Tax Due Date – October 2017

S. No	Due Date	Related to	Compliance to be made
1	04.10.2017	SEZ Compliance	Monthly exemption details for the month of September 2017
2	10.10.2017	GST	Filing of GSTR 1 for the month of July, 2017
3	11.10.2017 to 31.10.2017	GST	Filing of GSTR 2 for the month of July, 2017
4	20.10.2017	GST	-Payment of GST for the month of September, 2017 -Filing of GSTR 3B for the month of September, 2017
5	07.10.2017	TDS/TCS (Income Tax)	· Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of September 2017. · Deposit TDS from Salaries deducted during the month of September 2017 • Deposit TCS for collections made under section 206C including sale of scrap during the month of September 2017, if any • Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of September 2017, if any
6	31.10.2017	TDS Return	·         Filing of 2nd Quarter (1st July to 31st September) TDS return.
7	15.10.2017	TCS Return	·         Filing of 2nd Quarter (1st July to 31st September) TCS return.

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31.10.2017

Income tax

Filing of income   tax return for the Corporate assesses (or) Non Corporate assesses (Whose books of accounts are required to be audited U/s 44AB of IT act 1964 (or) working partner (of a firm whose books of accounts required to be audit ( in case of Assesses not having international or specified domestic transaction).

HC’s order impleading CBEC in challenge to IGST payment under Advance Authorisations

Delhi HC impleads CBEC as respondent in writ petition challenging curtailment of duty exemption benefit under Advance Authorisation Scheme; Directs CBEC to instruct all Customs Commissionerates to comply with interim order dated September 11 allowing imports without payment of IGST against authorisations issued prior to July 1; Notes that despite such interim order, petitioner was compelled to pay IGST to effect clearance of raw material under specified authorisations; Matter is listed on February 22, 2018 

Amendment in GST registration

The option for amendment of GST registration (both core and non-core amendments) available in the GST portal now. The information being showing in the portal like “Application for Amendment in Registration Particulars (for both core and non-core) service is available on the portal now. Taxpayers who wish to change their particulars may do so now.”

HC : Grants relief to Vedanta; 'Vagaries of litigation' irrelevant for asset transfer pre-approval u/s 281

Goa bench of Bombay HC sets aside AO’s order rejecting Vedanta’s prior permission request u/s Sec. 281(1) (applicable before effecting an asset transfer or creating a charge thereon); HC refers to Sec. 281 and opines that the section demands precision, holds that the AO cannot  generally say that “no proposed transaction or charge over any asset, though unencumbered, can be permitted because there is a possibility of another demand, or on account of the vagaries of litigation, etc.”, clarifies that the section only requires AO to ensure that the known claims of the Revenue are sufficiently secured; HC further observes that "There is no room in considering an application under Section 281 for a response that is speculative, predicated on imponderables and unknowns such as litigation outcomes, or on suppositions that all stay orders obtained by an assessee are bound to be vacated and an assessee’s appeals lost";  HC notes that assessee has available assets in excess of Rs. 80,000 crores of which roughly assets of Rs. 49,000 crores assets have some form of encumbrance on them, while the remaining are not so encumbered; However, without rendering a decision on the merits of assessee’s application, HC directs AO to consider assessee’s application afresh, uninfluenced by the previous order, further lays down timelines and directs both the parties to consider provisions of Sec. 281 and Circular No.4/2011 setting out the guidelines for the grant of prior permission u/s. 281 :HC 

HC : Prescribes four guidelines for Revenue on re-assessments; Quashes Sec 147-proceedings on share issue

