GST: FAQs Series 22 : Returns Process and matching of Input Tax Credit (Updated Statutory provisions & Rules 03 June 2017)

Returns Process and matching of Input Tax Credit
(Updated Statutory provisions & Rules 03 June 2017)

Continue…


Q 11. What will be the legal position in regard to thereversed input tax credit if the supplier later realizes the mistake and feeds the information?

Ans. At any stage, but before September of the next financial year, supplier can upload the invoice and pay duty and interest on such missing invoices in his GSTR-3 of the month in which he had earlier failed to upload the invoice. The recipient shall be eligible to reduce his output tax liability to the extent of the amount in respect of which the supplier has rectified the mis-match. The interest paid by the recipient at the time of reversal will also be refunded to the recipient by crediting the amount in corresponding head of his electronic cash ledger.

Q 12. What is the special feature of GSTR-2?

Ans. The special feature of GSTR-2 is that the details of supplies received by a recipient can be auto populated on the basis of the details furnished by the counterparty supplier in his GSTR-1.

Q 13. Do tax payers under the composition scheme also need to file GSTR-1 and GSTR-2?

Ans. No. Composition tax payers do not need to file any statement of outward or inward supplies. They have to file a quarterly return in Form GSTR-4 by the 18th of the month after the end of the quarter. Since they are not eligible for any input tax credit, there is no relevance of GSTR-2 for them and since the credit of tax paid under Composition Levy is not eligible, there is no relevance of GSTR-1 for them. In their return, they have to declare
summary details of their outward supplies along with the details of tax payment. They also have to give details of their purchases in their quarterly return itself, most of which will be auto populated.


Q 14. Do Input Service Distributors ( ISDs) ne ed to file separate statement of outward and inward supplies with their return?

Ans. No, the ISDs need to file only a return in Form GSTR- 6 and the return has the details of credit received by them from the service provider and the credit distributed by them to the recipient units. Since their return itself covers these aspects, there is no requirement to file separate statement of inward and outward supplies.

Q 15. How does a taxpayer get the credit of the tax deducted at source on his behalf? Does he need to produce TDS certificate from the deductee to get the credit?

Ans. Under GST, the deductor will be submitting the deductee wise details of all the deductions made by him in his return in Form GSTR-7 to be filed by 10th of the month next to the month in which deductions were made.

The details of the deductions as uploaded by the deductor shall be auto populated in the GSTR-2 of the deductee.

The taxpayer shall be required to confirm these details in his GSTR-2 to avail the credit for deductions made on his behalf. To avail this credit, he does not require to produce any certificate in physical or electronic form.

The certificate will only be for record keeping of the tax payer and can be downloaded from the Common Portal.

Q 16. Which type of taxpayers need to file Annual Return?

Ans. All taxpayers filing return in GSTR-1 to GSTR-3, other than ISD’s, casual/non-resident taxpayers, taxpayers under composition scheme, TDS/TCS deductors, are required to file an annual return. Casual taxpayers, nonresident taxpayers, ISDs and persons authorized to
deduct/collect tax at source are not required to file annual return.

Q 17. Is an Annual Return and a Final Return one and the same?

Ans. No. Annual Return has to be filed by every registered person paying tax as a normal taxpayer. Final Return has to be filed only by those registered persons who have applied for cancellation of registration. The Final return has to be filed within three months of the date of cancellation or the date of cancellation order.

Q 18. If a return has been filed, how can it be revised if some changes are required to be made?

Ans. In GST since the returns are built from details of individual transactions, there is no requirement for having a revised return. Any need to revise a return may arise due to the need to change a set of invoices or debit/ credit notes. Instead of revising the return already submitted, the system will allow changing the details of those transactions (invoices or debit/credit notes) that are required to be amended. They can be amended in any of the future GSTR- 1/2 in the tables specifically provided for the purposes of amending previously declared details.

Q 19. How can taxpayers file their returns?

Ans. Taxpayers will have various modes to file the statements and returns. Firstly, they can file their statement and returns directly on the Common Portal online. However, this may be tedious and time consuming for taxpayers with large number of invoices. For such taxpayers, an offline utility will be provided that can be used for preparing the statements offline after downloading the auto populated details and uploading them on the Common Portal. GSTN has also developed an ecosystem of GST Suvidha Providers (GSP) that will integrate with the Common Portal.

