The Government has notified the effective date of implementation of TCS provisions in GST returns w.e.f. 1.10.2018 (unless extended). This requires E-commerce operators like Amazon, Flipkart, etc. to collect TCS on the Transaction made by the suppliers through their portals w.e.f. the same date. If any under reporting is found, the same would be penalized by adding to the account of the supplier. The learned authors looks at the related provisions to bring attention to them so as to avoid penal actions.
As many transactions nowadays are happening through e-commerce mode, their day to day use in life is increasing. But with the implementation of GST, selling and purchase through GST is not as easy as it was earlier. There are many boundaries and restriction while transacting through E-Commerce. We will discuss here the provisions of TCS on E-commerce Operators.
E-commerce is the buying and selling of goods and services on the internet electronically and making payment electronically or via any other mode. Section 2(44) of CGST Act defines the term ‘e-commerce’ as the supply of goods or services or both, all the traders/dealers selling goods/services online would need to get registered under GST even if their turnover is less than 20 Lakh for claiming the tax deducted by E-commerce operators.
Table of Contents
1. For E-Commerce Operator
2. For E-Commerce suppliers
3. Liability to collect TCS
4. Rates of TCS
5. Notice to the E-Commerce Operators
6. Conclusion
Firstly it is important to understand the difference between E-commerce Operators and E-Commerce Suppliers:
1. E-Commerce Operator
An entity like Amazon, Paytm-Mall, and Flipkart etc. that owns operates or manages digital platform for e-commerce. Section 2(45) of the CGST Act, defines “E-commerce operator” as any person who owns, operates or manages digital or electronic facility or platform for e-commerce.
2. E-Commerce suppliers
An entity that supplies goods or services on a digital ecommerce platform, means any entity which is supplying goods or services through E-Commerce operator and will be termed as E-Commerce Suppliers.
3. Liability to collect TCS
As per provision of section 52 of the CGST Act, every e-commerce operator, not being an agent is required to collect tax known as TCS on the net taxable value in case a supplier supplies some goods or services through its portal and the payment for that supply is collected by the e-commerce operator.
Tax is to be collected on net taxable value of goods or services supplied by other suppliers through e-commerce operator.
Tax is to be collected on net taxable value of goods or services supplied by other suppliers through e-commerce operator.
Explanation to section 52(1) clarifies that “net value of taxable suppliers” shall mean the aggregate value of taxable suppliers of goods or services or both made during any month by all registered persons through the e-commerce operator as reduced by the aggregate value of taxable supplies returned to the suppliers during the said month. Further, specified services on which ecommerce operator itself is liable to pay GST under section 9(5) is not included in the net taxable value and thus, no tax is to be collected on such amount.
4. Rates of TCS
An e-commerce operator needs to collect tax @2% (1% CGST + 1% SGST) from the supplier on the net taxable value of intra state supply of goods or services supplied through its portal.
Any dealer/traders selling goods/services online would get the payment after deduction of 2% tax. They would need to deposit the tax deducted by the 10th day of the next month.
Mr. X is a trader who sells his ready-made clothes online on Flipkart. He received an order for Rs.10,000 inclusive of tax and commission. Flipkart charges a commission of Rs.200. Flipkart would, therefore, need to deduct 2% tax (TCS) on the amount, including the money paid as commission (Rs. 200) and GST (Rs.1800 when GST @ 18%) Flipkart would thus be deducting tax for Rs.200 (2% of Rs.10000)
5. Notice to the E-Commerce Operators
A Deputy Commissioner or a person above the rank of Deputy Commissioner can issue a notice to the E-Commerce Operator asking him to furnish details regarding the volume of Goods/Services supplied, rate and value, goods still lying in godown etc.
On receiving such notice the operator is required to furnish such details within 15 working days. In case the operator fails to furnish such information within 15 days, he would be liable for penal action and penalty upto Rs.25000.
Further other relevant points can be noted out which are as follows:
6. Conclusion
Subject to above there are many other rules which are required to be followed by E-Commerce Operators. The government has notified the effective date of implementation of TCS Provisions in GST Returns with effect from 1.10.2018 (unless otherwise extended). Thus E-Commerce Operators like Snapdeal, E-bay etc. have to collect TCS on the transactions made by the suppliers through such portals w.e.f. 1.10.2018.