Delhi HC quashes Sec. 148 proceedings (initiated beyond 4 years period) on assessee–company (engaged in the real estate business) for AY 2008-09; AO had recorded reasons that the five companies that subscribed to assessee’s share capital were ‘paper companies’, however, HC notes that assessee had disclosed the names of all the five companies along with the details of share premium amount received from them during original assessment proceedings; Accordingly, HC holds there was ‘no new material’ for initiating re-assessment, remarks that “the reasons for reopening do not mention as to what fact or information was not disclosed by the Petitioner…. An allegation that the companies are `paper companies' without further facts is by itself insufficient to reopen assessments”; However, considering that a large number of writ petitions are filed on a routine basis challenging reopening u/s. 147/148, HC lays down  a four-point guideline in matters of reopening of assessments, viz.: 1) while communicating reasons, copy of the standard form used by AO for obtaining the approval of the Superior Officer should itself be provided to assessee, 2) reasons ought to spell out all the reasons and grounds available with the AO for re-opening including reference to investigation report or enquiry, 3) where the reasons make a reference to another document, such document and/ or relevant portions of such report should be enclosed along with reasons and 4) the exercise of considering  assessee’s objections to reopening, not a mechanical ritual, hence AO should give proper reasons for the conclusion.:HC 

CBEC : Avail credit of service-tax paid in July in revised Form ST-3, then TRAN-1

CBEC issues clarification on certain transitional issues arising w.r.t. payment of service tax after June 30; Clarifies that in cases where service was received and payment thereof was made before July 1 but service tax was paid by July 5 / 6, details of credit should be indicated in Part I of Form ST-3 by filing revised return; Accordingly, to give assessees an immediate and viable window to file revised returns within 45 days, CBEC states that all ST-3 returns for the period April – June 2017 which have been filed upto and inclusive of August 31, shall be deemed to have been filed on August 31; Once details of such credit are reflected in ST-3, assessee may proceed to fill in the details in Form GST TRAN-1; Assessees who were not registered under ACES and who want to make payment of service tax on after July 1, can avail the category of “non assessee registration” in registration module of ACES : CBEC Circular  

ITAT : ITAT Special Bench- Lays down law on penalty for self-assessment tax payment default in original return

ITAT Special Bench (ITAT SB) holds that penalty u/s. 221(1) attracted for default in payment of self-assessment tax due u/s 140A while filing original tax-return even though assessee subsequently files a revised return of income and pays tax; Assessee

SC stays HC's interim-order allowing Clean Energy Cess credit utilization against Compensation Cess

SC issues notice in Revenue’s SLP, stays operation of Delhi HC’s interim order which had allowed petitioner to utilize credit of ‘Clean Energy Cess’ paid on stock of coal towards payment of Compensation Cess leviable in terms of GST Compensation Rules r/w Notification No. 1/2017-Compensation Cess (Rate); Finding prima facie merit in challenge to legislative competence of Parliament to enact Compensation Act, HC had observed that power of Parliament to enact said Act cannot be traced to Section 18 of Constitution (One Hundred and First Amendment) Act, 2016; Accordingly, HC had barred additional payment on sale and clearance of stocks of coal which have already suffered Clean Energy Cess, while listing matter for hearing on October 26 : SC

Customs Valuation Rules

This is to update you that CBEC has issued by Notification 91/2017(NT) dated 26 September 2017 which amends the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Further, a circular 39/2017 dated 26 September 2017 has also been issued clarifying the key changes that have been made vide the amendment Notification.  We have summarised the amendments below for your ease of reference:  

CESTAT : Supply of goods to merchant-exporter constitutes 'export', excludible from SSI exemption

Supply of goods to merchant-exporter constitutes ‘export clearances’, not includible in aggregate turnover for purpose of SSI exemption; CESTAT notes that CBEC Circular No. 648/39/2002-CX allows SSI units to export goods either directly or through merchant exporter and documents prescribed by Sales Tax Dept. viz. Form H / equivalent Forms, are acceptable as proof of export; States that CBEC has very consciously prescribed such Forms as proof of export for the reason that they are issued by Dept. only in respect of those goods which are exported; Therefore, interpretation of Adjudicating Authority that goods should have been directly exported from factory of manufacturer (i.e. assessee) is very narrow and defeats the entire objective of simplified export procedure prescribed by the Board, states CESTAT; Accordingly, observes that if the supplies made by assessee get correlated with details in said Sales Tax Forms, same must be accepted and certificates issued by merchant exporter fortifying assessee’s claim cannot be simply brushed aside  : Mumbai CESTAT

