GST is applicable on transfer of title without affecting the delivery of goods – Tamilnadu Advance Ruling Authority

CA Priya Agarwal
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GST is applicable on transfer of title without affecting the delivery of goods – Tamilnadu Advance Ruling Authority

AAR (Advance Ruling) Case Law Details

Applicant Name :  Automative Components Technology India Private Limited

Appeal Number : Order No. 05/ARA/2020

Date of Judgement/Order : 31/01/2020

Courts : AAR Tamilnadu (96) Advance Rulings (1253)

Question(s) on which Advance Ruling was sought :

1.Whether GST will be applicable on the transfer of title in moulds from applicant to Indian buyer?

2. If yes, whether the Indian buyer would be eligible to take credit of the GST paid to the applicant for said purchase?

Note: The provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act.

Facts of the case

M/s. Automative Components Technology India Private Limited , Plot No.3/39 B, Sri Nagar, Thodukkadu(Post), Mannur Kootu Road, Sriperumbudur District, Thiruvallur, Tamil Nadu-602105 (hereinafter referred to as the ‘Applicant’ or ACTI’) is registered under GST vide GSTIN 33AANFP5828N1ZM.

1. The applicant stated that they are engaged in the supply of automotive components such as door locks and strikers (in short ‘parts’) .They supply such parts to a wide range of customers which inter – alia include moulds and tools (in short –moulds’). They propose to enter into the below transaction- They agree to supply certain parts, including the moulds to an Indian company (in short ‘Indian buyer’), located in the State of Tamil Nadu. In this regard, they place an order for manufacturing the said parts and moulds on a Thailand Company (in short ‘Foreign supplier’).

 Accordingly, the foreign supplier manufactures the parts and the same are physically imported into India. However, the moulds developed by the foreign supplier are retained in Thailand and are not physically imported into India.

Thus, there is only a transfer of ownership in the mould from the foreign supplier to Applicant and the foreign supplier retains the physical possession of the moulds.

 The foreign supplier raises an invoice on the Applicant for the parts and moulds separately. Similarly, the Applicant raises separate invoices on the Indian buyer.

The applicant has stated that in the present case as well, only the title in moulds are transferred to the Indian buyer, wherein the moulds physically continue to remain in possession of the foreign supplier. Thus, with regard to the moulds, there are two transactions involved in the present case:

T1: Transfer of title in moulds from the foreign supplier to the Applicant.

T2: Transfer of title in moulds from the Applicant to the Indian buyer.

They also stated that the moulds are never physically imported into India. The moulds will be disposed as waste in Thailand after its usage for manufacturing the requisite parts. In the above background, with regard to T2 the Applicant was of the view that the transfer of title in moulds (without physical import of the same from Thailand) would not make the said transaction liable to GST under Section 5 of the IGST Act read with Section 7(5)(a) of Integrated Goods and Services Tax Act 2017 and thereby not be required to charge IGST on the moulds sold to the Indian buyer.

2. As per the applicant’s interpretation of law, the transaction between them and the Indian buyer for transfer of title of moulds would not be liable to IGST as the same extends beyond territorial jurisdiction as the possession is retained by the foreign supplier .

As the moulds are supplied by the Applicant to the Indian buyer, by way of transfer in title, the Applicant is said to be the ‘Supplier’.

 With regard to place of supply, section 10(1)(c) would get and as there is no movement of goods from Thailand by any of the parties to the transaction and thus the place of supply of goods would be Thailand . Further stated that GST may not take within its fold a transaction wherein the place of supply is outside the territory of India.

In light of the above facts the applicant contended that the transaction would not subject to IGST.

3. Further, the applicant contended that the said transaction does not constitute import of goods as there is no physical movement of goods into India.

4. Further, the applicant submitted that if at all tax is applicable on the transaction then input tax credit of the same should be available to the recipient of Supply as the major objective of introducing GST is to allow seamless flow of credit .

The applicant stated that ITC should be available as per section 16(2)(b) of CGST Act 2017. If the transaction is deemed to be an inter-state supply and if the same is made liable to GST ‘ then it should be deemed that such goods have been received from perspective and the credit should accordingly be made available to him.

