Tax Connect (57th Issue)

TAX CONNECT – 57 th Issue JAV & ASSOCIATES (28 Feb. 2016 – 05 Mar. 2016) Page 1 Chartered Accountants TAX CONNECT 57th Issue 28 feb 2016 – 5 Mar 2016 INCOME TAX CENTRAL EXCISE SERVICE TAX GST CUSTOMS STATE TAXES JAV & ASSOCIATES Chartered Accountants Kolkata: 1, Old Court House Corner ^To
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o House_ ￿t Floor Room No.-13 (North) Kolkata-70001 West Bengal Vadodara: Quarter no. 3/174 Gujarat Refinery Township Jawaharnagar Vadodara-391320 Gujarat Contact: +919331042424; +91931594980; +918697575185; +913322625203 Email: tb.chatterjee@dic.co.in; tb.chatterjee@yahoo.co.in; cavivekjalan@gmail.com; vivek.jalan@icai.org TAX CONNECT – 57 th Issue JAV & ASSOCIATES (28 Feb. 2016 – 05 Mar. 2016) Page 2 Chartered Accountants Friends Just ahead of the budget 2016, the CBEC has issued a series of notifications. We have covered all of them is various issues. Two important Notifications we are covering in this issue are N No 6/2016 & 7/2016 whereby all the services provided by the Government or local authority to a business entity, except the services that are specifically exempted or covered in the Negative List, shall be liable to service tax w.e.f. 1.4.2016. Businesses should also note in this regard that in respect of certain services provided by Government or local authority, reverse charge is applicable vide N No 30/2012 dated 20.6.2012. Vide N No 7/2016, reverse charge shall n ow be applicable in respect of services provided by Government or a local authority to a business entity with a turnover up to Rs. 10 lacs in the preceding financial year shall be exempt from service tax. Further the term ^ Government _ has been defined exhaustively in Finance Act 2015. Hence while making payments to Government Bodies; one should remain take extreme
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ligations. Further, the Economic Survey of 2015-16 has been presented by the FM. The highlights are as under – 1. GST rollout to mark an unprecedented reforms measure in the modern global tax history. However, as of now GST looks certain to be delayed at least until 1.4.2017. 2. Trade deficit declines to 106.8 billion US dollars in April-January 2015-16 from 119.6 billion US dollars in corresponding period 2014- 15. 3. Trade deficit declines to 106.8 billion US dollars in April-January 2015-16 from 119.6 billion US dollars in corresponding period 2014- 15. 4. Economic Survey 2015-16: Services Sector remains the Key Driver of Economic Growth contributing almost 66.1% in 2015- 16. 5. Fiscal Deficit target of 3.9% for 2015-16 seems Achievable, says the Economic Survey. 6. Impressive strides made in the power sector in the last two years: addition of record generation capacity moves towards one market in power, reform of discoms and development of renewable energy. Just to reiterate that we remain available over a telecom or e-mail. Truly Yours Timir Baran Chatterjee M.Com, FCS, MBA (International Business)-IIFT, ACMA Vivek Jalan FCA, CIDT (ICAI), B. Com EDITORIAL TAX CONNECT – 57 th Issue JAV & ASSOCIATES (28 Feb. 2016 – 05 Mar. 2016) Page 3 Chartered Accountants S. NO. TOPICS PAGE NO. 1] COMPLIANCE CALENDAR 4 2] GOODS & SERVICE TAX (GST) - REPORT OF SUB COMMITTEE - II ON MODEL GST ACT, 2016 – RETURNS 5 3] CENTRAL TAXES a) SERVICE TAX 6 Notification/Circular Swachh Bharat Cess shall not be leviable on special order issued under sub-section (1) or as the case may be under sub-section (2) or otherwise not leviable to service tax under sectio n 66B of the Finance Act, 1994 Notification/Circular 1st April 2016 to be the effective date for provisions of section 109(1) of the Finance Act, 2015 Notification/Circular Services provided by Government or a local authority to a business entity having turnover up to Rs. 10 lacs exempted from service tax Case Law Refund of excess payment of service tax due to reduction in value of services on the basis of credit note, is allowed. b) CENTRAL EXCISE 7 Case Law Courier bill of entry is a valid document for claiming cenvat credit under Rule 9 of CENVAT Credit Rules, 2004. Case Law Capital goods
