CBIC issues clarification on Customs (IGCRS) Rules, 2022

 This Tax Alert summarizes a recent Circular issued by Central Board of Indirect Taxes and Customs (CBIC) on Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022 (IGCRS Rules). These rules supersede the existing Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 (IGCR Rules).

The key clarifications are as follows:

• Basic contours of IGCR Rules have been retained. Changes made are to broaden the scope of IGCR and capture additional useful data fields in forms.
• The scope of IGCRS Rules is widened to include cases where imported goods are utilized for specified end use which can be other than manufacturing or providing output services.
• Where time period for utilization of goods is specified in respective notifications, the said period will apply. If the same is not specified, time period of six months will apply. Jurisdictional Commissioner can extend such period by another three months in cases where the delay in utilization is beyond importer’s control.
• Procedures have been prescribed for immediate re-credit of Bonds by jurisdictional AC/DC, rather than waiting till the time of filing the monthly statement.

CBDT issues additional guidelines on withholding provision on payment of business perquisites to residents

This Tax Alert explains Circular No. 18 dated 13 September 2022 (Circular) issued by the Central Board of Direct Taxes (CBDT) with a view to remove difficulties and provide guidance on various issues on interpretation and application of a withholding provision, Section (S.) 194R, under the Income Tax Law (ITL).

GST reporting in Income Tax Audit Report (Form 3CD) - Clause-44

 Since the inception of cross-sharing of information between Direct Tax authorities and Indirect Tax authorities, the taxpayers are at the receiving end. One of the major challenges is the GST reporting in Income Tax Audit Report i.e., Form 3CD.

Reform on Japan consumption tax return.

 

Below the  facts towards reform on Japan consumption tax return.

·         Currently consumption tax is being computed purely based on accounting transaction

Eg: If vendor has not charged consumption tax, but the item qualifies to be consumption tax then we can go ahead and claim consumption tax (That was how accounting system was done) . Even though there was no consumption tax in the invoice, just by seeing accounting entries input was being claimed.

CESTAT holds GST ITC cannot be utilized towards pre-deposit for appeals under earlier regime

 

This Tax Alert summarizes a recent ruling of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Allahabad on utilization of Input Tax Credit (ITC) under Central Goods and Services Tax Act, 2017 (CGST Act) for payment of mandatory pre-deposit under Central Excise Act, 1944 (CEA).

Amendment in Customs IGCR Rules to include imports for specific end use

 The Government vide. Notification No. 74/2022-Customs (NT) dated September 9, 2022, has notified the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022 ('IGCR-SEU Rules').

CBIC issues guidelines for claim of transitional credit pursuant to SC ruling

 This Tax Alert summarizes recent Circular issued by Central Board of Indirect Taxes and Customs (CBIC) providing guidelines for filing/ revising TRAN-1/ TRAN-2 pursuant to the Supreme Court (SC) ruling. Reference is invited to our earlier tax alerts dated 26 July 2022 and 5 September 2022.

The key clarifications are:

CBIC issues guidelines for launching prosecution under the GST law

 Section 132 of the Central Goods and Services Tax Act, 2017 (CGST Act) codifies the offences under the Act which warrant the institution of criminal proceedings and prosecution. Recently, CBIC has issued Instruction No. 04/2022-23 [GST-Investigation] dated 1 September 2022 which provides the guidelines for launching prosecution proceedings. The gist of the guidelines is as follows:

GST Activities due by September 2022

 

We have highlighted some of key activities under GST that need attention and action by the forthcoming due dates prescribed for the FY 2021-22.

 

Re-Charge Without Markup vs Reimbursement

  

 The taxability of reimbursements has always been a contentious issue in India. However, before the taxability of reimbursements is discussed, it is important to understand when an amount constitutes reimbursement. The term reimbursement is not defined in the Income-tax Act, 1961 (‘ITA’), however, the same has been explained by the Indian courts.

Is TDS u/s 194R applicable on Liquidated Damages?

 

 

With effect from July 1, 2022, a new obligation to deduct tax has been introduced in Section 194R. This provision now requires any person providing a benefit or perquisite to deduct tax at 10% of the value or aggregate value of such benefit or perquisite. Since its introduction, the applicability of this provision has been debated and discussed in great detail in different fora. Readers of this Article would therefore be aware that the expression 'benefit or perquisite' though not defined in the Section, is not a phrase that is new to the Income Tax Act and finds place in Section 28(iv) of the IT Act.

