Tax Due Dates - July 2018.

Sr No	Due Date	Related to	Compliance to be made
1	10.07.2018	GST	Filing of GSTR – 1 for the month of June 2018
2	06.07.2018 (since July 7th is a Saturday)	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 June 2018. · Deposit TDS from Salaries deducted during the month of June 2018 • Deposit TCS for collections made under section 206C including sale of scrap during the month of June 2018, if any • Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of June 2018, if any
3	31.07.2018	TDS/TCS (Income Tax)	Furnish quarterly statement of tax deducted at source (TDS) and tax collected at source (TCS) for the quarter ended June 2017 in Form 24Q / 26Q / 27Q / 27EQ.
4	20.07.2018	GST	Payment of GST for the month of June 2018 and filing of GSTR – 3B
5	31.07. 2018	Income Tax	Filing of return of income tax by non –corporate assesses
6	30.07.2018	SEZ	Filing of Form A3  for the quarter  ended June 2017

CBDT: Final notification maintains 40% tax-rate for POEM hit foreign co., clarifies WDV, b/f losses treatment

CBDT issues final notification u/s. 115JH specifying tax consequences in respect of foreign company treated as resident in India on account of its place of effective management (POEM) being in India; The final notification maintains 40% tax-rate in case of foreign company post POEM application; Likewise, while final notification also allows foreign tax credit (‘FTC’) relief u/s. 90/91, it additionally clarifies on FTC allowability where income on which foreign tax has been paid or deducted, is offered to tax in more than one year; With respect to compliance to TDS provisions (under Chapter XVII-B of the Act), the final notification prescribes that the provisions applicable to the foreign company alone shall apply where more than one provision of Chapter XVII-B apply to the foreign company as resident as well as foreign company; In this regard, final notification additionally clarifies that  “compliance to those provisions of Chapter XVII-B as are applicable to the foreign company prior to its becoming Indian resident shall be considered sufficient compliance to the provisions of said Chapter.”; Similarly, final notification amends  the ‘modification / adaptation’ condition with respect to opening WDV of asset, brought forward losses and unabsorbed depreciation. 

AAR : Pre-delivery registration, handling & insurance charges to make vehicle 'road worthy', liable to VAT

AAR holds that registration, insurance and handling charges received and paid on behalf of customer of motor vehicle are includible in ‘sale price’ thereof in terms of Section 2(25) of Maharashtra VAT Act, under the deeming fiction that “any sum charged for anything done by the seller in respect of the goods at the time of or before delivery thereof”; Consequently, observes that “pre-delivery charges are brought within the meaning of the expression “sale price” and even if a sale has taken place, but delivery has not been taken, all pre-delivery charges would form part of the sale price”, while drawing inference from SC ruling in case of KTC Automobiles; Explains that motor vehicle remains in the category of ‘unascertained’ or ‘future’ goods till its appropriation to the contract of sale and sale gets concluded only upon compliance with stipulated conditions to make it road worthy in terms of Motor Vehicle Act, accordingly, “possession of a motor vehicle passes or can pass legally to the purchaser only after obtaining valid registration under the Motor Vehicles Act and the purchaser gets entitled to use the vehicles in public places”; However, holds that tax liability on handling or service charges related to registration shall be protected for the period July 11, 2011 to January 29, 2016 considering that Bombay HC decision in Sehgal Autoriders Pvt. Ltd. which held that such charges were not liable to VAT, was subsequently reversed by Apex Court in KTC Automobiles; Relying on various judicial precedents, AAR holds that reimbursement of discounts offered to customers by automobile company shall form part of ‘sale price’, while allowing input tax credit of motor vehicles used as ‘Demo Vehicles’ provided that they are not capitalized  : AAR

HC : Upholds addition based on 'window-dressed' financials prepared for availing bank loan