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ture of the same final products, the credit cannot be denied. c) CUSTOMS 8 Notification/Circular Customs duty on electricity imported or cleared from SEZ to DTA Notification/Circular Further amendments in Notification No. 12/2012 dated 17.03.2012 Notification/Circular Revision of exchange rate of foreign currencies into rupee & vice versa d) INCOME TAX 9 Notification/Circular Safe Harbour Rules amended for Specified Domestic Transactions Notification/Circular Authorised entities under Section 10(15)(iv)(h) To issue tax-free, secured, redeemable, non- convertible bonds Notification/Circular ZAtal Pe
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ue -tax Act, 1961 Notification/Circular Competition Commission of India notified in respect of specified income arising to the said Commission 4] STATE TAXES 10 Notification/Circular Delhi: Time period for rectification/revision for return in form GE-II further extended to 07.03.2016 Odisha : Modification in Form VAT-201 due to change in rate of tax Punjab: - Amendment in Rule 52 allowing Refund to 'Gau-shala' - Advance Tax rate on Sarson and Binola khal reduced" Uttarakhand: Change in tax rate on Bricks INDEX TAX CONNECT – 57 th Issue JAV & ASSOCIATES (28 Feb. 2016 – 05 Mar. 2016) Page 4 Chartered Accountants Due date COMPLIANCES FROM 28th February, 2016 to 5th March, 2016 STATUTE 28th February, 2016 Deposit of VAT of previous month Arunachal Pradesh VAT Act Filing of monthly/quarterly/annual VAT return Arunachal Pradesh (Monthly, if annual turnover>Rs. 1 crore) Due date for VAT Audit Uttarakhand VAT Act 29th February, 2016 Deposit of VAT of previous month Punjab VAT Act (if payment otherwise than by cheque) Tripura VAT Act Mizoram VAT Act Himachal Pradesh VAT Act Jammu & Kashmir VAT Act Goa VAT Act (if Tax < Rs. 1 lac) Filing of monthly/quarterly VAT return Himachal Pradesh VAT Act (Monthly, if Turnover in PY is>Rs 5 crores) Punjab VAT Act (if payment otherwise than by cheque) Tripura Vat Act (Monthly/Quarterly) Deposit of WCT of previous month Goa VAT Act (Monthly, if Tax< Rs. 1 lac)) Filing of monthly/quarterly/annual WCT return Assam VAT Act (Annual) Bihar VAT Act (Monthly) Chandigarh VAT Act (Monthly) Rajasthan VAT Act (Monthly) Tamil Nadu VAT Act (Monthly) Issuance of WCT certificate Assam VAT Act (Monthly) Arunachal Pradesh VAT Act (Yearly) Deposit of Entry tax of previous month Assam VAT Act Maharashtra VAT Act (For unregistered dealers) Goa VAT Act Deposit of P tax of previous month Maharashtra VAT Act 5th March, 2016 Deposit of WCT of previous month Kerala VAT Act Service Tax deposit of previous month (Company/ Society) Finance Act COMPLIANCE CALENDAR TAX CONNECT – 57 th Issue JAV & ASSOCIATES (28 Feb. 2016 – 05 Mar. 2016) Page 5 Chartered Accountants REPORT OF SUB COMMITTEE - II ON MODEL GST ACT, 2016 – RETURNS The provisions for Returns covered in CHAPTER IX of the model GST Act can be summarized as follows: Details of outward supplies  The details of outward supplies and credit or debit notes issued shall be furnished electronically within 10th of every succeeding month (other than under compounding scheme) .  The details shall be communicated to the receiver of outward supplies for furnishing the details of inward supplies within the prescribed period.  Any rectification of error shall be allowed before filing of the return for the month of November (September, for credit note issued) following the end of the financial year or filing of the annual return, whichever is earlier. Details of inward supplies  The details of inward supplies (received from supplier and modified if required) shall be furnish ed, electronically, within 15th day of the succeeding month.  