Circular No. SEBI/HO/MRD/MRD-PoD-2/P/CIR/2024/25; Dated: 24.04.2024

SEBI received representations from market participants via the Industry Standards Forum (ISF) to relax the requirement outlined in Chapter 6 at Para 2.4.2.2.2 of the Master Circular dated October 16, 2023, regarding the publication of text related to ‘fit and proper’ on contract notes.

Accordingly, SEBI has now waived the requirement of publishing ‘fit and proper’ text on contract notes as a step to enhance the ease of doing business. Only a reference to the applicable regulation about ‘fit and proper’ must be made a part of the contract note.

Click Here To Read The Full Circular

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Circular No. RBI/2024-25/24 A.P. (DIR Series) Circular No.02; Dated: 24.04.2024

The RBI has come across instances of unauthorised entities offering foreign exchange (forex) trading facilities to Indian residents with promises of disproportionate/exorbitant returns. Upon investigation, the RBI observed that to facilitate unauthorised forex trading, these entities have resorted to engaging local agents who open accounts at different bank branches to collect money towards the margin, investment, charges, etc.

These accounts are opened in the name of individuals, proprietary concerns, trading firms etc. and the transactions in such accounts are not found to be commensurate with the stated purpose for opening the account in several cases.

Further, RBI observed that these entities are providing residents with options to remit/deposit funds in Rupees to undertake unauthorised forex transactions using domestic payment systems like online transfers, payment gateways, etc. Thus, greater vigilance is needed to prevent the misuse of banking channels to facilitate unauthorised forex trading.

In this regard, RBI has advised AD Category-I banks to be more vigilant and exercise greater caution to prevent the misuse of banking channels in facilitating unauthorised forex trading.

Further, as and when AD Category-I banks come across an account being used to facilitate unauthorised forex trading, they are required to report it to the Directorate of Enforcement for further action.

Also, AD Cat-I banks may bring the contents of this circular to the attention of their constituents and customers. They may advise their customers to deal in forex only with ‘Authorised Persons’ and on ‘authorised ETPs’ and give wide publicity to the list of ‘Authorised Persons’ and the list of ‘authorised ETPs’ available on the RBI website.

AD Cat-I banks are also advised to publicize the ‘Alert List’ and Press Releases issued by the RBI in this regard.

Click Here To Read The Full Circular

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Circular no. 6/2024, dated 23-04-2024

Rule 114AAA lists down consequences that apply if the PAN of a person becomes inoperative due to non-linking with his Aadhaar. One of the consequences listed is tax shall be deducted/collected at a higher rate in accordance with section 206AA/206CC.

The Central Board of Direct Taxes (CBDT) vide Circular No. 3 of 2023 dated 28.03.2023 clarified that all the consequences provided under the Income-tax Act should take effect from July 1 2023, and continue till the PAN becomes operative.

The Board noticed that taxpayers were complaining about getting notices for not deducting/collecting enough TDS/TCS towards payees’ who have inactive PANs. This results in demands from the Department against deductors/collectors during TDS/TCS statement processing.

In response to complaints, the Board has decided to modify Circular No. 03 of 2023. The CBDT has specified that for transactions up to March 31, 2024, if the PAN becomes active (linked with Aadhaar) by May 31, 2024, there shall be no liability on the deductor/collector to deduct/collect the tax under section 206AA/206CC. Tax shall be deducted/collected as per the relevant provisions of the Act.

However, the circular failed to clarify what actions should be taken concerning demands that have already been settled or remain outstanding.

Click Here To Read The Full Circular

The post No Liability to Deduct/Collect Tax at Higher Rates if Payee Links Pan-Aadhaar by May 31, 2024 | CBDT appeared first on Taxmann Blog.

CA Rajesh Kumar Khandelwal – [2024] 161 taxmann.com 700 (Article)

“In this article, I’ve examined whether a taxpayer is obligated to pay interest if they deposited GST via PMT 06 into their electronic cash ledger (ECL) on or before the due date for filing a monthly return in form GSTR-3B. However, if the monthly return in form GSTR-3B is filed after the due date, and the output liability has already been settled by debiting the electronic cash ledger, we need to determine the specific date on which the liability is considered discharged. Is it:

1. The date when the taxpayer deposited the tax liability in the ECL through form PMT 06?
2. The date when they filed their monthly return in form GSTR-3B?
3. The date when the GST liability was debited from the Electronic cash ledger?”

