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Volume - IV | May 2019

Baroda Branch of Western India Regional Council of

The Institute of Chartered Accountants of India

The Institute of

Chartered Accountants of India(Setup by an Act of Parliament)

Newsletter

Editorial Team

CA. Hitesh Agrawal

CA. Krunal Brahmbhatt

CA. Vin d Pahilwani

CA. Manoj Sahu

CA. Vishal Doshi

CA. Dhiren Parikh

CA. Rikin Patel

CA. Rahul Agrawal

CA. Dhruvik Parikh

99980 28737Chairman

78748 11551Vice-Chairman

98980 78176Secretary

90990 94500Treasurer

98240 59901Ex-officio

93762 11099IP - Chairman

88667 09509Committee Member



o

CA. Hitesh Agrawal CA. Rahul Agrawal

CA. Nayan Kothari CA. Manas Rindani

CA. Niraj N Shah CA. Ketki Desai

CA. Keyur Shah CA. Dhruti Vaidhya

CA. Daxesh Gandhi CA. Niraj Majmundar

Forthcoming Events

Direct Tax Updates

Photo Gallery 11

Pg 02

Pg 03

Interest Whether on the Grossor the Net Dues ??

MAT under Ind AS Pg 10

Pg

Judicial Decisions on Pg 05Indirect Taxes

Pg 06

GST Update Pg 09

Managing Committee

Contents

"Some people dream of success,

While other people get up every morning and make it happen."

“VOTE KAREGA CA, VOTE KARAYEGA CA”

Whatever action a great man performs, common men follow.

And whatever standards he sets by exemplary acts, all the world pursues- Bhagvad Gita

– Wayne Huizenga

The past month, if I am to describe it, has been quite enthrallingprofessionally. The Institute, the professional fraternity, the regulatorshave witnessed winds of change and well for professionals like us, whoare on a constant lookout for opportunities of growth, development and moments to proveour mettle; we are a firm believer of finding much synonymity between change andprogress.

Last month’s election motto proved to be highlymotivational for the voters. Vadodara Lok Sabha constituency witnessed over 67 %voting, despite the scorching heat. The voting percentage is much higher compared to thelast Lok Sabha Election.

We are already in the second month of the Fiscal Year. The Statutory Bank Audit iscompleted. The professionals are now gearing up for the GST Annual Returns which aredue next month. The government has opened up numerous opportunities for ourprofession by implementing various Bye-Laws for the betterment of the overall Economy.

Above shaloka from Bhagvad Gita’s Chapter 3 on ‘Karma Yoga’ guides all of us to keepperforming our Karma and remain focussed on our goal every moment. As Arjunaexemplified such focus and determination on his goal of shooting in the blackness in thecentre of the eye of the wooden sparrow, avoiding all distractions on the way whetherphysical or psychological. This points out towards the need of becoming a ‘Karma Yogi’ inour respective fields by controlling our senses by training and purifying our mind andintellect to undertake selfless service of humanity. In this process, ultimately, a humanbeing is automatically driven towards the attainment of excellence which other commonhuman beings follow. Indeed, our ancient Indian scriptures are full of wisdom to guide andenlighten to this noble path.

Students are engrossed in studies for the June Examination. Thanks to the postponementdue to elections which gave some extra time to prepare for the examination. DearestStudents, now is the time for you to wake up and grind in order to rise and shine later. Putyour utmost efforts during these last few days of preparation. Remember, the branch isopen for you to provide the perfect study environment and guidance.

This month also, various seminars shall be conducted such as seminars on RERA and NGOare just around the corner and many more academically and professionally significanttopics. Also, the Baroda Branch has now taken up to conduct the Workshop Series onIncome Tax. Additionally, the regular lecture meets on GST are conducted. The detaileddescription of this month’s events is stated in the Newsletter.

Lastly wishing you all students- “GOOD LUCK” for exams.

Regards,

Chairman

CA. Hitesh Agrawal

Chairman Communication

NewsletterBaroda Branch of WIRC of ICAI

2 MAY 2019Volume - IV

Branch Events

Half day seminar on Charitable Trust/ NGO

Date & Date : Saturday, 04.05.2019

Time : 03:00 pm to 06:00 pm

Fees : Rs. 350/- including 18% GST till 03.05.2019afterwards Rs. 500/- including 18% GST

Venue : ICAI Bhawan, Vadodara

Time : 09:00 am to 11:00 am

Fees : Rs.1000/- for the series upto 06.05.2019afterwards Rs. 1200/- including 18% GST


