Newsletter

The Hon’ble Finance Minister, Ms. Nirmala Sitharaman announced various reliefs under the Aatmanirbhar Bharat Abhiyaan to support Indian economy in fight against COVID-19. Following are the key takeaways of the address held on 13 May 2020:

• In order to provide more funds at the disposal of the taxpayers, the rates of Tax Deduction at Source (TDS) for non-salaried specified payments made to residents and rates of Tax Collection at Source (TCS) for the specified receipts are to be reduced by 25% of the existing rates;
• Payment for contract, professional fees, interest, rent, dividend, commission, brokerage, etc. shall be eligible for this reduced rate of TDS;
• This reduction shall be applicable for the remaining part of the FY 2020-21 i.e., till 31 March 2021;
• Due date of all income-tax return for FY 2019-20 to be extended from 31 July 2020 and 30 October 2020 to 30 November 2020 and Tax audit from 30 September 2020 to 31 October 2020;
• Date of assessments getting barred on 30 September 2020 to be extended to 31 December 2020 and those getting barred on 31 March 2021 to be extended to 30 September 2021;
• Period of Vivad se Vishwas Scheme for making payment without additional amount will be extended to 31 December 2020.

GLS Remarks:

The Hon’ble Prime Minister, Shri Narendra Modi, on 12 May 2020, addressed the nation amid the COVID-19 pandemic. During the speech, the Hon’ble PM, while pledging a sum of Rs. 20 lakh crores, emphasized on the need to become a self-reliant economy. Accordingly, the Hon’ble PM introduced the ‘Atmanirbhar Bharat Abhiyan’ which will provide the special economic package to the labourers, farmers, honest taxpayers, MSMEs and cottage industry.

We are glad to present to you the 4th volume of our Fortnightly Newsletter containing notable judgments and key legislative updates in the fields of Direct and Indirect Taxation. In this volume, we have penned down a few articles addressing the current issues and challenges faced by the Trade and Industry:

• Equlization Levy - with its extended scope through Part VI of the Finance Act, 2020;
• Valuation of Branch Transfers under GST: Challenges and Way Forward; and
• Transitional Credit and the twist of three year limitation

We hope that reading of the newsletter would bring an enriching experience to you! Your valuable feedback is always welcome!

The Union Ministry of MSME (‘Ministry of Micro, Small and Mini Enterprises’) has launched ‘CHAMPIONS’ portal aimed at assisting Indian MSMEs march into big league as National and Global Champions. This portal is a Technology driven Control Room-Cum-Management Information System.

The name of the Portal stands for Creation and Harmonious Application of Modern Processes for Increasing the Output and National Strength. Following are the key features of the portal:

• This Portal, as a real one-stopshop solution of MSME Ministry, will be used for making the smaller units big by solving their grievances, encouraging, supporting, helping and handholding;
• It is a technology packed control room-cum-management information system. In addition to ICT tools including telephone, internet and video conference, the system is enabled by Artificial Intelligence, Data Analytics and Machine Learning;
• It is fully integrated on real time basis with the Government’s main grievances portal CPGRAMS and MSME Ministry’s own other web based mechanisms

Notably, the entire ICT architecture was created in house with the help of NIC in no cost. Similarly, the physical infrastructure was created in one of ministry’s dumping rooms in a record time. As part of the system a network of control rooms has been created in a Hub & Spoke Model. The Hub is situated in New Delhi in the Secretary MSME’s office. The spokes will be in the States in various offices and institutions of Ministry. As of now, 66 state level control rooms have been created as part of the system.

During the trail launching of the system, the MSME Secretary had assured the Ministry’s full commitment to help, re-start and rejuvenate the MSMEs.