Section 39. (7)

Every registered person, who is required to furnish a return under sub-section (1) or sub-section (2) or sub-section (3) or sub-section (5) of section 39, shall pay to the Government the tax due as per such return not later than the last date on which he is required to furnish such return.

According to Section 39(7) of the Act, taxpayers are required to pay the tax to the Government before the last date for filing the monthly return in form GSTR-3B. This implies that the payment of tax must happen no later than the last filing date for monthly GSTR-3B returns. It’s important to note that this section specifically addresses tax payment and not the filing process for monthly GSTR-3B

“39. Furnishing of returns.—

Section 39(1) Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52 shall, for every calendar month or part thereof, furnish, in such form and manner as may be prescribed, a return, electronically, of inward and outward supplies of goods or services or both, input tax credit availed, tax payable, tax paid and such other particulars, in such form and manner, and within such time, as may be prescribed, on or before the twentieth day of the month succeeding such calendar month or part thereof.”

The aforesaid section 39(1) states that a taxpayer will provide the following particulars in his monthly return in Form GSTR-3B:-

Inward and outward supplies of goods or services or both,

Input tax credit availed,

Tax payable,

Tax paid and

Such other particulars as may be prescribed,

From the above, it is clear that in the monthly returns in form GSTR-3B, it is mandatory to provide the details for the tax paid. It means before filing Form GSTR-3B, the tax should have been paid by the taxpayer person as provided in Section 39(1) of the Act. If tax has not been then details can not be provided in the GSTR-3B.

Based on the above it is stated that section 39(1) deals with the filing of monthly GSTR-3B it has nothing to do with the payment of tax.

Section 39(1) deals with filing of monthly GSTR-3B and section 39(7) deals with payment of tax not later than the last date on which the taxpayer required to furnish form GSTR-3B

Upon careful examination of both Section 39(1) and Section 39(7), it becomes apparent that a taxpayer should first pay the tax using form PMT-06. Subsequently, they provide details of this tax payment in the GSTR-3B return before uploading it.

Here it is important to mention that, for payment of tax to the Government the filing of the monthly returns in Form – GSTR-3B is not the matter but the last date for furnishing the monthly return is important. Why it is important. It is important because tax should have been paid on or before the last date of filing the monthly return in Form GSTR-3B. (Section 39(7)) Thus, whether the monthly return is filed in time or not but the GST has to be remitted not later than the last date for filing the monthly returns.

Thus, in summary, in terms of Section 39(1) of the Act, while filing the monthly returns in Form GSTR-3B, the taxpayer has to state the amount of tax paid, which means before the filing of returns, the tax should have been paid.

Now the question arises when a registered person deposits the tax amount in his electronic cash ledger through PMT-06 but he has not filed his monthly GSTR-3B within the due date whether the registered person will be liable to interest under Section Subsection (1) of Section 50 of CGST Act.

When interest is payable where there is a delay in fling of monthly GSTR-3B

Click Here To Read The Full Article

The post [Opinion] No Payment of Interest on Late Filing of GSTR-3B if Tax is Deposited in Electronic Cash Ledger Within Due Dates appeared first on Taxmann Blog.

Case Details: Amit Upadhyay (Proprietor of Gayatari Diamonds) v. Sales Tax Officer - [2024] 161 taxmann.com 676 (Delhi)

Judiciary and Counsel Details

• • Sanjeev Sachdeva & Ravinder Dudeja, JJ.
  • Puneet Rai & Kapil Sharma, Advs. for the Petitioner.
  • Rajeev Aggarwal, ASC & Ms Samridhi Vats, Adv. for the Respondent.

Facts of the Case

The petitioner received a show cause notice proposing a demand for “excess claim ITC and ITC claimed from cancelled dealers, return defaulters and tax non-payers”. It submitted detailed reply but the department disallowed input tax credit as petitioner not shown bank payment proof of invoices and the demand was confirmed. It filed writ petition against the demand order.

