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Delhi HC gives relief for companies in anti-profiteering probe

Delhi HC gives relief for companies in anti-profiteering probe

A company is required to give information to the Director-General of Anti-profiteering (DGAP) only about the ‘complained product’ and not about every product it produces, the Delhi High Court has said.

A complained product refers to a product against which complaint of not passing reduction in GST rate or benefit of Input Tax Credit (ITC) is alleged. The complaint can be made by any consumer or even a tax officer can suo motu files a complaint.

“It is directed that, till the next date, it will not be required to furnish information to the DGAP pursuant to the impugned notice other than information pertaining to the Complained Product,” a division Bench of the Delhi High Court ordered in a matter related with profiteering complaint made against Dettol HW Liquid Original 900 ml, produced by Reckitt Benckiser India (petitioner).

The National Anti-profiteering Authority (NAA) ordered an enquiry of profiteering against the said product. However, the company moved to Delhi High Court after the DGAP issued a notice seeking information on all its products (nearly 3,500 in number).

It argued that that as per the provisions under the GST Rules, without a report of the DGAP on the Complained Product followed by an order of NAA, the DGAP cannot suo motu issue a notice requiring the Petitioner to submit information on all its products.

The Bench found force in the submissions of the petitioner. Accordingly it allowed interim relief to the company. The matter has been listed for hearing on August 22.

It is important to note that in the case of Abbott Healthcare Private Ltd it was held that DGAP cannot proceed to investigate into products other than those covered in the notice and stay was granted until further order.

To overcome this, the rule was amended with effect from June 28 providing power to the NAA to direct the DGAP to investigate into goods or services other than those covered in the report submitted by DGAP. Further the investigation of other products shall be deemed to be a fresh proceeding. It is further provided that in order to initiate proceeding for other products, the NAA must have reasons which are to be recorded in writing.

Harpreet Singh, Partner with KPMG, said this ruling would give some belief to the dealers that authorities cannot arbitrarily question the pricing/policies of products “unless they have tangible evidence to substantiate their claim and are working within the framework of GST regulations.

Echoing the same sentiment Anita Rastogi, Partner with PwC, said that investigation of the complained product is right, but “expanding the scope of investigation to other products without following the due process looks unreasonable.”

MS Mani, Partner at Deloitte India, said that the mandate of the anti-profiteering provisions to investigate specific allegations of profiteering should be respected. “Broad level enquiries covering all products/SKUs would entail significant change compliance efforts for businesses and hence should be avoided unless there are compelling grounds for such an enquiry,” he said.

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Source: The-Hindu-Business-Line
Homestays in Kochi to come under GST, service providers upset

Homestays in Kochi to come under GST, service providers upset

The state goods and service tax department on Monday issued notices to around 50 homestays in Fort Kochi area, stating that they should come under the purview of Goods and Service Tax (GST). There are 250 homestay service providers in the West Kochi and all of them will be issued notices in the coming days by the sales tax department.

Meanwhile, the homestay operators said this move would adversely affect their businesses and lead to the closure of homestays which were the livelihood of around 1,000 people in Fort Kochi area alone. “As per the GST norms, those running services below Rs 20 lakh a year are exempted from registration. But the notice issued by state GST department clearly states that we are liable for paying GST,” said Antony Kureethra, president, Tourism Promoters’ Association, an umbrella organization which has 140 members in Fort Kochi.

The state GST department has also asked homestay operators to come to its office in Kochi on July 17 for a hearing. The homestay owners should also produce the documents like the register of customers, bank statement for 2018-19 period, cash book and receipt book for 2018-19, ledgers and other books maintained by them and the licence issued by the local authority.

Meanwhile, officials with the state GST department said that they just conducted a survey for exploring the possibilities of bringing more establishments under GST. “We conducted the survey as per the direction of the state finance department. We haven’t given notices to the homestay owners seeking GST,” an officer with state GST department said. At the same time, the notice issued by state GST department, a copy of which has been procured by TOI, clearly stated that the homestays are liable for paying GST. “It is found that you are liable to get registered under Section 22 of the CGST/SGST Act, 2017. In order to finalize the enquiry relating to your registration liability, you are requested to furnish the following documents for verification within 7 days,” notice issued to one of the homestay owners stated.

“Many of the operators think that the GST department would come knocking their doors if there is a homestay board at their facilities. So, they have started to remove the boards on Monday night itself,” said one of the homestay owners.

The Tourism Promoters’ Association has decided to approach the top officials of the GST department. They made it clear that the association would move the court if needed.

Source: Times-Of-India.