HrsCPE 8

Workshop Series for Accountants on Income Tax

Day & Date : Wednesday & Thursday, 01 & 02.05.2019

Time : 06:00 pm to 08:00 pm

Faculty : CA. Prashant Upadhyay, Vadodara

Fees : Rs. 150/- including 18% GST


Topics Speakers

• Formation of Charitable Trust/ NGO CA. Samir Parikh, Vadodara

• Registration of Trust under CA. Ajit Shah, AhmedabadIncome Tax Act

• Taxation aspects of Charitable Trustunder Income Tax Act

• Assessment of Trust

Back To Basics Series on RERA

Topics Speakers

Brief About the Act Definitions CA. Jigar Shah, BarodaRegistration Requirement of theproject & Procedural aspects

Understanding of various terminology CA. Niraj Shah, BarodaMap & Area in context of form 1,2 & 3Form 5 in Brief

Reading of AFS ( Clause to Clause) CA. Mukund Bakshi, BarodaFunctions & Duties of Promoters Vis a VisRights & duties of allotter

Power of Authority Appellate Tribunal CA. Lalit Raithatha, BarodaOffences & Penalties with case studies

Topics Speakers

Recent Developments and Select Issues CA. Jagdish Punjabi, Mumbaiwith reference to transactions inImmovable Property - Ss. 2(42A), 22,23, 43CA, Capital Gains issues, 56(2)(x)

Emerging Issues in Corporate Tax CA. Arpit Jain, Ahmedabad

(per day 2 hrs)

Day & Date : Wednesday, 08.05.2019

Day & Date : Thursday, 09.05.2019

Day & Date : Friday, 10.05.2019

Day & Date : Saturday, 11.05.2019

HrsCPE 16Direct Tax Refresher Course (DTRC)

(per day 4 hrs)

Fees : Rs.1700/- for the series upto 08.05.2019afterwards Rs.1900/- including 18% GST Rs. 600/-per day upto 08.05.2019 afterwards Rs.750/-including 18% GST


Day & Date : Saturday, 11.05.2019 | Time : 02.00 to 04.00 pm

Time : 04.30 to 06.30 pm

Taxation of Share Capital/Premium with CA. Bhupendra Shah,respect to latest judgement of Supreme MumbaiCourt in NRA Steel

Critical issues of Tax Deduction at Source CA. Dhinal Shah,

on Non resident Payment Ahmedabad

Tax Planning through business structuring CA. Milin Mehta, Vadodara

Concepts like Peak Credit, Telescoping, CA. Pankaj Shah, IndoreCivil Procedures Code in Income Tax,Preponderance of Probabilities,Affidavits, Cross Examination &Consistency

Search assessment 115bbe / CA. (Adv) Kapil Goel, DelhiReassessment

Remedial Action under Income Tax Act for CA. (Adv) Tushar Hemani,Revision & Rectification Ahmedabad


Time : 04.30 to 06.30 pm


Time : 04.30 to 06.30 pm


Time : 04.30 to 06.30 pm

WICASA Events

Date Topic

01.05.2019 Final - Financial Reporting (Old/New)

01.05.2019 IPCC - Accounting (Old/New)

02.05.2019 Final - Strategic Financial Management (Old/New)

02.05.2019 IPCC - Corporate And Other Laws (New)

02.05.2019 IPCC - Business Law, Ethics and Communication(Old)

03.05.2019 Final - Advanced Auditing and Professional Ethics(Old/New)

03.05.2019 IPCC - Cost and Management Accounting (New)

03.05.2019 IPCC - Cost Accounting and Financial Management(Old)

04.05.2019 Final - Corporate and Economic Law (Old/New)

04.05.2019 IPCC - Taxation (Old/New)

04.05.2019 Payment of Tax - GST Certificate Course by CA.Varun Fitter

05.05.2019 Refunds - GST Certificate Courseby CA. Pushpendra Singh Sisodia

06.05.2019 Final - Strategic Cost Management andPerformance Evaluation (New)

06.05.2019 Final - Advanced Management Accounting (Old)

06.05.2019 IPCC - Advanced Accounting (Old/New)

07.05.2019 Final - Optional Subject (New)

07.05.2019 Final - Information System Control And Audit (old)

07.05.2019 IPCC - Auditing and Assurance (Old/New)

08.05.2019 Final - Direct Tax Laws and International Taxation(Old/New)

08.05.2019 IPCC - Enterprise Information System andStrategic Management

Forthcoming Events for the Month of May, 2019



Date Topic

08.05.2019 IPCC - Information Technology and StrategicManagement

09.05.2019 Final - Indirect Taxation (Old/New)

09.05.2019 IPCC - Financial Management and Economics forFinance (New)

11.05.2019 Assesment and Audit Under GST - GST CertificateCourse by CA. Takshil Shah

19.05.2019 Accounting in Software GST - GST CertificateCourse by CA. Mansi Bhatt

Not Yet Decided Career Counselling in Hanifa School

C o n g r a t u l a t i o n s

CA. Arpan Dodia

Digital Transformation & Technology

CA. Nayan R. Kothari

Banking, Financial Services & Insurance

CA. Viral Shah

Insolvency & Bankruptcy Code

CA. Dhruvank Parikh

GST & Indirect Taxes

Contributed by : CA. Narendra Hindochacan be reached at [email protected]