Calcutta HC dismisses assessee’s appeal with costs for AY 2005-06, confirms addition based on the balance-sheet and P&L account prepared for availing bank loan and certified by Chartered Accountant in Form 3CB; Observes that the figures in audit report in Form 3CB (issued in July, 2005) were at variance with actual audited balance sheet and P&L account for the said period, notes that the difference between the two was due to the over-valuation of the fixed assets for availing of the bank loan; Assessee had argued that it is usual practice to draw up accounts on the basis of estimates for the presentation to a bank at a time prior to when the assessee is statutorily required to complete the annual accounts and that addition cannot be made based on such estimated figures in Form 3CB; Rejecting assessee’s stand, HC quashes the practice of window-dressing of accounts for making it attractive for bankers and subsequently removing the gloss and sheen at the time of paying taxes; HC observes that certificate issued by the CA firm in Form 3CB purported to give an impression that it was in exercise of an audit as required u/s 44AB (for which Form 3CD is prescribed), however it was presented in a statutory form with the fine print of paragraph 2(A) thereunder indicating that it was only an estimate; HC remarks that “It is scarcely expected of a banker to question the veracity of any accounts certified by a firm of chartered accountants or to look into the fine print and comprehend therefrom that utterly bogus figures had been furnished only for the purpose of availing of the credit facilities from the bank.”; HC rules that “the balance-sheet and profit and loss accounts of an assessee accompanied by a certificate as to its fairness, notwithstanding the caveat as noticed in paragraph 2(A) thereof, cannot be tailor-made to suit a particular purpose…”; Applies the doctrine of pari delicto to preclude the assessee from detracting from the figures contained in the balance-sheet and profit and loss accounts certified on July 18, 2005 at any subsequent stage; Directs Registrar to forward the copy of this order to ICAI for appropriate steps to be taken against the CA firm.:HC 

CBIC withdraws revised monetary limits for high ranking Customs officers for adjudicating confiscations

CBIC withdraws Circular No. 16/2018-Cus specifying monetary limits for adjudication by specified Customs officers in cases liable to confiscation under Chapter XIV of Customs Act; Notes that as a result of such Circular, show cause notices issued previously would need to be amended in terms of revised adjudication powers, which would delay the adjudication proceedings; Show cause notices issued for adjudication of cases falling under Chapter XIV (Section 122(a) of Customs Act) are answerable to Principal Commissioner / Commissioner / Jt. Commissioner without any limits : CBIC Circular

HC : 'Interest' recoverable under VAT law on belated installment payment under sales-tax deferment scheme

HC dismisses assessee’s writ, upholds recovery of interest on belated payment of installments under sales tax deferment scheme u/s 25 of AP VAT Act, 2005 (Act) dealing with recovery of tax as an arrear of land revenue; Remarks that, “after indicating four different types of amounts, viz., (1) tax assessed; (2) penalty levied; (3) interest payable under the Act; and (4) amount of tax under the deferment scheme, the last part of Section 25 uses an omnibus expression, viz., the whole of the amount then remaining unpaid”, thus, rejects assessee’s plea that Section 25 cannot be invoked for recovery of interest due on installments; Explains that, tax deferment is granted by Government generally in terms of Section 69 of Act but manner in which eligibility period has to be fixed, method of debiting eligibility amount and question of repayment, are all left to rule making authorities u/s 69(3); Perusing Rule 24(5)(b) of AP VAT Rules, HC elucidates that, “Once the order granting the facility of deferred payment of tax becomes infructuous, the amount that remains unpaid automatically gets restored to the status of a tax”, consequently, Section 22(2) would come into play which indicates that liability to pay interest is not just correlated to tax assessed or penalty levied, but has a correlation even to 'any other amount due' which would include “arrears or installments payable under a deferment scheme”; Further finds no illegality in the order of attachment, states that, “To have an attachment on the property which is already under mortgage to the Bank is completely different from the priority that Section 26E of the Securitization Act talks about” : Andhra Pradesh HC

CBDT: Proposes amendments in Forms 36/36A for filing appeals / cross objections before ITAT

CBDT issues draft notification substituting old Forms 36/36A with new Forms for filing appeals / cross objections before ITAT, with a view to rationalise these Forms to make them more informative; The new Forms seek additional details about appellant, respondent, pending appeals, amount disputed in appeal or cross-objections; Invites stakeholders’ comments by July 2nd

CBDT: Proposes amendments in Forms 36/36A for filing appeals / cross objections before ITAT

CBDT issues draft notification substituting old Forms 36/36A with new Forms for filing appeals / cross objections before ITAT, with a view to rationalise these Forms to make them more informative; The new Forms seek additional details about appellant, respondent, pending appeals, amount disputed in appeal or cross-objections; Invites stakeholders’ comments by July 2nd. 

