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www.ctconline.orgTHE CTC NEWS | December 2020 1

RNI No. MAHENG/2015/67505I Postal Reg. No. MCS/210/2019-21

Vol. VII I Issue 5 I December 2020 I Total Pages• 18 I Price: `2/-

THE CTC NEWSMonthly Newsletter of The Chamber of Tax Consultants

(For Private Circulation - Members Only)

Leadership is an action, not a position

”“ - Donald H. McGannon

L E A D E R S H I P


SR. NO. DATE COMMITTEE PROGRAMME DESCRIPTION

PG. NO.

1. 09-12-2020 Indirect Taxes IDT Study Circle Meeting (For IDT SC Members only) 3

2. 11-12-2020 Direct Taxes Workshop on The Direct Tax Vivad Se Vishwas Act, 2020 3

3. 11-12- 2020 & 13-12-2020

Membership & Public Relations

Aalekhan Leading Drafting Ki Pathshala (In association with Jaipur Chartered Accountants Group ( JCAG)

10

4. 14-12-2020 Indirect Taxes Webinar on E-Invoicing- A New Concept under GST & New Quarterly Return Filling 8

5. 16-12-2020 & 17-12-2020

Student & Membership & Public Relations

Workshop on Speed Reading and Dynamic Memory 4

6. 18-12-2020 Direct Taxes Intensive Study Group Meeting (For ISG Members only) 2

7. 18-12-2020 Residential Refresher Course

Webinar on Current Market Scenario - Strategy and Roadmap for Investors (Jointly with Matunga Gymkhana and IGF (SEBI Regd. Investor Organisation)

8

8. 08-01-2021 Membership & Public Relations

SAS Meeting: Taxation through the lens of Indian mythology 5

9. 26-02-2021 to 28-02-2021

Indirect Taxes 9th Residential Refresher Course (RRC) on GST ( In Virtual Mode ) 6-7

10. 02, 03, 15, 16, 17-01-2021

International Taxation

Webinar Series - TDS u/s 195 On Foreign Remittances Including Procedural Aspects 9

11. 11-03-2021 to 14-03-2021

Residential Refresher Course

44th Residential Refresher Course (In Virtual Mode) 5

12. — — Important Decisions Under GST and Service Tax Laws 11

13. — — Unreported Tribunal Decision 15

14. — — Sale of Publication – Permanent Establishment –Emerging Trends 16

15 — — Sale of Publication – 56 ( 2 ) ( x ) – A Treatise 17

Note : All the events will be held through virtual platform (Zoom App) Kindly enrol at the earliest to avoid disappointment. Participation Fees to be paid online on the website : www.ctconline.org

Due to lock down, The Chamber’s office is not fully functional.If members have any query, kindly contact the following staff members.

Hitesh G. Shah : Chief Manager - 9821889249 | Pradeep Nambiar - Dy. Manager-Events - 8080254129Bindu Mistry : Dy. Manager-Technical - 9637692312 Manisha Kasbe : Dy. Manager-Accounts - 8104816841

CONTENTS

DIRECT TAXESChairman: Dinesh Poddar | Co-Chairman: Ashok Mehta | Vice-Chairman: Abhitan Mehta Convenors: Chintan Gandhi, Nimesh Chothani, Viraj Mehta| Advisor: Mahendra Sanghvi

Sr. No. Topic Speaker

1. Recent Important Direct Tax Decisions CA Prachi Parekh

Day & Date: Friday, 18th December, 2020

Time: 06.00p.m. to 08.00 p.m.

Intensive Study Group Meeting (For ISG Members Only)



1. Issues regarding Schedule III Entries under GST Mr. Ramnath Prabhu, Advocate

INDIRECT TAXESChairman: Atul Mehta | Vice-Chairman: Sumit Jhunjhunwala Convenors: Hemang Shah, Kush Vora, Keval Shah | Advisor: Rajiv Luthia

IDT Study Circle Meeting (For IDT SC Members only)Day & Date:

Wednesday, 09th December, 2020 Time:

05.30 p.m. to 07.30 p.m.

DIRECT TAXESChairman: Dinesh Poddar | Co-Chairman: Ashok Mehta | Vice-Chairman: Abhitan Mehta Convenors: Chintan Gandhi, Nimesh Chothani, Viraj Mehta| Advisor: Mahendra Sanghvi

Sr. No. Topics Speakers

1. Discussion on Direct Tax Vivad Se Vishwas Act, 2020 & Q&A Session. Mr. Dharan Gandhi, Advocate

2. Procedure & Practical Issues in filing Forms under Direct Tax Vivad Se Vishwas Act, 2020

CA Vinodkumar Jain

Participation Fees

For Student Members ` 300/- + ` 54/- (18% GST) = ` 354/-

For Non-Student Members ` 500/- + ` 90/- (18% GST) = ` 590/-


Time: 05.00 p.m. to 08.00 p.m.

Workshop on The Direct Tax Vivad Se Vishwas Act, 2020

In the Union Budget of 2019, the Government introduced ‘Sabka Vishwas Scheme’ with a view to reduce litigation in indirect taxes. This scheme was very effective and over 1,89,000 taxpayers resolved their cases pending across all forums. Similarly, in direct taxed ‘The Vivad se Vishwas Bill’ was introduced in the Lok Sabha on 5th February, 2020. The intention of the Legislature in introducing Vivad se Vishwas Act is to reduce pending income tax litigation and at the same time put an end to prolonged litigation. The waiver of interest, penalty and as a consequence, waiver of prosecution, are the direct benefits that an assessee will get immediately once his case is settled under the Act.