Q 20. What precautions, a taxpayer is required to take for a hassle free compliance under GST?

Ans. One of the most important things under GST will be timely uploading of the details of outward supplies in Form GSTR-1 by 10th of next month. How best this can be ensured
will depend on the number of B2B invoices that the taxpayer issues. If the number is small, the taxpayer can upload all the information in one go. However, if the number of invoices is
large, the invoices (or debit/ credit notes) should be uploaded on a regular basis. GSTN will allow regular uploading of invoices even on a real time basis. Till the statement is actually submitted, the system will also allow the taxpayer to modify the uploaded invoices. 

Therefore, it would always be beneficial for the taxpayers to regularly upload the invoices. 

Last minute rush will make uploading difficult and will come with higher risk of possible failure and default. 

The second thing would be to ensure that taxpayers follow up on uploading the invoices of their inward supplies by their suppliers. This would be helpful in ensuring that the input tax
credit is available without any hassle and delay. Recipients can also encourage their suppliers to upload their invoices on a regular basis instead of doing it on or close to the due date.
The system would allow recipients to see if their suppliers have uploaded invoices pertaining to them. 
The GSTN system will also provide the track record about the compliance level of a tax payer, especially about his track record in respect of timely uploading of his supply invoices giving details about the auto reversals that have happened for invoices issued by a supplier.

The Common Portal of GST would have pan India data at one place which will enable valuable services to the taxpayers. Efforts are being made to make regular uploading of invoices as easy as possible and it is expected that an enabling ecosystem will be developed to achieve this objective. Taxpayers should make efficient use of this ecosystem for easy and hassle free compliance under GST.



Refer extract of  Chapter IX (Sec 37 to 48) of CGST Act (Return provisions) on following link: GST RETURNS: CHAPTER IX (SEC 37 TO 48) OF CGST ACT & UPDATED RULES 03 JUNE 2017

http://gstindia1.blogspot.in/p/37.html

Refer Income tax, GST & Company Law daily updates on link

   http://knowledgedailyrefresher.blogspot.in

Disclaimer:

This FAQ on GST compiled by NACEN and vetted by the Source Trainers is based on the CGST/SGST/UTGST/IGSTAct(s). This FAQ is for training and academic purposes only.

The information in this blogger is reproduced from FAQ on GST publised by CBEC updated on 31 March 2017 and is not intended to be treated as legal ad vice or opinion. For greater details, you are requested to refer to the respective CGST/SGST/UTGST/IGST Acts.

The FAQs refer to CGST and SGST Acts as CGST/SGST as CGST Act and SGST Act are identical in most of the provisions. CGST Act has been introduced in the Parliament. The SGST Acts will be passed by respective state legislatures. A few provisions may be specific to state and may not be in CGST Act.

Transfer of shares by company in pursuance of family settlement isn’t exempt from capital gains


Where assessee company was under control of members of a family, who were a part of a family settlement, but was a separate legal entity being incorporated as a limited company, transaction of transfer of shares by assessee-company amounted to transfer and would be covered within meaning of section 2(47) so as to be assessable to capital gains tax.


Refer full judgement:


[2017] 82 taxmann.com 397 (Bombay)
HIGH COURT OF BOMBAY
B.A. Mohota Textiles Traders (P.) Ltd.
v.
Deputy Commissioner of Income-tax, Maharashtra
M.S. SANKLECHA AND MANISH PITALE, JJ.
IT APPEAL NO. 73 OF 2002
JUNE  12, 2017 
C.J. Thakkar and S.C. Thakkar, Advocates for the Appellant. B.N. Mohta, Advocate for the Respondent.
JUDGMENT
M.S. Sanklecha, J. – This appeal under Section 260A of the Income Tax Act, 1961 (Act) challenges the order dt.23.4.2002 of the Income Tax Appellate Tribunal, Nagpur (Tribunal) relating to Assessment Year 1995-96.
2. This appeal was admitted on 23 March, 2007 on the following substantial questions of law :
(a)   Whether in the facts and circumstances of the case and in law the Tribunal was right in holding that the transaction of transfer of shares by the assessee company in pursuance of family arrangement amounted to transfer and was exigible to capital gains tax ?
(b)   Whether in the facts and circumstances of the case and in law the Tribunal was right in not accepting the fact that the transfer of shares by the assessee company being only incidental and in consequence of allotment and control of management of companies in pursuance of family arrangement, took the transaction out of purview of Section 2 (47) of I.T. Act, 1961 ?
(c)   Whether in the facts and circumstances of the case and in law merely because the assessee/company has a corporate veil, will it make the transfer of shares by it assessable to capital gains tax even though such transaction is in pursuance of family arrangement ?
3. It is agreed between the parties that Question (a) above brings out the real controversy between the parties, Questions (b) and (c) are mere facets of Question (a).
4. This appeal relates to A.Y. 1995-96.
5. The brief facts leading to this appeal are as under :
(a)   The appellant is a Private Limited Company. Over 80 % of it’s share capital is held by the family members of Mr.Girdhardas Mohota, Mr.Gwaldas Mohota and Mr.Ranchhoddas Mohota referred to by the Tribunal as Groups ‘A’, ‘B’ and ‘C’ respectively. The Mohota family, besides holding a majority stake in the appellant/Company, had joint interest in various other Limited Companies and Partnership Firms, besides the family also owned immovable properties jointly.
(b)   Disputes and differences arose between three groups of Mohota family i.e. Groups A, B and C. Consequently, with a view to settle the differences between them and restore family peace and harmony, it was decided by the three groups to refer their dispute by an agreement dt.15.1.1994 to the sole arbitration of Mr. Justice S.W.Puranik. The scope of reference to the Arbitration were as under :
(a)   Allotment and/or division of properties mentioned in schedule ‘B’ and related matters;
(b)   Allotment, management and control of partnership firms and limited companies mentioned in schedule ‘A’ and related matters;
(c)   All matters connected with or related to or ancillary to the above referred matters; and
(d)   To give suitable orders and directions for implementation thereof .
(c)   On 30.4.1994, Justice Puranik rendered his Arbitration Award by way of family settlement. The Arbitration Award thereafter became decree of the Court dt.7.11.1994 under the erstwhile Arbitration Act, 1940. The above Award distributed the properties belonging to Mohota family amongst it’s three groups. The Appellant/assessee was allotted to Group ‘B’. M/s.R.S.Rekchand Mohota Spinning and Weaving Mills Ltd. and M/s. Vaibhav Textiles Pvt. Ltd. were allotted to Groups ‘A’ and “C’ collectively.
(d)   Thus, the settlement inter alia required members of Group ‘B’ (Mr.Gwaldas Mohta group), who were in control of appellant/assessee, to transfer the shares held by the appellant/assessee in M/s.R.S.Rekhchand Mohta Spinning and Weaving Mills Ltd. and M/s. Vaibhav Textiles Mills Ltd. in favour of members of Groups ‘A’ and ‘C’ collectively i.e. Mr.Girdhardas Mohota and Mr.Ranchhoddas Mohota. The Award directed the transfer of shares at a consideration of Rs.225/- per share of M/s.R.S.Rekchand Mohota Spinning and Weaving Mills Ltd. and at a consideration of Rs.10/- per share of M/s. Vaibhav Textiles Mills Ltd.
(e)   Therefore, the appellant/assessee in terms of the Award transferred 25,650 shares held by it in M/s.Rekhchand Mohta Spinning and Weaving Mills Ltd. and 1,22,000 shares held by it in M/s. Vaibhav Textiles Pvt. Ltd. to the members of the family of Group ‘A’ and Group ‘C’.
