129D OF THE CUSTOMS ACT, 1962, SECTION 35B (2) OR
SECTION 35E OF THE CENTRAL EXCISE ACT, 1944 AND
SECTION 86 (2A) OR SECTION 86 (2) OF FINANCE ACT,
1994
OUR COMMENTS:
The CBEC, Dept. of Revenue, Ministry
of Finance, Government of India vide Instruction F. No.
390/Review/36/2014- JC dated 17.03.2016 has
instructed Field Formations to abide strictly by the
provisions mentioned in law for reviewing the orders and
counter check revenue figures in the disputed demands
before taking a view whether a case is fit for preferring
an appeal.
The Board noted that an Order in Appeal was reviewed
twice.
As per the provisions of Section 129A (2) or Section 129D
of the Customs Act, 1962, Section 35B (2) or Section 35E
of the Central Excise Act, 1944 and Section 86 (2A) or
Section 86 (2) of Finance Act, 1994, there is no provision
for reviewing the same order twice.
COURT DECISIONS
M. RATHAKRISHNAN, D. MURALIDHARAN VERSUS
ADDITIONAL DIRECTOR GENERAL DIRECTORATE OF
REVENUE INTELLIGENCE, THE COMMISSIONER OF
CUSTOMS [MADRAS HIGH COURT]
BRIEF: Show cause notice issued with a pre-judged mind
is not valid.
OUR COMMENTS
: In the above case, the first
respondent issued the show cause notices dated asking
the assessee to show cause that why the penalty should
not be imposed on them under sections 112 and 114AA
of the Customs Act, 1962.
The assessee contended that the show cause notice is
liable to be set aside on the ground that the first
respondent pre-judged the issue involved in the matters.
The first respondent should have issued the show cause
notices with an open mind as they have to act fairly in
adjudging the guilt or otherwise of the person proceeded
against.
The Hon’ble High Court held that a showcause
proceeding is meant to give the person proceeded
against a reasonable opportunity of making his objection
against the proposed charges indicated in the notice.
The first respondent should take utmost care to
manifestly keep an open mind, as they have to act fairly
in adjudging the guilt of the petitioners and especially
when he has a power to take punitive steps against the
petitioners after giving them a show cause notice.
In the given case, the first respondent had issued the
show cause notices with pre-judged mind, there is no
purpose in issuing show cause notices at all.
The show cause notice accordingly stood quashed.
[Decided in favor of assessee]
TAX CONNECT – 62 nd
Issue JAV & ASSOCIATES
(03 Apr. 2016 – 09 Apr. 2016) Page 9 Chartered Accountants
INCOME TAX
NOTIFICATIONS & CIRCULARS
AMENDMENT IN RULE 114E FOR INSERTING THE
WORDS ^OR STATEMENT OF FINANCIAL
TRANSACTIONS _ AFTER THE WORDS ^INFORMATION
RETURN _
OUR COMMENTS : The CBDT,
Dept. of Revenue, Ministry
of Finance, Government of India vide Notification No.
19/2016 dated 18.03.2016 has amended Rule 114E and
inserted the words ^or Statement of financial
transactions _ with the words ^Information return _.
This rule shall be applicable for the specified financial
transactions carried out during the period fr om
01.04.2015 to 31.03.2016.
M/S. ASCENDAS IT PARK (CHENNAI) LTD. NOTIFIED AS
AN INDUSTRIAL PARK FOR THE PURPOSES OF SECTION
80 -IA(4)
OUR COMMENTS : The CBDT,
Dept. of Revenue, Ministry
of Finance, Government of India vide Notification No.
20 /2016 dated 21.03.2016 has notified the undertaking
M/s. Ascendas IT Park (Chennai) Ltd as an industrial park
for the purpose of Section 80-IA(4) from the date of
commencement of the park i.e. 31.03.2011.
THE FUNCTIONALITY FOR ONLINE CORRECTION OF
FORM 26QB HAS BEEN ENABLED
OUR COMMENTS : The Directorate of Income Tax
(Systems) vide F. No. DIT(S)-2/Form26QB/100/2015
dated 22.03.2016 has enabled the functionality for
online correction of Form 26QB.
The form is a statement cum challan relating to TDS on
sale of property u/s 194IA of the IT Act. It is filled and
submitted by the buyer of the property for making TDS
payment on sale of property. It contains details of buyer,
seller, property being sold, sale consideration, tax
deposit details etc.
