ANTI – PROFITEERING UNDER GST – ISSUES & CHALLENGES

ANTI – PROFITEERING UNDER GST – ISSUES & CHALLENGES

1. The provision in the Central GST Act - Section 171, mandates that benefits arising due to either lower tax rates or more tax credits being available in the GST regime should be passed on to the consumer by way of commensurate reduction in prices.

Let us understand anti profiteering with an example...

2. Reduction in effective rate of tax: GST rates were reduced significantly post GST , once in November 2017 , then on January 2018, and Now in Dec 2018 .Supplier need to pass the benefit arises due to such rate reduction to the recipient

If the sum total of taxes being levied on a supply prior to GST regime is more than the GST levy on the said supply, then there has to be equivalent reduction in prices of the supply. E.g. if sale of a manufactured good subject to levy of a total tax of approx. 25% (12.5% as ED and 12% as VAT) in the pre-GST regime presently attracts 18% GST, there is a reduction in rate of tax of about 6.5%.

In case of supplies exclusive of tax , passing of benefit due to reduction in tax is not a big challenge. This is because the reduction in tax rate will directly be evidenced by invoices, and the recipient will get benefit of the rate reduction.

3. Benefit of increased availability of input tax credit.: All the industries are getting advantage of better flow of input tax credit due to better credit chain. These are service sector, manufacturing, trading, or any specific industry So overall the expectations of anti-profiteering provisions are commensurate reduction in prices of supplies.

For example, CA firms earlier could not adjust the input VAT on office supplies with the output service tax payable. Now, ITC on all inputs can be adjusted against output tax. These benefits must be passed on by them.

4. Commensurate reduction in prices :- As per section 172 of the CGST Act 2017 , such benefit shall be passed on the recipient by way of COMMUNSURATE REDUCTION in prices .

What does ‘commensurate reduction’ mean? No guidance has emerged from the Government on the connotation of ‘commensurate reduction’ and its applicability in various specific scenarios.

In this scenario , it is difficult to established , how much of the benefit needs to be passed on? What does ‘commensurate reduction’ mean?

5. Emerging Issues on Anti Profiteering Under GST Act 2017

 The anti profiteering provisions have created a lot of confusion amongst the industries resulting in numerous complaints being filed more so when “any person” can file a complaint. “

Almost every contractor is in the process of invoking the change in law clause to re- negotiate the prices of the contracts especially EPC contracts. Due to unclear provisions and mechanism for calculating the “commensurate reduction” the negotiation process gets stretched which is leading to delay in completion of ongoing projects.

6. Difficulties in compliance : Practically , it is very difficult to comply provisions of Anti Profiteering measures There are many unanswered questions raised by business community :-:-

• At what profit indicator level should the anti-profiteering computation be made at product/segment/business vertical/ company. It should be considered that within different product lines, there are certain SKUs which exist. Also, while there may be profits in one product line, there may be losses in others. Further, same product may be marketed differently to different class of people
• How the margins and prices are to be checked is a subjective matter. Does one factor profit on products in absolute terms or as a percentage, on each type of product/service or company as a whole, make customer-wise bifurcations (in B-to-B scenarios)?
• While significant costs have been incurred on GST implementation, would the  same be considered in arriving at anti profiteering related decisions.
• What if prices are controlled/regulated statutorily or aligned with an international benchmark?
• What is the accepted guideline for specific sectors with inherent complexities like real estate?
• Breach of Confidentiality – The cost structure and pricing mechanism is something which is very confidential to a business, given the competition in the market. In such a scenario, ascertainment of profit being made on taxes by the consumers/ affected party becomes impossible.
• Many companies in commodities and trade have market forces based pricing model, therefore, it is not clear how anti profiteering is going to impact the prices in these cases.
• There may be external cases determining the price, for instance for drugs, medicines where other acts/ regulations have a significant interplay in the pricing of the products. Therefore, the impact of anti-profiteering has to be seen specific to these cases as well.
• Computational Mechanism – It is difficult to establish one to one correlation between ITC on inward supplies and Tax payable on outward supplies

7. Retail Specific Issues

In addition to the above generality, certain retail specific issues arise: Retail typically has a long supply chain. There is usually one to two months of inventory in the pipeline. Hence, it would only be prudent to have time duration specified under law/ guidelines, to take corrective actions on account of changes in rates., Many retail sectors are also required to comply with Legal Metrology Act and Rules made there under, where the standard sizes for certain identified FMCG products is provided under law itself. This may possibly disrupt the requirement to pass on benefit by way of increase in quantity.

8.Consequences for non-compliance with anti-profiteering measures :-

The provision in the Central GST Act - Section 171, empowers the Government to constitute an authority or entrust an existing authority to ensure compliance of anti- profiteering provisions.

Non compliance of anti profiteering measures may entail severe penal consequences under the GST law.

The authorities may order the defaulter to reduce the prices of supplies to

ensure that the benefit of tax rate cuts or enhanced credits is passed on to the customer. While the penalties can also be levied as provided under the law, the taxpayer may be ordered to return the amount of un passed benefit to the customer along with applicable interest. In the extreme cases, the registration of the taxpayer may also be cancelled, thereby impacting business continuity. Failure to address anti- profiteering related requirements in any manner may effect consumer confidence as well as may have a reputational impact.

9. Action needs to be taken :- It is therefore critical that businesses understand the requirements and . set up processes to compute the likely benefits and have a plan to ensure smooth passage of the benefits to the consumer.

(a) Computing Benefits due to Lower Tax Rates and Increased Credits: Currently, guidelines to compute the benefits have not been prescribed, yet taxpayers can compute the likely benefit at a boarder level.

• Taxpayer should identify benefits arising due to more Input Tax Credit available on account of transition to GST at organizational level.
• Once benefits arising from credit are captured, the next step should be to compute benefits from rate reduction, if any. This benefit may be computed at the product level based on cost sheet .

(b) Looping in Vendors / Supply Chain : While the above steps provide clarity in understanding how much benefit is arising at the manufacturing level, the company will also have to ensure that their vendors pass on the benefits by way of price reduction. To do this, the company will be required to get cost data from vendors. Once details are shared by vendors, their veracity should be verified by the company or through an independent firm. In case vendors are not willing to share details, some sample cost sheets can be prepared based on industry knowledge. The expected amount of benefits thus arrived at could be shared with vendors for confirmation and used for negotiation.

To ensure that vendors comply with the company's requests, it is advisable to add an appropriate anti-profiteering clause in the vendor agreement stating that the vendor agrees to comply with anti-profiteering provisions and to share authentic and verified data to ensure that the benefit is appropriately passed on in accordance with the provisions. Going a step further, the clause can also state that in case appropriate benefit is not passed to the customer, then the vendor will be held accountable to pay any future disputed liability along with interest, fine, penalty, litigation cost etc.

(c ) Vigilant to Govt announcements : The anti-profiteering provisions in the GST is not elaborative , leaving enough room for misperceptions and perplexities. While the steps mentioned above can help the company prepare for business conducted in the future, there are several questions such as how to change MRPs if products are already at the retail store, Is compliance mandatory even if the product is covered under drug pricing control order etc. still need clarifications.

For questions such as these, taxpayers need to be vigilant to announcements from the government on the topic and plan their processes accordingly.

• (d) System & Processes : Anti-profiteering brings in a dynamic situation for businesses where, every time there occurs a reduction in GST rates orTaxpayer should identify benefits arising due to more Input Tax Credit available on account of transition to GST at organizational level.
• Once benefits arising from credit are captured, the next step should be to compute benefits from rate reduction, if any. This benefit may be computed at the product level based on cost sheet .