(f)   On 30.11.1995, the appellant/assessee filed return of income for the Assessment Year 1995-96 declaring an income of Rs.58.35 Lakhs. During the Assessment proceedings, the appellant/assessee contended that transfer of shares in M/s.Rekhchand Mohota Spinning and Weaving Mills Ltd. and M/s. Vaibhav Textiles Pvt. Ltd. to members of Group ‘A’ and ‘C’ was done in pursuance of family arrangement/settlement as reflected in the Arbitration Award dt.30.4.1995. Therefore, it was contended that no Capital gains would be attracted as there was no transfer as it was working out of family settlement/arrangement. However, the Assessing Officer, by order dt.7.4.1997, negatived the same and inter alia held that the Company being a separate legal entity distinct from it’s share holders, cannot be as part of family settlement/arrangement. Thus, transfer of shares done by independent entity such as the Appellant/assessee would not be covered by the ‘Family Settlement’ and consequently, brought the transfer of 25,650 shares for consideration of Rs.225/- per share of M/s.Rekhchand Mohota Spinning and Weaving Mills Ltd. and 1,22,000 shares for consideration of Rs.10/- per share of M/s.Vaibhav Textiles Pvt. Ltd. to Capital Gains Tax. Resultantly, it determined the total income of the appellant for the Assessment Year 1995-96 at Rs.66.80 Lakhs.
(g)   Being aggrieved, the appellant carried the issue in appeal to the Commissioner of Income Tax (Appeals) {CIT(A)}. By an order dt.17.6.1998, the CIT accepted the position in law that family settlement cannot amount to transfer or create any interest and it is binding upon all the members of the family. However, the same can only be applied to members of the family who are parties to the settlement. In this case, the appellant/assessee was a Company incorporated under the Companies Act having a distinct and independent entity from it’s share holders. Thus, while holding that the Award dt.30.4.1994 is a family settlement, the same can only be applied to members of Mohota family, who were party to the proceedings before the Arbitrator and not to a Limited Company such as Appellant/Company. Therefore, notwithstanding the fact that the Appellant/assessee was under control and management of the members of Mohota family, who were part of family settlement, yet the transfer of shares by the Company would be covered within the meaning of Section 2(47) of the Act so as to be assessable to Capital Gains Tax. Thus, the appeal of Appellant/assessee was dismissed by the order dated 17.6.1998 of the CIT (A).
(h)   Being aggrieved with the order dated 17.6.1998 of the CIT(A), the Appellant/assessee preferred an appeal to the Tribunal. The impugned order dtd. 23 April, 2003 upheld the view of the lower Authorities by holding that a family settlement would not amount to transfer as it only recognizes pre-existing rights. However, it held that the Appellant/assessee (even if controlled by members of a family), on incorporation as a Limited Company becomes a separate legal entity and the members who own shares in the Company and the Company are in law different persons. It held that there exists a veil between the members of the Company and the Company. Thus, the family settlement arrived at between the members of a family will not inure to the benefit of the Appellant/assessee as it is not a member of the family. Consequently, the impugned order dated 23.4.2002 of Tribunal dismissed the appellant/assessee’s appeal.
6. Being aggrieved with the impugned order, the Appellant/assessee is in appeal before us on the substantial questions of law as reproduced above.
7. Mr.S.C.Thakkar, learned Counsel for the appellant/assessee in support of the appeal submits as under :
(a)   It is undisputed position as settled by the Apex Court that a family settlement/arrangement would not give rise to any transfer. The transfer of shares by the Appellant/assessee was in pursuance of and to give effect to the family arrangement as reflected in the Award dt.30.4.1994. There was no choice with the Appellant/assessee not to transfer the shares and such transfer of shares cannot be seen de hors the family arrangement. Thus, it is submitted that the entire transaction has to be looked at wholistically.
(b)   The corporate veil can be lifted to ascertain the real nature of the transaction and the person behind the transfer. In support, reliance is placed upon the decision of the Calcutta High Court in the case of Shaw Wallace and Company Ltd. v. Commissioner of Income Tax reported in 119 ITR 399.
(c)   The transfer of shares was mere adjustment of rights between the parties and no consideration has been received by the appellant/assessee The fair market value attributed to the shares by the Arbitrator was only for ascertaining and adjusting the rights of the parties to reach a family settlement.
8. As against this, Mr.Mohta, learned Counsel appearing for the Revenue submits as under :
(a)   The appellant/assessee is a Company incorporated under the Companies Act having a separate and independent existence, different from that of it’s share holders/members. Thus, the distinction between the incorporated Company and it’s members cannot be ignored.
