Levy of Service Tax on Services Provided By Government or Local Authority to Business Entities

Levy of Service Tax on Services Provided By Government or Local Authority to Business Entities

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CIRCULAR NO.192/02/2016-STDATED 13-4-2016 : Any service provided by Government or a local authority to a business entity has been made taxable w.e.f 1st April 2016. Post Budget 2016, representations have been received from several quarters including business and industry associations in respect of various aspects pertaining to the taxation of such services. Accordingly, the following clarifications are issued:—

Sl. No. Issue Clarification
1. Services provided by Government or a local authority to another Government or a local authority. Such services have been exempted vide Notification No. 25/2012-ST dated 20-6-2012 as amended byNotification No. 22/2016-ST dated 13-4-2016 [ENTRY 54 REFERS]. 

However, the said exemption does not cover services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994.

 

2. Services provided by Government or a local authority to an individual who may be carrying out a profession or business. 1. Services by way of grant of passport, visa, driving license, birth or death certificates have been exemptedvide Notification No. 25/2012-ST dated 20-6-2012 as amended by Notification No. 22/2016-ST dated 13-4-2016 [ENTRY 55 REFERS].2. Further, for services provided upto a taxable value of Rs 5000/-, Sl. No. 5 below may please be seen.

 

3. Service Tax on taxes, cesses or duties. Taxes, cesses or duties levied are not consideration for any particular service as such and hence not leviable to Service Tax. These taxes, cesses or duties include excise duty, customs duty, Service Tax, State VAT, CST, income tax, wealth tax, stamp duty, taxes on professions, trades, callings or employment, octroi, entertainment tax, luxury tax and property tax. 
4. Service Tax on fines and penalties. 1. It is clarified that fines and penalty chargeable by Government or a local authority imposed for violation of a statute, bye-laws, rules or regulations are not leviable to Service Tax. 
2. Fines and liquidated damages payable to Government or a local authority for non-performance of contract entered into with Government or local authority have been exempted vide Notification No. 25/2012-ST dated 20-6-2012 as amended by Notification No. 22/2016-ST dated 13-4-2016 [ENTRY 57 REFERS]. 
5. Services provided in lieu of fee charged by Government or a local authority. It is clarified that any activity undertaken by Government or a local authority against a consideration constitutes a service and the amount charged for performing such activities is liable to Service Tax. 

It is immaterial whether such activities are undertaken as a statutory or mandatory requirement under the law and irrespective of whether the amount charged for such service is laid down in a statute or not. As long as the payment is made (or fee charged) for getting a service in return (i.e., as a quid pro quo for the service received), it has to be regarded as a consideration for that service and taxable irrespective of by what name such payment is called.

 

It is also clarified that Service Tax is leviable on any payment, in lieu of any permission or license granted by the Government or a local authority.

 

2. However, services provided by the Government or a local authority by way of:
(i) registration required under the law;

 

(ii) testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, required under the law,
have been exempted vide Notification No. 25/2012-ST dated 20-6-2012 as amended by Notification No. 22/2016-ST dated 13-4-2016 [ENTRY 58 REFERS]. 
3. Further, services provided by Government or a local authority where the gross amount charged for such service does not exceed Rs 5000/- have been exempted vide Notification No. 25/2012-ST dated 20-6-2012 as amended by Notification No. 22/2016-ST dated 13-4-2016 [ENTRY 56 REFERS]. 

However, the said exemption does not cover services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994. Further, in case of continuous service, the exemption shall be applicable where the gross amount charged for such service does not exceed Rs. 5000/- in a financial year.

4. It is also clarified that Circular No.  89/7/2006-Service Tax dated 18-12-2006 & and Reference Code 999.01/23.8.07 in Circular No. 96/7/2007-ST dated 23-8-2007 issued in the pre-negative list regime are no longer applicable. 
6. Services in the nature of allocation of natural resources by Government or a local authority to individual farmers. Services by way of allocation of natural resources to an individual farmer for the purposes of agriculture have been exempted vide Notification No. 25/2012-ST dated 20-6-2012 as amended by Notification No. 22/2016-ST dated 13-4-2016 [ENTRY 59 REFERS]. 

Such allocations/auctions to categories of persons other than individual farmers would be leviable to Service Tax.

 

7. Services in the nature of change of land use, commercial building approval, utility services provided by Government or a local authority. Regulation of land-use, construction of buildings and other services listed in the Twelfth Schedule to the Constitution which have been entrusted to Municipalities under Article 243W of the Constitution, when provided by governmental authority are already exempt under Notification No. 25/2012-ST dated 20-6-2012. 

The said services when provided by Government or a local authority have also been exempted from Service Tax vide Notification No. 25/2012-ST dated 20-6-2012 as amended by Notification No. 22/2016-ST dated 13-4-2016 [ENTRY 39 REFERS].