Key Observation of Authority for Advance Ruling, Tamilnadu

Tamilnadu Authority for Advance Ruling observed as follows:

1. The applicant is engaged in the supply of automotive components. They have stated that they agree to supply certain parts, including moulds to Indian Company located in the State of TamilNadu, for which they place an order for manufacturing the said parts and moulds on a Thailand Company. The parts manufactured are physically imported, while the moulds developed are retained in Thailand and are not physically imported into India, but the ownership in the mould is transferred from the foreign supplier to the Applicant and from the applicant to the Indian buyer by raising of separate invoices.

In view of the above the applicant raised the following questions:

(I) Whether GST will be applicable on the transfer of title in moulds from applicant to Indian buyer?

(II) If yes, whether the Indian buyer would be eligible to take credit of the GST paid to the applicant for said purchase?

2.  Section 97(2) of the CGST Act / Tamil Nadu GST Act (TNGST) gives the scope of Advance Ruling Authority, i.e., the question on which the Advance Ruling can be sought.

The Act limits the Advance Ruling Authority to decide the issues earmarked for it under Section 97(2) and no other issue can be decided by the Advance Ruling Authority. Of the above questions on which ruling is sought by the applicant, the question at (2) relates to eligibility to credit of tax paid by them at their buyers’ end.

The eligibility to credit of input tax paid by the applicant alone is covered under clause (d) of Section 97(2)  and the eligibility at the buyers’ hand when raised by an applicant do not fall under any of the category specified under Section 97(2) of the Act and therefore not within the ambit of this authority.

The First Question relating to whether GST is applicable on a transaction is within the ambit of this authority and is taken up for consideration.

3. In the case at hand, the applicant is undertaking two transactions-

T1 : Transfer of title in moulds from the foreign supplier to the Applicant

T2: Transfer of title in moulds from the applicant to the Indian buyer.

 The question raised by the applicant is with respect to transaction at T2 above. The applicant on his interpretation of law has stated that on application of Section 10 (1)(c) of IGST Act 2017, the place of supply is Thailand and the supplier is in India, therefore the supply could not get covered under IGST Act as IGST levy can be imposed only to supplies within the territorial jurisdiction of the IGST Act.

4. From the documents and averments of the applicant, the transaction involved requiring the clarification by the applicant is that the title in the moulds got manufactured by the applicant are transferred to the applicant and thereupon to the applicants’ vendor by way of declaration and against invoice indicating the “consideration” for the moulds. The moulds/tools remains with the manufacturer for manufacturing the parts, i.e., the moulds are supplied free of cost to the parts manufacturer and it is stated that the cost of the moulds are not amortised in the parts cost.

5. Having seen the factual position, the relevant statutory provisions examined as under. Supply is defined under Section 7 of the CGST Act 2017 and the same is reproduced below for reference:

Section 7(1) For the purposes of this Act, the expression “supply” includes—

(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;

(b) import of services for a consideration whether or not in the course or furtherance of business; and

(c) the activities specified in Schedule I, made or agreed to be made without a consideration;

(1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.;

Schedule II determines the list of activities to be considered as supply of goods/Services and entry Sl.No. 1 is as follows:

1. Transfer

(a) any transfer of the title in goods is a supply of goods;

From the above, it is evident that “transfer of the title in goods” is “supply of goods”. In the case at hand there is transfer in title of moulds for a consideration and the supply is in the course of business therefore, the same constitutes supply of goods and GST is liable to be paid on such supply.

Ruling from Authority for Advance Ruling, Tamilnadu

 In view of the above, authority ruled as under:

1. GST is applicable on the transfer of title in moulds from the applicant to the India buyer.

2. The question is not answered as the same is not in the ambit of this authority as per Section 97(2) of the Act.

ORDER OF AUTHORITY FOR ADVANCE RULING , TAMILNADU

TDS provision under GST

CA Harshi Modi
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TDS provision under GST

TDS provision under GST

There are certain category of persons for whom registration under GST act is mandatory irrespective of their turnover limits as specified in Section 22. These categories have to get register themselves on mandatory basis under GST act by virtue of Section 24 of the act. Thus mandatory registration is required for TDS deductors separately under this act even though they hold a separate registration number under any other category in act itself. So, the person who is required to deduct tax under Section 51 (i.e. deductor) would have to take registration under GST.

For taking registration as deductor, such person requires to submit application in Form GST REG-07 duly signed and verified on common portal. After due verification of the same, proper officer grant certificate of registration in Form GST REG-06 within 3 Working days from the date of submission of the application.

Other important provisions related to TDS have been highlighted below.

