Quarterly India tax updates - October - December 2021 19 January 2022 - Deloitte
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Quarterly India tax updates October - December 2021 19 January 2022
Subject matter experts © 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 2
We will discuss… • Economy/Regulatory updates • Direct tax updates • Transfer pricing tax updates • Indirect tax updates • Recent judicial pronouncements © 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 3
Economic and Regulatory Updates
Non-requirement of NOC
Amendments to the RPT FAQs on SEBI (Share Based
Press Release on review of from Income Tax
under SEBI Listing Employee Benefits and
FDI policy on Telecom sector Department for Voluntary
Regulations Sweat Equity) Regulations
Liquidation Process
The key amendments to the RPT are The government raised foreign direct FAQs released with simplistic It is clarified that an Insolvency
as follows: investment limit in telecom sector explanations / clarifications of the Professional handling voluntary
• Definition of related party and through the automatic route to terms / concepts related to the SEBI liquidation process is not required to
related party transactions; 100% from 49% earlier to salvage (Shared Based Employee Benefits seek any No Objection Certificate /
the beleaguered telecom sector. and Sweat Equity) Regulations, 2021. No Dues Certificate (“NOC / NDC”)
• Change in monetary limits for from the Income Tax Department as
classification of material RPTs; part of compliance in the process.
• Disclosure requirements for RPT;
• Process to be followed by Audit
Committee for approval of RPTs.
© 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 4Direct tax updates © 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 5
Circular no. 19 of 2021
Guidelines issued to clarify eligibility criteria for claiming exemption under section 10(23FE) of the Income-tax Act, 1961
Section 10(23FE) of the Income-tax Act, 1961 (Act) inter-alia provides that in case a specified fund has loans or borrowings, directly or indirectly,
for the purposes of making investment in India, such fund shall be deemed to be not eligible for the tax exemption in India. In this regard, there
were certain interpretation issues pertaining to the meaning of the term ‘indirectly’ as well as concerns raised by various stakeholders in
connection with the automatic ineligibility to claim tax exemption in case the specified fund or its group concerns has any loans or borrowings.
CBDT clarified the following:
• If the loans and borrowings have been taken by the specified fund or any of its group concerns, specifically for the purposes of making
investment by the specified fund in India, such fund shall not be eligible for exemption under section 10(23FE) of the ITA.
• If the loans and borrowings have been taken by the specified fund or any of its group concerns, not specifically for the purposes of
investing in India, it shall not be presumed that the investment in India has been made out of such loans and borrowings, and such
specified fund shall be eligible for exemption under section 10(23FE) of the ITA, subject to fulfilment of all other conditions outlined in
section 10(23FE) of the ITA, provided that the source of investment in India is not from such loans and borrowings.
© 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 6CBDT Circular 20 of 2021
Clarification on sections 194O, 194Q and 206C of the Act
Section 194O of the Act – E-auction services carried out through Adjustment of various state levies and taxes other than GST for
electronic portal computing liability under section 194Q of the Act
• The provisions of section 194O of the Act would not apply to e-auction • The CBDT vide an earlier circular (i.e. circular 13 of 2021) had
carried out by e-auctioneers if all the facts listed below are satisfied: clarified that the provisions of section 194Q of the Act shall not be
• E-auctioneer conducts e-auction services for its clients in its electronic applicable on the amount of GST levied on the transaction, if the said
portal and is responsible for the price discovery only which is reported GST amount is separately indicated on the invoice (in line with
to the client. clarifications previously issued for other TDS provisions).
• The Price so discovered may not be the price at which transaction takes • It has now been further clarified that similar to the exclusion of the
place and is up to the discretion of the client to accept price or directly GST component, other indirect taxes such as VAT, excise duty, sales
negotiate with party. tax etc. should also be excluded from the ambit of section 194Q of
the Act if the same is separately indicated on the invoice
• Price discovery only acts as the starting point for the negotiation and
conclusion of purchase/sale.
• E-auctioneer is not responsible for facilitating the purchase and sale of
goods for which e-auction was conducted
• Payment for the transaction which are carried outside the electronic
portal and e-auctioneer does not have any information of the deal.
