The Institute of Chartered Accountants of India e...

Volume - II | March 2018

Baroda Branch of Western India Regional Council ofThe Institute of Chartered Accountants of India

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

EditorialTeam

Contents

CA. Dhiren Parikh 93762 11099Chairman

CA. Hitesh Agrawal 99980 28737

CA. Krunal Bhrambhatt 78748 11551

CA. Vin d Pahilwani 98980 78176

CA. Pradeep Agrawal 98985 60967

CA. Arpan Dodia 98983 83530

CA. Abhijit J Kotecha 98254 83173

CA. Manoj Sahu 90990 94500

CA. Rikin Patel 88667 09509

Vice-Chairman

Secretary

Treasurer

Ex-officio

IP - Chairman

Committee Member

Committee Member

Committee Member

o

CA. Dhiren Parikh CA. Manoj Sahu

CA. Rahul Parikh CA. Nayan R Kothari

CA. Neena Patel CA. Gunjan Agrawal

CA. Jigita Shah CA. Dhruti Vaidya

CA. Parth Patel CA. Chintan Popat

Forthcoming Events ... 2

Congratulations

Direct Tax Updates ... 4

Judicial Decisions on Indirect Taxes ... 5

...

Controversies in Making Exportswith Payment of IGST ...

Expectations of VariousStakeholders from SBA of Banks ... 8

Snap Gallery ... 11

... 3

GST Update 6

7

Pg. No.

ManagingCommittee

Chairman Communication

Dear Members,

In every phenomenon the beginning remains always the most notable

moment.

Importantly, ICAI has changed guards and I congratulate our new ICAI

President CA. Naveen N.D. Gupta and our Vice President CA. Prafulla

Chhajed and pledge our complete support to the President’s vision for

the year 2018-19. I am sure these stalwarts will lead ICAI to greater

heights of glory. We pledge to work closely with our leaders and

accelerate the growth of branch under their esteemed guidance.

WIRC also handed over its leadership to a young and dynamic

Chairman CA. Sandeep Jain. I also take the opportunity to congratulate

new team of WIRC CA. Sandeep Jain, CA. Priyam Shah, CA.

Purushottam Khandelwal, CA. Balkishan Agarwal and CA. Vikrant

Kulkarni on being elected as the Chairman, Vice Chairman, Secretary,

Treasurer and WICASA Chairman respectively of Western India

Regional Council for the year 2018-19. I congratulate them all and

assure that the Branch will carry out its functions in sync with theAction

Plan down.

It gives me immense sense of pride to share about yet another victory of

TEAM BARODA 2017. Baroda Branch has been adjudged as Second

BEST BRANCH of the region and Baroda WICASA has been awarded

as BEST STUDENTSASSOICATION of the region for the year 2017. I

take this opportunity to congratulate and thank the entire CA fraternity,

Students of Baroda Branch and Staff members of Baroda Branch for

their co-operation and support throughout the year.

The month of February witnessed various events and seminars on Union

Budget 2018, Live Screening and Public Programme on Union Budget

2018, Lecture meeting on Companies (Amendments) Act,2017 and

Role of Chartered Accountants, Full day seminar on GST –Practical

Issues and Solutions, Programme on Accounting and Actuarial

fundamentals of Standard on Employee Benefit IND AS-19,

programme on Insolvency and Bankruptcy Code –Law & Practical

Issues jointly with Federation of Gujarat Industries (FGI) and GST

Clinic.

CPE Study circle has successfully completed its 20th year and I

congratulate founder Chairman and his team, all Convener & Co-

convener and Members of branch for their support and co-operation for

organising various study circle meetings.

Details of programs for the month of March are given in the newsletter

and I hope members will participate and be benefitted by the same as

most of these programs will concentrate on practical exposure and

expertise for the members. The month of March is a busy one for all

Chartered Accountants as fraternity is gearing up with Bank Branch

Audit, Advance Tax calculation, Filing Income tax Returns, GST

returns and Tax payments etc.

But March is also a month of colour and I extend my warm wishes to all

members on the occasion of Holi. May this festival of colours brings

happiness and joy to your life.

Chairman

CA. Dhiren Parikh

e-Newsletter

Baroda Branch of WIRC of ICAI2

Branch Events

HrsCPE 3

Day & Date :

Time :

Venue :

Saturday, 03.03.2018

2:00 pm to 5:00 pm

Faculty :

Fees :

CA. Sanjay Shah, Ahmedabad

Rs. 300/- including GST

ICAI Bhawan, Vadodara

Workshop on Filing the documents &legal issues in Partnership Firm

Day & Date :

Time :

Venue :

Tuesday, Wednesday & Friday

06, 07 & & 09.03.2018

06.00 to 08.00 pmpm

CA. Nirav Shah

CA. Farhad Wadia

CA. Varun Fitter



Faculty :

Fees :

Workshop for Accountants

Day & Date :

Time :

Venue :

Thursday, 08.03.2018

03.00 to 05.00 pm (Followed by Hi Tea)pm

Dr. Darshana Thakker, Ahmedabad



Faculty :

Fees :

Celebration of International Women’ day –“ Paint Your life”

Day & Date :

Time :


06.00 pm onwards

Fees :

Venue :


Delta 9, Gorwa, Vadodara

Celebration of International Women’ day –Box Cricket League

Study Circle EventsDay & Date :

Time :

Topic :

Faculty :

Fees :

Venue :


6.00 pm to 8.00 pm

Aum Shri Lokaay Namah:

