24 things you should know about Draft GST Rules and Forms

With enactment of 101st Constitution Amendment Act, the road to GST is clear. The Govt. had already unveiled draft model law on GST. On 26th September, 2016 CBEC released draft rules and forms under GST on Registration, Invoice and Payment. GST council has also approved of draft rules in its meeting on 30th September, 2016. Key takeaways of draft rules and forms are given hereunder:

Registration
1.	The application for GST registration will be made online either directly on the GSTN Portal or through Facilitation Centres.
2.	The proper officer will examine registration application and grant registration within 3 common working days.
3.	If the application is found deficient, then applicant will be intimated within 3 common working days. Thereafter, applicant has to furnish information or documents sought within 7 working days electronically. If the proper officer is satisfied with such details, then he will grant registration within 7 common working days from date of receipt of such details.
4.	The person obtaining registration as casual dealer is required to make advance deposit for estimated tax liability for the period for which registration is sought.
5.	The registration certificate must be displayed at principal place of business and at every additional place of business. GSTIN (i.e. registration number) must be displayed in the name board at the entry point of business premises.
	Invoice
6.	Supplier needs to mention following details in invoice if recipient is unregistered and taxable value of supply is Rs 50,000 or more:
	♦   Name and address of recipient;
	♦   Delivery address along with the name of State.
7.	Every invoice should contain place of supply if supply is in course of inter-State trade or commerce.
8.	Three copies of invoice should be prepared in case of goods and only two copies of invoice are needed in case of services.
9.	In case of taxable supply of services, the invoice shall be issued within 30 days from date of supply of services. However, no time-period is specified for issuance of invoice in case of supply of goods.
Returns
10.	The registered taxable person is required to file details of outward supplies in Form GSTR-1 electronically. The recipient will receive GSTR 2A on the basis of details furnished by supplier in GSTR 1.
11.	The recipient will file details of inward supplies in GSTR 2 electronically on basis of details contained in GSTR 2A. The recipient shall specify the details of inward supplies for which he is not eligible for input tax credit and quantum of such ineligible input credit.
12.	The registered taxable person (other than composition dealer) shall file monthly return in GSTR-3. Part of this return will be electronically generated from GSTR 1, GSTR 2, electronic credit ledger, electronic cash ledger and electronic liability register.
13.	A notice in Form GSTR 3A will be sent electronically to a registered taxable person who fails to file returns.
Payments
14.	The electronic tax liability register, electronic credit ledger and electronic cash ledger will be maintained on the common portal for every registered person.
15.	The electronic tax liability register shall be debited with amount of tax, interest, late fee, mismatch in credits, etc. It shall be credited with amount paid through electronic cash register or electronic credit register.
16.	The electronic credit ledger of taxpayer will show the details of invoice and amount of credit. It will also show details of credit matchingor mismatching.
17.	The electronic cash ledger shall be credited with the amount deposited and debiting with the payment therefrom towards tax interest, penalty, fee or any other amount.
18.	The final acceptance of input credit will be made available to registered taxable person through Form GST ITC 1 electronically.
Refund
19.	The refund claimed in Part B of GSTR-3 shall be deemed to be an application filed for refund.
20.	The provisional refund, i.e., 80% of refund claimed shall be granted on satisfaction of following conditions:-
	♦   Person claiming refund has not been prosecuted for any offence under GST during any 5 preceding years. If he has been prosecuted under an earlier law, the amount of tax evaded should not exceed Rs.2,50,000.
	♦   GST compliance rating of the applicant is not less than 5 on a scale of 10.
	♦   No proceeding for any appeal, review or revision is pending on issues which form the basis of the refund andif pending, the same has not been stayed by the appropriate authority or court.
21.	Refund shall be granted after adjusting any outstanding demand payable by the applicant.
22.	If Proper Officer is satisfied that refund is not payable then he shall issue a notice requiring applicant to furnish a reply within 15 days.
23.	Any amount rejected as refund shall be re-credited to the electronic credit ledger.
24.	Person claiming refund of tax paid on inward supplies shall apply for refund in FORM GST RFD-10 once in every quarter.

SetCom has powers to make addition in income of assessee to determine tax liability: HC

Facts:

a) The CIT challenged the order passed by the Settlement Commission (‘SetCom’). Such order was challenged on the ground that the order passed by Set Com was without jurisdiction as the assessee had failed to comply with the statutory requirements under Section 245-C which stipulates that there must be "full and true disclosure" in the Settlement Applications; 

b) It was further stated that when the Set Com had made further addition, it was clear that there was no full or true disclosure of the statement by the assessee for which the Commission should not have allowed the application of the assessee.