• For payment to e-auctioneer for its services, client deducts tax under
relevant provision other than 194O of the Act
© 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 7CBDT Circular 20 of 2021
Clarification on sections 194O, 194Q and 206C of the Act
Applicability of the provisions of section 194Q of the Act in case of
Applicability of section 194Q of the Act on transaction exempted under
department of Government not being a public sector undertaking or
section 206C(1A) of the Act
corporation
• Section 194Q of the Act inter-alia provides that no tax shall be deducted • In case of any Department of the Government which is not carrying
at source in case of a transaction on which tax is collectible under the out any business or commercial activity, the primary requirement for
provisions of section 206C of the Act other than transaction to which being considered as a 'buyer' will not be fulfilled. Accordingly, such an
sub-section (1H) of section 206C of the Act applies. organization will not be considered as 'buyer' for the purposes of
• Section 206C(1A) of the Act provides that no tax is to be collected at section 194Q of the Act and will not be liable to deduct tax on the
source in case where a resident buyer furnishes a declaration to the goods so purchased by them.
effect that the goods being purchased are to be utilized for the purposes • It is also clarified that for the purposes of section 194Q of the Act,
of manufacturing, processing or producing articles or things or for the Central Government or State Government shall not be considered as
purposes of generation of power and not for trading purposes. 'seller' and no tax is to be deducted by the buyer, in cases where any
• It has been clarified that since no tax is collected at source on Department of Central or State Government are seller of goods
transactions covered under section 206C(1A) of the Act , provisions of
section 194Q of the Act will apply on such transactions and the buyer
shall be liable to deduct tax at source under the said section (subject to
fulfillment of the conditions specified under section 194Q of the Act).
© 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 8Direct Taxes Mon Mohan Kohli v ACIT (Writ Petition No. 6176 of 2021) (Delhi HC) © 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 9
Mon Mohan Kohli v. ACIT (Delhi HC)
(Writ Petition No. 6176 of 2021)
Facts of the case
• Reassessment notice issued under section 148 of the Income-tax Act, 1961 Arguments of the Assessee
(Act) after 31 March 2021 by following the old procedure of reassessment • It is settled law that the law prevailing as on the date of issuance of notice
(pre-amendments made vide Finance Act, 2021). under section 148 has to be applied.
• Revenue is attempting to revive and keep in existence two different
schemes governing reassessment proceedings, which are different from
Arguments of the Revenue
each other cannot co-exist at the same time.
• New provisions do not operate during the period 01 April 2021 to 30 June
• Hence, notice issued under section 148 without following procedures laid
2021 as applicability of section 148 of the Act extended up to 30 June 2021
down under section 148A is illegal
by way of notifications issued under TLA Act, 2020*
• Reassessment notices issued u/s. 148 after 31 March 2021 relating to any AY have to comply with the substituted sections.
• Repealing of old reassessment provision is followed by a fresh legislation on the same subject shows the intention of legislature to
destroy the old procedure.
Decision of HC • Revenue cannot rely on Covid 19 for contending that new provision should not operate during the period April – June as Parliament was
fully aware of Covid 19 when it passed the Finance Act, 2021.
• Delhi HC while delivering its decision has specifically mentioned its disagreement with the view of the Chhattisgarh HC decision in case
of Palak Khatuja and relied on Allahabad HC & Rajasthan HC decisions in case of Ashok Kumar Agarwal and Bipin Infra Private Limited
respectively
*Taxation Laws Amendment Act, 2020
© 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 10Direct Taxes Kanoria Chemicals & Industries Ltd. (ITA no. 2184/Kol/2018) (Kolkata Tribunal) © 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 11
Kanoria Chemicals & Industries Ltd. vs ACIT [ITA No. 2184/Kol/2018] (Kolkata Tribunal) Facts of the case • The Assessee raised an additional ground before the Tribunal regarding allowing of deduction of education cess while computing the income chargeable under the heads of profits and gains of the business or profession. Issue before the Tribunal: Whether to allow education cess as an allowable expenditure while computing the income chargeable under the heads of profits and gains of the business or profession. Judgement & Observations • Section 40(a)(ii) states that “any rate or tax levied” on profits and gains of business and profession shall not be deducted in computing the income chargeable under the heads of profits and gains of the business or profession. • On perusal of the relevant provisions of Finance Act 2004 and the relevant provisions of section 2(11) & (12) of the subsequent Finance Acts, it is held that that education cess is an additional surcharge levied on income-tax. • Relying on the decision of the Hon’ble Apex court in case of CIT v. K Srinivasan, ITAT held that additional surcharge is part of income tax and hence education cess is not an allowable expenditure. • ITAT further observed that aforesaid discussion, relating to Finance Act provisions and the SC ruling, was not done before the Hon’ble HCs in case Sesa Goa (Bombay HC) & Chambal Fertilisers (Rajasthan HC) and hence same cannot be applied in this case. © 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 12
