Taxation of Capital Gains earned by Non-residents

Since the opening up of the economy almost two decades back, many non-residents have found favour with investments in India. This article aims at discussing the various provisions and issues related to taxation of capital gains earned by non-residents in India.

Section 80GG Deduction On Rent paid

Deductions is respect of rents paid : Under Section 80GG, an Individual can claim deduction for the rent paid even if he don’t get HRA. Not many people are aware of this deduction.

Section 80GG allows the  Individuals to a deduction in respect of house rent paid by him for his own residence. Such deduction is permissible subject to the following conditions :-

(a)  the Individual has not been in receipt of any House Rent Allowance from his employer specifically granted to him which qualifies for exemption under section 10(13A) of the Act;

(b)  the Individual files the declaration in Form No. 10BA.     

SC : Lifts corporate veil of Multinational Accounting Firms, raps ICAI for inaction

SC, in a detailed 75 pages judgment, lifts corporate veil of Multinational Accounting Firms (MAFs), holds that MAFs violate CA Act, orders further investigation by Enforcement Directorate & examination by ICAI, to probe violation of RBI/FDI policies   

HC : Directs reopening of GSTN portal for revised TRAN-1 or manual copy acceptance

Chhattisgarh HC allows writ petition of Bharat Aluminium Company Ltd. (BALCO) challenging the denial of transitional credit on account of non-filing of revised Form TRAN-1 due to GSTN system errors; Following Allahabad HC order in Continental India Private Limited, directs Dept. to either reopen the GSTN portal so as to allow refiling of revised TRAN-1, or in the alternative, treat the manual copy of revised Form TRAN-1 filed by petitioner as compliance with relevant provisions under CGST Act and allow transitional credit availed therein; HC also observes that petitioner's case is on a stronger footing as compared to Continental India Private Limited inasmuch as petitioner had manually filed the revised Form long before the due date : Chhattisgarh HC 

New GSTN requirement on Tax amount

Dear User, Earlier today, GSTN introduced a new validation for Tax amount of line items in sales invoices and other GSTR-1 documents. Per this validation, for every line item, Tax amount should equal Taxable value * Tax rate, rounded up to 2 digits. Example: If taxable value = Rs. 100.53 and tax rate = 28%, then tax amount should be Rs. 28.15. Values such as 28, 28.1, 28.148, 28.1484, 28.1, 28.20, 29 will result in error from GSTN. Starting 22nd Feb, we request you to make sure that the tax amount of line items in your Excel files matches this new validation. If you try to import Excel data where Tax amount is not as per the calculation above rounded up till 2 digits, you will see an error message- "Per GSTN's latest requirements, Tax amount should be 28.15 (i.e. 100.53 * 28%), rounded up to 2 digits".

In such cases, we request you to correct the Excel data and upload again.

HC : Disallows cross-utilisation of Education Cesses towards excise duty / service tax payment

HC quashes writ petition of Cellular Operators Association seeking to quash Notification No. 22/2015-CE (NT) as being violative of Articles 14, 19(1)(g), 265 and 300A of Constitution of India, holds that accumulated credit of Education Cess and Secondary & Higher Education Cess post abolition, cannot be cross-utilised for payment of excise duty / service tax; Rejects Association’s reliance on TRU’s explanation dated February 28, 2015 as well as claim of vested right to avail benefit of unutilized credit since EC and SHE were ‘subsumed’ in increased rates of excise duty (from 12% to 12.5%) and service tax (from 12.36% to 14%) w.e.f. March 1, 2015 and June 1, 2015 respectively; Referring to Finance Minister’s speech and explanatory Memorandum to Finance Bill 2015, HC states that no statement or assertion was made that benefit of unutilized EC and SHE credit would be available against excise duty / service tax and use of word ‘subsumed’ could indicate that there would not be an increased tax burden on taxpayers on account of EC and SHE withdrawal; Observes, “Any exercise of increasing taxes and withdrawing a cess or a tax is undertaken keeping in mind several aspects. This can include revenue collection in the form of increased taxes on one hand, and withdrawal or reduction of cess or another tax so as to curtail the adverse impact due to increase. Budgets do, and are, a balancing exercise”; Opines, while it is true that the two Cesses were in nature of taxes and not fee, it would be incorrect and improper to treat them as excise duty or service tax, they were specific Cesses for the objective and purpose so specified; Remarks, “Omission of a provision signifies deletion of that provision and is normally not treated as different from repeal” while stating that repeal / omission in present case was not made retrospectively, but applied prospectively; Elucidates that amendment to CENVAT Credit Rules 2004 incorporating provisos (3) to (8) to Rule 3(7)(b) are in nature of concessions confined to a limited and narrow set of cases where capital goods / inputs / input services were received by the manufacturer /  service provider after March / June 2015; Said provisos are not of general application, as they expand the scope and give benefit of utilization of accumulated EC and SHE against payment of excise duty and service tax, which was not the position prior to such dates, hence, “said classification would not fall foul of vice of discrimination. Article 14 is not offended”; Relies on SC rulings in Hingir-Rampur Coal Co. Ltd. and B.K. Industries, while distinguishing SC ratio in Eicher Motors Ltd : Delhi HC