  • The provisions of TDS have been notified and made effective from 01.10.2018
  • Section 51 of CGST Act, 2017 Government may order the following person (deductor) to deduct  Tax at source:-
  • Department/ Establishment of Central/ State Government
  • Local Authority
  • Governmental agencies
  • An authority or a board or any other body which has been set up by Parliament or a State Legislature or by a government, with 51% equity (control) owned by the government.
  • A society established by the Central or any State Government or a Local Authority and the society is registered under the Societies Registration Act, 1860.
  • Public sector undertakings.

Section 51(1) – Applicability of TDS provision:-Where Total value of Taxable supply under the contract exceeds ₹ 2.50 lakhs (Excluding GST).

TDS is required to be deducted even if an individual invoice is less than ₹ 2.50 lakhs, if the total value of contract is exceeding ₹ 2.50 lakhs.

In the following cases TDS is not required to be deducted:-

  • Total value of Taxable supply < ₹ 2.5 lakhs
  • Contract value > ₹2.5 lakhs for both taxable supply and exempt supply but value of taxable supply under the contract < ₹ 2.5 lakhs
  • Receipt of services which are exempted.
  • Receipt of Goods which are exempted.
  • Goods on which GST is not leviable.
  • Where the payment is made to the unregistered supplier.
  • Where tax is to be paid on RCM basis by recipient.
  • All activities or transactions as specified in schedule-III of CGST/SGST Act, 2017.(Transactions which shall be treated neither as a supply of goods nor a supply of services.)
  • Where any amount was paid in advance prior to 01.10.2018 and tax invoice has been issued on or after 01.10.2018,to the extent of advance payment made before 01.10.2018 
  • Where place of supply is in state different from the state in which deductor is registered. [Goods and services are not supplied to recipient where he is located but at another state or union territory.]

TDS deduction and payment:-

  • 1% of CGST+1% of SGST= 2% [in case of intra state supply]
  • 2% of IGST [in case of interstate supply]
  • TDS is required to be deducted on net value excluding CGST,SGST/UTGST and IGST
  • Deductor to pay tax deducted to the government within 10 days after end of month, in a prescribed manner.

Other Compliances:-

  • Person who is liable to deduct TDS has to compulsorily register and there is no threshold limit for this as stated above.
  • Deductor is required to file TDS return in GSTR-7 within 10 days after end of each month.
  • The details furnished by the deductor shall be made available electronically to each supplier in Part-C of GSTR-2A/ GSTR-4A for composition dealer.
  • A TDS Certificate is required to be issued by deductor in GSTR-7A within 5 days of crediting the amount to the government.
  • Deductee can reject the details filed by deductor, if he may find that amount deducted by deductor doesn’t pertains to his supply.
  • The deductor shall furnish to the deductee a certificate manually mentioning therein contract value, rate of deduction, Amount deducted and paid to the appropriate government.

Credit of TDS in Electronic Cash register of deductee –There will an Automatic reflection in the Electronic ledger of dedcutee, once the deductor files his return.

Consequences of not complying with TDS provisions:-

S/No. Event Consequences
1 TDS not deducted Interest to be paid along with the TDS amount, else the amount shall be determined and recovered as per the law.
2. TDS certificate not issued or delayed beyond the prescribed period of five days   Late fee of Rs. 100/- per day subject to maximum of Rs. 5000
3 TDS deducted but not paid to the government or paid later than 10th of the succeeding month Interest to be paid along with the TDS amount; else the amount shall be determined and recovered as per the law.
4. Late filing of TDS returns Late fee of Rs. 100/- for every day during which such failure continues subject to a maximum amount of five thousand rupees.

          * consequences of non-compliances as stated above are as prescribed under the Act and the same are subject to change from time to time as per the notification issued in this regard.

Ordinance for extension of time limits under Taxation and Benami Act

CA Richa Agarwal
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Ordinance for extension of time limits under Taxation and Benami Act

The Union Finance & Corporate Affairs Minister Smt. Niramla Sitharaman announced several important relief measures taken by the Government of India in view of COVID-19 outbreak vide Press Release dated 24.03.2020, especially on statutory and regulatory compliance matters related to several sectors. In order to give effect to the announcements the government has brought in an Ordinance on 31.03.2020 which provides for extension of various time limits under the Taxation and Benami Acts.