Direct Taxes Bechtel France SAS (ITA no. 830/Mum/2021) (Mumbai Tribunal) © 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 13
Bechtel France SAS vs DCIT [ITA No. 830/Mum/2021] (Mumbai Tribunal) Facts of the case • For the Financial Year (FY) 2013-14, corresponding to Assessment Year (AY) 2014-15, the taxpayer filed its return of income declaring total income after setting- off brought forward loss from earlier AYs and book profit under section 115JB of the Act [relating to minimum alternate tax on book profits] • The AO had allowed the set-off of losses. • The CIT relying on Delhi HC decision in case Yum Restaurants observed, there was a change in shareholding of Assessee company and invoked revisionary jurisdiction under section 263 of the Act and disallowed the set-off of losses under section 79 of the Act Issue before the Tribunal: Whether to allow education cess as an allowable expenditure while computing the income chargeable under the heads of profits and gains of the business or profession. Judgement & Observations • Relying on the Karnataka HC decision in the case of Amco Power Systems Ltd. (62 Taxmann.com 350), the Tribunal held that carry forward and set-off of loss in the year of change in direct shareholding was to be allowed, as ultimate holding company and control over the taxpayer company remained same. • Purpose of section 79 of the Act is that the benefit of carry forward and set-off of business losses of earlier years of a company should not be misused by any new owner, where change in shareholding takes place. • In case there are conflicting judgments of non-jurisdictional HCs, the AO is obliged to take a view favourable to the taxpayer and not against him © 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 14
Direct Taxes Best of the Rest © 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 15
Best of the Rest V.S. Dempo Holding (P) Ltd. – [2021] 130 taxmann.com 456 – Bombay HC • Where assessee holding company advanced interest-free loans to its subsidiary purely out of commercial expediency and there was no findings of fact that such loans advanced by assessee were utilized for personal benefits of directors of subsidiary and, further, assessee had sufficient interest-free funds to cover such loans given to its subsidiary, no interest expenditure was to be disallowed under section 36(1)(iii). Coursera INC – [TS – 1142 – HC- 2021 (Del)] – Delhi HC • Delhi HC, without delving into merits of the case, set aside order under section 197 of the Act directing TDS @ 10% on Coursera's receipts in India and directed Revenue to pass a de novo order excluding the receipts already subjected to Equalisation Levy in light of section 10(50) of the Act. EY Global Services Ltd and EYGBS India Pvt Ltd – [2021] W.P(C) 11957/ 2016 & 12003/2016 (Delhi HC) • The Delhi HC, based on the facts of the case, has rendered its decision that the payment received by a UK entity for providing access to computer software (procured from third-party vendors) to its member firms, within its network located in India, did not amount to ‘royalty’ under the provisions of Article 13 of the India-UK tax treaty. Subex Ltd – (ITA. No. 378/2015) – (Karnataka Hc) • The Karnataka HC has rendered its decision that the cost of acquiring 100% stake in companies cannot be treated as an asset/ cost of the project for the purpose of determining deduction under section 35D of the Act. Flying Fabrication – [ITA No. 1049 & 1047/Del/2021] (Delhi Tribunal) • Relying on various decisions of the jurisdictional HC, the Tribunal held that no disallowance could be made if the payment of employees’ claim to PF and ESI is made before filing the return of income under section 139(1) of the Act and that the amendment to section 36(1)(va) is applicable from AY 2021-22 onwards. © 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 16
Transfer pricing updates © 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 17
Transfer pricing updates
Progress in APA landscape - Post COVID APA The cases for AY 2019-20 were not selected
team gained momentum in conducting site for scrutiny assessment and as a
visit, concluding cases, etc., consequence, the cases for AY 2020-21 are
getting selected earlier than usual
SEBI (Listing Obligations and
Disclosure Requirements) has The offline utility of Form 3CEB
been amended recently expanding for AY 2021-22 is still awaited
the ambit of Related party & Transfer pricing to be released by the CBDT
Related party transactions, updates
imposed approval requirements by
independent directors, etc.,
Tolerance range for ALP - notification is
Safe Harbour rules (‘SHR’) extended issued for AY 2021-22 retaining the same
for AY 2021-22, rates unchanged. This tolerance range of earlier year viz., 1% for
amended rules will deemed to come wholesale traders and 3 % in other cases
into force from 01 April 2021