This should give encouragement and cheer to all taxpayers, as it would give finality to litigation.

The Act also provides for savings in terms of time and resources. At the same time, it would bring immediate revenue to the Government.

Considering the grip of Corona virus in the Country, the Government announced that the “period of Vivad se Vishwas Act for making payment without additional amount will be extended to 31st March, 2021”. Consequently, this extension will now bring much relief to the tax payers and will enable more people to take benefit and advantage of the Act.

With a view to refresh ourselves and to understand the insights & issues of the Direct Tax Vivad Se Vishwas Act, 2020; Chamber has organized a detailed workshop on Direct Tax Vivad Se Vishwas Act, 2020 followed by a Q&A session:-


Speaker

CA Sriniwas Vakati (He is a certified Neuro Linguistic Programming Master Practitioner and Memory Trainer)

Participation Fees

For Students and CTC Members Free

For Non-members ` 200/- + ` 36/- (18% GST) = ` 236/-

STUDENTChairperson: Varsha Galvankar | Vice-Chairperson: Niyati Mankad | Vice-Chairman: Vitang ShahConvenors: Raj Khona, Charmi Shah | Advisor: Ajay Singh

MEMBERSHIP & PUBLIC RELATIONSChairperson: Nishtha Pandya | Co-Chairman: Premal Gandhi | Vice-Chairperson: Ashita Shah Convenors: Bandish Hemani, Tanvi Vora | Advisor: Hitesh R. Shah

Day & Date: Wednesday, 16th December, 2020

– Speed Reading Thursday, 17th December, 2020

– Dynamic Memory Time:

05.30 p.m. to 07.30 p.m.

Workshop on Speed Reading and Dynamic Memory

Speed Reading is not just about reading faster, it is the ability to comprehend the information better and retain it longer.

The ability to read faster is a very important skill, especially for people who need to read a large amount of text every day, such as; students, editors, reading enthusiasts, etc.

It is therefore necessary for us to increase and develop the life skill of Speed Reading and Dynamic Memory

To learn new techniques of Speed Reading and to apply it in our life, the Student Committee jointly with Membership Committee of The Chamber of Tax Consultants is pleased to present Life skill workshop on “Speed Reading and Dynamic Memory”.

Details of the workshop:-

What will you learn in this workshop?

What is your reading speed? How to calculate your reading speed?

Myths, misconceptions of reading and what are the facts.

Your reading habits – Good and Bad and how to overcome your bad reading habits.

Eyes: How to use your eyes in a right way to increase your

reading speed

Practical Techniques to double your Reading Speed.

Biggest mistake every reader makes. This lesson will change

the way you look at reading forever.

Right state for reading a book.

Right mindset for reading.

Step-by-Step system to read any book and retaining what you

have read

Tips for reading on a computer screen and other Electronic

Devices.

Basics of memory

3 principles for remembering ANYTHING

Memory technique to remember important numbers


Fees

SAS Members For Members SAS : Free

For Others ` 100 + ` 18/- (18% GST)

Speaker

CA Dinesh Agarwal (A Transfer Pricing Professional, Founding member of Hong Kong Chapter of ICAI, “A total of IQ + EQ is always 100” Evangelist, amateur author, trainer in finance, cricket commentator, quiz master.)


Day & Date: Friday, 8th January, 2021

Time: 05.30 p.m. - 07.30 p.m.

SAS Meeting: Taxation through the Lens of Indian Mythology

There is a saying if you want to impress someone make any subject matter look and feel extremely complex but the idea is to help and aid in his/her understanding keep it very simple! A burger may be sweet in Gujarat, lot spicy in Andhra Pradesh and perhaps differently enabled across India offering fascinating intrinsic diversity. Consequently, the world of taxation is about nuanced perspectives and hyper local understanding. Please join the workshop for an engaging acute insights on understanding taxation through the lens of Indian mythology.

Details of the workshop:-What will you learn in this workshop?

— The form, substance and conduct of humanity across all four yugas & its influence in establishment of societal laws.

— A deep dive into concepts of “sound of silence” vis-à-vis light behind darkness impacting taxation laws.

Details of the meeting are as under:

Watch this space Detailed Announcement to follow

RESIDENTIAL REFRESHER COURSEChairman: Mehul Sheth | Vice-Chairmen: Bhavik Shah, Ankit Sanghavi Convenors: Darshak Shah, Pratik Doshi | Advisor: Kishor Vanjara

44TH RESIDENTIAL REFRESHER COURSE 44TH RESIDENTIAL REFRESHER COURSE (IN VIRTUAL MODE)(IN VIRTUAL MODE)

Block Your

DatesThursday,

11th March, 2021to Sunday,

14th March 2021


9th Residential Refresher Course (RRC) on GST [VIRTUAL MODE]


Day & Date: Friday 26th February 2021 to Sunday 28th February 2021

The year 2020-21 is a unique year in the history of mankind where masks, sanitizers, social distancing, work from home, VIRTUAL MEETINGS/WEBINAR’S, etc have become “New Normal”. Not to be dithered by the COVID-19 challenges, CTC has decided to hold its annual flagship event i.e. GST RRC as per schedule – only this time it will be in VIRTUAL MODE keeping the safety concerns of participants and faculties in mind. While the participants may have to give a skip to the personal ‘Touch’, exotic venue and sumptuous food, which were some of the Hallmarks of the erstwhile RRCs, the key Take Aways [new norms] of this year’s RRC in Virtual Mode would be the enthusiastic knowledge sharing, intense group discussions, in-depth deliberations by eminent faculties and overall knowledge dissemination with the same vibrancy and personal ‘Touch’. CTC brings you this virtual GST RRC with the same spice, stuffings and deserts as in all RRC’s. Significant features of ensuing Virtual RRC:• 2 Exhaustive case study papers covering substantive and

conceptual issues written by eminent experts in the field.