HC: Refuses Google's 'indirect' appeal for absolute stay of ITAT order

Karnataka HC dismisses Google India’s plea for absolute stay of ITAT order holding Adwords Program payment as royalty; Accepts Revenue’s stand that “the appellant is seeking to obtain stay of liability in proceedings under Section 143(3) of the Act in this indirect manner

Maharashtra Govt. prescribes new process for filing single revised returns for FY 2016-17

Maharashtra Govt. prescribes procedure for filing of single revised return u/s 20(4)(b) of MVAT Act from year 2016-17 onwards, pursuant to audit observations; Inter alia states that single return template must be used for filing all type of returns, viz. 231, 232, 233, 234 and 235 under MVAT & CST Acts; Creation of profile is mandatory for dealers registered before May 25, 2016 to avail SAP based e-services, such as return filing; Dealers will be required to file invoice-wise details in monthly sales and purchases annexures irrespective of their periodicity (monthly or quarterly), but those who have opted for composition scheme and required to file return in Form 232, shall file purchase annexure only; However, dealers who have already submitted monthly / quarterly revised returns u/s 20(4)(b) before issuance of present Trade Circular, shall not be required to file single revised return for said period : Maharashtra Trade Circular

Singapore to introduce GST on imported services from January 2020

Singapore proposes to introduce GST on imported services on or after January 1, 2020 to ensure a fair and resilient tax system in digital economy; B2B imported services to be taxed via reverse charge mechanism, whereby local business customer, making taxable supplies, shall account for GST to IRAS on services it imports and in turn, claim input tax subject to GST input tax recovery rules; However, businesses that (i) make exempt supplies, or (ii) do not make any taxable supplies need to apply reverse charge; Taxation of B2C imported services will take effect through an Overseas Vendor Registration (OVR) mode, which requires overseas suppliers and electronic marketplace operators making significant supplies of digital services to local consumers, to register with IRAS for GST; IRAS to release further details by end-February 2018; Explaining the rationale, Minister for Finance Mr. Heng Swee Kea states, “Today, services such as consultancy and marketing purchased from overseas suppliers are not subject to GST. Local consumers also do not pay GST when they download apps and music from overseas. This change will ensure that imported and local services are accorded the same treatment.”; As regards import of goods, Mr. Heng Swee Kea states that Govt. will review the international discussions on applicability of GST before deciding on measures to take : Singapore Budget 2018 

HC : Pipes manufactured using steel plates for use in pipeline laying contract, constitutes 'sale'

HC upholds Tribunal, manufacture and supply of steel pipes for use in execution of lump-sum engineering, procurement and construction (EPC) contract for supply and laying of pipeline qualified as ‘sale’ within definition of Section 2(28) of Gujarat Sales Tax Act, 1969 (Act), liable to tax; Rejects assessee’s plea that steel plates were purchased from vendor enjoying exemption u/s 49(2) which were used by assessee to manufacture steel pipes for further use in work contract execution, therefore, they are sold and hence, claim of re-sale deduction is admissible; Relying upon SC decision in Pyare Lal  Malhotra and Arihant Tiles and Marbles Pvt. Ltd, states that not only there is manufacture but also an activity which is something beyond manufacture and which brings a new product into existence post which the steel pipes are supplied, which amounts to 'sale' within definition of Section 2(28); Accepts Revenue’s argument that, merely because steel pipes were required to be used of a particular brand/company and/or specification or because payment was directly made to assessee’s vendor, it cannot be said that there was a contract for sale of steel plates, remarks that said stipulations are required to ensure quality work for quality payment; Also, upholds penalty, stating that there is no material which suggests that assessee had consulted any expert or applied for determination order which could prompt him for a bona-fide belief that it was not required to pay tax : Gujarat HC