Nirmal Parekh

NIL for Study Circle members and Rs. 250/-(including 18% GST for non members)


Day & Date :

Time :

Topic :

Faculty :

Fees :

Venue :

Friday, 23.03.2018

6.00 pm to 8.00 pm

Decoding Online Banking Frauds

CA. Urvanki Shah

NIL for Study Circle members and Rs. 250/-(including 18% GST for non members)


HrsCPE 2

HrsCPE 2

Day & Date :

Time :

Topic :

Faculty :

Fees :

Venue :


02:00 pm to 05:00 pm

Tax Planning through HUF & Familyarrangement including Case studies & Practicalaspects and Prepara t ion of Wil l &documentation in relation to HUF & Familyarrangement

CA. Vimal Punmiya, Mumbai

Rs. 300/- including GST till 08.03.2018thereafter Rs. 400/- including GST


Half day seminar

HrsCPE 3

WICASA EventsRevisionary Lectures Schedule for May 2018

Day & Date :

Time :

Topic :

Faculty :

Venue :


09.30 am to 05.30 pm

Statutory Bank BranchAudit

CA. Shriniwas Joshi, Mumbai

CA. Sanjay Rane, Mumbai

CA. R. C. Thakkar, Vadodara

Fees : Rs. 600/- for Members on or before21.03.2018 thereafter Rs. 800/- plus GST.Rs. 350/- for students on or before 21.03.2018thereafter Rs. 500/-


plus GST

Full Day Seminaron Statutory Bank Branch Audit

Date

04-03-2018

12-03-2018

13-03-2018

Topic

Amendment Direct Tax

Mangement of Working Capital

Cost of Capital

Faculty

CA. Nirav Shah

CA. Mahesh Jaiswal

14-03-2018

15-03-2018

16-03-2018

16-03-2018

17-03-2018

17-03-2018

17-03-2018

18-03-2018

19-03-2018

20-03-2018

21-03-2018

22-03-2018

23-03-2018

24-03-2018

24-03-2018

Major Topics of Audit

Information and Technology

Financing Decisions

Advance Auditing andProfessional Ethics

Marginal Costing / StandardCosting

Amendment Direct Tax

Corporate & Allied Laws

Marginal Costing / StandardCosting

Accounting Standards, Espo,Underwriting, Buyback

Issue in Partnership Accounts

Cash Flow Statement (direct &Indirect Method )

Single Entry

Internal Reconstruction

Accounting for Non TradingOrganization

Accounting Standard

Amalgamtion

Major Topics of ISCA

CA. Harshad Jaju

CA. Himanshu Shah

CA. Mahesh Jaiswal

CA. Aseem Trivedi

CA. Siddharth Jadeja

CA. Nirav Shah

CA. Aseem Trivedi

CA. Siddharth Jadeja

CA. Mansi Bhatt

MR. Divyesh Dholakia

MR. Divyesh Dholakia

MR. Soham Vaishnav

CA. Yuvraj Bachhawat

HrsCPE 6

Day & Date :

Time :

Friday, 02.03.2018

09.30 am onwards (Followed by Brunch)

Venue : ICAI Bhawan, Vadodara

Holi Celebration

Jointly with All Gujarat Federation of Tax Consultant


CongratulationsCA. Naveen N. D. Gupta,

President ICAI

2018-2019

A man of professional wisdom, vision andstrong organisational skills with a firmbelief in inclusive growth of Indian accountancy profession,CA. Naveen ND Gupta has been elected as the new Presidentof The Institute of Chartered Accountants of India (ICAI) on12th February 2018. A seasoned professional of 22 years ofstanding, CA. Naveen ND Gupta is widely commended forhis role in making the Income Disclosure Scheme, 2016 asuccess, which was acknowledged by the Finance Minister.

He is now Chairman of Board of Directors of ICAI-ARF(Accounting Research Foundation) and XBRL India. ICAI-ARF is instrumental in driving governmental accountingreforms in various bodies such as Indian Railways, MCD andKMC. He is also Director Indian Institute of InsolvencyProfessionals of ICAI, which is the first Indian IPA.Internationally, he is technical Advisor to member SMPCommittee of IFAC.

His association as Central Council Member at ICAI, nowrunning in 9th year since 2010, with position as VicePresident in 2017-2018; has made him traverse regimen ofstandard setting, quality assurance framework, anddisciplinary mechanism. He has earlier been Chairman ofICAI’s Committee (s) on Direct Taxes, Economic,Commercial Laws & WTO, Peer Review Board, CapacityBuilding of CA Firms and Small & Medium Practitionersand Public Relations. He has been appreciated for hisdistinguished contribution as Vice-Chairman of Audit &Assurance Standard Board, Professional DevelopmentCommittee, Internal Audit Standards Board, ContinuingProfessional Education Committee, and Board of Studies.

Known for his prowess in many areas, he steered the draftingof IFRS compliant Schedule III to the Companies Act, 2013,Ind-AS compliant Schedule III for NBFC, Ind-AS -114 onRegulatory Deferral Accounts and Guidance Note onAccounting for Rate Regulated Activities as Convener. He isalso credited for initiating and starting two Certificate

Courses on ‘Intellectual Property Rights’ and ‘Anti MoneyLaundering Laws’for ICAI.

He is representing ICAI in many important committeesconstituted by the Government Ministries/ Regulators suchas Government Accounting Standards Advisory Board(GASAB) and Audit Advisory Board both constituted byC&AG of India, Board of Insurance Regulatory &Development Authority (IRDA), National AdvisoryCommittee on Accounting Standards (NACAS) and SEBI’sPrimary MarketAdvisory Committee.