• Adequate time for group discussions under the guidance of experienced group leaders and senior mentors.

• Sufficient time at the disposal of faculties to express their views on the case studies with expert c o m m e n t s /t o p p i n g s by Technical Chairmen.

• Presentation paper on a novel subject by renowned counsel.

• A Unique and Flavored Panel Discussion [desert] by eminent experts from the field of Indirect tax and Direct tax (Domestic and International) giving inter alia their views on various business transactions culminating in 360 degree views with convergence of GST, Direct tax and other laws as applicable.

• RRC being conducted on virtual platform, participants can connect from their office, home or any other comfortable/cozy place.

Papers for Discussion

PAPER I Case Studies on Levy & Scope of Supply and Place of Supply Paper Writer: CA Nilesh Vasa

Chairman: CA Jayraj Sheth

PAPER II

Case Studies on Valuation, Classification and ITC Paper Writer: Adv Vipin Jain

Chairman: Adv C. S. Lodha

Paper for Presentation

PAPER III Foreign jurisprudence relevant to GST law Adv. Rohan Shah

Panel Discussion

PAPER IV Case Studies – GST and Direct Tax Perspective including other legal ramifications Panelists:1. Adv. K. Vaitheeswaran 2. Adv. Rohit Jain3. CA Yogesh TharModerator: CA A. R. Krishnan

Fees Early Bird registration fees on or before 15/01/2021 Registration fees from 16/01/2021

Members ` 3,000 + ` 540 (18% GST) = ` 3,540/- ` 3,500 + ` 630 (18% GST) = ` 4,130/-

Non-Members ` 3,500 + ` 630 (18% GST) = ` 4,130/- ` 4,000 + ` 720 (18% GST) = ` 4,720/-


TENTATIVE PROGRAMME SCHEDULE

1st Day –Friday 26th February, 2021

09 30 am to 12.00 noon Group Discussion on Paper I “Levy & Scope of Supply and Place of Supply”

12.00 noon to 04.15 pm Break (Group Leaders of paper I will report to CA Nilesh Vasa during 1.00 PM to 3.00 PM)

04.15 pm to 04.45 pm Inaugural Session

05.00 pm to 07.30 pm Assembly and presentation of paper I “Levy & Scope of Supply and Place of Supply” by Paper Writer CA Nilesh Vasa with comments by Technical Chairman CA Jayraj Sheth.

2nd Day - Saturday 27th February, 2021

09 30 a.m. to 12.00 noon Group Discussion on Paper II “Valuation, Classification and ITC”

12.00 noon to 03.15 pm Break (Group Leaders of paper II will report to Advocate Vipin Jain during 1.00 PM to 3.00 PM)

03.15 pm to 04.45 pm Assembly and Presentation Paper “Foreign jurisprudence relevant to GST law” by Advocate Rohan Shah.

05.00 pm to 07.30 pm Assembly and presentation of paper II “Valuation, Classification and ITC” by Paper Writer Advocate Vipin Jain with comments by Technical Chairman Advocate C. S. Lodha.

3rd Day – Sunday 28th February, 2021

09.30 am to 11.15 am Assembly and Panel Discussion “Case Studies – GST and Direct Tax Perspective including other legal ramifications” Panelists1. Advocate K. Vaitheeswaran 2. Advocate Rohit Jain3. CA Yogesh TharModerator: CA A. R. Krishnan

11.15 am to 11.30 am Break

11.30 am to 01.00 pm Panel Discussion Continues

01.00 pm to 01.20 pm Concluding Session

Other relevant information: • RRC will commence at 9.15 AM on Friday, 26th February 2021 and conclude at 1.30 PM on Sunday, 28th February 2021.

• RRC fees includes course material and access to attend all sessions on virtual platform.

• Request for refund will not be entertained except where cancellation is for genuine unavoidable circumstances and it will be subject to the discretion and approval of Managing Council of CTC.

• Please provide your unique email ID from which you will join technical sessions of the RRC. Group allocations for discussion papers and entry to sessions will be based on such unique Email ID provided by participant at the time of registration.

• Participants may enroll from the Chamber’s website www.ctconline.org and make online payment.

• Members can also download the “Form” from The Chamber’s website www.ctconline.org or may collect it from The Chamber’s office and send it along with the Cheque/DD/Pay Order in favour of “The Chamber of Tax Consultants.”

• Outstation members are requested to make the payment by at par Cheque / Demand Draft only or can make online payment through Chamber’s website www.ctconline.org.