(b) Looping in Vendors / Supply Chain : While the above steps provide clarity in understanding how much benefit is arising at the manufacturing level, the company will also have to ensure that their vendors pass on the benefits by way of price reduction. To do this, the company will be required to get cost data from vendors. Once details are shared by vendors, their veracity should be verified by the company or through an independent firm. In case vendors are not willing to share details, some sample cost sheets can be prepared based on industry knowledge. The expected amount of benefits thus arrived at could be shared with vendors for confirmation and used for negotiation.

To ensure that vendors comply with the company's requests, it is advisable to add an appropriate anti-profiteering clause in the vendor agreement stating that the vendor agrees to comply with anti-profiteering provisions and to share authentic and verified data to ensure that the benefit is appropriately passed on in accordance with the provisions. Going a step further, the clause can also state that in case appropriate benefit is not passed to the customer, then the vendor will be held accountable to pay any future disputed liability along with interest, fine, penalty, litigation cost etc.

(c ) Vigilant to Govt announcements : The anti-profiteering provisions in the GST is not elaborative , leaving enough room for misperceptions and perplexities. While the steps mentioned above can help the company prepare for business conducted in the future, there are several questions such as how to change MRPs if products are already at the retail store, Is compliance mandatory even if the product is covered under drug pricing control order etc. still need clarifications.

For questions such as these, taxpayers need to be vigilant to announcements from the government on the topic and plan their processes accordingly.

(d) System & Processes : Anti-profiteering brings in a dynamic situation for businesses where, every time there occurs a reduction in GST rates or enhancement in credit pool, the benefit needs to be passed on to consumers.

Therefore, every change in prices is expected to be backed by data, documentation providing the formulas, workings, backups etc. explaining the rationale of such price increase.
Towards this, the companies should gear up their systems and processes to deal with the requirements of anti–profiteering on a go forward basis.
(e) Advance Ruling :Anti-profiteering is likely to be an area where policy and practice will continue to develop but in the interim it important to develop and implement a plan to comply with the law. As some of these clarifications may emerge in due course, industry may also think of taking advance ruling on critical issues.
(f) Articulate Methodology Articulate and evidence the methodology adopted in calculating and deploying the GST benefit Maintaining relevant commercial documentation updated to reflect GST benefits, particularlyservice contracts and pricing schedules

(g) Documentations :Other documentation to be maintained as adequate to support and evidence compliance with law

10. Anti-profiteering measures need to be consistently followed as it is not a one-time activity since the law, rates keep changing

Source: https://studycafe.in/2018/12/anti-profiteering-under-gst-issues-challenges.html

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Fact that vendors are not available at given address doesn't make purchases bogus : ITAT

Fact that vendors are not available at given address doesn't make purchases bogus : ITAT

The Fact that vendors are not available at given address is not sufficient to make purchases as bogus when assessee purchased the goods and made the payments through banking channel and he substantiated all the necessary documents which is required to be kept such as purchase invoices, ledger accounts, C Form issued to the suppliers, Form No.XXXVIII of the Department of Commercial Taxes etc.

Delhi ITAT in matter of ACIT, Central Circle-7, New Delhi. Vs. Karam Chand Rubber Industries (P) Ltd.,

Fact that vendors are not available at given address doesn't make purchases bogus : ITAT

The extract of Order is given below for reference :

16. We find merit in the above argument of the ld. counsel for the assessee. It is an admitted fact that during the course of search nothing adverse was found from the premises of the assessee regarding the purchases made from the four parties concerned. Only during post search enquiry it was found that those four parties are not available at the given address. However, it is a fact that the payments have been made through banking channel and the assessee had substantiated the purchases by providing documents such as purchase invoices, copy of the ledger accounts, evidences for having made payments through banking channels, C Form issued to the suppliers, copy of VAT return duly reflecting the said purchases, etc. The assessee has also submitted the copies of Form No.XXXVIII of the Department of Commercial Taxes which accompanies details of each consignment of goods that enters Uttar Pradesh from outside the State. None of these documents have been proved to be false or untrue and thus, the initial burden cast on the assessee was duly discharged. No doubt, those four parties were not available at the given address at the time of enquiry by the Inspector. However, is it is also an admitted fact that the enquiries were conducted at a later stage and there may be a number of reasons for those parties to shift their place of business. From the submissions made by the ld. DR, we find the names of those parties were existing at the website of the Government of NCT, Delhi earlier, but, at the relevant time of enquiry, the status of the concerns was shown as ‘cancelled.’ This indicates that at some point of time, these concerns were very much available in the website of Government of Delhi and, therefore, it cannot be said that these firms are bogus when the assessee purchased the goods and made the payments through banking channel and the assessee substantiated all the necessary documents which is required to be kept such as purchase invoices, ledger accounts, C Form issued to the suppliers, Form No.XXXVIII of the Department of Commercial Taxes which
accompanies details of each consignment of goods that enters Uttar Pradesh from outside the State. In our opinion, the assessee in the instant case has discharged the initial onus cast on it. Under these circumstances and in view of the detailed reasoning given by the CIT(A) while deleting the addition, we do not find any infirmity in the order of the CIT(A). So far as the decision in the case of N.K. Proteins Ltd., is concerned, in that case, during the course of search proceedings at the office premises of the assessee blank signed cheque books and vouchers of number of concerns were found. Accordingly, the purchases made through these concerns were treated as bogus purchases by the Assessing Officer and the entire deposits in bank accounts of these parties were treated as assessee’s income on protective basis. The Tribunal restricted the addition on account of such alleged bogus purchases at 25% of the total purchases and the Hon'ble High Court modified the order of the Tribunal and directed for addition of the entire bogus purchases. However, in the instant case, no such blank cheque books and vouchers of the alleged four concerns have been found. Therefore, the decision in the case of N.K. Proteins Ltd. cannot be applied to the facts of the present case. Similarly, in the case of Vijay Proteins Ltd., the purchases were made through brokers and such documents relating to the brokers were produced for the first time before the CIT(A) and it was also found that there was close link between the assessee company and one Mr. P. Therefore, the above decision relied on by the ld. DR is also not applicable to the facts of the present case. In view of the above discussion, we do not find any infirmity in the order of the CIT(A) deleting the above addition on account of the purchase from the four parties. Accordingly, the order of the CIT(A) is upheld and the ground of appeal No.2 of the Revenue is dismissed.

17. So far as ground No.3 is concerned, we find the Assessing Officer disallowed the entire addition of Rs.4,20,000/- paid to Smt. Shibani Khosla by invoking the provisions of section 40A(2)(b) of the IT Act and in appeal, the ld.CIT(A) deleted the addition of Rs.1,80,000/-, the reasons for which has already been given in the preceding paragraphs. We find from the order of the A.O. that Smt. Shibani Khosla was receiving salary and bonus from assessment year 2006-07 to 2010-11 ranging from Rs.3,74,000/- during financial year 2006-07 which has gone up to Rs.7,80,000/- in assessment year 2010-11. Even in the assessment order while the A.O. mentions that the kind of work rendered by Mrs. Khosla would have fetched her Rs.3000/- to 5000/- per month in an industrial area of Ghaziabad. Thus, the A.O is not saying that Mrs. Khosla has not done any work for the assessee company. Therefore, he could not have disallowed the entire salary. Since the ld. CIT(A) after considering the totality of the facts of the case has restricted Rs.1,80,000/- as against Rs.4,20,000/- disallowed by the A.O., we are of the considered opinion that the order of the ld.CIT(A) is justified under the facts and circumstances of the case. Accordingly, the same is upheld and the ground raised by the Revenue is dismissed.