High Court Held

The Honorable High Court noted that the petitioner had submitted a detailed reply responding to each of the points raised. The Court also noted that the department issued reminder letter to petitioner and opportunity to personally appear was given. However, there was no requirement stipulated in letter to produce any bank payment proofs.

The Court also noted that the petitioner was ready to produce all proofs of payments made through bank channel. Therefore, it was held that the impugned order was to be set aside and matter to be remanded. The Court also directed the petitioner to produce all the relevant documents before the proper officer.

The post HC Remanded Matter Since Dept. Disallowed ITC for Not Showing Bank Payment Proof of Invoices Without Demanding It appeared first on Taxmann Blog.

Case Details: Sharnam Realities (P.) Ltd v. PCIT - [2024] 161 taxmann.com 437 (Ahmedabad-ITAT)

Judiciary and Counsel Details

• • Smt. Annapurna Gupta, Accountant Member & T.R. Senthil Kumar, Judicial Member
  • Tushar Hemani, AR & Parimalsinh B. Parmar, AR for the Applicant.
  • Akhilendra Pratap Yadav, CIT-DR for the Respondent.

Facts of the Case

The assessee, a company engaged in the construction of commercial and residential properties, filed its return of income for the relevant assessment year. The Assessing Officer (AO) processed the return of income under section 143(1) of the Act.

Subsequently, the Principal Commissioner of Income Tax (PCIT) exercised his powers under section 263 and contended that the AO failed to make proper inquiries regarding the sale of properties. Specifically, the AO did not examine the sale of godowns/offices/shops undertaken by the assessee during the year from the perspective of section 43CA.

The matter reached the Ahmedabad Tribunal.

ITAT Held

The Tribunal held that the power of the AO under section 43CA is limited to substituting the actual consideration with the stamp duty value if the latter exceeds the former. The AO cannot question the property valuation adopted by the stamp valuation authority.

In the instant case, the assessee furnished the details of all 27 properties to the PCIT. It was clearly pointed out that the stamp duty value never exceeded the actual sale consideration. Thus, the PCIT could not demonstrate even a single instance of the sale of property inviting invocation of section 43CA.

Therefore, the Tribunal held that the PCIT failed to make out a case of any error in the order of the AO warranting the exercise of revisionary powers under section 263.

List of Cases Reviewed

• • Gestetner Duplicators (P.) Ltd. v. CIT [1979] 1 Taxman 1/117 ITR 1 (SC) (para 23)
  • Nitin P. Shah alias Modi v. Dy. CIT [2005] 146 Taxman 536/276 ITR 411 (Guj.) (para 23);
  • Agricultural Produce Market Committee v. ITO [2011] 15 taxmann.com 170/[2012] 204 Taxman 22 (Mag.)/[2013] 335 ITR 384 (Guj.) (para 23)
  • ITO v. E-Infochips Ltd. [2009] 124 TTJ 176 (Ahd.) (para 23)
  • ITO v. Gujarat Information Technology Fund [2011] 11 taxmann.com 206/45 SOT 529 (Ahd. – Trib.) (URO) (para 23)
  • Pr. CIT v. BA Research India Ltd. [2016] 70 taxmann.com 268/240 Taxman 443 (Guj.) (para 23)
  • CIT v. Quintiles Research (India) (P.) Ltd. [2020] 121 taxmann.com 241/[2021] 276 Taxman 10/[2020] 429 ITR 4 (Kar.) (para 23) followed.

List of Cases Referred to

• • Gestetner Duplicator (P.) Ltd. v. CIT [1979] 1 Taxman 1/117 ITR 1 (SC) (para 15)
  • Nitin P. Shah Alias Modi v. Dy. CIT [2005] 146 Taxman 536/276 ITR 411 (Guj.) (para 15),
  • Agricultural Produce Market Committee v. ITO [2011] 15 taxmann.com 170/[2012] 204 Taxman 22 (Mag.)/[2013] 355 ITR 384 (Guj.) (para 15)
  • ITO v. E-Infochips Ltd. [2009] 124 TTJ 176 (Ahd.) (para 15)
  • ITO v. Gujarat Information Technology Fund [2011] 11 taxmann.com 206/45 SOT 529 (Ahd. – Trib.) (URO) (para 15)
  • Pr. CIT v. BA Rescarch India Ltd. [2016] 70 taxmann.com 268/240 Taxman 443 (Guj.) (para 15)
  • CIT v. Quintiles Research (India) (P.) Ltd. [2020] 121 taxmann.com 241/[2021] 276 Taxman 10/[2020] 429 ITR 4 (Kar.) (para 15).