AAR : 65 Key observations from AAR MasterCard ruling on PE constitution, Royalty & FTS taxation

AAR rules that the Applicant (a Singaporean MasterCard group company) has a fixed place PE, service PE and dependent agent PE in India under Article 5 of the India Singapore DTAA in respect of the services with regard to use of a global network and infrastructure to process card payment transactions for Customers in India; AAR notes that the transaction processing activity consists of electronic processing of payments between banks of merchants and cardholders through the use of MasterCard Worldwide Network (‘the Network’) and the MlPs (MasterCard Interface Processor) are located at the Customers' locations in India that connects to MasterCard's Network and processing centers; Holds that MIPs and MasterCard Network create a fixed place PE of the Applicant in India, even if MIPs are automatic equipment placed at the site of customer banks in India, holds that they pass the test of permanency and they are at the disposal of the Applicant despite not being owned by Applicant; Holds that MIPs in India carried out significant functions of preliminary verification/validation of PIN, card codes, names and address in India which  facilitate authorization part of the transaction processing and cannot be said to be preparatory or auxiliary; Notes that though MIPs are owned by Indian subsidiary (‘MISPL’), but considering the FAR profile of MISPL which shows that it is performing support activity and not actual transaction processing, AAR holds that “This clearly means that authorization part of the transaction processing activity, carried on by MIPs, is the activity of the Applicant and not of MISPL.”, further notes that the software inside MIP is owned by the Applicant; Further, holds that MasterCard Network also creates a fixed place PE considering significant activities relating to clearance and settlement taking place in India through the MasterCard Network; Likewise, AAR observes that the India subsidiary (‘MISPL’) constitutes Applicant's PE in India , finds force in Revenue’s submission that while erstwhile LO (the activities of which are now taken over by subsidiary) was doing transaction processing activity accepting 100% income attribution, MISPL is shown doing only support activities, resulting in drastic reduction of income returned in India; Holds that since transaction processing activities carried out in India through MIP and MasterCard Network are not reflected in FAR analysis of MISPL, to that extent it constitutes fixed place PE for the Applicant;  Also upholds constitution of service PE on account of Applicant’s employees visiting India and constitution of Dependent agent PE for MISPL securing orders for the Applicant; Extensively relies upon Formula one, e-Funds, Morgan Stanley rulings, subsidiary’s TP report, also relies on Amedeus and Galileo rulings; On royalty taxation, AAR holds that “licensing of various IPs in the form of brand/trade name/mark etc. are not incidental to the activity of transaction processing and the payment made by various customer banks in India to the Applicant is also for the use of these IPs and hence is royalty.”, also upholds royalty taxation for use of equipment, software and secret process; However, AAR clarifies that since the payment is effectively connected with various types of PEs held as above, “it would get taxed with the PE under Article 7 and not under Article 12.”; Lastly, AAR clarifies that arm’s length remuneration to PE on account of Indian Subsidiary for the activities performed / to be performed in India, would not absolve the Applicant from any further attribution of its global profits in India since the FAR of the Indian Subsidiary does not reflect the functions/risks of the Applicant performed/undertaken by it:AAR 

Allows Sec. 10AA benefit on trading activity, imports ‘service’ definition from SEZ rules

Kolkata ITAT allows Sec. 10AA benefit to assessee in respect of international trading, warehousing and consultancy income for AY 2009-10; ITAT acknowledges that trading activity is not expressly covered u/s 10AA, but observes that as per the Special Economic Zone Act, 2005 (SEZ Act) and its Rules, 2006, definition of ‘service’ included trading activity; Rejects Revenue’s stand that the ‘service’ definition as specified in SEZ Act cannot be imported for the purpose of the income tax, referring to Sec. 51(1) of the SEZ Act, ITAT holds that “the provisions as specified under the SEZ Act, 2005 would have overriding effect on the Income Tax Act because SEZ Act is a Special Act and a later Act of the Parliament.”, relies on co-ordinate bench ruling in assessee’s own case of earlier year; Likewise, notes that the definition of ‘service’ under SEZ rules include ‘warehousing activity’ also, therefore holds that the warehousing income qualifies for exemption u/s. 10AA on the same reasoning as that given for trading activity; Further,  notes that consultancy services rendered by assessee were intrinsically linked to the normal import-export activity carried on by assessee and the same are covered under the head ‘other business service’ of SEZ Rules by applying ejusdem generis:ITAT 

West Bengal Govt. enhances intra-state e-Way Bill threshold to Rs. 1 lakh from June 6

West Bengal Govt. enhances threshold for generation of e-Way Bill for intra-state movement of goods; Accordingly, notifies that e-Way Bill in respect of movement of goods originating and terminating within the State (without passing through any other State) shall be required where consignment value exceeds Rs. 1 lakh w.e.f June 6 : West Bengal Govt. Notification 

Imp Case Laws.