18. Ground of appeal No.1 being general in nature is dismissed.

19. In the result, the appeal filed by the Revenue is dismissed.

The decision was pronounced in the open court on 12.12.2018.

Click here to download the OrderDownload

Source: https://studycafe.in/2018/12/fact-that-vendors-are-not-available-at-given-address-doesnt-make-purchases-bogus-itat.html

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Placing a quantitative cap on Rectification of Mistakes in ITC claim : HC admits writ

Placing a quantitative cap on Rectification of Mistakes in ITC claim : HC admits writ

Learned counsel for the parties have made submissions. It was submitted by Ms. Maninder Acharya, learned Additional Solicitor General on behalf of the Central Government, firstly, that with respect to the rectification of returns, suitable amendments have been carried out in Section 39(9) to facilitate at least two rectifications within a specified period.

Learned counsel for the petitioners pointed out however, that Section 39(9) is subject to Section 37 – which deals with the general power of rectification and that provision does not indicate any cap. It is pointed out that both, Sections 37 and 39(9) are to be read with Rules – in this case Rule 71 – sub-rules (2) and (3) which in fact indicate that there can be “rectification for a month”, thus implying that a rectification within a month is not necessary but that as many rectifications, as are necessary, for the dealers to correct the mistakes discerned later not merely on account of its errors but on account of the errors, in receipt of inputs or from the buyers’ transactions would also be admissible. 

Given these provisions, this Court is of the prima facie opinion that placing a quantitative cap over a specified period may not be permissible. Learned ASG submitted that certain instructions would be sought in this regard.

It was submitted by the learned ASG, secondly, that the date for filing annual return has now been extended to 31.03.2019 in exercise of power under Section 172 of the Central Goods and Services Tax Act, 2017 read with the Removal of Difficulties Order, 2018. In these circumstances, that issue does not survive.

Learned counsel for the petitioners pointed out that apart from the routine rectifications, other corrections such as inadvertent reflection of a mandatory GST registration form, as voluntary or vice versa, which can lead to serious consequences cannot be rectified in the existing format in the GST portal. Learned ASG submitted that on this aspect, instructions would have to be obtained.

List on 18.02.2019.

Click here to download the OrderDownload

Source: https://studycafe.in/2018/12/placing-a-quantitative-cap-on-rectification-of-mistakes-in-itc-claim-hc-admits-writ.html  

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Analysis of The Companies Amendment Bill 2018 as introduced in Lok Sabha

Analysis of The Companies Amendment Bill 2018 as introduced in Lok Sabha

Clause by Clause Analysis of The Companies Amendment Bill 2018 as introduced in Lok Sabha
Clause 1 of the Bill provides for the short title and commencement of the proposed Legislation.
Clause 2 of the Bill seeks to amend clause (41) of section 2 of the Companies Act, 2013 (the Act) so as to enable the relevant companies to follow different financial year with the approval of the Central Government, instead of taking approval of the Tribunal.
Clause 3 of the Bill seeks to insert a new section 10A relating to commencement of business etc., to provide that a company having a share capital shall not commence business or exercise any borrowing powers unless a declaration is filed with the Registrar by a director that every subscriber to the memorandum has paid the value of shares and the company has filed with the Registrar the verification of its registered office. The said clause further provides that non-compliance with filing of declaration may result into action by Registrar under Chapter XVIII.
Clause 4 of the Bill seeks to insert a new sub-section (9) in section 12 of the Act to provide that the Registrar may cause a physical verification of the registered office of the company if he has reasonable cause to believe that company is not carrying on any business or operations as specified and to provide consequent action thereof.
Clause 5 of the Bill seeks to amend the second proviso to sub-section (1) of section 14 of the Act to provide that any alteration having the effect of conversion of a public company into a private company shall not be valid unless it is approved by an order of the Central Government on an application made in such form and manner as may be prescribed. Earlier this approval was obtained from the Tribunal.
Clause 6 of the Bill seeks to amend sub-section (3) of section 53 of the Act to provide for monetary penalty and refund of monies in case of failure to comply provision of that section.
Clause 7 of the Bill seeks to amend sub-section (2) of section 64 of the Act to provide for monetary penalty for company and its officers in default in case of failure to comply with provision of such section.
Clause 8 of the Bill seeks to amend the first and second proviso of sub-section (1) of section 77 of the Act to provide that the Registrar may, on the application made by a company, allow registration of charge, in case of charges created before the commencement of the Companies (Amendment) Act, 2018, within a period of three hundred days or charges created after the commencement of the said Act within sixty days, on payment of additional fees. The additional period within which the charges required to be registered is also provided.
Clause 9 of the Bill seeks to insert sub-section (2) in section 86 of the Act to provide that any person who wilfully furnishes any false or incorrect information or knowingly suppresses any material information, required to be registered in accordance with the provisions of section 77, shall be liable for action under section 447.
Clause 10 of the Bill seeks to substitute section 87 of the Act to empower the Central Government to extend time or allow rectification, if it is satisfied that omission to give intimation to the Registrar of the payment or satisfaction of a charge, within the time required under Chapter VI; or the omission or misstatement of any particulars, in any previous filing with respect to any such charge or modification thereof or with respect to any memorandum of satisfaction or other entry made in pursuance of section 82 or section 83 was accidental or was due to inadvertence.
Clause 11 of the Bill seeks to amend sub-section (9) of section 90 of the Act to provide that the company or the person aggrieved by the order of the Tribunal may make an application to the Tribunal for relaxation or lifting of the restrictions placed under sub-section (8), within a period of one year from the date of such order and if no such application is filed, such shares shall be transferred without any restrictions to Investor Education and Protection Fund Authority. The clause also seeks to amend the penal provision under sub-section (10) of section 90 of the Act.
Clause 12 of the Bill seeks to amend sub-section (5) of section 92 of the Act to provide that if any company fails to file its annual return under sub-section (4), before the expiry of the period specified therein, such company and its every officer who is in default shall be liable to monetary penalty as specified in the provision.
Clause 13 of the Bill seeks to amend sub-section (5) of section 102 of the Act to provide that in case of any default made in complying with the provisions of such section, every promoter, director, manager or other key managerial personnel of the company who is in default shall be liable to monetary penalty as specified in the provision.
Clause 14 of the Bill seeks to amend sub-section (3) of section 105 of the Act to provide that for any default under sub-section (2) of said section, the officer in default shall be liable for monetary penalty as specified in sub-section (3).
Clause 15 of the Bill seeks to amend sub-section (2) of section 117 of the Act to provide that for failure in filing a copy of every resolution or an agreement as per sub-section (1) of said section, the company and its officer in default shall be liable for monetary penalty as specified in sub-section (2).
Clause 16 of the Bill seeks to amend sub-section (3) of section 121 of the Act to provide for liability to pay monetary penalty for not filing with the Registrar a copy of report within the stipulated period as per sub-section (2) of said section.
Clause 17 of the Bill seeks to amend sub-section (3) of section 137 of the Act to provide for payment of monetary penalty in case of failure to file a copy of financial statements with the Registrar.
Clause 18 of the Bill seeks to amend sub-section (3) of section 140 of the Act to provide for payment of monetary penalty of fifty thousand rupees or an amount equal to the remuneration whichever is less and further penalty for continuous faliure, if the auditor does not comply with sub-section (2) of said section.
Clause 19 of the Bill seeks to amend sub-section (2) of section 157 of the Act to provide for payment of monetary penalty in case there is failure to furnish Director Identification Number pursuant to sub-section (1) of said section.
Clause 20 of the Bill seeks to amend section 159 of the Act to provide for payment of monetary penalty if any individual or director of a company makes default in complying with sections 152, 155 and 156 of the Act.
Clause 21 of the Bill seeks to insert clause (i) in sub-section (1) of section 164 of the Act to provide disqualification to become a director if an individual has not complied with the provisions of sub-section (1) of section 165 of the Act.
Clause 22 of the Bill seeks to amend sub-section (6) of section 165 of the Act to provide for payment of monetary penalty in case a person accepts an appointment as a director in contravention of sub-section (1) of said section.
Clause 23 of the Bill seeks to amend sub-section (5) of section 191 of the Act to provide for payment of monetary penalty if a director makes default in complying with such section.
Clause 24 of the Bill seeks to omit sub-section (7) and to amend sub-section (15) of section 197 of the Act to provide for payment of monetary penalty by any person or the company in case of default.
Clause 25 of the Bill seeks to amend sub-section (5) of section 203 of the Act to provide for payment of monetary penalty by any company and director and key managerial personnel who is in default in complying with said section.
Clause 26 of the Bill seeks to amend sub-section (3) of section 238 of the Act to provide for payment of monetary penalty for the director who issues a circular which has not been presented for registration and registered as per sub-section (1) of said section.
Clause 27 of the Bill seeks to amend sub-section (1) of section 248 of the Act to insert new clauses (d) and (e) to provide that in case the subscribers to the memorandum have not paid the subscription which they had undertaken to pay and declaration under section 10A has not been filed or where the company is not carrying on any business or operation as revealed after the physical verification, the Registrar shall send notice to such companies and its directors informing them of his intention to remove the name of the company from the register of companies.
Clause 28 of the Bill seeks to amend clause (b) of sub-section (1) of section 441 of the Act to increase the threshold of maximum amount of fine that does not exceed twenty-five lakh rupees for compounding by the Regional Directors.
Clause 29 of the Bill seeks to amend section 446B of the Act to provide for payment of reduced amount of monetary penalty in case of default by One Person Company or small companies.
Clause 30 of the Bill seeks to amend section 447 of the Act to enhance the amount of fine from "twenty lakh rupees" to "fifty lakh rupees".
Clause 31 of the Bill seeks to amend sub-sections (3) and (8) of section 454 of the Act to provide that adjudicating officer may also direct the company or officer in default or other person to rectify default, wherever he considers fit.
Clause 32 of the Bill seeks to insert a new section 454A relating to monetary penalty for repeated default, which is twice the amount of penalty provided for such defaults under the relevant provisions of this Act.
Clause 33 of the Bill seeks to repeal the Companies (Amendment) Ordinance, 2018 and to save the actions done during the course of the period of Ordinance.