Following are the decisions with respect to matters related to Direct Tax and Benami:

  1. Extension of last date of filing of original as well as revised Income-tax returns for the FY 2018-19 (AY 2019-20) to 30th June, 2020.
  2. Extension of Aadhaar-PAN linking date to 30th June, 2020.
  3. The date for making various Investment/ Payment for claiming deduction under Chapter-VIA-B of IT Act which includes Section 80C (LIC, PPF, NSC etc.), 80D (Mediclaim), 80G (Donations), etc. has been extended to 30th June, 2020. Hence the investment/payment can be made up to 30.06.2020 for claiming the deduction under these sections for FY 2019-20.
  4. The date for making investment/construction/purchase for claiming roll over benefit/deduction in respect of capital gains under sections 54 to 54GB of the IT Act has also been extended to 30th June 2020. Therefore, the investment/ construction/ purchase made up to 30.06.2020 shall be eligible for claiming deduction from capital gains arising during FY 2019-20.
  5. The date for commencement of operation for the SEZ units for claiming deduction under deduction 10AA of the IT Act has also extended to 30.06.2020 for the units which received necessary approval by 31.03.2020.
  6. The date for passing of order or issuance of notice by the authorities under various Direct Taxes & Benami Law has also been extended to 30.06.2020.
  7. It has provided that reduced rate of interest of 9% shall be charged for non-payment of Income-tax (e.g. advance tax, TDS, TCS) Equalization Levy, Securities Transaction Tax (STT), Commodities Transaction Tax (CTT) which are due for payment from 20.03.2020 to 29.06.2020 if they are paid by 30.06.2020. Further, no penalty/ prosecution shall be initiated for these non-payments.
  8. Under Vivad se Vishwas Scheme, the date has also been extended up to 30.06.2020. Hence, declaration and payment under the Scheme can be made up to 30.06.2020 without additional payment.

A special fund “Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND)” has been set up for providing relief to the persons affected from the outbreak of Corona virus. The donation made upto 30th June 2020 to the PM CARES Fund shall be eligible for 100% deduction under section 80G of the IT Act. Further, the limit on deduction of 10% of gross income shall also not be applicable. Hence, any person including corporate paying concessional tax on income of FY 2020-21 under new regime can make donation to PM CARES Fund up to 30.06.2020 and can claim deduction u/s 80G against income of FY 2019-20 and shall also not lose his eligibility to pay tax in concessional taxation regime for income of FY 2020-21.

Disclaimer: This article doesn’t constitute professional advice. The author does not represent that the said information is correct and complete in all regards. The views contained in this article are personal views of the author and may change depending upon underlying facts and circumstances. Judicial and legal authorities may not subscribe to the views of author and can take different view. Readers of this article are advised to take professional advice before taking any course of action or decision. The author does not assume any responsibility or liability in respect of the information contained in this article or for any decision/ course of action readers may take based on information contained in this article.

Transfer of ITC in case of business reorganization

CA Harshi Modi
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Transfer of ITC in case of business reorganization

Transfer of ITC in case of sale, merger, demerger amalgamation, lease or transfer of business:-

  • As per section 18(3) of CGST Act, 2017 in case of change in the constitution of registered person on account of sale, merger, demerger, amalgamation, lease or transfer of business with specific provision of transfer of liabilities, the transferor shall be allowed to transfer ITC which remains Unutilized in his electronic credit ledger (as on the date of filing GST ITC-02) to the transferee.
  • As per Rule 41(1) of CGST Rules, 2017, the transferor has to file GST ITC -02 on common portal regarding the details of transfer along with a request to transfer the unutilized ITC to the transferee.
  • The transferor shall be at liberty to determine the amount to be transferred under each head (CGST, SGST, IGST and compensation cess) subject to the ITC balance available with the transferor as on effective date of merger and acquisition as clarified in circular No. 133 03/2020-GST.
  • The transferor is required to file GST ITC-02 only in those states where both the transferor and transferee are registered as clarified in Circular No. 133 03/2020-GST. Let’s understand this with the help of an example. ABC is transferor having registration in UP and MP having two assets in each state. XYZ is the transferee having registration in UP and MP. If all the assets of ABC are to be transferred to XYZ’s business unit having registration in UP, whether it would be logical to transfer ITC under Rule 41(1) to both the units of XYZ? As the asset is to be used by XYZ’s business unit having registration in UP so same must be transferred only to XYZ’s business unit having registration in UP not to the XYZ’s business unit having Registration in MP. Thus in the above case, ABC is required to file GST ITC-02 only for his registration in the state of U.P.
  • Proviso to rule 41(1) is applicable for all forms of business organization that results in partial transfer of business assets along with liabilities. In case of demerger, ITC (CGST+SGST+IGST) as available in electronic credit ledger as on date of filing form GST ITC-02 shall be apportioned in the ratio of value of assets of new units as specified in the demerger scheme.

