c.v.o. ca's · c.v.o. ca's news & views for members / subscribers / vol. 22 - no. 3...

C.V.O. CA'S NEWS & VIEWS

FOR MEMBERS / SUBSCRIBERS / VOL. 22 - NO. 3 & 4 - SEPTEMBER - OCTOBER 2018

Follow us on , , LinkedIn@cvocain Join Yahoo group : [email protected]

From President's Desk...

Mumbai, 15th October, 2018

Dear Professional Colleagues and Readers,

Asian Games and CA profession

In the history of Asian games Indian athletes have given their best performance by winning 69 medals in

various games in Jakarta–Palembang 2018 . Uniqueness of this medal tally in these games was that Indian athletes

won medals in sports where Indians were not performing well like Badminton ,Equestrian , Squash, table tennis,

Kurash, Wushu... and Indian athletes have not performed well in their core games like Kabbadi, Hockey and boxing.

We can relate these new sports with new opportunities and challenges available in our profession like GST,

forensic audits, Risk assessment, and many more opportunities. We should think beyond our core area of practice

and start developing ourselves in to new area of practice where competition is comparatively less.

Goods and Service Tax

Goods and Service tax is still settling. We at CVO CA for the benefits of member's are coming up with various

articles on GST and changes in the law in every news letter. In current issue articles on GST annual return, GST audit,

TDS and TCS provisions under GST and recent changes in GST are included.

Government is trying to make GST more simpler but same is creating more hurdle for professionals like matching data

of input credit with GSTR-2A and that delays finalisation of books of account and completion of audits, we hope

government come up with more simpler mechanism in GST for the benefit of the business community and more for

professionals.

Income tax

In last budget long term capital gain on shares is reintroduced and market has taken it in negative manner.

Market corrected majorly after introduction of LTCG on stock. Article on mechanism of LTCG on shares is included in

current issue for the benefit of the members.

Member's family picnic is planned at City of Nawab , Hydrabad between 31st January and 3rd February 2019

So those who are interested are requested to kindly enrol at earliest .

Jeevdaya Paramo Dharma

Frequency of drought in Kutch is after every 2.5 years, this year also Kutch is witnessing drought as there is no

rain throughout the year resulting in prolonged shortage of water and fodder . I appeal to help in cash or kind for the

fodder of animals.

Deepavali and New Samvat Year

Deepavali is the biggest and most prominent festival celebareted across India and the Globe. It is mark of

victory of good over evil. It is Nirvana day of Thirthankar Mahaveera.

In Sanskrit Deepavali means Rows of Lights. May this Deepavali light up new dreams, Fresh hopes, everything bright &

beautiful and fill your days with surprises.Happy Deepavali of Samavat 2074 and Prosperous New 2075 Samvat Year!

Program at CVO CA

After the busy schedule of working season next few months will be

very hectic in terms of activities of CVO CA like Public program, Study

circles, RRC, Students programs, Sports, and meetings for the benefit of

members, students, public at large. I request all members and students to

extend whole hearted support and take active participation in all the

activities of the association. CA Sunil V. Dedhia

Thank you all..... Always in Gratitude

Continuing our discussion , We all have observed and celebrated the th thParyushan Parva from 6 Sept to 13 Sept 2018 The fragrance and cream

of Paryushan Parva is Samvatsari Pratikraman,, Confession /Forgiveness a

tradition of seeking forgiveness once a year from everyone whom one has

wronged, be it in thought, word or action, as well as being forgiving. The

tradition of seeking forgiveness is very wide in scope to include family, friends

and all living beings. The culmination of confession is in receiving forgiveness

from all living beings and also forgiving everyone, including oneself. The

tradition of forgiveness is sometimes called the rite of universal friendship. It

is a process for cleaning/healing which really lightens the burden of one's

heart. It frees the mind of the guilt, which troubles us throughout our lives.

Unlike what people think it means when they say it, Michhami

Dukkadam does not mean (at least literally), “I seek your forgiveness & I

forgive you”. Michhami comes from two words - Michha and Mi - meaning

futile/useless and my/mine. Dukkadam means bad deeds. So the meaning of

the complete phrase is “May my bad deeds (faults) become futile”. In other

words “please forgive me”. Old quarrels are forgotten and friendships and

relationships renewed, as we fold our hands and ask for “Michhami

Dukkadam” or forgiveness.

Forgiveness asked for has to be with a true feeling of repentance and not a

mere formality of superfluously saying Sorry or MICHHAMI DUKKADAM.

Sincerity is the essence of asking for forgiveness and it has to come from the

heart.

We all like to believe that we are right, howsoever wrong we may be. This

makes seeking forgiveness a difficult task. The first and foremost difficult

step is to accept and realize that we have been wrong. Even when we realise

that we have been wrong, we hesitate, we shudder to admit our mistake. Yes,

Sorry is the hardest word! It looks like losing one's face and involves

overcoming one's ego. Even a small child does not like to admit that he is

wrong; and discovers a hundred excuses to defend his action. The question

is: Is this correct? I believe that when one admits that one is wrong, one does

not shrink but instead grows taller in the eyes of others. Even their self-

esteem increases. Everyone makes mistake; only a few have the courage to

admit their mistakes.

It is said that forgiving is a quality of the brave. One can also say that

FROM THE DESK OF CHAIRMAN

PRAYER PRAYER (PRARTHANA) (PRARTHANA) III

NEWS BULLETINNEWS BULLETINCOMMITEECOMMITEE

PresidentCA Sunil Dedhia

Chairman CA Dinesh Shah Convenor CA Mehul Gala Jt. Convenor CA Parin Gala Sp. Invitees CA Rakesh Vora

Members CA Hitesh Pasad CA Paras Maru CA Virav Dedhia CA Viral Satra CA Deepesh Chheda CA Keval Satra CA Jinit Bheda CA Nisha Gala

CONTENTSCONTENTS

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CA DINESH SHAH

C.V.O. CA'S NEWS & VIEWSVOL. 22 - NO. 3 & 4 - SEPTEMBER - OCTOBER 2018

KÉ©ÉÉ ´ÉÒù»«É §ÉÚºÉiÉ©ÉÃ

Association news ................................4

Annual activity plan .............................7

First things first....................................8

Superstition .......................................10

Comeback of Long term capital -

Gains.................................................12

Recent Amendments in GST ............14

The issues around place of-

removal .............................................19

GST audit an overview......................21

Annual returns under GST ................26

TDS and TCS provisions -

under GST ........................................36

GST on Special-

Economic zone .................................39

Sebi and Corporate law updates.......45

FEMA updates ..................................47

Direct Tax updates ............................49

GST updates.....................................52

...CONT’D FROM PG. 1

asking for forgiveness is equally a quality of the brave. If one

realises that one has wronged someone, asking for forgiveness has

to be prompt. It is no use waiting for days and weeks to apologize.

Just as justice delayed is justice denied, asking for belated

forgiveness is meaningless. The charm of spontaneity is lost, and

the action becomes formal, instead of being heartfelt. We must treat others the way we want to be treated.

Asking for forgiveness does not merely end with conveying one's apology. It must be accompanied by possible

remedial action and redressal of the wrong. It must also go along with a resolve not to repeat such an action, and

also convey this in clear terms to the person whom one has wronged. Let us then, pick up courage, and whenever

we wrong someone, recognize and admit our mistake, ask for forgiveness and redress the wrong done.

“To err, even grievously, is human. But it is human only if there is determination to mend the error and not

to repeat it. The error will be forgotten if the promise is fully redeemed.”

- Mahatma Gandhi

Even more difficult than asking for forgiveness, is forgiving others, who, we believe, have wronged us and

against whom we hold a grudge. We never heal until we forgive. However, we seldom let go of the feeling of

anger, which, many a time, drives people to do all sorts of vengeful acts. We tend to cling to those hurts, real or

imaginary, as if our life depends on them. Many a time, small acts or even a few words, spoken with no

intention of harming, create hurts which are carried along lifelong and sometimes even to the grave. There are

known cases where family feuds have gone on for generations.

Many of us carry the feeling of guilt for any wrong deeds which we may have committed, but there is no one

in the world who has not done a wrong step. Accepting our mistake, sincerely repenting for the same, trying to

undo the damage, asking for forgiveness from the wronged one and resolving not to falter again is the only way

to get rid of the guilt. Having shed the burden of guilt, having dropped that baggage of negative emotion, our

journey would be easier, smoother and faster.

May we then resolve to clean our slate, ask for forgiveness of everyone whom we have wronged, forgive

everyone who we believe has wronged us, and even forgive ourselves for all the wrong deeds committed by us in

the past, resolve not to deviate and travel on the right path.

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SE O UH L T I S. O. N Y . J O EU R N

TREAT OTHER THE WAY YOU WANT TO BE...

REMEMBER !!

Khamemi savve jeeva (I grant forgiveness to all)

Savve jeeva khamantu me (May all living beings grant me forgiveness)

Mitti me savva bhuesu (My friendship is with all living beings)

Vairam majham na kenai (My enemy is totally non-existent)

Michchami Dukkadam (May all my faults be dissolved)

Universal Forgiveness and Friendship Prayer / Kshamapan Sutra:

FROM THE DESK OF CHAIRMAN

PRAYER PRAYER (PRARTHANA)(PRARTHANA)


CA PARIN GALACA MEHUL GALA

ASSOCIATION NEWSASSOCIATION NEWS Compiled by:

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ASSOCIATION NEWSASSOCIATION NEWSEVENTS IN EVENTS IN RETROSPECTRETROSPECT

SHREYA CHETAN NAGDAVillage: RamaniyaResiding: Malad (E)Mobile: 9920480221Email: [email protected]

VRUSHALI DINESH DEDHIAVillage: GhadsisaResiding: Borivali (W)Mobile: 9833783931Email: [email protected]

HARSH MANOJ DEDHIAVillage: BhujpurResiding: BorivaliMobile: 9773865215Email: [email protected]

RUSHABH KANTILAL DEDHIAVillage: PragpurResiding: Kandivali (W)Mobile: 9699466335Email: [email protected]

KINJAL MEHUL HARIAVillage: HalapurResiding: MulundEmail: [email protected]: [email protected]

KENIL VIJAY DHARODVillage: ChhassaraResiding: Bhandup WestMobile: 8082701226Email: [email protected]

JIGAR NAVIN BHEDAVillage: MokhaResiding: ThaneMobile: 9664286624Email: [email protected]

PARAS MANOJ MARUVillage: BidadaResiding: Curry RoadMobile: 9870767660Email: [email protected]

HET DHANJI BHEDAVillage: KAPAYAResiding: Mulund WestMobile: 8433634400Email: [email protected]

AKSHAY MUKESH GALAVillage: SadauResiding: ChinchpokliMobile: 8169212566Email: [email protected]

NEW MEMBERS ENROLLED

Session was well conducted by CA Jeel Gosar, giving detailed analysis of what needs to be reported under various clauses of Tax Audit. It was an interactive session along with practical issues raised by the faculty. Students were amazed with the presentation made by the faculty. In all around 111 students attended the Seminar.

STUDENTS COMMITTEE

Seminar on Provisions of Tax Audit

Speaker : CA Jeel Gosar

Date : 13th August 2018

Venue: Chincpokhli Mahajan Wadi

Seminar was well conducted by CA Punit Mehta, wherein he has dealt with how to use tally for generating various reports and use the same for the Audit purpose. It was a very lively session, wherein various issues were raised by the students and were answered by faculty. CA Punit Mehta also explained how you can generate various reports for various clauses to be reported under Form 3CD, thereby saving time for doing audits. In all around 38 students took the benefit of the seminar.

STUDENTS COMMITTEE

Seminar on Use of Tally as an AUDIT TOOL

Speaker : CA Punit Mehta

Date : 23rd August 2018

Venue : D R Ghalla Hall, Jasmine Apartments, Dadar


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Often referred to as the "Pearl City of India" Hyderabad reflects the charm of Nizam's era at every nook

and corner. Encompassing of historically rich and culturally rooted tourist attractions, the city turns out to be

quite a charmer. Veritable melting pot of the old and the new, Hyderabad, also known as the City of the

Nawabs, is a city that exudes an old-world charm of its own while still coexisting with the rapidly growing

onslaught of commercialization in perfect harmony. Steeped in history, Hyderabad is home to old mosques

and bazaars lined parallelly alongside swanky new office buildings and malls, and it is these very contrasts -

these glimpses into the city's rich past with inherent promises of an even better future - this is what exactly

makes Hyderabad a city worth visiting. Maybe even more than once.

The most iconic landmark of Hyderabad is the Charminar, which is a distinguished monument that

clearly exhibits the Indo-Islamic architecture of its times. Charminar, which literally translates to four

minarets, is built entirely out of limestone and granite, with four minarets on four sides, each of them facing a

different street. The Charminar is the oldest mosque in Hyderabad, and it has stairs leading to the second

level, which is open for devotees to come and pray in. The entire stretch outside the monument is lined with

little stalls selling pearls, bangles, and other jewellery, and this bazaar is bustling with both tourists and locals

at any given hour of the day.

Another impressive tourist attraction in Hyderabad is the Golconda Fort, which was considered as

nothing less than an architectural marvel during its times. The entire fort is bordered by a 10-kilometre long

wall, and with over 80 bastions, four drawbridges, and several mosques, halls and royal residences, the fort is

FORTHCOMING EVENTSFORTHCOMING EVENTSJoin us for the fun filled trip to Hyderabad.Join us for the fun filled trip to Hyderabad.

Hyderabad ki VishestaHyderabad ki Vishesta

Dinner and a movie, forget that, I'd rather have a picnic and a waterfall

- Amanda Grace.

After working so hard, it's time to travel harder with

CVOCA????.

Join us for a trip to city that can make you smile with

only its unique language, a city that takes you back

to the pages of history, a city that can tickle your

taste buds with its delicious cuisines! ????

Let's visit the iconic 'City of Nawabs' & explore the

extraordinary Ramoji Film City* which gives a

glimpse of the magical world of cinema??

Date: Wed 30-Jan-19 (night) to

Sun 03-Feb-19 (evening)

Venue: Leonia Hol ist ic Dest inat ion,

Hyderabad

Charges: Rs. 17,500/pax double

occupancy

extra pax @ Rs.14,200 (> 12 yrs),

Rs.12,500 (6 - 12 yrs), Rs.6,500 (< 6 yrs)

Incl. Stay, Food, Sightseeing & 3AC Train

travel to Hyderabad (excl. flights to

Mumbai)

Registration @ https://goo.gl/Qb87ip


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DAY-NIGHT BOX CRICKET LEAGUEDAY-NIGHT BOX CRICKET LEAGUE

For team registration or any clarification, please contact -

CA Harsh Soni: 9664263564 CA Umang Soni: 9773533468CA Harsh Soni: 9664263564 CA Umang Soni: 9773533468

All work and no play makes Jack a dull boy. Let's all get together to play & have fun.

CVOCA organising Day-Night Box Cricket League 2.0 for emerging Kohlis, Sharmas, Dhonis, Bumrahs, Yadavs on

Saturday, 01-December-18

12.30 p.m. onwards at

Dr Antonio D'Silva Turf, Dadar (W)

CVOCA Members, their relatives (Parents, Kids & Spouse only) with age more than 12 years

Tournament will be played in an "Ownership Structure", whereby CVOCA Member will own team/(s) with maximum 4 own players. Other players would be allotted by the committee.

Register online @ https://goo.gl/vVZAjn Registration closure date: 21-Nov & Team formation date: 23-Nov

Charges:Male team ownership: Rs. 4,000

Female team ownership: Rs. 2,000Individual registration: Rs. 200 / person

Snacks & Dinner

nothing short of imperial. Today, while most of the fort is in ruins, hints of its regal ambience and its past

grandiose still linger on.

Hyderabad is very famous for being home to the Ramoji Film City, which is the largest film studio complex

in the entire world. Built across a sprawling 2000 acres, the Ramoji Film City has seen a huge number of

regional language, Hindi, and even some international films being shot here. Apart from offering studio tours,

it even provides options for quite a number of sports and adventure activities, making it a very popular

hangout for the younger generation. Who knows, you might even get to meet an actor there!

An oasis in the midst of an otherwise landlocked city, Hussain Sagar Lake in Hyderabad is an entirely

manmade lake which boasts of a 450-tonne statue of Buddha in the middle of the lake. Carved entirely out of

white granite, the monolith shines brightly under the moonlight and is a beautiful place to sit and spend an

evening under the stars.

Hyderabad is famous for its food, and be it street food to casual dining to high-class fancy dining - you

name it, and Hyderabad has it. Old City is teeming with dozens of roadside eateries where you can have your

fill of lip-smacking biryani and kebabs.

Join us for the fun filled trip to Hyderabad.


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ANNUAL ACTIVITY PLAN ANNUAL ACTIVITY PLAN

PROGRAM COMMITTEE

To organise programs on the following ·topics: How to ensure organisations

working for social cause are CSR

compliant

Managing wealth considering Indian ·economy in an organised way

Surveys and Search· Capital Markets and Indian Economy·

NEWS BULLETIN COMMITTEE

To publish monthly Bulletin on articles of ·professional and non- professional

interest. To publish special issues on

current topics and specific topics like

GST, Capital Market, FEMA, and

Corporate Laws.

Recent updates under various laws along ·with unreported decisions under various

laws.

N e w M e m b e r ' s p h o t o s a n d ·congratulations column to be given as

and when it happens.

STUDY CIRCLE COMMITTEE

Study circle meetings on various topics· Study courses on different areas of ·

profession

To conduct Workshops · To increase membership of study circle·

RRC & PD COMMITTEE

One RRC for 3 days· Lectures on practice development, how ·

to read big data, etc.

STUDENTS COMMITTEE

Orientation on How to Prepare for Exams· Study circle on various topics relating to ·

practice

Two days NRRC· Educational Assistance Activities· To increase the membership of students·

YIMEC COMMITTEE

Trekking· Board games / Treasure hunt, Moonlight ·

cycling, Yoga sessions

Youth RRC·CAPITAL MARKET COMMITTEE

2 days RRC· Industrial visit· Lectures on SME, current scenario on ·

capital market

PUBLICATION AND TRAINING COMMITTEE

Karvera Na Atapatta in Patrika· Reference books on various topics· Conducting CCA course· Providing books at discounts·

MEMBERSHIP COMMITTEE

Picnic for members· Sports day· Career Guidance Seminar for newly ·

passed Ca's

Felicitation of Newly Passed Ca's· Special membership drive·

- Compiled by CA Mehul Gala and CA Parin Gala

CA PARIN GALACA MEHUL GALA


- By CA Nisha Gala

W hen we were younger, getting up on a Sunday morning and

finishing that unfinished puzzle or jigsaw of last night was the top priority. We would instantly get on to the act, until, weheard our mother call out, "finish your breakfast first"!