Nokia Networks OY vs. JCIT (ITAT Delhi Special Bench)

Entire law explained on (a) whether a subsidiary of a foreign company constitutes "business connection" and/ or "fixed Permanent Establishment" and/or "Dependent Agent Permanent Establishment" of assessee in India, (b) whether any attributes of profits on account of signing, network planning and negotiation of off-shore supply contracts in India could be attributed to such business connection/ permanent establishment and (c) whether notional interest on delayed consideration of supply of equipment and licensing of software taxable in the hands of assessee as interest from vendor financing     

NAA : Exonerates lift-manufacturer from profiteering charges; Excise duty non-deductible where material supplied pre-GST

National Anti-profiteering Authority drops the proceedings instituted by purchaser (applicant) of Schindler elevators, absent violation of provisions of Section 171 of CGST Act by manufacturer (respondent); Finds that applicant had been charged appropriate service tax on the advance paid before July 1, 2017 but as installation of elevator had been completed after coming into force of CGST Act, was charged GST at prevalent rate under separate invoices; Moreover, accepts DG Safeguards’ finding that since all material was delivered before June 30, 2017, manufacturer was not in a position to pass any benefit by deducting excise duty from final GST charged; Notes applicant’s request for withdrawal of application citing inadequate understanding of GST provisions and subsequent clarifications pertaining to issue raised : NAA  

HC : Re-assessment not void for want of proper service of notice u/s. 282(2)

Delhi HC sets aside ITAT order quashing re-assessment for AY 1995-96 on the ground that service of Sec. 148 notice on a person other than ‘principal officer’ as contemplated in Sec. 282(2) [as prevalent at the relevant time] , was not a valid service, HC rules that “re-assessment u/s. 147/148 not invalid or void for want of proper service of notice”; HC observes that Sec. 148 notice was sent by registered post at assessee-company’s factory premises but was served on the security guard, however, upon service of the said notice, assessee’s director (i.e. principal officer) had appeared before the AO; Firstly, HC observes that use of the word "may" in Sec. 282(2) reflects that this provision is permissive and not mandatory, next HC rules that “A company being a juristic and a legal person, service cannot be in person on the Company, and has to be affected by sending the notice to the registered office or at the place of business”; Holding that the object and purpose of service of notice was to inform and make the company aware about Sec. 147/148 proceedings initiation, HC holds that in the context of present case, “Initiation to this extent was valid.”, moreover, HC notes that assessee did not raise the question about validity of service before the AO; However, remands matter back as ITAT did not decide the appeal on merits, distinguishes assessee’s reliance on plethora of rulings including co-ordinate bench ruling in Rajesh Kumar Sharma, follows co-ordinate bench ruling in Jagat Novel Exhibitors Private Limited:HC 

Information to Taxpayers on new releases on GST Portal

Dear Taxpayer,

Given below are updates on functionalities which were made available on GST Portal recently:    

Govt. allows provisional settlement of IGST funds through adjustment in subsequent period

Govt. amends Rule 11(3) of GST Settlement of Funds Rules 2017 to allow provisional settlement of any sum of IGST collected in a particular FY and remaining unsettled so far, through adjustment in subsequent month(s) / year(s) based on returns filed by taxpayers : Finance Ministry Notification 

Govt. notifies procedure & declaration forms for e-commerce exports through posts w.e.f June 21

Govt. notifies Regulations to govern e-commerce export of goods through foreign post offices (FPOs) w.e.f. June 21, 2018, along with relevant declaration forms thereto; Any IEC holder exporting goods through FPOs will be eligible for zero rating by way of IGST refund or discharge of LUT, but those who do not wish to avail this facility or fall in the category of exempted / non-taxable are also permitted to export under same procedure; In absence of EDI system at FPOs, the Postal Bill of Export (PBE-1) for e-commerce exports will be processed in manual environment for the time being, while exports under MEIS through post will continue to be governed vide Circular No. 36/2016-Cus except that declaration form thereto will be replaced by PBE-1, states Govt.; Allows Customs Brokers to operate at all FPOs for ease of operations of exporters via third party-party web application, whereas natural persons (i.e. other than firms & companies) exporting parcels are not required to file any PBE; As regards personal imports, it has been clarified that in view of amendments carried out to CTH 9804, imports by a legal person (firms, companies, other forms of business entities) or which are for trade, manufacture or agriculture, cannot be regarded as “personal imports” and such imports by posts shall be classified as per Customs Tariff and require an IEC : Finance Ministry