As per the explanation to rule inserted WEF 29.03.2019 “Value of assets” means  the value of  the entire assets of the business (Whether or not ITC has been availed thereon ) as on the appointed date of demerger as specified in demerger Scheme.

Value of assets shall be taken on state level basis and not at the all India level. E.g. A Company ABC is registered in two states of Gujarat and Maharashtra. Its total value of assets is worth Rs.100 crore, while its assets in State of Gujarat and Maharashtra are Rs 60 crore and Rs 40 crore respectively. It demerges a part of its business to company XYZ. As a part of such demerger, assets of ABC amounting to Rs 30 Crore are transferred to company XYZ in State of Gujarat while assets amounting to Rs.10 crore only are transferred to XYZ  in State of Maharashtra (Total assets amounting to Rs 40 crore at all-India level are transferred from ABC to XYZ). The unutilized ITC of ABC in State of Gujarat shall be transferred to XYZ on the basis of ratio of value of assets in State of GUJARAT, i.e. 30/60 = 0.5 and not on the basis of all-India ratio of value of assets, i.e. 40/100=0.4. Similarly, unutilized ITC of ABC in State of Maharashtra will be transferred to XYZ in ratio of value of assets in State of Maharashtra i.e. 10/40 = 0.25.

  • As per rule 41(2), the transferor shall also submit the copy of certificate issued by practicing chartered or cost accountant certifying that such transfer has been done with the specific provision of transfer of liabilities.
  • As per rule 41(3), the transferee shall on the common portal, accept the details submitted by transferor and upon such acceptance, the utilized ITC as specified in ITC-02 shall be credited to his electronic credit ledger.
  • As per rule 41(4),the inputs and capital goods so transferred shall be duly accounted for by the transferee in his books of accounts.

Procedures to be followed in case of death of sole proprietor:

Application for cancellation of registration shall be made in form GST REG-16 by legal heir/successor of the deceased. But before that the transferee/successor shall apply for registration under GST Act in REG-01 only thereafter legal heir can file application for cancellation of registration.

Now if legal heir continue the business it will be considered as transfer of business and credit shall be allowed to be transferred as per section 18(3) of CGST Act, read with rule 41 of CGST Rules.GST ITC-02 should be filed before filing application for cancellation of registration. On acceptance by transferee/Successor, Unutilized ITC as specified in ITC-02 shall be credited to the electronic credit ledger of transferee.

Procedure for filing ITC-02

By Transferor after log in to GSTN portal:-

Services>Returns>ITC Forms> Online preparation of ITC-02> Transferor has to entered the GSTIN of transferee and amount of matched ITC to be transferred> Enter the particulars of certifying chartered /cost accountant > Attach the certificate > Upload the form using DSC or EVC.

By transferee after log in to GST portal:-

Services> ITC02- pending for actions> Click on ARN link> Accept/Reject> File it with DSC or EVC for the acceptance of ITC.  On such Acceptance transferred inputs and capital goods should be properly accounted in the books of accounts.

On Acceptance by the acquiring merged entity (transferee), The ITC will be transferred to the transferee and Electronic credit ledger of (transferee) Acquiring Entity will get updated.

Clarification regarding Set-aside matters under Direct Tax Vivad Se Vishwas Act-2020

Sneh Mehta
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Clarification regarding Set-aside matters under Direct Tax Vivad Se Vishwas Act-2020

Guided by “Sabka Saath, Sabka Vikas, Sabka Vishwas”, the Finance Minister Smt. Nirmala Sitharaman had introduced a new No Dispute but Trust Scheme – ‘Vivad Se Vishwas’ in the Budget 2020 in the Lok Sabha on 5th February, 2020. As per the combined reading of the amended The Direct Tax Vivad se Vishwas Bill, 2020 introduced on 14.02.2020 and Clarifications issued by CBDT vide Circular No. 07/2020 on 04.03.2020, the issues regarding the set aside matters were squarely resolved as under:

  1. In case of an order passed by any Appellate Authority with the direction to set aside a matter back to the file of the Assessing Officer [excluding the matters for which fresh assessment i.e. denovo assessment is to be carried on] for giving proper opportunity to the assessee or to carry out fresh examination of the issue with specific direction, the assessee can opt under Vivaad se Vishwas Scheme and pay the disputed tax.
  2. The disputed tax shall be the same tax (including surcharge and cess) calculated on the addition in respect of which the set-aside order was passed as if it was added again by AO.