ITC changes in Form GSTR-3B

 that the changes in manner of reporting in GSTR 3B (i.e. ITC reversal and ineligible ITC details etc), as notified earlier vide Notification No. 14/2022 – Central Tax dated 5 July 2022 and subsequent Circular No 170/02/2022-GST dated 6 July 2022, have now been made available on the GST portal. Screenshot of the GSTN portal w.r.t. Input tax credit has been attached herewith for your reference.

 

Suggestions to improve GST

 

Following are the suggestions to improve & make GST more taxpayer friendly.

1.     Input Credit: – Sellers should be made responsible for Deposit of Tax and in case of Mismatch sufficient time should be given to the dealers to settle it but ultimate liability should be of sellers. 

Taxability of ‘free’ supplies in the privacy/ information framework

 The Supreme Court in the landmark judgment of Puttaswamy recognized that right to privacy is a fundamental right, the notions of which amplified in the Aadhar case. This followed up with the tabling of Personal Data Protection Bill, 2019 (PDPB) before the Parliament. But after the criticism and its inadequacies, the PDPB has recently been withdrawn, with reported placement of a new draft in due course. All things said and done, the privacy framework is not only going to shake up the internet traffic, but depending upon how its worded may leave its marks on the tax laws as well. In this backdrop, the present piece discourses the potential taxability of information collected by the service providers.

Electronic furnishing of Form 10F – Flowchart for Payer/Deductor

  

While Form 10F has been notified for electronic filing, the income-tax portal allowed filing for only AY 2022-23. However, now the income-tax portal has been updated to file Form 10F online for AY 2023-24 (i.e. FY 2022-23).

IGST on import of goods – ‘duty of customs’ or IGST

 

1. The case concerned classification of imported goods and application of IGST rate thereon. The customs officer went with the what a layman would do, trace goods into IGST rate notification and do the rest of the math (right or wrong)

New Features in GST Portal.

 Various new functionalities are implemented on the GST Portal, from time to time, for stakeholders. In the month of July 2022, the following changes are made:

1. Registration:

i. Allow taxpayers to enter multiple trade names
ii. Mandating mobile number for applying for persons applying for Temp ID for Advance Ruling

2. Return:

i. Addition of new GST Rate slab of 6%
ii. Auto population of data in Form GSTR-4 from Form GSTR-1 in Table 4A & 4B

3. Refund: Option in Form RFD-01 to get refund arising out of excess payment in GSTR 4, for Taxpayer under Composition levy

4. Advance Ruling: Functionality to search and view Advance Ruling Orders

5. Payments:

i. The limit of cash payment in Over the Counter (OTC) mode has is now restricted to Rs 10,000
ii. Updated generic messages on GST PMT-06 challan page

Guidelines for arrest and bail relating to punishable offences under the CGST Act, 2017

 

The GST Investigation Wing of CBIC has released Guidelines for arrest and bail relating to punishable offences under the CGST Act, 2017 on 17 August 2022 vide Instruction No.02/2022-23(GST Investigation).

The above instruction is aimed to ensure the judicious use of power to arrest an accused during the course of investigation by the officers in the backdrop of Supreme Court judgement dated 16 August 2021 in Criminal Appeal No.838 of 2021 arising out of SLP (Crl) No. 5442/2021.

Guidelines for the issuance of summons under Section 70 | Instruction No.03/2022-23

 

The GST Investigation Wing of CBIC has released Guidelines for the issuance of summons under Section 70 of the CGST Act, 2017 on 17 August 2022 vide Instruction No.03/2022-23(GST Investigation). The instruction is aimed to ensure diligent use of power by the officers while issuing of summons to the tax payers during routine requisition of information and documents.

Mumbai Tribunal rules MAT provisions are not applicable to foreign bank despite having branch in India

 This Tax Alert summarizes a ruling of the Mumbai Income Tax Appellate Tribunal (Tribunal) dated 3 August 2022 in the case of Credit Suisse AG ^[1] (Taxpayer), wherein one of the issues was whether minimum alternate tax (MAT) provisions under the Indian Tax Laws (ITL) will be applicable to a foreign company having permanent establishment (PE) in India and also independently earning incomes not attributable to such PE.