The post AO Can’t Question Valuation Done by Stamp Duty Authority While Invoking Provisions of Section 43CA | ITAT appeared first on Taxmann Blog.

Case Details: Mukund Rajhans v. Rajasthan Patrika (P.) Ltd. - [2024] 161 taxmann.com 684 (NCLAT-New Delhi)

Judiciary and Counsel Details

• • Ashok Bhushan, Chairperson, Barun Mitra & Arun Baroka, Technical Member
  • Vipul Wadhwa, Ms Kashika Gera & Vishal Binod, Advs. for the Appellant.
  • Anand Shankar Jha, Abhishek Tiwari & Sachin Mintri for the Respondent.

Facts of the Case

In the instant case, the suspended director of the corporate debtor (i.e. TMPL) filed an appeal u/s 61 of the IBC against the order passed by the NCLT. The NCLT admitted the application u/s 9 of the IBC, initiating the CIRP proceedings against the appellant.

The corporate debtor provided advertising services for various clients, including ‘VIL’, acting as an agent. ‘VIL’ availed the said services and placed advertisements through the corporate debtor, who then coordinated with companies like the respondent (i.e. the operational creditor) to publish ads.

However, payment delays from ‘VIL’ resulted in an agreement for ‘VIL’ to settle debts directly with the respondent through barter, exchanging appliances for outstanding amounts.

Since the due amount was not paid, the respondent demanded payment from the corporate debtor and filed a petition under section 9 of the IBC. The Adjudicating Authority (NCLT) admitted the said application. Aggrieved by the said order, the appellant filed an instant appeal on the ground that the respondent did not serve demand notice.

It was noted that dues were pending for quite some time and the appellant offered to settle accounts through barter mode instead of upfront payment. Further, it was noted that the corporate debtor itself was regularly coordinating and facilitating payments to the respondent and later on, it could not be continued due to issues relating to the new regime of Goods and Service Tax (GST).

NCLAT Held

The NCLAT noted that when the arrangement could not proceed further, the responsibility for repayment lies solely with the corporate debtor. Further, during the course of business, the corporate debtor used to place purchase orders/release orders from time to time with the operational creditor for providing services of issue of advertisements of its products and this was done on letterheads of the corporate debtor.

The NCLAT held that since the corporate debtor failed to make a payment towards outstanding invoices, proceedings under section 9 of the IBC could be initiated against it.

Further, the NCLAT held that where there is a debt in terms of section 5(21) of the IBC and there was also a default in terms of section 3(12) of the IBC and debt was within the period of limitation and there was no dispute raised at any point of time, it would satisfy the requirement for admission under section 9 of the IBC for CIRP.

List of Cases Reviewed

• • Mukund Rajhans v. Rajasthan Patrika (P.) Ltd. [2024] 161 taxmann.com 683 (NCLT -New Delhi) (para 33) affirmed See Annex

The post CD is Solely Responsible for Repayment After Failed Barter Agreement, AA Rightly Admitted CIRP Plea | NCLAT appeared first on Taxmann Blog.

Case Details: Johnson Bevisedmond v. Joint Commissioner of GST & Central Excise - [2024] 161 taxmann.com 632 (Madras)

Judiciary and Counsel Details

• • Krishnan Ramasamy, J.
  • G. Derrick Sam for the Petitioner.
  • K. Mohanamurali, Sr. Standing counsel for the Respondent.

Facts of the Case

The petitioner is an individual and he received notice from the GST department for personal hearing. He was not able to appear for the aforesaid personal hearing. Thereafter, the department passed the order. He filed writ petition and contended that only two opportunities were provided to him and the impugned order has been passed by the department in violation of principles of natural justice.