Direct Tax Updates

1. Quantification of penalty under section271(1)©, judicial discipline and rectification ofmistakes

2. New Return Forms

I consider this as a very

The case was before The Income Tax AppellateTribunal, Ahmedabad in MA No. 166/Ahd/18Arising out of ITA No. 210/Ahd/15 in case ofIncome Tax Officer Vs Devendra J Kothari.

Based on AIR inputs available with the income taxdepartment, it was found that the assessee has

account with ICICIBank Limited. The amount was

under section 271(1)(c)was levied, rejecting explanations given by theAssessee. In appeal against penalty proceedings,the Tribunal held that while the entire additionwas finally upheld,

Theof the

approach adopted by the Tribunal observing thatthe Tribunal had found

Thereafter on the basis of such observations, the

of mistake in quantifyingthe penalty.

The for theHigh Court and also accepted that it was a mistakeon its part, but

as the earlier order was notaltogether devoid of any basis or rationale.

CBDT vide notification No. 32/2019 dated 1 April2019 amended the Income Tax Rules 1962 andadded certain clauses to Rule 12 and released

unique case involving thinlines of distinctions.

deposited the sums of money aggregating to Rs43,72,650 in his savings bank

added in incomeand concealment penalty

penalty was justified only tothe extent of 10% of the addition and regardingbalance element, there was a possibility of theassessee’s explanation being correct.

High Court dismissed the writ petition by theRevenue but still expressed disapproval

a way to bypass theminimum level of penalty.

Assessing Officer once again approached theTribunal for rectification

Tribunal expressed utmost respect

still refused to rectify the same onthe ground that such mistake was not oneapparent on record

Baroda Branch of WIRC of ICAI is proud to share that these CAs ofBaroda are co-opted in various Committees of WIRC



- has assets (including financial interest inany entity) located outside India;

- has signing authority in any account locatedoutside India;

- has income from any source outside India;

- has income to be apportioned inaccordance with provisions of section 5A;

- is a director in any company;

- has held any unlisted equity share at anytime during the previous year;

- has total income, exceeding fifty lakhrupees;

- owns more than one house property, theincome of which is chargeable under thehead “Income from house property”;

- has any brought forward loss or loss to becarried forward under any head of income;

- is assessable for the whole or any part of theincome on which tax has been deducted atsource in the hands of a person other thanthe assesse;

iv) ITR 3 which was applicable in case of assessehaving proprietory business will now apply toassesse

In case ofIT Appeal No. 33 of 2010 it was held that

Income Tax was payable on Capital Gain ifPossession handed over despite subsequentagreement cancellation. It observed that once thesale agreement comes under the provisions ofsection 53A of the TP Act, handing over ofpossession takes place and the provisions undersection 2(47) would squarely apply. That contractwas subsequently rescinded will not be of anyhelp.

While the

-whether there would be anydeduction, or whether there would be revision ofearlier assessment or whether the assesseewould be saddled with tax on income which isapparently not received.

‘having income under the head profitsand gains of business or profession’.

CIT Vs Harbour View (Kerala High Court)in

decision upholds taxation in the year oftransfer, I do not see any observation dealing withwhat would happen in the year of cancellation oftransaction

3. Capital gains tax although transactioncancelled.

Income Tax Return Forms asapplicable forAssessment Year 2019-20.

i) New requirements in brief include thefollowing:

a) Additional details for Residential Status (inITR 2 and 3)

b) Details of Directorship in Company (in ITR 2and 3)

c) Details of holding of Unlisted equity sharesat any time during the previous year (in ITR2, 3, 5 and 7)

d) Income from House Property – To furnishthe PAN of the Tenant is mandatory, if tax isdeducted under section 194-IB.

e) To Furnish the TAN of the Tenant ismandatory, if tax is deducted under section194I

f) Income from Capital Gain – Full value ofconsideration adopted as per Section 50Cfor the purpose of Capital Gain is calculatedupto 1.05 times of Value of Property as perstamp valuation authority

h) PART A – P&L is divided into ManufacturingAccount, Trading Account and Profit andLoss account.