(b)   It is undisputed that the appellant/assessee who has transferred the shares of M/s.R.S.Rekhchand Mohota Spinning and Weaving Mills Ltd. and M/s. Vaibhav Textiles Pvt. Ltd. are not members of Mohota family and therefore, they were not part of family settlement. Consequently, the Arbitration Award dt.30.4.1994 arrived at as a family settlement cannot, in any manner, have any impact on the appellant/assessee’s liability to tax under the Act.
(c)   Transfer done by the appellant/assessee of it’s shares in M/s.R.S.Rekhchand Mohota Spinning and Weaving Mills Ltd. and M/s. Vaibhav Textiles Pvt. Ltd. to members of Groups ‘A’ and ‘C’ is a transfer within the meaning of Section 2(47) of the Act. It does not fall under any of the exclusions provided in Section 47 of the Act. Thus, the impugned order dated 23 April, 2002 calls for no interference.
9. We have considered the rival submissions. There is no dispute before us that a family arrangement/settlement would not amount to a transfer. In fact, all the three Authorities under the Act have not disputed the aforesaid position in law. So far as the members of Mohota family are concerned, who are parties to the family settlement, any transfer inter se between them on account of family settlement would not result in a transfer so as to attract the provisions of the Capital gain tax under the Act. However, in the present case, we are not concerned with the members of Mohota family who were parties to the family settlement, but with transfer of share done by the Company incorporated under the Companies Act having separate/independent corporate existence, perpetual succession and common seal. This Company is independent and distinct from it’s members. In fact, this principle dates back to the decision of House of Lords in Saloman .vs. Saloman & Co. Ltd., 1897 AC 22. Our Court in T.R. Pratt (Bombay) Ltd. v. E.D. Sassoon and Co. Ltd., AIR 1936 (Bombay) 62 has observed as under :
” As held in 1897 A.C. 22 (23), under the law, an incorporated Company is a distinct entity and although shares may be practically controlled by one person, in law a Company is a distinct entity and it is not relevant to enquire whether the directiors belonged to the same family or whether it is compendiously described ‘a one-man Company’.
10. However, the Courts have permitted the lifting of corporate veil to prevent injustice. One such class of cases, where the Court has disregarded the corporate entity is where it is used for tax evasion. A classic illustration of this is found In Re. Dinshaw Maneckjee Petit, AIR 1927 (Bombay) 371, where the Court lifted the corporate veil as it found that “the Company in this case was formed by the assessee purely and simply as a means of avoiding super tax and that the Company was nothing more than the Assessee himself. It did no business but was created purely and simply as a legal entity to ostensibly receive dividends and interest and handed them over to the assessee as pretended loan”. In the present case, the Revenue does not seek to lift the corporate veil. It is not the case of the Revenue that the Corporate identity is a sham and it has been formed only to circumvent the law. In this case, it is the Assessee which seeks to lift the corporate veil so as to identify the members of the Assessee/Company as those who entered into family settlement as reflected in the Arbitration Award dt.30.4.1994 and call upon the authority to ignore the corporate existence of the Appellant. This lifting of the corporate veil is not allowed when it is not for the benefit of the Revenue. The Apex Court in the case of M/s. Bacha F. Guzdar v. CIT, 27 ITR 1 has inter alia observed that “A shareholder has no interest in the property of the Company….. It has only a right to participate in the profits of the Company as and when the Company decides to divide them. The Company is a juristic person and is distinct different from it’s share holders. It is the Company which owns the property and not the share holders.” Therefore, the attempt of the share holder to lift the corporate veil at the instance of the share holder was rejected. In this case also, shares in M/s.R.S.Rekhchand Mohota Spinning and Weaving Mills Ltd. and M/s. Vaibhav Textiles Pvt. Ltd. are held by the appellant/assessee and not it’s members. The members, therefore, cannot claim any rights to the property of appellant/assessee Company i.e. shares of M/s.R.S.Rekhchand Mohota Spinning and Weaving Mills Ltd. and M/s. Vaibhav Textiles Pvt. Ltd. as rightly held by the Authorities under the Act.