It is to be noted that issues which are not covered in the Order of the Appellate Authority and therefore are not directed to be set-aside to the file of the Assessing Officer are eligible to be duly settled as per the general provision of this Act.

For better clarification regarding determination of the amount of disputed tax let us understand it through the following example:

Sr. No. Particulars Scenario 1 Scenario 2
I Addition by AO Rs.50000/- Rs. 75,000/-
II Disputed Tax

(Including Surcharge & Cess)

Rs.15,600/- Rs. 23,400/-
III Interest Rs.6,250/- Rs. 8,750/-
IV Decision of CIT(A) Addition Confirmed Addition Confirmed
V Decision of ITAT Addition Confirmed Matter set aside to Assessing officer
VI Option To opt Vivaad Se Vishwas Scheme Can avail Scheme only if further appeal is filled or time limit to file appeal against the order has not expired Can avail the scheme after paying the amount of disputed Tax of Rs. 23,400/-
  1. In such cases assessee while filing the declaration form can indicate that with respect to the set-aside issues the appeal is pending with the Commissioner (Appeals).

Conclusion-  The issues regarding the matters which are set aside to the file of Assessing officer by any Appellate authority can opt the scheme of ‘Vivad se Vishwas’ and simplify the Tax Litigation burdens and get quick redressal .

Disclaimer

This article doesn’t constitute professional advice. The author does not represent that the said information is correct and complete in all regards. The views contained in this article are personal views of the author and may change depending upon underlying facts and circumstances. Judicial and legal authorities may not subscribe to the views of author and can take different view. Readers of this article are advised to take professional advice before taking any course of action or decision. The author does not assume any responsibility or liability in respect of the information contained in this article or for any decision/ course of action readers may take based on information contained in this article.

Can assessee avail Vivad se Vishwas scheme for some of the issues and not for other issues in a pending appeal?

CA Nilisha Shah
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Can assessee avail Vivad se Vishwas scheme for some of the issues and not for other issues in a pending appeal?
Under the proposed Vivad Se Vishwas scheme, a taxpayer would be required to pay only the amount of the disputed taxes and will get complete waiver of interest and penalty provided he pays by March 31, 2020. Those who avail this scheme after March 31, 2020 will have to pay some additional amount of 10% of disputed tax. The income tax (I-T) department has so far approached 5,627 entities to avail of the Vivad se Vishwas, or direct tax dispute settlement, scheme. Those approached include large taxpayers, mostly foreign banks, which have disputes relating to international taxes. If the tax arrears include tax on issues that are excluded from the Vivad se Vishwas, such cases are not eligible to file declaration under Vivad se Vishwas. There is no provision under Vivad se Vishwas to settle part of a pending dispute in relation to an appeal or writ or SLP for an assessment year. For one pending appeal, all the issues are required to be settled and if anyone of the issues make the declaration invalid, no declaration can be filed. Picking and choosing issues for settlement of an appeal is not allowed. With respect to one order, the appellant must choose to settle all issues and then only he would be eligible to file declaration.  
Disclaimer
This article doesn’t constitute professional advice. The author does not represent that the said information is correct and complete in all regards. The views contained in this article are personal views of the author and may change depending upon underlying facts and circumstances. Judicial and legal authorities may not subscribe to the views of author and can take different view. Readers of this article are advised to take professional advice before taking any course of action or decision. The author does not assume any responsibility or liability in respect of the information contained in this article or for any decision/ course of action readers may take based on information contained in this article.

The taxpayer get a refund under Vivad Se Vishwas Scheme if more tax already paid?

CA Nilisha Shah
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The taxpayer get a refund under Vivad Se Vishwas Scheme if more tax already paid?
Under the proposed Vivad Se Vishwas Scheme, a taxpayer would be required to pay only the amount of the disputed taxes and will get complete waiver of interest and penalty provided he pays by March 31, 2020. Those who avail this scheme after March 31, 2020 will have to pay some additional amount of 10% of disputed tax. Under the similar scheme of indirect taxation “Sabka Vishwas”, taxpayer was not allowed refund of amount already paid if tax was paid in excess of the amount payable under the scheme. However, under “Vivad se Vishwas Scheme”, if a tax payer availing the income tax dispute settlement scheme- Vivad se Vishwas – has already paid the disputed tax while litigation is on-going then he/she can get a refund of the amount paid which is in excess of the tax payable under the scheme. Disclaimer This article doesn’t constitute professional advice. The author does not represent that the said information is correct and complete in all regards. The views contained in this article are personal views of the author and may change depending upon underlying facts and circumstances. Judicial and legal authorities may not subscribe to the views of author and can take different view. Readers of this article are advised to take professional advice before taking any course of action or decision. The author does not assume any responsibility or liability in respect of the information contained in this article or for any decision/ course of action readers may take based on information contained in this article.