Who cared about breakfast? Whose priority was it, our's or our mother's?

Even, as we have grown up, our everyday routine and the things we do, are more than often driven by other people or external circumstances, unless ofcourse, there is a conscious effort to not allow them to do so!

E.g. We get on to our work desk, we have a list of the things to do for the day. We check our e-mails and receive an unexpected mail from a client and our immediate action is to respond to the client. This may probably eat away an hour to a day, depending upon the subject matter. So, shouldn't we respond, isn't it important? Well, it's these kind of everyday situations whenwe decide, what comes first! Put First Things First is one of the habits described in the book "The Seven Habits of Highly Effective People", by Stephen Covey.

Ironically, deciding what to be done first, is one of the toughest challenges a lot of us face!

The reason - We seldom CONSCIOUSLY DECIDE. We often are just driven or dragged by the things and the work that confront us or are apparently before us, and tend to act like the Ninja warrior, battling through! Here are some possible reasons for not being able to do the things we ought to do first (with no particular order of relevance) :-

Procrastination: P r o c r a s t i n a t i o n i s d e f i n e d a s t h e

habitual/intentional delay of starting or finishing a task despite its negative consequences. This habit can get very serious and deeply rooted.

e.g. A day before the exam , you may observe a teenage student feeling a lot

more hungrier, taking frequent breaks , wanting to take a walk for some fresh air, wanting to speak to a friend to solve queries and even cleaning up his otherwise messed up room . All these could be signs of anxiety or fear which make him delay going back to books, which he ought to. For him everything e l s e b e c o m e s a p r i o r i t y. H e

procrastinates to de-stress. Visiting the Social media, is again, a sign of

procrastination. In the middle of something important that we are working on, there is a strong urge to take a break and go to the social media sites and before we even realise, the break becomes longer than we envisaged.

The reasons could be varied. But, the way to get rid of procrastination is to be aware of it, accept that you need to get rid of it and then work on it.

(Here is a link to one of the videos by Mel Robbins, an author and motivational speaker, on the topic https://www.youtube.com/watch?v=CFu_58AnT0g)

Multiple Priorities Choosing one thing over the

other, is always a challenge, be it work or relations, clothes or even our favourite food.

We are juggling with multiple priorities all the time, and the reason we juggle, is that we don't want to let go of either one.

Ever noticed a Juggler, juggling balls or bottles? Even the expert, starts with the minimum he can handle, stabilises and then keeps adding further balls or tricks.

That precisely is the trick. While dealing with priorities, we must try and take in as much we can handle. Emotions, social responsibility, mental blocks, physical limitations, all play a crucial role are helping us fix them. And being aware of how much wecan handle, can come only through personal introspection.

Lack of Organising capabilities. Doing and then re-doing, keeping and then keep

finding, deciding and re-visiting the decision, planning and then diverting from the plan, these are all a part and parcel of our work and the activities

FIRST THINGS FIRST FIRST THINGS FIRST

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that we do. Being organised, helps reduce the stress and the

frustrations that may arise in doing the above. e.g. Always having a stock of passport size

photographs and even a soft copy in the email.

A pre-decided path and process to save everyday files and documents and retrieve them

A pre-determined process to deal with e-mails, acting, forwarding, storing , deleting etc.

Preparing flowcharts , checklists , summary notes , minutes , agenda , etc.

All the above are examples of organising, while at work.

From small everyday routine to handling big projects , an organised approach always helps in delivering the best. Some have an inborn ability of organising, while others have to make conscious and continuous efforts to seek the desired results. The Time to Find the Time

In a hurdle race , on the word go ,an athlete runs fast and then crosses a hurdle and then runs and another hurdle and so on till he reaches the finishing line. Unfortunately for a lot of us , the hurdle race we are in , has no finishing line. One deadline after the other, one challenge after the other, one event after

the other. Even on a holiday, we have an itinerary and a list of things to do and places to visit. Literally, no time to stand and stare !

So when should we find the time to make the'to -do list' or 'work plan' or 'organised time table', because we always have something to finish, before we start something else.

The answer could be RIGHT NOW, if it is really very crucial.

Here is a sample Eisenhower Matrix or the Urgent -Important matrix.

The "Eisenhower Method" stems from a quote attributed to former U.S. President Dwight D. Eisenhower: "I have two kinds of problems, the urgent and the important. The urgent are not important, and the important are never urgent."

An ideal situation could be to :- Manage Quadrant 1 FOCUS on Quadrant 2 Minimise Quadrant 3 Eliminate Quadrant 4

(Read more about the Urgent I m p o r t a n t M a t r i x o n https://www.eisenhower.me/eisenhower-matrix/)

There are many such tools and techniques available for Planning, Prioritisation, Time Management, Achieving Goals.The To do lists , Monthly Plan , Weekly plan , Daily plan , Urgent -Important Matrix , Goal Sheets, Targets , Calender ,ABC analysis all are various tools and techniques , we can adopt and practice. We have a lot of time management apps also, to our rescue.

But these are only Indicative, they provide direction. There are no thumb rules.

W e c a n u s e o u r o w n combination of the various theories and practices to decide what works best for us.

However, what sure is needed, is

Desire,

Discipline,

Determination !


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uman mind is always having some thoughts of Hpast, present or future. Some have creative

thoughts, some have religious thoughts, some have

social thoughts and some have superstitious

thoughts. Some are rationalists whereas there are

many who believe in miracles. Superstition is

creation of mind, because there is nothing like magic

or miracles but everything is result of scientific

reasons. It is only when we do not understand or

know the scientific reason; we believe that there is

miracle or magic. Many a time, it is art also by the

performers of miracles or magic. This equally applies

to blind faith in religions. Due to blind faith many

people fear of unforeseen incidents which creates

superstitious mind and it becomes difficult for such

people to come out of such fear. It is said that there is

no medicine for SUPERSTITION. Mostly ladies are

victims of such fear. The pity is that many educated

people do not understand the scientific reasons

behind anything magical or miraculous and have

blind faith in such activities.

It is said that “there is nothing like fear, it is only

to be understood.” To pray God is of course an act of

faith. It may be any God, Jain, Hindu, Islamic,

Christian or Gurudwara. One has to understand

that there is very thin line of dividing meaning

between faith and blind faith. The prayer is subject of

belief in God. It comes from within one's soul. It has

continuous flow. There is nothing to fear even if no

prayer is performed. Prayer is just for the calmness

of mind. Many people go to Shirdi, Tirupatti, or to

Darshan yatras at various places. These Darshan

yatras are not blind faith, but is for calmness of mind

to satisfy one's inner conscious. Unfortunately now

these places have also become places for enjoyment

during vacations and due to that all types of activities

like drinking alcohol & gambling etc. are being

carried out there. This is not new for so called

developed countries nor for city people.

We know that many of our community people

visit native place for Darshan of Kuldevies etc. So far

it is okay till it relates to Darshan as there is faith in

our Kuldevis. But unfortunately we find the people

exhibiting blind faith in performing poojas &

Darshan in Bhuvas and other Sadhus who play tricks

with such devotees and take undue advantage of their

weakness or fear. They extract money by hook or

crook and make them fools. These type of activities

are rally speaking show our civilized community's

backwardness and blind faith which shows how

much superstitious our people are? One would

question whether it is Darshan or show business or

fear ? Only the answer can be given by such people's

inner soul.

It is said “If mind is clean you have Ganges water

in your pot.”(Mann changa to kathrotme ganga) So it

is due to blind faith if some one directs you to have

Darshan at some fixed time or on fixed day. Faith

never wants evidences for performance of poojas.

Faith needs confidence in oneself. If fear enters in

faith it invites blind faith which is nothing but mental

weakness. Mostly people who have less financial

sources or suffering from lasting sicknesses or suffer

from family disturbances are mainly becoming

superstitious. But really speaking such activities

spoil more the position. It is positive self efforts

which if supports faith, then the positive result is

sure. The activities carried with blind faith normally

create mental sickness.

The science has proved that there is nothing like

miracles. Fear or blind faith are instruments in the

hands of crook people to extract money from people

of weak mind or of straight forward nature by playing

tricks with them and keeping them in blank mind.

Incidents of doubling of money or ornaments by

tricks are common and many ladies or greedy people

are the victims of such looters.

The intention of this write up is mainly to make

educated people understand the science behind every

such incident where the people understand it as

miracle. It is possible that one may not have scientific

solution on the spot, but one thing is sure that

SUPERSTITIONSUPERSTITION

CA Shanti Rambhia


everything is scientific and should try to find out

the solution at later stage. We, the educated people

should not be believer of wrong doings to make

people fool but should educate our nearest and

dearest not to be greedy and fearful of anything but

weigh the situation to come out with positive solution.

It is seen that since a few years many educated people

have become blind followers of activities like VANSA(

dhoon) in PEDIES of our devi-devtas or Jyotises,

Bhoovas Daklias and Bavas , Vastushtris and so on.

The community should come out of these fearful

situations of beliefs in miracles and magic. This is

equally true for Rashi Milap in the matters related to

engagements.

Reki, Vastushashtra, fangsoi etc. are all related

activities carried on by professionals in this line.

They put attractive ads for their business in

performance of miracles which is nothing but

robbery of different kind. They try to brainwash the

weak minded peaple who become the victims of such

professional magicians. Rashi Bhavishyas in

newspapers is nothing but to fill the pages of papers.

It is fact that mind's weakness is nothing but

one's unfaith in God. Gunvant Shah a welknown

writer of Gujarati has said that “To pray idol without

bringing in stoniness of idol is Darshan.”

Unfortunately, our educational institutions do

not teach “not to fear and not to have blind faith” and

in fact, they should impart lessons of courage.

Lastly, “INGENUITY PLUS COURAGE PLUS

WORK EQUALS MIRACLES" said by Olympic gold

medalist Bob Richards. So do not be superstitious

and do not believe in miracles just use your

intelligence and work hard with courage.

11


12

CA Harsh Soni

Before Budget 2018, LTCG arising on transfer of equity shares or units of equity oriented mutual fund or units of a business trust (hereinafter collectively referred as 'equity securities') was exempt from the Income Tax subject to following conditions

* except genuine cases specified in notification no. 43/2017, Dated 5th June 2017

Post amendment in the Finance Act 2018, Long Term Capital Gainson 'equity securities' exceeding Rs. 1 lakh is taxed at rate of 10% without indexation.(Section 112A)

Long-term capital gains arising from transfer of specified assetLTCG from transfer of any listed security orany unit of UTI or mutual fund (whether listed or not),not being

covered under Section112A,and Zero coupon bonds shall have the following options:a. Capital gains taxed at 20% with benefit of indexationb. Capital gains taxed at 10% without benefit of indexationThe selection of the option is available to the assesse based on lower tax liability.In the case of an individual or a HUF, being a resident, if total income, excluding such long-term capital

gains is below the maximum amount not chargeable to income-tax, then the long-term capital gains shall be reduced by difference between total income and maximum amount which is not chargeable to income-tax.

As per section 48, cost of acquisition of such assets will be higher of:a. Actual Cost of Acquisition ANDb. Lower of: Fair Market Value (FMV)* of such asset as on 31st January 2018 OR Sale value of such asset*FMV, in case of listed shares or units will be the highest value ofsuch share or unit on recognised stock

exchange on 31st January 2018. If there is no trading on 31st January 2018, then FMV will be the highest value on day immediately preceding31st January 2018whensuch asset was tradedon recognised stock exchange. In case of unlisted unit, FMV will be the net asset value of such unit on 31st January 2018.

The FMV of the bonus shares and right shares as on 31st January 2018 will be taken as cost of acquisition and hence, the gains accrued upto 31st January 2018 will continue to be exempt.

Let us understand the above with examples:

COMEBACK OF LONG TERM CAPITAL GAIN (LTCG) COMEBACK OF LONG TERM CAPITAL GAIN (LTCG)

TAX IN STOCK MARKET FROM FY 2018-19TAX IN STOCK MARKET FROM FY 2018-19

Particulars Equity share in a

company

Unit of an equity oriented mutual fund or unit

of a business trust Securities

Transaction Tax

paid on acquisition * and

transfer

paid on transfer

Actual Cost on 1st April 2016 A 100 100 100 100

FMV as on 31stJanuary 2018 B 200 200 50 200

Sale Value on 1st April 2018 C 250 150 150 50

Cost of Acquisition as per above method

[Max of {A and Min of (B&C)}] D 200 150 100 100

Capital Gain / (Loss) (C-D) 50 0 50 (50)

Particulars Case 1 Case 2 Case 3 Case 4


13

Summary of Taxability on Long Term Capital Gains on sale of equity shares or units:

Widening the definition of 'equity oriented fund' i.e. fund set up under a scheme specified in section 10 (23D) with inclusion of -

1. Fund of Funds (FOF) which are traded on a recognised stock exchange& asset allocation of FOF should have at east 90% in such other underlying fund which in turn invests minimum 90% of proceeds in the equity shares of listed domestic companies

2. Any Fund which invest minimum 65% of the total proceeds in the equity shares of listed domestic companies

The above % of equity shareholding or unit held in respect of the fund, as the case may be, shall be computed with reference to the annual average of the monthly averages of the opening and closing shareholding pattern.

Long Term Capital Loss Sale between 1st February 2018 and 31st March 2018 -Since the exemption under section 10(38) will be available for sale executed up to 31st March 2018, loss

arising during above said period will not be allowed to be set off or carried forward. Sale after 1st April 2018 -Loss arising from sale can be set-off against any other long term capital gains and balance loss can be

carried forward to subsequent eight years for set-off against long term capital gains.

SR. NO. PURCHASE SALE TAX IMPLICATION

1 Before 31st January 2018 Before 31st January 2018 LTCGis exempt under section 10(38)

2 Before 31st January 2018 After 31st January 2018

but before 1st April 2018

3 Before 31st January 2018 On or after 1st April 2018 " LTCGis taxable.

" Capital gains to be computed

4 After 31st January 2018 After 1st April 2018 in the manner stated above.


14

Goods and Service Tax (GST) has been the pet project of the Central Government since the time of UPA-I and groundwork for the same was laid with the introduction of Cenvat Credit Rules, 2004. The present Government of NDA has been able to implement the biggest tax reform of independent India with infamous glitches and difficulties faced by trade and industry on a daily basis.

Sensing a need for making certain changes in the new law to address the issues faced by the assessees, amendments have been brought in by way of Central Goods and Service Tax (Amendment) Act, 2018. Since similar amendments will have to be made by all the State Legislatures, most of the provisions of this Amendment Act will be effective once CBIC notifies of the same.

At the outset I would like to Thank our President - CA Sunil Dedhia, Vice President - CA Sanjay Chheda, Managing Committee Member - CA Chintan Rambhia and Publication and Training Committee to provide this opportunity to me to write for this magazine. It must be noted that this article deals with amendments to CGST Act, 2017 other than those related to Input Tax Credit. Some of the major changes introduced by the Amendment Act are as follows:

1. Changes in Registration Provisions under GST.

1.1 As per Section 25(2) of CGST Act, 2017 any person seeking registration under the Act shall be granted a single registration in the same State or Union Territory. However, separate/multiple registrations can be obtained in the same State/UT in case of separate business verticals. This condition has been done away with, and assessees shall be eligible to obtain multiple registrations in the same State/UT for the same business vertical. In doing so, definition of 'business vertical' as given in Section 2(18) of CGST Act, 2017 has been deleted from the Act.

Say for e.g. Mr. A is in the business of manufacturing clothes having factories in Mumbai and Yavatmal in Maharashtra. Under the current provisions, he was

eligible to obtain only one GSTIN for both the premises. However, under the new law, he will be able to obtain separate registrations for Mumbai and Yavatmal premises.

It must be noted that rules, procedures and guidelines to do so have not been notified and various questions like transfer of ITC etc. remain unanswered and can be addressed only once these rules/guidelines are issued by the Government.

1.2 Under the current provisions, assessee having a unit in DTA and another unit in SEZ was allowed to register the premises separately treating SEZ unit as a separate 'business vertical'. But, with the concept of 'business vertical' being done away with, the Act has now been amended to allow separate registration for SEZ and for DTA unit similar to the one discussed above in 1.1.

1.3 As per Section 22(1) of CGST Act, 2017, any person located in special category state having a turnover upto Rs. 10 Lakhs is liable to get registered under GST. After the amendment, for the purpose ofprovisions of registration, the States of Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand will be excluded from the list of special category states for the purpose of registration thereby increasing the limit for registration to Rs. 20 Lakhs from current Rs. 10 Lakhs.

1.4 Under the current law, under Section 24, an e-commerce operator (ECO) is compulsorily required to take registration under GST irrespective of the turnover of such ECO. However, these provisions have been amended to provide that compulsory registration is applicable only to those ECOs who are liable to Collect Tax at Source (TCS). An ECO who is not required to collect tax at source will not be required to obtain registrations under GST if his turnover does not cross the threshold limit.

1.5 Under Section 29 of the CGST Act, 2017 any person who has either discontinued the business, sold the business, or there is a change in the constitution of the business or any other reason as covered therein shall apply for cancellation of the

RECENT AMENDMENTS IN RECENT AMENDMENTS IN G S TG S T

- Law Update

CA Deep R. Chheda


15

registration which shall be subsequently approved by the proper officer. However, till the time such approval is received, the assessee is required to comply with all the provisions of the GST Law like filing of returns etc. However, the amendment has introduced the concept of suspension of registration. Once the assessee applies for cancellation of registration, the GSTIN stands suspended till the proper officer approves the cancellation. Benefit of the cancellation is that the assessee is not required to comply with any provisions of the GST law. This move is likely to reduce the burden of compliance on the common man. It must be noted that procedures and Rules in this regard have not yet been issued by the Department and practical hurdles will be clear only once the same is issued.

2. Changes in Reverse Charge Mechanism (RCM).

Under the current law, tax is payable under reverse charge mechanism under Section 9(3) of CGST Act for notified supplies like sponsorship service, GTA service, advocate services, etc. and under Section 9(4) of the Act on inward supplies received from unregistered suppliers. While payment of tax under Section 9(3) is ongoing, payment of tax under Section 9(4) has been exempted vide Notification No. 22/2018 – CT (Rate) dated 06.08.2018 till 30.09.2019.

