PROFESSIONAL UPDATES FOR THE 1ST WEEK OF AUGUST 2014, BY RAJPUT JAIN & ASSOCIATES TEAM

PROFESSIONAL UPDATES FOR THE 1ST WEEK OF AUGUST 2014

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  • No application of section 2(22)(e), where shareholding of each partners of assessee-firm as well as of assessee-firm in closely held company is less than 10%, even though their cumulative shareholding is more than 10% [CIT vs. Octave Apparels, Punjab & Haryana High Court].
  • State Bank of India invites application for stock auditors / valuers, those having their place of business in the State of Delhi, Uttarakhand, Rajasthan and the districts of Uttar Pradesh and Haryana may send their offers.
  • The penalty u/s 271(1)(c) cannot be levied merely on the fact that assessee surrendered outstanding balance of creditors while filing revised return of income, considering inaccurate particulars furnished by the assessee.[CIT vs. Mathura Commercial Co., IT Appeal No. 54 of 2003, Date of Order: 15.01.2014, Allahabad High Court.]
  • CS, CMA can do UP VAT Audit as they are also included in definition of Accountant [Uttar Pradesh Value Added Tax (Fifth Amendment) Rules, 2014].
  • Register for certificate course on concurrent audit at Yamuna Nagar branch of NIRC of ICAI to be held on 26-27 July 02-03 and 09-10 August 2014.
  • No annual physical demat statement by DP if balance is zero and no transaction during year, if annual charges not paid e-statements to be sent. [SEBI Circular of 01-07-2014].
  • RBI not to issue instructions clarifying tax issues under FEMA. Banks to comply with tax laws for remittances to non-residents etc [RBI Circular 151 of 30-06-2014].
  • Maharashtra Co-operative Auditors (existing Panel) – Profile updation has been extended till 10th July, 2014. Also the following clarification has been updated.
  • MEF 2014-2015 has been made live on www.meficai.org on 1st July, 2014. Last date for online submission of MEF 2014-2015 is 4th August 2014.
  • Relief u/s 11 is available to hospital in respect of income from pharmacy run by it with in the hospital premises [Franciscan Sisters of St. Joseph Society vs. JCIT, ITAT – Chennai]
  • The Central Board of Excise and Customs has issued Instruction F. No. 201/01/2014-CX.6 dated June 26, 2014 (“the Instruction”) for all the Commissioners to follow judicial discipline in the matters relating to refund.
  • Multipurpose Empanelment Form for the year 2014-2015 has been made live at www.meficai.org. Last date for submission of online form is 4th August, 2014, and the last date of submission of hard copy of “Declaration for MEF 2014-2015” is 14th August, 2014.
  • Even if section 201 does not prescribe any limitation period, proceedings must be completed within a reasonable period [DIT (IT) vs. Mahindra and Mahindra Limited Bombay High Court].

IMPORTANT DATES

  • Payment of Service Tax for July by Companies: 5/Aug/2014, for E-payment: 6/Aug/2014
  • Submission of Forms 15G, 15H,27C  received in July to IT Commissioner: 7/Aug/2014
  • Issue of Quarterly TDS/TCS certificate for June quarter: 30/07/2014
  • Filing of IT Returns by Individuals , HUF (without Audit): 31/07/2014
  • Filing of IT return by Firms, AOPs, BOIs (without audit): 31/07/2014
  • Filing of IT Return by Trusts, Political party etc.(without audit): 31/07/2014
  • Payment of TDS/TCS deducted/collected in July: 7/Aug/2014
  • Return for Non SSI assessees (ER-1) for July: 10/Aug/2014
  • Return for EOUs (ER-2) for July: 10/Aug/2014.

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CONTENTIONS OF THE DEPARTMENT

Contentions of the Department

Untitled22The Revenue argued that Rule 5A of the Service Tax Rules was made pursuant to the power conferred under Section 94 of the Finance Act and not pursuant to Section 72A of the Finance Act. Further, the Revenue also contended that the Rule is also justified by invoking the provisions of Service Tax Audit Manual as the basis for ordering an audit.

Held:

Rule 5A(2) of the Service tax Rules is ultra vires the provisions of the Finance Act:

The Hon’ble Delhi High Court held that Rules only give effect to statute’s provisions and intent and cannot be used to create substantive rights, obligations or liabilities that are not within the contemplation of the statute. Further, the only audit within the Statute is as mentioned under Section 72A of the Finance Act, i.e. a Special Audit, when only certain circumstances are fulfilled. The Parliament thus had a clear intention to provide for only a special audit. Accordingly, Rule 5A(2) of the Service Tax Rules cannot provide for a general audit of the assessee and is ultra vires the rule making power conferred under Section 94(1) of the Finance Act.