11. The submission of learned Counsel Mr.Thakkar that the entire transaction should be looked at wholistically bearing in mind the purpose and object of the settlement as recorded in the Arbitration Award dt.30.4.1994 so as to settle the dispute between members of the family and it was to achieve aforesaid objective that the shares in the appellant/assessee were directed to be transferred. The objective/purpose of family settlement would restrict itself only to the persons who entered into the family arrangement and are part of the settlement. It cannot extend to the persons who are strangers to the settlement. In this case, admittedly, the Appellant/assessee is not a member of Mohota family so as to be a part of the family settlement. The appellant/assessee having been formed under the Companies Act have certain advantages and disadvantages attached to it. But once a Company comes into existence under the provisions of the Companies Act and it is considered to be an independent entity, then it’s obligation under the law as a separate legal entity has to be complied with and settlement arrived at between it’s members cannot discharge the appellant/assessee from complying with it’s obligations under the Law. It was also contended that the Appellant/assessee had no volition in transferring the shares. This submission overlooks the fact that an artificial entity such as a Company only acts through it’s Directors and in no case, does the Company has a mind of it’s own to decide the course of action to be adopted.
12. It was also submitted that no consideration was received by the Appellant/assessee for the transfer of shares. It is submitted that the fair market value of M/s.R.S.Rekhchand Mohota Spinning and Weaving Mills Ltd. arrived at Rs.225/- per share and that of M/s. Vaibhav Textiles Pvt. Ltd. arrived at Rs.10/-per share by the Arbitrator was only for the purposes of adjustment of rights amongst the parties. This submission overlooks the fact that the Arbitration Order annexed to the decree (Page 62 of the Appeal memo) itself records that the shares in M/s.R.S.Rekhchand Mohota Spinning and Weaving Mills Ltd. and M/s. Vaibhav Textiles Pvt. Ltd. are to be transferred at a consideration of Rs.225/- and Rs.10/- per share respectively. Thus, the consideration has been determined and accepted by the members of the family, who are in management of the Assessee/Company.
13. Mr.Thakkar, learned Counsel also placed reliance upon the decision of the Calcutta High Court in the case of Shaw Wallace and Co. Ltd. (supra) in support of the submission that one is entitled to lift corporate veil and look behind to find out who are the real persons in control of the incorporated Company. In the aforesaid case, the issue was with regard to amalgamation of 100% subsidiary company to it’s holding company. The question which arose for consideration before the Calcutta High Court was whether an amalgamation between holding and subsidiary Companies would amount to transfer of capital asset in terms of Section 45 r/w. 2 (47) of the Act. The Calcutta High Court specifically referred to Section 47 of the Act and in particular, to Section 47, sub-clause (v) of the Act to hold that a transfer by a subsidiary company to the holding Company of the whole of it’s share capital will not be regarded as transfer for the purposes of computing capital gains under Chapter IV-E of the Act. Further observations made by the Calcutta High Court to the effect that, on looking behind the facade of the Company, one would notice that all the assets of the subsidiary company are held by it’s parent company which owns 100 % of it’s shares. The aforesaid observations of the Calcutta High Court seems to provide the rationale for Section 47(v) of the Act in excluding a transfer of the entire share capital of a subsidiary to it’s holding company which owns 100% of it’s shares from being considered a transfer. In the present facts, we are not concerned with transfer between holding and subsidiary companies. It is not the case of the appellant that Section 47 of the Act is applicable.
14. Further, lifting of corporate veil at the instance of the assessee would mean that it is denying it’s corporate existence. This, after taking advantage of the separate existence of a Company under the Act. Therefore, after having incorporated the Limited Company and given it separate existence from it’s share holders, it is not open to the Company to urge “Please ignore my separate existence and look at the persons behind me.” If that be so, the Appellant/Company must opt for voluntarily winding up and then the shares being allotted to the individual members on liquidation would be governed by the family arrangement/settlement.
15. In the above view, the Tribunal was correct in holding that the transaction of transfer of shares by the independent corporate entity was assessable to capital gain tax. Therefore, the substantial questions of law which arise for our consideration are all decided in favour of the respondent/revenue and against the appellant/assessee. Accordingly, the appeal is dismissed. No order as to costs.