Further E-Commerce operators are required to timely deposit the TCS and also required to furnish monthly and annual return of TCS. Further sale entered in GSTR-1 will be compared with the report of supplies by E-Commerce operators furnished in GSTR-8. If any under reporting is found, the same will be penalized by adding to the account of the supplier.
Thus TCS provisions need to be carefully looked at as any discrepancies found may lead to penalizing actions.
Need personal assistance in dealing with GST registration & filing? Get in touch with ADCA - One of the best ca firms in Bangalore.
Table of Contents
1. Prologue
2. Registration
3. Input tax Credit
4. Itemised Sales
5. Slump Sale
6. Liability of companies w.r.t. order of court or Tribunal
7. Sale of Securities
1. Prologue
Corporate Restructuring through amalgamation, arrangement, mergers, acquisition and takeover has become vital to corporate strategy to day. To attain accelerated growth, corporate in India now a days resort more towards restructuring strategies. The Goods and Services Tax (GST) has been envisaged as an efficient tax system and it affects the structuring of the various operations in India. Corporate transaction in pursuance of amalgamation, arrangement, mergers, acquisition and takeover are also affected by GST. Thus, the industries are required to analyse the provisions of the GST Law and its impact on their business.
2. Registration
Registration of any business entity under the GST Law implies obtaining a unique number from the concerned tax authorities for the purpose of collecting tax on behalf of the government and to avail Input tax credit for the taxes on his inward supplies. By virtue of section 22(3) of the CGST Act, where a business carried on by a taxable person registered is transferred, the transferee or the successor would be liable to be registered with effect from such transfer or succession and he will have to obtain a fresh registration with effect from the date of such transfer or succession.
Section 22(4) states that if the business is transferred as an order of a High Court, Tribunal or otherwise pursuant to –
Sanction of scheme
Arrangement for amalgamation
De-merger of two or more companies,
The transferee would be liable to obtain registration from the date on which the Registrar of Companies issues a certificate of incorporation giving effect to such order of the High Court or Tribunal.
3. Input tax Credit
Section 18 enshrines the provisions regarding availment of input tax credit by taxable person. Section 18(3) of the CGST Act as well as rule 41 of the CGST Rules stipulates that in case of change of constitution of a registered taxable person on account of sale, merger, demerger, amalgamation, lease or transfer of business, the registered person would be allowed to transfer the unutilized input tax credit to transferor. In this context, the registered person is required to furnish the details of sale, merger, de-merger, amalgamation, lease or transfer of business in Form GST ITC-02 electronically on the Common Portal along with a request to transfer the unutilized input tax credit lying in his electronic credit ledger to the transferee. The transferee would accept the details so furnished by the transferor on the Common Portal and, upon such acceptance, the unutilized credit would be credited to his electronic credit ledger.
In the case of demerger, the input tax credit would be apportioned in the ratio of the value of assets of the new units as specified in the demerger scheme.
4. Itemised Sales
Where assets and liabilities of a business are transferred by way of assigning a value to each item then it is called as itemized sale. Such sale involves the disposal of key or selected business assets. Under the merger and amalgamation, value of each asset is calculated separately i.e. the whole business is transferred but item wise.
Transaction of itemized sale is supposed as supply under the ambit of GST and individual asset would covered under the definition of goods as per schedule II of the CGST Act. Thus, GST would levy on itemized sale.
5. Slump Sale
Slump sale will have the same treatment as normal supply. Under the GST regime tax is payable by the registered taxable person on the supply of goods and/or services. The term ‘Supply’ is wide in its import cover all forms of supply of goods or services or both that includes sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. Further, supply covers the activities to be treated as supply of goods or supply of services as referred to in Schedule II. Accordingly, transfer of business assets is supposed as supply.
The transfer of business is amounted to transfer of a part of the assets and not the whole business. Moreover, para 4© of the schedule II specifies that in case business is transferred as a going concern then it would not constitute as supply. However, in pursuance of Notification No. 12/2017 Central tax (rate) dt 28.06.2017 services, which are provided by way of transfer of a going concern as a whole or an independent part thereof, are exempted from GST. Thus, no GST would applicable on slump sale transaction as transfer of business on a going concern basis.