Click here to Download The Companies (Amendment) Bill, 2018 as introduced in Lok Sabha

Source: https://studycafe.in/2018/12/analysis-of-the-companies-amendment-bill-2018-as-introduced-in-lok-sabha.html

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Time to submit Investment proof to the employer.

Time to submit Investment proof to the employer.

It is December & January , the Time to submit the investment proof to the employer based on the declarations made. Proof of investments will enable the employer to calculate the actual tax to be deducted from the salary & to be deposited to the government in equal instalments till the end of Financial year.

There are various avenues like LIC , PPF, NSC, ELSS, etc. to invest money & to get tax benefit u/s 80C. Employee can buy Mediclaim & health insurance policies to get the benefit u/s 80D.For availing tax benefit u/s 80C, we would recommend to invest in ELSS, Mutual Fund due to lowest lock-in period of 3 years compared with other avenues like LIC,PPF,NSC,etc. Also wealth can be created asthey invest in equity linked fund.

For availing tax benefit u/s 80D , we recommend to take mediclaim /health Insurance policy. There are various good mediclaim policies are available from Government & Private stand alone companies.

We recommend to invest in time & provide the proof of investment to the employer, so as to get higher take home salary.

Writer is an MBA Professional & can be reached at anildoshi2005@yahoo.co.in for best advices for investment in Mutual Fund & Mediclaim policy

Source: https://studycafe.in/2018/12/time-to-submit-investment-proof.html

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Procedure to claim Refund of unclaimed dividend transferred to IEPF

Procedure to claim Refund of unclaimed dividend transferred to IEPF

As per Section 124(5) read with Section 125(1) of Companies Act 2013
Any money transferred to the Unpaid Dividend Account of a company which remains unpaid or unclaimed for a period of seven years shall be transferred by the company to the Investor Education and Protection Fund Authority (IEPF).

Can that money be claimed again?
Yes, any person, whose unclaimed or unpaid amount has been transferred by the company to IEPF may claim their refunds to the IEPF authority.

For claiming such amount, claimant needs follow below mentioned procedure:

1. Download the form IEPF-5 from the website of IEPF (http://www.iepf.gov.in) for filing the claim for refund. Read the instructions provided on the website/instruction kit along with the e-form carefully before filling the form.

2. After filling the form save it on your computer and submit the duly filled form by following the instructions given in the upload link on the website. On successful uploading an acknowledgement will be generated indicating the SRN. Please note the SRN for future tracking of the form.

3. Take a printout of the duly filled IEPF-5 and the acknowledgement issued after uploading the form.

4. Submit indemnity bond in original, copy of acknowledgement and self-attested copy of e-form along with the other documents as mentioned in the Form IEPF-5 to Nodal Officer (IEPF) of the company at its registered office in an envelope marked "Claim for refund from IEPF Authority".

5. Claim forms completed in all aspects will be verified by the concerned company and on the basis of company's verification report, refund will be released by the IEPF Authority in favor of claimants' Aadhaar linked bank account through electronic transfer.

Kindly note that there is no fees charged for filing form IEPF-5

The Author of this article can be Emailed at Pratibha_Goyal @hotmail.com

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. In no event shall I shall be liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information


Please comment in the comment Section Given below in case of Queries.

Source: https://studycafe.in/2018/12/how-to-claim-dividend.html

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No GST will be levied if consideration is received after receipt of Occupancy Certificate : AAR

Karnataka in matter of Bindu Ventures
The applicant has sought ruling in respect of below mentioned questions :
(1) Which date should be considered as the date of completion of the property – the date of receipt of necessary approvals from BBMP / Karnataka Pollution Control Board / Karnataka Electricity Board or the date of receipt of completion certificate from a registered Chartered Engineer?
(2) Whether the applicant is liable to pay GST on any amount received as consideration towards sale of completed offices, after the date of completion, where part of the consideration was received prior to the date of completion as determined in question (a) above?
(3) Whether the applicant is liable to pay GST on the consideration received as consideration towards the sale of completed offices, where the entire consideration is received after the date of completion of construction as determined in question number (a) above?
The Extract of ruling is given below:
Ruling
1. The date of Occupancy Certificate issued by the competent authority, i.e. Bruhat Bengaluru Mahanagara Palike should be treated as the date of completion of the construction.
2. If any part of the consideration is received before such date of completion, then the transaction would be considered as the supply of services in terms of entry 5 of Schedule II to the GST Acts, and liable for GST.
3. If the entire consideration is received after the date of completion, then the transaction would not be liable to GST.
Click here to download the ruling

Source: https://studycafe.in/2018/12/no-gst-will-be-levied-if-consideration-is-received-after-receipt-of-occupancy-certificate-aar.html

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Exemption of Rs 50 L in case of TDS u/s 194 IA is related to each transferee : ITAT