SC : Advises unconditional apology but declines relief in contempt proceedings initiation against taxpayer /TRO

SC refuses to interfere with Bombay HC order directing initiation of civil and criminal contempt proceedings against the President of Sinhgad Technical Education Society (assessee) as also against the Tax Recovery Officer (‘TRO’) for misrepresenting the order of the Court and for wilful disobedience of Court’s order; Subsequent to HC’s refusal to grant relief against ITAT’s order to deposit Rs.18 cr., President Mr. Navale had filed communications before the Bank officials & TRO, claiming that HC, through 'oral' directions, had allowed assessee to withdraw funds received by it in its bank account (post this communication the assessee withdrew Rs. 9 cr from bank account received from Social Welfare Department), similar misrepresentation was also made by TRO to the assessee's bank; Noting the undisputed and agreed position between the parties that no such 'oral' instructions were given by the Court, HC had held that the conduct of Mr. Navale and TRO amounted to wilful disobedience of the Court’s order; Against the SLP filed by assessee challenging HC order, SC holds that “We are not inclined to interfere but we leave the petitioner with the remedy of approaching the High Court to tender an unqualified apology and also to make the offer of payment/deposit as made before this Court.”; SC further holds that the HC is free to pass such order as may be considered appropriate:SC 

Nagaland Govt. notifies e- way Bill Rules for intra-state goods movement from June 1

Nagaland Govt. notifies e-way Bill Rules for intra- state movement of all taxable goods of any value w.e.f. June 1, 2018 : Nagaland Govt. Notification 

CESTAT : Condemns Revenue's poor adjudication knowledge, quashes goods confiscation basis

CESTAT allows assessee’s appeal, sets aside order of Commissioner (Appeals) levying penalty & redemption fine relying upon report of laboratory not qualified to test as per DGFT Policy Circular No. 33 (RE-08)/2004-09; Based on report of SGS India Pvt. Ltd. to the effect that percentage of Indian Basmati Rice in the export sample was NIL, goods were confiscated, however, said order was reversed by Commissioner (Appeals) in first round of litigation on ground that SGS India was not a competent laboratory to test as per DGFT Policy Circular; Notes that, under a direction to conduct re-test of random samples through Agmark laboratory, report of Regional Agmark Laboratory stated that samples due to infestation by insects were not for any analysis, and subsequently Revenue accepted report of SGS India citing absence of contradictory evidence; Criticising Revenue’s approach of again relying upon test report of laboratory already held as not qualified, states that, Revenue did not understand the process of adjudication nor has knowledge of judicial discipline; Remarks, it is more pitiable that senior officer of rank of Commissioner working as Commissioner (Appeals) did not object to such an action, accordingly holds that said order "does not survive in law" : Allahabad CESTAT

HC : Upholds retrospective withdrawal of Sec 10(23C) exemption citing educational Trust’s illegal activities

Karnataka HC dismisses assessee’s (a Trust running 13 Educational Institutions) writ, upholds withdrawal of Sec. 10(23C) exemption with retrospective effect from April 1, 2009 (i.e. the date on which approval was granted) onwards; Revenue had withdrawn exemption based on a search and seizure operation conducted in December, 2015 on assessee’s various premises which revealed cash donations (capitation fees) collected from students for admission to medical courses and utilized for personal gains of trustees; Observes that approval u/s. 10(23C) was thoroughly misused by the trustees, notes that a staggering sum of Rs. 52 cr. of capitation fees was booked under the innocuous name of ‘Anonymous Donations’ which was clearly against public policy and specifically prohibited by SC in various cases; Holds that “Trust had indulged in illegal activities … and rather various other business activities of the family of Trustees and their money was passing through the cover and shields of the Books of Accounts of the petitioner - Trust rendering it as merely a skeleton for the purpose of exemption..”, remarks that “the petitioner - Trust cannot be allowed to cry wolf on the anvil of breach of principles of natural justice.”; Upholding exemption withdrawal from April 2009 onwards, HC states that “illegalities and transactions offending the said provisions cannot be split or bifurcated for the period in question only after the search and seizure operations were carried out on 16/12/2015 and the illegality cannot be allowed to be perpetuated for the preceding periods for which such evidence pointing out the illegalities exist on record.”, distinguishes assessee’s reliance on SC rulings in Queen’s Educational Society and American Hotel and Lodging Association Educational Institute, Rajasthan HC ruling in Geetanjali University Trust:HC 