6. Liability of companies w.r.t. order of court or Tribunal
According to section 87 of the CGST Act, when two or more companies are amalgamated or merged in pursuance of an order of court or of Tribunal or otherwise and the order is to take effect from a date earlier to the date of the order and any two or more of such companies have supplied or received any goods or services or both to or from each other during the period commencing on the date from which the order takes effect till the date of the order, then such transactions of supply and receipt would be included in the turnover of supply or receipt of the respective companies and they would be liable to pay tax accordingly.
Such two or more companies would be treated as distinct companies up to the date of order and the registration certificates of companies would be cancelled with effect from the date of the order.
7. Sale of Securities
In most case, the usual mode is the acquiring of company by making an offer by the transferee company to the shareholders of the transferor company to purchase their securities, in the transferor company, at a price stated for the purpose. The definition of goods as well as services under the GST regime do not cover the securities, therefore GST would not be levied on the sale of securities.
8. Summing Up
Goods and Services Tax have impact on each and every industry and business in India. Transfer of business under mergers, amalgamation and acquisitions do not attract any tax liability under GST regime, they are unlikely to impacted by indirect taxation. For calculating the Capital gains, the holding period is calculated from the date of original purchase of shares. The companies who opt for merger and acquisition, the liability to register arises on the date of transfer for transferee of a business as going concern. Further, GST Law stipulates transfer or sale of business assets can take place either as a slump sale or itemized sale. In case of change of constitution of a registered person on account of sale, merger, demerger etc, the unutilized ITC would be allowed to be transferred to transferee. Thus, GST Law brought the immense clarity on the taxability of business transfer and related aspect thereof.
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2. Filing Of NIL GSTR 3B Through SMS
3. Special Economic Zones - Related Issues Under GST
Need personal assistance in dealing with GST Registration & filing? Get in touch with ADCA - One of the best GST Consultants in Bangalore.
Introduction:
Many people have question about maximum cash they can give or accept without facing any problem under Income Tax Act.
People have lot of doubts on one can accept cash and give cash whether in form of loan, advance, deposit or against a business transaction.
Under Income Tax Different sections of IT ACT which prohibits dealing in cash transactions or limits the value of cash transactions.
These sections define the value of cash transactions that are allowed as per income tax Act. Remember there is no constitutional ban on dealing in cash, only thing is that the income tax department assesses cash transactions in different manner putting penalties on cash transaction done.
As per Section 269ST, any person who enters into a transaction of Rs.2 Lakh or above in cash, will be liable to a penalty of an amount equivalent to the amount of transaction.
For example
If you buy an expensive watch for cash worth Rs.5 Lakh, it is the shopkeeper who receives payment in contravention of section 269ST will have to pay the tax (penalty) of Rs.5 Lakh. So here the tax rate is 100%.
Though this new section on cash Transaction limit sounds simple, we need to go through it in details, as I believe that this may have quite an impact on our daily financial lives.
2. What does section 269ST say ?
With effect from 1st April, 2017, no person shall receive an amount of Rs.2 Lakh or more;
The new Cash transaction limit is not applicable, if a person receives the amount through an Account Payee Cheque (or) an Account Payee Bank Draft (or) through use of electronic clearing system through a bank account. (Look like, any receipts done through e-Wallets like Paytm, credit cards etc, may also be hit by this new amendment, need more clarity though)
Kindly note that Penalty under section 271D will be imposed on a person who receives a sum of Rs.2 Lakh and above in cash. The extent of penalty will be a sum equal to amount of such receipt. The said penalty shall however not be levied if the person proves that there were good and sufficient reasons for such contravention.
3. Section 269ST & Rs.2 Lakh cash Transaction Limit: Examples
Let us understand the above three points with examples;
Single Person
Cash receipt of Rs.2 Lakh or more, from a single person in a day is not allowed even if the amount has been paid through multiple transactions during the day which are below Rs.2 lakh.
For example
Mr.X buys a gold chain worth Rs.2 Lakh and pays the amount by cash to Mr.Y on a single day in 4 equal installments of Rs.50,000 each. As Mr.Y accepted cash worth Rs.2 lakh from a single person and in a single day, section 269ST is applicable in this case. Mr.Y has to pay a penalty of Rs.2 Lakh.
Single Transaction
Cash receipt of Rs.2 Lakh or more which are related to a single transaction are prohibited.
For example
Mr.A goes through a medical surgery and the hospital charges him a bill of Rs.4 Lakh. Mr.A clears the bill in 4 installments if Rs.1 lakh each on four different dates. Here, the cash receipt got by hospital are less than Rs.2 Lakh and have been received on different dates.