Exemption of Rs 50 L in case of TDS u/s 194 IA is related to each transferee : ITAT

The exemption of Rs. 50 lakh in case of TDS on transfer of Immovable Property (TDS u/s 194 IA) is related to each transferee and not with reference to the amount as per sale deed. Each transferee is a separate income tax entity and the law has to be applied with reference to each transferee as an individual transferee / person.
The Extract of Order is given below :
These appeals are filed by the different Assessee against the common order dated 26.3.2015 passed by the Ld. CIT(A), Faridabad relating to assessment year 2014-15. Since the grounds raised in these appeals are common, hence, the appeals were heard together and are being disposed of by this common order for the sake of convenience, by dealing with ITA No. 2739/Del/2015 (AY 2014-15) – Pradeep Kumar Soni vs. ITO, TDS Ward. The following are the common grounds raised by all the 04 assessees, hence, the ground in the case of Pradeep Kumar Soni are only reproduced hereunder:-

1. That under the facts and circumstances, the provisions of deduction of TDS @1% u/s. 194-IA are not applicable qua assessee as the purchase consideration qua assessee is only Rs. 37,50,000/- being less than Rs. 50,00,000/- being 1/4th un-divided equal share of the property of which total purchase consideration is Rs. 1,50,00,000/- for 4 persons, consequently, both the lower authorities erred in law as well as on merits in invoking provisions of section 201(1) and 201(1A) and consequently calculating amount payable u/s. 201(1) as Rs. 1,50,000/-/ Rs. 37,500/- and intt. u/s. 201(1A) Rs. 27,000/- / Rs. 6,750/-.

2. That without prejudice, the liabilities created u/s. 201 & 201(1A) for the part of purchase consideration paid prior to 1.6.2013 is un-sustainable as provisions of section 194-IA are operative w.e.f. 1.6.2013.

3. That without prejudice, in view of 1st provisio to Section 201(1), no liability should have been created u/s. 201(1).

4. That without prejudice, inttt. u/s. 201(1A) have been wrongly charged @1.5% per month against correctly @1% as provided in Sec. 201(1A)(i).

5. That without prejudice, in any case, intt. u/s. 201(1A) has to be charged only for the period as prescribed in proviso to Sec. 201(iA), i.e. till the date of furnishing the return of income by such resident person from whom property has been purchased.

6. That without prejudice, no reasonable opportunity of hearing has been allowed.

7. That without prejudice, the whole proceedings are vitiative in law and un-sustainable as single and common proceedings have been initiated in respect of 4 individual buyers namely Pradeep Soni, Babita Soni, Vinod Soni and Beena Soni and a common order has been passed treating all these four as one single unit/ one single assessee.

2. The brief facts of the case are that as per the information received from the sub-registrar, Ballabhgarh vide his office letter No. 69 dated 18.2.2014, Sh. Pradeep Soni, Smt. Babli Soni, Sh. Vinod Soni & Smt. Beena Soni had purchased an immovable property of Rs. 1,50,00,000/- vide registry made on 3.7.2012. AO observed that as per the provisions of Section 194-IA of the I.T. Act, 1961 w.e.f. 1st June, 2013, “any persons being a transferee, responsible for paying (other than the person referred to in section 194LA to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), shall at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one percent of such sum as income tax thereon”. AO further observed that sub-section (2) of Section 194IA of the I.T. Act, 1961 further provides that no deduction under sub-section (1) shall be made where the consideration for the transfer of an immovable property is less than fifty lakh rupees. Accordingly, the assessee was required to deduct tax @ 1% on this amount and deposit the same to the credit of the Central govt. account. To verify such compliance of TDS provisions, specific information was called for u/s. 133(6) of the Income Tax Act from the assessee vide AO’s letter no. 2356 dated 19.2.2014. In response to the same, it was submitted that by the Persons Responsible that the said property was purchased for a consideration of Rs. 1.50 crores from Smt. Rutash Kumari by Sh. Pardeep Soni, Smt. Babli Soni and Smt. Beena Soni. It was further submitted that every co-owner having equal share in the property i.e. share of every co-owner comes on amounting to Rs. 37,50,000/- which is under the threshold limit as provided by Section 194IA of the Income Tax Act, hence, Section 194IA is not applicable. AO further observed that sub-section (2) of section 194IA of the Income Tax Act, 1961 provides that no deduction under sub-section (1) shall be made where the consideration for the transfer of an immovable property is less than fifty lakh rupees. AO further observed that in the instant case, consideration for the transfer of an immovable property is Rs. 1,50,00,000./- i.e. more than Rs. Fifty lakhs and the same is executed through a single sale deed made on 3.7.2013 and duly registered with Sub-Registrar, Ballabhgarh in respect of the transfer of an immovable property. As such, provisions of section 194IA are very much applicable in this case. Accordingly, a show cause notice was sent to the assessee, but no compliance was made by the Assessee. However, AO observed that as per the provisions of Rule 30(2) of the Income Tax Rules, 1962, the Persons Responsible were required to deduct tax u/s. 194(IA) and deposit the same to the credit of the Central Govt. account within a period of seven days from the end of the month. In view of the above, AO held that the Person Responsible in default of TDS and charge the tax deductible u/s. 194(IA) of the I.T. Act, 1961 and charge the non deduction of TDS u/s. 201(1) and interest thereon u/s. 201(1A) on the payments made and accordingly made the demand of Rs. 1,77,000/- vide his common order dated 10.7.2014 and also observed that since all the Persons Responsible (Sh. Pardeep Soni, Smt. Babli Soni, Sh. Vinod Soni and Smt. Beena Soni) are the joint buyers of the immovable property, they are jointly and severally responsible for payment of taxes. Against the order u/s. 201(1) & 201(1A) of the Act, dated 10.7.2014, assessee appealed before the ld. CIT(A), Faridabad who vide his impugned exparte order dated 26.3.2015 has dismissed the appeal of the assessee by observing that in the absence of any rebuttal offered by the assessee despite repeated opportunities during the course of appellate proceedings, ld. CIT(A) held that the AO has rightly made the additions. Aggrieved with the impugned exparte order, assessee is in appeal before the Tribunal.
3. Ld. Counsel for the assessee submitted that the provisions of deduction of TDS @1% u/s. 194-IA are not applicable qua assessee as the purchase consideration qua assessee is only Rs. 37,50,000/- being less than Rs. 50,00,000/- being 1/4th undivided equal share of the property of which total purchase consideration is Rs. 1,50,00,000/- for 4 persons consequently, both the lower authorities erred in law as well as on merits in invoking provision of section 201(1) & 201(IA) and consequently calculating amount payable u/s. 201(1) as Rs. 1,50,000/-; Rs. 37,500/- and interest u/s. 201(1A) Rs. 27,000; Rs. 6,750/-. It was further submitted that the liabilities created u/s. 201 & 201(1A) for the part of purchase consideration paid prior to 1.6.2013 is un-sustainable as provisions of Section 194-IA are operative w.e.f. 01.6.2013. It was further submitted that in view of 1st proviso to section 201(1), no liability should have been created u/s. 201(1). It was further submitted that inttt. u/s. 201(1A) have been wrongly charged @1.5% per month against correctly @1% as provided in Sec. 201(1A)(i) and in any case, intt. u/s. 201(1A) has to be charged only for the period as prescribed in proviso to Sec. 201(iA), i.e. till the date of furnishing the return of income by such resident person from whom property has been purchased and the whole proceedings are vitiative in law and un-sustainable as single and common proceedings have been initiated in respect of 4 individual buyers namely Pradeep Soni, Babita Soni, Vinod soni and Beena Soni and a common order has been passed treating all these four as one single unit/one single assessee. To support his case, he filed two paper books i.e. Paper Book- I which is containing pages 1 to 13 in which he has attached the copy of purchase deed dated 3.7.2013; copy of letter to AO dated 27.2.2014; copy of show cause notice dated 21.4.2014 by the AO and the Memorandum to Finance Bill, 2013. In second Paper Book-II which is containing pages 1 to 21 having the copy of 1st Paper Book; details of party wise payment for purchase of property; Canara Bank statement showing payment (Pradeep Soni); ICICI Bank Statement showing payment (Pradeep Soni); ICICI Bank statement showing payment (Babli Soni); HDFC Bank statement showing payment (Vinod Soni); HDFC Bank Statement showing payment (Beena Soni) and Loan Statement ICICI showing payment (All 04 parties).
4. On the other hand, Ld. DR strongly relied upon the orders of the authorities below, which does not need any interference on our part. To support the order of the authorities below, he relied upon few cases mentioned the Written Submissions.
5. We have heard both the parties and perused the records especially the impugned order as well as the provisions of law on the subject and the case laws cited by the Ld. DR in his written submissions. We find that in the instant case Sh. Pradeep Soni; Smt. Babli Soni; Sh. Vinod Soni and Smt. Beena Soni of same family, purchased 1/4th undivided equal shares in immovable property, Plot No. 94, Block-F, SLF Model Town, Sector-10, Faridabad vide single registered sale deed dated 3.7.2013 for Rs. 1,50,00,000/-. The 1/4th share purchase consideration for each person was only Rs. 37,50,000/- each. The AO held that since the value of the property purchases under single sale deed was exceeding Rs. 50,00,000/- therefore, as per section 194 IA(2), the assessee was required to deduct TDS @1%. The AO thus held that all the four assessees as defaulter u/s. 201(1) and created a total liability @ 1% i.e. Rs. 1,50,000/- by a common order u/s. 201(1) of the Act and Ld. CIT(A) confirmed the findings of the AO. During the hearing, Ld. Counsel for the assessee draw our attention towards the Paper Book-I Page no. 1 to 8 which is a copy of purchase deed dated 3.7.2013 was attached especially page no. 6 para no. 4 of the Sale Deed which is reproduced as under:-