Any rectification of error shall be allowed before filing of the return for the month of September (November, for credit note received) following the end of the financial year or filing of the annual return, whichever is earlier: Returns  Every registered taxable person (other than under compounding scheme) shall furnish monthly return within 20th of the succeeding month.  Person under compounding scheme shall furnish quarterly return within 18th of the succeeding month of the end of such quarter.  The tax due shall be paid not later than the last date of filing return, else, such return shall not be treated as a valid return for allowing input tax credit in respect of supplies made by such person.  Every person deducting tax at source shall make payment and furnish monthly return for the tax so deducted within 10th of the succeeding month.  Any rectification of error shall be allowed before filing of the return for the month of November/second quarter, as the case may be, following the end of the financial year or filing of the annual return, whichever is earlier:  Taxable person (other than a casual or non-resident taxable person) shall furnish an annual return electronically within 31st December following the end of financial year. Late fee If the details of outward or inward supplies or return is not filed by the due date, a late fee of Rs. 100/day shall be charged subject to a maximum of Rs. 5,000. Tax Return Preparers An approved Tax Return Preparer may be authorized to furnish the above details on behalf of the taxable person. GOODS & SERVICE TAX (GST) TAX CONNECT – 57 th Issue JAV & ASSOCIATES (28 Feb. 2016 – 05 Mar. 2016) Page 6 Chartered Accountants SERVICE TAX NOTIFICATIONS/CIRCULARS SWACHH BHARAT CESS SHALL NOT BE LEVIABLE ON SPECIAL ORDER ISSUED UNDER SUB-SECTION (1) OR AS THE CASE MAY BE UNDER SUB-SECTION (2) OR OTHERWISE NOT LEVIABLE TO SERVICE TAX UNDER SECTION 66B OF THE FINANCE ACT, 1994 OUR COMMENTS : The CBEC, Dept. of Revenue, Ministry of Finance, Government of India vide Notification No. 5/2016-Service Tax dated 17.02.2016 has amended Notification No. 22/2015-Service Tax dated 06.11.2015 . As per notification dated 6.11.2015, Swachh Bharat Cess shall not be leviable on services which are exempt from service tax by a notification issued under sub-section (1) of section 93 of the Finance Act, 1994 . After the amendment dated 17.02.2016, in addition to above, Swachh Bharat Cess shall not be leviable on special order issued under sub-section (1) or as the case may be under sub-section (2) or otherwise not leviable to service tax under section 66B of the Finance Act, 1994. 1 ST APRIL 2016 TO BE THE EFFECTIVE DATE FOR PROVISIONS OF SECTION 109(1) OF THE FINANCE ACT, 2015 OUR COMMENTS : The Dept. of Revenue, Ministry of Finance, Government of India vide Notification No. 6/2016-Service Tax dated 18.02.2016 has appointed the 1st day of April, 2016 as the effective date for provisions of section 109(1) of the Finance Act, 2015. As per the notification, all the services provided by the Government or local authority to a business entity, except the services that are specifically exempted, or covered by any another entry in the Negative List, shall be liable to service tax w.e.f. 1.4.2016 SERVICES PROVIDED BY GOVERNMENT OR A LOCA L AUTHORITY TO A BUSINESS ENTITY HAVING TURNOVER UPTO RS. 10 LACS EXEMPTED FROM SERVICE TAX OUR COMMENTS : The Dept. of Revenue, Ministry of Finance, Government of India vide Notification No. 7/2016-Service Tax dated 18.02.2016 has amended Notification NO. 25/2012-Service Tax dated 20.06.2012 and exempted the services provided by Government or a local authority to a business entity with a turnover up to Rs. 10 lacs in the preceding financial year from payment of service tax. COURT DECISIONS PIRAMAL ENTERPRISES LTD. VERSUS COMMISSIONER OF SERVICE TAX MUMBA I [CESTAT MUMBAI] BRIEF: Refund of excess payment of service tax due to reduction in value of services on the basis of credit note, is allowed. OUR COMMENTS : In the above case, the is registered with