For enrollment and RRC related inquiries, please contact Mr. Hitesh Shah – 7977258507 Mr. Pradeep Nambiar - 8080254129


Webinar on E-Invoicing - A New Concept under GST & new Quarterly Return Filling


1. E-Invoicing - A New Concept under GST & new Quarterly Return Filling. CA Pranav Kapadia


Day & Date: Monday, 14th December, 2020.

Time: 5.00 pm to 7.00 pm.

The GST System Project is a unique and complex IT initiative. It is unique as it seeks to establish a uniform interface for the taxpayer. It also establishes a common and shared IT infrastructure between the Centre and States.

GST e-invoice is a step towards achieving the said goal. It introduces a feature of digital invoice for goods and services provided by the business firm generated at the government GST portal. The concept of GST e-invoice generation system has been taken into consideration for the reduction in GST evasion.

Within a time span of three and half years we have witnessed frequent changes along with numerous circulars & clarification, on return filling and their due dates. A major dichotomy for filling of GSTR-1 & GSTR-3B for small taxpayer’s was one on quarterly & second on monthly thus giving no benefit to the taxpayer. In order to align both, QRMP Scheme have been introduced from 01/01/2021.

To update members regarding E-invoicing and QRMP scheme, IDT Committee of The Chamber of Tax Consultants has organized a webinar.


Time: 5.00 p.m. to 6.30 p.m.

Webinar on Current Market Scenario - Strategy and Roadmap for Investors (Jointly with Matunga Gymkhana and IGF (SEBI Regd. Investor Organisation)

RESIDENTIAL REFRESHER COURSEChairman: Mehul Sheth | Vice-Chairmen: Bhavik Shah, Ankit Sanghavi Convenors: Darshak Shah, Pratik Doshi | Advisor: Kishor Vanjara

Sr. No. Topic Speaker1 Current market scenario - strategy and roadmap for investors Mr. Saurabh Mukherjea, FRSA, CFA

He is the Founder and Chief Investment Officer of Marcellus Investment Managers. He has over two decades of experience in equity research and investment. A renowned figure on capital market segment.

Dear Members,

The RRC Committee of The Chamber of Tax Consultants alongwith Matunga Gymkhana and Investors Grievances’ Forum (SEBI Regd.

Investor Organization) has organised the webinar on Capital Market scheduled on December 18, 2020. This session is free and open to all.

The details of webinar are as follows

All are cordially Invited to take the benefit of the meeting.

All are cordially Invited to take the benefit of the meeting.


INTERNATIONAL TAXATIONChairman: Rajesh L. Shah | Vice-Chairman: Kirit Dedhia, Shabbir Motorwala Convenors: Isha Sekhri, Ronak Doshi, Kartik Mehta | Course Co-ordinators: CA Ronak Doshi & CA Kartik Badiani

Days & Dates: 2, 3, 15, 16, 17-01-2021

Webinar Series - TDS u/s 195 on Foreign Remittances Including Procedural Aspects

Sr. No. Day & Date Topic Timings

1 Saturday 02 Jan 2021 Overview on TDS on payments to NR under section 195

Basic of 195 including who is obliged to withhold tax, when to deduct, how much to deduct, when DTAA can be considered, whether NR to NR payments are also covered; Overview, entry into force and impact of MLI including entry into force of MLI for withholding tax purposes etc.

3 pm to 5 pm

2 Saturday 02 Jan 2021 Taxation of dividends and other income

Change in regime for taxation of dividends vide the Finance Act 2020, impact under various treaties, impact of MLI (Preamble, LOB, SLOB, PPT), MFN clauses, etc., Dividend payments to FIIs and other controversies including interplay between Sec 195 and 196A/196D

5.30 pm to 7.30 pm

3 Sunday 03 Jan 2021 TDS on capital gains including indirect transfer

Nature and taxation of capital gains for non-residents liable to withholding tax under the Act and DTAA, impact of MLI, impact of amendment to key tax treaties, grandfathering, BEPS, GAAR , etc. Capital gains on sale of Indian immovable properties by NR.

10.30 to 12.30 pm

4 Friday 15 Jan 2021 Taxation of royalty / FTS and digital payments - Part 1

Nature of payments liable to TDS as Royalty / FTS, various issues under DTAA such make available, software royalty, beneficial ownership, MLI, terms not defined, Permanent Establishment, Reimbursements, secondment, etc.

5.30 pm to 7.30 pm

5 Saturday 16 Jan 2021 Taxation of royalty / FTS and digital payments - Part 2

The Interplay between the taxation of the Royalty/FTS on gross basis and SEP 2016 EL, 2020 EL and selected case studies.

10.30 am to 12.30 pm

6 Saturday 16 Jan 2021 Procedural issues, commission and procurement payments

Procedures, 15CA / 15CB, 206AA, interplay between domestic rate, treaty rate, 206AA examples, how representation and documentation requirement has changed due to MLI, interest, penalty, refund of TDS, lower withholding application, TDS on commission and procurement payments

5.30 pm to 7.30 pm

7 Sunday 17 Jan 2021 Brains Trust session / Panel Discussion Queries or mixed case studies 10 am to 1 pm

Fees FOR ENTIRE WEBINAR SERIES (7 SESSIONS): For Members ` 1,250/- + ` 225 /- (18% GST) = ` 1,475/-

For Non-Members ` 1,500/- + ` 270 /- (18% GST) = ` 1,770/-FOR INDIVIDUAL SESSION: ` 300/- + ` 54/- (18% GST) = ` 354/-

Section 195 of the Income-tax Act, 1961 (Act) lays down the obligation for deduction of tax at source from payments made to non-residents which are in the nature of income taxable in India.

