Respected Seniors and my Dear Friends,

It gives me immense pleasure and its really an honour to communicate with the members of our branch on this auspicious day. On the eve of 72nd CA day, I extend my warm greetings to all our members and wish you a very Happy CA Day. Chartered Accountants are partners in nation building and with a fighting spirit, we have proactively complied with various regulatory require-ments and I compliment and congratulate the members to be a part of this esteemed and noble profession. We have organised Virtual session on 1st July, 7 pm onwards and invited Dr Pankaj Ashiya Ji, IAS, Honourable Commissioner, BNCMC & CA Nilesh Vikamsey Ji, Past President, ICAI to address the members and share their words of wisdom with us. I request members to please attend the session where we shall be launching the branch first publication and our new website. I request all the members to regularly visit the branch website and stay updated about the branch activities.

During this unprecedented and challenging time, our branch has very well disseminated the knowledge to students and members at large. We have calibrated the vision of Innovation, Professional excellence and Skill development and initiated Mission Kalam Project. Kalyan Dombivli Branch of WIRC is publishing its first publication on COVID-19, Relief measures under various Statutory Regulations. I express my gratitude and heartfully thanks the author CA Santosh Jagdale for his dedicated and sincere efforts in compiling this publication. He has covered relief measures by various regulators til l 30th June 2020 and it is wonderful contribution to the profession. This e publication contains various relief measures by regulators in field of Income Tax, GST, Customs, Companies Act, MSME, International Tax, SEBI, Foreign Trade Policy, Banking and Finance, IBC, and Employment Regulations. It will help not only the members of branch but members all over the country. Branch will also be releasing its Volume II of Mission Kalam which will cover all areas of practice like Direct taxes, Indirect Taxes, Finance, International Tax, IBC, etc. I acknowledge and appreciate the efforts of all the members who have participated in this initiative, our Editorial Committe CA Suhas Ambekar, CA Vyomesh Pathak and CA Mayur Jain, Vetting by CA Gopal Kedia, CA Vijay Shelar, Designing done by CA Keyur Gangar, and the efforts of all Managing Committe Members of the Branch.

Briefing about the branch activities; we have organised a Virtual CPE meeting on Current Direct Tax Issues in Real Estate Transactions by Dr Girish Ahuja on 3rd July. On similar lines for Tax and ITC Optimisation in Real Estate for GST, CA Madhukar Hiregange sir will address our members on 5th July. CA play an important role in growth of MSME. We are also planing to organise an Intensive Course on MSME on 18,19,25 and 26 July where eminent speakers will guide members on various Central and State Govt incentives for MSME, Role of SIDBI, MIDC, Various Banking Products for MSME, Start up Incentives, Make in India, etc. I request members to attend it and update & upgrade your knowledge base. We have also organised GST literacy programmes in Agarwal College & Birla College for the students.

Before signing off, I would urge all the members to take care of their, and near & dear ones health, especially the senior members and with a very positive attitude and disciplined approach, we would be able to win against COVID and help India get back to business soon.

Stay Healthy and Best Wishes

In Yours Professional Service & Always with all of you,

CA Ankit R. Agarwal

Chairman

Kalyan Dombivli Branch of WIRC of ICAI

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I N D E X

Sr. No. Particulars Page No.

1 Direct Tax Case Law Update’s 04

2 International Tax Case Law Update’s 08

3 Indirect Tax Law Update’s 11

4 Case Study 25

5 Photo Gallery 27

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SUPREME COURT DECISIONS

Ramnath & Co Vs CIT Civil Appeal No 2506-2509 Date of Publication 6th June 2020 Section 80 O

Conclusion: - In favour of Revenue The sweeping proposition in some Supreme Court decisions that when two views are possible, the one favourable to assessee has to be preferred & that a tax incentive provision must receive liberal interpretation, is disapproved by the Constitution Bench in Dilip Kumar (2018) 9 SCC 1 (FB). The burden is on the assessee to prove eligibility to an incentive or exemption provision and it is subject to strict interpretation. If there is ambiguity, the benefit of the ambiguity must go to the Revenue. However, if the assessee proves eligibility, a wide and liberal construction of the provision has to be done (ii) Merely having a contract with a foreign enterprise and mere earning foreign exchange does not ipso facto lead to the application of s. 80-O of the Act. The principles laid down by the Constitution Bench in Dilip Kumar (2018) 9 SCC 1, when applied to incentive provisions like those for deduction, would also be that the burden lies on the assessee to prove its applicability to his case; and if there be any ambiguity in the deduction clause, the same is subject to strict interpretation with the result that the benefit of such ambiguity cannot be claimed by the assessee, rather it would be interpreted in favour of the revenue. In view of the Constitution Bench decision in Dilip Kumar & Co. (supra), the generalised observations in Baby Marine Exports 290 ITR 323 (SC) with reference to a few other decisions, that a tax incentive provision must receive liberal interpretation, cannot be considered to be a sound statement of law; rather the applicable principles would be those enunciated in Wood Papers Ltd. (1990) 4 SCC 256, which have been precisely approved by the Constitution Bench ACIT Vs Marico Ltd Special Leave Petition No 7367/ 2020 Date of Publication 11th June 2020 Section 147 , 148 Conclusion: - In favour of Assessee The reasons in support of the s. 148 notice is the very issue in respect of which the AO had raised a query during the assessment proceedings and the Petitioner had responded justifying its stand. The non-rejection of the explanation in the Assessment Order amounts to the AO accepting the view of the assessee, thus taking a view/forming an opinion. In these circumstances, the reasons in support of the notice proceed on a mere change of opinion and would be completely without jurisdiction The non-rejection of the explanation in the Assessment Order would amount to the Assessing Officer accepting the view of the assessee, thus taking a view/forming an opinion. Therefore, in these circumstances, the reasons in support of the impugned notice proceed on a mere change of opinion and therefore would be completely without jurisdiction in the present facts