the service tax authorities as provider of "management consultancy services." He entered into an agreement with M/s Nicholas Piramal India Ltd by which in return for services, he would be compensated @0.50% of turnover besides sharing in the expenditure incurred by the appellant for rendering services as per agreed proportion. He charged the client a certain amount of fee and after 3 months reduced the fee amount after mutual agreement and issued a credit note to the client. On the service tax component covered in the credit note, he sought refund on account of over payment of tax. The revenue rejected the refu nd claim on the ground that the reduction did not appear to have extended beyond the second component of the compensation, i.e. the share in expenses, in the service agreement. The Hon [ble CESTAT held that re-negotiation after initia l payments does not weaken the claim because the fact of reduced net consideration is incontrovertible; the transaction does not extend to a chain beyond the assessee and his client and therefore, it can be deduced that the incidence of tax has had no scope of being passed on. Accordingly, refund shall be allowed. . [Decided in favor of assessee] CENTRAL TAXES TAX CONNECT – 57 th Issue JAV & ASSOCIATES (28 Feb. 2016 – 05 Mar. 2016) Page 7 Chartered Accountants CENTRAL EXCISE COURT DECISIONS ARBES TOOLS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAIII [CESTAT MUMBAI] BRIEF: Courier bill of entry is a valid document for claiming cenvat credit under Rule 9 of CENVAT Credit Rules, 2004. OUR COMMENTS : In the above case, the assessee is a manufacturer of excisable goods and has imported certain components for manufacturing his products. He took cenvat credit on the goods imported and filed courier bill of entry instead of the original bill of entry. The revenue denied the cenvat credit and issued a show cause notice for not filing the original bill of entry. The Hon[
le CESTAT held that courier bill of entry is a valid document for claiming cenvat credit under Rule 9 of CENVAT Credit Rules, 2004. Also, cenvat credit cannot be denied on mere technical grounds. [Decided in favour of assessee] PRIMO PICK N PACK LTD. VERSUS CCE & ST, BHOPAL [CESTAT NEW DELHI] BRIEF: Capital goods moved only between the assessee[s own units, and that too for use in the manufacture of the same final products, the credit cannot be denied. OUR COMMENTS : In the above case, the assessee is a manufacturer. He shifted the machine and semi finished goods to another premises near to the factory for completion of manufacturing process due to shortage of space in the factory and shifted back the finished goods to factory from that rented premises within 180 days. The whole transaction is well supported by challans and no job work is involved in the process. He paid excise duty on the machine and availed credit of 50% in the same financial year and 50% in the next financial year. A show cause notice was issued alleging that the assessee has wrongly availed cenvat credit on capital goods as the same was used in another premises for short time. The Hon[
le CE“TAT held that from the above facts it can be said that the activity of assessee in using the machine is part of its manufacturing activities of final products in its registered factory premises. Also, there is no suppression of facts on the part of the assessee as he intimated the department about removal of machine by proper documents Hence, the cenvat credit cannot be denied to the assessee . [Decided in favour of assessee]. THIS SPACE HAS BEEN INTENTIONALLY KEPT VACANT TAX CONNECT – 57 th Issue JAV & ASSOCIATES (28 Feb. 2016 – 05 Mar. 2016) Page 8 Chartered Accountants CUSTOMS NOTIFICATIONS & CIRCULARS CUSTOMS DUTY ON ELECTRICITY IMPORTED OR CLEARED FROM SEZ TO DTA OUR COMMENTS : The Dept. of Revenue, Ministry of Finance, Government of India vide Notification No. 9/2016 – Customs dated 16.02.2016 has amended Notification No. 12/2012-Customs dated 