OECD updates CbCR-Guidance covering consolidated group revenue definition, confidentiality condition non-compliance

The Inclusive Framework on BEPS releases additional guidance to give certainty to tax administrations and MNE Groups on the implementation of Country-by-Country (CbC) Reporting under BEPS Action 13; Additional guidance addresses 2 specific issues – a) definition of total consolidated group revenue and b) whether non-compliance with the confidentiality, appropriate use and consistency conditions constitutes systemic failure; On the first issue, OECD Guidance clarifies that if an MNE Group which does not have equity interests traded on a public securities exchange use consolidated financial statements based on accounting principles/standards different from those that are used to determine the existence of and membership of a group under Article 1.1 of the Model Legislation, then such MNE Group will still be required to calculate 'total consolidated group revenue’ for the purposes of Article 1.3 based on the accounting standards to be used for identifying a group under Article 1.1.;  On the second issue, OECD Guidance states that if a jurisdiction does not in practice meet the conditions of confidentiality, appropriate use or consistency, a Competent Authority may temporarily suspend the exchange of information by giving notice in writing if it is determined that there is or there has been significant non-compliance by the other Competent Authority; However, noting that consequences of non-compliance with conditions of confidentiality, consistency and appropriate use will depend on the terms of the Qualifying Competent Authority Agreement (QCAA) between the jurisdictions, OECD Guidance clarifies that “Because a temporary suspension of exchange of information under Section 8 is in accordance with the terms of the relevant QCAA, this does not constitute Systemic Failure”; Separately, OECD also releases compilation of approaches adopted by member jurisdictions of the Inclusive Framework with respect to issues where the guidance allows for alternative approaches 

HC : GST regime "not tax friendly"; Appeals to administration to fix system glitches

Bombay HC expresses discontent over unsatisfactory state of affairs, terming GST regime “not tax friendly”, while presiding over writ petition seeking grievance redressal against lack of access to GST portal despite registration; Notes that petitioner is unable to inter alia file necessary returns, particularly Form GSTR-3B, thereby attracting late fee for period from October 207 onwards, and generate E-way bill; HC states, “It is not the business of this Court to grant such access as is claimed by the petitioner. It is for the authorities to work out the necessary mechanism and set that in place” while directing authorities to set up and establish grievance redressal mechanism; Noting that Revenue could not give a definite answer on whether petitioner’s grievance would be projected and raised before GST Council or not, HC observes, “A tax like  Goods and Services Tax was highly publicised and termed as popular. We had yet not seen a celebration of New Tax regime, but that has followed with great hue and cry. These celebrations mean nothing. The special sessions of Parliament or special or extraordinary meetings of Council would mean nothing to the assessees unless they obtain easy access to the website and portals.”; Hopes that those in charge of implementation and administration of GST law would at least now wake up and put in place requisite mechanism so as to preserve the image, prestige and reputation of country, and lists matter on February 16 while noting Allahabad HC’s direction to reopen GST portal in a similar grievance : Bombay HC 

HC : 'Renting' & 'hiring' of cabs liable to service tax; Transfer of control irrelevant