Amount Payable by Declarant under Vivad se Vishwas Scheme

Khushi Surana
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Amount Payable by Declarant under Vivad se Vishwas Scheme
On February 5, the Honourable Finance Minister Mrs. Nirmala Sitharaman introduced ‘Vivad Se Vishwas’ Bill , within a few days of its announcement of the Finance Budget. It aims to provide for resolution of disputed direct taxes in a speedy manner. Finance Minister had said that “in the past our Government has taken several measures to reduce tax litigations. The Finance Minister had clarified that “under the proposed Vivad Se Vishwas scheme, a taxpayer would be required to pay only the amount of the disputed taxes and will get complete waiver of interest and penalty provided he pays by March 31, 2020. Those who avail this scheme after March 31, 2020 will have to pay some additional amount” The provisions of the Bill regarding the amount payable by the declarant is provided as under: Subject to the provisions of this Act, where a declarant files under the provisions of this Act on or before the last date, a declaration to the designated authority in accordance with the provisions of section 4 in respect of tax arrear, then, notwithstanding anything contained in the Income-tax Act or any other law for the time being in force, the amount payable by the declarant under this Act shall be as under. Interpretation of the provisions of the Bill is as follows: The provision says that those declarants who enroll into the scheme on or before 31.03.2020 will be at an advantage of having to pay a lower amount than those who enroll on or after 01.04.2020. The last date of enrolling into the scheme is 30.06.2020. There are 3 kinds of scenarios possible viz: 1.All eligible Cases (except search u/s 132 or s.132A): Tax arrears = Disputed tax + interest chargeable/ charged on such disputed tax + penalty leviable/levied.
On or before 31.03.2020 On or before 01.04.2020
100% of the Disputed tax 110% of the Disputed tax (subject to the maximum amount of the aggregate of tax arrears, interest and penalty)
2. Cases under search u/s 132 or s. 132A: Disputed tax + interest chargeable/ charged on such disputed tax + penalty leviable/levied.
On or before 31.03.2020 On or before 01.04.2020
125% of Disputed tax (subject to the maximum amount of the aggregate of tax arrears, interest on disputed tax and penalty)  135% of Disputed tax (subject to the maximum amount of the aggregate of tax arrears, interest on disputed tax and penalty)
3. Cases without the disputed tax element: Tax arrears = Disputed interest and/or disputed penalty and/or disputed fee.
On or before 31.03.2020 On or before 01.04.2020
25% of disputed interest/ penalty/disputed fee  30% of disputed interest/ penalty/disputed fee
Note:  In case of taxpayers appeal, if any issue is already covered in favor of the taxpayer by the appellate authority, the amount payable is reduced to 50% of the amount stated above.

Disclaimer

This article doesn’t constitute professional advice. The author does not represent that the said information is correct and complete in all regards. The views contained in this article are personal views of the author and may change depending upon underlying facts and circumstances. Judicial and legal authorities may not subscribe to the views of author and can take different view. Readers of this article are advised to take professional advice before taking any course of action or decision. The author does not assume any responsibility or liability in respect of the information contained in this article or for any decision/ course of action readers may take based on information contained in this article.

Restriction in Availment of Credit in terms of sub rule (4) of rule 36 of CGST Rules,2017