Now, Section 9(4) has been amended to provide that tax under reverse charge on supplies received from unregistered suppliers must be paid only by notified class of persons on notified types of supplies. Since the requirement to pay such tax under RCM has been exempted till 30.09.2019, the class of persons liable to pay tax on specified services is not expected to be notified anytime soon.

Therefore, upto 30.09.2019 tax under RCM needs to be paid only those services which have been notified in Notification No. 13/2017 – CT (Rate) dated 28.06.2017 and for payment of tax under RCM under Section 9(4), we will have to wait for government to notify the 'specified class of persons' and 'specified types of services.'

3. Changes in Composition levy.

3.1 Under Section 10(1) of CGST Act, 2017 any registered person having an aggregate turnover in the preceding financial year upto Rs. 50 Lakhs from supply of only goods was eligible to opt for composition scheme. Further, the Government had been empowered to increase this limit upto Rs. 1

Crores. This section has now been amended to allow the Government to increase the maximum ceiling upto Rs. 1.5 crores. This move is widely anticipated to provide relief to thousands of MSMEs who will now be able to opt for composition scheme and save a lot of money and manpower on GST compliances.

3.2 A supplier of only goods was allowed to opt for composition scheme. Any person who supplied services or both goods and services was not allowed to opt for composition scheme under Section 10(2) of the Act. The said condition has been tweaked to allow composition suppliers to also supply services upto 10% of their turnover of the preceding FY or Rs. 5 Lakhs, whichever is higher.

Say for e.g. Mr. A is trading in electronics and in addition to that also undertakes annual maintenance contracts of such electronics as a value additional service and charges to his customers separately for such AMC. Under the current law, he would be ineligible to opt for composition scheme. However, after the amendment, he will be able to opt for composition scheme, provided turnover from supply of service does not cross the threshold limit mentioned therein.

4. Credit Note and Debit Note.

Whenever there is an increase or decrease in the value of supply made during a financial year for which an invoice has been issued needs to be given impact by issuance of Credit Note [for reduction in value under Section 34(1) of CGST Act, 2017] and Debit Note / supplementary invoice [for increase in value under Section 34(3) of CGST Act, 2017].

Format of Credit note and Debit note has been given in Rule 53 of CGST Rules. As per these rules, no. of invoice against which such credit note or debit note has been raised needs to be mentioned. On the GST portal, only one invoice no. can be input in one credit/debit note. Thereby implying that one separate credit / debit note needs to be made for each invoice separately. Due to this several practical difficulties have been faced by the Trade and Industry where year end discounts based on performance of the recipient are passed on to the recipient as per the agreement between supplier and recipient.

According to the amendment, assessee will be allowed to issue single consolidated credit / debit note against more than one invoices issued to a single recipient. This amendment can reduce the unwanted duplication of work of issuing multiple credit / debit notes. This will help suppliers to issue a single credit /


16

debit note to pass on discount benefits earned by the recipients across multiple invoices. How the portal allows the assessee to upload these credit / debit note needs to be seen.

5. Order of utilization of Input tax credit.

Under the current GST law, the credit of State tax shall first be utilized towards payment ofState tax and the amount remaining, if any, may be utilized towards payment ofintegrated tax and similar sequence is applicable for unutilized credit balance of central tax. There is no restriction under law as to whether central tax must be first used to pay integrated tax or state tax must be used to pay integrated tax.

However, on GST common portal the credit of State tax/ Union territorytax can be utilized for payment of integrated tax only when the balance of the input taxcredit on account of central tax is not available for payment of integrated tax. There isrestriction placed by GST common portal in the utilization of input tax credit of Statetax/Union territory tax towards payment of integrated tax which is not there in the law.

It is proposed to amend order of cross utilisation to make GST provisions in line withGST common portal and as per proposed amendment the credit of State tax/ Unionterritory tax can be utilized for payment of integrated tax only when the balance of theinput tax credit on account of central tax is not available for payment of integrated tax.

Further, credit of Central Tax/ state tax/ union territory tax shall be utilised towardspayment of integrated tax, Central Tax/ state tax/ union territory tax (as allowed) onlyafter credit of integrated tax has been first utilised fully towards payment of integratedtax.

6. Changes in provisions for exports and refund on exports.

6.1 The principle of unjust enrichment was not applicable in case of refund claim made by suppliers for supply made to SEZ developer/unit. Which means even if the incidence of tax has been passed on to the SEZ unit/developer, the supplier (exporter) supplying goods to the SEZ Unit / developer was eligible to avail refund of tax paid on such export or of unutilised ITC in case of export under LUT. However, after the amendment, the Principal of Unjust Enrichment will apply in case of refund claim arising out of supplies of goods or services made to SEZ

developer/unit and accordingly declaration and certificate from CA/cost accountants stating that incidence of tax or any other amount claimed as refund has not been passed on to any other person will be required in case where person claiming refund in case of supplies made to SEZ unit or developers.

6.2 Section 2(6) of IGST Act defines which supply can be defined as an 'Export of Service'. One of the conditions placed in the said definition is that consideration for such supply needs to be received by the supplier in freely convertible foreign currency. However, in the case of exports to Nepal and Bhutan, the payment is received in Indian rupees as per RBI Regulations. In this respect, various provisions of CGST & IGST Act have been amended to provide that services shall qualify as exports even if the payment for the services supplied is received in Indian rupees as per RBI regulations.

6.3 Under the GST regime, assesses have been allowed to take refund of accumulated ITC on account of inverted duty structure (where rate of tax on outward supply is less than rate of tax on inward supply). Under the current laws, refund application needs to be made within two years of the end of the financial year to which the supply pertains to. After the amendment the relevant date in case of claiming refund of unutilized input tax credit on account of inverted duty structure shall be due date of filing of GSTR 3/ 3B (instead of end of financial year) for the period for which claim for such refund arises. And accordingly, due date for filing of return shall be two years from date of filing of such return.

7. Recovery Provisions.

Business premises of a registered person in more than one State/UT shall be deemed to be distinct persons from each other for the purpose of GST Law. However, when any recovery is to be made from any one GSTIN of a state, recovery can be made from other GSTINs of the same person across other States/UTs.

8. Amendments in Transitional Provisions.

8.1 Under the current law, there is an ambiguity with respect to carry forward of various cess such as KKC, EC, SHEC to GST. The transitional provis ionsare proposed to be amended retrospectively w.e.f. 01.07.2017 to remove such ambiguity andrestrict carry forward of such cess to GST law. In case company has carried forward creditof KKC, ED cess or SHE cess in GST law, the


17

same needs to be reversed. The assessee may apply for refund of such cess once it has been reversed if the amount of the same is substantial. It is a litigative area and clarity can be achieved only once the matter reaches the higher courts.

8.2 Also, additional duty of excise leviable under the Additional Duties of Excise (Textile and Textile Articles) Act, 1978 and any cess which is collected as additional duty of Customs under Customs Tariff Act is not to be considered as eligible duties and taxes for carry forward under GST.

9. Changes in Provisions related to Job Worker

Presently, inputs or capital goods provided to job worker should be returned back to manufacturer within a period of 1 year or 3 years respectively otherwise the same will be subject to GST. As per proposed amendment, Commissioner will be empowered to extend such time limit for a further period up to 1 year or 2 years respectively if sufficient cause shown to him.

10. When any service is received by a registered person in the course or furtherance of his business from any related person or his own establishment situated outside India then the same is deemed to be a supply. But when such services are received by an unregistered person, they are not deemed to be a supply under the current law and therefore, such person is not liable to pay tax on such supply under Reverse charge for import of services. However, the amendment has made it compulsory for an unregistered person receiving services from related person or his own establishment outside India in the course or furtherance of his business shall be liable to be registered under GST and must pay tax under RCM on import of such services.

11. Addition of entries to Schedule III of CGST Act.

The schedule III contains list of transactions which are considered neither as supply ofgoods nor as supply of services. The proposed amendment will bring followingtransaction under ambit of schedule III and accordingly the same will not be considered assupply under GST law:

11.1 Supply of goods purchased from Non-Taxable Territory to another Non-taxable Territory without such goods entering into India. For e.g. Goods are purchased from China and directly transported to Indonesia. In this case the goods have not entered into India and therefore, GST law is not applicable to

these goods. Therefore, the same will not be considered to be a supply under GST.

11.2 Supply of warehoused goods before clearance for home consumption. However, IGST along with BCD will have to be paid by the person getting the goods cleared from the warehouse for home consumption. Only when goods are sold by the importer / subsequent purchaser while the goods are still in warehouse and have not been cleared for home consumption shall not be considered as supply under GST.

11.3 High Seas Sales. Same as 12.1 above, when goods are sold by the importer even before they have entered the Indian territorial waters is not considered as a supply under GST since GST law is not applicable to it. However, similar to 12.2 above once the goods have entered the territorial waters and cleared for home consumption, the person clearing these goods will be liable for payment of BCD and IGST.

It must be noted that these supplies will be considered as 'exempt supplies' for reversal of common ITC as required in Section 17(2) CGST Act, 2017 read with Rule 42 of CGST Rules.

12. Place of supply in case of transportation of Goods service.

In case of goods transportation service, where both the service recipient and supplier are located in India place of supply of such service as per Section 12(8) of IGST Act was the place where the service recipient is located, which would by default be somewhere in India and therefore, tax was payable on such service. Due to this, in case of goods destined for export outside India, exporter being the service recipient had to pay tax on such transportation of service leading to blockage of capital since export of goods is a zero-rated supply.

This anomaly has been rectified by the government and therefore, Section 12(8) has been amended and after the amendment, place of supply of such service shall be the destination of the goods. Therefore, if goods are destined to be exported outside India, place of supply of service of transportation of goods will be such country where the goods have been exported and not the location of service recipient.

13. Other miscellaneous changes:

13.1 The definition of business under GST is being amended to specify that the activities of aRace Club


18

by way of totalizers will be treated as a business under GST.

13.2 The definition of local authority under the GST law will also include the DevelopmentBoard established in the State of Karnataka under the Article 371J of the Constitution.

13.3 The government had issued FAQ in respect of banking and financial services wherein ithad been clarified that all charges like; documentation fees, charges levied in connectionwith the transaction supply of securities will also be subject to GST. In order to removeambiguity and bring more clarity in this respect an appropriate Explanation has beenadded under the definition of the term “Service”. The tax will continue to be paid onvarious types of charges recovered for facilitating or arranging the transactions insecurities.

13.4 The Schedule II of the GST Act specifies certain transaction as supply of goods or supplyof service. The necessary amendments are being made in Section 7 of the GST Act tospecify that Schedule II is only for the purpose of classification of transaction between theservices and goods. Therefore, the transaction stated in Schedule II will not amount tosupply if not made in the course or furtherance of business.

13.5 The amount of VAT on goods like alcoholic liquor etc. levied under entry 92A of list I ofschedule 7 of constitution will be excluded from the value of turnover for distribution ofISD credit.

13.6 Any department of the Central or State Government / local authority whose books ofaccounts are audited by CAG need not get their books of account audited by anyChartered Accountant or Cost Accountant.

13.7 The new formats of GST returns have been approved by GST council. The new provisionsand procedures for furnishing GST returns and availing input tax credit will be provided.

13.8 In the amendments it is proposed to increase the maximum limit of pre-deposit to be made at the time of filing appeal with the Appellate Authority and Appellate tribunal. The same can be seen from the following table:

13.9 The time limit to pay tax & penalty for releasing of goods, conveyance, documents seizedwill be increased to 14 days from existing 7 days.

13.10 The reference to Panchayat under article 243G is sought to be added in the definition ofGovernmental authority.

13.11 The GST will not be payable on supply of service in relation to goods which aretemporarily imported in India for treatment, process, repair works on it and are exportedback after such treatment, process, repair works without being used in India. Presentlythe said transaction is limited to goods imported temporarily for repairs work.

Overall, these amendments are a step taken towards plugging some the loop holes in the system and to address the problems faced by the trade and industry. However, as has been the experience in the past, any good change which has been brought into the system has been hastily implemented and therefore, has increased the problems of the taxpayers rather than reducing the same. Only time can tell whether these amendments will work in favour of the taxpayers or not. Irrespective of the same, role of Chartered Accountants in this ever-dynamic atmosphere becomes more and more important with each passing day.

I hope this article has been of help to each and everyone reading this. Best efforts have been taken to keep the article accurate, concise and free from any bias. However, mistakes are what make us human and rectifying them can only help us become better human beings. Any kind of constructive criticism will be welcomes with open arms and acknowledged with gratitude. On this note, I would like to conclude this article and once again thank CVOCA Association and its members for providing me with this wonderful opportunity.


Particulars

%

of

demand to be deposited

Maximum amount to be deposited

IGST CGST SGST

Appellate Authority

10%

Rs. 50 Crores

Rs. 25 Crores Rs. 25 Crores

Appellate Tribunal 20% Rs. 100 Crores Rs. 50 Crores Rs. 50 Crores

he Central Board of Indirect Taxes and T Customs ('CBIC') has recently issued a Circular No. 1065/4/2018-CX dtd. 8 June 2018. The said circular clarifies the meaning of 'Place of Removal' under the Central Excise Act, 1944 ('CEA') and the CENVAT Credit Rules, 2004 ('CCR').

The term 'place of removal' has a legacy of interpretation and litigation around it for valuation of excisable goods and eligibility of CENVAT Credit on input services. It is in this regards that the Circular tries to clarify the term and settle the litigations.Background:

The term 'Place of Removal' has been defined u/s. 4 of the CEA, which provides for valuation of excisable goods. As per explanation VI to Section 4 of the CEA,

“Place of removal means –i. a factory or any other place or premises of

production or manufacture of the excisable goods;ii. a warehouse or any other place or premises

wherein the excisable goods have been permitted to be deposited without payment of duty;

iii. a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory;

from where such goods are removed;”Earlier, the above definition of place of removal

was not present in the CCR. Rule 2(t) of the CCR provided for assignment of the definitions of words (used but not defined in CCR) from the CEA or Finance Act, 1944.

The Hon'ble Supreme Court (SC) analysed the definition of place of removal in the case of Escorts JCB Ltd. [2002 (146) ELT 31 (SC)]. The Apex Court held that as per Section 39 of the Sale of Goods Act, 1930, the delivery of goods to the carrier is prima facie delivery of goods to the buyer. Even though the transit insurance was in the name of the manufacturer, the risk and rewards of the goods were on the buyer from the time goods left the factory. Thus, the ownership of goods being transferred to the buyer at the factory gate, the factory gate would be the place of removal.

This principle was further upheld in the Apex Court's decision in the case of Prabhat Zarda Factory Ltd. [2002 (146) ELT 497 (SC)].

Consequently, the CBEC issued Section 37B Order No. 59/1/2003-CX dated 3 March 2003 to clarify that the place of removal would have to be determined based on this principle for the purpose of valuation of goods.

Subsequently, the CBEC issued Circular No. 97/8/2007-ST dtd. 23 August 2007 to provide clarity on eligibility of CENVAT Credit on outward transportation of goods. This circular also followed the above mentioned principle to determine place of removal – thus the eligibility of credit up to the place of removal.

The definition of 'place of removal' was inserted in the CCR vide Notification No. 21/2014-CE (NT) dtd. 11 July 2014. In light of the amendment, the CBEC issued Circular No. 988/12/2014-CX dtd. 20 October 2014 and stated that place of removal has to be ascertained in terms of provisions of Central Excise Act r.w. the Sale of Goods Act, 1930.

In the meanwhile, the Hon'ble SC too laid down the principles for determining the place of removal for couple of the valuation cases.

In the case of Accurate Meters Limited [2009 (235) ELT 581 (SC)], it has held that since the delivery of goods to the transporter is delivery to the buyer, sale takes place at the factory gate. Thus, factory gate being the place of removal, transportation and insurance though charged separately cannot be included in the valuation of excisable goods.

Further, the Hon'ble SC also analysed the term 'place of removal' in case of FOR sales in the case of Roofit Industries Limited [2015 (319) ELT 221 (SC) ] and Emco Limited [2015 (332) ELT 394 (SC)]. In these decisions, the Apex Court held that in case of FOR sales – since the responsibility (i.e. transit damage/risk) of the goods was of the manufacturer till delivery to the buyer's premises, the transfer of property in goods to the buyer happens at the buyer's premises and not the factory gate (refers Section 19 of the Sale of Goods Act). Thus, the place of removal would be the buyer's premises.

The above settled principle received a serious blow in the case of Ispat Industries [2015 (324) ELT 670], wherein the Hon'ble SC held that the place of removal has to be referred with reference to the manufacturer of the goods and not the buyer. Thus, the Apex Court held that the buyer's premises can

19

THE ISSUE AROUND THE ISSUE AROUND “PLACE OF REMOVAL”“PLACE OF REMOVAL”

- CA NIHAR S. DHAROD


20

never be the place of removal for a manufacturer.In Ispat's judgement the Hon'ble SC has

distinguished its earlier decisions of Roofit and Emco on the basis of facts. However, the ratio laid down in Ispat's case remains clearly in contrast to the ratio laid down in all its earlier decisions.

In February 2018, the Hon'ble SC pronounced its decision in the case of Ultratech Cement Limited [2018-TIOL-42-SC-CX] on eligibility of input tax credit on outward transportation.

The Apex Court has held that w.e.f. 01 April 2008, CENVAT credit of outward transportation of goods from the place of removal to the buyer's premises would not be eligible. It stated that CBEC's Circular issued in 2007 on eligibility of such credit was in relation to the definition of input services up to 01 April 2008 (prior to its amendment) and thus cannot be relied up on for the period w.e.f. 01 April 2008 (i.e. post amendment).

However, the Hon'ble SC did not analyse the definition of 'place of removal', for which contradictory decisions have been pronounced in the past.Circular No. 1065/4/2018-CX dtd. 8 June 2018:

In light of the aforementioned sequence of events, CBIC has issued this Circular. It is an attempt to put an end to the pending litigation around the term 'place of removal' and its implication on valuation and the CENVAT Credit.

In order to put the issues at rest, this Circular has rescinded Circular no. 988/12/2014-CX dtd. 20 October 2014 and clause (c) of para 8.1 and para 8.2 of the Circular no. 97/8/2007-CX dtd. 23 August 2007.