i) Schedule GST – Information regardingturnover / gross receipts reported for GSTincluded now in ITR 3 and ITR 6 also. (Earlierit was in ITR-4 only)

ii) Sahaj 1 is not applicable if assesse

- has claimed deduction under section 57,other than deduction claimed under clause(iia) thereof;

- is a director in any company;

- has held any unlisted equity share at anytime during the previous year;

- is assessable for the whole or any part of theincome on which tax has been deducted atsource in the hands of a person other thanthe assesse;

iii) ITR 4 is available to

It is not available if assesse

a Hindu undivided family,who is a resident other than not ordinarilyresident, or a firm, other than limited liabilitypartnership firm, which is a resident,



charge u/s 66A of the Finance Act,1994. To betaxable under reverse charge mechanism,services provided from outside India must bereceived in India.

[Enso Secutrack Ltd vs CCE&ST – CestatHyderabad]

3.3 In case of transport of goods by road, service tax isnot leviable on transport of goods per se but onservices provided by a Goods Transport Agency inrelation to transportation of goods by road. TheGTA is required to issue a consignment note. Theassessee providing cargo handling services, wasnot required to pay service tax under reversecharge mechanism simply on the basis of monthlybill given by the transporter, unless thetransporter acts as a GTA and issues aconsignment note.

[CCE&ST vs JWC Logistics Pvt Ltd – CestatMumbai]

3.4 Where the assessee hired lorries from differenttruck owners for transportation of its own goodsand the assessee was the consignor as also theconsignee, service tax under reverse chargemechanism was not payable since there was noevidence of consignment-wise consignment noteissued and only periodical consolidated bills wereissued by the truck owners.

[Chhattisgarh State Coop Mkg Federation Ltd vsCST – Cestat Delhi]

3.5 The Applicant was engaged in design, erection,commissioning and installation of solar rooftoppower plant and solar irrigation water pumpingstation. It was ruled that the said supply was acomposite supply with supply of goods asprincipal supply. Two rates of GST would beapplicable – 70% would be deemed to be supplyof goods on which GST would be payable @5%and 30% of the total contract value taxable asservice on which GST wold be payable@18% interms of Notification 27/2018-CT(Rate). It wasalso observed that the contract would not qualifyas a works contract since the power plant isattached to a platform and can be easily detachedand is not an immovable property.

[Premier Solar Systems Pvt Ltd – AAR-Uttarakhand]

In the course of construction of warehouse onlease of land for more than 30 years, it was held

Iv. Input Tax Credit

Contributed by : CA. Anirudh Sonpalcan be reached at [email protected]

Judicial Decisions onIndirect Taxes

I. Place of Supply

Ii. Valuation

Iii. Levy & Supply

Indian Oil Corporation (IOCL), for the purpose ofexporting to Nepal, was transporting from itsrefinery at Haldea (WB) by rail, Aviation TurbineFuel and other products to its warehouse atBaxaur (Bihar), from where the products would beexported to Nepal. IOCL sought to claim ITC of taxpaid on rail transportation, treating its supplies aszero rate. The Appellate AAR approved the AARruling which had held that there was supply ofnon-taxable goods from WB to Bihar, which wasits distinct unit and since the exports had nottaken from refinery at WB but from its unit atBihar, the WB refinery cannot treat it as a zerorated supply and hence ITC was not available onthe non-taxable goods.

[Indian Oil Corporation Ltd – Appellate AAR-WB]

The Appellate AAR, while setting aside the rulingof the AAR, held that the amortized value of thetools supplied by OEM customers on FOC basiswill not be required to be added to the value ofthe components supplied by the appellant.

[Nash Industries India Pvt Ltd – Appellate AAR-Karnataka]

3.1 Services pertaining to research on matterspertaining to functions of foreign holdingcompany and services pertaining to informationon markets in territory – are not compositesupplies but are two distinct services. Theservices under Marketing Service Agreement arenot Intermediary services but in the nature ofMarket Research services and would qualify as anExport of Service.

[Asahi Kasei India Pvt Ltd – AAR – Maharashtra]

3.2 The assessee, having registered office inHyderabad, received commission in Brussels inrespect of capital raised in London for use inMauritius. Just because the corporate office waslocated in India, the global transactions appearedin its books of account and this is not a sufficientreason for payment of service tax under reverse



and circumstances, the interest shall becomputed on the gross dues or only on the netdues.