ITAT : Equity from directors' daughter not transaction between strangers, deletes 'unexplained credit'

Ahmedabad ITAT deletes unexplained cash credit addition with respect to share application money received by assessee (a private limited company) during AY 2010-11 from one of the shareholder (who is daughter of one of the assessee’s directors); Rejects Revenue’s stand that source of funds in the hands of shareholder and creditworthiness was not proved; ITAT takes note of earning statements, bank account details of the shareholder and her husband, which “show prima facie evidence of the means of the shareholder.”; Further, ITAT observes that the relationship between the assessee-company and the shareholder was well established in the sense that the shareholder is the daughter of one of the directors, remarks that “It is, therefore, not a transaction between two strangers.”; Also, ITAT observes that amounts were received through the banking channels.:ITAT 

Payment of 'Admitted tax liability' u/s 140A, through Revised return, will not obliterate default committed in original return, and hence penal consequenses will follow u/s 221(1): ITAT Special Bench

THE issue before the Bench is - Whether payment of admitted tax liability at the time of filing revised return, would obliterate the lapse committed in non-payment of such liability at the time of filing original return, so that the consequences of earlier lapse will not be visited with penal consequences. NO is the answer of the Special Bench.

HC : Reiterates statutory-mechanism; Releasing detained goods on 50% demand discharge &

HC sets aside Single Judge Bench order, finds direction to release detained goods on payment of 50% of demand and execution of simple bond contrary to provisions of Section 129 of Central GST Act / Kerala GST Ordinance r/w Rule 140 of CGST Rules; Notes that goods were detained by Revenue on ground that documents accompanying them had no nexus with actual goods under transport; Observes that Section 129 provides for detention, seizure and release of goods and conveyances in transit, whereby goods may be released provisionally upon execution of bond and furnishing of security in prescribed manner or on payment of applicable tax, interest and penalty in terms of Section 67(6); Hence, when statute itself provides a mechanism for adjudication following detention of goods including provisional release thereof, a deviation therefrom cannot be ordered, holds HC; However, taking note of Rule 140 obliging dealer to produce goods upon demand, and considering the inconvenience and prejudice likely to be caused on account of delay, HC emphasizes the necessity of an expeditious adjudication even in cases where goods are released provisionally : Kerala HC 

HC : Reverses ITAT; Contracts receipts, not JV-company's income, but diversion by overriding title

Jammu and Kashmir HC reverses ITAT order and rules in favour of assessee (a JV company) for AY 2005-06, railway contract receipts of over Rs. 12 cr. not income of assessee, but diversion of income by overriding title;  Assessee (a joint venture between two companies) was formed for construction of railway tunnels, HC notes that assessee was formed only for the purposes of submission of tender and that the contract was not executed by assessee, but by JV members, and contract was merely allotted in assessee’s  name;  Further, noting that the contract receipts of over Rs. 12 cr. were allocated to the JV partners  (in the ratio of 97:3), HC holds no income accrued to assessee as there was diversion of income by overriding title, extensively relies on SC ruling in Sitaldas Tirathdas;  Remarks that “neither amount would have been received by the assessee from the northern railways for no work performed by it nor it could be stated that the assessee has performed any activity but still the income has accrued.”; Separately, HC rules that the amount allocated / distributed to JV partners could not be disallowed u/s. 40(a)(ia), holds Finance Act, 2012 amendment inserting proviso to Sec. 40(a)(ia) [stating that once tax is paid by payee, deductor cannot be treated as assessee-in-default] is retrospective in nature, also cites CBDT circular on allocation of revenues in consortium arrangements:HC 

CESTAT : CENVAT credit availment towards manufacturing cannot debar exemption for factory space

CESTAT extends service tax exemption to manufacturer under Notification No. 6/2005-ST in respect of renting of open space within factory, finding no violation of any conditions stipulated therein with respect to non-availment of CENVAT credit; Observes that assessee had neither received / used any capital goods at the premises rented out nor utilized inputs / input services and no credit thereto was availed; Hence, all conditions thereunder stood complied with by assessee; Holds that availment of CENVAT credit in respect of inputs, input services and capital goods only in relation to manufacturing activity does not debar assessee from availing exemption under said Notification for service of renting of immovable property; Stating that activity in manufacturing unit and service related to immovable property are two distinct activities, CESTAT concludes that assessee is not liable to pay any service tax  : Mumbai CESTAT

GST on reimbursement of expenses

Goods and Services Tax or GST is made simple compared to earlier indirect tax laws. The confusion which we had earlier is very specifically articulated by government regarding reimbursements of expenses incurred at the time of provision of services.