Neha Kabra
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Restriction in Availment of Credit in terms of sub rule (4) of rule 36 of CGST Rules,2017
As per CGST Rule 36(4) : Input tax credit to the recipient in respect of invoices or debit notes that are not reflected in his FORM GSTR-2A shall be restricted to 10 % of the eligible credit available in respect of invoices or debit notes reflected in his FORM GSTR-2A. (Earlier the said restriction was 20% of eligible Invoices). This amendment is effective from 1st January,2020. The said rule had created a lot of confusion among the taxpayers therefore, a clarifying circular as stated below was provided. Various issues relating to implementation of the said sub-rule have been examined and the clarification in Circular No. 123/42/2019 :  
  1. The restriction is not imposed through the common portal and it is the responsibility of the taxpayer that credit is availed in terms of the said rule and therefore, the availment of restricted credit in terms of sub-rule (4) of rule 36 of CGST Rules shall be done on self-assessment basis by the tax payers.
  2. The restriction of availment of ITC is imposed only in respect of those invoices / debit notes. Therefore, taxpayers may avail full ITC in respect of IGST paid on import, documents issued under RCM, credit received from ISD The restriction of 36(4) will be applicable only on the invoices / debit notes on which credit is availed after 09.10.2019.
  3. The taxpayer have to ascertain the ITC from his auto populated FORM GSTR 2A as available on the due date of filing of FORM GSTR-1 under sub-section (1) of section 37. i.e., 11th of the succeeding month for monthly return filers and for quarterly return filers last day of the month succeeding the end of the quarter.
  4. The ITC to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers, shall not exceed 10 per cent (Earlier the said restriction was 20% of eligible Invoices) of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers.
  5. The balance ITC may be claimed by the taxpayer in any of the succeeding months provided details of requisite invoices are uploaded by the suppliers. He can claim proportionate ITC as and when details of some invoices are uploaded by the suppliers provided that credit on invoices, the details of which are not uploaded remains under 20 per cent of the eligible input tax credit, the details of which are uploaded by the suppliers.
  The circular though provided clarification on some questions of taxpayers, it failed to address the situation as to how the credit will be availed where the supplier is Quarterly return filer and the recipient is monthly return filer. This mechanism would have a great impact on the working capital of the taxpayers. Restriction imposed in Rule 36(4) will certainly impact working capital of taxpayers as they must pay more taxes when suppliers file belated returns in Form GSTR-1.Further, the taxpayer would not be able to claim refund of excess tax paid by them due to default of the suppliers. Also, this reconciliation exercise of ITC is going to consume lot of man hours every month. Even after the issuance of a clarificatory circular the questions which remain unanswered seem to be plenty. The practical implementation of this rule looks very challenging and the trade and industry should brace themselves to ensure proper compliance with the rule to avoid uncertainties and litigation to the extent possible. The practical issues to keep GSTR 2A at different dates in soft/hard form and compare the same with the previous ones to take the fresh credits added subsequently and to ensure the cap set under Rule 36 (4) has complied, would make the compliance of this rule cumbersome. The author’s advice for the compliance of this rule is to take the credit as reflecting in GSTR2A by matching it to the invoices as shown in their purchase registers. Disclaimer: This article doesn’t constitute professional advice. The author does not represent that the said information is correct and complete in all regards. The views contained in this article are personal views of the author and may change depending upon underlying facts and circumstances. Judicial and legal authorities may not subscribe to the views of author and can take different view. Readers of this article are advised to take professional advice before taking any course of action or decision. The author does not assume any responsibility or liability in respect of the information contained in this article or for any decision/ course of action readers may take based on information contained in this article.

Clarifications on provisions of the Direct Tax Vivad se Vishwas Bill, 2020

itatorders Admin
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Clarifications on provisions of the Direct Tax Vivad se Vishwas Bill, 2020
The Central Board of Direct Taxes ( CBDT ) has issued clarifications on Direct Tax Vivad se Vishwas Scheme, 2020. During the Union Budget. 2020 presentation, the ‘Vivad se Vishwas’ Scheme was announced to provide for dispute resolution in respect of pending income tax litigation. Pursuant to Budget announcement, the Direct Tax Vivad se Vishwas Bill, 2020 (Vivad se Vishwas) was introduced in the Lok Sabha on 5th Feb 2020. The objective of Vivad se Vishwas is to inter alia reduce pending income tax litigation, generate timely revenue for the Government and benefit taxpayers by providing them peace of mind, certainty, and savings on account of time and resources that would otherwise be spent on the long-drawn and vexatious litigation process. Subsequently, based on the representations received from the stakeholders regarding its various provisions, official amendments to Vivad se Vishwas have been proposed. These amendments seek to widen the scope of Vivad se Vishwas and reduce the compliance burden on taxpayers. The CBDT has addressed the several queries have been received from the stakeholders seeking clarifications in respect of various provisions. To read the full text of the Clarifications issued by CBDT Click below. CBDT issue Clarifications on Direct Tax Vivad se Vishwas Scheme, 2020
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