Whether this transaction violates section 269ST? – yes. Hospital has to pay the penalty. Because, they received the payments with respect to single bill/transaction. So, spitting of payments over several days is prohibited.
Single Event/Occasion
Cash transaction or cash receipts related to a single event or occasion, cannot be more than Rs.2 Lakh.
For Example
X gets married to Y. On their wedding occasion, their relatives gifted Cash amount worth Rs.10 Lakh on different dates. Even if we assume that each person has gifted cash worth less than Rs.2 lakh, are these receipts come under the purview of Section 269ST? Is penalty applicable?
Yes, penalty can be levied. Here, marriage is a ‘single occasion’ and cash gift worth Rs.2 Lakh or more can not be received from relatives and other person.
4. Other Important Points
* Based on interpretation of section 269 ST, payment modes like bearer cheque and self-cheque will also be considered on par with Cash based transactions only.
* It has been clearly stated that penalty (if any) is chargeable to an individual who violates section 269ST, even if you do not have PAN and/or is not a tax assesse.
* The restriction of receipt of money in cash of Rs.2 Lakh or above in cash is applicable irrespective of whether it is for personal/business purpose, capital or revenue in nature, tax-free or taxable income.
* Kindly note that the payer of money is not liable to pay any penalty. It is the receiver of cash who has to bear the penalty under section 271DA.
* Donations in cash exceeding Rs.2,000 are not permitted (Donations can be claimed under section 80G)
* Premiums on Health insurance policies paid in cash cannot be claimed as deduction under section 80D.
* Loans or Deposits cannot be repaid in cash in excess of Rs.20,000 or more.
*Payment of above Rs.10,000 per person, cannot be made for any business payment towards any expenses (or) purchase of capital asset.
* One should not accept a loan or deposit or sale consideration of immovable assets in cash in excess of Rs.20,000.
5. Restriction on capital Expenditure for business in cash above Rs.10,000 (Section 32 of the income Tax Act, 1961)
Where an assessee incurs any expenditure for acquisition of a depreciable asset in respect of which a payment ( or aggregate of payment made to a person in a day ), otherwise than by an account payees cheque/draft or use of electronic clearing system through a bank account, exceeds Rs.10,000. Such a payment shall not be eligible for normal/additional depreciation.
6.Reduction in the limit of Cash Payment to Rs.10,000 in a Day (Section 40A (3) & 40A(3A) of the Income Tax Act, 1961)
The monetary limit on revenue expenditure in cash has been reduced from Rs.20,000 to Rs.10,000 (there is no change in the monetary limit pertaining to cash payment upto Rs.35000 to transport Contractors). Few exceptions are also provided in Rule 6DD of the Income Tax Rules. Consequently, any expenditure in respect of which payment (or aggregate of payment made to a person in a day), otherwise than by an account payee cheque/ draft/use of electronic clearing system through a bank account, exceeds Rs.10,000, no deduction shall be allowed in respect of such payment under sections 30 to 37 of Income Tax Act, 1961.
7.Conclusion
As a business owner or as an economic soldier we should try to avoid cash transactions. Cash is the main source for bribes at lower level of bureaucracy. The best we can do is to minimize cash transactions.
Read More
1. All You Need To Know About Filing ITR With Or Without Form 16
2. A Tax Guide For A YouTube Vlogger
3. Cash Transaction Under Income Tax Law
Have a query or comment to make? Get it answered through call or email from ADCA, one of the best Chartered Accountants In Bangalore.
Understanding the various allowances, deductions, and exemptions available under the Income Tax Act can help salaried individuals optimize their taxes and maximize savings. Let's break down the essential elements of income tax exemptions, reimbursements, and deductions to help you file your tax return with ease
The new tax regime introduced in FY 2023-24 offers lower tax rates by eliminating most of the traditional exemptions and deductions. However, a few allowances and deductions remain available under the new regime, including:
Conveyance Allowance: Received to meet expenditure on travel as part of employment.
Exemption on Voluntary Retirement (Section 10(10C)), Gratuity (Section 10(10)), and Leave Encashment (Section 10(10AA)).
Interest on Home Loan (Section 24): Deduction on interest paid for a home loan on let-out property.