With focus on innovation and niche enablement, he intendsto position CA profession as aiding and upholding publicinterest by enhanced focus on QualityAssurance framework,calibrating Regulation with development and leveragingdigital technology to turn disruptions arising out of changingparadigm of businesses to niche empowerment.

His vision is to work for Global mobility of CAprofessionalsthrough enhanced focus on recognition overseas, capacitybuilding through exposure to jurisdiction specific skillbuilding programs and exploring newer industrial trainingopportunities domestically and overseas as also internationalplacements of Indian CAs.

CA. Prafulla Chhajed,

Vice President,

ICAI 2018-2019

A blend of experience, foresight andprofessional excellence dedicated to thecause of accountancy profession, CA.Prafulla Chhajed is the new Vice Presidentof the Institute of Chartered Accountants ofIndia (ICAI) for the term 2018-19. He was elected as the VicePresident of the ICAI by the 23rd Council of the Institute onFebruary 12, 2018.

Having gained deep insights into the profession as a fellowmember of the ICAI with more than 20 years of impeccableprofessional standing, he has been serving the ICAI and theprofession as a Central Council Member since 2013-14. Amulti-dimensional personality, he is widely commended forprofessional acumen, organizational and leadership skills.

Bestowed with professional prudence, he has been elected to

the Central Council for two consecutive terms (i.e. 2013-16and 2016-19). As a Council Member, he has exceptionallyserved the ICAI and the accountancy profession as theChairman of Committee for Professional Accountants inBusiness & Industry, and Committee on Banking, Insurance,Pension & Financial Markets in 2017-18, and ProfessionalDevelopment Committee, Committee on Public Finance andGovernment Accounting and Committee on CorporateSocial Responsibility in 2016-17. CA. Prafulla Chhajed hasbeen widely commended for his initiatives as Chairman ofYoung Members Empowerment Committee and WomenMembers Empowerment Committee.

CA. Prafulla Chhajed has always inspired his fellowmembers with his humble down-to-earth approach toconnect with people, and self-less service to the profession.Aresident of Mumbai, he has actively partnered in the growthof the nation and the profession as a member.

A proponent of giving a global outlook to Indianaccountancy profession, CA. Prafulla Chhajed haspassionately represented the profession on the internationalfront at several global meetings and conferences. With aglobal approach and vision, he has been appreciated for hiswork as ICAI nominee on ‘Public Sector FinancialManagement Committee (PSFMC)’of The Confederation ofAsian and PacificAccountants (CAPA).

CA Prafulla Chhajed was Chairman of Western IndiaRegional Council of ICAI for the year 2007-2008 and waselected Regional Council Member of Western IndiaRegional Council of ICAI for the period of 9 years from2001-2010.

He has been contributing to various Publications and hisarticles on Taxation and Investments have been published inwell-known Marathi daily ‘Maharashtra Times’ for 15 yearsbesides in other Publications. More than 600 articles havebeen published till date As the Vice President of the ICAI,CA. Prafulla Chhajed is now the Vice-Chairman of allStanding Committees of the ICAI including Executive,Finance and Examination Committees, and the ex-officioMember of all Non-Standing Committees of the ICAI andJoint Editor of The Chartered Accountant journal. He is alsoDirector on ICAI-Accounting Research Foundation andXBRLIndia.


the only reason for giving large discounts is to earn

profits in a later year. According to news reports,

has started disallowing the

whole/part of such discounts

expenditure. I do not consider such

disallowances is valid in law, but the disturbing part of

such disallowances is the uncertainty they create and

the collateral damages in terms of litigation costs,

liquidity issues and reduction in valuation of the

concerned company.

The Income Tax Department has launched an ‘online

chat’ service for taxpayers so that they can seek

answers to their basic queries and doubts relating to

direct tax issues.Awindow has been hosted on the main

p a g e o f t h e d e p a r t m e n t ’ s w e b s i t e –

www.incometaxindia.gov.in/ – with a prominent icon

stating ‘Live Chat Online- ask your query’.

It would appear that a

to answer the general queries of a

taxpayer. A person can enter the ‘chat room’ by

furnishing an email-id and ask questions as a guest. An

has also been provided to the taxpayer for

the

Income-tax Department.

While only God can resolve all the issues, I believe the

facility may resolve simple issues faced by many

taxpayers.

Section 54 allows exemption from tax on capital gains

if such gains are invested in a new house. If the new

house comes with built in furniture like cupboards built

in a wall, we would consider cost of such furniture as

cost of the house. The house will also come with

electrical fittings which also, I believe, we would

Income-tax Department

considering the same as

capital

team of experts from the

department and independent tax practitioners has

been deputed

option

emailing the entire chat to their IDs for future

reference although responses may not bind

3. Online chat on website of Income-tax Department

4. Exemption under section 54 also for furniture etc.

Congratulations

Heartiest Congratulations to Newly Elected Office Bearersof WIRC of ICAI

CA. Saneep K C Jain - Chairman

CA. Priyam Shah - Vice Chairman

CA. Purshottam Khandelwal - Secretary

CA. BalkishanAgarwal - Treasurer

CA. Vikrant Kulkarni - Chairman, WICASA

Congratulations

CA. Satyakant Shastri elected as

Syndicate Member for Second Term

in the Syndicate of

Maharaja Sayajirao University of Baroda.

1. Credit for tax deducted at source when Cash basis

used

2. Discounts by e-commerce companies

Stress created by the processes of Income-tax

Department has not spared even the Chartered

Accountants as regards their own cases.