3. Court ruled against the petitioner by holding thatthe interest u/s 50(1) of the CGST Act, 2017 has tobe computed on the gross dues and not on the netdues. Following reasons were given by the Courtto reach the said conclusion:

a. The broad scheme of Section 39 which dealswith the filing of returns, Section 41 whichdeals with the claim of ITC and its provisionalacceptance, Section 16 which deals with theconditions and eligibility for taking ITC andSection 49 which deals with payment of tax,make it clear that the moment all the fourconditions stipulated in sub-section (2) ofSection 16 are complied with, a personbecomes entitle to take credit of ITC. Once aperson takes credit of ITC, the amount getscredited on a provisional basis to hiselectronic credit ledger under Section 41(1).Thus, the scheme of the Act makes adistinction between (i) the entitlement to takecredit which comes first; (ii) the actual entry ofcredit in the electronic credit ledger, whichcomes next; and (iii) the actual payment fromout of the credit, which comes last.

b. As per Sec. 50(1), liability to pay interest arisesautomatically, when a person who is liable topay tax, fails to pay the tax to the Governmentwithin the period prescribed. The liability topay interest is in respect of the period forwhich the tax remains unpaid. In fact, theliability to pay interest under Section 50 (1)arises even without any assessment, as theperson is required to pay such interest “on hisown”.

c. Thus until a return is filed as self-assessed, noentitlement to credit and no actual entry ofcredit in the electronic credit ledger takesplace. As a consequence, no payment can bemade from out of such a credit entry.

d. Suppose a registered person under the Actpurchases goods, which have suffered tax, tobe used as inputs in the goods to be sold byhim. Let us assume that the purchase is madein January and hence the same is reflected in

Contributed by : CA. Abhay Desaican be reached at [email protected]

Interest Whether on theGross or the Net Dues ??

1. Recently, Telangana High Court in the case of

held that in the eventof the delayed filing of the return, the interestpayable u/s 50(1) of the CGST Act, 2017 shall beon the gross amount of the dues and not on thenet amount of the dues (i.e. after adjusting theITC). Let us first understand the said ruling alongwith the logic adopted to reach the saidconclusion. Subsequently we shall also see theadditional contentions not considered in the saidruling.

2. In the said case the petitioner had filed GSTR-3Bfor the months of July, 2017 to May, 2018 withsome delay. It was submitted by the petitionerthat they were entitled to ITC equivalent to almost95% of the dues and were required to pay only5% of the dues by cash. However since GSTR-3Bcannot be filed unless entire dues are paid, theywere not able to file the same in time. Petitionerthereafter discharged the interest liability bycomputing the same on the net dues (i.e. dues onoutward supplies less the ITC). However thedepartment demanded the said interest on thegross amount contending that unless the ITC is notavailed and utilized through the online electroniccredit ledger, the amount of dues to the extent ofthe said ITC cannot be said to have been paid.Hence the writ petition was filed seeking ananswer from the Court as to whether in such facts

Megha Engineering & Infrastructures Ltd. v. TheCommissioner of Central Tax and others (WritPetition No.44517 of 2018)

High Court Ruling and Additional Contentions

that ITC would not be available on pre-fabricatedmaterials used on load bearing ACC floor. It wasobserved that just because the pre-fabricatedmaterials can be removed, does not take away thefact that is was part of an immovable property andhence ITC would not be available on such pre-fabricated materials, though detachable.

[Tewari Warehousing Company Pvt Ltd – AAR-WB]



section (2) or sub-section (3) or sub-section (5),shall

“2. Payment of taxes for discharge of tax liability asper FORM GSTR-3B.– Every registered personfurnishing the return in FORM GSTR-3B of the saidrules shall, subject to the provisions of section 49 ofthe said Act, towards tax,interest, penalty, fees or any other amount payableunder the said Act by debiting the electronic cashledger or electronic credit ledger, as the case maybe,

“(117) “valid return” means a return furnishedunder sub-section (1) of section 39 on which

pay to the Government the tax due as per suchreturn not later than the last date on which he isrequired to furnish such return”

discharge his liability

not later than the last date, as specified in thefirst paragraph, on which he is required to furnishthe said return.”

self-assessed tax has been paid in full”

5. Above referred provision specifies the due datefor payment of tax. It provides that the tax shall bedue not later than the last date on which one isrequired to furnish the return. Hence only the duedate for the payment of tax has been linked withthe due date for filing of the return. The conditionthat return can be filed only if the entire dues arepaid is not coming out from the reading of theabove referred provisions.