The High Court held as under:

1) The Set Com has also got powers to find out if at all any income left out or could not be disclosed by the assessee to come to a mechanism of settlement.

2) The settlement is not only covered by the dispute which arose before them but also for the dispute yet to come. So the Commission has got wide power to consider the income disclosed, add additional income after due investigation and also to add any income which is found to be valid as per report submitted by the Department and finally settle the tax payable by the assessee. [2016] 73 taxmann.com 93 (Orissa)

Ban on circulation of trading tips via social media – 8 things you should know

The SEBI has issued consultation paper proposing amendments or clarifications to the investment adviser regulations. The objective of the consultation paper is to specify uniform standards across all the intermediaries/persons engaged in providing investment advisory services irrespective of whether such activity is incidental to their primary activity or not and to address the gaps or overlaps in legal or regulatory standards.

The key highlights of consultative papers are as under:

1. Ban on circulation of trading tips via social media platform: SEBI has proposed to curb the practice of providing trading tips (containing buy or sell recommendation on securities) to the general public through any social media platform such as SMSs, email, telephonic call, whatsapp, ChatOn, Wechat, Twitter, Facebook, etc.

2. Restrictions on mutual fund distributors: Under the existing norms, a mutual fund distributor can sell mutual fund products and he can also provide basic advice on mutual fund products and in executing the transactions. It has been proposed that only corporate entities registered as investment advisers should offer execution or distribution services. Further, mutual fund distributors should be registered as investment advisors if they want to engage themselves in providing incidental or basic investment advisory services on mutual fund products.

Reference to TPO not invalid even if AO doesn't supply satisfaction note before making reference

Facts:

a) Assessee filed the instant petition before the High Court challenging the validity of reference made by AO to TPO to determine ALP of international transaction.

b) The petition was filed on following grounds:

- In terms of the Instructions No. 3/2016 dated 10-3-2016, the requirement of passing reasoned order on the objections of assessee (regarding whether a transaction is an international transaction or not) and the service of the order upon the assessee is a condition precedent to the Assessing Officer making a reference to the TPO.

- Non-compliance with either or both the above mandatory conditions render the reference to the TPO void.

The High Court held as under:

1) The satisfaction recorded by the AO in the instant case contained sufficient reasons. He had indicated the relationship between the assessee and the other parties. He had made a comparative chart and alleged that the sales were under invoiced. That would be sufficient to refer the matter to the TPO. Whether the allegations are true or not must be tested before the authorities under the Act and not in a writ petition under Article 226. The challenge on this ground was, therefore, unsustainable.

No extension of time-limit under Sec. 54F in absence of genuine hardship: HC

Facts:

a) The assessee filed application before the CBDT for extension of time-limit to complete construction of house property for availing of Section 54F relief. The CBDT rejected the said application on the ground that the assessee had failed to demonstrate compliance of Section 119.

b) The aggrieved-assessee filed the instant writ petition wherein he seeks quashing of such order of CBDT.

The High Court held as under:

1) As per Section 119(2)(c), on a genuine hardship shown by any assessee, the CBDT can order relaxation in any requirement contained in any of the provisions of Chapters IV or VI-A of the Income Tax Act. Such power is subject to two riders. Firstly, that the default in complying with such requirement was due to circumstances beyond the control of the assessee and secondly, that the assessee had already complied with such requirements before the completion of assessment in relation to the previous year in which such deduction is claimed.

4 things you should know about amended Incorporation Rules

MCA had introduced an integrated process of incorporation of companies by notifying single Form INC-29 under Companies Act, 2013. Now MCA has amended the Companies (Incorporation) Rules, 2014 to further simplify the incorporation process by introducing simplified proforma for incorporating company electronically. Key highlights of amended Rules are given hereunder:

1. Separate e-forms for MOA and AOA: Earlier MOA and AOA were drafted in a word format and attached with the ‘E-form INC-29’. Now the MCA has mandated e-filing of Memorandum of Association (‘MOA’) and Articles of Association (‘AOA’) separately. ‘Form INC-33’ and ‘Form INC- 34’ have been notified for e-filing of MOA and AOA, respectively.