I believe there are substantial number of Chartered

Accountants who claim credit for tax deducted in the

year of receipt of professional fees and not in the earlier

year in which tax is deducted at source. However,

credit is denied in case of many of them (as tax appears

in Form 26AS of a different year) who, as a result, are

engaged in prolonged processes for rectification.

Another lot of Chartered Accountants claimed as soon

as they saw it in Form 26AS. They accounted income

to the extent of tax deducted at source and claimed

credit for entire amount of tax deducted. Credit was

allowed in most such cases but in a few it was not

allowed citing the rule to the effect that credit is

allowable in the year in which income is accounted.

Before the Ahmedabad Bench of ITAT, it was argued

that the Income-tax Department should not create

problems when giving credit in one year or another is

immaterial. This argument is not brought out in the

order but the

E commerce companies often give large

which result in losses,

image. Apparently

Tribunal did allow credit of entire

amount of tax although income was accounted only

partly. This was in case of M/s Theo Desh Consultants

V.ACIT in ITANo.2680/Ahd/2014 dated 23/01/2018

discounts

with a view to acquire

customers and building up brand

Contributed by :can be reached at [email protected]

CA. Narendra Hindocha

Direct Tax Updates

CA. Minesh M Shah elected as

Syndicate Member Under

Teachers Category for the term of

3 years from 2018 to 2021


consider as part of the cost of the house, although if a

business acquires or constructs building with electrical

fittings, such electrical fittings would be considered as

separate asset for the purpose of depreciation. I wonder

if the value of

Well, in this case, the judges were liberal

enough to consider not only all of the above but also

as

integral part of the house

It was held that the cost of house has to

essentially include the cost of these things as well and it

is not open to the Assessing Officer to treat only the

cost of only civil construction as cost of house and

segregate the cost of other things as not eligible for

exemption under section 54. The decision is reported

at (2018) TaxCorp(LJ) 14301 (ITAT) Rajat B Mehta vs.

ITO

I believe that penalties and prosecutions should be in

proportion to the nature and gravity of offense. While

there is a philosophy that would justify severe penalty

to set an example and scare others, it is like slapping an

innocent child to scare a mischievous one.

This is in the context of large number of notices for

Press release issued by Finance Ministry on 20-

January-2018 states about defaulter of Income Tax

TDS being arrested and sent to jail by the Tis Hazari

Court. It further adds that The Principle Chief

Commissioner of Income Tax – Delhi, Shri. S. S.

Rathore stated that the Department is very serious

about timely depositing of the TDS deducted by the

employer and failure to deposit the tax deducted will

lead to criminal prosecution with imprisonment from 3

months to 7 years.

airconditioners, geysers, fans and

modular kitchens can be considered as part of the

house.

movable assets like furniture and dishwashers

when they were acquired as

an integral deal.

prosecution for delayed deposit of TDS and the

Commissioners are not willing to drop it even after

demonstration of reasonable cause for delay.

5. Prosecution for delay in depositing TDS dues

While no fault can be found with the strict

implementation of law, in this particular case,

the assessee asked for repeated adjournments,

instead of giving reasonable explanations for

the defaults and if he had demonstrated

reasonable cause, Court would have spared

the extreme action.


CA. Anirudh Sonpal

Judicial Decisions onIndirect Taxes

I. VALUATION

1.1 The appellant Company was providing cable operator

services to its employees for distribution of TV signals

received from MSO; the Company was paying Service

Tax on the charges recovered from employees for

distribution of the TV signals as cable operator. The

revenue authorities were of the view that the Company

had incurred much higher expenditure on the TV

signals obtained from the MOS but had recovered

lesser amount from the employees and hence the

services were undervalued; the revenue authorities

were of the view that the extra consideration was in the

form of benefits received by the Company through

welfare measures which led to increase in production.

The Honourable Tribunal observed that there was no

evidence of any extra consideration having been

received and quantification of non-monetary

consideration should be based on specific and tangible

evidences. Accordingly, the Honourable did not find

merit in increasing the taxable value in terms of Section

67 of the Finance Act,1994 and the service tax

valuation rules.

[West Coast Paper Mills vs CCE&ST, Mangalore –

Bangalore Cestat]

1.2 With reference to Karnataka VAT, the Honourable

Supreme Court observed that where assessee allowed

quarterly discount to its dealers on basis of sales

turnover generated in every quarter of financial year

and gave it to dealers in sales invoices raised in

subsequent quarter, in computing taxable turnover,

assessee would be entitled to deduction of trade

discount.

[MayaAppliances Pvt Ltd vsAC of Com.Taxes - SC]

2.1 Service provider had not issued any consignment note

and hence the appellant will not be covered under the

scope of Goods Transport Agency for payment of

service tax under reverse charge.

[Ultratech Cement vs CCE – Mumbai Cestat]

2.2 Assessee was not entitled to cenvat credit of service tax

paid on GTA services for transportation of goods from

place of removal upto the buyer’s premises after the

amendment in the definition of ‘input service’in 2008.

[CCE&ST vs Ultratech Cement Ltd – SC]

2.3 Where transportation of goods was the primary service

and loading/unloading was incidental to transportation

of goods, such loading/unloading was part of GTA

services.

[CST, Ranchi vs HEC Ltd – Kolkata Cestat]

2.4 Where the assess was engaged in transportation of coal

in the mining area, loading and unloading of coal was

incidental to the main activity of transportation and

hence was part of GTAservices.

