Latest Blogs from SBS and Company LLP

    INTRODUCTION:

    1. On 01.02.2019, the amendments made to Goods & Services Tax (GST) laws vide Central Goods and Services Tax (Amendment) Act, 2018 are made effective. One of the amendment  relates to determination of place of supply for transportation of goods. Though, it was clarified that the purpose of this amendment is to grant relief to taxpayers, the manner in which the amendment was brought in does not legally assure such relief.  In this article, we are going to discuss this issue.

    LEGAL POSITION:

    Pre-Amendment Position:

    1. Section 5 of Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as ‘IT Act’) provides for levy and collection of Integrated tax (IT) on all the inter-state supplies, that takes place in case of goods or services or both, whether by way of forward charge or reverse charge. Similarly, with respect to intra-state supplies, section 9 of Central Goods and Services Tax Act, 2017 (hereinafter referred to as ‘CT Act’) read with section 9 of respective State Goods and Services Tax Act, 2017 (hereinafter referred to as ‘ST Act’) shall provide for payment of Central Tax (CT) and State Tax (ST) for intra-state supply of goods or services or both whether by way of forward charge or reverse charge. 

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    In this edition, we bring to you certain important articles on various aspects.

    We have penned an article on ‘Interesting Issues in Arrest and Interplay of GST laws, IPC and PMLA’, which deals with the question whether completion of assessment is mandatory to initiate prosecution under GST laws, for which the Supreme Court has answered in negative. This judgment is important as it gives wide powers to the taxation authorities to tackle with the economic frauds. Further, in the article, we also discussed the interplay between GST laws, IPC and PMLA for the trending offence of circular trading.

    We have also brought an article, which deals with the recent amendments made to Foreign Contribution Regulation Act and rules made thereunder. I request everyone to read the same to keep yourself updated with the changes which effect your businesses.

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    Key Topis:

    AUDIT

    • SA 701 COMMUNICATING KEY AUDIT MATTERS IN THE INDEPENDENT AUDITOR’S REPORT

    INDIRECT TAX

    • GST APPLICABILITY ON GTA SERVICES WHERE PLACE OF SUPPLY IS OUTSIDE INDIA

    DIRECT TAX

    • SECTION 56 OF INCOME TAX ACT, 1961

    FEMA

    • IMPORT OF GOODS BY SEZ DEVELOPER AND UNIT

    The Central Board of Direct Taxes (for brevity ‘CBDT’) has released a paper for public consultation on the proposals pertaining to the amendment of rules which deal with profit attribution to Permeant Establishment (for brevity ‘PE’). The current rule does not lay down a universal approach for determination of profits attributable to PE, leaving to the discretion of Assessing Officer a wide power for such attribution. This has led to multiple rounds of litigations both by tax payer and revenue. The Courts also held in different matters, different profit attributions making this more complicated. Further, the tax payer is also burdened in absence of a concrete mechanism, which leads to tax uncertainty. Hence, the CBDT thought in the best interests of tax payers and to achieve a universality in attributions of profits to PE, brought out a paper for public consultation dealing with the amendments to such rules. The paper was published on 18th April 2019 and CBDT has provided a window of 30 days for providing the comments on the proposed amendments. Such comments can be mailed to This email address is being protected from spambots. You need JavaScript enabled to view it.. In this write up, we have tried to concisely capture the key contents in the paper, so that reader can go through this write up and make his suggestions to the proposed amendments.

     

    In our last article, we have analyzed the legal provisions relating to interest payable under Goods & Services Tax (for brevity ‘GST’) laws towards delay in remittance of tax. Taking into consideration, the well established legal principle that interest is compensatory in nature and is required to be payable only when there is a loss to revenue for delayed remittance of tax, we have expressed our opinion that interest payable under GST law is on net liability after adjustment of input tax credit as against the view expressed by Principal Commissioner, Hyderabad vide his standing Order No. 01/2019 dated 04.02.2019. In the meantime, the Telangana and Andhra Pradesh High Court, in the case of M/s Megha Engineering and Infrastructures Limited vs CCT[1], has expressed that interest is payable gross tax liability. In this article, we will now analyze the reasons for such conclusion by Honorable High Court and the probable legal proposition that can be reconceived.

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