© 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 18Recent judicial pronouncements © 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 19
Transfer Pricing Sulzer Pumps India Private Limited [TS-587-HC-2021(BOM)-TP] © 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 20
Sulzer Pumps India Private Limited [TS-587-HC-2021(BOM)-TP]) Facts of the case • Sulzer Pumps India Private Limited (‘Petitioner’) filed a writ petition against the order passed by AO u/s 143 (3) r/w 144C (3) and 144B of the Act for AY 2017-18 and consequential Notice of Demand and Show Cause Notice for penalty u/s 156 and 270A • Assessee had the option under Section 144C (2)(i) of the Act to file objections before the DRP within 30 days from the receipt of Draft Assessment Order • Assessee further submitted that section also requires assessee to file a copy of the reference with the AO within the time limit and that section 144C (4) of the Act requires AO to pass a final order within one month from the end of the month in which the period of filing of objections before DRP and AO expires • Assessee further presumed that assessments being faceless and completely electronic, the reference filed by it would automatically communicated to AO by DRP and unfortunately the same was not followed and AO was unaware of objections filed by assessee before DRP • Consequently after the expiry of prescribed period of 30 days proceeded to pass the Assessment Order dated 28th June 2021 which is impugned in this petition Judgement & Observations by the HC • The reference before DRP is still pending and it is also not disputed that assessee had filed to directly communicate the reference to DRP to the AO. • Assessee already filed objections to the DRP and that 144C (4) requires AO to pass the final order including the view expressed by the DRP • Accordingly, HC held that “we will be justified in setting aside the order of the Assessing Officer dated 28th June 2021 which is impugned in this petition” • HC observed that AO cannot be faulted for passing the impugned order and further clarified that “At the same time, the Assessing Officer will also have benefit of considering the views of DRP while passing a fresh Assessment Order”. • Accordingly, HC allows the assessee’s writ petition. • HC directed that AO shall take further steps in the matter after the DRP passes its order on the reference filed by assessee in accordance with law © 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 21
Transfer Pricing Cisco Systems Capital (India) Pvt.Ltd [TS-576-HC-2021(KAR)-TP] © 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 22
Cisco Systems Capital (India) Pvt.Ltd [TS-576-HC-2021(KAR)-TP] Facts of the case • The assessee was engaged in the business of leasing and finance. The assessment order under Sec.143(3) r.w.Sec. 144C was passed and the subsequent suo-moto revision proceedings initiated by principal CIT was challenged by the Tribunal • The Tribunal quashed the same and remanded the matter to AO for re-adjudication • Subsequently, TPO passed an order under Sec. 92CA r.w Sec. 254 relating to the AY 2008-09 and AY 2009-10. On receipt of the said order, the AO passed an order u/s 143(3) of the Act against which the Assessee filed an appeal before CIT(A) as the AO failed to pass the draft assessment order • The CIT(A) dismissed the appeal and aggrieved by the said order, the Assessee filed appeal before the Tribunal wherein the appeal was allowed by the Tribunal • The Revenue filed appeal before the HC Judgement & Observations by the HC • Opined that in second round of appellate proceedings, the Revenue failed to appreciate the mandate of Sec. 144C which postulates that AO shall in the ‘first instance’ forward a draft assessment order to the eligible assessee for acceptance or filing of objections • Further warned the incorrect interpretation by Revenue of the phrase ‘at the first instance’ and observes that passing of draft assessment order is quintessential before issuing the final order • Rejected Revenue’s justification for not passing draft assessment order basis non-applicability of the CBDT Circular No.9/2013 dated 19.11.2013 • Relied on Delhi HC ruling in JCB India, wherein, the Court held that it was mandatory for the AO to pass a draft assessment order under Sec. 144C of the Act prior to issuing the final assessment order even in the case of remand proceedings © 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 23
Indirect Tax Updates © 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 24
Indirect Tax Updates
Goods and Services Tax
Area Effective Date Changes and amendments
Rate rationalization for Deferred • GST Council has deferred the earlier decision of GST rates rationalisation in the textile sector and the existing
textile sector GST rates would continue beyond 1 January 2022.
Restaurant services 1 January 2022 • GST at 5% on restaurant services supplied through ECOs is to be paid by the ECOs instead of the restaurants
through from 1 January 2022.
E-Commerce Operators
(ECOs) • ECOs are already registered as supplier of goods or services, there is no requirement to obtain separate
registration for payment of tax on restaurant service
• ECOs will be liable to issue invoice and pay GST on any restaurant service supplied through it including by an
unregistered person.