[Rungta Projects Ltd vs CCE&ST, Allahabad –

Allahabad Cestat]

3.1 Maintenance, Management and Repair facilities

provided by Maharashtra Industrial Corporation to plot

owners against collection of service charges was not

II. GOODS TRANSPORT

III. GOVERNMENT SERVICES


Act may opt to pay tax in composition scheme under

section 10 with effect from the first day of the month in

which he files an intimation in Form GST CMP-02.

Such person shall further furnish the statement in Form

GST ITC-3. The time period to furnish the statement in

Form GST ITC-3 has been increased from ninety days

to one hundred and eighty days from the day on which

such person commences to pay tax under Section 10.

2. Rate of tax of the composition levy -The category of

registered persons, eligible for composition levy under

section 10 are as under:

1 Manufacturers, other than

manufacturers of such goods as

may be notified by the Government. Union

territory.

2 Suppliers making supplies referred

to in clause (b) of paragraph 6 of

Schedule II. turnover in the

State or Union

territory.

3 Any other supplier eligible for

composition levy under section 10

and the provisions of this Chapter. taxable supplies

of goods in the

State or Union

territory.

3. In the Rule 20 proviso that no application for the

cancellation of registration shall be considered in case

of a taxable person, who has registered voluntarily,

before the expiry of a period of one year from the

effective date of registration has been omitted.

4. New Rule 31A has been inserted to prescribe value of

supply under Section 15 in case of lottery, betting,

gambling and horse racing as under:

(a) The value of supply of lottery run by State

Governments shall be deemed to be 100/112 of the

Sr. Categories of Registered Persons Rate of Tax

Half per cent of

the turnover in

the State or

Two and a half

percent of the

Half per cent of

the turnover of

face value of ticket or of the price as notified in the

Official Gazette by the organizing State,

whichever is higher.

(b) The value of supply of lottery authorised by State

Governments shall be deemed to be 100/128 of the

face value of ticket or of the price as notified in the

Official Gazette by the organizing State,

whichever is higher.

(c) The value of supply of actionable claim in the form

of chance to win in betting, gambling or horse

racing in a race club shall be 100% of the face

value of the bet or the amount paid into the

totalisator.

5. In Rule 43 an explanation has been replaced to clarify

that the value of exempt supply for the purposes Rule

42 and Rule 43 shall exclude:

(a) the value of supply of services specified in the

notification No. 42/2017-Integrated Tax (Rate),

dated 27.10.2017;

(b) the value of services by way of accepting deposits,

extending loans or advances in so far as the

consideration is represented by way of interest or

discount, except in case of a banking company or a

financial institution including a non-banking

financial company, engaged in supplying services

by way of accepting deposits, extending loans or

advances; and

(c) the value of supply of services by way of

transportation of goods by a vessel from the

customs station of clearance in India to a place

outside India.

6. In Rule 54 sub-Rule (1A) has been inserted to prescribe

content of invoice or debit-credit note to be issued by

Input Service Distributors.

7. Rule 55A has been inserted to provide that the person-

in-charge of the conveyance shall carry a copy of the

liable to service tax since the services provided by IDC

were its statutory obligations and the charges collected

were a compulsory levy.

[CCE, Nashik vs MIDC – Bombay HC]

3.2 Whereas service tax was payable on rent charged by

Municipal Corporation for providing its property such

as land, building etc for advertisement purpose,

charging fees/taxes for giving permission for providing

space by private parties to advertising agencies is a

statutory levy which did not amount to any service.

[Pimpri Chinchwad Municipal Corporation vs CCE,

Pune – Mumbai Cestat]

Where an assessee entered into two separate contracts –

one for providing engineering consultancy and the

second for execution and implementation of a project,

the Honourable High Court observed that both the

contracts constituted one single indivisible contract

and hence it cannot be said that the assessee was

providing independent engineering service so as to

levy service tax on such consultancy independent of the

project execution and implementation.

[CCE vs Hindustan Construction Company Ltd –

Madras HC]

IV. INDIVISIBLE CONTRACT


CA. Manilal Parsiya

GST Update

Central Government vide

amends Central Goods and Service

Tax Rules, 2017 as under:

1. Under Rule 3(3A) a person who has been granted

registration on a per provisional basis in case of

migration from registration under existing law or who

has been granted certificate of registration under CGST

Notification No. 3/2018 Central

Tax, dated 23.01.2018


tax invoice or the bill of supply issued in accordance

with the provisions of rules 46, 46A or 49 in a case

where such person is not required to carry an e-way bill

under these rules.

8. In Rule 89 sub-Rule (4A) and (4B) has been substituted

with effect from 23.10.2017.

(a) According to new sub-rule (4A) in the case of the

supplier has availed the benefit of the Notification

No. 48/2017-Central Tax dated 18.10.2017,

refund of input tax credit, availed in respect of

other inputs or input services used in making zero-

rated supply of goods or services or both, shall be

granted.

(b) According to new sub-rule (4B) in the case of the

supplier has availed the benefit of the Notification

No. 40/2017-Central Tax (Rate) dated the

23.10.2017 or Notification No. 41/2017-

Integrated Tax (Rate) dated 23.10.2017 or

Notification No. 78/2017- Customs dated the

13.10.2017 or Notification No. 79/2017-Customs

dated 13.10.2017 or all of them, refund of input tax

credit, availed in respect of inputs received under

the said notifications for export of goods and the

input tax credit availed in respect of other inputs or

input services to the extent used in making such

export of goods, shall be granted.