6. Above contentions shall also hold good evenunder the proposition that GSTR-3B is not a“return” u/s 39. This is because paragraph 2 ofNotification No. 13/2019 – CT which prescribesthe due date for GSTR-3B reads as under:

7. Hence similar to Sec. 39(7), only the due date forthe payment of tax is linked with the due date forthe filing of GSTR-3B. Said notification nowhereprovides that the said GSTR-3B can be filed only ifthe entire dues are paid.

8. Said issue can even be looked at from anotherperspective. The term “valid return” has beendefined u/s 2(117) as under:

9. Hence a return furnished u/s 39(1) for which self-assessed tax has not been paid in full shall stillremain a “return” but cannot be considered as a“valid return” for the purpose of matching of theclaim of ITC u/s 42.

10. Now Sec. 50(1) under which interest is levied

the return filed by February 20. While filingthe return in February, the dealer could havetaken credit and it is possible that the credit isavailable in the electronic credit ledger for themonth of February. If after some kind ofprocessing, the goods are sold in March, theoutput tax becomes payable while filing thereturn by April 20. This payment can be eitherby way of cash or by way of adjustmentagainst the claim for ITC. The payment is madeby way of cheque in the case of the former andby way of a claim made in the return by way ofan entry. Only when the payment is so made,the Government gets a right over the moneyavailable in the ledger. Since ownership ofsuch money is with the dealer till the time ofactual payment, the Government becomeentitled to interest upto the date of theirentitlement to appropriate it.

1. In our opinion following contentions should havebeen considered by the Hon’ble Court beforereaching the above mentioned conclusion:

2. Let us first consider whether the act of thepayment of tax and the filing of return are linkedin the scheme of the Act. Sec. 39(1) reads as under:

3. Hence the above provision clearly provides forthe filing of return declaring the tax payable aswell as the tax paid. However it does not lay downthat only if tax is fully paid that the return can besubmitted.

4. This conclusion shall be apparent if one considersSec. 39(7). Same is also reproduced below:

Additional Contentions

“SECTION 39. Furnishing of returns. — (1) Everyregistered person, other than an Input ServiceDistributor or a non-resident taxable person or aperson paying tax under the provisions of section10 or section 51 or section 52 shall, for everycalendar month or part thereof, furnish, [in suchform, manner and within such time as may beprescribed], a return, electronically, of inward andoutward supplies of goods or services or both, inputtax credit availed, and suchother particulars as may be prescribed”

“(7) Every registered person, who is required tofurnish a return under sub-section (1) or sub-

tax payable, tax paid



invited to the Goods and Services Tax Settlementof Funds Rules, 2017 formulated by exercisingthe powers conferred by various provisions of theCGST Act as well as IGST Act. Said Rules providesfor furnishing of various reports by the GSTN todetermine the amount due to the respective Stateand the Central Government. Accordingly as perthe procedure laid down in Rule 11, the fundscollected by the Centre/State shall be transferredbased on the reports by the RBI between “theConsolidated Fund of India and the ConsolidatedFund of States”. Hence the tax paid by the supplierfor which ITC will be claimed has been credited tothe consolidated fund of the India/Statedepending on the nature of tax. Said funds shallthen be transferred to the respective States orUnion based on the utilization, if any. Hence tillsuch time it shall remain in the said consolidatedfund. Hence the said amount cannot beconsidered as the tax which is beyond the reach ofthe Government so as to impose the tax on thegross amount.

16. Intent behind the levy of interest must also benoted. The Apex Court in the case of PrathibaProcessors v. Union of India reported in 1996 (88)ELT 12 (SC), explaining the term tax, interest andpenalty in Fiscal Statute held as under:

17. Said theory of interest being compensatory innature also remains to be tested judicially in lightof the design of the GST.

18. Hence we conclude by opining that the above

“In fiscal Statues, the import of the words – “tax”,“interest”, "penalty", etc. are well known. They aredifferent concepts. Tax is the amount payable as aresult of the charging provision. It is compulsoryexaction of money by a public authority for publicpurposes, the payment of which is enforce by law.Penalty is ordinarily levied on an Assessee for somecontumacious conduct or for a deliberate violationof the provisions of the particular statute.

Essentially, it is compensatory and differentfrom penalty - which is penal in character.”

Interest iscompensatory in character and is imposed on anAssessee who as withheld payment of any tax asand when it is due and payable. The levy of interestis geared to actual amount off tax withheld andthe extent of the delay in paying the tax on the duedate.

does not distinguish between a “valid return” orotherwise. Hence a conclusion can be reachedthat the law in fact visualises a scenario wherein areturn is filed with the amount due. The saidreturn may not be a valid return for the purpose ofmatching ITC but the filing of the same cannot berestricted by the GSTN portal unless the entiredues are paid.