• ECOs are not required to reverse input tax credit on account of restaurant services on which it pays tax. Further,
the tax liability needs to be discharged in cash only.
• On any supply other than restaurant service, the liability to pay GST continues on the supplier and ECOs shall
continue to collect tax at source on such supplies.
© 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 25Indirect Tax Updates
Goods and Services Tax
Area Effective Date Changes and amendments
Services by club or 1 July 2017 • GST is made applicable retrospectively on services provided by club or association to its members.
association to its (retrospective)
members
GST Input Tax Credit on 1 January 2022 • Registered person can recover or deduct GST input tax credit only on the invoice or debit note details of which
100% matching with has been furnished by the supplier in its GSTR-1 or using invoice furnishing facility (IFF) and such details have
vendor invoices on GST been communicated to the recipient in GSTR-2B.
Portal
• Businesses need to match the credit in purchase register with auto-populated data in GSTR-2B. At present, most
of the taxpayers are using GSTR-2A for the purpose of matching GST credits.
Recovery of tax on 1 January 2022 • Scope of self-assessed tax has been widened to recover GST on account of difference between GSTR-1
difference in tax Statement and GSTR-3B Return of a particular tax period.
reported in GSTR-1
Statement and GSTR-3B • There could be cases where the tax liability basis turnover declared in GSTR-1 is more than actual tax payable
Return in GSTR-3B. This may be due to manual or clerical error.
• Post amendment, recovery proceedings can be initiated even in such cases, requiring taxpayer to substantiate
the difference. However, post the amendment, the tax authorities have clarified that the recovery proceedings
will be initiated only after providing an opportunity to the taxpayer.
© 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 26Indirect Tax Updates Goods and Services Tax Area Effective Date Changes and amendments Annual returns and 28 February 2022 • Due date for filing GSTR-9 (annual return) and GSTR-9C (self-certified reconciliation statement) for the financial Self-certified year 2020-21 has been extended by 2 months reconciliation statement filing Provisional attachment - • Commissioner can pass an order for provisional attachment of property / bank account of taxable or any other of property/bank person to protect Government revenues accounts © 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 27
Indirect Tax Updates
Customs and Foreign Trade Policy
Area Effective Date Changes and amendments
Customs HS-2022 1 January 2022 • World Customs Organization (WCO) Convention on Harmonized Commodity Description and Coding System
comes out with the Harmonized System (HS) Nomenclature in order to facilitate the standardization of trade
documentation and the transmission of data
• The seventh edition of HS nomenclature (HS-2022) released by WCO shall come into force from 1 January 2022.
This edition has significant changes to HS with 351 amendments at the six-digit level, covering a wide range
of goods.
• Necessary changes were brought to align the First schedule of Customs Tariff Act, 1975 with HS 2022 with effect
from 1 January 2022
• For ease of transition, the Board has released a document covering correlation of the tariffs at the eight-digit
level. To understand the extent of changes between two versions, a ‘correlation code’ has also been provided
against each entry.
SEIS and MEIS 31 January 2022 • Merchandise Exports from India Scheme (MEIS) applications for exports made from 1 July 2018 to 31
December 2020.
• Service Exports from India Scheme (SEIS) applications for service exports made in FY 2018-19 and 2019-20
© 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 28Indirect Tax
Practical experience post issuance of circulars on intermediary services and export of services to related persons
Scope of intermediary service Export of service between related entities
• Benefit of export of services is being granted to subcontracted services • Benefit of export of services to distinct related entities is accepted
which does not involving arranging and facilitation activities. post issuance of circular and consequently, refunds are being granted
• Recently Delhi Tribunal also acknowledged this position in the case of on export of services to parent/holding/subsidiary/group companies
IDP Education India Pvt Ltd. The facts of the case are, Foreign established outside India
Universities had contracted with IDP Australia for identification and
requirements of Student. IDP Australia had sub-contracted these
services to IDP India. In this case, Tribunal observed that it was IDP
Australia which was acting as an intermediary between foreign
universities and student and IDP India was only providing services to
IDP Australia in terms of the sub-contracting arrangement and hence,
the same should not be classified as intermediary.