17.03.2012 and specified customs duty on import of electricity or clearance of electricity from SEZ to DTA. FURTHER AMENDMENTS IN NOTIFICATION NO. 12/2012 DATED 17.03.2012 OUR COMMENTS : The Dept. of Revenue, Ministry of Finance, Government of India vide Notification No. 10/2016 – Customs dated 17.02.2016 has further amended Notification No. 12/2012-Customs dated 17.03.2012 and included Octreotide & Somatropin in List 3 and Anti- Haemophilic Factor Concentrate (VIII and IX) in List 4. REVISION OF EXCHANGE RATE OF FOREIGN CURRENCIES INTO RUPEE & VICE VERSA OUR COMMENTS : The CBEC (Dept. of Revenue), Ministry of Finance, Government of India vide Notification No. 29/2016-Customs (N.T.) dated 18.02.2016 & in supersession of Notification No. 18/2016-Customs (N.T.) dated 04.02.2016 has revised the exchange rate of foreign currencies specified in col.(2) of each of Schedule I and Schedule II annexed hereto, into Indian currency or vice versa, w.e.f. 19.02.2016 to be the rate mentioned against it in the corresponding entry in column (3) thereof, for the purpose of the said section, relating to imported and export goods. SCHEDULE-I Sl. No Foreign Currency Rate of exchange of one unit of foreign currency equivalent to Indian rupees (1) (2) (3) (a) (b) (For Imported Goods) (For Export Goods) 1. Australian Dollar 49.65 48.40 2. Bahrain Dinar 186.90 176.20 3. Canadian Dollar 50.60 49.55 4. Danish Kroner 10.35 10.05 5. EURO 77.05 75.20 6. Hong Kong Dollar 8.85 8.70 7. Kuwait Dinar 235.15 222.45 8. New Zealand Dollar 46.20 45.00 9. Norwegian Kroner 8.10 7.90 10. Pound Sterling 98.95 96.75 11. Singapore Dollar 49.25 48.25 12. South African Rand 4.55 4.30 13. Saudi Arabian Riyal 18.75 17.75 14. Swedish Kroner 8.15 7.95 15. Swiss Franc 69.80 68.05 16. UAE Dirham 19.15 18.10 17. US Dollar 68.95 67.90 18. Chinese Yuan 10.60 10.40 SCHEDULE- II Sl. No Foreign Currency Rate of exchange of 100 units of foreign currency equv. to Indian rupees (1) (2) (3) (a) (b) (For Imported Goods) (For Export Goods) 1. Japanese Yen 60.70 59.35 2. Kenya Shilling 69.15 65.35 TAX CONNECT – 57 th Issue JAV & ASSOCIATES (28 Feb. 2016 – 05 Mar. 2016) Page 9 Chartered Accountants INCOME TAX NOTIFICATIONS & CIRCULARS SAFE HARBOUR RULES AMENDED FOR SPECIFIED DOMESTIC TRANSACTIONS OUR COMMENTS : The CBDT, Dept. of Revenue, Ministry of Finance, Government of India vide Notification No. 5/2016 dated 17.02.2016 has amended safe harbor rules (10THA, 10THB, 10THC, & 10THD) under the Income tax Rules, 1962 for specified domestic transactions. The notification is self-explanatory. The readers may refer the said notification. AUTHORISED ENTITIES UNDER SECTION 10(15)(IV)(H ) TO ISSUE TAX-FREE, SECURED, REDEEMABLE, NON- CONVERTIBLE BONDS OUR COMMENTS : The CBDT, Dept. of Revenue, Ministry of Finance, Government of India vide Notification No. 06/2016 dated 18.02.2016 has amended Notification No. 59/2015 dated 06.07.2015 and authorised entities under Section 10(15)(iv)(h) of the Income Tax Act, 1961 to issue tax-free, secured, redeemable, non-convertible bonds. Accordingly, National Highways Authority of India (NHAI) has been allocated bonds amount of 19000 crore and National Bank for Agriculture and Rural Development (NABARD) has been allocated bonds amount of 5000 crore. ZATAL PEN“ION YOJANA ~APY[ NOTIFIED U/S 80CCD OF THE INCOME-TAX ACT, 1961 OUR COMMENTS : The CBDT, Dept. of Revenue, Ministry of Finance, Government of India vide Notification No. 07/2016 dated 19.02.2016 has notified the ZAtal Pe