High Court Held

The Honorable High Court noted that petitioner was provided two opportunities of personal hearings but he couldn’t attend hearing as his residence was shifted. Now, the petitioner was intended to file the appeal and it would be appropriate to grant liberty to the petitioner to approach the Appellate Authority. Therefore, the Court granted liberty to the petitioner to approach the Appellate Authority by filing the appeal within a period of 30 days from the date of receipt of copy of this order.

The post Appellate Authority Should Entertain Appeal of Assessee Who Failed to Attend Hearing as His Residence Was Shifted | HC appeared first on Taxmann Blog.

Case Details: Agarwal Coal Corporation (P.) Ltd. v. Assistant Commissioner of State Tax - [2024] 161 taxmann.com 1 (Bombay)

Judiciary and Counsel Details

• • G.S. Kulkarni & Firdosh P. Pooniwalla, JJ.
  • J.K. Mittal & Aman Mishra for the Petitioner.
  • Ms S.D. Vyas, Addl. Govt. Pleader & Ms P.N. Diwan, AGP for the Respondent.

Facts of the Case

The petitioner was engaged in importing coal from various countries on FOB (Free on Board) and CIF (Cost, Insurance and Freight) basis. A show cause notice was issued by the department primarily relying on Notification No. 8/2017-Integrated Tax (Rate) dated 28-6-2017 levying IGST along with interest and penalty on the ocean trade service on FOB contracts.

It filed writ petition to challenge the show cause notice on the ground that the said notification was struck down by Division Bench of Gujarat High Court in case of Mohit Minerals (P.) Ltd. v. Union of India [2020] 113 taxmann.com 436. The department contended that the said decision needed to be applied only in respect of cases involving contracts on CIF basis and not on FOB contracts.

High Court Held

The Honorable High Court noted that the case of Mohit Minerals (P.) Ltd. involved both categories of contract namely CIF and FOB and the said notification itself had been declared ultra vires and the same was also upheld by Supreme Court. Therefore, following the mandate of the settled principle of law, the notification was no manner available to the State Authorities to be applied as it would amount to applying an illegal notification. Thus, the Court held that the impugned notice was to be quashed and striking down of the notification would be applicable on FOB contracts.

List of Cases Reviewed

• • Mohit Minerals (P.) Ltd. v. Union of India [2020] 113 taxmann.com 436/78 GST 519/2020 (33) G.S.T.L. 321 (Guj.) (para 7) followed.

List of Cases Referred to

• • Mohit Minerals (P.) Ltd. v. Union of India [2020] 113 taxmann.com 436/78 GST 519/2020 (33) G.S.T.L. 321 (Gujarat) (para 2)
  • Union of India v. Mohit Minerals (P.) Ltd. [2022] 138 taxmann.com 331/92 GST 101/2022 (61) G.S.T.L. 257 (SC) (para 3)
  • Agarwal Coal Corporation (P.) Ltd. v. Union of Indian [Writ Petition (C) No. 8720 of 2017, dated 24-8-2022] (para 4)
  • Agarwal Fuel Corporation (P.) Ltd. v. Union of India [Writ Petition No. 19382 of 2017, dated 30-1-2023] (para 5)
  • Liberty Oil Mills Ltd. v. Union of India [2023] 148 taxmann.com 85/97 GST 285/2023 (72) G.S.T.L. 305/(2023) 4 Centax 65 (Bombay) (para 6)
  • Kusum Ingots & Alloys Ltd. v. Union Of India AIR 2004 S.C. 2321 (para 8).

The post Bombay HC Quashed SCN Issued to Levy GST on Ocean Freight on FOB Contracts appeared first on Taxmann Blog.

Notification No. 40/2024, dated 23-04-2024

The Central Board of Direct Taxes (CBDT) has notified ‘Shree Ramanuj Kot Laxmi Venkatesh Mandir’ managed by Shree Ramanuj Kot Trust, Indore, Madhya Pradesh to be a place of historic importance and a place of public worship of renown throughout the state of Madhya Pradesh for the purposes of section 80G.

The Notification will be valid only for the renovation or repair of the “Shree Ramanuj Kot Laxmi Venkatesh Mandir” to the extent of Rs. 1,63,06,311 and will cease to be effective after the said amount has been collected or on 31.03.2029, whichever is earlier.

Click Here To Read The Full Notification

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