Contributed by

CA Shekhar Patwardhan

Direct Tax Case Laws Update’s

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HIGH COURT DECISIONS

Bombay High Court Ventura Textiles Ltd Vs CIT IT Appeal No 958 of 2017 Date of Publication 12th June 2020 : Section 260 A , 271(1)( C) Conclusion: - In favour of Assessee An appeal u/s 260-A can be entertained by the High Court on the issue of jurisdiction even if the same was not raised before the Tribunal (ii) the question relating to non-striking off of the inapplicable portion in the s. 271(1)(c) show-cause notice goes to the root of the issue & is a jurisdictional issue (iii) it would be too technical and pedantic to take the view that because in the printed notice the inapplicable portion was not struck off, the order of penalty should be set aside even though in the assessment order it was clearly mentioned that penalty proceedings u/s 271(1)(c) had been initiated s eparately for furnishing inaccurate particulars of income, (iv) Penalty cannot be imposed for alleged breach of one limb of s. 271(1)(c) of the Act while proceedings were initiated for breach of the other limb of s. 271(1)(c). This vitiates the order of penalty, (v) Threat of penalty cannot become a gag and / or haunt an assessee for making a claim which may be erroneous or wrong Concealment of particulars of income was not the charge against the appellant, the charge being furnishing inaccurate particulars of income. As discussed above, it is trite that penalty cannot be imposed for alleged breach of one limb of Section 271(1)(c) of the Act while penalty proceedings were initiated for breach of the other limb of Section 271(1)(c). This has certainly vitiated the order of penalty. PCIT Vs Alag Securities Pvt Ltd ITA No 1512 of 2017 :Date of Publication 13th June 2020 : Section 68 Conclusion: - In favour of Assessee In the case of an assessee engaged in providing 'accommodation entries', the entire deposits cannot be assessed as unexplained cash credits. Only the commission (0.15%) earned in providing the accommodation entries can be assessed as income (PCIT vs. NRA Iron and Steel (2019) 103 Taxmann.com 48 (SC) distinguished) In so far the decision of the Supreme Court in NRA Iron and Steel Pvt. Ltd. (supra) is concerned, the same is not attracted in the present case in as much as facts of the present case are clearly distinguishable. Unlike the present case, the assessee in NRA Iron and Steel Pvt. Ltd. (supra) claimed the cash credits as its income. However, it was found that the creditors had meagre or nil income which did not justify investment of such huge sums of money in the assessee. The field enquiry conducted by the Assessing Officer revealed that in several cases the investor companies were non-existent. Thus, it was held that the assessee had failed to discharge the onus which lay on it to establish the identity of the investor companies and the credit worthiness of the investor companies. In such circumstances, the entire transaction was found to be bogus. But as already discussed in the preceding paragraphs, assessee never claimed the cash credits as its income. It admitted its business was to provide accommodation entries. In return for the cash credits it used to issue cheques to the customers / beneficiaries for slightly lesser amounts, the balance being its commission. Moreover, the cash credits had been accounted for in the respective assessment of the beneficiaries Essar Shipping Limited Vs CIT IT No 201 of 2002 : Date of Publication 26th June 2020 : Section 28(iv) Conclusion: - In favour of Assessee The Dept's argument that the waiver of a loan constitutes an operational subsidy which is taxable is not correct. There is a fundamental difference between “loan” and “subsidy” & the two concepts cannot be equated. While “loan” is a borrowing of money required to be repaid back with interest; “subsidy” is not required to be repaid back being a grant. Such grant is given as part of a public policy by the state in furtherance of public interest. Therefore, even if a “loan” is written off or waived, which can be for various reasons, it cannot partake the character of a “subsidy”. The waiver of a loan cannot be brought to tax u/s 28(iv) of the Act. Conceptually, “loan” and “subsidy” are two different concepts. As per the Concise Oxford English Dictionary, Indian Edition, the term “loan” has been explained as a thing that is borrowed, especially a sum of money that is expected to be

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paid back with interest; the action of lending. Black’s Law Dictionary, Eight Edition, describes “loan” as an act of lending; a grant of something for temporary use; a thing lent for the borrower’s temporary use, especially a sum of money lent at interest; to lend, especially money. In Supreme Court on Words and Phrases, it is stated that “loan” necessarily supposes a return of the money loaned; in order to be a loan, the advance must be recoverable; “loan” is an advance in cash which includes any transaction which in substance amounts to such advance Karnataka High Court Navin Jolly Vs ITO ITA No 320 of 2011 : Date of Publication 20th June 2020 : Section 54 F Conclusion: - In favour of Assessee In determining whether the assessee owns more than one residential property, the usage of the property must be considered. If an apartment is sanctioned for residential purposes but is in fact being used for commercial purposes as a serviced apartment, it must be treated as commercial property. Alternatively, several independent residential units in the same building must be treated as one residential unit and there is no impediment to allowance of exemption u/s 54F (1) The usage of the property must be considered for determining whether the property in question is a residential property or a commercial property. It is not in dispute that the aforesaid two apartments are being put to commercial use and therefore, the aforesaid apartments cannot be treated as residential apartments. The contention of the revenue that the apartments cannot be taxed based on the usage does not deserve acceptance in view of decisions of Kerala, Delhi, Allahabad, Calcutta and Hyderabad High Courts with which we respectfully concur. Alternatively, we hold that assessee even otherwise is entitled to the benefit of exemption under Section 54F(1) of the Act as the assessee owns two apartments of 500 square feet in same building and therefore, it has to be treated as one residential unit. The aforesaid fact cannot be permitted to act as impediment to allowance of exemption under Section 54F(1) of the Act

TRIBUNAL DECISIONS

DELHI TRIBUNAL Dev Milk Foods Pvt Ltd Vs Addnl CIT ITA No 6767 /Del / 2019 Date of Publication 16th June 2020 Section 143(3) , 292BB Conclusion: - In favour of Assessee Under CBDT Instruction No.5/2016, a case earmarked for 'Limited Scrutiny' cannot be taken for 'Complete Scrutiny' unless the AO forms a "reasonable view" that there is a possibility of under assessment of income. The objective of the instruction is to (i) prevent fishing and roving enquiries; (ii) ensure maximum objectivity; and (iii) enforce checks and balances upon the powers of the AO. On facts, there is not an iota of cogent material shown by the AO for the conversion from limited scrutiny to complete scrutiny. The PCIT has also accorded approval in a mechanical manner. S. 292BB does not save the infirmity. The assessment order has to be quashed as a nullity The department, which is State, can be permitted to selectively apply the standards set by themselves for their own con-duct. If this type of deviation is permitted, the consequences will be that floodgates of corruption will be opened which it is not desirable to encourage. When the department has set down a standard for itself, the department is bound by that standard and cannot act with discrimination Muradul Haque Vs ITO ITA No 114 /Del / 2019 Date of Publication 20th June 2020 : Section 40(a) (ia) Conclusion: - In favour of Assessee The amendment to s. 40(a)(ia) by the Finance (No.2) Act, 2015 w.e.f. 01.04.2015, which restricts the disallowance for failure to deduct TDS to 30% of the expenditure instead of 100%, is curative in nature and should be applied retrospectively . We find that the Finance (No.2) Act has made amendment to section 40(a)(ia) of the Act w.e.f. 01.04.2015. Various benches of the Tribunals including the Delhi Benches of the Tribunal, have held the amendment made by Finance (No 2) Act to be curative in nature. We further find the coordinate bench of the Tribunal in the case of R.H. International Vs.

6 6

ITO (supra) has held that disallowance u/s. 40(a)(ia) of the Act be restricted to 30% of the expenses paid as against 100% because amended provision is curative in nature and the provisions should be applied retrospectively Exotica Housing & Infrastructure Company Pvt Ltd Vs ITO ITA No 5188/Del / 2019 : Date of Publication 29th June 2020 Section 2(22) (e) Conclusion: - In favour of Assessee:- S. 2(22)(e) is a deeming provision & should be construed strictly. The section uses the expression "by way of advances or loans" which shows that all payments received from the sister company cannot be treated as deemed dividend but only payments which bear the characteristics of loans and advances. Under the law, all loans and advances are debts, but all debts are not loans and advances. The term 'loans and advances' is not defined & has to be understood in the commercial sense. Advances given for purely temporary financial accommodation for business purposes does not attract the deeming fiction. After hearing both the parties and perusing the relevant records, it reveals that they are in the form of current and inter banking accounts and contain both types of entries i.e. giving and taking the amount and appear to be a current account and cannot be considered as loans and advances as contemplated u/s 2(22)(e) of the IT Act

6 7

India’s MLI Choices – An In-depth Analysis

India has liberalised and has opened up its economy to the foreign investment with warm heart. To attract foreign

investments in India, various incentives are granted to the foreign companies and the non-residents in the form of lower

rate of taxes. It has provided a huge market base along with favourable regulatory and tax regime for the foreign investors.

However, various shields have been put in place so that the beneficial regimes are not being abused by the taxpayers.