The Circular has clarified that the general principle for determination of 'place of removal' would be as laid down by the Hon'ble SC in the case of Ispat Limited i.e. place of removal would be with reference to the manufacturer's premises only.

Interestingly, the Circular has created exceptions to the above for Contract for FOR Sales (relying on the Hon'ble SC decisions in the case of Roofit Industries Limited and Emco Limited) and for Export Clearances (relying on its Circular issued in 2015).

Thus, in case of FOR sales (similar to the aforementioned decisions) place of removal would be buyer's premises and in case of exports would be the Port/ICD/CFS.

However, the Circular has explicitly stated that

CENVAT Credit on outward transportation would be

allowed only 'up to the place of removal' (relying on

the recent decision of the Hon'ble SC in the case of

Ultra Tech Cement).Further, the Circular has acknowledged that the

issue is in the nature of interpretation of law but has

surprisingly restricted the scope for invoking

extended period of limitation to the extent of new

show cause notices only.Conclusion:

In case of ex-works sales, the matter seems to ·be settled i.e. place of removal would be

manufacturer's premises only and hence CENVAT

Credit of outward transportation beyond place of

removal would not be allowed; In case of FOR sales, CENVAT Credit would be ·

eligible on the fact that the buyer's premises is the

place of removal (as per the ratio laid in the case of

Roofit Industries and Emco). This view has also been

confirmed by the exception created in the Circular

and would be binding on the Revenue. However, risk

of matter being referred to the Larger Bench ought to

be kept in mind considering the inconsistencies in

the principle laid down in the SC decisions; In case of exports, the benefit of the Circular of ·

2015 and this Circular may be claimed as the same

are binding on the Revenue. However, this seems to

be contradictory to the ratio laid down in the case of

Ispat Industries and may pose some risk; The issue being in the nature of interpretation ·

of law, the exposure (if any) would be limited to tax

and interest only. The Revenue would not be in a

position to invoke extended period of limitation in the

new as well as old matters. Suitable submissions

ought to be made against penal proceedings initiated

or extended period invoked by the Revenue.

Bob R

ichard

s A

merica

n A

thle

te

INGENUITYINGENUITY COURAGE COURAGEWORKWORK MIRACLES=+

+


21

Like the erstwhile Indirect Tax Laws, Good and Service Tax Law ('GST Law')1is also based on the model of self-assessment. A registered person is required to assess his value of taxable supply, applicable tax rates on the same and amount of input tax credit available. A taxpayer has to compute the tax payablethereon and to discharge the computed tax liability.In order to ensure correct and effective compliance of GST laws, audit provisions are incorporated under GST Law.On the auspicious day of Ganesh Chaturthi i.e., 13th of September 2018, Central Board of Indirect Taxes& Customs ('CBIC'), has issued the notification no. 49/2018- Central Tax, to notify Form GSTR 9C to be uploaded electronically along with Annual returns in Form GSTR - 9 on or before 31st December 2018.

¢ Brief Background:In the earlier indirect tax regime, there was no provision for compulsory audit on crossing of the specified turnover threshold under taxes administered by Centre i.e Service Taxor Central Excise. However in the state wise VAT laws provision relating to audit of the books of accounts on crossing of the turnover threshold was there.Under CGST Act 2017, 'audit' has been defined under section 2(13) of the said Act.

"audit" means the examination of records, returns and other documents maintained or furnished by the registered person under this Act or the rules made thereunder or under any other law for the time being in force to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess his compliance with the provisions of this Act or the rules made thereunder;

On quick glance of Form GSTR 9C it appears that the form is essentially a reconciliation statements which reconciles the figures reported in the audited financial statements and Annual return of a taxpayer. However, above definition of the 'audit' indicates that the GST lawmakers had envisaged very wide coverage for audit and our professional brothers may have to think about the scope and coverage of this GST Audit.

CA Mihir Shah

GST AUDIT GST AUDIT - Law Update

AN OVERVIEWAN OVERVIEW

Particulars GST Audit by Registered Persons.

GST Audit by Tax Authorities

Special Audits

Applicable to Compulsory for every registered person on crossing the threshold limit

Applicable only in cases where the tax authorities finds it necessary

Applicable only in the cases where the tax officials finds it necessary based on the complexity of the cases

Governed by Governed by sec 35(5) of the CGST Act.

Governed by sec 65 of the CGST Act.

Governed by sec 66 of the CGST Act.

Auditor appointed by

Auditor is appointed by the Registered Person himself to be conducted by Chartered Accountant or Cost Accountant

Records are Audited by Tax officials themselves

Auditor is appointed by the Tax officials (akin to special audits conducted under Service Tax and Excise regime)

1. GST Law includes, Acts passed by names such as central Goods and Service Tax Act 2017, Integrated Goods and Service Tax Act 2017, State GST Acts, Union Territory GST Acts and rules thereunder


22

Legislative Coverage and its applicability.

Sec 35 (5) of the CGST Act 2017, prescribes "Every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall submit a copy of the audited annual accounts, the reconciliation statement under sub-section (2) of section 44 and such other documents in such form and manner as may be prescribed".

Sec 44(2) of the CGST Act 2017, prescribes "Every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35 shall furnish, electronically, the annual return under sub-section (1) along with a copy of the audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and such other particulars as may be prescribed".

Rule 80(3) of the CGST Rules prescribes "Every registered person whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner".

On perusal of the above provisions it can be observed that every registered person whose aggregate turnover during the financial year exceeds Rs. 2 crore has to get their accounts audited by Chartered Accountants or Cost Accountants and shall submit the prescribed documents.

Section 35(5) of the Act uses the term as 'turnover' and not' aggregate turnover'.However, when read with rule 80(3) of CGST Rules, it appears that turnover limit to get the accounts audited by taxpayer should be 'Aggregate Turnover'.

Aggregate turnover is defined u/s 2(6) as per which following amounts are to be included / excluded from the calculation of the turnover value to determine applicability of Audit u/s 35(5):

Inclusions Exclusions

Value of All Taxable Supplies Value of inward supplies on which tax is paid by a person on reverse charges basis

Exempt supplies (Including outward supplies where tax is to be paid by person receiving such supplies under RCM)

Value of State Tax, Central Tax, Union Territory Tax, Integrated tax and Cess under GST tax Laws.

Value of Export of Goods or Services both

The said Values are to be calculated on PAN India Basis.

Some of the examples for calculation of the Aggregate Turnover for the threshold of Audit are as follows:

Particulars

Example 1 (Rs.)

Example 2

(Rs.)

Example 3

(Rs.)

Maharashtra

Taxable

1.25 crores

0.8 crores

1.25 crores

Exempt

0.8 crores

0.25 crores

0.25 crores

Gujarat Export Supplies 1.6 crores - -

Exempt Supplies 1.2 crores 0.2 crores 0.75 crores

Total Sales 4.85 crores 1.25 crores 2.25 crores

Applicability for Audit Audit Applicable in both the state

of Maharashtra & Gujarat

Audit is not applicable in either of the state.

Audit Applicable in both the state

of Maharashtra & Gujarat


23

As can be observed in Example 3 above, even though the turnover in the state of Gujarat is less than specified turnover of Rs. 2 crores, still GST Audit under section 35(5) of CGST Act has to be conducted since its aggregate turnover (PAN India) is crossing the specified threshold of Rs. 2 crores.Please note, it can be argued that a Rule (Rule 80(3) from which 'aggregate turnover' word is specified) cannot override Section (section 35(5) where only the word 'turnover' has been mentioned). The word 'turnover' is not defined anywhere in the GST Law. The words 'aggregate turnover' or 'turnover in state' are the closest definitions. Since 'turnover' has not been defined, one can interpret section 35(5) threshold by considering these two definitions.A conservative view would be what we have followed in Example 3 above.

Snapshot of FORM GSTR 9C:Below chart briefly explains the flow of the Form GSTR 9C in two major parts that is Reconciliation Statement and Certificate to be issued by the GST Auditor.

Form GSTR 9C

Part A: Reconciliation Statement

Part B: Certification

Reconciliation to be done for amounts as submitted in Annual return and that as per financial statements

Case where reconciliation statement is drawn by the person who had conducted the audit.

Case where reconciliation statement is drawn by any other person other than who has conducted the audit.

Brief comments onPart A of Form GSTR-9C:

Table reference

Particulars Remarks

1-4

Basic Details

In this tab, basic details of the person under audit are to be entered (most likely shall be auto populated).

5A to 8C

Reconciliation of Turnover declared in Annual Financial Statement with turnover declared in Annual Return (GSTR 9)

Following points should be considered while filling these fields:

Statewise revenue as entered in the audited financial statement

to be considered.

Due verification to be undertaken to ensure correct turnover is reported.

The method of revenue recognition may be

different in the financial

statement as compared to recognition of time of supply for GST. (For eg. cash system of accounting followed,revenue recognition for Construction sector etc.)

Turnover not forming part of operating income such as sale of Scrap, Sale of Fixed Assets etc.

Additional requirement for this year will be that the turnover in the financial statement will be for entire year from April 17 to March 2018, however in Annual return it will be for July 2017 to March 2018.

All such adjustments are listed in the reconciliation statement are to be explained in the reconciliation statement from points given in from rows 5A to 5N, and also an additional space is given for the items not fitting under cell 5A to 5N, as 5O.

Once the reconciliation of Gross turnover is done we have to provide reconciliation of the taxable turnover also.

Any un-reconciled

figure at the Gross level or taxable turnover level is to be explained with appropriate reason for the same.


24

Table reference

Particulars

Remarks

Any un-reconciled figure at the Gross level or taxable turnover level is

to be explained with appropriate reason for the same.

9A

to 11

Reconciliation of Tax Paid

In this column, tax rate wise liability is to be given for outward supplies and also for inward supplies liable to reverse charge. If any amount which remains payable shall be shown as un-reconciled payment and the same is

to be explained with appropriate reasons.

12A to 16 Reconciliation of Input Tax Credit (ITC)

Reconciliation is to be done for the ITC availed (net of reversals) as mentioned in the Financial Statement vis -à-vis to the ITC availed as given in the GST Annual Returns.

Also the credit is to be bifurcated expense wise as per the list given inTable 14, along with its value, Total ITC and eligible ITC respectively.

Any difference of such eligible ITC with the amount of ITC as per the annual return is to be explained with appropriate reasons.

Tax Payable if any , due to difference in the eligible ITC and ITC claimed as per Annual Return has to be disclosed.

Point V Auditor’s recommendation on additional liability

The auditor is required to disclose the additional amount payable, due to reconciliation difference as mentioned in the Table 8, Table 10 and Table 16.

Verification

Auditor has to solemnly affirm and declarethe following:

1. True and correct information provided in above tables

2. No concealment of information provided in above tables

One has to be absolutely certain of information provided in Form GSTR 9C while signing the same along with Firm’s stamp

Brief comments on Part B of Form GSTR 9C:

Particulars

FORMAT 1

FORMAT 2

Applicability

Certification by Person who has conducted the audit under any other law

Certification by person other than the person who has conducted the audit under any other law

Examination of Financial Statement

To certify the examination of Balance Sh eet, Profit & Loss Account and Cash Flow Statement

To report that audit was conducted by another person and to annex the Balance Sheet, Profit and Loss Account and Cash Flow Statement.

Certification on the books of Accounts/ records maintained(please refer note below)

To certify whether all the books of accounts, records required as per the GST law are properly maintained and also to confirm the accounting treatment given for the same in the books of accounts

Certification for Form 9C

To certify whether all the information provided in form 9C are true and correct.

Additional observations to Qualification(s) to be provided here.

report


25

Note: Following records needed to be verified while issuing the GST Audit report:

(a) production or manufacture of goods;

(b) inward and outward supply of goods or services or both;

(c) stock of goods;

(d) input tax credit availed;

(e) output tax payable and paid; and

(f) records / documents as prescribed under Rule 56, Rule 57 and Rule 58 of CGST Rules.

Therefore, on examining Form GSTR 9C closely, it can be observed that though major part of the said form is

about reconciliation between financial statement and annual returns filed in form GSTR 9, there is a bigger

onus on a Chartered Accountant to certify Form GSTR 9C which should be considered before starting to

conduct such audits.

Note: The above views of the author are personal and are based on the laws prevailing as on the date of article.


26

ANNUAL RETURNS UNDERANNUAL RETURNS UNDERGSTGST

Compiled by:

CLAUSE BY CLAUSE ANALYSIS OF ANNUAL RETURNS UNDER GST (FORM GSTR – 9)

The hectic audit season is almost on the verge of completion. The extended deadlines shall ensure that all the work in hand shall be completed in a timely manner. However, as our professional community has now experienced, if one deadline is over, then next is already a part of the TO-DO list. One such item in TO-DO list amongst many other items is that of filing Annual return under GST to be filed by 31 December 2018.

BRIEF BACKGROUNDCentral Board of Indirect Taxes & Customs ('CBIC') on 4 September 2018 vide notification no 39/2018 – Central Tax has notified the format of Annual return to be filed by registered dealers (regular) in FORM GSTR – 9 ('Annual return') and by composition dealers under section 10 of CGST Act 2017 in FORM GSTR – 9A.

After detailed analysis of the format, the notified form is not what was expected by most dealers. A closer look of the form along with the instructions annexed with the form, it becomes certain that the annual return to be filed by all the regular registered dealers is nothing but the consolidated summary of returns / statements filed by them during July 2017 to March 2018 in FORM GSTR 3B and FORM GSTR 1. Any additional liability that remained to be reported in such returns / statements, shall not form part of Annual return. The dealers were expecting that inadvertent mistakes could be rectified while filing Annual return.

How to file Annual return form, how to rectify mistakes like additional sales to be reported, additional credit to be claimed etc., forms part of this article. Before answering such questions, let us have a look at the legislative coverage / applicability of Annual return.

LEGISLATIVE COVERAGEAs per Section 44(1) of CGST Act, 2017 read with Rule 80 of CGST Rules 2017, every registered person other than an Input service distributor, a person paying tax under section 51 or 52 (TDS / TCS), a casual taxable person and a non-resident taxable person, shall furnish an annual return in FORM GSTR – 9 electronically on or before 31 December following the end of a financial year (for FY 2017-18, the due date is 31 December 2018).

SNAPSHOT OF FORM GSTR 9

Annual return has been divided in six sections. Following table shall provide the details of the same.

Sr No

Section

Information required

1 Part-I

Basic details of the taxpayer. This detail will be auto -populated.

2 Part-II Details of Outward and Inward supplies declared during the financial year. This detail must be picked up by consolidating summary from all GSTR-1 returns filed in previous FY.

3 Part-III Details of ITC declared in returns filed during the FY. This will be summarised values picked up from all the GSTR 3B returns filed in previous FY.

4 Part-IV Details of tax paid as declared in returns filed during the FY.

5 Part-V

Particulars of the transactions for the previous FY declared in returns of April 2018 to September 2018 of current FY or up to the date of filing of annual return of previous FY whichever is earlier.

6 Part-VI

Other Information comprising details including HSN wise summary information of the

quantity of goods supplied and received with its corresponding Tax details

CA Chintan Rambhia


27

CLAUSE BY CLAUSE ANALYSIS OF ANNUAL RETURN FORM GSTR - 9The notified form has been reproduced along with comments. It is pertinent to note that the comments provided are combination of instructions annexed with the notified form along with comments of the author. The important comments have been highlighted in RED for ease of reference.

“FORM GSTR - 9

(See rule 80)

Annual Return

Pt. I

Basic Details

1

Financial Year

<<Relevant Financial Year for which the form is being filled>>

2

GSTIN

<<GSTIN of the dealer>> This means Annual return needs to be filed for each GSTIN

3A

Legal Name

<<Name as per PAN of the entity>>

3B

Trade Name (if any)

<<Trade name to be entered here>>

Pt. II

Details of Outward and inward supplies declared during the financial year

(Amount i n ₹

in all tables)

Nature of Supplies Taxable Value Central Tax

State Tax / UT

Tax

Integrated Tax

Cess

1 2 3 4 5 6

4 Details of advances, inward and outward supplies on which tax is payable as declared in returns filed during the financial year

A Supplies made to un-registered persons (B2C)

a) This table consists of supply on which GST is applicable / payable. B) Fields shall be filled from relevant tables of GSTR 1 filed during the period July 2017 to March 2018. c) B2C supplies shall be reported net of credit and debit notes.

B Supplies made to registered persons (B2B)

C Zero rated supply (Export) on payment of tax (except supplies to SEZs)

D Supply to SEZs on payment of tax

E Deemed Exports

F Advances on which tax has been paid but invoice has not been issued (not covered under (A) to (E) above)

G Inward supplies on which tax is to be paid on reverse charge basis

To be filled from Table 3.1 (d) of GSTR 3B for the period July 2017 to March 2018

H Sub-total (A to G above) I Credit Notes issued in respect of

transactions specified in (B) to (E) above (-)

Credit notes issued for B2B supplies, Exports, SEZ supplies, Deemed exports as per table 9B of GSTR 1 for July 2017 to March 2018 to be used for filling these details. The original supply must contain GST element

J Debit Notes issued in respect of transactions specified in (B) to (E) above (+)


28

K

Supplies / tax declared through Amendments (+)

Amendments made to B2B supplies, exports, supplies to SEZ and deemed exports, credit notes, debit notes and refund vouchers shall be declared here. Table 9A and Table 9C of FORM GSTR-1

for July 2017 to March 2018

may be

used for filling up these details. The original supply must contain GST element

L Supplies / tax reduced through Amendments

(-)

M

Sub-total (I to L above)

N

Supplies and advances on which tax is to be paid (H + M) above

5 Details of Outward supplies on which tax is not payable as declared in returns filed during the financial year

A Zero rated supply (Export) without payment of tax

a) This table consists of supply on which GST is not applicable / payable. b) Fields shall be filled from relevant tables of GSTR 1 filed during the period July 2017 to March 2018. c) The value of “no supply” (Schedule III supply)

shall also be declared here .

B Supply to SEZs without payment of tax

C Supplies on which tax is to be paid by the recipient on reverse charge basis

D Exempted

E Nil Rated

F Non-GST supply

G Sub-total (A to F above)

H Credit Notes issued in respect of transactions specified

in A to F above (-) Credit notes issued for Exports, SEZ supplies, Deemed exports, Exempted, Nil Rated, Non-GST supply as per table 9B of GSTR 1 of July 2017 to March 2018 to be used for filling these details. The original supply should not contain GST element.