 

8. Services provided by Government, a local authority or a governmental authority by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution. Such services have been exempted vide Notification No. 25/2012-ST dated 20-6-2012 as amended by Notification No. 22/2016-ST dated 13-4-2016 [ENTRY 60 REFERS].
9. Whether Service Tax is payable on yearly installments due after 1-4-2016 in respect of spectrum assigned before 1-4-2016. Service Tax is payable on such installments in view of rule 7 of Point of Taxation Rules, 2011 as amended byvide Notification No. 24/2016-ST dated 13-4-2016

However, the same have been specifically exemptedvide Notification No. 25/2012-ST dated 20-6-2012 as amended by Notification No. 22/2016-ST dated 13-4-2016 [ENTRY 61 REFERS].

 

The exemption shall apply only to Service Tax payable on one time charge, payable in full upfront or in installments, for assignment of right to use any natural resource and not to any periodic payment required to be made by the assignee, such as Spectrum User Charges, license fee in respect of spectrum, or monthly payments with respect to the coal extracted from the coal mine or royalty payable on extracted coal which shall be taxable.

10. When does the liability to pay Service Tax arise upon assignment of right to use natural resource where the payment of auction price is made in 10 (or any number of) yearly (or periodic) instalments under deferred payment option for rights assigned after 1-4-2016. Rule 7 of the Point of Taxation Rules, 2011 has been amended vide Notification No. 24/2016-ST dated 13-4-2016 to provide that in case of services provided by Government or a local authority to any business entity, the point of taxation shall be the earlier of the dates on which:
(a) any payment, part or full, in respect of such service becomes due, as indicated in the invoice, bill, challan, or any other document issued by Government or a local authority demanding such payment; or
(b) such payment is made.
Thus, the point of taxation in case of the services of the assignment of right to use natural resources by the Government to a business entity shall be the date on which any payment, including deferred payments, in respect of such assignment becomes due or when such payment is made, whichever is earlier. 

Therefore, if the assignee/allottee opts for full upfront payment then Service Tax would be payable on the full value upfront. However, if the assignee opts for part upfront and remainder under deferred payment option, then Service Tax would be payable as and when the payments are due or made, whichever is earlier.

 

11. How to determine the date on which payment in respect of any service provided by Government or a local authority becomes due for determination of point of taxation (Sl. No. 10 refers)? The date on which such payment becomes due shall be determined on the basis of invoice, bill, challan, or any other document issued by the Government or a local authority demanding such payment [Point of Taxation Rules, 2011 as amended by Notification No. 24/2016-ST dated 13-4-2016 refers]. 

For instance, Notice Inviting Applications (NIA) dated January 9, 2015 issued vide File No. 1000/16/2014-W.F./Auction for auction of right to use spectrum and letter dated March 29, 2015 issued vide File No. 1000 /23 / 2014 -W.F. /Auction by Department of Telecommunications to successful bidders of spectrum indicate the dates on which the payments in respect thereof become due. These may be accessed at

http://www.dot.gov.in/sites/default/files/u8/NIA_January_2015.pdfand

 

http://www.dot.gov.in/sites/default/files/u8/PaymentMethodologyAndPaymentDetai ls.pdf

respectively.

12. Whether Service Tax is leviable on spectrum user charges and license fee payable after 1-4-2016 for the year 2015-16. Service Tax is payable on such payments in view of rule 7 of Point of Taxation Rules, 2011 as amended by Notification No. 24/2016-ST dated 13-4-2016. However, the same have been specifically exemptedvide Notification No. 25/2012-ST dated 20-6-2012 as amended by Notification No. 22/2016-ST dated 13-4-2016 [ENTRY 62 REFERS]. 
13. Whether Service Tax is payable on the interest charged by Government or a local authority where the payment for assignment of natural resources is allowed to be made under deferred payment option. Rule 6(2)(iv) of the Service Tax (Determination of Value) Rules, 2006 has been amended videNotification No. 23/2016-ST dated 13-4-2016 so as to provide that interest chargeable on deferred payment in case of any service provided by Government or a local authority to a business entity, where payment for such service is allowed to be deferred on payment of interest, shall be included in the value of the taxable service. 
14. When and how will the allottee of the right to use natural resource be entitled to take CENVAT Credit of Service Tax paid for such assignment of right. The CENVAT Credit Rules, 2004 have been amendedvide Notification No. 24/2016 C.E. (N.T.) dated 13-4-2016. Consequently, the CENVAT Credit of the Service Tax on one time charges (whether paid upfront or in installments) paid in a year, may be allowed to be taken evenly over a period of 3 (three) years. [Rule 4(7) of CENVAT Credit Rules, 2004 as amended refers]. Detailed illustrations explaining how the CENVAT Credit is to be availed, are given in para 2 below. 
  However, the Service Tax paid on spectrum user charges, license fee, transfer fee charged by the Government on trading of spectrum would be available in the year in which the same is paid. Likewise, Service Tax paid on royalty in respect of natural resources and any periodic payments shall be available as credit in the year in which the same is paid. The existing eighth proviso in sub-rule (7) of rule 4 of CENVAT Credit Rules, 2004 is being omitted because the same is superfluous.
  Amendments have also been made in CENVAT Credit Rules, 2004 so as to allow CENVAT credit to be taken on the basis of the documents specified in sub-rule (1) of rule 9 of CENVAT Credit Rules, 2004 even after the period of 1 year from the date of issue of such a document in case of services provided by the Government or a local authority or any other person by way of assignment of right to use any natural resource [Fifth Proviso to sub-rule (7) of Rule 4 of CENVAT Credit Rules, 2004]. 
15. On basis of which documents can CENVAT Credit be availed in respect of services provided by Government or a local authority. CENVAT Credit may be availed on the basis of challan evidencing payment of Service Tax by the Service recipient [Clause (e) of sub-rule (1) of rule 9 of CENVAT Credit Rules, 2004, refers].