Bhagavad Gita: How to achieve peace (Text 70, Contents of the Gita Summarized)

apuryamanam acala-pratistham
samudram apah pravisanti yadvat
tadvat kama yam pravisanti sarve
sa santim apnoti na kama-kami
(Text 70, Contents of the Gita Summarized)

Meaning: A person who is not disturbed flow of desires–that enter like rivers into the ocean, which is ever being filled but is always still–can alone achieve peace, and not the man who strives to satisfy such desires.

GST: EVC and OTP mode for authentication of documents under GST (N/No 06/2017 dated 19 June 2017))



[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)] 
GOVERNMENT OF INDIA 
MINISTRY OF FINANCE 
DEPARTMENT OF REVENUE CENTRAL BOARD OF EXCISE AND CUSTOMS 

Notification No. 6/2017 – Central Tax
New Delhi, the 19th June, 2017
29 Jyaistha, 1939 Saka 

G.S.R. (E).- In exercise of the powers conferred by sub-rule (1) of rule 26 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the said Rules), the Central Board of Excise and Customs hereby notifies the following modes of verification, for the purpose of the said rule, namely:- 

(i) Aadhaar based Electronic Verification Code (EVC); 

(ii) Bank account based One Time Password (OTP): 

Provided that where the mode of authentication of any document is through any of the aforesaid modes, such verification shall be done within two days of furnishing the documents. 

2. This notification shall come into force on the 22nd day of June, 2017.

[F. No. 349/72/2017-GST]
(Dr. Sreeparvathy.S.L.) Under Secretary to the Government of India

Happy Yoga Day 21 June 2017

Happy Yoga Day 21 June 2017



Yoga-sthah Kuru Karmani
Sangam tyaktva dhananjaya
Siddy-asiddyoh samo bhutva
Samatvam yoga ucyate (Text 48, Ch2, Contents of Gita Summarized)
                                  
Meaning: Perform your duty equipoised,  O Arjuna, abandoning all attachment to success or failure, such equanimity is called yoga.
(Bhavavad Gita)
Yoga:

-Yoga
-is merger
-is unification of Atman with Brahman
-is one who has integarated himself with the Totality
-is the one who has achieved the highest  purpose of life
-is the one who is merged with the Lord. He is óne with the Lord
-is one who has reached the highest state of consciousness, the real Self
-knows everything ‘As it is’-that everything is only an extension of himself as  Brahman
-is the one who has reached the Summit (the highest level or degree attainable; the highest stage of development)
(Ashtavakra Gita)

Bhagavad Gita: Introspective sage(Text 69, Contents of the Gita Summarized)

Ya nisa sarva-bhutanam tasyam jagarti samyami
yasyam jagrati bhutani sa nisa pasyato muneh
(Text 69, Contents of the Gita Summarized)

Meaning: What is night for all beings is the time of awakening for the Self controlled; and the time of awakening for all beings is night for the Introspective sage.

**
There are two classes of intelligent men.One is intelligent in material activities for sense gratification, and the other is Introspective and awake to the cultivation of self realization.  Activities of the Introspective sage, or thoughtful man, are night for persons materially absorbed. The sage feels transcendental pleasure in the gradual advancement of spirtual  culture, whereas the man in materialistic activities, being asleep to Self-realization, dreams of varieties of sense pleasure, feeling sometimes happy and sometimes distress in his sleeping condition.The Introspective man is always indifferent to materialistic happiness and distress.He goes on with his self realization activities undisturbed by material reactions.

Here’s how GST complicates the employee-employer relationship



Here’s how GST complicates the employee-employer relationship

June 20, 2017

(ET Article)
Here’s how GST complicates the employee-employer relationship

“How would you treat a car given to employees for their use under GST (goods and services tax)?” a tax head of a car company asked me.

‘Why should it be such a big problem?’ I wondered. Until I realised the nuances of such a transaction.

Is the car capitalised in the books of the company? Is it registered in the company’s or employee’s name?

As per the company’s HR policy, is the employee allowed personal use of the car? If yes, is there any way to identify that personal use? Are there different entitlements, different models or variants of cars specified for each level in the organisational hierarchy? And many more queries.