Therefore, the tax policy in India is very conservative in terms of allowing the treaty benefit only to the genuine taxpayers

who demonstrate the substance and nexus requirements. Further, at the assessment level, it has been observed that the

foreign investments are examined in depth in order to have effective check on treaty abuse situations. The regulators and

law makers have always ensured to put as many safeguards as possible so as to capture the abusive arrangements. India

being a G-20 nation has been actively involved in the BEPS designing and implementation. It was part of various working

groups, task forces and committees to design and implement BEPS measures including ad hoc group writing the MLI. As

a result, India has also signed and ratified Multilateral Instrument (MLI) and adopted majority of its provisions. MLI

would be effective in India from financial year 2020-2021 (applicable to credits / payments that occur in the taxable year

beginning after the date). Further, India has also adopted most of the BEPS recommendations under its domestic tax law

even before MLI was signed. India has also introduced the domestic General Anti-Avoidance Regulations (GAAR).

Therefore, on reflection of India’s tax policy, it can be very well understood that India focuses on establishing substance

for claiming the tax benefits and imposes harsh consequences in case of abusive situations.

India’s tax official have stated that OECD BEPS project is an expression of virtually every stand India has taken on

taxation and reflects what India has been saying for 20 years. The Indian Government is pleased that global thinking on

international tax policies is moving in the “source-based” direction – something which India has been advocating as a

lone, minority voice.

Till now, India has notified 93 treaties. Analysis has been made with respect to the MLI choices made by India with

respect to its tax policy divided into 2 parts.

Contributed by

CA Prerna K. Peshori

International Taxation Update’s

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Article 7: Prevention of treaty abuse (minimum standard)

Article 7 of the MLI in line with OECD BEPS Action Plan 6 gives the options to the countries to opt for any of the three

anti-abuse measures to meet the minimum requirement to tackle treaty abuse:

A. Principal Purpose Test (PPT) – This denies the treaty benefit if the one of the principal purposes of the transaction

was to obtain the treaty benefit unless granting that benefit is in accordance with object and purpose of treaty.

B. PPT supplemented with either Simplified Limitation of Benefits (SLOB) or detailed LOB clause

C. Detailed LOB provision, supplemented by a mutually negotiated mechanism to deal with conduit arrangements not

already dealt with in CTA

Since this is a minimum standard, India has opted for PPT as an interim measure to prevent treaty abuse along with the

possibility to adopt LOB provisions through bilateral negotiation. This would give option to India to amend its existing

treaties to incorporate LOB provisions where deemed necessary, in addition to or as replacement of PPT. This is clearly in

line with the tax policy of India. India has always been very conservative in allowing treaty relief where the substance

requirements are not fulfilled and the main purpose was to obtain the treaty benefit. This can be very well gathered from

the fact that recently India amended its India-Mauritius DTAA, India-Singapore DTAA and India-China to introduce the

LOB clause. PPT being very subjective test as it questions the intention of the transaction and there is no specific criteria,

India has included an objective criteria laid under LOB clause. Further, since LOB clause would not be able to capture all

the treaty abuse situations, PPT too has been adopted.

Further, India has also introduced the GAAR under its domestic law which gets triggered if the main purpose of the

transaction was to obtain the tax benefit. It would be interesting to see the interplay between the domestic GAAR and the

PPT. PPT is more stringent as it requires “one of the principal purposes” in contrast with GAAR where “main purpose”

needs to be seen. Further, in order for GAAR to get triggered, other tainted element tests needs to be satisfied like

creation of rights or obligations that are not at arm’s length, abuse of the Act, lack of commercial substance, or lack of

bona fides. Further, domestic GAAR provides for grandfathering. Therefore, the question arises as to whether the

taxpayer can opt to the beneficial provision of the domestic GAAR as compared to PPT. It may be unlikely for GAAR to

get triggered if the PPT is met, except in situations where the PPT is avoided on the ground that the benefit was in

accordance with the object and purpose of the treaty provision.

The fact that any treaty benefit availed by the taxpayer can be questioned based on a subjective threshold marks an

extreme widening of the power of tax authorities to deny treaty benefits. This will be a major cause of concern for

taxpayers. Here one will have to watch out how India resolves the disputes and whether the resolution under MAP could

prove beneficial.

The effect of PPT needs to be seen from the point view of its major treaty partners. Treaty with USA has LOB but USA

has not signed MLI. Germany, Hongkong and Mauritius also have not listed India as a CTA. Therefore, PPT will not

apply to these treaties. However, the PPT will apply to treaties with Singapore, Netherlands, UK and Luxembourg. India’s

DTAA with countries such as Hong Kong, Malaysia, South Korea, UAE and UK contain a general LOB clause. Though

the wordings have varied, the general LOB clause, highlights main purpose test, treaty shopping arrangements, bonafide

8 9

business test etc. aligned more or less to Article 7 of MLI. In particular, DTAA with Hong Kong seems to contain the

strictest LOB test, understandably due to its lateness of treaty negotiations. Protocol to DTAA between India and China,

signed on June 5, 2019, reflects the MLI’s wording in Article 27 A of the amended treaty, truly representing the MLI

implementation to its fullest extent.

Further, India’s position on Article 6 – Preamble to tax treaties is silent. Therefore, it being a minimum standard it will

apply to its treaties. However, the new preamble needs to be analysed in light of Apex Court ruling in case of treaty with

Mauritius where relying on the Preamble treaty shopping was held as permissible.(Supreme Court, Azadi Bachao Andolan

[2003] 132 Taxman 373 (SC))

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Various Notifications/Circulars/orders/instructions were issued in the month of Jun-2020 and decisions of 40th GST Council meeting dated 12/06/2020 are summaries as follows.

Notification No. 44/2020–Central Tax [G.S.R. 357(E).] dated 08/06/2020 -GSTR-3B EVC filing & Filing by SMS effective from 08.06.2020 Effecting the provisions of Rule 67A for furnishing a nil return in FORM GSTR-3B by SMS has appointed the 8th day of June, 2020, as the date from which Rule 67A (Manner of furnishing of return by short messaging service facility ) shall come into force to allow the registered person to furnish a Nil return in FORM GSTR-3B for a tax period, through a short messaging service (SMS) using the registered mobile number and the said return shall be verified by a registered mobile number based One Time Password facility (OTP). For the purpose of this rule, a Nil return shall mean a return under section 39 for a tax period that has nil or no entry in all the Tables in FORM GSTR-3B. Notification No. 45/2020 –Central Tax/G.S.R. 360(E) dated 09/06/2020 CBIC extends the date for transition under GST on account of merger of erstwhile Union Territories of Daman and Diu & Dadar and Nagar Haveli from existing 31st day of May, 2020 to 31st day of July, 2020. Notification No. 46/2020 –Central Tax/G.S.R. 361(E) dated 09/06/2020 Section 54(7) of CGST Act provides that final order in GST refund shall be issued within sixty days from the date of receipt of application complete in all respects but considering Pandemic CCovid-19 CBIC notified that If GST refund order date falls between 20th March to 29th June 2020 in that case refund order can be issued within 75 days (i.e. 60 + 15 Days) of receipt of reply of notice or 30th June 2020, whichever is later. Notification No. 47/2020 –Central Tax/G.S.R. 362(E) dated 09/06/2020 CBIC extends validity of e-way bill generated on or before 24.03.2020 (whose validity has expired on or after 20th day of March 2020) till the 30th day of June. financial year 2018-2019 to 30th September, 2020. Notification No. 48/2020 – Central Tax/G.S.R. 394(E) dated 19/06/2020 GST Registered person who are also registered under the provisions of the Companies Act, 2013 are allowed to file Form GSTR-3B/GSTR-1 using EVC, vide Notification No. 48/2020 – Central Tax dated 19.06.2020 as follows:- Form GSTR-3B-during the period from the 21st day of April, 2020 to the 30th day of September, 2020. Form GSTR-GSTR-1 – during the period from the 27th day of May, 2020 to the 30th day of September, 2020.