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Budget 2019: Amnesty scheme to resolve legacy tax issues

Budget 2019: Amnesty scheme to resolve legacy tax issues

The government has unveiled an amnesty scheme to resolve excise and service tax disputes pertaining to the period before the introduction of the goods and services tax to clear the backlog of cases and improve the ease of doing business. Even two years after the indirect tax regime was replaced by GST, the litigation doesn’t seem to die down and there is a huge pendency, tax experts said.

“The announcement relates to the legacy dispute resolution scheme, which intends to reduce the pending service tax and excise litigation of the pre-GST regime. It is expected that the scheme will support businesses where there are various ambiguous issues pending before the tribunals,” said Abhishek A Rastogi, a partner at Khaitan & Co.

All parties can settle the disputes, save those who face conviction and those who have moved the Settlement Commission. Relief under the scheme varies from 40% to 70% of the tax dues for cases other than voluntary disclosure cases, depending on the amount of tax dues involved.

“More than Rs 3.75 lakh crore is blocked in litigations in service tax and excise. There is a need to unload this baggage and allow business to move on,” finance minister Nirmala Sitharaman said.

Source: Economic- Times.

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GST on Electric Vehicles Reduced to 5 Percent, Tax Benefits Upto Rs 1.5 Lakh on EV Loan: Union Budget 2019

GST on Electric Vehicles Reduced to 5 Percent, Tax Benefits Upto Rs 1.5 Lakh on EV Loan: Union Budget 2019

Finance Minister Nirmala Sitharaman has announced the reduction of GST on electric vehicles from 12% to 5%. She said that the government has already moved GST council to lower the GST rate on electric vehicles (EV) from 12% to 5%. Also to make EVs affordable for consumers, the government will provide additional income tax deduction of Rs 1.5 lakh on the interest paid on the loans taken to purchase EVs.

Presenting the Budget for 2019-20, Finance Minister Nirmala Sitharaman said the government has already approved Rs 10,000 crore for FAME II scheme on April 1, 2019, to encourage faster adoption of electric vehicles by providing right incentives and charging infrastructure. FM also said there will be a comprehensive restructuring of National Highways Programme to ensure the creation of National Highways Grid of desirable capacity.

While presenting the Economic Survey yesterday, Sitharaman said the country must emphasize on electric vehicles (EVs) as these represent the next generation in sustainable mobility and appropriate policy measures are needed to lower the overall lifetime ownership costs to make them an attractive alternative to consumers.

Source: News 18.

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Rajasthan HC notice to Centre, government on GST input credit benefit delay

Rajasthan HC notice to Centre, government on GST input credit benefit delay

Rajasthan High Court on Tuesday issued notices to the Central government, state government and the GST Council seeking reply in four weeks on the denial of the input tax credit benefit.

Lakhani Metal and Castings Pvt. Ltd. of Bikaner had moved a petition challenging the clause (ii) of proviso of Sub Section 3 of Section 54 of the Central GST Act, 2017 and Rajasthan GST Act, 2017, by effect of which refund of the unutilized input tax credit can be denied to any company without any reasons and praying for striking down such unconstitutional provision.

Counsel for the petitioner, Ramit Mehta said that the refund of unutilized Input tax credit was denied to the industry supplying railway parts to the Indian Railways by issuing a notification on June 28, 2017 by the Central Government and June 29, 2017 by the State Government on the basis of the power drawn from the Central and State GST Acts.

Terming this denial arbitrary, discretionary and unconstitutional Mehta argued that the Section 49(6) of the GST Act, 2017 grants statutory right for obtaining a refund of the input tax credit after its adjustment of tax, interest, fees and penalty.

“But this arbitrary and discriminatory denial was the clear violation to fundamental rights enshrined under Article 14, 19, 21 and 300A of the Constitution of India,” argued Mehta.

He further argued that the refund of the Input tax credit was smoothly available in the pre GST era in the Rajasthan VAT Act and the Central Excise Act. But post-GST, it was left to the discretion of the government to deny a refund of the Input tax credit without any reason,” Mehta argued.

Hearing the arguments, the division bench comprising justice Sangeet Lodha and justice Dinesh Mehta issued the notices to the central government, state government and the GST Council seeking reply in 4 weeks.


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Source: Times Of India
Companies may soon be able to rectify GST returns for Non-IT errors

Companies may soon be able to rectify GST returns for Non-IT errors

Indian businesses may soon be able to amend goods and services tax (GST) return mandated for carrying forward tax credit from the previous regime for non-IT related errors as well. The GST Council has directed a committee for IT grievance redressal to quickly draw up a solution that will give relief to the industry.