I Debit Notes issued in respect of transactions specified

in A to F above (+)

J Supplies declared through Amendments (+)

Amendments made to B2B supplies, exports, supplies to SEZ and deemed exports, credit notes, debit notes and refund vouchers shall be declared here. Table 9A and Table 9C of FORM GSTR -1 from July 2017 to March 2018

may be used for filling up

these details. The original supply should not contain GST element.

K

Supplies reduced through Amendments (-)

L Sub-Total (H to K above)

M

Turnover on which tax is not to be paid (G + L above)

N

Total Turnover (including advances) (4N + 5M -

4G above)


29

Pt. III

Details of ITC as declared in returns filed during the finan cial year

Description Type Central Tax

State Tax /

Integrated Tax

Cess

UT

Tax

1 2 3 4 5 6

6 Details of ITC availed as declared in returns filed during the financial year

A Total amount of input tax credit availed through FORM GSTR-3B (sum total of Table 4A of FORM GSTR-3B)

Total input tax credit availed in Table 4A of FORM GSTR-3B would be auto-populated here.

B

Inward supplies (other than imports and inward supplies liable to reverse charge but includes services received from SEZs)

Inputs Aggregate value of input tax credit availed on all inward supplies including on which tax is payable on reverse charge, supply of services received from SEZs shall be declared here.

It may be noted that the total ITC availed is to be classified as ITC on inputs, capital goods and input services

(Such details were not to be provided in any of the already filed returns). Table 4(A)(5) of FORM GSTR-3B for July 2017 to March 2018 shall be used for filling up these details.

Capital Goods

Input Services

C

Inward supplies received from unregistered persons liable to reverse charge (other than B above) on which tax is paid & ITC availed

Inputs

Capital Goods

Input Services

D

Inward supplies received from registered persons liable to reverse charge (other than B above) on which tax is paid and ITC availed

Inputs

Capital Goods

Input Services

E

Import of goods (including supplies from SEZs)

Inputs Details of input tax credit availed on import of goods including supply of goods received from SEZs, import of services shall be declared here. It may be noted that the total ITC availed is to be classified as ITC on inputs and capital goods. Refer table 4A(1) and 4A (2) of GSTR 3B for July 2017 to March 2018

Capital Goods

F Import of services (excluding inward supplies from SEZs)

G Input Tax credit received from ISD Aggregate value of input tax credit received from input service distributor shall be declared here. Table 4(A)(4) of FORM GSTR-3B for July 2017 to March 2018 may be used for filling up these details.

H Amount of ITC reclaimed (other than B above) under the provisions of the Act

Example of this could be ITC availed but payment not made to vendor within stipulated time. However, credit reclaimed once the payment has been made to the vendor

I Sub-total (B to H above)


30

J Difference (I -

A above)

K Transition Credit through TRAN -I (including revisions if any)

Details of transition credit received in the electronic credit ledger on filing of FORM GST TRAN-I including revision of TRAN-I (net of revision) and from FORM GST TRAN-2

L Transition Credit through TRAN -II

M Any other ITC availed but not specified above Details of ITC availed through FORM ITC01

and FORM ITC-02 during the financial year 2017-18 shall be declared here

N Sub-total (K to M above)

O Total ITC availed (I + N above)

7 Details of ITC Reversed and Ineligible ITC as declared in returns filed during the financial year

A As per Rule 37 Reversal of credit if payment not made to vendor within stipulated timelines

B As per Rule 39 Distribution of ITC by input service distributor

C As per Rule 42 Reversal of credit on inputs and input services claimed against taxable supply and exempt supply

D As per Rule 43 Reversal of credit on capital goods claimed against taxable supply and exempt supply

E As per section 17(5) Blocked credits F Reversal of TRAN-I credit Reversal of credits claimed in GST TRAN-1

(example: input credit claimed on Krishi Kalyan Cess)

G Reversal of TRAN-II credit Reversal of credits claimed in GST TRAN-2

H Other reversals (pl. specify) Example: Reversal of credits claimed by filing GST FORM ITC 03 (regular dealer opting for composition scheme)

I Total ITC Reversed (A to H above) J Net ITC Available for Utilization (6O - 7I) 8 Other ITC related information A ITC as per GSTR-2A (Table 3 & 5 thereof) This field is Auto populated. This field shall

report aggregate value of all input tax credit reported by corresponding vendors in their GSTR 1

B ITC as per sum total of 6(B) and 6(H) above

<Auto>


31

C ITC on inward supplies (other than imports and inward supplies liable to reverse charge but includes services received from SEZs) received during 2017-18 but availed during April to September, 2018

Input credit pertaining to FY 2017-18 but availed in GSTR 3B return of April 2018 to September 2018 to be declared here.

D

Difference [A-(B+C)]

If the difference is negative, it could mean that the suppliers have not paid taxes & GSTR 1 has not been filed by them. Need to check the actual implementation of this till Annual return is practically

rolled out. There is a distinct possibility that such additional input credit already claimed by taxpayer shall be denied while filing Annual return.

If the difference is positive then provide explanation in 8E & 8F

E

ITC available but not availed (out of D)

Aggregate value of the input tax credit which was available in GSTR2A but not availed in any of the GSTR-3B returns or ineligible credit shall be declared here.

Any

input tax credit pertaining to FY 2017-18 which has not been availed upto the due date of September 2018 GSTR 3B return, will lapse.

F ITC available but ineligible (out of D)

G IGST paid on import of goods (including supplies from SEZ)

Details of IGST paid on import of goods including supplies by SEZ

H IGST credit availed on import of goods (as per 6(E) above)

<Auto>

I Difference (G-H) Shall be NIL in most cases

J ITC available but not availed on import of goods (Equal to I)

K

Total ITC to be lapse d in current financial year (E + F + J)

This field is Auto populated. All the prudent taxpayers shall ensure that no ITC

pertaining to FY 2017-18

shall lapse.

Pt. IV

Details of tax paid as declared in returns filed during the financial year

9

Description

Tax Payable

Paid through cash

Paid through ITC

Central Tax

State Tax / UT

Tax

Integrated Tax

Cess

1

2

3

4

5

6

7

Integrated Tax

Table 6 of GSTR 3B to be used for filling these details

Central Tax

State/UT Tax

Cess

Interest

Late fee

Penalty

Other


32

Pt. V Particulars of the transactions for the previous FY declared in returns of April to September of current FY or upto date of filing of annual return of previous FY whichever is earlier

Description Taxable Value Central Tax

State Tax / UT

Tax

Integrated Tax

Cess

1 2 3 4 5 6

10 Supplies / tax declared through Amendments (+) (net of debit notes)

a) Include the details of amendments to any of the supplies already declared in the returns of the previous financial year.

b) Also include the details of any outward supplies not declared in GSTR 1 of the previous financial year.

c) To be declared as net of credit notes or debit notes issued 11 Supplies / tax reduced through

Amendments (-) (net of credit notes)

12 Reversal of ITC availed during previous financial year To be filled as per Table 4B of GSTR 3B

13 ITC availed for the previous financial year

a) this should be equal to Table 8E.

b) should include the details of ITC for goods or services received in the previous financial year but ITC for the same was availed in the current financial year

14 Differential tax paid on account of declaration in 10 & 11 above

Description Payable Paid

1 2 3

Integrated Tax Differential tax payable & paid on account of declaration in 10 & 11 above. Central Tax

State/UT Tax

Cess

Interest

Pt. VI

Other Information

15 Particulars of Demands and Refunds

Details Central Tax

State Tax / UT Tax

Integrated Tax Cess Interest Penalty Late Fee / Others

1 2 3 4 5

A Total Refund claimed

Particulars of the following to be provided:

1. Refund claimed, sanctioned, rejected and pending

2. Demand raised, paid, pending

B Total Refund sanctioned

C Total Refund Rejected

D Total Refund Pending


33

E Total demand of taxes

F

Total taxes paid in respect of E above

G

Total demands pending out of E above

16

Information on supplies received from composition taxpayers, deemed supply under section 143 and goods sent on approval basis

Details Taxable Value Central Tax

State Tax / UT Tax

Integrated Tax

Cess

1 2 3 4 5 6

A

Supplies received from Composition taxpayers

Aggregate value of purchases made from composition suppliers to be declared here

B Deemed supply under Section 143

This column shall remain NIL as the time limit for return of inputs & capital goods is 1 year & 3 years of being sent respectively

C

Goods sent on approval basis but not returned

If the goods are not returned to the principal supplier within 180 days of such supply then it shall treated as deemed supply on completion of 180 days

17 HSN Wise Summary of outward supplies

HSN

Code UQC Total

Quantity Taxable Value

Rate of Tax Central Tax

State Tax / UT

Tax

Integrated Tax

Cess

1 2 3 4 5 6 7 8 9

HSN wise summary of outward supplies

to be provided here. Reference can be made of

GSTR 1. HSN code is compulsory to be put for dealers having annual turnover of more than 1.5 crores (2 digits up

to 5 crores, else 4 digits)

18 HSN Wise Summary of Inward supplies

HSN

Code UQC

Total Quantity

Taxable Value

Rate of Tax

Central Tax

State Tax / UT

Tax

Integrated Tax Cess

1

2

3

4

5

6

7

8

9

HSN wise summary of inward supplies

to be provided here. HSN code is compulsory to be

put for dealers having annual turnover of more than 1.5 crores (2 digits up

to 5 crores, else 4 digits). Such details have not been reported in any of the returns filed up

to date.

However, these details have to be filed while uploading annual return.


34

19

Late fee payable and paid

Description Payable Paid

1 2 3

A Central Tax Late fee will be payable if annual return is filed after the due date.

B

State Tax

CORRECTIVE ACTION THAT COULD BE TAKEN BY 20 OCTOEBR 2018

CBIC has issued a circular dated 29 December 2017 wherein the department had suggested how to

take corrective actions in case of error committed while filing GST returns. The following table

provides a brief snapshot as to what corrective action to be taken. In order to undertake such

corrective actions, it is advisable that relevant reconciliations are also in place.

Sr No

Common errors

Change in GSTR 3B

Change in GSTR 1

1

Tax liability was under reported

Additional liability in the return of next month and pay tax with interest.

If such liability was not reported in FORM GSTR-1 of the month/quarter, then such liability may be declared in the subs e quent

month’s/quarter’s

FORM GSTR - 1 in which

payment was made.

2

Tax liability was over reported

Reduce this liability in

the return of subsequent months or claim refund of the same.

Where the liability was over reported in the month’s / quarter’s FORM GSTR-1 also, then such liability may be amended

through amendments under Table 9 of FORM GSTR-1

3

Tax liability was wrongly reported

The inter State supply in their next month's liability and adjust their wrongly paid intra-State

liability in the subsequent months returns or claim refund of the same.

Such taxpayers will have to file for amendments by filling Table 9 of the subsequent month’s / quarter’s FORM GSTR-1.


35

4 Input tax credit was under reported Add such Input tax credit in their return for subsequent month(s)

No Action

5 Input tax credit was over reported

Pay (through cash) / Reverse such over reported utilized input tax credit with interest.

No Action

6 Input tax credit of wrong tax was taken Adjust such error in subsequent month's return

No Action

CONCLUSIONAs discussed, it can be derived that outward supplies related details, one has to refer GSTR – 1 filed by the dealer, while inward supplies related details GSTR 3B has to be referred. Hence it is of paramount importance that corrective measure if any, that needs to be taken, should be taken by 20 October 2018 (due date of filing GSTR 3B for September 2018 return). Annual return is nothing but the collective summary of returns that have already been filed by the dealer.

Further, the reconciliation statement that needs to be filed by specified dealers (having aggregate turnover of Rs. 2 crore or above) also has a reference point at annual return to be filed. Hence, one will have to be very careful in finalising / uploading the said Annual return.

The states GST laws are substantially similar to the CGST Act. The core concepts such as levy, value and credit of the state GST Acts are identical to the CGST Act. Hence, for the purposes of the present article, we refer to the provisions of the CGST Act and/ or the IGST Act where applicable

The provisions discussed above are as on the date of writing this article and author's personal views.


36

Background and Introduction:

The concept of Tax Deduction at Source(TDS) and

Tax Collection at Source (TCS) is very familiar in the

direct tax laws. While tax deduction is made by a

person from the amounts paid/payable by him to

another person which is in the nature of Income for

such another person, tax collection is made by a

supplier of certain goods over and above the amount

the receivable by him from the recipient for such

supply of goods. TDS under income tax are deducted

on incomes such as rent, salary, professional fees,

works contract etc. TCS is collected on sale of luxury

goods such as jewelley, cars above Rs. 10 lacs etc.

In the erstwhile VAT laws, TDS was applicable on the

works contract activities and TCS was applicable on

sale of Scrap. The concept of TDS as well as TCS is

carried forward in Goods and Services tax laws with

some modifications. Wherein, the concept of TDS is

applicable on the contractual supplies, while TCS is

applicable on E-commerce activities.

TDS under GST:

The provisions with respect to the deduction of TDS

is laid down under Section 51 of the CGST/SGST

Act. The applicability of section 51 was deferred by

the Government initially till 30th September, 2017

than till 31st March, 2018 and further till 30th

September, 2018. Finally, the provisions were made

applicable from 1st October, 2018.

Transactions liable for deduction:

Section 51 of the CGST/SGST Act lays down that any

supplies of goods or services or both made under a

contract the aggregate value of which exceeds Rs.

250000 to a specified person is liable for the

deduction of TDS at rate of 1% each under both

CGST and SGST Act. It is worthwhile to note that

supplies have to be made under a contract. If

supplies are not made under a contract no TDS is

required to be deducted. Further, the limit of Rs.

250000 is to be considered separately for each

contract. For example, if value of Contract A is

Rs.200000 and Value of Contract B is Rs. 100000,

the basic limit is to be applied to each contract

separately.

TDS shall not be liable to be deducted on the contracts

where the location of the supplier and the place of supply

is in some other state than in the state of the recipient.

Value of Contract:

Explanation to Section 51(1) of the CGST/SGST Act

provides the "Value of Supply" for the purpose of deducting

TDS. It states that Value of supply shall be taken excluding

the amount of Tax whether CGST, SGST, IGST or Cess

wherever it is mentioned separately under the

corresponding invoice raised for the supply. Thus, it is

pertinent to note that wherever, tax is not indicated

separately in the invoice, TDS will be deducted on the

entire amount indicated in the invoice.

Persons liable to deduct tax:

According to Section 51(1) read with notification

no.50/2018-Central Tax dated 13th September, 2018

mandates the following person to deduct tax at source

namely:

a) a department of establishment of Central

Government or State Government; or

b) local authority;

c) Governmental agencies;

d) an authority or board or any other body,-

i. set up by an act of the parliament or state

legislature; or

ii. established by any Government,

with fifty-one percent or more participation by way of

equity or control, to carry out any function;

e) Society established by the Central Government or

the State Government or a Local Authority under the

Societies Registration Act, 1860 (21 of 1860);

f) Public sector undertaking

The deductors of TDS whether or not registered under the

GST Act are required to obtain mandatorily a separate

registration for the purpose of deducting TDS irrespective of

the threshold limits. Normally, all the registrations under GST

are based on the PAN. However, in the absence of PAN,

registrations under GST can be obtained on the basis of TAN.

TDS AND TCSTDS AND TCSPROVISIONS UNDER GSTPROVISIONS UNDER GST

Compiled by:

CA Poojan M. Dedhia CA Aditya Khandelwal


37

Deductions and payment of TDS:

Every person liable to deduct TDS shall deduct it from

the value of supply under a contract and amount equal

to 2% (1% CGST and 1% SGST or 2% IGST). The

amount of TDS so deducted shall be liable to be paid to

the credits of the Government by 10th day of the month

succeeding the month in which TDS is deducted.

Moreover, the deductor of TDS shall also file a return

GSTR-7 on the due date same as that of date of

payment.

Once the payment of TDS is made and return is filed by

the deductor, he shall furnish a TDS certificate in form

GSTR-7A within 5 days of the date of payment of TDS

containing therein the following particulars:

i. Value of contract;

ii. Rate of deduction;

iii. Amount deducted;

iv. Amount paid to the government;

v. Such other prescribed particulars

Claim of TDS Credit:

The claim of TDS credits under GST shall be made

available to the deductee to his electronic cash ledger on

the basis of return in GSTR-7 furnished by the

deductor.

Consequences of Non-compliances:

Any failure to comply with the provisions for deduction

and payment of TDS will be liable to interest, fees and

penalties, as the case maybe as follows:

1. In the event of failure to deposit the amount of

TDS deducted, interest shall be liable to be paid at the

rate of 18% in addition to amount of tax deducted.

2. In case of non-filing of GSTR-7 or non-

furnishing of GSTR-7A within the prescribed period,

late fee of Rs. 200 per day (Rs.100 CGST and Rs.100

SGST) shall be levied subject to the maximum of

Rs.10000 (Rs.5000 CGST and Rs.5000 SGST).

Demands and Refunds

The demands for the amounts of TDS shall be made in

accordance with the provisions of Section 73 or Section

74 which deals with bona-fide or mala-fide cases

respectively. The cases with mala-fide intensions shall

attract penal provisions of the act.

The refund of excess/erroneous deductions shall be

made in accordance with the provisions of section 54 of

CGST Act. However, refund of excess/erroneous

deductions shall not be given to the deductor if the

amount so deducted is credit to the cash ledger of the

deductee.

TCS under GST:

The provisions of TCS under GST act are made

applicable on the transactions carried through an

electronic commerce operator (ECO) by a supplier vide

section 52 of the GST Act. The liability to deduct TCS

has been casted upon the electronic commerce

operators like Fipkart, Amazon, Snapdeal etc.

Who is an Electronic Commerce Operator?

According to definition laid down in Section 2(45) of the

CGST Act, an 'electronic commerce operator' means a

person who owns, operates or manages digital or

electronic facility or platform for electronic commerce.

Further, 'electronic commerce' is defined in Section

2(44) as supply of goods or services or both including

digital products over digital or electronic network.

Thus, for the purpose of Section 52, a person acting as

electronic commerce operators has to deduct TCS of a

person who supplies goods or services or both through

the ECO. Therefore, no TCS is required to be deducted

if goods are supplied by an ECO on his own account.

Further, no TCS is required to be deducted where ECO

acts as an agent for the supplier.

Rate of TCS:

According to notification no. 2/2018- Integrated tax and

notification no.52/2018-Central tax, the rate of TCS

required to be collected by the ECOs are 1% on all intra-

state and inter-state supplies of goods and services

through the electronic facility/platform of the ECO.