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances ;Hope the information will assist you in your Professional   endeavors. For query or help, contact:  info@carajput.com or call at 9555555480

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STARTUP INDIA PORTAL HAS BEEN FINALLY LAUNCHED

STARTUP INDIA PORTAL HAS BEEN FINALLY  LAUNCHED

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  • Information Availability: The portal and mobile app provide up-to- date information on various notifications/ circulars issued by various Government ministries/ departments, towards creation of a conducive ecosystem for Startups. The portal and mobile app provide information regarding incubators and funding agencies recognized for the purpose of recommending Startups (as part of Startup recognition application). A comprehensive list of FAQs is also available to help Startups, Incubators and Funding Agencies use the portal and mobile app more effectively.
  • Startup India Hub:The Startup India Hub, which has been established within Invest India, will be a single point of contact for the entire Startup ecosystem which would enable exchange of knowledge. The Hub will work in a hub and spoke model with Governments, VCs, Angel Funds, Incubators, Mentors, etc. It will assist Startups through their lifecycle, on all aspects, such as providing mentorship, incubator facilities, IPR support, funding etc. The Hub will be operational from 10:00 AM to 5:30 PM on working days and can be reached via the toll free number: 1800115565 or the email ID: dipp-startups@nic.in
  • Application for Startup Recognition:Entities that fulfill the criteria as per the definition of “Startup” and are incorporated/ registered in India, can obtain recognition as a “Startup” to avail various benefits listed in the Startup India Action Plan. The process of recognition is simple and user friendly and involves a single page application form that a user can fill either through a web interface or through mobile app. Formats of the recommendation/ support letters that need to be attached as part of the application form have been published on the portal and mobile app.
  • Real Time Startup Recognition: A real time recognition certificate is provided to Startups on completion of the application process. A digital version of the final certificate of recognition is available for download, through the portal and mobile app. A request for certificate of eligibility for tax exemptions from Inter-ministerial Board will be made simultaneously by selection of a simple option.
  • Verification of Recognition Certificate:The certificate of recognition is verifiable through the portal and mobile app by entering the Startup Recognition/ Certificate Number.
  • Approval of Inter-Ministerial Board: DIPP has also setup an Inter-Ministerial Board to verify the eligibility of Startups opting to avail Tax and IPR related benefits and to provide a certificate of eligibility to innovative Startups.

LINKS

  • Official site startup India portal : http://startupindia.gov.in/
  • To download mobile app of start up : http://startupindia.gov.in  /download-app.php

 The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances ;Hope the information will assist you in your Professional   endeavors. For query or help, contact:  info@carajput.com or call at  9555555480

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Update on services provided by Government or Local Authority

Update on services provided by Government or Local Authority

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Services (except few) provided by Government or Local Authority to business entities are covered under Reverse Charge Mechanism w.e.f 1st April, 2016 meaning thereby business entities are required to pay Service Tax on services received from Government or Local Authority. To curtail dilemma regrading non-taxability of various charges received by government like registration fee, Central Government has issued Notification No. 22/2016-ST. In addition, changes have been made in Point of Taxation Rules, 2011 and Service Tax (Determination of Value) Rules, 2006 vide Notification No. 23/2016-ST and Notification No. 24/2016-ST, respectively.

Changes in Mega Exemption Notification to exempt following services:-

  1. In entry 39, benefit of exemption has been extended to services provided by Government or Local Authorities by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution. Earlier this exemption is available only to Governmental Authorities.
  2. Services provided by Government or a local authority to another Government or local authority:
    Provided that nothing contained in this entry shall apply to services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994
  3. Services provided by Government or a local authority by way of issuance of passport, visa, driving licence, birth certificate or death certificate
  4. Services provided by Government or a local authority where the gross amount charged for such services does not exceed Rs. 5000/-
    Provided that nothing contained in this entry shall apply to services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994
    Provided further that in case where continuous supply of service, as defined in clause (c) of rule 2 of the Point of Taxation Rules, 2011, is provided by the Government or a local authority, the exemption shall apply only where the gross amount charged for such service does not exceed Rs. 5000/- in a financial year.
  5. Services provided by Government or a local authority by way of tolerating non-performance of a contract for which consideration in the form of fines or liquidated damages is payable to the Government or the local authority under such contract
  • Services provided by Government or a local authority by way of-
    (i) registration required under any law for the time being in force;
    (ii) testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, required under any law for the time being in force
  1. Services provided by Government or a local authority by way of assignment of right to use natural resources to an individual farmer for the purposes of agriculture
  2. Services by Government, a local authority or a governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution
  3. Services provided by Government or a local authority by way of assignment of right to use any natural resource where such right to use was assigned by the Government or the local authority before the 1st April, 2016
    Provided that the exemption shall apply only to service tax payable on one time charge payable, in full upfront or in installments, for assignment of right to use such natural resource
  4. Services provided by Government or a local authority by way of allowing a business entity to operate as a telecom service provider or use radiofrequency spectrum during the financial year 2015-16 on payment of licence fee or spectrum user charges, as the case may be
  5. Services provided by Government by way of deputing officers after office hours or on holidays for inspection or container stuffing or such other duties in relation to import export cargo on payment of Merchant Overtime charges (MOT).