• Argument that services between two parties cannot be classified as
intermediary services being accepted in the absence of the condition
of minimum three parties to constitute an intermediary services
• Ambiguity persists on classification of marketing and support services
as intermediary or otherwise and the same is being adjudicated on
case of
case basis
© 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 29Recent judicial pronouncements © 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 30
Orissa High Court | M/s Jyoti Construction
Input tax credit cannot be utilized for payment of pre-deposit under GST
Facts Issue Observations
• The petitioner had used input tax credit for • Whether pre-deposit can be paid through • HC observed that the term “output tax”, as
payment of pre-deposit under GST by debiting input tax credit by debiting the electronic defined under Section 2(82) of the Act,
the electronic credit ledger and contended credit ledger cannot be equated with the pre-deposit
that the amount paid as pre-deposit was a required to be made under Section 107(6).
percentage of the “output tax” and thus, • Further, Section 41(2) of the Act limits the
balance in electronic credit ledger can be usage to which the electronic credit ledger
used. could be utilized. It cannot be debited for
making payment of pre-deposit at the time of
filing appeal.
• Accordingly, HC held that payment of pre-
deposit cannot be made by utilizing input tax
credit
© 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 31Kolkata High Court | M/s LGW Industries Limited
No denial of ITC where purchases are genuine and supported by documents|
Facts Issue Observations
• The petitioner received notices from • Denial of ITC to recipient without • The High Court held that the petitioner shall
department refusing to grant the benefit of substantiating collusion between the parties be given the benefit of ITC given that all the
ITC on purchase from various suppliers, and without initiating proceedings against the purchases and transactions are genuine and
contended that the suppliers are all fake and non-compliant supplier supported by valid documents and
non-existing and the bank accounts opened transactions were made before the
by those suppliers are also on the basis of cancellation of registration of the suppliers
fake documents and also, that the and also the fact that the transactions in
department has already cancelled the GST question were also appearing in GSTR-2A of
registration of such suppliers the petitioner
© 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 32Allahabad High Court | Savista Global Solutions Private Limited
Interest on delayed refund
Facts Issue Observations
• Petition had been filed for a refund that • Applicability of interest on delay of processing • The application for refund was not processed
became due to Savista Global under the order on manual refund application within a period of sixty days and hence, by
passed by department way of a legal consequence arising from the
• Since the amount was not refunded to the plain language of the statute, the petitioner
petitioner further prayer for award of interest was eligible and granted interest @ 6% from
was also made the date of filing of application till date of
refund of the amount
© 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 33Punjab & Haryana High Court| SBI Cards and Payment Services Ltd
Refund to be sanctioned on GST paid inadvertently on intra-state supplies which were inter-state supplies
Facts Issue Observations
• During the initial stage, the complete break • Whether the petitioner is entitled to refund of • The High Court relied on CBIC Circular No.
up of individual transactions was not available CGST and SGST paid inadvertently CBIC-20001/8/2021-GST dated 25 September
to the petitioner and hence, the petitioner 2021 which clarified for the tax to be
paid CGST & SGST of about Rs.108 crores refunded in such situations and accordingly,
approximately considering the transactions to directed to refund the amount deposited
be intra-state sales. It later transpired that the earlier by the petitioner towards CGST and
transactions were actually inter-state SGST along with applicable interest within a
transactions. period of one month.
• Given this, the petitioner paid IGST on the
inter-state transactions and filed for a refund
of CGST+SGST paid inadvertently, however,
the department rejected the refund.
© 2022 Deloitte Touche Tohmatsu India LLP. India TaxHour Quarterly India tax updates 34CESTAT Chennai | Terex India Private Limited
Tax-paid under RCM pursuant to audit does not tantamount to ‘arrear’ recovery post GST
Facts Issue Observations
• During the course of service tax audit, it was • Whether cash refund of service tax liability • Section 142(8) deals with recovery of arrears
noticed that assessee was liable to pay a under RCM paid subsequent to audit is under the erstwhile law after implementation
service-tax liability under reverse charge on available to the appellant. of CGST Act and states that if an assessee pays
the amount paid to the parent company the tax determined by an assessment or
under RCM for the period from 2015 to 2017 adjudication proceedings, he cannot claim the
as a recipient of service. The assessee paid benefit of ITC on the same.
the amount with interest in 2018, and claimed • In the present case, the CESTAT observed that
refund under Section 142 (8) (a) of the CGST the assessee had paid the tax when pointed
Act,2017, out by the Audit Officers which does not fall
• The refund was rejected by the adjudicating under recovery of arrears of tax by an
authority and the order was upheld by assessment or adjudication proceedings as
Commissioner (Appeals) covered under section 142(8) and hence,
allowed the refund
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