Employer’s Contribution to NPS (Section 80CCD(2)).
Standard Deduction of ?50,000 for salaried individuals.
Deduction under Section 57(iia) for family pension income.
Agniveer Corpus Fund under Section 80CCH(2).
Under the old tax regime, taxpayers can avail themselves of various exemptions and deductions. Let's explore these:
1. Standard Deduction
Every salaried individual is eligible for a standard deduction of ?50,000 from their salary income.
2. Allowable Deductions
Here’s a detailed breakdown of various allowances that can be claimed for tax exemption under the old regime:
House Rent Allowance (HRA): If you receive HRA and pay rent for accommodation, you can claim an HRA exemption. The exemption is the minimum of:
Actual HRA received.
50% of annual salary (basic + dearness allowance) if residing in a metro city, or 40% if residing elsewhere.
Excess of rent paid over 10% of annual salary.
Note: If no rent is paid, the entire HRA is taxable.
Leave Travel Allowance (LTA): Can be claimed for travel within India. Exemption is available on two journeys in a block of four years, covering only travel expenses for the shortest route to the destination.
Children Education Allowance: An exemption of ?100 per month for up to two children. Additional exemption is available for hostel expenses up to ?300 per month.
Other Allowances (Section 10(14)(i)): Includes attire, telephone, vehicle, and helper allowances, which are exempt to the extent of actual expenditure incurred.
3. Medical Expenditure and Insurance Premium (Section 80D)
Medical Insurance Premium: You can claim a deduction of up to ?25,000 for insurance premiums paid for yourself, spouse, and dependent children. An additional ?50,000 deduction is available for senior citizen parents.
Medical Expenditure: For senior citizens without health insurance, medical expenses of up to ?50,000 can be claimed.
4. Interest on Home Loan (Section 80C and Section 24)
Section 80C: Deduction up to ?1.5 lakh for principal repayment of home loan.
Section 24: Deduction up to ?2 lakh on interest paid for a self-occupied property. If the property is let out, there is no upper limit.
5. Deduction for Loan for Higher Studies (Section 80E)
Interest paid on education loans for higher studies can be claimed as a deduction under Section 80E. This benefit is available for up to 8 years or until the interest is fully repaid.
6. Deduction on Savings Account Interest (Section 80TTA)
Interest earned on savings accounts up to ?10,000 is exempt under Section 80TTA. For senior citizens, the exemption limit under Section 80TTB is ?50,000.
7. Tax Treatment on Notice Pay and Joining Bonus
Notice Pay: The amount paid by an employee to the employer for not serving the full notice period is taxable as salary income.
Joining Bonus: It is treated as a part of salary income and is fully taxable.
Understanding the various exemptions and reimbursements available to salaried individuals can significantly reduce your tax liability. Whether you opt for the old or new tax regime, proper planning and documentation are key to maximizing your tax benefits.
If you need expert guidance on tax planning, filing, and management, Anil D'Souza & Associates (ADCA) is here to assist. Our team of professionals can provide tailored solutions for all your tax-related needs. Get in touch with us today for a seamless tax filing experience.
1. What is the exemption limit for reimbursement?
The exemption limit for reimbursements depends on the type of allowance or reimbursement. For instance, medical reimbursements are tax-free, up to ?15,000 per year, while HRA exemption varies based on salary, rent, and location.
2. Is reimbursement of salary taxable?
Reimbursements that are directly related to employment expenses and are supported with valid bills and receipts (e.g., travel, telephone) are generally not taxable. However, excess or unsubstantiated reimbursements are taxable.
3. Is tax deducted on reimbursement?
Employers usually deduct taxes on taxable reimbursements, such as LTA or non-allowable expenses, as part of the salary income. Non-taxable reimbursements do not attract TDS.
4. How do I claim tax reimbursement?
Tax reimbursement is claimed by providing necessary proofs (e.g., rent receipts, travel tickets) to your employer. They will then adjust your taxable salary. You can also claim these during ITR filing if missed through the employer.
5. How do I claim my reimbursement?
Submit the required documentation (receipts, bills, etc.) to your employer to claim the reimbursement. Ensure all expenses are genuine and related to your work.
As part of updating its registry Ministry of Corporate Affairs (MCA) has provided for filing of KYC by all directors on an Annual Basis. MCA has notified Companies (Appointment and Qualification of Directors) Fourth Amendment Rules 2018 on July 5th 2018, which will come into effect from July 10th 2018. Form DIR-3 KYC has been notified for the purpose.