Earlier the bank branches could not make any
corrections in the form through the existing RT18
mechanism as it is an internet challan.
Now, C
PC-TDS has enabled functionality for online
correction in the form 26QB from 29. 02.2016.
The Standard operating procedures ( SOP) dated
20 .04 .2015 for correction in form 26QB challan is
withdrawn with immediate effect.
THE ONLINE TMS FUNCTIONALITY IS BEING ENABLE D
FROM 15.03.2016 FOR PROCESSING OF RETURNS FILED
IN FY 2014-15 GETTING TIME BARR ED
OUR COMMENTS : The Directorate of Income Tax
(Systems) vide Instruction No. 140 [F.NO.DGIT(S)/DIT(S)-
3/AST/TMS/ONLINE/27-C/2015-16] dated 15.03.2016
has enabled the online TMS functionality for Processing
of returns filed in FY 2014-15 getting time barred.
The functionality will be available till 31-3-2016 for
processing time barring returns only
THIS SPACE HAS BEEN
INTENTIONALLY KEPT
VACANT
TAX CONNECT – 62 nd
Issue JAV & ASSOCIATES
(03 Apr. 2016 – 09 Apr. 2016) Page 10 Chartered Accountants
DELHI
ASSESSMENT OF ENFORCEMENT SURVEY/SEIZURE
CASES BY RESPECTIVE WARD OFFICERS
OUR COMMENTS : The Department of Trade & Taxes,
Government of National Capital Territory of Delhi, vide
Circular N o. 42 OF 2015- 16 dated 19.03.2016 has
directed that the assessment of all cases pursuant to
Enforcement surveys shall be to transferred to the
concerned ward officers immediately. After transfer
ward authorities shall ensure that assessments are
completed within the time frame specified under the
said Act.
This circular does not cover the cases for which
proceedings/jurisdiction has been transferred by the
Commissioner, Value Added Tax through a separate
order under section 67 of Delhi Value Added Tax Act,
2004.
SEALING AND DE-SEALING OF THE PREMISES
OUR COMMENTS : The Department of Trade & Taxes,
Government of National Capital Territory of Delhi, vide
Circular No. 43 OF 2015- 16 dated 21.03.2016 has stated
that Section 60 of the Delhi Value Added Tax, 2004
empowers the Commissioner to enter premises and seize
records and goods of any person during surveys. The
Surveys are to be conducted on the premises of a dealer
to detect tax evasion.
The survey teams are headed by an officer of the level of
Assistant Commissioner/VATO and comprises of AVATOs
and VATIs. The team size depends upon the size of the
dealer to be surveyed.
HARYANA
AMENDMENT OF RULE 42
– APPROVAL AUTHORITY FOR
REFUND ABOVE RS. 25 LACS
OUR COMMENTS : The Excise & Taxation Department ,
Government of Haryana vide Notification S.O. No. 7/ST-
1/H.A. 6/2003/S.60/2016. dated 11.03.2016 has
amended Rule 42 of the Haryana Value Added Tax Act,
2003.
Earlier Commissioner was entitled to allow refund of any
amount.
Now, Committee comprising of 3 senior most Additional
Excise and Taxation Commissioners from department
side posted at the Head Quarter and an officer not below
the rank of Deputy Excise and Taxation Commissioner
nominated by the Commissioner as the Member
Secretary shall be entitled to allow refund above twenty
five lakh rupees.
NAGALAND
EXEMPTION OF ENTRY TAX TO MOTOR VEHICLES
OUR COMMENTS : The Finance Department, Government
of Nagaland vide N otification No. FIN/REV-3/44/03/23
dated 09.02.2016 has notified that the following
categories of goods will be exempted from entry tax.
1. Heavy goods vehicles above 10 MT of payload
2. Heavy Passenger Vehicles above 35 seating capacity
3. Vehicles belonging to manufacturers that do not have
authorized dealership in the State of Nagaland
Disclaimer: This e-bulletin is for private circulation only. Views expressed her ein are of the editorial team. JAV & Associates or any of its employees do
not accept any liability whatsoever direct or indirect that may arise from the use of the information contained herein . No matter contained h erein
may be reproduced without prior consent of JAV & Associates. While this e -bulletin has been prepared on the basis of published/other publicly
available information considered reliable, we do not accept any liabil ity for the accuracy of its contents.
STATE TAXES
1
CAclubindia