9. Rule 138 is being replaced by detail provisions relating

to information to be furnished prior to commencement

of movement of goods and generation of e-way bill.

10. Central Government vide

postpone the

implementation provisions of Rule 138 relating to e-

way bill.

11. Central Government vide

reduced

the amount of late fee payable by any registered person

as under:

Notification No. 11/2018 –

Central Tax dated 02.02.2018

Notification No. 04, 05, 06

and 07/2018 – Central Tax dated 23.01.2018

Exporter may supply goods or services or

both, subject to such conditions, safeguards and

procedure as may be prescribed,

paid on

goods or services or both supplied. Rule 96 of the

CGST Rules, 2017 prescribes the manner for claiming

the refund of IGST paid on exports.

3. Normal belief is that the selection of route is only a

matter of convenience. It is not so. Both the above

referred rules (viz. Rule 89 & Rule 96) have been

amended to put some restrictions on route available for

claiming the refund in certain circumstances. First let

us deal with amended Rule 96. For our discussion sub-

rule (10) of Rule 96 is relevant and hence the same is

reproduced below:

“Rule 96 (10)

of the Government of

India, Ministry of Finance, notification No. 48/2017-

Central Tax dated the 18th October, 2017 published in

the Gazette of India, Extraordinary, Part II, section 3,

sub-section (i), vide number G.S.R. 1305(E) dated the

18th October, 2017 or notification No. 40/2017-

Central Tax (Rate), dated 23rd October, 2017 published

in the Gazette of India, Extraordinary, Part II, section 3,

sub-section (i), vide number G.S.R 1320(E) dated the

23rd October, 2017 or notification No. 41/2017-

Integrated Tax (Rate) dated the 23rd October, 2017

published in the Gazette of India, Extraordinary, Part II,

section 3, sub-section (i), vide number G.S.R. 1321 (E)

dated the 23rd October, 2017 or notification No.

78/2017-Customs dated the 13th October, 2017


section 3, sub-section (i), vide number G.S.R. 1272(E)

dated the 13th October, 2017 or notification No.

79/2017-Customs Tax dated the 13th October, 2017


section 3, sub-section (i), vide number G.S.R. 1299(E)

Route 2:

on payment of

integrated tax and claim refund of such tax

The persons claiming refund of

integrated tax paid on exports of goods or services

should not have received supplies on which the

supplier has availed the benefit

ReturnForms

(Rs.)

Particulars Amount of Amount oflate Fees latefees forper day NILReturn(Rs.) per day

GSTR-1 Failure to furnish the

details of outward

supplies

GSTR-5 Failure furnish the

return

GSTR-5A Failure furnish the

return

GSTR-6 Failure furnish the

return

25 10

25 10

25 10

25 –


CA. Abhay Desai

Controversies inMaking Exports with

Payment of IGST

1. As per Sec. 16(1) of the IGSTAct, 2017 export of goods

or services or both is regarded as "zero rated supply".

This means that exporter is not required to levy any tax

on such exports and recover the same from the

customer and at the same time is also entitled to input

tax credit ("ITC") of the goods or services used in

making such exports. Further Sec. 16(3) gives two

routes for obtaining the refund of ITC which may get

accumulated on account of exports. Said routes are as

under:

2. Exporter may supply goods or services or

both under bond or Letter of Undertaking, subject to

such conditions, safeguards and procedure as may be

prescribed,

Rule 89

read with Rule 96A of the CGST Rules, 2017

prescribes the manner for claiming the refund of such

accumulated ITC.

Route 1:

without payment of integrated tax and

claim refund of unutilised input tax credit.


dated the 13th October, 2017”

As per the above sub-rule exporter can go under Route

2 by making exports on payment of IGST and

subsequently claiming refund of the same only if such

exporter has not received supplies on which supplier

has availed benefit under referred Notifications. Let us

briefly analyze the contents of the referred

Notifications:

A. dated

18.10.2017 - Said Notification deals with deemed

exports. It covers supplies made against advance

authorization, supply of capital goods against

EPCG authorization, supply of goods to EOU &

supply of gold by a bank or PSU against advance

authorization. It must be noted that procurement

against advance authorization has to be done on

pre-import basis for physical exports to claim the

benefit.

B. dated

23.10.2017 &

dated 23.10.2017 - Said

Notification covers supplies made to merchant

exporter at the rate of 0.1% in case of IGST or

0.05% each in case of CGST & SGST.

C. dated

13.10.2017 - Said Notification read with parent

Notification provides exemption from Customs

Duty & IGST under Customs on goods imported

or procured from Public or Private Warehouse or

from International Exhibition by Hundred per cent

EOU, STP or EHTP units. Said exemption is

available till 31.03.2018.

D. dated

13.10.2017 - Said Notification read with parent

Notification provides exemption from Customs

Duty & IGST under Customs on imports under

EPCG, Advance Authorization, Advance

Authorization for Annual Requirements, Advance

Notification No. 48/2017-Central Tax

Notification No. 40/2017-Cetral Tax (Rate)

Notification No. 41/2017-

Integrated Tax (Rate)

Notification No. 78/2017-Customs

Notification No. 79/2017-Customs

Authorization for Deemed Export, Advance

Authorization for export of Prohibited Goods and

Narrow Woven Fabrics, etc. Said exemption is

available till 31.03.2018.

Thus if an exporter has received supplies on which

supplier has availed benefit under any of the above

referred Notifications, exporter cannot make exports

on payment of IGST. He has to compulsorily export

under LUT and claim refund of unutilized ITC under

Route 1. Consequential amendments have also been

made by inserting sub-rule 4A & 4B to Rule 89 to

permit refund of unutilized ITC.