Thousands of crores of tax credit claimed by businesses have been denied because of errors in the filing of returns, prompting many to approach judiciary. The move will be a reprieve for businesses that had lost credit due to minor, non-technical errors.

“The council has approved changes in cases where the error is not IT related,” a government official aware of deliberations told ET. It was felt that in some areas where errors are apparent or high courts have issued directions, those should be settled, he said.

A standard operating procedure will be developed by the grievance committee for all the cases where high courts have given a direction, the amount has been wrongly entered or the concerned jurisdictional commissioner has made a recommendation. The forms TRAN1 and TRAN2, specified for claiming past credits, can now be amended to allow for this.

The GST law does not provide for any appeal on issues related to TRAN1 or TRAN2 and thus many taxpayers filed writs in high court and also secured favorable orders holding the view that bona fide errors should be considered by the government. A number of taxpayers had lobbied the government and the GST Council to allow amendments.

GST

“Lot of companies could not claim the entire eligible opening credit under TRAN1 due to inadvertent errors,” said Pratik Jain, national indirect taxes leader, PwC. “This move will help them to claim the additional amount, without going to courts, which some of them have already opted for.”

Businesses looking to claim tax credit of the pre-GST period under GST could file TRAN1. The government had allowed revision of TRAN1 until December 27, 2017. Many businesses missed doing so and ended up losing large transitional credits, even for typographical errors.

The GST Council had allowed a liberal scheme for claiming credit in lieu of taxes paid under the previous regime against GST liabilities. Businesses could claim credit even if they did not have proof of payment under the deemed benefit provision. However, large transition credit claims, which pulled down overall GST collections, made authorities wary, leading to the increased vigil. Any changes to the TRAN1 were thus not allowed on non-IT related issues.

Reports of fraudulent credit claims also led to inquiries into transitional credit claimed by businesses to ascertain if they were genuine.

“Transition credits have been challenging for all businesses and the IT grievance redressal committee should ideally be considering all issues for the entire period instead of a sunset period and clarify that all genuine errors, whether arising from the GSTN portal issues or committed by the taxpayers would be condoned unless there is mala fide intent,” said MS Mani, partner, at Deloitte India.

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Source: Economic Times
Major Decisions taken by the GST Council in its 32nd Meeting

Major Decisions taken by the GST Council in its 32nd Meeting

The GST Council in its 32nd Meeting held today under the Chairmanship of the Union Minister of Finance & Corporate Affairs, Shri Arun Jaitley in New Delhi took the following major decisions to give relief to MSME (including Small Traders) among others –

1.   Increase in Turnover Limit for the existing Composition Scheme: The limit of Annual Turnover in the preceding Financial Year for availing Composition Scheme for Goods shall be increased to Rs 1.5 crore. Special category States would decide, within one week, about the Composition Limit in their respective States.

1.1    Compliance Simplification: The compliance under Composition Scheme shall be simplified as now they would need to file one Annual Return but Payment of Taxes would remain Quarterly (along with a simple declaration).

2.    Higher Exemption Threshold Limit for Supplier of Goods: There would be two Threshold Limits for exemption from Registration and Payment of GST for the suppliers of Goods i.e. Rs 40 lakhs and Rs 20 lakhs. States would have an option to decide about one of the limits within a weeks’ time. The Threshold for Registration for Service Providers would continue to be Rs 20 lakh and in case of Special Category States at Rs 10 lakhs.

3.   Composition   Scheme for Services: A Composition Scheme shall be made available for Suppliers of Services (or Mixed Suppliers) with a Tax Rate of 6% (3% CGST +3% SGST) having an Annual Turnover in the preceding Financial Year up to Rs 50 lakhs.

3.1  The said Scheme Shall be applicable to both Service Providers as well as Suppliers of Goods and Services, who are not eligible for the presently available Composition Scheme for Goods.

3.2  They would be liable to file one Annual Return with Quarterly Payment of Taxes (along with a Simple Declaration).

4.     Effective date: The decisions at Sl. No. 1 to 3 above shall be made operational from the 1st of April, 2019.

5.    Free Accounting and Billing Software shall be provided to Small Taxpayers by GSTN.

6.   Matters referred to Group of Ministers:

i.   A seven Member Group of Ministers shall be constituted to examine the proposal of giving a Composition Scheme to Boost the Residential Segment of the Real Estate Sector.

ii.    A Group of Ministers shall be constituted to examine the GST Rate Structure on Lotteries.

7.  Revenue Mobilization for Natural Calamities: GST Council approved Levy of Cess on Intra-State Supply of Goods and Services within the State of Kerala at a rate not exceeding 1% for a period not exceeding 2 years.

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Source: Narendra Modi