In order to be compliant with the provisions of section 195, one has to understand all the sections of the Act and Tax Treaties for taxing such foreign remittances and also determine the correct rate of tax to be applied. This position is then required to be declared and certified in Form 15CA/ 15CB. There have been series of recent changes which impact this exercise and there is interplay with other enactments e.g. the widened scope of equalization levy, etc. Further

impact of MLI has also to be considered while issuing certificate in Form 15CB. There is now a new scheme for taxation of dividends earned by shareholders including non-resident shareholders and there has been wide interpretation of the deemed incomes taxable under section 9 of the Act. With a view to understand and deal with all these issues and several other developments, the Chamber of Tax Consultants has organized this Seminar for the benefit of tax professionals and the professionals in the industry.

Overview of the topics proposed to be covered which will be ad-dressed by eminent faculties is as follows.


IMPORTANT DECISIONS UNDER GST AND SERVICE TAX LAWS By Vinay Kumar Jain and Sachin Mishra, Advocates

1. Whether Proviso to Section 50 of the Central Goods and Services Tax Act, 2017 (‘CGST Act’) is retrospective in operation even as the Notification brought it into effect prospectively?

Facts and Pleadings: Section 50 of the CGST Act deals with levy of interest on delayed remittance of the output GST liability. Section 100 of the Finance (No.2) Act, 2019 inserted a Proviso to Section 50 which stated that interest is leviable only on that portion of output liability which is discharged by way of cash. The date on which the said amendment would become effective was not specified. Later, in the minutes of the 39th GST Council meeting where the recommendation to insert the Proviso was discussed, it was stated that the amendment would be retrospective w.e.f. 1.7.2017. Subsequently, vide Notification No. 63/2020-Central Tax, dated 25.8.2020, the Central Government notified 1.9.2020 as the date on which the Proviso would come into force. This led to doubts and apprehension in the industry. The Central Board of Indirect Taxes and Customs (‘CBIC’) issued a Press Release dated 26.8.2020 stating that the notification was issued prospectively only to get over technical limitations and the decision of the GST council in the 39th meeting would be given full effect. The GST Authorities had issued notices to the assessees levying interest on the total output liability including the portion discharged by way of Input Tax Credit (‘ITC’). In case of many assessees, no opportunity was granted before confirming the levy of interest and proceedings to recover interest by attachment of bank accounts were resorted to. The issue before the Madras High Court was thus, on the effective date of application of the Proviso to Section 50 of the CGST Act.

The Assessees argued that the credit was available even before output tax liability arose and hence the question of delay does not arise. Interest is a measure of compensation and since ITC is already available in the electronic ledger, there is no question of the same being due to the revenue. No opportunity was granted before raising the impugned demand and consequential proceedings. The Assessees also argued that the Proviso has been inserted to set right an anomaly and is therefore retrospective in operation. The Assessees relied on the decision of Madras High Court in Refex Industries Limited v. Assistant

Commissioner, decision dated 6.1.2020 in W.P. No. 23360 & 23361 of 2019 wherein it was held the proviso to be applicable retrospectively.

The Revenue argued that Section 41 of the CGST Act provides that the entitlement to credit is only with the filing of return on self-assessment basis. Thus, same cannot be availed of till such time a return is filed by an assessee. As per Section 49 of the CGST Act, only when a credit entry is made in the electronic credit ledger the entitlement to avail the same arises. The effective date of applicability of Section 100 of the Finance (No.2) Act, 2019 was not notified when the decision in Refex Industries was rendered. Thus, the decision is of no benefit to the assessee. The Revenue further argued that the Telangana High Court in Megha Engineering and Infrastructure Ltd. v. Commissioner of Central Taxes, Hyderabad [W.P. No. 44517 of 2018] has held that liability to pay interest is on the total output liability including that portion discharged by utilising ITC. The Revenue relied on a clarification which was issued by the CBIC bearing No. 20/16/07/2020-GST, dated 10.2.2020 to the effect that liability to interest would arise on total amount of tax liability as revealed in the GST return.

Judgement: The Hon’ble High Court held that the Proviso to Section 50 of the CGST Act is retrospective in operation notwithstanding the notification bringing it into effect from 1.9.2020. Thus, interest is leviable only on that portion of the output GST liability discharged belatedly by way of cash with effect from 1.7.2017. The Hon’ble High Court also held that the decision of the Madras High Court in the case of Refex Industries, has dealt with this very issue and held in favour of the Petitioner. The Hon’ble High Court held that the Department is enriching itself doubly by, on the one hand, holding in its coffers the available credit and on the other, seeking the payment of interest upon the same sum. It is settled that where a Proviso was designed to eliminate unintended and prejudicial consequences which would cause hardship to a party, such a Proviso should be seen to be remedial and one that mitigated the prejudice caused from inception. Moreover, interest is intended to compensate the revenue for loss of capital. In the present case, there is no loss insofar as the revenue is in possession of the credit which is as good as cash. The decision of the Telangana