Now let us deal with two controversial issues:

4. Amendment with retrospective effect ??

Before 23.01.2018, sub-rule (10) only covered cases of

Notifications stated at A & B above (i.e. benefits

claimed under deemed exports & merchant exports).

Vide Notification No. 3/2018-Central Tax dated

23.01.2018, sub-rule (10) has been amended to cover

situations described in Notifications stated at C & D

above. Moreover said amendment has been given a

retrospective effect from 23.10.2017. Hence an

uncertainty has been created for claims of refund made

against exports made with payment of IGST from

23.10.2017 to 22.01.2018 in cases where exporter has

procured goods availing exemption under Notification

No. 78/2017-Customs or 79/2017-Customs during the

said period. Is exporter required to surrender the claim

? If yes, there is no procedure to make such surrender.

There is also a larger issue involved about whether

Government can make a retrospective amendment to

disturb the rights created to receive the refund which

has already arisen as per the earlier valid provisions ?

5. Whether the benefit availed under the above

referred Notifications should be seen qua the supplier

or qua the transaction ??

Let us take an example to understand the issue.

Issue 1:

Issue 2:

Exporter has given an invalidation against advance

licence to a supplier to procure goods domestically.

Said supplier imports the requisite goods and claims

Customs Duty & IGST exemption under Notification

No. 79/2017-Customs. Subsequently such supplier

supplies the goods to exporter by charging IGST under

the IGST Act, 2017. Can it be said that supplier has

availed the benefit under Notification No. 79/2017-

Customs ? Plain reading may suggest that benefit under

the above referred Notifications must have been

claimed on the supplies received by the exporter and

not on supplies received by the supplier of exporter. In

our case, supplier has not claimed any IGST exemption

under the IGST Act, 2017 on supplies made to the

exporter. He has claimed benefit on his procurement.

Hence a view is possible that such receipt of supplies

shall not debar the exporter from making exports with

payment of IGST. Said view is further fortified by

reading sub-rule (4B) of Rule 89. As per said sub-rule,

refund of input tax credit shall be granted in respect of

"inputs received under said Notifications". Hence

whether benefit of above referred Notifications has

been availed or not on the transaction between the

supplier and exporter has to be seen and not the benefit

availed by supplier on his procurement.

6. From the above discussion we can conclude that one

has to be very careful in deciding the route for claiming

the refund. Wrong route may result in demand of refund

erroneously claimed along with interest and penalties.


CA. Nayan R. Kothari

Expectations of VariousStakeholders from Statutory

Branch Auditors of Banks

Bank Management

Banks attach prime importance to statutory audit and

preparation for the audit is a structured process consisting of

allocating branches to auditors, briefing branches in small


clusters about the do’s and don’ts, reporting discipline,

action on MOC and expected time lines for audit completion.

In many cases, a preliminary scrutiny of accounts is

undertaken in order to identify and decide on the treatment of

cases of ambiguous classification. The concerns of the banks

in this area are:

I. Whether the audit will commence and conclude on

schedule – It is customary for the banks to decide on the

tentative date for bringing out their annual results, all

audit activity to be completed within time limit, leaving

time for finalization of results. This does put pressure

on auditors, but they have also conditioned themselves

to this requirement of banks.

ii. Whether the auditor has familiarized himself with the

bank’s significant accounting policies, internal

guidelines on different aspects, internal notes,

information emanating from branch and management

response thereto, problem areas etc.

iii. Whether the audit will be conducted in a harmonious

atmosphere, meeting the infrastructural and

information needs without delay, and the auditor is

planning his requirements in a methodical manner.

iv. Whether the bank could expect a generally ethical and

professional approach. This is an area of subjectivity,

but auditors have generally been found to be reasonable

within the limits of their professional authority and

responsibility.

v. Whether the auditor is able and willing to guide bank

staff in the interpretation of guidelines and bringing

risky situations or practices of the branch to the

knowledge of the management, with guidance

wherever possible.

The above will enable us to construct the role of an auditor

insofar as bank audit is concerned. This is attempted in the

following sections, organized in the order of importance.

I. The auditing team is an efficient unit which acts upon

the assignment letter promptly, visits the branch

allotted, participates in pre audit meetings and

understands the accounting ‘topography’of the branch,

and is generally well prepared to complete the audit on

schedule. This will lead to the auditing team perusing

the relevant files, inspection reports, control returns

and documents in advance of the commencement of the

audit, and familiarize themselves with the IT System.

ii. Conclusions regarding accounts in general and

individual cases would be arrived at based on the extant

regulatory guidelines, the bank’s views on the

transactions and an understanding of the real nature of

the transactions or situations. This is a very important

aspect because the risk of a loan loss cannot be decided

on accounting events alone but on the basis of a study of

the account in totality. Any decision to classify solely

on the basis of a calendar of events would be

inappropriate. Some banks have the practice of

preparing internal notes on cases of ambiguous

classification of accounts, setting out the history of the

accounts, the market in which the customer operates,

the transaction in question or account status, and

advising the reasons for treating an account as standard

or otherwise. Bankers will be bankers, given the

pressure that they are subject to, and auditors are bound

by their professional compulsions. Without suggesting

that ever greening or incorrect asset classification

should be allowed, it is submitted that the auditor, given

his time constraint and limited exposure regarding the

account must keep an open mind and study the

submissions of the branch. If this is not done, good

borrowers would also stand classified and affected as

NPAs accounts. What is important is a balanced view

on the account. Such decisions by the auditors must be

taken with conviction, so that if a transaction is

questioned at a later date, the auditor must be able to

stand his ground and not submit to undesirable

pressures. This is a very important role for the auditor

and demands considerable maturity and balanced

judgement on his part.