2. Digital Sign under MOA and MOA: Earlier each subscriber sheet and witness column in MOA and AOA was signed manually. Now the MCA does away with manual signature and only digital signature needs to be affixed on subscriber and witness column.

3. New e-form INC-32: Form INC-32 is similar to Form INC-29. However, there are some minor changes in reporting requirements under new Form INC-32.

4. Conversion procedure: The MCA has prescribed the procedure for conversion of a company limited by guarantee into a company limited by share. Such conversion procedure is applicable for a company other than a company registered under section 25 of the Companies Act, 1956 or section 8 of the Companies Act, 2013. Such procedure is given hereunder:

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Intimation issued by AO is appealable where fee is charged for delay in filing of TDS returns

Facts:

a) The issue arising in this appeal was against the intimation issued under section 200A in charging fees payable under section 234E.

b) The CIT(A) held that no appeal was maintainable against the order of AO passed under Section 200A while processing the TDS returns and charging fees under Section 234E. The ITAT held as under:

1) The Legislature recognizes that a deductor who has filed his TDS return, which, in turn, has been processed by the AO and intimation is generated under which, if any amount is found to be payable, then such intimation is also appealable under section 246A since the demand issued by the AO is deemed to be a notice of payment under section 156.

2) Since the intimation issued by the AO was appealable order under section 246A(1)(a) of the Act, therefore, the CIT(A) should have examined the legality of adjustment made under intimation issued under section 200A.- [2016] 74 taxmann.com 6 (Pune - Trib.)

Fee for delay in filing TDS return not permissible in an intimation with retro-effect: Pune ITAT

Facts:

a) The issue raised in this appeal related to charging of fees payable under section 234E prior to amendment to section 200A(1)(c) [vide Finance Act, 2015 w.e.f. 01.06.2015], while processing the TDS returns.

b) The assessee also pointed that the Legislature had inserted clause (c) in section 200A(1) of the Act specifically w.e.f. 01.06.2015 and there was nothing to suggest that the said amendment was clarificatory or retrospective in nature. Hence, in respect of TDS statements filed for the period prior to 01.06.2015, late fees under section 234E could not be levied in the intimation issued under section 200A.

The ITAT held in favour of assessee as under:

1) Where the TDS return could not be filed before the prescribed authority within stipulated time, the assessee was liable to levy of fees under section 234E.

Monthly maintenance charge payable by tenant is part of actual rent: High Court

The substantial question of law that arose before the High Court was as under:

Whether maintenance charges could be included as part of rent?

The High Court held as under:

1) If the maintenance charges are not included in the rent, it would enable an assessee to avoid paying tax on the true annual value of the property.

2) The amount of rent would also be dependent upon the common facilities of a building. The better the facilities, the higher the rent. It can hardly be suggested that the annual value of a property which provides several common amenities such as a swimming pool, gymnasium, security car, parking and elevators would be the same as the annual value of a property in the same area but without these facilities.

3) Where the agreement provides that the owner shall pay the amounts for the common facilities, maintenance charges, etc., it is obvious and reasonable to presume that the same is factored into the rent payable by the lessee or the licencee. In that event the same cannot be added to the rent agreed to be paid. However, if the maintenance charges, etc., are stipulated to be payable by the licencee or the lessor it must form a part of the rent for the purpose of computing the annual value of the property. -SUNIL KUMAR GUPTA V. ASTT. CIT - [2016] 73 taxmann.com 374 (Punjab & Haryana)

Interest paid to partners can't be disallowed under sec. 14A in hands of firm: Pune ITAT

Facts:

a) A partnership firm was engaged in the business of manufacturing of chemicals. It had claimed deduction of interest paid on partner’s capital.

b) While making assessment, the Assessing Officer observed that investment in mutual funds was made out of interest bearing funds which also included interest bearing partner's capital.

c) The Assessing Officer was of the view that assessee had incurred expenditure including interest expenses which were attributable to earning tax-free dividend income from investment in mutual funds. Thus, the expenditure so incurred on interest was required to be disallowed.

d) Further, the CIT(A) confirmed the action of the Assessing Officer.Aggrieved-assessee filed the instant appeal before ITAT.

The ITAT held in favour of assessee as under:

1) Interest and salary received by the partners are treated on a different footing by the Act and not in its ordinary sense of term. The Section 28(v) treats the passive income accrued by way of interest as also salary received by a partner of the firm as a 'business receipt' unlike different treatments given to similar receipts in the hands of entities other than partners.