Value on which TCS is collected:

TCS is to be made on the "Net Value of Taxable

Supplies". The net value of taxable supplies means the

aggregate value of goods or services or both made

during the month by all the registered persons through

the ECO as reduced by the aggregate value of taxable

supplies returned to the suppliers during the same

month. It is to be noted that no TCS is required to be

made on the value of services where the burden of

payment of tax is casted upon the ECO as per section

9(5).

Registration:

As per the requirements of Section 24(x), every ECO is

required to register itself as a collector of TCS

irrespective of the threshold limits. Accordingly, even in

cases where ECO was supplying goods or services or

both on electronic platform only on his own account

and thus, not liable to collect TCS shall also be required


38

to be registered as collector of TCS. In GST

(Amendment) Act, 2018 which is yet to be notified,

government has made changes in requirements

whereby it has specified that only ECOs who are

required to collect the tax are required to get themselves

mandatorily.

Payment of TCS and returns:

Every ECO who are liable to collect TCS and have

collected the same are required to deposit in the

government treasury by 10th of the month succeeding

the month in which the TCS is collected. Further, the

ECO is required to furnish a monthly statement in form

GSTR-8 by 10th of the succeeding month containing

details of outward supplies made through it including

goods or services returned through it along-with the

amount of TCS collected. Furthermore, ECOs are also

required to furnish an Annual return in form GSTR-9B

by 31st December of the succeeding financial year. Any

rectification in the statements furnished by it can be

made before the statement for the succeeding month is

furnished by it.

Credit of TCS:

The credits of TCS collected by the ECO shall be

credited to the electronic cash ledger of the supplier

who has supplied goods or services or both through the

ECO.

Matching of Data:

The details furnished by the ECO shall be matched with

the outward supplies furnished by the supplier through

ECO. In case of discrepancies, it shall be communicated

both to the supplier and the ECO. Where discrepancies

communicated are not rectified either by the supplier or

the ECO, and such discrepancies leads to the increase

in liabilities of the supplier, it shall be added to the

output tax liabilities of the supplier. The amount of tax

so added to the output tax liability of the supplier shall

be required to be paid along with interest.

Other responsibilities of ECOs:

The ECOs will be required to submit to the any

authority not below the rank of Deputy Commissioner

upon receipt of the notice from such office details

relating to supplies of goods or services made through it

and details of stock held by a supplier/s in the godowns

or warehouses provided and managed by it. In the event

of failure to furnish such information, the ECO shall be

chargeable to penalty upto Rs.25000

Conclusion:

Looking at the tedious provisions relating to TDS and

TCS, it can be construed that the implementation of the

same and preparing a system strong enough to deal

with the matching mechanism could have led to the

delayed implementation of these provisions. However,

success of the system can only be judged in the times to

come when the actual implementation is done, returns

are filed and credit matching are performed.


39

Some Important Definitions in relation to the

Special Economic Zone:

Section 2 (19) of Integrated Goods and Services Tax

Act, 2017 “Special Economic Zone” shall have the

same meaning as assigned to it in clause (za) of

section 2 of the Special Economic Zones Act, 2005;

Section 2 (20) of Integrated Goods and Services Tax

Act, 2017 “Special Economic Zone developer” shall

have the same meaning as assigned to it in clause (g)

of section 2 of the Special Economic Zones Act, 2005

and includes an Authority as defined in clause (d) and

a Co-Developer as defined in clause (f) of section 2 of

the said Act;

As per Section 2 ( za) of the Special Economic Zones

Act, 2005 "Special Economic Zone" means each

Special Economic Zone notified under the proviso to

sub-section (4) of section 3 and sub-section (1) of

section 4 (including Free Trade and Warehousing

Zone) and includes an existing Special Economic

Zone;

As per Section 2 (g) of the Special Economic Zones

Act, 2005 “Developer” means a person who, or a

State Government which, has been granted by the

Central Government a letter of approval under sub-

section (10) of section 3 and includes an Authority

and a Co-Developer;

As per Section 2 (d) of the Special Economic Zones

Act, 2005 “Authority” means a Special Economic

Zone Authority constituted under sub-section (1) of

section 31;

As per Section 2 (f) of the Special Economic Zones

Act, 2005 "Co-Developer" means a person who, or

a State Government which, has been granted by the

Central Government a letter of approval under sub-

section (12) of section 3

As per Section 16 (b) of IGST Act supply of goods or

services or both to a Special Economic Zone

developer or a Special Economic Zone unit is

considered as “Zero rated Supply”.

As per section 16 (2) of IGST Act , credit of input tax

may be availed for making zero-rated supplies,

notwithstanding that such supply may be an exempt

supply subject to Section 17 (5) of Central Goods and

Service Act.

Section 17 (5) of Central Goods and Service Act deals

with certain credits which are not allowed or certain

credits are allowed but if certain conditions are

fulfilled.

As per Section 16 (3) of IGST Act,

A registered person making zero rated supply shall

be eligible to claim refund under either of the

following options, namely:–– (a) he may supply goods

or services or both under bond or Letter of

Undertaking, subject to such conditions, safeguards

and procedure as may be prescribed, without

payment of integrated tax and claim refund of

unutilized input tax credit; or

(b) He may supply goods or services or both, subject

to such conditions, safeguards and procedure as may

be prescribed, on payment of integrated tax and

claim refund of such tax paid on goods or services or

both supplied, in accordance with the provisions of

section 54 of the Central Goods and Services Tax Act

or the rules made thereunder.

So under Option 1 which is available under section

16 (3) (a) of IGST Act that a registered person may

supply such goods or services or both under bond or

Letter of undertaking to SEZ Developer or SEZ Co-

Developer or SEZ Units without payment of

integrated tax and also claim refund of unutilized

input tax credit.

So on one hand no funds will be blocked and another

hand a registered person making zero rated supply

can claim refund of unutilized input tax credit.

Further, under Option 2 under section 16 (3) (b) of

IGST Act a registered person may supply such goods

or services or both to SEZ Developer or SEZ Co-

Developer or SEZ Units on payment of integrated tax

and claim refund of such tax paid on goods or

services or both supplied in accordance with Section

54 of Central Goods and Service Tax Act or rules

made thereunder.

GSTGSTON SPECIAL ECONOMIC ZONEON SPECIAL ECONOMIC ZONE

Compiled by:

CA Jinesh P. Gada


40

So under this option First IGST is to be paid and then

one can claim refund. Therefore, under this option

working capital will be blocked. Getting refund from

department has always been a challenge and the said

process will take time & efforts too.

But in GST regime as per section 54 (6) of the CGST

Act, the proper officer may in case of any refund on

account of zero-rated supply of goods or services or

both made by registered person refund on a

provisional basis, ninety per cent of the total amount

so claimed, excluding the amount of input tax credit

provisionally accepted, in such manner and subject

to such conditions, limitations and safeguards as

may be prescribed and thereafter make an order

under Section 54 (5) for final settlement of the

refund claim after due verification of documents

furnished by the applicant.

Therefore in case of refund is relating to supplies

made to SEZ Developer/Co-Developer or SEZ Unit

than in GST regime now provisional refund of 90%

will be given immediately. This provision is a big relief

to the registered person claiming such refund. But

theoretically, 90% of refund is to be granted on

provisional basis but practically the department is

asking for relevant proofs from the registered

persons for verification before granting any refund.

As per Section 8(1) of IGST Act, Subject to the

provisions of section 10 (PLACE OF SUPPLY OF

GOODS OR SERVICES OR BOTH), supply of goods

where the location of the supplier and the place of

supply of goods are in the same State or same Union

territory shall be treated as intra-State supply:

Provided that the following supply of goods shall not

be treated as intra-State supply, namely:–– (i) supply

of goods to or by a Special Economic Zone developer

or a Special Economic Zone unit;

So even if supply of goods to or by a Special Economic

Zone developer or a Special Economic Zone unit is

made within the state then also it is treated as

interstate supply as per IGST Act.

As per Notification NO 15/2017- Integrated Tax

(Rate) dated 30-06-2017 In exercise of the powers

conferred by sub-section (1) of section 6 of the

Integrated Goods and Service Tax Act, 2017 , the

Central Government, on being satisfied that it is

necessary in the public interest so to do, hereby

exempts all goods or services or both imported by a

unit or a developer in the Special Economic Zone,

from the whole of the integrated tax leviable thereon

under sub-section (7) of section 3 of the Customs

Tariff Act, 1975 (51 of 1975) for authorized

operations.

Above notification exempts all goods or services or

both imported by a unit or a developer in the SEZ

from the whole of the integrated tax for authorized

operations.

As per Section 2 (c) of SEZ Act 2005 "authorized

operations" means operations which may be

authorized under sub-section (2) of section 4 and

sub-section (9) of section 15;

As per Section 15 (9) of SEZ Act 2005 The

Development Commissioner may, after approval of

the proposal referred to in sub-section (3), grant a

letter of approval to the person concerned to set up a

Unit and undertake such operations which the

Development Commissioner may authorize and

every such operation so authorized shall be

mentioned in the letter of approval.

Notification No. 18/2017 -Integrated Tax (Rate)

exempts services imported by a unit or a developer in

the Special Economic Zone for authorized

operations, from the whole of the integrated tax

leviable thereon under section 5 of the Integrated

Goods and Service Tax Act, 2017

Asper F.No. D.12/19/2013-SEZ dated 02-01-2018

Government of India, Ministry of Commerce &

Industry, Department of Commerce (SEZ Section) a

list of 66 Services which may be permitted by all Unit

Approval Committees (UACs) as default authorized

services for IGST exemption. The Board of Approval,

after deliberation, approved the reiteration of the

default authorized operations as approved earlier.

Default List of Services approved by Department of

Commerce includes Architect services, Asset

Management services, Banking and other financial

services, Business Exhibition expenses, commercial

or industrial construction services,Consulting

Engineers service, Interior decorator service,

Legal consultancy services, Management,

maintenance or repair services, renting of

immovable property services, site formation &

clearance, excavation earth moving, Works

contract services,Construction services, SEZ

Online services , Business Support service,

Accommodation service etc.

Clarification on issues related to furnishing of

Bond/Letter of Undertaking for Exports is mentioned

in Circular No. 5/5/2017- GST dated 11-08-2017.


41

Eligibility to export under LUT

Notification No. 16/2017- Central Tax dated 07-07-

2017 specifies conditions to be fulfilled for export

under letter of undertaking (LUT) in place of Bond. It

is clarified that any registered person who has

received a minimum foreign inward remittance of

10% of export turnover in the preceding financial

year is eligible for availing the facility of LUT

provided, that the amount received as foreign inward

remittance is not less that Rs 1 Crore.

It may however be noted that a status holder as

specified in paragraphs 3.20 and 3.21 of the Foreign

Trade Policy 2015-2020 is eligible for LUT facility

regardless of whether he satisfies the above

conditions.

Paragraphs 3.20 and 3.21 of the Foreign Trade Policy

2015-2020 is as mentioned below:

3.20 Status Holder

(a) Status Holders are business leaders who have

excelled in international trade and have successfully

contributed to country's foreign trade. Status

Holders are expected to not only contribute towards

India's exports but also provide guidance and

h a n d h o l d i n g t o n e w e n t r e p r e n e u r s .

(b) All exporters of goods, services and technology

having an import-export code (IEC) number shall be

eligible for recognition as a status holder. Status

recognition depends upon export performance. An

applicant shall be categorized as status holder upon

achieving export performance during current and

previous two financial years, as indicated in

paragraph 3.21 Of Foreign Trade Policy. The export

performance will be counted on the basis of FOB

value of export earnings in free foreign exchange.

(c) For deemed export, FOR value of exports in Indian

Rupees shall be converted in US$ at the exchange rate

notified by CBEC, as applicable on 1st April of each

F i n a n c i a l Y e a r .

(d) For granting status, export performance is

necessary in at least two out of three years.

3.21 Status Category

Status Category Export Performance

FOB / FOR (as converted) Value

(in US $ million)

One Star Export House 3

Two Star Export House 25

Three Star Export House 100

Four Star Export House 500

Five Star Export House 2000

Form for LUT: Bonds are furnished on non-judicial

stamp paper, while LUTs are generally submitted on

the letterhead containing signature and seal of the

person or the person authorized in this behalf.

Time for acceptance of LUT/Bond: As LUT/bond is a

priori requirement for export, including supplies to a

SEZ developer or a SEZ unit, the LUT/bond should

be processed on top most priority and should be

accepted within a period of three working days from

the date of submission of LUT/bond along with

complete documents by the exporter.

Purchases from manufacturer and form CT-1:

There is lack of clarity about treatment of CT-1 form

which was earlier used for purchase of goods by a

merchant exporter from a manufacturer without

payment of central excise duty. The scheme holds no

relevance under GST since transaction between a

manufacturer and a merchant exporter is in the

nature of supply and the same has not been exempted

under GST even on submission of LUT/bond.

Therefore, such supplies would be subject to GST.

The zero rating of exports, including supplies to SEZ,


42

is allowed only with respect to supply by the actual

exporter under LUT/bond or payment of IGST.

Transactions with EOUs: Zero rating is not

applicable to supplies to EOUs and there is no special

dispensation for them. Therefore, supplies to EOUs

are taxable under GST just like any other taxable

supplies. The EOUs, to the extent of exports, are

eligible for zero rating like any other exporter.

Forward inward remittance in Indian Rupee

It is clarified that acceptance of LUT instead of a bond

for supplies of goods to Nepal or Bhutan or SEZ

developer or SEZ unit will be permissible

irrespective of whether the payments are made in

Indian currency or convertible foreign exchange as

long as they are in accordance with applicable RBI

guidelines. It may also be noted that supply of

services to SEZ developer or SEZ unit will also be

permissible on the same lines. The supply of

services, however, to Nepal or Bhutan will be deemed

to be export of services only if the payment for such

services is received by the supplier in convertible

foreign exchange.

Jurisdictional officer: It has been clarified in

Circular Nos. 2/2/2017 – GST dated 4th July, 2017

and 4/4/2017 – GST dated 7th July, 2017 that

Bond/LUT shall be accepted by the jurisdictional

Deputy/Assistant Commissioner having jurisdiction

over the principal place of business of the exporter.

The exporter is at liberty to furnish the bond/LUT

before Central Tax Authority or State Tax Authority

till the administrative mechanism for assigning of

taxpayers to respective authority is implemented. It

is reiterated that the Central Tax officers shall

facilitate all exporters whether or not the exporter

was registered with the Central Government in the

earlier regime.

Applicability of circulars on Bond/LUTs: It is learnt

that some field officers have inferred that the

instructions given by the said circulars are effective in

respect of exports made only from the date of its issue

despite the fact that it has been categorically clarified

specifically in the said circular (dated 7th July, 2017)

that the instructions shall be applicable for exports

on or after 1st July, 2017. It is reiterated that the

instructions issued vide said circular and this

circular are applicable to any export made on or after

the 1st July 2017.

Service tax on SEZ in earlier Service tax regime

Central Board of Excise and Customs, Ministry of

Finance has rescinded Notification No. 40/2012-ST

dated 20thJune 2012 and introduced new

Notification No. 12/2013-ST dated 01-07-2013.

1. As per this Notification where the specified

services received by the SEZ unit or the Developer are

used exclusively for the authorized operations, the

person liable to pay service tax has the option not to

pay the service tax ab-initio, subject to the following

conditions and procedure as stated below:

a) The SEZ Unit or the Developer shall get an

approval by The Approval Committee of the list of the

services as are required for the authorized

operations (referred to as the specified services) on

which the SEZ Unit or Developer wish to claim

exemption from service tax.

b) The SEZ Unit or the Developer shall furnish a

declaration in Form A-1, verified by the Specified

Officer of the SEZ, along with the list of specified

services in terms of abovementioned condition a);

c) On the basis of declaration made in Form A-1, an

authorization shall be issued by the jurisdictional

Deputy Commissioner of Central Excise or Assistant

Commissioner of Central Excise, as the case may be

to the SEZ unit or the Developer in Form A-2;

The SEZ Unit or the Developer shall provide a copy of

said authorization to the provider of specified

services. On the basis of the said authorization, the

service provider shall provide the specified services

to the SEZ unit or the Developer without payment of

service tax;

Now in New regime of GST condition for filing

declaration in Form A-1 by the SEZ Unit or Developer

verified by the Specified Officer of the SEZ and on the

basis of declaration made in Form A-1, an

authorization shall be issued by the jurisdictional

Deputy Commissioner of Central Excise or Assistant

Commissioner of Central Excise, as the case may be

to the SEZ unit or the Developer in Form A-2 is done


43

away with.

So under the new GST regime for saving of GST, now

efforts have been sifted from SEZ Unit or SEZ

Developer to a registered person supplying such

goods or services or both to SEZ Developer or SEZ

Co-Developer or SEZ Units, so the same is a

beneficial for SEZ Developer / SEZ Co-Developer or

SEZ Units .

Case Study on SEZ

SEZ developer is having lease right of Land for 99

years obtained from say GIDC would like to Sub-Sub

lease land of processing zone to SEZ unit after

creating infrastructure required by SEZ Unit. So now

query is SEZ unit will pay one time salami payment to

SEZ Developer for acquiring Leasehold rights of 99

years. So whether GST payable on Renting of

Leasehold rights of land (on one time salami

payment) will be taxable or exempt.

Possible Solution on the said case study of SEZ

In the IGST Act or notification, it is mentioned that

what is to be done if services are provided by a

registered person to SEZ Developer/ Co-Developer or

SEZ Units but it is nowhere mentioned that what is to

be done if services are provided by SEZ Developer to

SEZ Units.

As per F.No. D.12/19/2013-SEZ dated 02-01-2018

Government of India, Ministry of Commerce &

Industry, Department of Commerce (SEZ Section) a

list of 66 Services which may be permitted by all Unit

Approval Committees (UACs) as default authorized

services for IGST exemption. The Board of Approval,

after deliberation, approved the reiteration of the

default authorized operations as approved earlier.

Renting of immovable property services is mentioned

in the above default list of authorized services for

IGST exemption.

The said services is in the processing zone & the said

service is also for the authorized operation but as

mentioned earlier in the IGST Act or notification

what is to be done if services are provided by a

registered person to SEZ Developer/ Co-Developer or

SEZ Units but it is nowhere mentioned that what is to

be done if services are provided by SEZ Developer to

SEZ Units.

