Tax Updates January 2020 – 07.01.2020
1. If assessee owns property jointly with two or more persons then assessee can’t use ITR 1 and ITR 4 notified for AY 2020-21.
2. MCA vide notification dated 3rd January 2020 amends Rule 8A and provides that every private company which has a paid-up share capital of ten crore rupees or more shall have a whole-time company secretary. Earlier the limit of paid-up share capital of five crore rupees or more.
3. Company Act Rule 9 is also amended by MCA to extend the scope of Secretarial Audit Report and now it is mandatory also for every company having outstanding loans or borrowings from banks or public financial institutions of 1,000 crore rupees or more. Before amendment, there were only two criteria viz.
a). Paid-up share capital of 50 crore rupees or more; or
b). Turnover of 250 crore rupees or more.
4. Branch Office is entitled to avail full ITC of Tax Paid by Head office
a). In the case of M/s. Sanghvi Movers Limited it was held that Branch office is very much entitled to claim the ITC of the tax paid by its Head office.
b). In this case, the appellant engaged in the business of providing medium-sized heavy-duty cranes on rental/lease/hire basis to its clients,
c). The Appellant receives a final work order from its customers for providing cranes on hire charges. In turn, the appellant raises an internal work order on Head Office for providing required cranes on hire charges basis,
d). Head Office discharges IGST on value of hire charges recovered from appellant treating same as inter-state supply of service, in such a situation, appellant is eligible to avail full Input Tax Credit (ITC) of tax paid by Head Office on lease/hire of cranes to it for furtherance of business, subject to other conditions of eligibility to such credit.
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5. CBIC ask DGFT to tighten the refund process after some exporter holding “Star” status mis-avail IGST refund based on fake invoices.
a). The Central Board of Indirect Taxes and Customs (CBIC) has asked the Directorate General of Foreign Trade to make the granting credit system more strong with a view to curb tax frauds.
b). The Board used data analytics and matched data with GST, income tax, and customs to identify risky exporters.
c). The purpose of the whole exercise is to avoid fraudulent availment of IGST refunds, especially in the case of “star exporters”
d). Since an exporter enjoying ‘star’ status is allowed many facilities, including reduced customs inspections, it makes for a strong case for DGFT to continuously (or annually) seek a compliance and verification report from other regulators.,” the CBIC said in a letter to the DGFT earlier this month.
e). The move comes following investigations into the mis-availment of IGST refunds by certain exporters holding ‘star’ status.
g). The move comes after an exporter with over Rs 50 crore of exports of readymade garments have taken a refund of Rs 3.90 crore while the entity’s total GST payment in cash was merely Rs 1,650.
h). Investigators are of the view that all such cases involve fake invoicing and fraudulent tax credits, which have been encashed through the facility of IGST refunds, sources said.
i). The present ongoing exercise by CGST field formations has revealed serious issues in compliance behavior in some cases.
6. Consultant Offering Services Related to Customs, DGFT Along With Facilitating Duty Credit scrips are ‘Mixed Supply’
a). In the case of RB Shah Enterprise India Private Limited applicant offers various services to clients such as services of Customs and DGFT compliances along with the contract of duty credit scrips facilitation & its accountability, documents preparation related to duty payments like Bill of Entry, etc.,
b). The court found that the stated services are supplied along with supplying the duty credit scrip as seen in the invoice and service order. The applicant is billing the client for a single lumpsum payment. It is seen that the duty credit scrip is purchased by the applicant by means of transfer, which means that the scrip belongs to the applicant and he can import goods against the scrip if he chooses so.
c). Document Management system (DMS, i.e., Storage of Hard copies, Soft Copies and Data Entries), Goods transport track, redemption of scrips and refund of additional duties from Customs, if any, it has to be regarded as a case of ‘mixed supply’ as defined under section 2(30) and rate of tax to be charged is highest rate of services supplied which is 18 percent under section 8 of Act;
d). The Authority of Advance Ruling ( AAR ) in Tamil Nadu held that the mixed supply of services that are billed at a single price is liable for the highest GST rate of the services supplied i.e. 18%.
Also See, “Tax updates January 2020 – 06-01-2020
Also See, “Reminder Statutory Due Dates Chart for January 2020
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