Notification No. 49/2020-Central Tax/G.S.R. 402(E) dated 24/06/2020 CBIC brings into force Sections 118, 125, 129 & 130 of Finance Act, 2020 in order to bring amendment to Sections 2,

109, 168 & 172 of CGST Act w.e.f. 30.06.2020 vide Notification No. 49/2020-Central Tax Dated 24th June, 2020.

Contributed by

CA Rohan Pathak

Indirect Taxation Update’s

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Extract of Sections 118, 125, 129 & 130 of Finance Act, 2020 118. Amendment of section 2. In section 2 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the Central Goods and Services Tax Act), in clause (114), for sub-clauses (c) and (d), the following sub-clauses shall be substituted, namely: — “(c) Dadra and Nagar Haveli and Daman and Diu; (d) Ladakh;”. 125. Amendment of section 109. In section 109 of the Central Goods and Services Tax Act, in sub-section (6),— the words “except for the State of Jammu and Kashmir” shall be omitted; the first proviso shall be omitted. 129. Amendment of section 168. In section 168 of the Central Goods and Services Tax Act, in sub-section (2), for the words, brackets and figures “sub-section (5) of section 66, sub-section (1) of section 143”, the words, brackets and figures “sub-section (1) of section 143, except the second proviso thereof” shall be substituted. 130. Amendment of section 172. In section 172 of the Central Goods and Services Tax Act, in sub-section (1), in the proviso, for the words “three

years”, the words “five years” shall be substituted.

Notification No. 50/2020-Central Tax/G.S.R. 403(E) dated 24/06/2020 CBIC notifies Central Goods and Services Tax (Seventh Amendment) Rules, 2020 and amended Rules 7 of the CGST Rules 2017 with a new entry for Composition tax payers who are providing services will be taxed at rate of 6% (CGST – 3% & SGST/UTGST – 3%) are as follows.

10

Sl. No.

Section under which composition levy is opted

Category of registered persons Rate of tax

(1) (1A) (2) (3)

1. Sub-sections (1) and (2) of section 10

Manufacturers, other han manufacturers of such goods as may be notified by the Government

half per cent. of the turnover in the State or Union territory

2. Sub-sections (1) and (2) of section 10

Suppliers making supplies referred to in clause (b) of paragraph 6 of Schedule II

two and a half per cent. of the turnover in the State or Union territory

3. Sub-sections (1) and (2) of section 10

Any other supplier eligible for composition levy under subsections (1) and (2) of section 10

half per cent. of the turnover of taxable supplies of goods and services in the State or Union territory

4. Sub-section (2A) of section 10

Registered persons not eligible under the composition levy under sub-sections (1) and (2), but eligible to opt to pay tax under sub-section (2A), of section 10

three per cent. of the turnover of taxable supplies of goods and services in the State or Union territory.’

12

Notification No. 51/2020-Central Tax/G.S.R. 404(E) dated 24/06/2020 CBIC notifies lowered interest rate for a prescribed time for tax periods from February, 2020 to July, 2020 for delayed fil-ing of GSTR 3B are as follows.

11

S.No. Class of registered persons Rate of interest Tax period

(1) (2) (3) (4)

1. Taxpayers having an aggregate turnover of more than rupees 5 crores in the preceding financial year

Nil for first 15 days from the due date, and 9 per cent thereafter till 24th day of June, 2020

February, 2020, March 2020, April, 2020

2. Taxpayers having an aggregate turnover of up to rupees 5 crores in the preceding financial year, whose principal place of business is in the States of Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana or Andhra Pradesh or the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands and Lakshadweep

Nil till the 30th day of June, 2020, and 9 per cent thereafter till the 30th day of September, 2020

February, 2020

Nil till the 3rd day of July, 2020, and 9 per cent thereafter till the 30th day of September, 2020

March, 2020

Nil till the 6th day of July, 2020, and 9 per cent thereafter till the 30th day of September, 2020

April, 2020

Nil till the 12th day of September, 2020, and 9 per cent thereafter till the 30 th day of September, 2020

May, 2020

Nil till the 23rd day of September, 2020, and 9 per cent thereafter till the 30 th day of September, 2020

June, 2020

Nil till the 27th day of September, 2020, and 9 per cent thereafter till the 30 th day of September, 2020

July, 2020

3 Taxpayers having an aggregate turnover of up to rupees 5 crores in the preceding financial year, whose principal place of business is in the States of Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha or the Union territories of Jammu and Kashmir, Ladakh, Chandigarh and Delhi

Nil till the 30th day of June, 2020, and 9 per cent thereafter till the 30th day of September, 2020

February, 2020

Nil till the 5th day of July, 2020, and 9 per cent thereafter till the 30th day of September, 2020

March, 2020

13

Notification No. 52/2020-Central Tax/G.S.R. 405(E) dated 24/06/2020 CBIC provide one time amnesty by lowering/waiving of late fees for non furnishing of FORM GSTR-3B from July, 2017 to January, 2020 and also seeks to provide relief by conditional waiver of late fee for delay in furnishing returns in FORM GSTR-3B for tax periods of February, 2020 to July, 2020 as follows.

12

Nil till the 9th day of July, 2020, and 9 per cent thereafter till the 30th day of September, 2020

April, 2020

Nil till the 15 th day of September, 2020, and 9 per cent thereafter till the 30 th day of September, 2020

May, 2020

Nil till the 25th day of September, 2020, and 9 per cent thereafter till the 30 th day of September, 2020

June, 2020

Nil till the 29th day of September, 2020, and 9 per cent thereafter till the 30 th day of September, 2020

July, 2020.”.

S.No. Class of registered persons Tax period Condition

(1) (2) (3) (4)

1. Taxpayers having an aggregate turnover of more than rupees 5 crores in the preceding financial year

February, 2020, March, 2020 and April, 2020

If return in FORM GSTR-3B is furnished on or before the 24th day of June, 2020

2. Taxpayers having an aggregate turnover of up to rupees 5 crores in the preceding financial year, whose principal place of business is in the States of Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana or Andhra Pradesh or the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands and Lakshadweep

February, 2020 If return in FORM GSTR-3B is furnished on or before the 30th day of June, 2020

March, 2020 If return in FORM GSTR-3B is furnished on or before the 3 rd day of July, 2020

April, 2020 If return in FORM GSTR-3B is furnished on or before the 6th day of July, 2020

14

12

S.No. Class of registered persons Tax period Condition

(1) (2) (3) (4)

May, 2020 If return in FORM GSTR-3B is furnished on or before the 12th day of September, 2020

June, 2020 If return in FORM GSTR-3B is furnished on or before the 23rd day of September, 2020

July, 2020 If return in FORM GSTR-3B is furnished on or before the 27th day of September, 2020

3 Taxpayers having an aggregate turnover of up to rupees 5 crores in the preceding financial year, whose principal place of business is in the States of Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Me-ghalaya, Assam, West Bengal, Jharkhand or Odisha or the Union territories of Jammu and Kashmir, Ladakh, Chandigarh and Delhi

February, 2020 If return in FORM GSTR-3B is furnished on or before the 30th day of June, 2020

March, 2020 If return in FORM GSTR-3B is furnished on or before the 5th day of July, 2020