High Court in Megha Engineering is dated 18.4.2019, i.e., long prior to the amendment made to Section 50 by insertion of the Proviso and the clarifications issued by the GST Council and CBIC. The Hon’ble High Court held that this entire controversy has now been settled by the CBIC vide its Circular in F.No. CBIC 20/01/08/2019-GST, dated 18.9.2020 where it has reiterated that the amendment by insertion of Proviso of Section 50 of the CGST Act is intended to be retrospective and thus, recovery of interest will only be on net cash tax liability from 1.7.2017. The Hon’ble High Court observed that the Centre, the State and the CBIC are in agreement that the operation of the Proviso of Section 50 should only be retrospective and the interpretation to the contrary by the authorities constituted under the CBIC is misplaced. Further, on perusal of the minutes of 31st GST council meeting dated 22.12.2018, minutes of 35th GST Council meeting dated 21.6.2019, minutes of 39th GST Council meeting dated 14.3.2020, press release of the GST Council post the 39th meeting and the CBIC press release dated 26.8.2020, the Hon’ble High Court held that it is clear that the amendment is intended to be retrospective in nature.

M/s. Maansarovar Motors Private Limited and Ors. v. Assistant Commissioner and Ors., Madras High Court decided on 29.09.2020 in W.P. Nos. 28437, 29998, 31081 of 2019.

2. Whether Rule 5A of the Service Tax Rules, 1994 saved and authorities have power under Section 174(2)(e) of the CGST Act, 2017 to institute any investigation, inquiry, verification, assessment proceedings, adjudication, etc. after the enactment of CGST Act, 2017?

Facts and Pleadings: M/s. Vianaar Homes Private Limited (hereinafter referred to as ‘the Petitioner’) is inter alia engaged in the business of construction of housing complex. On 21.1.2020, the Petitioner was visited by officers of CGST, Audit II and required to produce some documents and information regarding to several group of companies of the Petitioner, to which the Petitioner complied. This process of visitation was repeated and it seemed that the process of audit and verification proceedings had begun. Aggrieved by this the Petitioners challenged the letter that commenced the audit process by the Respondents.

The Petitioner contended that the Respondents have exercised powers beyond their jurisdiction under Rule 5A of Service Tax Rules, 1994 and are not proper officers. The Petitioner also contended that the Section 25 of the General Clauses Act, 1897 isn’t applicable since the Central Goods and Services Tax Rules, 2017 have been framed with effect from 22.6.2017 and supersede Service Tax Rule, 1994. The Petitioner further contended that since no obligation or liability has been accrued or incurred and no right of privilege has been acquired by the Respondents, Section 6 of the General Clauses Act, 1897 cannot save the Rule 5A of the Service Tax Rules, 1994. The Petitioner contended that since the proceedings were not instituted at the time of repeal, Section 174(2)(e) of CGST Act cannot save the current proceedings and no service tax was due from Petitioners. The Petitioner further contended that the duty, tax etc. that is within contemplation of the saving clause is only that which falls within the ambit of section 72 & 73 of the Finance Act, 1994 and Rule 5A proceedings are in the nature of a roving enquiry that would not result in tax becoming due, and, therefore, cannot be resorted to in the facts of the present case.

The Respondents contended that the arguments advanced by the Petitioners have already been considered and dismissed in the case of Aargus Global Logistics Pvt. Ltd. v. UOI, 2020-TIOL-593-HC-DEL-ST wherein it has been held that Rule 5A of Service Tax Rules, 1994 survives the CGST Act. The Respondents contended that by virtue of Section 3 of CGST Act, CGST officers are vested with the right to exercise powers under the Central Excise Act/Finance Act. It was further contended that the legislature intent cannot be to overlook the cases where there has been a duty evasion by an assessee prior to coming into force of the CGST Act, and the adjudication process for determining the said evasion has not commenced. The Respondents contended that the saving clause was imported for the very reason to assess the cases like the present one.

Judgement: The Hon’ble High Court has held that Rule 5A of Service Tax Rules, 1994 was saved even after the omission of Chapter V of the Finance Act, 1994. The Hon’ble High Court has held that the proceedings which formed the subject matter of Service Tax Rules, 1994 cannot be ignored just because the new law was implemented simultaneously


with the repeal of old rules. If audit/verification would lead to any tax not paid or short paid, the adjudicatory process would necessarily follow. The Hon’ble High Court relied on the judgement of State of Punjab vs Harnek Singh, (2002) 3 SCC 48 and went on to look at the intention of legislature behind including the saving clause and came to conclusion that unless a different intention appeared the repeal of an act wouldn’t affect anything duly done or suffered. After determining the legislative intent for replacement of acts and looking at the articulation of Section 6 and Section 24 of the General Clauses Act, 1897 and the saving clause of CGST Act, the Hon’ble High Court has held that the Rule 5A of Service Tax Rules, 1994 is saved even though Chapter V of the Finance Act, 1994 is omitted.

M/s. Vianaar Homes Private Limited Vs. Assistant Commissioner (Circle-12), Central Goods & Services Tax, Audit-II and Ors. High Court of Delhi, decided on 03.11.2020 in W.P. (C) 2245/2020 and CM Appl. 7832/2020.

3. Whether levying of Service Tax on the Appellant under the category of “Banking and other Financial Services” on the amounts/value charged by the foreign bankers while delivering their inward remittance in foreign currencies to the Indian Bankers of the Appellant valid? Whether the services received by the Appellant from overseas companies for receipt of clinical or non-clinical overviews related to marketing the pharmaceutical goods manufactured and exported by the Appellant fall under the category of “Scientific or Technical Consultancy Services”?