11. Hence it is submitted that the consequences ofthe fault of the GSTN portal by not allowing filingof the return where the amount is partly due evenif the law as discussed above allows it cannot beimposed on the tax payer.

12. With the said background the levy of interest onthe gross amount of tax is not proper.

13. Close perusal of Sec. 50(1) is also required. Saidprovision is reproduced below for readyreference:

14. Reading of the above provision shall entail thatthe interest can be imposed only on the failure topay the tax “or any part thereof” by the supplier“on its own”. Hence the provision visualises ascenario wherein even on the self-assessmentbasis, interest is to be paid on any part dues if thesame remains unpaid. Hence the GSTN portal notpermitting filing of return with part dues also goesagainst the above referred provisions and henceeven on this ground, interest should not beimposed on the gross amount.

15. Another contention to consider is that the ITCamount availed by the registered supplier inquestion cannot be said to be the amount underthe ownership of the said supplier and hencecannot be considered as the amount which theGovernment can appropriate thereby permittingthe levy of interest on the gross dues. Reference is

“SECTION 50. Interest on delayed payment of tax. -(1) Every person who is liable to pay tax inaccordance with the provisions of this Act or therules made thereunder, but

to the Government within theperiod prescribed, shall for the period for which thetax or any part thereof remains unpaid, pay, on hisown, interest at such rate, not exceeding eighteenper cent., as may be notified by the Government onthe recommendations of the Council.”

fails to pay the tax orany part thereof



Contributed by : CA. Manilal Parsiyacan be reached at [email protected]

GST Update

The government bought following changes for the

month of April in central tax-

Vide notification no. dated 10-

04-2019, Seeks to extend the due date for furnishing

FORM GSTR-1 for taxpayers having aggregate turnover

more than Rs. 1.5 crores for the month of March, 2019

from 11.04.2019 to 13.04.2019



FORM GSTR-7 for the month of March, 2019 from

10.04.2019 to 12.04.2019



of returns in FORM GSTR-3B for the Month of March,

2019 for three days (i.e. from 20.04.2019 to

23.04.2019).


04-2019, Seeks to make Third amendment, 2019 to

the CGST Rules. Leading to amendment in Central

Goods and Services Tax Rules, 2017, Rule no.23 sub

rule 1 and Rule no.62 sub rule no. 1, 2, 4 and 5.

A proviso has been added to sub rule 1 as

returns due for the period from the date of the order of

cancellation of registration till the date of the order of

revocation of cancellation of registration shall be

furnished by the said person within a period of thirty

days from the date of order of revocation of

cancellation of registration. Further provided that

where the registration has been cancelled with

retrospective effect, the registered person shall

17/2019-Central Tax,




rule 23

furnish all returns relating to period from the effective

date of cancellation of registration till the date of order

of revocation of cancellation of registration within a

period of thirty days from the date of order of

revocation of cancellation of registration.

In the the marginal heading, for the words

“Form and manner of submission of quarterly return by

the composition supplier”, the words “Form and

manner of submission of statement and return” shall

be substituted. In sub-rule (1), for the portion

beginning with the words and figures “paying tax

under section 10” and ending with letters and figures “

FORM GSTR-4”, the following shall be substituted,

namely:- “paying tax under section 10 or paying tax by

availing the benefit of notification No. 02/2019–

Central Tax (Rate), dated the 7th March, 2019, shall

(i) furnish a statement, every quarter or, as the case

may be, part thereof, containing the details of

payment of self-assessed tax in FORM GST

CMP08, till the 18th day of the month succeeding

such quarter; and (ii) furnish a return for every

financial year or, as the case may be, part thereof

in FORM GSTR-4, till the thirtieth day of April

following the end of such financial year;

(ii) the proviso shall be omitted;

In sub-rule (5), following should be inserted. A

registered person who ceases to avail the benefit of

notification No. 02/2019– Central Tax (Rate), dated the

7th March, 2019, shall, where required, furnish a

statement in FORM GST CMP-08 for the period for

which he has paid tax by availing the benefit under the

said notification till the 18th day of the month

succeeding the quarter in which the date of cessation

takes place and furnish a return in FORM GSTR - 4 for

the said period till the thirtieth day of April following

the end of the financial year during which such

cessation happens. Further added Form GST CMP-08


04-2019, Seeks to notify procedure for quarterly tax

payment and annual filing of return for taxpayers

availing the benefit of Notification No. 02/2019–

Central Tax (Rate), dated the 7th March, 2019.