I have found out one clarification in respect of GST on

points raised by SGJMA, F NO. Seepz- SEZ/GST

Legislation/62/2017-18 Dated 30-06-2017 issued by

Office of the Development Commissioner, SEEPZ

Special Economic Zone, Ministry of Commerce &

Industry, Government of India, Andheri (East),

Mumbai – 400096 dated 30-06-2017 issued to the

Secretary, SEEPZ Gems &Jewellery Manufacturer's rdAssociation, Business- facilitation center, 3 floor,

Office no 2, behind SEEPZ service centre, Seepz –

SEZ, Andheri (East) – Mumbai – 96

I am reproducing Question no 5 & Answer for the

same

Question no 5) Supply of Goods to SEZ Units will be

zero rated. Will this hold good for Inter Unit Transfer

(IUT) among units within the same SEZ as also

between two SEZ. We understand that it is for the

supplier of such goods to SEZ to make supplies

under Bond or LUT without payment of IGST and

claim credit of ITCs or supply on payment of IGST

and claim refund of taxes paid.

Answer NO 5) Supply will remain zero rated within

SEZ (IUT) and also between SEZs. Bond/LUT will

remain same for goods and services for supply to

SEZ.

So above clarification also considered case of Supply

of Goods or Services between SEZ Units or between

two SEZs but our case study is not answered which is

relating to Supply of Services between SEZ Developer

to SEZ Unit.

Even though our case study's answer is not given

under IGST Act or any notification and the same is

also not covered in the said clarification but I am of

the view that based on above cited clarification one

can take the stand that Supply of services provided

by SEZ Developer to SEZ Unit which is covered

under default list of authorized services for IGST

exemption & also keeping in mind the said service is

provided in processing zone and also the same is

towards authorized operation so Supply will remain

zero rated subject to that a SEZ Developer may

supply such goods or services or both under bond or

Letter of undertaking without payment of IGST to

SEZ Units and also claim refund of unutilized input

tax credit or

Supply on payment of IGST and claim refund of taxes

paid.

Conclusions:

1) Under GST regime formality of Form A1 &

Form A2 etc. for services provided to SEZ

developer or SEZ Units are done away with.

2) Under Option 1 which is available under

section 16 (3) (a) of IGST Act that a registered

person may supply such goods or services or


44

both under bond or Letter of undertaking to

SEZ Developer or SEZ Co-Developer or SEZ

Units without payment of integrated tax and

also claim refund of unutilized input tax

credit. So on one hand no funds will be

blocked and another hand a registered

person making zero rated supply can claim

refund of unutilized input tax credit.

3) Under Option 2 under section 16 (3) (b) of

IGST Act a registered person may supply

such goods or services or both to SEZ

Developer or SEZ Co-Developer or SEZ Units

on payment of integrated tax and claim

refund of such tax paid on goods or services

or both supplied in accordance with Section

54 of Central Goods and Service Tax Act or

rules made thereunder.

So under this option First IGST is to be paid and then

claim refund. Therefore, under this option working

capital will be blocked and not only getting refund

from department is always a challenge but the said

process will also take time & efforts

4) Supply will remain zero rated in case of SEZ

subject to following option 1 or option 2 as

mentioned above in all cases of Supply of

Goods or services by a registered person to

SEZ Developer/Co-Developer or SEZ Units

or supply of goods or services between Two

SEZ developers or between Two SEZ Units or

between SEZ Developer and SEZ Units and

also subject to compliance of other

conditions as mentioned in this article.


45

A. REGULATIONS:

1. Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)(Fifth Amendment) Regulations, 2018[Issued by the Securities and Exchange Board of India vide Notification No. SEBI/LAD-NRO/GN/2018/307 dated September 06, 2018]

SEBI has amended various regulations to provide for matters pertaining to listing of Security Receipts.

B. CIRCULARS

1. Streamlining the process of public issue under the SEBI (Issue and Listing of Debt Securities) Regulations, 2008, SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013, SEBI (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008 and SEBI (Issue and Listing of Debt S e c u r i t i e s b y M u n i c i p a l i t i e s ) Regulations, 2015[Issued by the Securities and Exchange Board of India vide Circular No. CIR/DDHS/P/ 121/2018 dated August 16, 2018]

SEBI has decided and amended the processes to reduce the time taken for listing of Non-Convertible Redeemable Preference Shares and Securitised Debt Instruments from 12 days to 6 days. It elaborated matters relating to ASBA, Roles of Intermediaries, Stock Exchanges, Other Requirements and Timelines.

2. Electronic book mechanism for issuance of securities on private placement basis - Clarifications "

[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/DDHS/CIR/P/2018/122 dated August 16, 2018]

SEBI had mandated use of Electronic Book Provider (EBP) Platform for private placement of securit ies. Various functionalities have been added such as closing bidding, multiple yield allotment, multiple bids by an investor, allotment on yield time priority basis, pay-in of funds through escrow bank account of issuer and depositories to act as EBP.

3. Amendment to SEBI Circular No. CIR/IMD/FPIC/CIR/P/2018/64 dated April 10, 2018 on Know Your Client Requirements for Foreign Portfolio Investors (FPIs) [Issued by the Securities and Exchange Board of India vide Circular No. IMD/FPIC/CIR/P/2018/124 dated August 21, 2018]

SEBI has provided certain relaxations with regard to KYC compliance to be done by FPIs it had mandated earlier in April 10, 2018.

4. Extension of Trading hours of Securities Lending and Borrowing (SLB) Segment[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/CIR/MRD/DoP-1/P/125/2018 dated August 24, 2018]

SEBI has, in order to facilitate the physical settlement of equity derivative contracts, extended the trading hours from 9.00 am to 5.00 pm.

For further details, please refer SEBI website at www.sebi.gov.in.

BRIEF UPDATE ONBRIEF UPDATE ONSEBI AND CORPORATE LAW SEBI AND CORPORATE LAW

SEBISEBIby CA IP Neha Gada and CA IP Rajen Gada


46

A. NOTIFICATIONS

1. Commencement Notification dated

July27, 2018

[Issued by Ministry of Corporate Affairs

vide notification no. S.O. 3684 (E) dated

July 27, 2018]

Section 5 (Articles) and Section 6 (Act to

Override Memorandum, Articles, etc.)

shall come into force from July 27, 2018.

B. RULES

Companies (Prospectus and allotment of

securities) 3rd Amendment Rules 2018

1. Issued by Ministry of Corporate Affairs

vide notification no. G.S.R. __(E) dated

September 10, 2018]

Ministry of Company Affairs has

introduced new Rule 9A with regard to

“Issue of Securities in Dematerialised

form by Unlisted Public Companies” with

effect from October 2, 2018.

As a result, all new issues as well as

transfers undertaken on or after October

2, 2018 will have to be undertaken in

dematerialised form.

C. CIRCULARS

1. Relaxation of additional fees and

extension of last date of filing of

FormBEN-2 under the Companies Act.

20I3- regarding.

[Issued by Ministry of Corporate Affairs

vide General Circular 07/2018 dated

September 06, 2018]

MCA has decided that the time limit for

filing of BEN-2 form shall be 30 days from

deployment of the of BEN-2 eform on the

MCA portal and there shall be no

additional fee payable if the said form is

filed within 30 days of deployment of the

said e-form.

CORPORATE LAWCORPORATE LAW


FEMAFEMAUPDATESUPDATES

(Matter on FEMA has been contributed by:

CA VIRAL SATRACA MANOJ SHAH

47

Sr. No.

Subject Matter

Contraventions Compounded

1. Foreign Direct

Investment - FEMA Notification No. 20

The applicant company was engaged in business of other information technology and computer service activities.

There was transaction of transfer of shares of company from resident holder to non-resident.

The company contravened the prov isions of Regulation 4 of FEMA 20 by taking on record the said transfer without certified FC-TRS.

(Indian entity shall not record in its books any transfer of security provided that RBI may on an application made to it and for sufficient reasons, permit an entity to issue any security to a person resident outside India or to record in its books transfer of security. Thus, only after receipt of confirmation of RBI, company can take transfer of shares from resident to non-resident in its records.)

Gist of some Compounding Orders passed by Reserve Bank of India

Implementation of Single Master Form – User Manual on Foreign Investment Reporting and

Management System:

For the companies who could not update data of foreign investment in Entity Master Form, RBI has stallowed for registering such entities with effect from 1 September 2018 along with reasons for not making

registration within the time period allowed by RBI.stFurther, with effect from 1 September 2018, Single Master Form (SMF) has been implemented by RBI and

revised user manual has been issued giving process of registration and filing of Forms prescribed to be uploaded in SMF.

The revised user manual can be reached at –

http://rbidocs.rbi.org.in/rdocs/FEMAMASTER/PDFs/SMF-FIRMS347E34AF5938415DAD0904E0584FB5A1.PDF


48

Gist of some Compounding Orders passed by Reserve Bank of India

Sr. No.

Subject Matter

Contraventions Compounded

1. Overseas Direct The applicant company made investment in overseas company at the time when it was under investigation of was Directorate of Revenue Intelligence. Investigation w as concluded in July 2014 however the applicant company filed an appeal against the show cause notice which was still pending.

Thus, applicant was not eligible to undertake ODI under automatic route resulting in contravention of Regulation 6(2)(iii) of F EMA 120.

2. Overseas Direct Investment – FEMA Notification No. 120

The applicant company set up a Special Purpose Vehicle in Italy. The initial share capital was contributed by another subsidiary of Applicant Company.

This resulted in contravention in nat ure of funding of overseas investment by mode other than that permitted under regulation 6(3) of FEMA 120.

3. Foreign Direct Investment – FEMA Notification No. 20

Applicant being a resident Indian transferred shares of an Indian company to a NRI.

The cons ideration was paid on deferred basis and entire consideration was received from third parties leading to contravention of FEMA provisions.

Investment – FEMA

Notification No. 120


DIRECTDIRECTTAXES LAW UPDATETAXES LAW UPDATE

- Law Update

CA HARESH P. KENIA

1. Income Tax Return-Extension of Due Date of filling Income Tax Return for A.Y. 2018-19 (256 Taxman (st) 23)

The Central Board of Direct Taxes vide order no. 225/242/2018-ITA.II] dated:- 26.07.2018 extends the due date of filling Income Tax Return as prescribed in sec 139(1) of the Act from 31/07/2018 To 31/08/2018.

2. Speculative Transactions u/s 43(5) of the Income Tax Act – Notified Recognised Stock Exchange Sec 43(5) – Explanation 1 proviso (d) of the Income Tax Act. (257 Taxman (st) 1)

The Central Government vide notification no. 35/2018 [F.No.225/111/2018-ITA-11] dated 31.07.2018 notifies India International Exchange (IFSC) Limited, Gandhinagar, Gujarat (PAN: AAGCB8819B) as a recognised Stock Exchange for the purpose of 43(5) Explanation 1 Proviso (d) w.e.f. the date of publication of this notification subject to fulfilment of certain conditions in respect of trading in derivaties. Please refer to the above notification for conditions specified.

3. Speculative Transactions u/s 43(5) of the Income Tax Act – Notified Recognised Stock Exchange Sec 43(5) – Explanation 1 proviso (d) of the Income Tax Act. (257 Taxman (st) 2)

The Central Government vide notification no. 35/2018 [F.No.225/111/2018-ITA-11] dated 31.07.2018 noti f ies NSE IFSC Limited, Gandhinagar, Gujarat (PAN:AAFCN4161P) as a recognised Stock Exchange for the purpose of 43(5) Explanation 1 Proviso (d) w.e.f. the date of publication of this notification subject to fulfilment of certain conditions in respect of trading in derivaties. Please refer to the above notification for conditions specified.

4. Tax Audit – sec 44AB – Deferment of Clauses 30C (GAAR) and 44 (GST) of Form 3CD (257 taxman (st) 3)

The Board has clarified that Section 44AB of the Income Tax Act, 1961 read with rule 6G of the Income Tax rules, 1962 requires prescribed persons to furnish the Tax Audit Report along with the prescribed particulars in Form No. 3CD. The existing Form No. 3CD was amended vide notification No.

GSR 666(E), dated 20th July, 2018 with effect from 20th August, 2018.

The matter has been examined and it has been decided by the Board vide circular no. 6/2018 [F.No. 370142/9/2018-TPL] dated 17/08/2018 that reporting under the proposed clause 30C and proposed clause 44 of the Tax Audit Report shall be kept in abeyance till 31st March, 2019. Therefore, for Tax Audit Reports to be furnished on or after 20th August, 2018 but before 1st April, 2019, the tax auditors will not be required to furnish details called for under the said clause 30C and clause 44 of the Tax Audit Report.

5. Section 270AA, read with section 271(1) (c), of the Income-tax Act, 1961- Under-reporting and Mis-reporting-penalty for – Clarification on immunity provided under section 270AA (257 taxman (st) 3)

Section 270AA of the Income-tax Act, 1961 (the Act) inter alia provides that w.e.f 1st April, 2017, the Assessing Officer, on an application made by an assessee, may grant immunity from imposition of penalty under section 270A (not being penalty for misreporting) and initiation of proceedings under section 276C or section 276CC, subject to the conditions specified therein.

It has been clarified by CBDT vide circular no 5/2018 [ F.No.370149/155/2018-TPL] dated 16/08/2018 that where an assessee makes an application seeking immunity under section 270AA of the Act, it shall not preclude such assessee from contesting the same issue in any earlier assessment year.

This clarification is issued on the apprehensions that where an assessee makes the application have seeking immunity under section 270AA of the Act, and in the earlier year(s) penalty under section 271(1) (c) of the Act has been initiated on the same issue, the Income-tax Authority may contend that the assessee has acquiesced on the issue in such earlier year(s), by seeking immunity under section 270AA of the Act and therefore, take an adverse view in the proceedings for penalty under section 271 (1) (c) of the Act.

Further, the CBDT has clarified that Income Tax Authority shall not taken an adverse view in the proceedings for penalty under section 271 (1) (c) of the

49


50

Act in earlier assessment years merely on the ground that the assessee has acquiesced on the issue in any later assessment year by preferring an immunity on such issue under section 270AA of the Act.

6. Section 10A of the Income-tax Act, 1961 – Free Trade Zone – Computation of admissible deduction under section 10A (257 taxman (st) 4)

The CBDT vide circular No.4/2018 [F.No. 279/MISC./140/2015/ITJ], dated 14/08/2018 clarifies as under:-

It is clarified that freight, telecommunication ·charges & Insurance expenses are to be excluded from “Export Turnover” & “Total Turnover” while working out deduction admissible u/s 10A of the Act to the extent their attributable to the deliver of the articles or things or computer software outside India.

It is further clarified that expenses incurred in ·foreign exchange for providing technical services outside India are to be excluded from both ”Export Turnover” & “Total Turnover” while computing deduction admissible u/s 1 0 A o f t h e A c t . T h e r e f o r e , a l l charges /expenses speci f ied in 10A explanation 2(IV) of the Income Tax Act are liable to be excluded from total turnover also for the purpose of computation of deduction u/s 10A of the Act.

It is further directed that no further appeals ·may be filled by the department on the above settled issue & those already filled may be withdrawn/not pressed upon.

The CBDT sought to issue clarification on the issue whether freight, telecommunication charges and insurance expenses are to be excluded from both” Export turnover” and “total turnover” while working out deduction admissible under section 10A of the Act on the ground that they are attributable to delivery of articles or things or computer software outside India has been highly contentious.Similarly, the issue whether charges for providing technical services outside India are to be excluded both from “Export Turnover” and “Total Turnover” while computing deduction admissible under section 10A of the Act on the ground that such charges are relatable towards expenses incurred inconvertible foreign exchange in providing technical services outside India has also been highly contentious.

The controversy has been finally settled by the Hon'ble Supreme Court vide its judgment dated 24/04/2018 in the case of CIT, central-III v. M/s. HCL Technologies Ltd. [2018] 93 taxmann.com 33(SC). Please refer to the above citation for the extract of the judgement held.

7. SECTION 139 OF THE INCOME-TAX ACT,

1961 - RETURN OF INCOME - CBDT FURTHER EXTENDS DATE FOR FILING INCOME-TAX RETURNS AND AUDIT REPORTS FOR ASSESSMENT YEAR 2018-19.