Facts and Pleadings: M/s. Aurobindo Pharma Ltd. (hereinafter referred to as ‘the Appellant’) is inter alia engaged in manufacturer of bulk drugs as well as providing of various services. (i) The export sale proceeds from their overseas customers are collected by the Appellant’s Indian Banker. The Indian Banks, who collect the said amount for the Appellant, in the process are required to pay certain charges to the foreign banks who transfer the funds to Indian Banks. (ii) The Appellant is also receiving consultancy from overseas companies with regards some clinical and non-clinical overviews which are required to be enclosed as part of the application to be filed before the Regulatory Authorities in various European countries for the purpose of marketing the pharmaceutical goods manufactured and exported by

the Appellant.

The department has alleged that (i) service tax is payable under the category of “Banking and other Financial Services” on the amounts/value charged by the foreign bankers while delivering their inward remittance in foreign currencies to the Indian Bankers of the Appellant. The department has also alleged that (ii) the Appellant is liable to pay service tax under reverse charge mechanism on the charges paid to overseas companies for the aforesaid clinical and non-clinical overviews under “Scientific or Technical Consultancy Services”.

The Appellant contended that (i) even though the Appellant does not receive the entire amount of sale proceeds, but certain charges are deducted in receiving the sale proceeds as collection charges by the foreign bankers having tie-up with the Indian Banks, such charges cannot be said to be service charges recovered from the Appellant by the foreign banks. Thus, there is no relation of service provider and service recipient in the present case and hence Appellant cannot be chargeable to service tax under “Banking and other Financial Services”. The Appellant relied upon Green Ply Industries Ltd., 2015 (38) STR 605 (Tri-Del). The Appellant submitted that (ii) they have already paid Service Tax for the period from 1.6.2007 onwards under the category of ‘Management of Business Consultancy Service’ and such payment is not disputed by the Department and hence, same cannot be classified under “Scientific or Technical Consultancy Services”. The Appellant further submitted that overseas companies provide the services which are in nature of overviews and do not involve application of pure sciences for conducting research on samples of pharmaceutical products. Such services are not used for any scientific or development purposes but to meet the regulatory objective of the European Union in marketing their products. The Appellant argued that overseas companies are not Technology or Scientific organization but are a consultant firm engaged in providing regulatory compliance related services in Europe.

Judgement: (i) The Hon’ble CESTAT relied on Green Ply Industries Ltd., (supra) wherein it was observed that export sale proceeds from overseas customers are collected by appellants’ Indian Banker and even though appellants do not receive entire amount of sale proceeds, but certain charges are deducted in receiving sale proceeds as collection


charges by foreign bankers having tie-up with Indian Banks, such charges cannot be said to be service charges recovered from appellants by foreign banks. The Hon’ble CESTAT held that there is no relation of service provider and service recipient in the present case and hence, amount deducted by foreign banks in transferring funds from overseas customers to Indian Bank, who ultimately passed on amount to Appellant cannot be chargeable to service tax under category of “Banking and other Financial Services”. (ii) The Hon’ble CESTAT relied upon IPCA Laboratories, 2019 (21) GSTL 502 (Tri-Mum) to held that when such services are provided for marketing of the product in the overseas market to meet the regulatory requirement, the same cannot fall under the category of “Scientific or Technical Consultancy Services”.

M/s. Aurobindo Pharma Ltd. vs. CCE & ST, CESTAT, Hyderabad, decided on 9.9.2020 in Service Tax Appeal No. 26923 of 2013.

4. Whether service tax paid on premium paid to DICGC for getting insurance on depositor’s accounts is eligible for credit under CENVAT Credit Rules, 2004? Whether CENVAT credit of the service tax paid on the commission paid to the brokers for underwriting the government securities etc. and for making investments in securities to maintain mandatory SLR as per the Banking Regulation Act, 1949 is admissible?

Facts and Pleadings: M/s. Bank of America (hereinafter referred to as ‘the Appellant’) is a scheduled commercial bank. In order to provide financial services certain statutory requirements are imposed on the banks. (i) One such condition is deposition of amount with the Deposit Insurance Credit Guarantee Corporation (‘DICGC’) for getting insurance on depositor’s accounts. Service tax is charged on the amount that is paid as premium to the DICGC for which credit can be claimed later as CENVAT. (ii) The Appellant are also authorized by the Reserve Bank of India as a primary dealer (PD), to underwrite government securities. In addition to earning interest and trading profits on these government securities, Appellant also get underwriting commission which is subject to service tax. As per Section 11(2)(b)(ii) of the Banking Regulation Act, 1949, Appellant is statutorily required to deploy 20 to 25% of their funds in Government Securities and are also require to maintain mandatorily prescribed

Statutory Liquidity Ratio (SLR). For the purpose of these the Appellant avail the services of stock brokers to buy and sell these government securities in open market.