Changes in Point of Taxation Rules, 2011:-

Generally, point of taxation in case of reverse charge is date of payment. Further, in case payment is not made within a period of three months the point of taxation shall be the date immediately following period of three months.

Now in specific case where services are provided by the Government or local authority to any business entity; the point of taxation shall be the earlier of the dates on which, -

  1. Any payment, part or full, in respect of such service becomes due, as specified in the invoice, bill, challan or any other document issued by the Government or local authority demanding such payment; or
  2. Payment for such services is made.

Changes in Service Tax (Determination of Value) Rules, 2006:-

As per rule 6, in sub-rule (2), in clause (IV), the value of taxable service, does not include interest on delayed payment of any consideration for the provision of services or sale of property, whether moveable or immoveable. Now following proviso has been inserted:

“Provided that this clause shall not apply to any service provided by Government or a local authority to a business entity where payment for such service is allowed to be deferred on payment of interest or any other consideration.”

Hence interest or any other consideration paid for deferment of payment against services provided by Government or a local authority will not be excluded for the purpose of calculation of value of taxable service.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances ;Hope the information will assist you in your Professional   endeavors. For query or help, contact:  info@carajput.com or call at  9555555480

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NEW UPDATE ON LEGALITY OF REOPENING OF ASSESSMENT U/S 147/263 BASED ON AUDIT OBJECTIONS

NEW UPDATE ON LEGALITY OF REOPENING OF ASSESSMENT U/S 147/263 BASED ON AUDIT OBJECTIONS

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One of the key sources of dispute is the existing arrangement for follow up on audit objections by Internal Audit Party and the Revenue Audit Party. In terms of the existing arrangement, the AO is required to take corrective steps following audit objections. The corrective measures take the form of rectification or reassessment (by reopening the case under section 147 or revision by the Principal Commissioner or Commissioner under section 263). In the case of rectification, these are general in the nature of correction for arithmetical errors and other mistakes which are apparent from the record. The problem arises when the AO seeks to take corrective measures by invoking the provisions of section 147 or 263 of the Income tax Act. Since the audit objections are based on material on record and there is no occasion for new material to be brought on record in the course of audit, any reopening of assessment or review by the Principal Commissioner constitutes “change of opinion” in the eyes of the law. This being so, the corrective measure under section 147 or section 263 of the Income tax Act is held to be invalid by Courts.

In spite of several court judgments to this effect, the CBDT had issued a circular to the effect that in all cases of audit objections, the AO should initiate corrective steps irrespective of whether the objection is valid or not in the eye of law. Consequently, steps are initiated by the AO to reopen the completed assessment or by the Principal Commissioner for revision of assessment orders. These steps give rise to several rounds of litigation; first the assessee challenges the very act of reopening or revision, as the case may be, and upon losing, the Department files appeal before the higher Courts thereby clogging the judicial system. While this process is on, the AO proceeds to complete the assessment on merit leading to another round of litigation. In large number of cases, the assessments on merit are completed even though the Department is in disagreement with the audit objection. The very issue has also been considered by the Income-Tax Simplification Committee constituted by the Govt. of India against such mechanical reopening .

In a recent judgment in case of Sunil Gavaskar vs. ITO, the Hon’ble bench of ITAT Mumbai considered the legality of such reassessments based on audit objections. Primarily reopening merely on the basis of audit objections and in absence of any new material indicating escapement of income, amounts to change of opinion and creates uncertainties for taxpayers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances ;Hope the information will assist you in your Professional   endeavors. For query or help, contact:  info@carajput.com or call at  9555555480

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CORPORATE AND PROFESSIONAL UPDATE APRIL 30, 2016

CORPORATE AND PROFESSIONAL UPDATE APRIL 30, 2016

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Direct Tax:

Income Tax has issued a circular on Framework for computation of book profit for the purposes of levy of MAT under section 115JB of the Income-tax Act, 1961 for Indian Accounting Standards (Ind AS) compliant companies dated 28/04/2016.