Renting of motor cab liable to service tax u/s 65(105)(o) r/w Section 66 of Finance Act, irrespective of whether operator retains possession and control of vehicle or passes it on to the customer; Rejects assessee’s stand that since control of cabs does not pass to customer, its business would not be covered under the term “Rent-a-cab scheme operator” chargeable to service tax; HC observes, a plain and simple reading of relevant provisions indicate that what is sought to be taxed under the Act is service provided by a person under a rent-a-cab scheme, whereby no distinction is made between ‘renting’ and ‘hiring’; Absent definition of said terms under Finance Act, meaning acceptable in common parlance must be assigned, states HC while observing that distinction carved out between 'renting' and 'hiring' of cab by Uttarakhand HC in case of Sachin Malhotra in view of Section 75 of Motor Vehicle Act, 1989 is not necessary for determining taxability of service; Further elucidates, “rent-a-cab scheme” formulated by Central Govt. providing for obtaining of license by scheme operator has nothing to do with the provisions relating to imposition / chargeability of service tax  : Allahabad HC

HC : Quashes Daimler's re-opening noting Form 3CEB disclosure; Onus on AO to peruse TPO's order

Madras HC allows Daimler India's writ, quashes re-assessment proceedings initiated after the expiry of 4 years from the end of the relevant AY 2009-10, holds that it was a ‘clear case of change of opinion’ as assessee made full & true disclosure at the time of the original assessment; Notes that AO sought to reopen the assessment on the basis that assessee had not disclosed the material fact that they had not commenced business during the year, however, observes that assessee had made disclosure about its business activity in Form 3CEB which was duly taken into account by TPO who specifically recorded in his order that commercial production proposed to start in year 2012; Regarding Revenue's contention that AO will not look into Form 3CEB, observes that there is sufficient indication to show that AO considered TPO's order and even assuming AO did not look into Form 3ECB, “he is bound to look into the order passed by the TPO, as he is required to see any other additions have been made”; Also rejects Revenue’s stand that assessee merely produced books of account before the AO and that there was no presumption that all the books were seen by the AO, opines that “it is for the Assessing Officer to arrive at a conclusion based on the materials produced and it is not for the assessee to suggest as to what conclusion that should be arrived as it has been held that the assessee is not expected to submit a draft assessment order”; Thus, concludes that “reopening could not have been done as it has been held that information received by the Assessing Officer, after the completion of the assessment alone is sound foundation for exercising power under Section 147”; Also relies on Kelvinator of India ruling and distinguishes A.L.A. Firm ruling :HC 

HC : Upholds validity of demand notice under CST Act sans challenge to assessment order

HC dismisses assessee’s challenge to validity of demand notice issued towards recovery of sales tax arrears under CST Act on account of failure to furnish Form F in respect of goods consigned to agents in other States; Notes assessee’s contention that he duly submitted Form F declaration to Assessing Authority in terms of Section 6A of CST Act, and since he closed business due to fire accident, Assessing Authority ought to have sent the notice and assessment orders on residential address instead of business address; States, these factual assertions having been urged for the first time, cannot be entertained in writ proceedings since it fails to afford opportunity to Revenue to rebut the same, moreover, assessee failed to intimate the fact of discontinuance of business and name of person authorized to receive assessment order on his behalf, which indicates that assessee possessed the hard copy of order; Further observes that absent challenge to the assessment orders, demand notice cannot be set aside on the ground that same are void and non est in the eyes of law or that assessment should be ignored as a nullity; Remarks, as long as assessment order is within the stipulated period of limitation, it is inconsequential whether same is passed immediately after end of assessment year / period, or at fag end before expiry thereof, also rejects assessee’s contention that intra-State sales were being treated as inter-state sales  : Telangana & Andhra Pradesh HC

HC : Absent proper records, upholds 10% gross-profit adoption for arriving 'works contract' liability

HC upholds Tribunal’s adoption of 10% gross profit for working out deemed sales value of goods transferred during works contract execution, under Tamil Nadu VAT Act, 2006 (TNVAT Act); Dismisses assessee's contention that Tribunal failed to consider assessee’s books of accounts and that adoption of thumb rule of 10% Gross Profit disregarding the actual gross profit as certified by CA was based merely on surmises and approximation; Finds that Tribunal, on noting that assessee did not maintain proper accounts and failed to produce related records, affirmed adoption of conventional method of 10% notional gross profit on purchase effected for arriving at deemed sales turnover; Also rejects assessee’s plea of natural justice principles violation, as well as its reliance on Income Tax ruling of Kerala HC in Joseph Thomas & Bros’ wherein it was held except assessment u/s 144, opportunity of being heard, shall be given in respect of any material gathered basis any enquiry; Holds that, adoption of 10% gross profit is in vogue ever since introduction of Section 3B of Tamil Nadu General Sales Tax Act, 1959 and continues even for liabilities relating to Section 5 of TNVAT Act : Madras HC