Below is the FAQ on this compliance :
Who is required to file DIR-3 KYC ?
Every person holding a DIN on the last day of financial year is required to file a DIR-3 KYC. Even if a person is holding DIN and not a director in any of the companies, he/ she is required to file DIR-3 KYC.
What is due date? What is extended due date for financial year ending March 31st 2018 ?
Due is date is April 30th of following financial year. For Financial year ending March 31st 2018, due date has been extended to August 31st 2018.
Consequence of not filing DIR-3 KYC? How to rectify non-compliance?
If the DIR-3 KYC is not filed within due date, DIN would be marked as deactivated, and no filing will be allowed with such DIN. To remove the defect DIR-3 KYC need to filed with late fee upon which DIN would activated. Late fees has been prescribed at Rs 5,000/-
Who has to Certify Form DIR- 3 KYC ?
Form DIR 3 KYC need to be certified by DSC of Director and DSC of Practicing Professional.
What are the KYC Documents :
i Photo in JPEG format.
ii. Proof of Identity- self attested :
iii. Proof of Residence – self certified – any of following
iv. Valid Person Email id and Mobile No. Same will be verified by OTP.
Filing your KYC could be hasslesome and time consuming. Mr. Anil D'Souza of ADCA, a higly qualified CA in Bangalore, can help you with that.
Due date for Filing Income Tax Return & Consequences of not filing IT Return within Due Date
The Income Tax Depart Act has prescribed various due dates for filing of Income Tax Return by a different class of assessees. Section 139 of Income Tax Act, 1961 provides for following different due dates for different class of assesses:
Belated filing of Income Tax Return & consequence of not filing IT return within the due date :
Belated Filing :
If the return is not filed within due date same can still be filed within the end of Assessment year, i.e March 31st of the year following the financial year. For example, if Return pertain to Financial year 2017-18, the assessment year is 2018-19, and if the return is not filed within due of July 31st or Sep 30th of 2018, belated return can still be submitted by March 31st 2019.
Consequences of not filing IT return within the due date :
1. Late fees of Rs 5,000 is applicable if the return is filed by December 31st of Assessment Year / Late fees of Rs 10,000 is applicable if return is filed after December 31st of Assessment Year. ( Late fee will be limited to Rs 1,000 for those with income up to Rs 5 lakh).
2. Carry forward of losses (other than loss under House Property) are not allowed unless return is filed within due date.
3. Interest under section 234A @ 1% per month becomes applicable on amount tax payable after the due date. This is in addition to interest @ 1% per month under section 234B. So on any tax which is not paid within the due date for filing return, interest required to paid @ 2% per month on taxes paid after due date. It is advisable to deposit tax before the due date, even if for some reason return can’t be filed before due date to avoid interest @ 2% per month.
Read More
1. All You Need To Know About Filing ITR With Or Without Form 16
2. A Tax Guide For A YouTube Vlogger
3. Cash Transaction Under Income Tax Law
Let ADCA (Excellent team of chartered accountants near HSR layout) do the ITR filing fo you to get the maximum benefits of tax saving.
In the case of Pr.CIT, New Delhi v. Delhi Airport Metro Express Pvt.Ltd. [ITA No. 705/2017, decided on 5-9-2017] the Commissioner opined that assessing officer allowed depreciation in excess of what was assessing officer to make fresh assessment. The Delhi High Court held that for the purpose of exercising jurisdiction under section 263 of the Act, the conclusioin that the order of the assessing officer is erroneous and prejudicial to the interests of the Revenue has to be preceded by some minimal inquiry. That basic exercise of determining as to what extent the depreciation was claimed in excess has not been undertaken by the Pr. CIT. He had exercised the second option available to him under section 263(1) of the Act by sending the entire matter back to the assessing officer for a fresh assessment. That option, in the considered view of the Court, can be exercised only after the Pr. CIT undertakes an inquiry himself. The High Court held that revision was not justified.The learned author discusses the case in detail.
Subject to it’s Explanations, section 263(1) of the Income Tax Act,1961 (‘Act’) states that the principal Commissioner may call for and examine the record of any proceeding under the Act, ad if he considers that any order passed therein by the assessing officer is erroneous on so far as it is prejudicial to the interests of the revenue, he may after giving the assessee an opportunity of being heard and after such order thereon as the case justify, including an order enhancing or modifying the assessment, or canceling the assessment and directing a fresh assessment.