April, 2020 If return in FORM GSTR-3B is furnished on or before the 9th day of July, 2020

May, 2020 If return in FORM GSTR-3B is furnished on or before the 15th day of September, 2020

June, 2020 If return in FORM GSTR-3B is furnished on or before the 25th day of September, 2020

July, 2020 If return in FORM GSTR-3B is furnished on or before the 29th day of September, 2020

15

Notification No. 53/2020-Central Tax/G.S.R. 406(E) dated 24/06/2020 CBIC provides relief by waiver of late fee for delay in furnishing outward statement in FORM GSTR-1 for tax periods for months from March, 2020 to June, 2020 for monthly filers and for quarters from January, 2020 to June, 2020 for quarterly filers. Provided also that the amount of late fee payable under section 47 of the said Act shall stand waived for the registered persons who fail to furnish the details of outward supplies for the months or quarter mentioned in column (2) of the Table below in FORM GSTR-1 by the due date, but furnishes the said details on or before the dates mentioned in column (3) of the said Table as follow:-

Notification No. 54/2020-Central Tax/G.S.R. 407(E) dated 24/06/2020 CBIC extends due date for furnishing FORM GSTR-3B for supply made in the month of August, 2020 for taxpayers with annual turnover up to Rs. 5 crore shall be furnished electronically through the common portal, on or before the 1st day of October, 2020. Notification No. 04/2020 –Integrated Tax/G.S.R. 409(E) dated 24/06/2020 CBIC notifies 30th day of June, 2020 as date of applicability of section 134 of Finance Act, 2020 vide which In section 25 of the Integrated Goods and Services Tax Act, 2017, in sub-section (1), in the proviso, for the words ‘three years’, the words ‘five years’ was substituted. Notification No. 04/2020 –Integrated Tax Dated- 24th June, 2020. Notification No. 55/2020-Central Tax [G.S.R. 416(E).] dated 27/06/2020 Notification under section 168A of CGST Act for extending due date of specific compliance which falls during the period from the 20th day of March, 2020 to the 30th day of August, 2020, to 31st day of August, 2020. Such Compliance Includes- a. Completion of any proceeding or passing of any order or issuance of any notice, intimation, notification, sanction or

approval or such other action, by whatever name called, by any authority, commission or tribunal, by whatever name called, under the provisions of the Acts stated above; or

b. Filing of any appeal, reply or application or furnishing of any report, document, return, statement or such other rec-ord, by whatever name called, under the provisions of the Acts stated above; but, such extension of time shall not be applicable for the compliances of the provisions of the said Act, as mentioned below‑

c. Chapter IV; d. Sub-section (3) of section 10, sections 25, 27, 31, 37, 47, 50, 69, 90, 122, 129; e. Section 39, except at-section (3), (4) and (5); f. Section 68, in so far as a-way bill is concerned; and g. Rules made under the provisions specified at clause (a) to (d) above;

12

Sl. No. Month/ Quarter Dates

(1) (2) (3)

1. March, 2020 10th day of July, 2020

2. April, 2020 24th day of July, 2020

3. May, 2020 28th day of July, 2020

4. June, 2020 05th day of August, 2020

5. January to March, 2020 17th day of July, 2020

6. April to June, 2020 03rd day of August, 2020.”.

16

Notification No. 56/2020-Central Tax [G.S.R. 417(E).] dated 27/06/2020 Seeks to amend notification no. 46/2020-Central Tax in order to further extend period to pass order under Section 54(7) of CGST Act till 31.08.2020 or in some cases upto fifteen days thereafter vide Notification No. 56/2020-Central Tax Dated 27th June, 2020.

Section 54(7) of CGST Act provides that final order in GST refund shall be issued within sixty days from the date of receipt of application complete in all respects but considering Pandemic Covid-19 CBIC notified that If GST refund order date falls between 20th March to 30th day of August, 2020 in that case refund order can be issued within 75 days (i.e. 60 + 15 Days) of receipt of reply of notice or 31st day of August, 2020, whichever is later. Circular No. 138/08/2020-GST dated 06/06/2020

Circular No. 136/06/2020-GST, dated 03.04.2020 and Circular No. 137/07/2020-GST, dated 13.04.2020 had been issued to clarify doubts regarding relief measures taken by the Government for facilitating taxpayers in meeting the compliance requirements under various provisions of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the “CGST Act”) on account of the measures taken to prevent the spread of Novel Corona Virus (COVID-19).

12

S.No Issue Clarification

Issues related to Insolvency and Bankruptcy Code, 2016

1. Notification No. 11/2020 – Central Tax dated

21.03.2020, issued under section 148 of the CGST Act

provided that an IRP/CIRP is required to take a

separate registration within 30 days of the issuance of

the notification. It has been represented that the IRP/

RP are facing difficulty in obtaining registrations

during the period of the lockdown and have

requested to increase the time for obtaining

registration from the present 30 days limit.

Vide notification No. 39/2020- Central Tax,

dated 05.05.2020, the time limit required for

obtaining registration by the IRP/RP in terms of

Special procedure prescribed vide notification

No. 11/2020 – Central Tax dated

21.03.2020 has been extended. Accordingly, IRP/

RP shall now be required to obtain

registration within thirty days of the

appointment of the IRP/RP or by 30th June,

2020, whichever is later.

2. The notification No. 11/2020– Central Tax dated 21.03.2020 specifies that the IRP/RP, in respect of a corporate debtor, has to take a new registration with effect from the date of appointment. Clarification has been sought whether IRP would be required to take a fresh registration even when they are complying with all the provisions of the GST Law under the registration of Corporate Debtor (earlier GSTIN) i.e. all the GSTR-3Bs have been filed by the Corporate debtor / IRP prior to the period of appointment of IRPs and they have not been defaulted in return filing.

i. The notification No. 11/2020– Central Tax dated 21.03.2020 was issued to devise a special procedure to overcome the requirement of sequential filing of FORM GSTR-3B under GST and to align it with the provisions of the IBC Act, 2016. The said notification has been amended vide notification No. 39/2020 – Central Tax, dated 05.05.2020 so as to specifically provide that corporate debtors who have not defaulted in furnishing the return under GST would not be required to obtain a separate registration with effect from the date of appointment of IRP/RP.

ii. Accordingly, it is clarified that IRP/RP would not be required to take a fresh registration in those cases where statements in FORM GSTR-1 under section 37 and returns in FORM GSTR-3B under section 39 of the CGST Act, for all the tax periods prior to the appoint-ment of IRP/RP, have been furnished under the registration of Corporate Debtor (earlier GSTIN).

17

12

S.No Issue Clarification

Issues related to Insolvency and Bankruptcy Code, 2016

3. Another doubt has been raised that the present notification has used the terms IRP and RP Interchangeably, and in cases where an appointed IRP is not ratified and a separate RP is appointed, whether the same new GSTIN shall be transferred from the IRP to RP, or both will need to take fresh registration.

i. In cases where the RP is not the same as IRP, or in cases where a different IRP/RP is appointed midway during the insolvency process, the change in the GST system may be carried out by an amendment in the registration form. Changing the authorized signatory is a non- core amendment and does not require approval of tax officer. However, if the previous authorized signatory does not share the credentials with his successor, then the newly appointed person can get his details added through the Jurisdictional authority as Primary authorized signatory. ii. The new registration by IRP/RP shall be required only once, and in case of any change in IRP/RP after initial appointment under IBC, it would be deemed to be change of authorized signatory and it would not be considered as a distinct person on every such change after initial appointment. Accordingly, it is clarified that such a change would need only change of authorized signatory which can be done by the authorized signatory of the Company who can add IRP /RP as new authorized signatory or failing that it can be added by the concerned jurisdictional officer on request by IRP/RP.