Delhi Govt. constitutes Refund Approval Committee for sanctioning refunds > Rs. 50 lakhs

Delhi Govt. constitutes “Refund Approval Committee” chaired by senior most Special Commissioner along with Special Commissioners & Controller of Accounts as members and Zonal In-charge as member secretary, to grant approval in case of refund of SGST, CGST, IGST and Cess above Rs. 50 lakhs under DGST / CGST Act; Directs all Asst. Commissioners / GSTOs who have been assigned powers u/s 54 of DGST Act, to issue refund order after obtaining prior approval of Zonal in-charge i.e. Jt. Commissioner / Addl. Commissioner / Spl. Commissioner, where amount claimed (of excess tax paid) is more than Rs. 10 lakhs but less than Rs. 50 lakhs; Similarly, in case of amount above Rs. 50 lakhs, prior approval of Refund Approval Committee shall be required : Delhi Govt. Orders

Revised India-China treaty to incorporate minimum standards & other changes under BEPS

Cabinet approves signing and ratification of protocol amending India-China DTAA; Protocol will incorporate changes required to implement treaty related minimum standards under the BEPS project; Besides minimum standards, the Protocol will also bring in changes as per BEPS Action reports as agreed upon by two sides; Further, Protocol updates the existing provisions for exchange of information to the latest international standards 

ITAT : Reliance Communication's software payments for wireless network operation, not royalty under DTAA

Mumbai ITAT rules that payment by Reliance Communication Ltd. (‘assessee’) to non-resident vendors (based in Australia, Israel, Sweden, Singapore and USA) for supplying software, not royalty under respective DTAA, holds it as payment for 'copyrighted article' and not ‘copyright’ itself; Observes that all software license agreements stipulate that the assessee would be using the software for ‘operation of its wireless network only’ and it was prevented from utilizing the software for commercial uses; Further, observes that copyrights in the software were not transferred to the customers and access to the ‘source codes’ in the software was not granted to assessee, also there was restriction on copying the software; Moreover, ITAT observes that in individual supplier's hands (i.e. Nortel Networks India International Inc. USA, Team Telecom International Ltd., Israel, Motorola Inc USA, Alcatel USA International Marketing Inc USA, ZTE Corporation China and Ericsson AB Sweden), the Courts / Tribunals have held that sums received by them from  assessee for supply of software for wireless network were not taxable and that the payments could not be termed as royalty; Cites plethora of rulings including Madras HC ruling in Neyveli Lignite Corporation Ltd., Delhi HC ruling in Asia Satellite Telecommunications Co.Ltd., rejects Revenue’s reliance on Karnataka HC ruling in Samsung, relies on SC ruling in Pradip J. Mehta to hold that when two views were possible, then the interpretation in favour of the taxpayer should be adopted:ITAT 

HC : Strikes down Circular restricting interest on delayed SAD refund; Follows Division Bench

HC strikes down Para 4.3 of Circular No.6/2008-Cus insofar as it restricts / obliterates the claim of interest on belated refunds of SAD granted in terms of Notification No. 102/2007-Cus; Rejects Revenue contention that Notification No. 102/2007-Cus being issued u/s 25(1) of Customs Act, interest u/s 27A would not be applicable to refund of SAD; HC refers to Division Bench ruling in Riso India Pvt. Ltd. to observe that, “SAD levied under the Customs Tariff Act is a duty within the meaning of Section 27” and interest would be payable on refunds u/s 27A when delayed beyond 3 months from date of application; Observes that Division Bench had categorically held that Para 4.3 of said Circular was not in accordance with statutory mandate of Section 27A, in fact Madras HC in KSJ Metal Impex (P) Ltd. had taken a similar view; Also rejects Revenue’s objection to maintainability of writ petition since CESTAT order is appealable, states that challenge to validity of Circular cannot be made before Customs’ authorities  : Delhi HC