More recently, in Pr. CIT, New Delhi v. Delhi Airport Metro Express pvt.Ltd. [ITA No. 705/2017, decided on 5-9-2017], the short question raised by the Revenue was whether the ITAT was justified in setting aside the order of the Principle Commissioner of Income Tax (‘Pr. CIT’) passed under section 263 of the Act in respect of assessment year 2011-12 setting aside the original assessment order dated 31-12-2013 passed by the Assessing Officer (‘AO’) under section 143(3) of the Act.
2. Facts of the case
The brief facts in the above –mentioned case were that the assessee being a concessionaire of the Airport Metro Express Project of the Delhi Metro Rail Corporation Ltd. (‘DMRC’) under a Build-Operate-Transfer (‘BOT’) Scheme, had accepted the concession for a period of 30 years During the assessment year in question, the assessee claimed depreciation of Rs.112,29,74,447, on fixed assets of Rs.15,60,48,17,189 50% of the eligible depreciation rates since, during the assessment year in question, the assets were used for less than 180 days. The assessing officer framed the assessment under section 143(3) of the Act allowing depreciation as claimed by the assessee.
The case of the revenue was that the assets were developed under the BOT scheme and the assessee was not eligible to claim depreciation as it was not the owner of the assets. The Revenue contended that the land for the project was handed over by the DMRC to the assessee as Concessionaire of the basic structure was also done by the DMRC.
The case of the assessee was that during the assessment year in question it had purchased and installed plant and machinery and such plant and machinery was legally owned by it. It was further contended that since such assets were used for the purpose assessee’s business,it was entitled to claim depreciation under section 32 of the Act.
The Pr. CIT, in exercise of powers under section 263 of the Act issued a show cause notice (SCN) dated 16-3-2015 to the assessee pointing out that if the value of these fixed assets were to be amortized evenly over a period of 30 years, the amount of to be amortized would only be Rs.52,01,60,572 for each year. Therefore, the depreciation allowed to the assessee was in excess by Rs. 60,28,13,875 and, to that extent, the order passed by the assessing officer was prejudicial to the interest of the Revenue. In reply to the SCN, the assessee took the stand that, interest of the Revenue. In reply to the SCN, the assessee took the stand that, during the assessment year in question, it “had purchased the assets from independent vendors, out of its own funds for settings up the project.
Thereafter, order dated 30-3-2016 was passed by the Pr. CIT.
3. Thus held the court
The learned Judges of the Delhi High Court observed that for the purpose of exercising jurisdiction under section 263 of the Act, the conclusion that the order of the assessing officer is erroneous and prejudicial to the interests of the assessing officer is erroneous and prejudicial to the interests of the Revenue has to be preceded by some minimum inquiry. In fact, if the Pr. CIT was of the view that the AO did no undertake any inquiry, it became incumbent on the Pr. CIT to conduct such inquiry. All that Pr. CIT had done in the order was to refer to the Circular of the CBDT and conclude that “in the case of the assessee company, the assessing officer was duty-bound to calculate and allow depreciation on the BOT in conformity of the CBDT Circular No. 9/2014 but the assessing officer is erroneous insofar as prejudicial to the interest of revenue”. In the considered view of the Court,this can hardly constitute jurisdiction under section 263 of the Act. In the context of the present case depreciation on assets like land and building, it was incumbent upon the purchased and installed by the assessee out of its own funds during the assessment year in question and, which were those assets that were handed over to it by the DMRC. That basic exercise of the determining as to what extent the depreciation was claimed in excess has not been undertaken by the Pr. CIT. He had exercised the second option available to him under section 263(1) of the Act by sending the entire matter back to the assessing officer for a fresh assessment. That option, in the considered view of the Court, can be exercised only ofter the Pr. CIT undertakes an inquiry himself in the manner indicated hereinbefore. That was missing in the present case.
Finally, the Delhi High Court held, in respect of the appeal, that the ITAT was not in error in setting aside the order of the Pr. CIT under section 263 of the Act, no substantial question of law arose herein.