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va ~APY[ (as published in the Gazette of India, Extraordinary, Part I, Section 1, vide number F. No. 16/1/2015-PR dated the 16th October, 2015) as a pension scheme for the purposes of the said section. COMPETITION COMMISSION OF INDIA NOTIFIED IN RESPECT OF SPECIFIED INCOME ARISING TO THE SAID COMMISSION OUR COMMENTS : The CBDT, Dept. of Revenue, Ministry of Finance, Government of India vide Notification No. 08/2016 dated 19.02.2016 has notified Competition Commission of India (a Commission established under sub-section (1) of section 7 of the Competition Act, 2002 (12 of 2003)) in respect of the following specified income arising to the said Commission, namely:- (a) amount received in the form of Government grants; (b) fees received under the Competition Act, 2002; and (c) interest accrued on Government grants and interest accrued on fees received under the Competition Act, 2002. 2. This notification shall be effective provided the Commission does not engage in any commercial activity, the nature of its specified income remains unchanged throughout the financial years and i t files its income tax return in accordance with section 139(4c)(g) of the Income-tax Act, 1961. 3. The notification shall be applicable for the specified income for the financial years 2016-2017 to 2020-2021. THIS SPACE HAS BEEN INTENTIONALLY KEPT VACANT TAX CONNECT – 57 th Issue JAV & ASSOCIATES (28 Feb. 2016 – 05 Mar. 2016) Page 10 Chartered Accountants DELHI TIME PERIOD FOR RECTIFICATION/REVSION FO R RETURN IN FORM GE-II FURTHER EXTENDED TO 07.03.2016 OUR COMMENTS: The Department of Trade & Taxes, Government of National Capital Territory of Delhi vide Notification No. F.3(619)/Policy/VAT/2016/1496-1506 dated 25.02 .2016 has direct ed that the returns in Form GE -II for the first 3 quarters of the FY 2015- 16 (i.e. 1st April, 2015 to 30th June, 2015; 1st July, 2015 to 30th September, 2015 and 1st October, 2015 to 31st December, 2015) are required to be filed by 7 th March, 2016. ODISHA MODIFICATION IN FORM VAT-201 DUE TO CHANGE IN RATE OF TAX OUR COMMENTS : The Commissioner of Commercial Taxes, Government of Odisha vide Notification No. III(III)122/06(V-III)2985/CT dated 20.02.2016 has modified the return form in Form VAT-201 for change in rate of tax from 13.5% to 14.5% and on "IMFL" under Schedule-C from @25% to 35% (vide Notification No. 80-FIN -CT1-TAX-0020-2015, dated 01.01.2016 and Notification No. 276 –FIN -CT1 –TAX –0020 –2015, dated 04.01.2016 respectively ) in order to enable the dealers to file return for the tax periods beginning on and after 01.01.2016. PUNJAB AMENDMENT IN RULE 52 ALLOWING REFUND TO 'GAU- SHALA' OUR COMMENTS : The Department of Excise & Taxation, Government of Punjab vide Notification No.G.S.R.12/P.A.8/2005/S.70/Amd.(57)/ 2016 dated 10.02.2016 has amended Rule 52 and allowed Gau-shala listed in the Schedule 'G' to get refund of tax up to Rs. 3 lacs every year on all purchases meant for such Gau- shala. In case of new Gau-shala, refund shall be allowed for up to Rs. 5 lacs on the purchases made for, construction material and other goods meant for such Gau-shala in the first year after which it will be treated as old Gau- shala only. ADVANCE TAX RATE ON SARSON AND BINOLA KHAL REDUCED OUR COMMENTS : The Department of Excise & Taxation, Government of Punjab vide Notification No.S.O.4/P.A.8/2005/S.6/2016 dated 02.02 .2016 has amended Notification No. S.O.90/P.A.8/2005/S.6/2013, dated 04.10.2013 and reduced the advance tax rate on sarson and binola khal to 2%. UTTARAKHAND CHANGE IN TAX RATE ON BRICKS OUR COMMENTS : The Finance Section-8, Government of Uttarakhand vide Notification No.133/2016/01(A)(120)/XXVII(8)/ 2001 dated 11 .02.2016 has amended Schedule-II(B) of the Uttarakhand Value Added Tax Act, 2005 and changed the tax rate on bricks to 5 % or Rs. 250/thousand, whichever is more. Disclaimer: This e-bulletin is for private circulation only. Views expressed herei n are of the editorial team. JAV & Associates or any of its employees do not accept any liability whatsoever direct or indirect that may arise from the use of the information contained herein. No ma tter contained h erein may be reproduced without prior consent of JAV & Associates. While this e-bulletin has been prepared on the basis of published/other publicly available information considered reliable, we do not accept any liabil ity for the accuracy of its contents STATE TAXES