Expenses incurred by service provider acting as a PURE AGENT shall be excluded from value of supply if some specified conditions are fulfilled.

It should be noted that you cannot exclude expenses incurred on behalf of recipient of service unless you satisfy the conditions specified.

Rule 7 of the valuation rules issued in public domain is the applicable rule to ascertain whether expenses incurred by service provider should be excluded or not

The conditions which should be satisfied before excluding reimbursements are:

1. The supplier acts as a pure agent of the recipient of the supply, when he makes payment to the third party for the services procured as the contract for supply made by third party is between third party and the recipient of supply;
2. The recipient of supply uses the services so procured by the supplier service provider in his capacity as pure agent of the recipient of supply;
3. The recipient of supply is liable to make payment to the third party;
4. The recipient of supply authorises the supplier to make payment on his behalf;
5. The recipient of supply knows that the services for which payment has been made by the supplier shall be provided by the third party;
6. The payment made by the supplier on behalf of the recipient of supply has been separately indicated in the invoice issued by the supplier to the recipient of service;
7. The supplier recovers from the recipient of supply only such amount as has been paid by him to the third party; and
8. The services procured by the supplier from the third party as a pure agent of the recipient of supply are in addition to the supply he provides on his own account.

Explanation . - For the purposes of this rule, “pure agent” means a person who -

• Enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both;
• Neither intends to hold nor holds any title to the goods or services or both so procured or provided as pure agent of the recipient of supply;
• Does not use for his own interest such goods or services so procured; and
• Receives only the actual amount incurred to procure such goods or services.

Which expenses can be claimed as reimbursements and excluded from value of supply/sale/service?

You must have doubts whether expenses listed below can be claimed as reimbursements and be excluded from value of supply.

• Expenses such conveyance, transportation, food, team lunch,
• Payment made to government departments such as ROC, Income Tax, GST etc.,
• Goods/materials purchased on behalf of client/customer,
• Other expenses incurred on behalf of client/customers.

The first condition is that supplier of service should act as a Pure Agent of his client/customer. If you are not providing services as a pure agent then you can not deduct expenses incurred on behalf of customer/client from value of supply of services.

You can deduct only those payments which were supposed to be made by your customer and parties involved in transaction knew the fact that it is your customer who is supposed to make payment.

Your customer should have authorised you to make payments on his behalf and you should:

• Specify this amount separately in invoice,
• Recover from client only actual amount paid,
• The payment are in addition to other services you provide to your client.
• Not hold title of goods or services procured on behalf of your client,
• Not use goods or services for your personal use,

Let us understand this rule with an example.

We will take an example of professional services provided by CA, CS or Lawyers. Professionals such as Chartered Accountants sometime have to make payment on behalf of their clients. Take an example, of a CA who provides service of LLP Registration.

CA charges client his professional fee along with expenses incurred in form of payment to ROC. In this case CA acts as a pure agent of his client.

If fee of providing services was Rs. 15,000 and ROC expenses incurred are Rs. 5,000.

CA need to charge tax only on Rs. 15,000 and not Rs. 5,000 which were paid in discharge of his duty as a Pure Agent.

Here things to be noted are that, the payments to ROC were made on behalf of service recipient and CA acted as a pure agent between his client and ROC. Service received from ROC by making payment were not used by CA but by his client to get the name approval and registration.