Very often, we believe the employer-employee relationship to be beyond the purview of indirect tax. The company, we figure, is only a juridical person and operates through the acts of its employees.

So, the employee and the company should not be treated as different persons to charge tax on every transaction between them. But some of the entries in the GST law tend to defy this logic.

Schedule 3 of the Central GST (CGST) Act 2017 deals with activities or transactions that shall not be treated as supply. One entry specifies “services provided by an employee to the employer in the course of or in relation to his employment”.

So, the consideration paid by an employer to the employee — i.e., salary paid for rendering services in the course of employment — would not be taxable under GST.

But what all can be treated as services in the context of employment? Will components covered in the cost-to-company (CTC) of an employee — house rent allowance, dearness allowance, etc — not attract GST, since this would be pure consideration to an employee for his employment? Also, what would be the treatment of, say, club fees reimbursed over and above the CTC?

If an employee of an IT company acts as a DJ at an office party and gets paid for the service, would it not be services rendered in the course of his employment? Would the same be treated as a service liable to GST?

The GST law complicates the employer-employee relationship further by way of Entry 2 in Schedule 1 of the CGST Act, “Supply of goods/services made without a consideration between related persons, when made in the course or furtherance of business, would be

Further, the law deems the employer and employee to be related persons. So, even if there is no consideration for the goods/services provided to an employee, the supply could still attract tax. Would this mean that laptops provided to employees would get covered, as these are provided in the furtherance of business? Well, they shouldn’t. Why? Because there must exist an element of ‘supply’ in the transaction.

Supply mostly occurs when someone loses possession or ownership or both. Barring exceptions, typically this test holds good. When a laptop is given to an employee, he gets its possession, which he retains till he is in employment. But would that qualify as a supply? If it does, then even the workstation allotted to the employee must qualify as one.

This makes the scenario absurd. However, all things are not as black and white. If we take the example of free coffee from a vending machine provided to an employee, the answer may not be so simple.

Another twist in the tale is that the proviso to Entry 2 in Schedule 2 excludes from the definition of ‘supply’ gifts up to Rs 50,000 provided to an employee in a financial year. Hence, gifts above Rs 50,000 would be liable to GST and a company would be required to keep a record of gifts provided to each employee.

But would showing appreciation in the form of cash rewards or vouchers — as opposed to a gold coin, for instance — be considered as a gift? Or would it be considered for services of employment provided by the employee?

The employee and employer relationship revolves around many such examples. It is the play of words like ‘in furtherance of’, ‘in relation to’ and ‘in the course of ‘ that makes the difference. So, it is necessary to understand each transaction and view it under the lens of the GST law.

Sometimes it may be prudent to tweak the HR policies and CTC structures, so as to make the compliance under GST simpler. Who said tax managers and tax consultants would lose relevance under GST? Source – http://economictimes.indiatimes.com [20-06-2017]

Bhagvad Gita: Steady intelligence (Text 67 & 68, Contents of the Gita Summarized

Indriyanam hi caratam yan mano nuvidhiyate
tad asya harati prajnam vayur navam ivambhasi (Text 67)

Tasmad yasya maha baho nigrhitani sarvasah
indriyanindriyarthebhyas tasya prajna pratisthita (Text 68)

Meaning: As a strong wind sweeps away a boat on the water, even one of the roaming senses on which the mind focuses  can carry away a man’s intelligence.
Therefore, O mighty armed, one whose senses are restrained from their objects is certainly of steady intelligence.

Bhagavad Gita : Connectivity with Supreme (Text 66, Contents of the Gita Summarized)

Nasti buddhir ayuktasya na cayuktasya bhavana
na cabhavayatah santir asantasya kutah sukham
(Text 66, Contents of the Gita Summarized)

Meaning: One who is not connected with Supreme  (in Supreme consciousness) can have neither transcendental intelligence  nor a steady  mind, without which there is no possibility  of peace. And how can there be any happiness without peace?

* When one understands  that Supreme (God) is the only enjoyer of all the good results of sacrifice and penance, that he is the proprietor of all universal manifestations, and that he is the real friend of all living entities, then only can one have real peace.