Other COVID-19 related representations.

4. As per notification no. 40/2017- Central Tax (Rate) dated 23.10.2017, a registered supplier is allowed to supply the goods to a registered recipient (merchant exporter) at 0.1% provided, inter-alia, that the merchant exporter exports the goods within a period of ninety days from the date of issue of a tax invoice by the registered supplier. Request has been made to clarify the provision vis-à-vis the exemption provided vide notification no. 35/2020-Central Tax dated 03.04.2020.

i. Vide notification No. 35/2020-Central Tax dated 03.04.2020, time limit for compliance of any action by any person which falls during the period from 20.03.2020 to 29.06.2020 has been extended up to 30.06.2020, where completion or compliance of such action has not been made within such time.

ii. Notification no. 40/2017-Central Tax (Rate) dated 23.10.2017 was issued under powers conferred by section 11 of the CGST Act, 2017. The exemption provided in notification No. 35/2020-Central Tax dated 03.04.2020 is applicable for section 11 as well.

iii. Accordingly, it is clarified that the said requirement of exporting the goods by the merchant exporter within 90 days from the date of issue of tax invoice by the registered supplier gets extended to 30th June, 2020, provided the completion of such 90 days period falls within 20.03.2020 to 29.06.2020.

18

Circular No. 139/09/2020-GST dated 10/06/2020 CBIC clarifies that Circular No. 135/05/2020­GST dated 31st March, 2020 does not in any way impact the refund of ITC availed on the invoices / documents relating to imports, ISD invoices and the inward supplies liable to Reverse Charge (RCM supplies) etc.. It is hereby clarified that the treatment of refund of such ITC relating to imports, ISD invoices and the inward supplies liable to Reverse Charge (RCM supplies) will continue to be same as it was before the issuance of Circular No. 135/05/2020­GST dated 31st March, 2020. Clarification is issued vide Circular No. 139/09/2020-GST dated 10th June, 2020. Circular No. 140/09/2020-GST dated 10/06/2020 I. Leviability of GST on remuneration paid by companies to the independent directors defined in terms of section

149(6) of the Companies Act, 2013 or those directors who are not the employees of the said company; and II. Leviability of GST on remuneration paid by companies to the whole-time directors including managing director

who are employees of the said 1. In order to ensure uniformity in the implementation of the provisions of the law across the field formations, the Board, in exercise of its powers conferred under section 168(1) of the CGST Act hereby clarifies the issue as below: Leviability of GST on remuneration paid by companies to the independent directors or those directors who are not the employee of the said company 2.1 The primary issue to be decided is whether or not a ‘Director’ is an employee of the company. In this regard, from the perusal of the relevant provisions of the Companies Act, 2013, it can be inferred that: a. the definition of a whole time-director under section 2(94) of the Companies Act, 2013 is an inclusive definition, and

thus he may be a person who is not an employee of the company. b. The definition of ‘independent directors’ under section 149(6) of the Companies Act, 2013, read with Rule 12 of

Companies (Share Capital and Debenture) Rules, 2014 makes it amply clear that such director should not have been an employee or proprietor or a partner of the said company, in any of the three financial years immediately preceding the financial year i n which he is proposed to be appointed in the said company.

2.2 Therefore, in respect of such directors who are not the employees of the said company, the services provided by them to the Company, in lieu of remuneration as the consideration for the said service, are clearly outside the scope of Schedule Ill of the CGST Act and are therefore taxable. In terms of entry at SI. No. 6 of the Table annexed to notification No. 13/2017–Central Tax (Rate) dated 28.06.2017, the recipient of the said service i.e. the Company, is liable to discharge the applicable GST on it on reverse charge basis. 2.3 Accordingly, it is hereby clarified that the remuneration paid to such independent directors, or those directors, by whatever name called, who are not employee of the said company, is taxable in hands of the company, on reverse charge basis. Levi ability of GST on remuneration paid by companies to the directors, who are also an employee of the said company

12

S.No Issue Clarification

5. Sub-rule (3) of that rule 45 of CGST Rules requires fur-nishing of FORM GST ITC-04 in respect of goods dispatched to a job worker or received from a job work-er during a quarter on or before the 25th day of the month succeeding that quarter. Accordingly, the due date of filing of FORM GST ITC-04 for the quarter ending March, 2020 falls on 25.04.2020. Clarification has been sought as to whether the extension of time limit as provided in terms of notification No. 35/2020-Central Tax dated 03.04.2020 also covers furnishing ofFORM GST ITC-04 for quarter ending March, 2020

Time limit for compliance of any action by any person which falls during the period from 20.03.2020 to 29.06.2020 has been extended up to 30.06.2020 where completion or compliance of such action has not been made within such time. Accordingly, it is clarified that the due date of fur-nishing of FORM GST ITC-04 for the quarter ending March, 2020 stands extended up to 30.06.2020.

19

3.1 Once, it has been ascertained whether a director, irrespective of name and designation, is an employee, it would be pertinent to examine whether all the activities performed by the director are in the course of employer-employee relation (i.e. a “contract of service’) or is there any element of “contract for service”. The issue has been deliberated by various courts and it has been held that a director who has also taken an employment in the company may be functioning in dual capacity, namely, one as a director of the company and the other on the basis of the contractual relationship of master and servant with the company, i.e. under a contract of service (employment) entered into with the company. 3.2 It is also pertinent to note that similar identification (to that in Para 5.1 above) and treatment of the Director’s remu-neration is also present in the Income Tax Act, 1961 wherein the salaries paid to directors are subject to Tax Deducted at Source (‘TDS’) under Section 192 of the Income Tax Act, 1961 (‘IT Act’). However, in cases where the remuneration is in the nature of professional fees and not salary, the same is liable for deduction under Section 194J of the IT Act. 3.3. Accordingly, it is clarified that the part of Director’s remuneration which are declared as `Salaries’ in the books of a company and subjected to TDS under Section 192 of the IT Act, are not taxable being consideration for services by an employee to the employer in the course of or in relation to his employment in terms of Schedule III of the CGST Act, 2017. 3.4 It is further clarified that the part of employee Director’s remuneration which is declared separately other than ‘salaries’ in the Company’s accounts and subjected to TDS under Section 194J of the IT Act as Fees for professional or Tech-nical Services shall be treated as consideration for providing service which are outside the scope of Schedule Ill of the CGST Act, and is therefore, taxable. Further, in terms of notification No. 13/2017 –Central Tax (Rate) dated 28.06.2017, the recipient of the said service i.e. the Company, is liable to discharge the applicable GST on it on reverse charge basis.

Circular No.141/11/2020-GST dated 24/06/2020-Clarification in respect of various measures announced by the Government for providing relief to the taxpayers in view of spread of Novel Corona Virus (COVID-19)

Circular No. 136/06/2020-GST, dated 03.04.2020 was issued by the Board on the subject issue clarifying various issues relating to the measures announced by the Government providing relief to the taxpayers. The GST Council, in its 40th meeting held on 12.06.2020, recommended further relief to the taxpayers and accordingly, following notifications have been issued:

12

S. No. Notification No. Remarks

1 Notification No.51/2020- Central Tax, dated

24.06.2020.