“4. That the actual physical possession of the said Residential Plot No. 94, Block-F, Area Measuring 500 sq. yards in the residential known as DLF’s Model Town, Sector-10, Faridabad situated in Village Sihi, Tehsil Ballabgarh, Distt. Faridabad has been handed over and delivered by the Vendor to the Vendees and the Vendees have become the absolute and undisputed owner of above said plot in equal share.”

5.1 He further draw our attention towards Paper Book-II Page No. 14 having the details of party wise payment for purchase of property and page no. 15 to 20 which are the copies of Banks Statements showing payment by Sh. Pradeep Soni; Smt. Babli Soni; Sh. Vinod Soni and Sh. Beena Soni and also draw our attention towards page no. 21 which the copy of Loan Statement ICICI showing payment (all 04 parties).
5.2 After perusing the Paper Book and the relevant provisions of law, we find that Section 194-IA(2) provides that Section 194-IA(1) will not applicable where the consideration for transfer of immovable property is less than Rs. 50,00,000/-. However, section 194-IA(1) is applicable on any person being a transferee, so section 194-IA(2) is also, obviously, applicable only w.r.t. the amount related to each transferee and not with reference to the amount as per sale deed. In the instant case there are 04 separate transferees and the sale consideration w.r.t. each transferee is Rs. 37,50,000/-, hence, less than Rs. 50,00,000/- each. Each transferee is a separate income tax entity therefore, the law has to be applied with reference to each transferee as an individual transferee / person. It is also noted that Section 194-IA was introduced by Finance Act, 2013 effective from 1.6.2013. It is also noted from the Memorandum explaining the provisions brought out alongwith the Finance Bill wherein it was stated that “in order to reduce the compliance burden on the small tax payers, it is further proposed that no deduction of tax under this provision shall be made where the total amount of consideration for the transfer of an immovable property is less than fifty lakhs rupees.” We further find that the main reason by the AO is that the amount as per sale deed is Rs. 1,50,00,000/-. The law cannot be interpreted and applied differently for the same transaction, if carried out in different ways. The point to be made is that, the law cannot be read as that in case of four separate purchase deed for four persons separately, Section 194-IA was not applicable, and in case of a single purchase deed for four persons Section 194-IA will be applicable. It is noted that AO has passed a common order u/s. 201(1) for all the four transferees. In order to justify his action since in case of separate orders for each transferee separately, apparently, provisions of section 194IA could not had been made applicable since in each case purchase consideration is only Rs. 37,50,000/-. This action of AO shows that he was also clear in his mind that with reference to each transferee, Section 194IA was not applicable. Hence, we are of the considered view that the addition made by the AO and confirmed by the Ld. CIT(A) is not sustainable in the eyes of law, thus the same is deleted. As far as issue of charging interest is concerned, the same is consequential in nature, hence, need not be adjudicated. As regards the case laws cited by the Ld. DR are concerned, the same are on distinguished facts and therefore, not applicable in the present case. Accordingly, the grounds raised by the assessee stand allowed and as a result thereof, the appeal of the assessee is allowed.
6. Since in all the other 03 appeals, i.e., in the case of Vinod Soni vs. ITO in ITA 2736/Del/2015 (AY 2014-15); Babli Soni vs. ITO in ITA No. 2737/Del/2015 (AY 2014-15) and Beena Soni vs. ITO in ITA No. 2738/Del/2015 (AY 2014-15), similar facts are permeating, therefore, our finding given above in ITA No. 2739/Del/2015 (AY 2014-15) in the case of Pradeep Kumar Soni vs. ITO will apply mutatis mutandis in these three appeals also, because the facts and circumstances of the case are exactly the same.
7. In the result, all the 04 appeals filed by the assessee are allowed.
Order pronounced on 10-12-2018.
Click here to download the Order

Source: https://studycafe.in/2018/12/exemption-of-rs-50-l-in-case-of-tds-u-s-194-ia-is-related-to-each-transferee-itat.html

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Cancellation of GST registration without issuing SCN is violation of principle of natural justice