(i) The Appellant argued that issue in respect of admissibility of CENVAT Credit of the service tax paid on the premium paid to DICGC, by the banks, has been settled by the larger bench of the tribunal in case of South Indian Bank, 2020-TIOL-861-CESTAT-BANG-LB, holding that CENVAT Credit is admissible. The Appellant also relied upon DBS Bank Ltd, Appeal No ST/89524/2018 decided on 07.09.2020, Yes Bank Ltd, Appeal No ST/86654/2016, decided on 15.09.2020 and IndusInd Bank, Appeal No ST/86705/2016 decided on 29.09.2020 wherein aforesaid decision of Larger Bench was followed. (ii) The Appellants relied on PNB Metlife India Insurance Co Ltd, 2015-TIOL-1097-HC-KAR-ST and Reliance Industry Ltd, 2016 (1) TMI 19 CESAT Mumbai, to argue that the service tax paid by the Appellant will be admissible because it was paid on availing the services mandated by the RBI of maintaining capital adequacy or maintenance of SLR as per Banking Regulation Act, 1949. The Appellant further argued that the commission paid for under writing by the stock broker is a statutorily mandated activity. The Appellant also submitted that since the services of stock broker is essential for providing underwriting services to the RBI and also for maintaining prescribed SLR, there being a direct relation and nexus between the input and output services, the CENVAT Credit availed by Appellant on the commission paid to the brokers will be admissible.

(i) On the first issue, the department merely stated that they await confirmation from concerned Commissionerate on whether any appeal has been filed against the said judgment. (ii) The department contended that the services claimed by the Appellant to be taken by the broker are not in relation with providing of output services. Therefore, the service tax paid on brokerage commission will not be admissible as CENVAT Credit as it fails to fulfill the definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004. The


Note : THE FULL DECISIONS CAN BE DOWNLOADED FROM THE WEBSITE WWW.CTCONLINE.ORG UNDER SEMINAR PRESENTATIONS - UNREPORTED DECISIONS

Note : THE FULL DECISIONS CAN BE DOWNLOADED FROM THE WEBSITE WWW.CTCONLINE.ORG UNDER SEMINAR PRESENTATIONS - UNREPORTED DECISIONS

UNREPORTED TRIBUNAL DECISION By Ajay R. Singh, Advocates

Penalty u/s. 271(1)(c) – Bogus Purchase – Estimation no penalty can be levied :

The assessee company wasengaged in the business of Builder and Contractor filed its ROI on 28.09.2012 . Assessment was completed 143(3) of the Act on 18-03-2015, upon making addition of ` 49,54,960/- being income calculated on total purchase of ` 1,90,63,350/- u/s. 69C of the Act in the absence of verification/non-production of bills/vouchers by the assessee. Penalty proceeding was initiated u/s. 271(1)(c) of the Act .

In appeal, quantum appeal the Ld CIT(A reject the books of accounts and restricted the addition to the tune of ` 19,19,401/- applying GP ratio @ 7.3% being average of preceding two years.

The Ld. AO imposed penalty to the tune of ` 5,93,095/- on the count of furnishing inaccurate particulars of income of the assessee. In appeal, the same was confirmed by the ld CIT(A) .

The Hon. ITAT observed that the ld CIT(A) while reducing / restricting the addition to the tune of ` 19,19,401/- rejected the books of accounts u/s. 145(3) r.w.s 144 of the Act; applied GP ratio @ 7.3% being average of preceding two years as best of his judgment. Thus it is a trite law that penalty cannot be imposed on 271(1)(c) on an estimated income and hence, the penalty is not sustainable and liable to be deleted.

KBC Estates Pvt Ltd vs ITO

[ITA 6790 / DEL / 2019 Bench SMC -1 ; dated: 27.11.2020 AY: 2012-13. Delhi Tribunal]

department alleged that the an act of sale of unsubscribed government securities after completion of under writing is simply trading and not related with input service required for output service. The department further contended that the objective of maintaining SLR is to maximize profit and not to provide service to their clients which means it is an investment not related to output service. Therefore, the service tax paid on brokerage or commission cannot be said to be an input service for providing the output service.

Judgement: The Hon’ble CESTAT held that baking companies provide two different services that is deposit and lending, these two streams are distinctively recognized by the law as well and DCIGC insures only the deposits and not lending. That being so, as per the Hon’ble CESTAT, the “business of banking” cannot be said be said to be insured under the DCIGC. The Hon’ble CESTAT held that the manner in which the scheme operates is to mitigate the risk faced by the depositor while making the deposits with the bank and not the risk which bank or banking business incurs. The Hon’ble CESTAT relied

on Dilip Kumar and Co - 2018-TIOL-302-SC-CUS-CB, wherein a five-member bench of Hon’ble Apex Court has favored the strict interpretation of the fiscal statue. As per Hon’ble CESTAT, the provisions of the Finance Act, 1994 and the CENVAT Credit Rules 2004 should be considered in the light of the said the principles of interpretation as laid down by the Apex Court in the above referred decision. As per Hon’ble CESTAT, the larger bench has while deciding the case of South India Bank (supra), relied heavily on the decision of the Karnataka High Court, in case of PNB Metlife Insurance (supra) which was related to insurance of the bank. Hon’ble CESTAT is of the view that by extending the benefit by referring to insurance of the bank, and the banking business, may not be the justified approach as per this decision. In their view the matter needs reconsideration, in light of this decision of the Hon’ble Apex Court and hence, Hon’ble CESTAT has referred the issue again to Larger Bench for reconsideration.

M/s Bank of America Vs Principal Commissioner, CESTAT, Mumbai, decided on 2.11.2020 in Service Tax Appeal No. 87659 of 2016.


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