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Authorised Representative plays a crucial role by appearing as a legal representative of another person in adjudicating proceedings under the GST regime. Section 116 provides qualification,disqualification and other procedures relating to authorised representative which are articulated under this article.
Authorised Representative is a authorised by a person to appear on his behalf in any proceedings. ‘Authorised Representative’ has been defined in the Goods and Services Act itself. Section 2(15) of the central Goods and services Act ,2017 (hereinafter reffered to as “ the CGST Act”) defines ‘authorised representative’ as representative reffered to in section 116. Broadly, it includes a relative, a regular employee, an advocate, a charted accountant, a company secretary, or any person with prescribed qualifications. It is also provided that indirect tax gazetted officers can appear as authorised representative after one year from retirement.
The GST law also specifies for some disqualification for an authorised representative such as dismissal from government service, conviction under some specified Acts, insolvency, misconduct, etc. Such orders of disqualification are, however , required to be passed after complying the principles of natural justice.
2 . Appearance by authorised representative
Section 116(1) provides that any person can appear by an authorised representative in any proceedings under the Goods and Services regime.By virtue of this, an authorised representative can appear before the following authorities-
1. GST Officers,
2. The Appellate Authority under GST Law,
3.The Appellate Tribunal under GST Law.
However, a person is not allowed to appear by an authorised representative when he is required under the Act to appear personally for examination on oath or affirmation.
3. Persons who can be authorised representative
Section 116(2) places limitation on the persons who may be authorised to represent before the authorities. The following categories of persons are so permitted to act as an authorised representative on his behalf -
Relative or regular employee of an registered person who has authorised him to act can be appointed as an authorised representative.
2. Advocate
An advocate who is entitled to practice in any court in india, and who has not been debarred from practicing before any court in india, can represent the assessee.
3. Professionals
Any charted accountant, a cost accountant or a company secretary who holds a certificate of practice and who has not been debarred from practice, are permitted to act as an authorised representative.
4. Government officers
A retired officer of the Commercial tax department of any State Government or Union territory or of the Board who, during his services under the Government had worked in a post not below the rank than that of a Group –b Gazetted officer for a period of not less than two years can be a appointed as an authorised representative.
However, such officer would not be entitledto appear before any proceedings under the GST Act for a period of one year from the date of his retirement or resignation.
5. GST practitioner
A GST practitioner would also be allowed to appear as authorised representative before any officer of department, Appellate Authority or Appellate Tribunal, on behalf of a registered person who has authorised him to be his GST practitioner.
4. Disqualification for acting as an authorised representative
The Disqualifying factors in relation to a person representing the assessee under section 116 are contained in sub-section (3) thereof which are as follows:
1. Who has been dismissed or removed from Government services; or
2. Who is convicated of an offence connected with any proceedings under this Act, the State Goods and Services Tax Act, the Integrated Goods and Services Tax Act or the Union Territory Goods ad Services Tax Act, or under the existing law or under any of the Integrated Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, or under the existing law or uder any of the Acts passed by a State Legislature dealing with the imposition of taxes on sale of goods or supply of goods or services or both; or
3. Who is found guilty of misconduct by the prescribed authority;
4. Who has been adjudged as an insolvent.
Such disqualifications to act as an authorised representative would work for the period as mentioned under-
5. Action for misconduct of an authorised representative
In term of rule 116 of the CGST Act, 2017, where an authorised representative, ( other than those advocate/ CA/ CS/ CWA) is found, upon an enquiry into the matter, guilty of connection with any proceedings under the act, the Commissioner may, after providing him an opportunity of being heard , disqualify him from appearing as an authorised representative.
6. principle of natural justice to be followed
The principle of natural justice has to be observed before any adverse action is going to be observed before any adverse action is going to be taken against the assessee. One of the grant of an opportunity of hearing, oral or in writing,before conclusion is arrived at by the authority exercising their powers.
7. Applicability of SGST Act/ UTGST Act
Any person who has been disqualified under the provisions of the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act will be deemed to be disqualified under the GST Act as stated under section 161(4) of the CGST Act.
8. Applicability of IGST Act
Section 20 of the IGST stipulates that the provisions of the CGST Act would, mutatis mutandis, apply to integrated tax as they apply in relation to central tax as if these are enacted under this Act. Accordingly, there is no separate provisions regarding authorised representative under the IGST Act, thus, the provision available under the CGST Act, is made applicable to IGST Act.
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