Cancellation of GST registration without issuing SCN is violation of principle of natural justice
Case :- WRIT TAX No. - 913 of 2018
Petitioner :- M/S Kashi Bartan Bhandar
Respondent :- State Of U.P. And 2 Others
Counsel for Petitioner :- Pooja Talwar
Counsel for Respondent :- C.S.C.,Anant Kumar Tiwari
Below is the Extract of Judgement
Heard Ms. Pooja Talwar, learned counsel for the petitioner and Sri C.B. Tripathi, Special Counsel appearing for the Assistant Commissioner, Commercial Tax, Sector-18, Varanasi. The pleadings exchanged by the parties have also been perused.
The petitioner has invoked the writ jurisdiction of this Court under Article 226 of the Constitution of India so as to challenge the order dated 27.01.2018 passed by the Assistant Commissioner, Commercial Tax, Sector-18, Varanasi, by which the registration of the petitioner as a dealer under the U.P. G.S.T. Act has been cancelled.
The main thrust of the argument of learned counsel for the petitioner is that the aforesaid order is in violation of principles of natural justice inasmuch as the show-cause notice alleged to have been issued to the petitioner on 18.01.2018 was never sent in any proper mode as prescribed under the Act and was not served upon the petitioner.
Secondly, it has been contended that only on prima-facie satisfaction that the petitioner is not carrying any business without coming to any final conclusion thereof, the registration of the petitioner has been cancelled.
Sri C.B. Tripathi, learned Special Counsel, in response to the above argument has submitted that the show-cause notice was sent to the petitioner at its e-mail address as provided by it. It was also sent by messenger and affixed at some conspicuous place of business of the petitioner.
On being specifically asked as to the basis on which the Assistant Commissioner has drawn the conclusion that the petitioner is not carrying any business and that its business is lying closed, he is unable to point out any such basis or material except to submit that as no one was found at the place of business when the messenger had gone there, it was presumed that the business is lying closed.
The notice under the Act is required to be served in accordance with the provisions of Section 169 of the Act which provides that it can be served by giving or tendering it directly or by messenger to the person concerned or to a person regularly employed by him in connection with his business or to an adult member of the family residing with him; or by registered or speed post or courier with acknowledgement due by sending at the last known place of business or residence of the person concerned; or by sending a communication at its email address provided at the time of registration and amended from time to time; or by making it available on the common portal; or by publication in a newspaper circulating in the locality in which the person concerned has last resided or carried business; or if none of the modes aforesaid is practicable, by affixing it at some conspicuous place, of his last known place of business or residence.
It is only if the mode of service as provided in the earlier parts of Section 169 are not practicable that the authorities can resort to service of notice by affixation. In this regard the words "if none of the modes is practicable" are relevant and important. The use of the aforesaid words clearly indicates that it is only after the authorities are satisfied that all earlier methods are not practicable for service of notice that resort can be taken for service of notice by affixation.
In the present case, we do not find that the Assistant Commissioner had come to any conclusion that all previous modes as prescribed under Section 169 are not practicable for the service of notice and has directly resorted to service by affixation. In such a situation, service if any by affixation cannot be regarded as a proper service. Moreover, nothing on record has been brought to establish the time, date and place and the manner in which service by affixation was resorted to.
Similarly, there is no averment as to through whom the notice was sent for service. The name of the messenger or the time and date when he went to serve the notice has not been disclosed.
Lastly, it has been stated that the show-cause notice was sent at the e-mail address of the petitioner on 18.01.2018 but again there is no material to support the said contention and the sending and receiving of any such e- mail has been categorically denied by the petitioner. The petitioner has even annexed the printout of its e-mail inbox to show that no mail from the office of the Assistant Commissioner, Commercial Tax was sent to the petitioner on 18.01.2018.
In view of the above, we are of the definite opinion that the petitioner was not served with any show-cause notice before passing of the impugned order and service through affixation could not have been resorted to in the facts and circumstances of the case. The order impugned, therefore, is in violation of the principles of natural justice.
Apart from the above, a bare reading of the impugned order dated 27.01.2018 discloses that it has been passed only on the basis of prima-facie opinion and the material on which such a prima-facie opinion was formed has not been indicated.
The Assistant Commissioner could not have passed the order on the basis of prima-facie opinion until and unless he was of a definite opinion that the petitioner has closed down the business.
A feeble attempt was made by the Special Counsel to sabotage the hearing of the petition on merits on the ground that against the order of cancellation of the registration, the petitioner has a remedy of appeal. Notwithstanding the remedy of appeal, we do not propose to relegate the petitioner to it for the simple reason that the petition was entertained and the parties have completed the pleadings to enable the Court to hear the matter on merits. Moreover, it is a case of clear violation of principles of natural justice and it is well accepted norm of exercising extraordinary jurisdiction that alternate remedy would not be a bar where the order is ex-facie, illegal and has been passed violating the principles of natural justice.
In view of the aforesaid facts and circumstances, the impugned order dated 27.01.2018 is not at all sustainable and is accordingly quashed.
The writ petition is allowed with no order as to costs with liberty to the respondent No.2 to pass a fresh order in accordance with law.
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Source: https://studycafe.in/2018/12/cancellation-of-gst-registration-without-issuing-scn-is-violation-of-principle-of-natural-justice.html 

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PV module is not naturally bundled with the solar power plant : AAAR

PV module is not naturally bundled with the solar power plant : AAAR

The Karnataka Appellant Authority of Advance Ruling has modified the ruling rendered by the Karnataka Authority of Advance Ruling in matter of M/s Giriraj Renewables Private Ltd. as under:
1. The supply of the PV module which is the major component of the solar power plant is not naturally bundled with supply of the remaining components & parts of the solar power plant and the supply of Services of Erection, Installation and Commissioning of the solar Power Plant.
2. The supply of the remaining portion of the contract in question which involves the supply of balance components and parts of the solar power plant and supply of services of erection, installation and commissioning of solar power plant is viewed as a composite supply as the supply of goods and services are naturally bundled. The tax liability on this portion of the contract in question (other than PV Module)which is termed as "composite supply" will be determined in terms of section 8 of the CGST Act 2017, where in the rate applicable to the dominant nature of the supply will prevail.

The Extract of Order is given below :
a) The supply of the PY module which is the major component of the Solar Power Plant is not naturally bundled with the supply of the remaining components & parts of the Solar Power Plant and the supply of the services of Erection, Installation and Commissioning of the Solar Power Plant
b) The supply of PY module is a distinct transaction from the supplies in contract in question as it is the owner whose responsibility it is to procure and supply the PY module. This PY module is to be supplied as free issue material over and above the plant being supplied by the contractor. The owner is responsible for transportation of the PV module from the point of origin till plant site and he bears the other risks and rewards of ownership. The PY module which is procured by the Project owner on High Sea Sale basis and imported by availing Customs duty exemptions and later supplied to the Appellant as a free issue for use in the setting up of the Solar Power Plant
c) The supply of the remaining portion of the contract in question by the Appellant which involves the supply of the balance components and parts of the Solar Power Plant and the supply of services of Erection, installation and Commissioning of the Solar Power Plant is viewed as a 'composite supply' as the supply of goods and services are naturally bundled.
d) The tax liability on this portion of the contract in question (other than PV module) which is termed as a 'composite supply' will be determined in terms of Section 8 of the CGST Act, 2017 wherein the rate applicable to the dominant nature of the supply will prevail.
Click here to download the Order of Karnataka Authority of Advance Ruling
Click here to download the Order of Karnataka Appellant Authority of Advance Ruling

Source: https://studycafe.in/2018/12/pv-module-is-not-naturally-bundled-with-the-solar-power-plant-aaar.html 

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Benami Transactions Act, 2016 - Complete Overview

Benami Transactions Act, 2016 - Complete Overview:
Recently, Govt. has introduced a law which has given a sudden jolt to the real estate sector. But the fact is, it is not only the real estate sector which would be affected by this law but it would have an impact on all types of properties be it movable or immovable. This law is called the Benami Transaction Act. Although, It is not a new act and it was originally created way back in 1988 but it was only the recent amendment brought in 2016 which has made a complete overhaul of this act and has made it really strong. But,  of course, you might be thinking right now; what is it? How does it affect me? why should I concerned about it? Well, you'll get to know all these things by the end of this article. So, Let's analyze it in a very simple language and step by step:-

1. What is Benami Property?

Benami literally means something "without a name". Therefore, you could easily assume it that any property without a legal name and the valid owner is called Benami. It is a Property which is purchases/sold under a Benami Transaction and it also includes the money involved in such property.
Property here means; assets of any kind, whether movable or immovable, tangible or intangible and it will include any right, interest, title to any property.

2. What is a Benami Transaction?

Benami Transaction means; a transaction or an arrangement where:

(A) A property is transferred to a person but the Consideration for such property has been given by another person. & Such property is held for the ultimate benefit of the person who has provided the consideration.