J&K notifies budgetary support for manufacturing units; To reimburse SGST after ITC adjustment

J&K Govt. notifies scheme for providing budgetary support to manufacturing units to come into operation from July 8, 2017, till the last date of Industrial Policy 2016; Said scheme shall be limited to reimbursement of tax which accrues to State Govt. under J&K GST Act (i.e. SGST) after adjustment of input tax credit of SGST and IGST on supply of finished goods by manufacturing units; As per the definitions clause, “eligible unit” shall mean a manufacturing unit registered as on July 7, 2017 under J&K VAT Act and also formally registered with Dept. of Industries and Commerce / Directorate of Handicrafts Handloom except units manufacturing specified goods (Annexure A) and units eligible for reimbursement under SRO 519 dated December 21, 2017; However, benefit of reimbursement shall not be extended to industrial units who are procuring inputs exclusively from composition dealers or from any unregistered persons, and to those who make supply of services or interstate supplies of finished goods either directly or indirectly or through intermediaries or proxies; Reimbursement shall be worked out on quarterly basis for which, claims would also require to be filed by 15th of succeeding month after end of quarter; As per Annexure A, the scheme shall apply to 17 goods such as repacked goods, bricks & tiles, soft drinks, TVs, ACs, Refrigerators and Washing Machines when sold under brand name of other products, tobacco and its products, and arms & ammunition including accessories thereof; Scheme also lays down the manner of budgetary support, provides for inspection of eligible unit, repayment by claimant / recovery and dispute resolution : J&K Finance Dept. Notification 

SC : Legal Metrology Act inapplicable to 'mineral water' sale above MRP in hotels/restaurants

SC upholds Single Judge bench view of HC, provisions of Standards of Weights and Measures Act, 1976 (SWM Act, 1976), Standards of Weights and Measures (Enforcement) Act, 1985 (SWM Act, 1985) and Legal Metrology Act, 2009 (LMA, 2009) inapplicable to 'mineral water' sale in hotels and restaurants at prices above MRP; Notes HC’s Division Bench observation that Single Judge Bench judgment to the effect that charging prices in excess of printed MRP does not violate provisions of SWM Act, shall not be enforceable in respect of provisions of LMA, 2009 and same needs to be adjudicated in de-novo proceedings under the new Act; Elucidates that, object of LMA, 2009 is only to do away with 1976 and 1985 Acts and combine provisions into one enactment to make the law simple and bring in transparency, moreover, despite changes made by 46thConstitutional amendment introducing Article 366(29A), position qua ‘sale’ in LMA 2009 / Rules remains exactly the same; Remarks, definition of “sale” contained in both Acts demonstrates that composite indivisible agreements for supply of services and food and drinks would not come within the purview of either enactment since the object is something quite different; SC also rejects Revenue’s reliance on definition of ‘institutional consumer’ contained in Rules and contention that hotels would be under the coverage of LMA, 2009 : SC

ITAT : Advances hearing over AO re-characterizing Flipkart's discounts bonanza as monopoly building capital-expense

Bengaluru ITAT directs Flipkart India Pvt Ltd. (‘assessee’) to pay 50% of demand of Rs.109.52 Cr and furnish bank guarantee for balance, relying upon ITAT stay order in Google India approved "in spirit" by HC, directs registry to advance appeal hearing date to April 9, 2018; Notes that AO treated the loss incurred as capital expenditure observing that discounts offered to customers were intended to build up brand value/monopoly or primacy in the online market and determined total income at 408 Cr adopting sales price at which the assessee could have sold the products, based on comparable profit earned by entities engaged in similar line of business; ITAT rejects assessee's contention that AO estimated turnover without rejecting books of accounts and applied TP principles to transactions with unrelated parties, observes that "AO merely adopted the methodology to arrive at the value of realization, had the products would have been sold with profit motive" and thus holds judicial precedents relied on by assessee to be not applicable; Observes that assessee did not advance any argument as to patent error in methodology adopted by tax authorities or rebutting the stand that assessee's loss in the form of discount was nothing but intangibles; Holds that no case was made out about financial hardship and "there is every possibility of availability of liquidity in the company on account of receipt of huge share capital and huge share premium"