04-2019, Seeks to notify the provisions of rule 138E of

the CGST Rules w.e.f 21st June, 2019. Whereby no

person (including a consignor, consignee, transporter,

rule no 62,



contentions must also be considered by theCourts to resolve the issue. It is also suggestedthat the Government must apply the proposedamendment u/s 50, which seeks interest only onthe net dues, retrospectively to put this debate toan end. Doing otherwise may only incentivizeshort reporting of the tax payable (to the extent ofITC available) in the returns filed within the duedates to avoid undue hardship by way of interest.



From the view point of subsidiary

i. Equity – capital contribution from the

parent is tax neutral

ii. Adjustment on retained earnings on

transition date i.e. 8 Crores (i.e. 20

Crores- 12 Crores) will be reduced from

the book-profits for the period of 5 years

including the year of implementation of

Ind AS.

On a go forward basis, interest expense

recognised by the subsidiary in P&L is MAT

deductible.

2. Actuarial remeasurement gain or loss on defined

benefit plans are required to be classified at Fair

Value through Other Comprehensive Income.

Such gain or loss is to be considered in book

profits every year.

3. Gains or losses from investments in equity

instruments designated at fair value through

Other Comprehensive Income are to be

considered in book profits at the time of

realisation/ disposal/retirement or otherwise

transferred.

The clarifications provided by CBDT addresses various

issues to stakeholders. However, there are certain

issues which are still not clear, say in case of

restatement of financials in case of prior-period errors,

omissions occurring on an ongoing basis, or

retrospective application of accounting policy. Further,

as per Ind AS 37, provisions for constructive

obligations are required to be made in books of

account even though they do not represent legal

obligations. Therefore, there is a clear tension between

“constructive obligation concept” under Ind AS and

clause (c) to Explanation 1 to Section 115JB(2) which

states that the amount set aside to provisions made for

meeting liabilities, other than ascertained liabilities,

are to be added back to book profit. The CBDT should

consider issuing appropriate clarifications in respect of

the implications of MAT provisions on such issues.

(a) On transition date:

(b) After transition date:

` `

`

Take-aways:1. Accounting by Subsidiary of Interest Free Loan

from Parent:

Under IGAAP, Interest free loan received by

Subsidiary from Parent will be accounted at Face

Value. However, under Ind AS, subsidiary has to

account for such loan at fair value. To the extent of

the interest free element, the subsidiary records

an equity component from parent for such

element. On transition date, such loan is

outstanding and following are the entries:Amount in Crores

Loan from Parent 20

Other Equity 20

Interest Expense 12

Loan from Parent 12

Interest Expense 8

Loan from Parent 8

Loan from Parent 100

Bank 100

`

Particulars Debit Credit

(i) Recognition of interest free loan on transition date

(ii) True up adjustment

(iii) Recognition of Interest after transition date

(iv) On repayment of loan

Contributed by : CA. Chandravali Tikmanican be reached at

[email protected]

Minimum Alternate Tax(MAT) under Indian

Accounting Standards(Ind AS)

31.03.2017 379,100 620,900 1,000,000

31.03.2018 37,910 (100,000) 317,010

31.03.2019 31,701 (100,000) 248,711

31.03.2020 24,871 (100,000) 173,582

31.03.2021 17,358 (100,000) 90,940

31.03.2022 9,094 (100,000) -

Year Liability Component Equity ` Total `

Unwinding ofInterest `

Interestpaid `

Outstandingbalance `

Continue....

an e-commerce operator or a courier agency) shall be

allowed to furnish the information in PART A of FORM

GST EWB-01 in respect of a registered person, whether

as a supplier or a recipient, who,— (a) being a person

paying tax under section 10, has not furnished the

returns for two consecutive tax periods; or (b) being a

person other than a person specified in clause (a), has

not furnished the returns for a consecutive period of

two months.



Photo Gallery

Back to Basics Workshop on GST - 2019

Inspirational Talk with Maj. Gen. Dilawar Singh Breaking out of Your Shell on 07.04.2019

Half day seminar on Recent Changes in GST with Respect to Real Estate Transaction on 13.04.2019

Management Talk on ''Zero to Hero - Small People Great Work” on 13.04.2019

Forgery & Frauds vis-a-vis Liability of Auditorsand need of UDIN on 16.04.2019

Workshop Series for Accountants & Staff Members of CA Firmson GST 24 & 25.04.2019


MAY 2019Volume - IV

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E Meeting on Taxation ofCompany vs Partnership Firm& LLP and Tax Aspects onConversion on 16.04.2019

Meeting on Provisions relating toReopening and Reassessmentsunder Income Tax Acton 25.04.2019

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