(B) A Property has been taken in a fictitious name. [i.e. Purchased in Fake name]

(C) A Property which has been taken in such manner that the owner (as per documents) of the property is not aware of such ownership. [i.e. Purchased in some unknown person name]

(D) The Person giving the consideration for purchase is not traceable or is Fictitious. [i.e. Purchase money is coming from unknown sources]

EXCEPTIONS: There are also some specific Exceptions to the general rule which means if Property has been taken in such manner then it will not be considered as Benami. These Exceptions would be in cases WHEN THE PROPERTY IS HELD BY:

• A Karta/Member of HUF and the property is held for his own benefit or benefit of other members in the family and considerations for such property is coming from known sources of HUF. [Important Note- If a Member of HUF purchases property in the name of Another Member then that would not be taken as Exception.]

• A Person standing in a fiduciary capacity (i.e. working on behalf of and benefit of other). If s/he is holding any property for the benefit toward whom he stands in such capacity then that would not be called as Benami. e.g. A share marketing company (say, Sharekhan) hold shares in the fiduciary capacity on behalf of their clients then that would not be considered as Benami.

• Any Individual (buying property) in the name of his/her spouse or in the name of any child & consideration for such property is coming from the known sources of such individual.

• Any Individual (buying property) in the name of Brother or Sister or lineal ascendant/ descendants, where the name of brother or sister or lineal ascendant/descendant AND the Individual appear AS JOINT-OWNERS in any document & consideration for such property is coming from the known sources of such individual.

3. Why People involved in Benami Transactions?

It is generally used to enter into by the people who have unaccounted money; more commonly known as Black money. People make the Benami Transactions to hide their name and use the black money in various types of properties in such names which is either fake or which are not under the lenses of tax departments.
Also, Another reason for entering the Benami Transactions is to hide the true ownership of the property from their lenders, creditors, and banks etc.

4. Who are the Parties involved in it?

In any Benami Transaction the following parties are involved:

(i) Benamidar: It is the person/fictitious person in whose name the property has been purchased.

(ii) Beneficial Owner: It is the person who has provided the consideration for purchase.

(iii) Seller: It is the person who is selling the property.

5. Which people would be affected by this Act?

The people who have entered in any way transactions which are covered under Benami especially the one who has the Black Money and invested the same into Benami Transactions would be hugely affected by this act. They have to bear the Huge penalties and prosecutions under the Act. Also, the real estate sector would be certainly impacted with this and every party involved must be very clear about the true ownership of the property.
People who have taken properties from their genuine sources and for their own direct benefit would not be affected by this law.

6. What are the Penalties & Prosecutions under the Act?

The Act prescribes the different penalties and prosecutions for different defaults which are as follows:

(i) Penalty for Benami Transactions:

Where any person enters into a Benami Transaction the beneficial owner, benamidar and any other person who supports any person to enter into the benami transaction shall be guilty under the act and punishable with rigorous imprisonment for a term between 1 year to 7 years (+) shall also be liable to fine which may be extend up to 25% of the Market Value of the Property.

(ii) Penalty for False Information:

Any person who is required to furnish information under this Act knowingly gives false information to any authority or furnishes any false document in any proceeding under this Act, shall be punishable with rigorous imprisonment for a term between 6 months to 5 years (+) shall also be liable to fine which may extend up to 10% of the Market value of the Property.
[Note: An offence under this Act shall be non-cognizable which means it will need a warrant before arresting any such person.]

(iii) Other Restrictions:

• Benami Property liable to Confiscation: Any Property, which is the subject matter of Benami Transaction, shall be liable to be CONFISCATED by Central Govt. without payment of any compensation.

• Prohibition on re-transfer of Property by Benamidar: Benamidar shall not re-transfer the Benami Property held by him to the Beneficial Owner or Any Other Person acting on his behalf. If, so transferred then such Transaction would be null and void.

7. What if the defaulter is a Company?

Where a company is contravening any provision of this Act, then the Company itself AND Every Person (including Director, manager, secretary, CEO etc.) who was responsible for such Transaction shall be deemed to be guilty of the contravention; and shall be liable to be proceeded against and punished accordingly. But if such person proves that such transaction was made without his/her knowledge then such a person would not be considered as guilty. 
Important Note: Here;
Company shall mean: Company, Firm, & AOP/BOI
Director shall mean: Director, Partner, Any Member in case of Company, Firm & AOP/BOI respectively.

8. SOME IMPORTANT POINTS:

• The Central Govt. shall appoint Adjudicating Authorities which will see of the cases of Benami Transactions and take the relevant actions against the same. It will not bound to follow the Code of Civil Procedure, 1908 but shall be guided by the given provisions under this Act. The Authority shall have the power to regulate its own procedure.

• The officers of other departments e.g. income tax authorities, officers of CBIC, officers of any recognized stock exchange, officers of SEBI, officers of RBI, Police, officers of enforcement directorate under FEMA etc would extend their assistance to the Adjudicating Authorities.

• Apart from this, the Central Govt. shall also from Appellate Tribunal and any party aggrieved by the decision of the Adjudicating Authority may proceed to the Appellate Authority.

In case of any further query, suggestions, or ideas, please do comment below. You can follow my blog @ Taxeffects.blogspot.com also reach me at niteshkbind@gmail.com.
Thanks. Be Helpful to One Another!

Source: https://studycafe.in/2018/12/benami-transactions-act-2016-complete-overview.html

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Benefits and mechanism of GST Amnesty Scheme

Benefits and mechanism of GST Amnesty Scheme
The Goods and Services Tax (GST) Council is considering a one-time amnesty scheme to facilitate an exit for ‘nil’ filers and non-filers. Let’s discussed what is GST Amnesty Scheme through this article.

Benefits and mechanism of GST Amnesty Scheme

What is GST Amnesty Scheme?

GST Amnesty Scheme is a one-time amnesty scheme to facilitate the exit of a certain category of registration holders who have not filed there GST returns till now.
As per the sources approximately there is 25 lakh ‘nil’ filer assessees while on an average 10 percent of assessees have never filed their returns so far.
These assessees do not contribute anything but add to the work of the tax system and therefore GST Amnesty Scheme has been introduced by the government for their exit.

What are the benefits of GST Amnesty Scheme?

GST Amnesty Scheme will

• bring down compliance cost of registration holder,
• will reduce pressure on the GST Network and
• encourage compliance under taxation laws

What is the mechanism adopted by the government to give the benefit of GST Amnesty Scheme?

Any registered entity not filing the return will have to pay penalty in the form of late fee. For late filing of GSTR 3B, the entity is obliged to pay a late fee of Rs. 50 a per day, that is, Rs. 25 per day in each case of CGST and SGST (in case of any tax liability) and Rs. 20 a day, that is, Rs. 10 in each CGST and SGST (in case of Nil tax liability) subject to a maximum of Rs. 5,000 from the given due date to the actual date when the returns are finally filed. GST Amnesty scheme is likely to give relief from such late fees.

What can be backlogs of GST Amnesty Scheme?

• Timing of the scheme,
• immunity from penal consequences and
• commitment to not initiate any investigations for those who participate in such scheme

are some critical aspects on which the success or failure of GST Amnesty Scheme depends.
In another words we can say that GST Amnesty Scheme can be a kind of gst late fees waiver scheme.
Source : The Hindu
The Author of this article can be emailed at pratibha_goyal@hotmail .com
Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. In no event shall I shall be liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information


Source: https://studycafe.in/2018/12/benefits-and-mechanism-of-gst-amnesty-scheme.html 

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