ORDER [F.NO.225/358/2018/ITA-II], DATED 8-10-2018The due date for filing of Income Tax Returns and Audit Reports for Assessment Year 2018-19 was 30th September, 2018 for certain categories of taxpayers. Central Board of Direct Taxes (CBDT) had earlier extended the date for filing of Income Tax Returns and various reports of Audit to 15th October, 2018. Upon consideration of representations from various stakeholders, CBDT further extends the 'due date' for filing of Income Tax Returns as well as reports of Audit (which were required to be filed by the said specified date) from 15th October, 2018 to 31st October, 2018 in respect of the said categories of taxpayers. However, as specified in earlier order dated 24.09.2018, assessees filing their return of income within the extended due date shall be liable for levy of interest as per provisions of section 234A of the Income-tax Act, 1961

8. SECTION 112A OF THE INCOME-TAX ACT, 1961 - LONG TERM CAPITAL GAINS - N O T I F I E D T R A N S A C T I O N S O F ACQUISITION OF EQUITY SHARES - CHARGEABILITY TO STT SHALL NOT APPLYNOTIFICATION NO. SO 5054(E) [F.NO. 60/2018 (F.No.370142/9/2017-TPL)], DATED 1-10-2018In exercise of the powers conferred by sub-section (4) of section 112A of the Income-tax Act, 1961 (43 of 1961) hereinafter referred to as the Income-tax Act, the Central Government, with a view to specify the nature of acquisition in respect of which the provision of sub-clause (a) of clause (iii) of sub-section (1) of section 112A of the Income-tax Act shall not apply, hereby notifies the transactions of acquisition of equity share entered into—(I) before the 1st day of October, 2004; or(II) on or after the 1st day of October, 2004 which are not chargeable to securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004), other than the following, namely:—(a) where acquisition of existing listed equity share in a company whose equity shares are not frequently traded in a recognised stock exchange of India is made t h r o u g h a p r e f e r e n t i a l i s s u e : Provided that nothing contained in this clause shall apply to acquisition of listed equity shares in a company;—(i) which has


51

been approved by the Supreme Court, High Court, National Company Law Tribunal, Securities and Exchange Board of India or Reserve Bank of India in this behalf;(ii) by any non-resident in accordance with foreign direct investment guidelines issued by the Government of India;(iii) by an investment fund referred to in clause (a) of Explanation 1 to section 115UB of the Income-tax Act or a venture capital fund referred to in clause (23FB) of section 10 of the Income-tax Act or a Qualified Institutional Buyer; and(iv) through preferential issue to which the provisions of chapter VII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 does not apply.(b) where transaction for acquisition of existing listed equity share in a company is not entered through a recognised s t o c k e x c h a n g e i n I n d i a : Provided that nothing contained in this clause shall apply to the acquisition of listed equity shares in a company which has been made in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), and is—(i) through an issue of share by a company other than the issue referred to in clause (a);(ii) by scheduled banks, reconstruction or securitisation companies or public financial institutions during their ordinary course of business;(iii) approved by the Supreme Court, High Courts, National Company Law Tribunal, Securities and Exchange Board of India or Reserve Bank of India in this behalf;(iv) under employee stock option scheme or employee stock purchase scheme framed under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999;(v) by any non-resident in accordance with foreign direct investment guidelines of the Government of India;(vi) in accordance with Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulation, 2011;(vii) from the Government;(viii) by an investment fund referred to in clause (a) to Explanation 1 to section 115UB of the Income-tax Act or a venture capital fund referred to in clause (23FB) of section 10 of the income-tax Act or a Qualified Institutional Buyer; and(ix) by mode of transfer referred to in section 47 or section 50B or sub-section (3) of section 45 or sub-section (4) of section 45 of the Income-tax Act, if the previous owner or the transferor, as the case may be, of such shares has not acquired them by any mode referred

to in clause (a) or clause (b) or clause (c) [other than the transactions referred to in the proviso to clause (a) or clause (b)].(c) acquisition of equity share of a company during the period beginning from the date on which the company is delisted from a recognised stock exchange and ending on the date immediately preceding the date on which the company is again listed on a recognised stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 read with Securities and Exchange Board of India Act, 1992 (15 of 1992) and the rules made thereunder;Explanation.— For the purposes of this notification,—(a) "frequently traded shares" means shares of a company, in which the traded turnover on a recognised stock exchange during the twelve calendar months preceding the calendar month in which the acquisition and transfer is made, is at least ten per cent. of the total number of shares of such class of the company: Provided that where the share capital of a particular class of shares of the company is not identical throughout such period, the weighted average number of total shares of such class of the company shall represent the total number of shares;(b) 'listed' means listed in a recognised stock exchange in India in accordance with the Securities Contracts (Regulation) Act, 1956 and the rules made thereunder;(c) "preferential issue" and "Qualified Institutional Buyer" shall have the meanings respectively assigned to them in sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;(d) "public financial institution" and "scheduled bank" shall have the meanings respectively assigned to them in Explanation to clause (viia) of sub-section (1) of section 36 of Income-tax Act;(e) "recognised stock exchange" shall have the same meaning assigned to it in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956; and(f) "reconstruction company" and "securitisation company" shall have the meanings respectively assigned to them in sub-section (1) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002).This notification shall come into force with effect from the 1st day of April, 2019 and shall accordingly apply in relation to the assessment year 2019-20 and subsequent assessment years.


52

NOTIFICATIONS - CENTRAL TAX:

Notification No 35/2018 -Central Tax dated th21 August,2018

The due date of furnishing return in FORM

GSTR-3B for month of July, 2018 is extended

from 20/08/2018 to 24/08/2018.




The due date of furnishing return in FORM

GSTR-3B & GSTR-1 for months of July, 2018 &

August, 2018 for registered persons in the State

of Kerala, whose principal place of business is

in Kodagu district in the State of Karnataka, and

whose principal place of business is in Mahe in

the Union territory of Puducherry is extended to

05/10/2018 and 10/10/2018 respectively. The

due date of furnishing return in FORM GSTR-1

for the quarter from July, 2018 to September,

2018 is extended for such registered persons

upto 15/11/2018.

Notification No 39/2018 -Central Tax dated th4 September,2018

Vide this notification following Rules are

amended in The Central Goods and Services

Tax Rules, 2017. Amendments are effective thfrom 4 September 2018 unless specified

otherwise.

Proviso added to Rule 22(4): A person to who

notice for cancellation of his registration is

issued in form GST REG-17 is compulsorily

required to file reply to the said notice. Now as

per amendment an option is given to file the

pending GST returns along with full payment of

tax, applicable interest and late fee. The filing of

pending returns would result in closure of

proceedings initiated by the department for

cancellation of registration. The Officer is

required to issue order in Form GST REG-20 to

drop said proceedings.

Proviso added to Rule 36(2): The provision of

this sub rule leads to denial of ITC on account of

non mentioning all the particulars on invoice

that are specified under invoice Rule. Now an

amendment is made to allow ITC as long as the

following mandatory details are given in

invoice: GST amount, description of goods or

services, total value of supply, GSTIN of the

supplier and recipient and place of supply in

case of inter-State supply.

Rule 55(5): Rule 55 allows transportation of

goods on delivery challan in certain situations.

Now this facility to issue delivery challan is also

made available for transpiration of goods in

batches or lots. This is subject to other

conditions as contained in Rule. E way bill is

also modified for this.

Rule 89(4) (E): Clause E is newly substituted. “Turnover

of Zero rated supply of services” in the denominator

was not calculated in the same manner as per

numerator hence resulting in adoption of different

value for the same zero rated supply in numerator and

denominator. The definition of adjusted total turnover

has been amended in order to adopt the same turnover

of zero rated supply of service for numerator and

denominator.

Rule 96(10): The sub Rule is substituted with

retrospective effect from 23/10/2017. The Sub

rule is substituted to clearly bring out that the

refund of IGST paid on export of goods or

services will not be admissible if the supplier

claiming refund avails the benefit of any

notifications specified in sub rule.

GST UPDATEGST UPDATE

CA Nitin D. Kenia and CA Bharat K. Gosar

Compiled by:


53

Rule 138A: Second proviso is added. The

person in charge of conveyance or transporter

is required to carry the copy of Bill of entry in

addition to invoice/ Bill of supply / delivery

challan and copy of E way bill while

transporting imported goods. The number and

date of Bill of Entry is required to be specified in

part A of E way Bill in GST EWB-01.


Vide this notification time limit for making

declaration for all periods from July 2017 to

June 2018 in form GST-ITC-04 in respect of

goods sent to job worker or received from Job

worker or sent from one Job worker to another

is extended till 30/09/2018.


The Central Government has waived the late fee

paid u/s 47 of the CGST Act, 2017 by the

following classes of taxpayers (i) The registered

persons whose return in FORM GSTR-3B for

October, 2017 was submitted but not filed on

the common portal, after generation of the ARN

number, (ii) The registered persons who have

filed the return in FORM GSTR-4 for the period

October to December, 2017 by the due date but

late fee was erroneously levied, (iii) The Input

Service Distributors who have paid the late fee

for filing or submission FORM GSTR-6 for any

tax period between the 01/01/2018 and

23/01/2018.


The Commissioner hereby extends the time

limit for making the declaration in FORM GST

ITC-01 by registered persons who have filed the

application in FORM GST-CMP-04 between

02/03/2018 and 31/03/2018, upto 04/10/2018.


The registered person having aggregate

turnover of up to Rs.1.5 Crores in the preceding

financial year or the current financial year are

required to furnish return Form GSTR-1 for

outward supply on quarterly basis. Last date of

nd rd thfurnishing such GSTR -1 for 2 , 3 , 4 Quarter st ndof FY 2017-18 and 1 and 2 quarter of FY

rd2018-19 shall be 31/10/2018, due date of 3 thquarter & 4 Quarter of FY 2018-19 will be

31/01/2019 & 30/04/2019 respectively.

In terms of notification No 31/2018 -Central tax thdated 6 August,2018, the persons, who did not

file the complete FORM GST REG26 of the

Central Goods and Services Tax Rules, 2017

but received only a Provisional Identification

Number (PID) till the 31st December, 2017 were

allowed to apply for Goods and Services Tax

Identification Number (GSTIN). Due date for

such person for furnishing FORM GSTR-1 for

the quarters from July, 2017 to September,

2018 shall be 31/12/2018.

Time limit for furnishing return Form GSTR-2

& GSTR-3 for April to Jun'18 shall be notified

subsequently.


The registered persons having aggregate

turnover of more than Rs.1.5 Crores in the

proceeding financial year or the current financial

year are required to furnish return Form GSTR-1 for

outward supply on monthly basis. Last date of

furnishing such GSTR-1 for July to September 2018

months will be 31/10/2018 & for the months from thOctober, 2018 to Mrach, 2019 will be 11 day of next

month. Due date for the months from July,2017 to

November, 2018 for Persons who have obtained GSTIN

in terms of notification No 31/2018 -Central tax dated th6 August,2018 shall be 31/12/2018.

Time limit for furnishing return Form GSTR-2 & GSTR-3

for the period July 17 to March 18 shall be notified

subsequently.th Notification No 45/2018 -Central Tax dated 10

September,2018th Notification No 46/2018 -Central Tax dated 10

September,2018th Notification No 47/2018 -Central Tax dated 10

September,2018

Due date for furnishing the return in GSTR-3B for the

periods from July,2017 to November, 2018 for

taxpayers who have obtained GSTIN in terms of thnotification No 31/2018 -Central tax dated 6


August,2018 shall be 31/12/2018. th Notification No 48/2018 -Central Tax dated 10

September,2018

Vide this notification following Rules are amended in

The Central Goods and Services Tax Rules, 2017. thAmendments are effective from 10 September 2018.

Rule 117(1A) : By adding this sub rule now powers are

given to the Commissioner to extend the date for

submitting the declaration electronically in FORM GST

TRAN-1 by a further period not beyond 31st March,

2019, in respect of registered persons who could not

submit the said declaration by the due date on account

of technical difficulties.

Rule 117(4) (b) (iii): The registered persons who are

allowed to file the declaration in FORM GST TRAN-1 due

to technical glitches can submit the statement in FORM

GST TRAN-2 by 30/04/2019.

Rule 142(5): By amending this sub rule now Penalty

Order u/s 125 will also be required to be uploaded

electronically in FORM GST DRC-07 specifying penalty

amount payable by the person.

NOTIFICATIONS - CENTRAL TAX-RATE:th Notification No. 22/2018-Central Tax (Rate) dated 6

August, 2018.

Exemption from the whole of the CGST leviable u/s 9(4)

of the CGST Act, 2017 was made available for intra-State

supplies of goods or services or both received by a

registered person from unregistered person. The said

exemption was available where the aggregate value of

such supplies of goods or service or both received by a

registered person from any or all the unregistered

suppliers was upto Rs. 5000/-. The exemption was

available for such supplies received upto 30/09/2018.

Now the date is extended and exemption will continue

till 30/09/2019.

CIRCULARS - CGST:th Circular No. 55/29/2018-GST-dated 10 August, 2018.

It is clarified that services provided by private ITI in

respect of designated trades notified under

Apprenticeship Act, 1961 are exempt from GST under

serial number 66 of notification no. 12/2017(CT (Rate).

Service provided by a private ITI in respect of other

than designated trade would be liable to GST. It is

further clarified that in case of designated trades,

Services provided by a private ITI by way of conduct of

entrance examination against fees will be exempt from

GST under serial number 66(aa) whereas service

relating to admission to or conduct of examination will

be exempt under serial number 66- both of

notification 12/2017-CT(Rate).th Circular No. 56/30/2018-GST-dated 24

August, 2018.

The Government has in details clarified

provision related to lapsing of input tax credit

accumulated on account of inverted duty

structure on fabrics for the period upto

31/07/2018.

Circular No. 57/31/2018-GST-th dated 4 September, 2018.

The Government has in details clarified scope

of principal – agent relationship in the context of

schedule 1 of the CGST Act.


It is clarified that taxpayers may reverse the wrongly

availed CENVAT credit under the existing law and

inadmissible transitional credit through Table 4(B) (2) of

FORM GSTR-3B. The applicable interest and penalty

shall be paid all such reversals through entry in column

9 of Table 6.1 of FORM GSTR-3B.


In the Circular, clarification is given in details for refund

related issues


The Government has clarified as regards processing of

refund applications filed by Canteen Stores Department

(CSD).


The Government has clarified as regards procedure and

requirements with respect to E-way bill in case of

storing of goods in godown of transporter.

ORDERS: CGST: TH Order No. 3 /2018 – GST- dated 16 August, 2018.

Vide this order, the Government has constituted

Standing Committee under sub-rule (4) of rule 97 of

Central Goods and Services Tax Rules, 2017.

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NOTIFICATIONS - CENTRAL TAX:

· Notification No 49/2018 -Central Tax dated th13 September, 2018

As per Rule 80(3) of CGST Rules, 2017 every

registered person whose aggregate turnover

during a financial year exceeds Rs. 2 crore

shall get his accounts audited as specified u/s

35(5) and he shall furnish a copy of audited

annual accounts and a reconciliation

statement, duly certified in FORM GSTR-9C.

Vide this notification Government has

introduced FORM GSTR-9C W.E.F.

13/09/2018.


With effect from 01/10/2018, provisions of

section 51 related to tax deduction at source

@ 2 % (1%+1%) from the payment made or

credited to the supplier of taxable goods or

services or both of total value under a

contract, exceeding Rs. 2,50,000/- by a

department or establishment of the Central

Government or State Government, local

authority, Governmental agencies, an

authority /a board /any other body set up by

an Act of Parliament or a State Legislature or

established by any Government with 51 % or

more participation by way of equity or control

to carry out any function, Society established

by the Central Government or the State

Government or a Local Authority under the

Societies Registration Act, 1860 (21 of 1860)

or public sector undertakings.



· Notification No 02/2018 –Integrated Tax thdated 20 September, 2018

With effect from 01/10/2018, provisions of

section 52 related to tax collection at source

by every electronic commerce operator, not

being an agent, shall collect an amount

calculated @1% of the net value of taxable

supplies made through it. Rate of TCS shall

be 1 % (0.5 % CGST + 0.5 % SGST) in case of

intra state supplies and 1 % IGST in case of

interstate supplies.

· Notification No 53/2018 -Central Tax dated th9 October, 2018

The Government has substituted Rule 96(10)

with retrospective effect from 23/10/2017

pertaining to IGST refund to exporters. By

substituting this sub Rule Government has

restored the original version as inserted on

23/01/2018 WEF 23/10/2017.

· Notification No 54/2018 -Central Tax dated th9 October, 2018

This notification amends rule 96(10) to allow

exporters who have received capital goods

under the EPCG scheme to claim refund of

the IGST paid on exports and align rule

89(4B) to make it consistent with rule 96(10)

NOTIFICATIONS - CENTRAL TAX-RATE:

· Notification No 23/2018-Central Tax (Rate) thdated 20 September, 2018.

This notification seeks to insert explanation

in serial number 41 in notification No.

12/2017 – Central Tax (Rate). Explanation is

added to clarify that the Central

Government, State Government or Union

territory shall have 50 per cent or more

ownership in the entity directly or through an

entity which is wholly owned by the Central

Government, State Government or Union

territory.

CIRCULARS - CGST:

h Circular No. 62/36/2018-GST dated 12

September, 2018.It is clarified that GST on Priority Sector Lending Certificate (PSLC) for the period 1.7.2017 to 27.05.2018 will be paid by the seller bank on forward charge basis and GST rate of 12% will be applicable on the supply.

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REGN. NO. MCE / 167 / 2018-20 / RNI NO. : 67578 / 97

h· Circular No. 63/37/2018-GST dated 14

September, 2018.

Vide this Circular Government has clarified

in details regarding processing of refund

claims filed by UIN entitles.


September, 2018.

It is clarified that where consignment of

goods is accompanied with an invoice or

specified document and also an e-way bill,

proceedings under section 129 of the CGST

Act may not be initiated in the following

specified situations : Spelling mistakes in the

name of the consignor or the consignee but

the GSTIN is correct; Error in the pin-code

but the address of the consignor and the

consignee mentioned is correct; Error in the

address of the consignee; Error in 1/2 digits

of the document number mentioned in the e-

way bill; Error in 4/ 6 digit of HSN where the

first 2 digits of HSN and rate of tax are

correct; Error in 1/2 digits/characters of the

vehicle number. It is further clarified that in

such cases penalty of Rs. 500/- +Rs. 500

(CGST/SGST) should be imposed (Rs.1000/-

under the IGST Act).

h· Circular No. 65/39/2018-DOR dated 14

September, 2018.h· Circular No. 67/41/2018-DOR dated 28

September, 2018.

Under Section 51 of the CGST Act 2017 the

Government Agencies (Deductor) or any

other person to be notified in this regard is

required to deduct tax at source (TDS) from

the payment made or credited to the supplier

(Deductee) of taxable goods or services or

both where the total value of such supply,

under a contract, exceeds Rs. 2.5 lacs. Vide

this circular Guidelines in details is issued

for Deductions and Deposits of TDS.


September, 2018.

In this circular Government has clarified

regarding GST applicability on Residential

programmes or camps meant for

advancement of religion, spirituality or yoga

where the fee charged includes the cost of

boarding and lodging by religious and

charitable trusts.

th· Circular No. 68/42/2018-GST-dated 5

October, 2018.

It is clarified that UN and specified

international organizations, foreign

diplomatic missions or consular posts in

India, or diplomatic agents or career

consular officers posted therein as specified

U/S 55 of the CGST Act, 2017, are entitled to

refund of Compensation Cess payable on

intra-State and inter-State supply of goods or

services or both received by them.

ORDERS: CGST: th · Order No. 4 /2018 – GST- dated 17

September, 2018.

The Commissioner has extended due date for

submitting the declaration in FORM GST

TRAN-1 till 31st January, 2019, for the class

of registered persons who could not submit

the said declaration by the due date on

account of technical difficulties on the

common portal and whose cases have been

recommended by the Council.

Disclaimer: The views / opinions expressed in the articles are purely of the writers. The readers are requested to take proper professional guidance before abiding the views expressed in the articles. The publisher, the editor and the association disclaim any liability in connection with the use of the information mentioned in the articles.

PRINTED AND PUBLISHED BY MANOJ SHAH ON BEHALF OF C.V.O. CHARTERED AND COST ACCOUNTANTS' ASSOCIATION - 304, JASMINE APARTMENT, DADA SAHEB PHALKE ROAD, DADAR (EAST), MUMBAI - 400014.TEL: 022-241059873. EDITOR: RAMESH CHHEDA

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