GLS Remarks:

Amid the global chaos caused by the COVID-19 pandemic, which has disrupted the entire world, including our economy, the Union Ministry has shown a ray of hope and help to the midsized industries in the MSME sector by launching the CHAMPIONS portal. As the portal has passed its trial stages, it is currently active and the stakeholders may approach the Ministry on the following link: <www.champions.gov.in> 

Dear Patrons,

GLS is organizing a special Webinar on 13th May 2020 at 3:00 p.m. to elaborately discuss, decode and provide the insights on the following topics:

• Performance of Contract: Force Majeure / Doctrine of Frustration;
• Possibility of Contract Restructuring;
• Operation Challenges: Inventory Loss, Immobility, Lack of access to systems;
• ITC Concerns: CSR Activities, Sanitary items / equipment, 180 days payment condition, 10% restriction under Rule 36(4) of the CGST Rules, 2017;
• Treatment of advances, discounts and revised pricing;
• Relaxation pronounced by the CBIC;
• Refund of GST: Issues emerging out of recent changes;
• Key Accounting and Auditing Challenges;
• Other Key Practical Challenges and its related indirect tax considerations.

You can register for this exclusive webinar at <https://us02web.zoom.us/webinar/register/WN_0DGA130RSvKHGmgthwbbWA>

Zoom Meeting ID: 820-1542-9387

Password: 278469

Thank You!

Earlier, the CBIC had issued Notification No. 11/2020 – Central Tax dated 21 March 2020 (‘NN. 11/2020’) to provide special procedure for corporate debtors undergoing the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016. Subsequently, a series of notifications were issues regarding relief measures taken by the Government for facilitating taxpayers in meeting the compliance requirements under various provisions of the Central Goods and Services Tax Act, 2017. Further, two circulars were also issues to clarify various issues being faced by the taxpayers with respect to the relief measures.

However, certain issues were still being faced by the taxpayers in adhering to the compliance requirements in respect of corporate resolution process and other procedural requirements due to the COVID-19 pandemic. In order to clarify the same, the CBIC has issued Circular No. 138/08/2020 – GST dated 06 May 2020. Following are the key highlights of the said Circular:

Amid the COVID-19 pandemic, the CBIC provided various reliefs under the GST Law. Following are the key highlights of the Notifications issued on 05.05.2020:

• Due Date for filing Annual Return in Form GSTR-9 and Reconciliation Statement in Form GSTR-9C for the F.Y. 2018-19 has been extended to 30 September 2020;
• The validity period of e-way bills generated on or before 24 March 2020 and the validity period of such e-way bills expire between 20 March 2020 to 15 May 2020, shall be deemed to be extended to 31 May 2020;
• Registered persons required to file Nil Returns under the CGST Act, may furnish their return in Form  GSTR-3B  through a short messaging service using the registered mobile number and the said return shall be verified by a registered mobile number based One Time Password facility;
• Corporate Debtors under Insolvency and Bankruptcy Code, 2016, with effect from the date of appointment of Interim Resolution Professionals / Resolution Professionals, shall be treated as a distinct person of the corporate debtor, and shall be liable to take a new registration within 30 days of appointment of Interim Resolution Professionals / Resolution Professionals or by 30 June, 2020, whichever is later.

Amid the COVID-19 outbreak, and with a view to adopt measures to ensure social distancing, reduce physical presence, use modern information and communication technology systems and change conventional mode of work, the CBIC has issued a set of guidelines for conduct of personal hearings in virtual mode under Customs Act.

Such guidelines have been provided by the CBIC to ensure that the ongoing Customs proceedings of appeals and adjudications are completed expeditiously for quick delivery of justice through quasi-judicial proceedings and in compliance of overall directions. This move would facilitate importers, exporters, passengers, advocates, tax practitioners and authorised representative to maintain social distancing while performing their work at ease, from a place of their choice.

Following are the guidelines for virtual conduct of personal hearings through video conferencing:

• Every party, either as an Appellant or a Respondent, shall give his consent to avail the personal hearing before the prescribed authorities through video conferencing, at the time of filing of appeal or immediately after the issuance of the instant instruction;
• The date and time of hearing along with a link for the video conference shall be informed in advance to the Appellant / Respondent and the concerned Revenue authorities through the official email or electronic media of the adjudicating / appellate authority giving the details of the officers in in-charge who would provide assistance to the party for conducting virtual hearing;
• The advocate / consultant / authorised representative, appearing on behalf of the party, in virtual hearing should file Vakalatnama or authorisation letter along with a copy of photo ID card and contact details through e-mail;
• Virtual hearing through video conference shall be held from the office of the adjudicating / appellate authority or any official video conference facility set up in the office of the authority;
• The virtual hearing through video conference shall be conducted through available applications like VIDYO or other secured computer network;
• In case where the where the party wishes to participate in the virtual hearing proceeding along with their advocate, the same should be done under proper intimation to the appellate authority;
• If the party or their representative wishes to modify the contents of e-mailed record of personal hearing, they can do so and sign the modified record, scan and send back to the authority;
• However, if the party or their representatives do not resend the above emailed record of personal hearing within 3 days of receipt of such email, it will be presumed that they agree with the contents of emailed record of personal hearing and the authority will proceed to decide the case accordingly;
• The records of personal hearing submitted in the above manner shall be deemed to be a document for the purpose of Customs Act;
• In case any additional submission is required to be made by the party / advocate, he may do so by self-attesting such document and a scanned copy of the same may be emailed to the authority within 3 days of the virtual hearing;
• Any official representing the Department, may also participate in the virtual hearing through video conferencing by informing the details in advance regarding such participation on receipt of the intimation of the virtual hearing.

The above guideline shall apply mutatis mutandis to personal hearings granted under the Excise Law and the Service Tax Law. 

Karnataka AAR holds that no separate registration is required for executing works contract in a state different from the supplier’s place of business. It was ruled that the principal place of business of the supplier of the services shall be the location of the supplier. It was also observed that if inputs are purchased from the place of business of the supplier and supplied in another state where the works contract is being executed then the ‘bill to ship to’ mechanism would apply for charging the taxes.

GLS Comments:

In 2018, the Rajasthan AAR in the case of Jaimin Engineering Private Limited [2018 (17) GSTL 33] had ruled that a separate registration would be required in case of supply of works contract in another state. As against the said ruling of the Rajasthan AAR, the instant ruling of the Karnataka AAR comes as a welcome move as it would substantially save various costs and compliance burdens of works contractors who undertake such contracts in various parts of the country.

The Finance Ministry, vide Press Release dated 17 April 2020, ensured its full commitment towards the GST taxpayers in helping them in the present situation. The ministry substantiated their commitment by presenting that since 30 March 2020, CBIC has processed 12,923 refund applications involving claims worth Rs. 5,575 Crore. Further, in the previous week alone, 7,873 refund claims were processed, worth Rs. 3854 Crore.

A certain section of the social media has misconstrued Circular No. 133 dated 31 March 2020 as troubling the taxpayers in the COVID-19 situation. The said Circular was issued as a trade and business friendly measure to facilitate early ITC refunds and to ensure that the wrong ITC claims are not processed in the absence of relevant information. In relation to the said circular, the Finance Ministry clarifies as follows:

• Various stakeholders including the taxpayers had brought to the notice of the CBIC that lot of time is spent in verification of whether the credit was availed on services and/or Capital Goods in certain categories for the refund claims. Accordingly, the GST Council in its 39th Meeting held on 14 March 2020 had decided to mitigate delays in ITC refunds faced by the taxpayers besides ensuring that fake ITC claims are not processed;
• It had been further decided to make a declaration of classification of codes as a part of the application so as to lessen the verification time and control compliance cost;
• It was also decided to allow bunching of tax periods across financial years to facilitate claim of refund by exporters, for applications filed after 31 March 2020. Further, the due dates for all such applications which were due during 20 March 2020 and 29 June 2020 have been extended to 30 June 2020;
• The said circular was issued in regard to the requirement to give HSN / SAC code along with the refund application. The GST Law does not allow refund of credit availed on services and / or Capital Goods in certain categories such as:
  • Capital Goods ITC refund is not permissible for refund of ITC on account of exports and other zero-rated supplies;
  • ITC availed on services and capital goods are not allowed to be refunded in Inverted Structure Refund category.

We are glad to present to you the 3rd volume of our Fortnightly Newsletter containing notable judgments and key legislative updates in the fields of Direct and Indirect Taxation. In this volume, we have also brought to you two insightful articles each in the direct tax and indirect tax sections:

• OECD’s final guidance on financial transactions – A deep dive
• Resurfacing of an age old issue – GST on Directors’ Remuneration

We hope that reading of the newsletter would bring an enriching experience to you! Your valuable feedback is always welcome.