 Levy of entertainment tax – Water sport activities offered by Polo Amusement – Polo amusement contended that levy of ET under the ET Act is conditional upon the activity being amusement where people are given admission to an entertainment as defined under Section 2(a) – Held that – the charging provision, Section 6 (1) enacts that tax is to be levied and paid on all payments for admission to any entertainment. Section 2 (m)(iv).( Commissioner of Excise Entertainment, Polo Amusement Park Ltd. Versus M/s Polo Amusement Park Ltd. & Others, Govt of NCT of Delhi And Another).- 2016 (4) TMI 1059 – DELHI HIGH COURT

INDIRECT TAX:

Department of Trade & taxes has issued a notification that returns in Form CR-II for the financial year 2015-16 are required to be filed by 16-May-2016 vide Notification no. .F.3(628)/Policy/VAT/2016/113- 125 dated 28/04/2016

DVAT has extend the period of Filling of online return for fourth quarter of 2015-16 vide circular No. 02 of 2016-17

MCA UPDATES

MCA clarifies that the companies (AS) amendment rules, 2016 dated 30.03.16, to be applicable from F.Y.2016-17. Circular no. 04/2016.

FEMA Updates:

RBI has issued a circular on Foreign Exchange Management (Remittance of Assets) Regulations, 2016 vide circular No. 64/2015-16 [(1)/13(R)] dated 28/04/2016

Key Dates:

  • Deposit of TDS deducted during during March (Other than u/s 194IA in case of purchase of property) through Challan No. ITNS-281- 30/04/2016
  • Excise Return ER-5 for FY 2014-15 by units paying duty > 1 Crore (CENVAT + PLA) in Form ER-5-30/04/2016
  • Excise Return ER-7 for FY 2014-15 by other excise units- 30/04/2016
  • E-Filling of information of declarations in Form 60 received upto 31st March in Form 61-30/04/2016
  • Filling of option to avail composition scheme in DVAT-01- 30/04/2016
  • Filling of withdrawal from composition Scheme in DVAT-03 – 30/04/2016

Plain paper has no value but if you write on it, it becomes document. Life is same, you have to decide which kind of document you want to make of it.

We look forward for your valuable comments. www.carajput.com Continue reading

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CORPORATE AND PROFESSIONAL UPDATE APRIL 29, 2016

CORPORATE AND PROFESSIONAL UPDATE APRIL 29, 2016

1DIRECT TAX:

  • IT:Expenditure incurred towards fund – allowed as deduction while computing income of the assessee co-operative bank – The Karnataka State Co-operative Apex Bank Ltd. Vs. DCIT, Cir-3(1), Bangalore (2016 (4) TMI 871 – ITAT Bangalore)
  • IT:Deduction u/s. 54F – allowance of claim as assessee has purchased a semi-finished house and completed construction before the three years period as prescribed –  Srinivasa Rao Vs. ACIT, Cir-3(2), Hyderabad (2016 (4) TMI 867 ITAT Hyderabad)
  • Today (28.04.16) is last date to file DVAT- 56 (DVAT Return verification form) and DVAT-48(Return of TDS) for quarter ended March, 2016.
  • CBDT Circular regarding Commencement Of Limitation For Penalty Proceedings U/s 271D and 271E of the Income tax Act, 1961
  • The CBDT has issued Circular No. 09/DV/2016 dated 26th April 2016 in which it has expressed the view, by relying on the judgement dated dated 8.7.15 of the Kerala High Court in Grihalaxmi Vision vs. ACIT that the limitation for imposition of penalty under sections 271D and 271E of the Income tax Act, 1961 does not commence at the level of the Assessing Officer (below the rank of Joint Commissioner of lncome Tax) but commences at the level of the Range authority i.e. the Joint Commissioner of Income Tax./Addl. Commissioner of Income Tax. The CBDT has advised Assessing Officers (below the rank of Joint Commissioner of Income) to make a reference to the Range Head regarding any violation of the provisions of section 269SS and section 269T of the Act, as the case may be, in the course of the assessment proceedings (or any other proceedings under the Act). It has directed that the Assessing Officer, (below the rank of Joint Commissioner of Income Tax) shall not issue the notice in this regard. The Range Head will issue the penalty notice and shall dispose/ complete the proceedings within the limitation prescribed u/s 275(1)(c) of the Act
  • reduces interest rates on employee provident fund (EPF) from 8.75% to 8.7% for financial Year 2015-16.
  • Family pension claim not acceptable if option to join scheme was not exercised. [Ganesh Prasad Mishra vs. Commissioner EPF Organization (Madhya Pradesh HC at Indore)].
  • Excess of TDS deposited u/s. 195 eligible for interest u/s. 244A. Circular no:11/2016– IT.
  • Relaxation of Know Your Customers (KYC) Norms for customs notified vide circular no. 13/2016 dated 26Th April 2016- (click here to view)
  • The Contract entered for the purpose of packing loading and unloading etc. of the goods for which labour was supplied by the assessee to M/s Birla Corporation Ltd. cannot be held as Cargo Handling Service as the two conditions are not satisfied- (The Deputy Commissioner, Central Excise & Another Versus Sushil & Company – 2016 (4) TMI 987 – SUPREME COURT.
  • Assessee is providing the services directly to M/s. Jet Airways (I) bPvt. Ltd. which is not on behalf of Airport Authority – it cannot be said that Airport Authority has authorized the assesse to provide the services- (Commissioner of Service Tax, Mumbai-I Versus Soft Touch Aviation – 2016 (4) TMI 986 – CESTAT MUMBAI)

INDIRECT TAX:

  • Delhi VAT extended online return filing due date till 16/05/2016 for Q4 15-16 vide circular no: 02 dated 28th April.
  • DELHI VALUE ADDED TAX ACT, 2004 – NEW COMPOSITION SCHEME FOR RESTAURANTS AND HALWAIS : CIRCULAR NO.01 OF 2016-17 [NO.F.3(664)/POLICY/VAT/2016/106-112], DATED 27-4-2016 dealers whose annual turnover is upto Rs. 50 Lakhs and who makes sales of cooked food, snacks, sweets, savouries, juices, aerated drinks, tea and coffee etc. have an option to pay composition tax @ 5%.