Seeks to provide relief to taxpayers by reducing the rate of interest from 18% per annum to 9% per annum for specified period

2 Notification No.52/2020- Central Tax, dated 24.06.2020.

Seeks to provide relief to taxpayers by conditional waiver of late fee for delay in furnishing FORM GSTR-3B for specified period

3 Notification No.53/2020- Central Tax, dated 24.06.2020.

Seeks to provide relief to taxpayers by conditional waiver of late fee for delay in furnishing FORM GSTR-1 for specified period

20

2. The above referred notifications have amended the parent notifications through which the relief from interest for late payment of GST and late fee for delay in furnishing of FORM GSTR-3B / FORM GSTR-1 was provided for the tax periods of February, March and April, 2020. Accordingly, the clarifications issued vide Circular No. 136/06/2020-GST, dated 03.04.2020 stand modified to the extent as detailed in the succeeding paragraphs to incorporate the decisions of the 40th meeting of the GST Council. In order to ensure uniformity in the implementation of the provisions of the law across the field formations, the Board, in exercise of its powers conferred under section 168(1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the “CGST Act”) clarifies the issues detailed below: Manner of calculation of interest for taxpayers having aggregate turnover above Rs. 5 Cr. 3.1 Vide notification No.31/2020- Central Tax, dated 03.04.2020, a conditional lower rate of interest was provided for various class of registered persons for the tax period of February, March and April, 2020. The same was clarified through Circular No. 136/06/2020-GST, dated 03.04.2020(para 3, sl. No. 3, 4 and 5). It was clarified that in case the return for the said months are not furnished on or before the date mentioned in the notificationNo.31/2020- Central Tax, dated 03.04.2020, interest at 18% per annum shall be charged from the due date of return, till the date on which the return is filed. 3.2 The Government, vide notification No.51/2020- Central Tax, dated 24.06.2020 has removed the said condition. Accordingly, a lower rate of interest of NIL for first 15 days after the due date of filing return in FORM GSTR-3B and @ 9% thereafter till 24.06.2020 is notified. After the specified date, normal rate of interest i.e. 18% per annum shall be charged for any further period of delay in furnishing of the returns. 3.3 The calculation of interest in respect of this class of registered persons for delayed filing of return for the month of March, 2020 (due date of filing being 20.04.2020) is as illustrated in the Table below:

Manner of calculation of interest for taxpayers having aggregate turnover below Rs. 5 Cr.

4.1 For the taxpayers having aggregate turnover below Rs. 5 Crore, notification No.31/2020- Central Tax, dated 03.04.2020 provided a conditional NIL rate of interest for the tax period of February, March and April, 2020. The Government, vide Notification No.52/2020- Central Tax, dated 24.06.2020 provided the NIL rate of interest till specified dates in the said notification and 9% per annum thereafter till 30th September, 2020. Similar relaxation of reduced rate of interest has been provided for the tax period of May, June and July 2020 also for the said class of registered persons having aggregate turnover below Rs. 5 Crore in the preceding financial year. The notification, thus, provides NIL rate of interest till specified dates and after the specified dates lower rate of 9% would apply till 30th September 2020. After 30thSeptember, 2020, normal rate of interest i.e. 18% per annum shall be charged for any further period of delay in furnishing of the returns.

12

S. No Date of filing GSTR-3B No. of days of delay

Interest

1 02.05.2020 12 Zero interest

2 20.05.2020 30 Zero interest for 15 days, thereafter interest rate @9% p.a. for 15 days

3 20.06.2020 61 Zero interest for 15 days, thereafter interest rate @9% p.a. for 46 days

4

24.06.2020 65 Zero interest for 15 days, thereafter interest rate @9% p.a. for 50 days

5 30.06.2020 71 Zero interest for 15 days, thereafter interest rate @9% p.a. for 50 days and interest rate @18% p.a. for 6 days

21

4.2 The calculation of interest in respect of this class of registered persons for delayed filing of return for the month of March, 2020 (for registered persons for whom the due date of filing was 22.04.2020) and June, 2020 (for registered persons for whom the due date of filing is 22.07.2020) is as illustrated in the Table below:

Manner of calculation of late fee

5.1 Vide notification No. 32/2020- Central Tax, dated 03.04.2020, a conditional waiver of late fee was provided for the tax period of February, March and April, 2020, if the return in FORM GSTR-3B was filed by the date specified in the said notification. The same was clarified through Circular No. 136/06/2020-GST, dated 03.04.2020 . 5.2 The Government, vide Notification No.52/2020- Central Tax, dated 24.06.2020 has provided the revised dates for conditional waiver of late fee for the months of February, March and April, 2020 and extended the same for the months of May, June and July, 2020 for the small taxpayers. 5.3 It is clarified that the waiver of late fee is conditional to filing the return of the said tax period by the dates specified in the said notification. In case the returns in FORM GSTR-3B for the said months are not furnished on or before the dates specified in the said notification, then late fee shall be payable from the due date of return, till the date on which the return is filed. Instruction No. 3/2/2020- GST dated 24/06/2020- GST Payment by Builders- Form DRC-03 for Shortfall from 80%. Payment of GST by real estate promoter/developer supplying construction of residential apartment etc, on the shortfall value of inward supplies from registered supplier at the end of the financial year. A revised GST rate has been prescribed, w.e.f. the 1st April, 2019 on the supply of service by way of construction of residential apartment. Under this, construction of affordable residential apartments attract GST at the rate of 1% [without ITC] and other residential apartments attract GST at the rate of 5% [without ITC]. (These rates have been prescribed vide Notification no. 11/2017- Central Tax (Rate) dated 28.06.2017 as amended by Notification no. 3/2019- Central Tax (Rate) dated 29.03.2019). 2. One of the condition prescribed vide said notification is that atleast eighty per cent. of value of input and input services, [other than services by way of grant of development rights, long term lease of land or FSI, electricity, high speed diesel, motor spirit, natural gas], used in supplying the construction service, shall be received by the promoter/developer from

12

S. No. Tax period Applicable rate of interest

Date of filing GSTR-3B

No. of days of delay

Interest

1 March, 2020 Nil till the 3rd day of July, 2020, and 9 per cent thereafter till the 30th day of September, 2020

22.06.2020 61 Zero interest

2 22.09.2020 153 Zero interest for 72 days, thereafter interest rate @9% p.a. for 81 days

4 22.10.2020 183 Zero interest for 72 days, thereafter interest rate @9% p.a. for 89 days and interest rate @18% p.a. for 22 days

4 June, 2020 Nil till the 23rd day of September, 2020, and 9 per cent thereafter till the 30th day of September, 2020

28.08.2020 37 Zero interest

5 28.09.2020 68 Zero interest for 63 days, thereafter interest rate @9% p.a. for 5 days

6 28.10.2020 98 Zero interest for 63 days, thereafter interest rate @9% p.a. for 7 days and interest rate @18% p.a. for 28 days

22

registered supplier only. In case of shortfall from the said threshold of 80 per cent., the promoter/developer shall pay the tax on the value of input and input services comprising such shortfall in the manner as has been prescribed vide said notification. This tax shall be paid through a prescribed form electronically on the common portal by end of the quarter following the financial year. Accordingly for FY 2019-20, tax on such shortfall is to be paid by the 30th June, 2020.

3. In the above context, requests have been received seeking details of prescribed form on which the said tax amount has to be reported.

4. The issue referred by the trade has been examined. It has been decided that FORM GST DRC-03, as already prescribed, shall be used for making the payment of such tax by promoter/developer. Accordingly, person required to pay tax in accordance with the said notification on the shortfall from threshold requirement of procuring input and input services (below 80%) from registered person shall use the form DRC-03 to pay the tax electronically on the common portal within the prescribed period.

