Quvisor’s weekly updates on Tax compliance in India : May 31, 2018


Country-wide intra-state e-way bill system mandatory from June 3, here are Six important things to remember
i. E-way bill will be required when the value of taxable consignment, along with the tax value, is more than Rs 50,000
ii. If you have sent material for Job Work then either you or the Job Worker can generate the e-way bill
iii. As a supplier, you can authorize the transporter, e-commerce operator or the courier agency to fill Part A of the e-way bill
iv. If the distance between your primary place of business and that of the transporter is less than 50 KMs, only Part A of the e-way bill is required to be filled, and Part B is not required to be filled
v. Once the e-way bill is generated, the recipient of goods can confirm or deny the receipt of goods before the actual delivery or 72 hours, whichever is earlier
vi. In cases where the goods are being transported by railways, aeroplane or ship, the e-way bill can only be generated by the supplier or a recipient, and not by the transporter. However, in such cases, an e-way bill can be generated even after the goods shipment has started

Special GST refund fortnight starts from 31/05/18 to 14/06/18 for all pending refunds
The Govt. is scheduled to start the second phase of ‘Special drive refund fortnight’ from May 31, 2018 to June 14, 2018 for all pending GST refunds on or before April 30, 2018. This will include refunds of IGST paid on exports, refunds of unutilized ITC and all other GST refunds submitted in Form GST RFD-01A.

GST would be applicable on rental of premises taken on lease by hospital: AAR
GST: Service of rental or leasing involving own or leased non-residential property is classified under heading (SAC) 997212 and is taxable under GST, further, no specific exemption is available under any notification for time being in force for said services, also there is no provision available in Act which allows exemption on an input service if output service provided by taxable person is exempt and, thus, GST is leviable on rent paid/payable for premises, taken on lease by applicant – hospital, catering, life saving services

IGST would be applicable only when goods are cleared from custom bonded warehouse; Govt. clarifies
Govt. has clarified that IGST would not be applicable on the supply of goods before their clearance from the warehouse. It would be levied and collected only when the goods are cleared for home consumption from the customs bonded warehouse. This Circular would be applicable for supply of warehoused goods which are deposited in a customs bonded warehouse on or after April 1, 2018.

Goods couldn’t be seized merely on basis that details of second vehicle were not mentioned in e-way bill: HC
GST/UP GST: Where assessee had sent goods by way of stock transfer from Baddi (HP) to Gorakhpur (UP), which were unloaded from vehicle and were loaded in another vehicle for onwards journey, and further since official portal was not permitting to mention details of two transport vehicles in E-way bill, registration number of second vehicle had been mentioned in E-way bill by hand, seizure of goods on ground that details of second vehicle had been mentioned in E-way bill by hand not justified


Income tax:

Advance received by land-owner from developer taxable only when flats handed over to prospective buyers
Where assessee had given land for development and was entitled to receive 18 per cent on gross sales under terms of development agreement, advance received by assessee from developer towards flat booking shall not be taxable in relevant year 2009-10 on receipt basis, but in subsequent assessment year when project was completed and tenements / flats were handed over to prospective buyers. Advance booking amount received by assessee is an advance receipt because right to collect said amount would crystallize on day when tenants or portion of land is sold by developer to prospective buyers. Moreover, developer recognized completion and sale of developed portion in subsequent assessment year 2011-12, consequently, business profits arising to assessee were taxable in such year. Further, since amount is not assessable to tax as his business profits in 2009-10, capital gains arising on conversion of capital asset into stock-in-trade is also not to be taxed in hands of assessee in 2009-10 but in year in which business profits are to be taxed. Furthermore, capital gains have to be worked out on basis of fair market value of property as on date of conversion and not on basis of market value of property

No additions on excess jewellery found during search if there was custom to gift jewellery in family
Where Assessing Officer under section 69A made addition on account of jewellery found in search of assessee, since assessee belonged to a wealthy family and jewellery was received on occasions from relatives, excess jewellery was very much reasonable and, thus, no addition under section 69A was called for

High salaries paid to doctors who were reputed professionals in their field couldn’t be held as excessive: ITAT
Where assessee-company paid higher salaries to doctors who were reputed professionals in their fields, payment of salaries could not be held to be excessive and unreasonable

CBDT rewards Start-ups and Merchant bankers but penalizes CAs
Two notifications have been issued by the CBDT in respect of Section 56(2)(viib). One of the notifications provides exemption to start-ups from this provision even if they issue shares at premium which exceeds its fair market value. The another notification bars the CAs from doing any valuation of unlisted shares for the purpose of calculating its fair market value as per discounted free cash flow method, such valuations to be carried out by Merchant bankers.


Companies Law:

SEBI enhances Disclosure and Transparency Norms for Credit Rating Agencies
Know more at : https://www.sebi.gov.in/legal/circulars/may-2018/enhanced-disclosure-and-transparency-norms-for-credit-rating-agencies_39130.html

SEBI to implement system-driven disclosures for non-promoter directors
Markets regulator Sebi will soon put in place system-driven disclosures for non-promoters, directors and certain class of employees of listed companies.

The system-driven disclosures in securities market was introduced in December 2015 and is being implemented in a phased manner. It has already been put in place with respect to disclosures of promoter/ promoter group.

In the next phase, the system-driven disclosures under certain sections of SAST (Substantial Acquisition of Shares and Takeovers) regulations would be made applicable for non-promoters

Co. was liable for act of share transfer agent who issued duplicate shares to an imposter without due-diligence
CL: A company is liable for all acts of its agents and cannot shirk responsibility towards their shareholders; where a unscrupulous person impersonated identity of petitioner shareholder of company and misrepresented documents to obtain duplicate share certificates in respect of shares held by her in company, and, company through their Share Transfer Agent issued duplicate shares to said person without exercising due diligence, since petitioner had her original certificates, she was entitled to rectification of register of shareholders maintained by company

Winding up order to be recalled when co-in-liquidation has settled all claims and dues to its creditor
CL: Where company-in-liquidation had settled all claims and dues of its creditors, winding up order passed against it was to be recalled


Insolvency & Bankruptcy Code:

Insolvency resolution process couldn’t be initiated as creditor failed to prove service of demand notice
CL: Where corporate creditor was not able to demonstrate with proof or evidence in respect of delivery of notice of demand despite time was granted, application to initiate CIRP was to be rejected

Insolvency process was to be admitted when all defects pointed out by debtor in application were removed
IBC: Where defects pointed out by corporate debtor in application under section 9 had been removed by operational creditor and said application was complete in all respects, said application was to be admitted

Insolvency plea was to be admitted when there was no dispute with regard to amount payable by debtor
I&B Code: Where there was no serious dispute with regard to amount payable by corporate debtor to financial creditor and a certificate of entries in a banker’s books in accordance with Banker’s Books Evidence Act, 1891 had been placed on record, application under section 7 by financial creditor against corporate debtor was to be admitted

Insolvency process was to be admitted when default had occurred in payment of liability: NCLAT
IBC : Moment when Adjudicating Authority is satisfied that a default has occurred, application to initiate Insolvency resolution process must be admitted, unless incomplete.

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