COMPANY LAW:

  • Query: One of our client company has not done annual filing since F.Y 2009-10. Now when are trying to file the same. Form 23AC, ACA and Form 20B are not available on MCA portal. Can we file the same through Form GNL- 2. Advice
  • AnswerNo, Annual filing e-forms under the Companies Act, 1956 viz. 23AC/ACA, 23AC/ACA-XBRL, 20-B, 21-A, Form 66, I-XBRL, A-XBRL, 23B, 23C and 23D would be made available shortly for filing purposes on MCA Portal. You are therefore advised not to file these forms as attachments with GNL-2 e-forms.
  • MCA has issued general circular no. 04/2016 dated 27th April 2016: amended AS should be used for preparation of accounts for accounting periods commencing on or after the date of notification.

MCA UPDATES:

  • MCA has released Clarification with regard to Companies (Accounting Standards) Amendment Rules 2016 vide Circular No- 04/2016 dated 27/04/2016. (Click here to view)
  • MCA has released Notification regarding the Jurisdiction of the state of Telangana under Section 396 of Companies Act 2013 vide Notification dated 26/04/2016. (Click here to view)

OTHER :

  • Amended ASs to be applied from FY 16-17 onwards
  • ICAIin order to make the Members aware as to what information is going to flow from Institute’s records in MEF this year has hosted Pre-MEF data verification at meficai.org for applicants’ perusal w.e.f. TODAY (27 APR 2016).
  • RBIhas issued a Master Direction for merger of private sector banks and also between NBFCs and banks.
  • releases draft guidelines for computation of book profit by Ind AS compliant Cos
  • Courier entities in Delhi to file return in CR-II for F.Y.2015-16 byMay 16, 2016

Key Dates:

  • Filing of DVAT return verification form for quarter ended March where return not signed with digital signature: 28/04/2016
  • Return of DVAT TDS for quarter ending March: 28/04/2016
  • Return by scheduled banks branches in delhi engaged in sale of silver, gold, repossessed vehicles for quarter ending March: 28/04/2016

The most useful asset of a person is not a head full of knowledge but a heart full of love with ears open to listen and hands willing to help.

Your mind is a magnet. If you think of blessings, you attract blessings and if you think of problems, you attract problems. Always cultivate good thoughts and always remain positive and optimistic.

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CORPORATE AND PROFESSIONAL UPDATE APRIL 26, 2016

CORPORATE AND PROFESSIONAL UPDATE APRIL 26, 2016

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Direct Tax:

Waiver of loan tantamount to benefit or perquisite, chargeable to tax under Sec. 28(iv)[2016] 68 289 (Madras) Commissioner of Income Tax v. Ramaniyam Homes (P.) Ltd.

Interest on loan allowed to be deducted as loan was obtained to repay on old business loan [2016] 68 223 (Bangalore Trib.) Senate v. Deputy Commissioner of Income-tax

Indirect Tax:

Govt. constitutes board to issue eligibility certificates for availing tax benefits by ‘startups’25 April 2016, Govt. constitutes board to issue eligibility certificates for availing tax benefits by ‘startups’

Operating of plants of client is ‘Business Support Services’ and not ‘Maintenance or Repair services'[2016] 68 239 (Mumbai – CESTAT)  Commissioner of Service Tax v. Global S.S. Construction (P.) Ltd.

Department cannot insist to avail particular option under rule 6. [Mahindra & Mahindra Limited vs. CCE (CESTAT New Delhi)].

CENVAT allowed on linkage of inputs/capital goods to production. [C.C.E. Raipur vs. Bharat Aluminum Co. Ltd. (CESTAT NewDelhi)].

Excise & Customs : Where assessee has manufactured or exported goods by procuring domestic inputs without payment of duty under rule 19(2) of Central Excise Rules, 2002, then, in view of specific restrictions imposed by drawback notifications, no drawback can be allowed to assessee (not even of customs component of drawback)[2016] 68 238 (Bombay)  Anandeya Zinc Oxides (P.) Ltd. v. Union of India

Delhi VATCOM assured extension of return filing due date till 16/05/2016 for Q4 15-16. Further assured that item name and item code to be optional for Q4 15-16. Members are advised to file returns only after new updation of software i.e. 03/05/2016. Digital signature is also made optional for Q4 (All dealers).

Company Law:

Query: We filed Form INC-29 and there is resubmission but when we affixing DSC, the size of e-form automatically increase by 2 MB and there is pop-error as file size cannot exceed 5 MB. Kindly advice as is there any alternate way as its last date of resubmission is also approaching.