Order No. 01/2020-Central Tax dated 25/06/2020 This Order may be called the Central Goods and Services Tax (Removal of Difficulties) Order, 2020.

1. For the removal of difficulties, it is hereby clarified that for the purpose of calculating the period of thirty days for filing application for revocation of cancellation of registration under sub-section (1) of section 30 of the Act for those registered persons who were served notice under clause (b) or clause (c) of sub-section (2) of section 29 in the manner as provided in clause (c) or clause (d) of sub-section (1) of section 169 and where cancellation order was passed up to 12th June, 2020, the later of the following dates shall be considered:- a) Date of service of the said cancellation order; or b) 31st day of August, 2020.

Recommendations of 40th GST council meeting held on 12/06/2020. The 40th GST Council met under the Chairmanship of Union Finance & Corporate Affairs Minister Smt Nirmala Sitharaman through video conferencing. The meeting was also attended by Union Minister of State for Finance & Corporate Affairs Shri Anurag Thakur besides Finance Ministers of States & UTs and senior officers of the Ministry of Finance& States/ UTs. The GST Council has made the following recommendations on Law & Procedures changes.

1. Measures for Trade facilitation: a. Reduction in Late Fee for past Returns: As a measure to clean up pendency in return filing, late fee for non-furnishing FORM GSTR-3B for the tax period from July, 2017 to January, 2020 has been reduced / waived as under: –

i. ‘NIL’ late fee if there is no tax liability; ii. Maximum late fee capped at Rs. 500/- per return if there is any tax liability. The reduced rate of late fee would apply for all the GSTR-3B returns furnished between 01.07.2020 to 30.09.2020

b. Further relief for small taxpayers for late filing of returns for February, March & April 2020 Tax periods: For small taxpayers (aggregate turnover uptoRs. 5 crore), for the supplies effected in the month of February, March and April, 2020, the rate of interest for late furnishing of return for the said months beyond specified dates (staggered upto 6th July 2020) is reduced from 18% per annum to 9% per annum till 30.09.2020. In other words, for these months, small taxpayers will not be charged any interest till the notified dates for relief (staggered upto 6th July 2020)and thereafter 9% interest will be charged till 30.09.2020..

c. Relief for small taxpayers for subsequent tax periods (May, June & July 2020): In wake of COVID-19 pandemic, for taxpayers having aggregate turnover upto Rs. 5 crore, further relief provided by waiver of late fees and interest if the returns in FORM GSTR-3B for the supplies effected in the months of May, June and July, 2020 are furnished by September, 2020 (staggered dates to be notified).

d. One time extension in period for seeking revocation of cancellation of registration: To facilitate taxpayers who could not get their cancelled GST registrations restored in time, an opportunities being provided for filing of application for revocation of cancellation of registration up to 30.09.2020, in all cases where registrations have been cancelled till 12.06.2020.

2. Certain clauses of the Finance Act, 2020 amending CGST Act 2017 and IGST Act, 2017 to be brought into force from 30.06.2020.

12 23

Facts of the Case:-

The learned assessing officer has disallowed the deductions u/s. 80P for interest received by a Co-operative Society from a

Co-operative Banks stating that Co-operative Banks are not Co-operative Societies and hence the deduction is not

available. Whether the stand taken by the AO is correct?

Opinion Sought:-

Whether the Co-operative Society is eligible to claim the deduction of income by way of interest derived from its

investment with any other Co-operative Society u/s. 80P(2)(d)?

Whether Co-operative Banks, which are not entitled to claim deduction u/s. 80P by virtue of sub-section (4) of section

80P, shall not to be treated as Co-operative Society for the purpose of section 80P(2)(d) ?

Understanding of the Case

The assessee is a Co-operative Society having investment with Co-operative Banks. During the year it has received interest

from the said Co-operative Banks and claimed the deduction u/s. 80P(2)(d) of the Income Tax Act, 1961. The learned

assessing officer denied the claim of deduction giving reason that Co-operative Banks are not Co-operative Society as

required to claim the deduction.

Relevant Sections and Judicial Pronouncements

Section 80P(1) states that an assessee being a Co-operative Society can claim the deduction of sum specified in

sub-section (2) of section 80P in computing the total income of the assessee.

Section 80P(2)(d) states that any income by way of interest or dividends derived by the Co-operative Society from its

investments with any other Co-operative Society, the whole of such income is eligible for deduction.

Contributed by

CA Paras Kenia

Case Study

13 24

Section 80P(4) states that provisions of section 80P shall not apply in relation to any Co-operative Bank other than a

Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank. For the

purposes of this sub-section,—

(a) "Co-operative Bank" and "Primary Agricultural Credit Society" shall have the meanings respectively assigned to them

in Part V of the Banking Regulation Act, 1949 (10 of 1949);

(b) "Primary Co-Operative Agricultural And Rural Development Bank" means a society having its area of operation

confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural

development activities.

Chapter VI-A Part-C of the Income Tax Act deals with profit linked deductions. Section 80P contained in Chapter VI-A,

provides deduction to a Co-operative Society in respect of its income. Section 80P(1) provides that the amount referred to

in sub-section (2) is allowed as a deduction while calculating the Gross Total Income of the assessee. Section 80P (2)(a)

provides seven types of activities of Co-operative Societies, the income of which is provided as deduction.

Section 80P(2)(a)(i) provides that Co-operative Society engaged in carrying on the business of banking or providing credit

facilities to its members is eligible to claim deduction in respect of whole of the amount of profit and gains of business

attributable to such activities.

Further, Section 80P(4) was inserted by Finance Act 2006, to restrict Co-operative Banks from availing deduction under

section 80P. Co-operative Society has been defined u/s 2(19) of the Act. However, the definition of Co-operative Banks

has been borrowed from the Banking Regulation Act, 1949 vide the explanation to Sec 80P(4).

As per section 2(19) "Co-operative Society" means a Co-operative Society registered under the Co-operative Societies Act,

1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative

societies.

From the above it is clear that Section 80P(2)(a)(i) and Section 80P(4) are related to each other and that section 80P(2)(d)

and Section 80P(4) are two separate sections and are neither related with each other nor dependent on each other in any

way. So, though the Co-operative Banks pursuant to the insertion of sub-section (4) to section 80P are not entitled to

claim deduction u/s. 80P of the Act, but as a Co-Operative Bank continues to be a Co-Operative Society registered

under the law for the time being in force in any State for the registration of co-operative societies.

This view is supported by the decisions of Hon’ble ITAT, Mumbai in the case of Solitaire CHS Ltd. v. PCIT (2019)

76 ITR 59 (SN) (Mum.)(Trib.) and Land and Cooperative Housing Society Ltd. v. ITO (2017) 46 CCH 52 (Mum)

(Trib.)

Conclusion

Considering the plain reading of the act and also the decisions given by the Hon’ble ITAT, Mumbai, it is clear that stand

taken by the learned assessing officer is incorrect. The assessee Co-operative Society is entitled to claim deduction of

interest income derived from its investments held with a Co-operative Banks u/s. 80P(2)(d) of the Act.

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Case Study for the Month of July 2020

The Central Processing Centre (CPC) is making adjustments u/s 143(1)(a) of the Income Tax Act

for alleged Mistakes in the returns of Income, without considering the objections of the Assessee

and giving reasons.

Whether this practice followed by CPC is valid considering the law and CBDT Circulars?

Discuss the legality of the actions of the CBDT and the remedies available to the Assessee.

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Photo Gallery

Some of Virtual Meeting Screen Shorts

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