Further, the Hon’ble Delhi High Court also held that the Service Tax Audit Manual is merely an instrument of instructions for the service tax authorities and do not have any statutory force. Therefore, Rule 5A(2) of the Service Tax Rules cannot be justified on the basis of the Service Tax Audit Manual.

The Instruction regarding Audit by Department is contrary to the Statue:Further, it was held that the Instruction is also ultra vires the Finance Act since executive instructions without statutory force cannot override the law. Consequently, any notice, circular, guideline etc., contrary to statutory laws cannot be enforced since the parent statute in this regard, the Finance Act itself does not authorise a general audit of the type envisioned by the impugned Rule 5A(2) of the Service Tax Rules, and furthermore only stipulates that a Special Audit can be undertaken if the circumstances outlined in Section 72A of the Finance Act are fulfilled. The Hon’ble High Delhi Court finds that the Instruction is not only an attempt to widen the scope of the law impermissibly but also is patently contrary to the Statute. The Instruction, to the extent it provides clarifications on Rule 5A(2) of the Service Tax Rules, pertaining to Service Tax audit, is quashed.

Conclusion to Note:

It will not be out of place to mention that recently, the Hon’ble Allahabad High Court in thecase of ACL Education Centre Pvt. Ltd. & Ors. Vs. Union of India [2014-TIOL-120-HC-ALL-ST] has held that the Audit under service tax is to be conducted by Chartered Accountants/ Cost Accountants only and not by officers of the Department.

Further the Hon’ble Calcutta High Court in the case of SKP Securities Ltd. Vs. DD (RA-IDT) & Ors. [2013-TIOL-38-HC-KOL-ST] has held that no audit of private assessee can be undertaken by CAG.

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Other News: PROFESSIONAL UPDATES FOR THE 3RD WEEK OF JUNE 2014, BY RAJPUT JAIN & ASSOCIATES TEAM

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  • Exporters with 3 year track record can get bank advance up to 10 years for long term export contracts, subject to conditions[RBI Circular 132 of 21-05-2014].
  • SEBI hikes regulatory fees for market intermediaries vide Notification No. LAD-NRO/GN/2014-15/03/1089, Dated 23-5-2014.
  • RBI further simplifies KYC norms for opening of bank accounts vide circular number RBI/2013-2014/634 dated 09-June-2014 regarding one documentary proof of address.
  • Dis-allowance of input tax credit by assessing officer of VAT on the ground that seller is bogus or cancelled dealer.
  • Resident Director of Foreign Companies to submit PAN at the time of incorporation. General Circular No. 16/2014, Dated: 10.06.2014.IMPORTANT DATES
  • Deposit of DVAT TDS for April : 15.05.2014
  • Filling of TDS/TCS for March Quarter by all Deductors including Govt : 15.05.2014
  • E -Payment of PF for April : 15.05.2014 o Deposit of VAT/CST for April : 21.05.2014
  • Deposit of Advance Tax: 15.06.2014
  • Deposit of DVAT TDS for May: 15.06.2014
  • Deposit of Advance Tax – Companies (15%) : 15.06.2014
  • Deposit of DVAT TDS for May: 15.06.2014

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OTHER MAJOR CHANGES IN NEW 3CD

Other Major changes in new 3CD

Untitled25A1. Location(s) (address(s)) of keeping books of accounts to be given
2. Particulars of sale of Land/Building less than Stamp value to be given
3. Comparison of amount debited vis a vis amount admissible on account of various deductions to be given
4. Detailed information to be given on amount debited to P & L a/c of Capital Exp, Personal Exp. ADVERTISEMENT
5. Details on TDS deducted not deposited or not deducted u/s 40(a) Non resident
6. Name of payee whose TDS not deposited, deducted to be given u/s 40(a)(ia)
7. Amount to be profit u/s 40A(3A) to be given
8. Modvat=Cenvat
9. (28) Whether receive shares below fair value u/s 56(2)(viia)- How it is possible for CA
10. Whether assessee receive security premium taxable u/s 56(2)(viib)
11. Detailed info on TDS/TCS deducted section wise to be given
12. Late filing of TDS/TCS return
13. Interest Payable u/s 201(1A) and 206C(7)
14. Audit under Service tax to be reported
15. Demand/Refund raised under any other law during the PY to be reported

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