Answer: This is a technical issue on the part of new modified MCA Portal, you can compress the attachments and try accordingly.

AASB of ICAI issues guidance note on the Companies (Auditors Report) Order, 2016 on 23.04.2016.

Key dates

Extension of due date of filing ST-3 returns from 25th April to 29th April : Assessees have faced difficulties in accessing the ACES application on 25th April 2016, therefore, in exercise of the powers conferred by sub­rule (4) of rule 7 of the Service Tax Rules, 1994, the Central Board of Excise & Customs has extended the date of submission of the Form ST-­3 for the period from 1st October 2015 to 31st March 2016, from 25th April 2016 to 29th April 2016 vide Order No. 1/2016-ST.

I think if you just look at life in a positive way, positive things will happen. -Jake Owen

Words have no value. But the manner in which you chose them while speaking decides whether you will get value or pay for them.

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CORPORATE AND PROFESSIONAL UPDATE APRIL 25, 2016

CORPORATE AND PROFESSIONAL UPDATE APRIL 25, 2016

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DIRECT TAX:

The definition of rent includes any payment by whatever name called, for use of buildings including factory buildings, equipment, furniture or fittings. Even if machinery was leased, the consequent rent comes under the definition. But machinery lease cannot be considered under income from House property .(Heritage Hospitality Limited Versus Deputy Commissioner of Income Tax, Circle-2 (2) , Hyderabad)- 2016 (4) TMI 873 – ITAT HYDERABAD

Unexplained investment – addition made simply on the basis of the statement recorded u/s. 133A – Held that – An admission by assessee during the search or survey proceedings cannot be considered as conclusive unless it is supported by corroborative evidence. (Sai Priya Constructions and Others Versus The Income Tax Officer, Ward-8 (2) , Hyderabad) 2016 (4) TMI 868 – ITAT HYDERABAD

INDIRECT TAX:

CBEC have revise the rate of exchange of conversion of the foreign currency with effect from 22nd April, 2016  vide Notification No. 55/2016 – Dated 21-4-2016 – Customs (Click here to view)

Indian Revenue Services ( Customa and Excise ) Group “A” Rules 2016 vide Notification No. G. S. R. 438(E) dated 22/04/2016

Imposition of penalty – Services provided as marketing agent – non-payment of Service Tax for the commission payments received – Held that – it is clear that the 2nd respondent has given an opportunity of personal hearing to the petitioner and he was also represented by his counsel before the 2nd respondent. The petitioner also filed his reply before the 2nd respondent, which was also considered by the 2nd respondent. Therefore, from the above, it is clear that there is no violation of principles of natural justice committed by the respondents  (V.R. Mohanraj, Proprietor of M/s. VMBK Promoters Versus The Commissioner of Service Tax –I , The Joint Commissioner of Service Tax)

MCA UPDATES:

MCA has released FAQs on problems faced by Stakeholders due to change/updation of MCA Portal.

KEY DATES:

 E-Return for DVAT for the quarter ended March: 25-04-2016 (Form 16 and CST 1)

Service tax return ST-3 for the half year ended March: 25-04-2016

Today or any day that phone may ring and bring good news. -Ethel Waters

Bath purifies body, Meditation purifies mind, Prayers purify soul, Charity purifies wealth, Fast purifies health and Forgiveness purifies relationship.

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CORPORATE AND PROFESSIONAL UPDATE APRIL 23, 2016

CORPORATE AND PROFESSIONAL UPDATE APRIL 23, 2016

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DIRECT TAX:

IT: Expenditure relatable to day to day running of the business is allowable as revenue expenditure in the hands of assessee irrespective of the fact that the assessee was following percentage completion method of recognizing its revenue – Arun Pitambar Seth Vs. ACIT, Cir-3, Pune (2016 (4) TMI 752 – ITAT Pune)

IT: Assessment u/s 153C – the concerned documents / diaries did not emanate from out of seizures made in the course of search action – M/s. Giriraj Developers Vs. ACIT, Cir-13, Mumbai (2016 (4) TMI 749 – ITAT Mumbai)

No penalty for non-maintenance of TP docs if assessee furnished updated margins of earlier comparables Assistant Commissioner of Income-tax, Circle-6, Jaipur v.Integrated Decisions & Systems (India) (P.) Ltd.[2016] 68 taxmann.com 185 (Jaipur – Trib.)