HC : Denies Sec. 80IB deduction to industrial undertaking formed by take-over of existing business

Allahabad HC upholds ITAT order for AY 2001-02, denies Sec. 80-IB deduction to assessee-company’s (running a flour mill) on profits of industrial unit formed by takeover of entire business from another entity; Holds that the industrial unit was set up by purchase of used plant and machinery thus, resulting in violation of condition u/s 80IB(2)(ii), observes that the purpose of Sec. 80-IB is to promote setting up of a new industrial undertaking by purchasing new plant and machinery which stands defeated in assessee's case; Relies on Madras HC ruling in Heartland KG Information Limited rendered in context of Sec. 10A(2), observes that Sec. 80IB(2)(ii) is pari materia with Sec. 10A(2)(iii); Clarifies that transfer of used plant and machinery to a new undertaking and the formation of an industrial undertaking by splitting up/ reconstruction of existing business are two separate conditions u/s 80IB(2), distinguishes assessee's reliance on Bombay HC ruling in Sonata Software Limited in the context of splitting up/reconstruction; Remarks that “The transfer of the used plant and machinery may not result in splitting and reconstruction of the existing industrial undertaking but nevertheless when an unit as a whole is transferred, it includes the transfer of plant and machinery which was in use by the existing unit of a separate legal entity for the formation of a separate industrial undertaking. This kind of transfer is clearly hit by clause (iii) of Sec. 10A(2)..”:HC 

CESTAT : Amortized cost of modifying free dies & tools includible in manufactured goods' value

Amortized cost of modifying dies & tools supplied free by customer includible in assessable value of manufactured motor vehicle parts; Noting that assessee discharged service tax on modification charges collected from customer, CESTAT observes that modification cost is nothing but an addition to the value of overall dies & tools used in manufacture; Referring to Rule 6 of Central Excise Valuation Rules, CESTAT remarks that it doesn’t make any difference whether assessee carried out any modification to dies, moulds & tools supplied free of cost by customer; Upholds invocation of extended period of limitation on ground of suppression of facts, noting that assessee had never disclosed collection of charges either through any communication / in monthly returns; Rejects assessee’s plea of revenue neutrality, thereby disallowing CENVAT credit to customer and also imposes penalty u/s 11AC : Mumbai CESTAT

ITAT : Delivers Sec. 68 blow for assessee's miserable failure in demonstrating share premium genuineness

Ahmedabad ITAT, in second round of litigation, confirms unexplained cash credit addition u/s. 68 with respect to share premium received by assessee (a private limited company manufacturing PVC pipes) for AY 2002-03; ITAT observes that the taxpayer could not produce even a single party out of the 13 share premium paying parties despite they all being based locally, remarks that “the assessee has not made any effort in discharging its initial onus so as to satisfy the basic factors of identity, capacity, genuineness and creditworthiness of the 13 parties in question who have paid it a very hefty share premium of Rs.90/- per share in question.” ; Further, ITAT notes that assessee could not even submit any original confirmation, holds that “its subsequent action in submitting all 4 photocopies of the same date indicates a very serious genuineness issue”; Tribunal clarifies that mere filing of confirmation letter or by receiving money through banking channel or by filing PAN particulars will not discharge assessee’s onus; While acknowledging that there cannot be any 'straight jacket formula' to determine share premium, Tribunal however puts onus squarely on the assessee for its failure to even prima facie demonstrate the intrinsic value of shares to be at par with the the exorbitant premium received; Applies Apex Court ratios in Sumati Dayal and Durgaprasad More, wherein the Courts advocated judging of evidence by applying the test of "human probabilities".:ITAT 

CBEC seeks verification of CGST transitional credit claims above Rs. 1 Cr. by registered persons

CBEC writes to Chief Commissioners in relation to Rs. 65,000 Cr claimed by registered persons as CGST transitional credit; Directs them to verify ITC claims of more than Rs. 1 crore, stating that carry forward of transitional credit is permitted only when such credit is also permissible under the GST law; States, “The possibility of claiming the ineligible credit due to mistake or confusion cannot be ruled out.”; Explains that verification may include – (a) matching credit claimed with closing balance in returns filed under earlier laws, (b) checking eligibility of credit under GST regime; Calls for a report in this regard by September 20 : CBEC Letter