iii. Ability to guide branch and head office functionaries in

aspects of risks involved in certain transactions or

accounts or procedures in the bank. An auditor who is

able to act as a guide and counsel (rather than as a fault

finder without diluting his professional responsibility)

would be able to command respect of the bank.

iv. It is in the interest of the bank and the auditors to

maintain grace during the course of the audit. On

Conflicting issues which may crop up during audit,

calls for assertiveness rather than aggression on the part

of the auditor and bank official. There are number of

instances where the auditors and bankers would have

gained by introspecting on their actions and remarks.

v. The reporting of possible fraud in an account or

transaction deserves to be mentioned. It is suggested

that the auditor concerned discusses the matter with the

Central Statutory Auditor before coming to a

conclusion. This will facilitate a report based on a

holistic view of the account or transaction.

vi. The matter of noting qualifications on the financial

results is a tricky area, as it has far reaching

implications for the bank concerned. This is an area

which requires tact and accuracy on the part of the

auditor. Fortunately, the Central Statutory Auditors

have the maturity to draft this area after discussions

amongst themselves, the branch auditor and with the

top management of the bank concerned such that

differences are resolved in a healthy and professional

manner.

vii. Finally, the Long Form Audit Report, which provides

critical information on the systems and procedures, and

practices at the branches is a very important document

for the bank. Auditors generally do this exercise with

diligence.

The branch statutory auditor’s report together with the Long

Form Audit Report and various certificates, should reflect

the status of the branch in terms of its operations, financial

results and the health of its portfolio of loans and advances,

specific instances and weaknesses account wise for taking

proper remedial action by the higher authorities of the bank

Reserve Bank of India


on implementation of internal controls, fraud, off balance

sheet items including contingent liabilities etc.,

The Reserve Bank of India can draw comfort that

professional scepticism has been exercised by the branch

statutory auditor and the affairs at the branches are conducted

in an acceptable and reliable manner as stipulated.

Reserve Bank of India looks to the audit fraternity to directly

report frauds above Rs.100 lakhs or transactions which are

suspicious or which may be in the nature of money

laundering for speedy action from their end.

Tax Audit: Taxation authorities rely on the information

provided by the Chartered Accountants in Form 3 CD.

Central Statutory Auditor place reliance on the branch

auditors reporting after verification of records that the

statement of particulars furnished in the Form 3CD at the

branches is true and correct.

Indirect Tax: The collection and remittance of Indirect Tax on

applicable services is an area which the branch auditor will

be reporting as part of the branch audit. Indirect Tax

authorities may rely on the information certified by the

branch auditor in this regard.

They are generally concerned about the financial health of

the bank and look forward to the branch auditor to bring out

issues which could be having an impact on the operation or

profitability of the bank including frauds or incidence of NPA

of large advance accounts.

The confidence of the general public in the banking system is

significantly enhanced due to the branch audits, which

ensures that there are adequate checks and controls in

banking institutions to put their hard earned monies as

deposits in banks.

Various statutory authorities

Shareholders of Banks

General Public

Shop No. 16,17 &18 Silver Arcade Complex, Munjmahuda Road, Akota,, Gujarat 390007 | Phone : 0265-2354608-18Vadodara

Dear Members,

The Baroda Branch of WIRC of ICAI has

strong tradition of providing the best tools

and support to CA students of Baroda, for

achieving their goal of becoming Chartered

Accountants. Finance should not be the

constraint for deserving Students who want to

be a CA and “Vidhya Daan” is considered as

the best amongst all gifts. Since past few years,

with the contribution of the big hearted

members, the Baroda Branch of WIRC of ICAI

has been taking responsibility to sponsor a

part of the total educational cost of the needy

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Financial Assistance is given to students after

systematically evaluating their eligibility (i.e.)

screening their applications, interviewing

them, cross-verifying the credential and so on.

The following are current registration fees of

our Institute for a CA student:

• Foundation : Rs. 09,200/-

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• Final : Rs. 22,000/-

The Branch seeks Members’ active support in

successful continuation of this noble cause.

Members willing to contribute any amount

may kindly write cheque favouring: “Baroda

Branch of WIRC of ICAI” and send it to CA.

Manoj Sahu (9099094500 / 0265-2363500).

Appeal for the Contributionto Financial Assistancescheme for CA students


Snap Gallery

Live Screening of Union Budget 2018-19 on 01.02.2018

CA. Anirudh Sonpal

CA. Abhay Desai

CA. Milin Mehta

CA. Dr. Girish Ahuja

Analysis of Union Budget 2018-19 on 10.02.2018

Dr. Neha Karnik Dr. Vishal Desai

New Horizon to the Companies (Amendment) Act, 2017 & Role of CA's on 10.02.2018

CS. M C Gupta

Public Program on Analysis of Union Budget -2018 on 14.02.2018

Full Day Seminar on GST-Practical Issues & Solutions on 17.02.2018

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Accounting & Actuarial Fundamentals of Standardon Employee Benefits – Ind AS 19 on 21.02.2018

Chartered Accountants Premier Legue on 17 & 18.02.2018 Study Circle Birthday Celebration on 24.02.2018

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Baroda Branch of WIRC of ICAI

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WICASA - FABRUARY 2018GST Clinic on 27.02.2018

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