Fall in value of stock allowed to be deducted, though it was in transit and lying at port Pr. Commissioner of Income Tax v. STCL Ltd [2016] 68 taxmann.com 224 (Karnataka)

IT: Export sales directly made to the consignee through the sister concern was the deemed export of the assessee – deduction u/s 10B allowed – M/s. Earth Stone Group Vs. ACIT (2016 (4) TMI 824 – ITAT Delhi)

INDIRECT TAX:

ST: Once what is received by the service receiver being output services the same would automatically become input service in terms of Rule 2 (l) of Cenvat Credit Rules – M/s Sundaram Industries Ltd. Vs. CCE, Madurai (2016 (4) TMI 777 – CESTAT Chennai)

Excise & Customs: Where assessee surrendered its registration certificate for de-registration, denial of de-registration on ground that a case of demand of duty was pending against it was wrong [2016] 68 taxmann.com 200 (Mumbai – CESTAT)  Akasha Syncotex Ltd. v. Commissioner of Central Excise

VAT & ST: Refund of excess TDS – construction business – Section 27 & 24 of HVAT Act would be applicable only to the taxable turnover i.e. after deducting service component and turnover relating to sales outside State in the course of inter-state sales or in the course of import – M/s. S.M. Constructions, Ludhiana Vs. The State of Punjab (2016 (4) TMI 762 – Punjab & Haryana High Court)

DVAT: Delhi Govt. has issued Delhi Value Added Tax (Amendment) Rules, 2016. Return Forms DVAT-16 and DVAT-17 have been amended wherein dealers are now required to furnish details of purchases and sales in Annexure 2A and 2B along with the description of goods and their codes. Forms DVAT-30 and DVAT-31 have also been amended.

ST: Increase in rates of service tax in respect of bank guarantee and insurance premium is directly relatable to the terms of the contract – M/s Centrodorstroy Vs. NHAI (2016 (4) TMI 801 – Supreme Court)

VAT & ST: Different view taken by Court – Tribunal has already decided the matter in case of original petitioner – Once a decision has attained finality it cannot be upset just on a mere ground that subsequently the higher forum has taken a different view – M/s. IFB Industries Ltd. Vs. DCCT (2016 (4) TMI 761 – Karnataka High Court)

Other Update

MCA: The relaxation of additional fees vide General Circular No.03/2016 dated 12 APR 2016 has been implemented in MCA21 system w.e.f. 21 APR 2016. The additional fee payable on Company e-forms which are due for filing b/w 25 MAR to 30 APR 2016 is relaxed till 10 MAY 2016.

Department of Education, Delhi Govt. invites application from CAs for empanelment for audit of private schools For details, please visit: http://resource.cdn.icai.org/lof2015/source/lof2015.html

CALS, a sister concern of “Grant Thornton (India)”offers cost effective learning for CA Final in an offline mode anytime, anywhere. For details:Toll free number: 1800-1200-560.   Email on info@calearning.in,   www.calearning.in

Key Dates:

Issue of TDS Certificate in case of payment/credit made in March for purchase of property u/s 194A:22/04/2016

Issue of certificate for deduction made in March in DVAT-43: 22/04/2016

“Judge a man by his questions rather than his answers.”

Happiness is a delicate balance between what you want and what you have. It is the  inner joy that can be sought and  caught but can never be taught and bought .

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CORPORATE AND PROFESSIONAL UPDATE APRIL 21, 2016

CORPORATE AND PROFESSIONAL UPDATE APRIL 21, 2016

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Indirect Tax:

IT: Receipt by the assessee from the HUF of which the assessee was the member – treated as gift received from the relative (group of relatives) – Not Taxable u/s 56 (2) r.w.s. 2(31) – Biravelli Dhanalaxmi Vs. ITO, W-4, Karimnagar (2016 (4) TMI 669 – ITAT Hyderabad)

IT: The question of TDS u/s 194-I does not arise on consideration paid to the Government – the manner in which the amount was quantified and the method of selection of the JV Partner are the crucial determining factors in this case to understand that the said amount could never constitute rent – M/s. Tril Info Park Ltd. Vs. ITO, W-1 (2016 (4) TMI 674 - Madras High Court)

INDIRECT TAX:

ST: Services which are supporting in nature to the main business like services relating to customer relationship telemarketing office infrastructure etc. are covered under Business Support Service – T.V. Today Network Pvt. Ltd. Vs. CCE, Delhi (2016 (4) TMI 690 – CESTAT New Delhi)

VAT & ST: In case of different stand taken by the department by rejecting its own order the exemption of entertainment tax is granted from the date of release of movie and not from the date of issuance of Government Order – Sushanth Prasad Vs. CCT (2016 (4) TMI 679 – Madras High Court)

 

COMPANY LAW:

MCA has released the list of few Frequently Asked Questions on the various issues related to the MCA website. An attempt has been made by MCA to clarify and all Stakeholders are requested to make note of the common queries. Stakeholders are also requested not to raise duplicate Helpdesk tickets on the issues which have been clarified through these FAQ’s.

OTHER UPDATE:

Small tobacco pouches weighing less than 10 grams not subject to retail sale price based assessment. [CCE, vs. Shakti Zarda Factory (India) Pvt. Ltd. (CESTAT New Delhi)].

Today (21.04.16) is the last date for deposit of ESI, DVAT & CST for the month of March, 2016.

Apply online through recruitment link of www.edudel.nic.in

Key Dates:

Payment of ESI of March for ESI: 21/04/2016

Payment of MVAT and WCT TDS for March for MVAT: 21/04/2016

MVAT return for March (10 days extra for e-returns): 21/04/2016

Life becomes interesting when you start speaking silently with your eyes, but life becomes more interesting when someone starts reading those eyes silently.

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