Trial run of Offline Tool of New Return of GST, for familiarisation & feedback by the taxpayers

You would be aware that shortly the existing Return formats are proposed to be replaced with the New Return format from a date to be notified.

CUSTOMS-Technical Know-How not includable in assessable value

This is to update you with a recent judgement of Mumbai CESTAT in the case of M/s Kostwein India Company Pvt Ltd Vs Commissioner of Customs, (Imports) [2019-TIOL-2000-CESTAT-MUM], in which it was held that the technical know-how and royalty payments to the foreign suppliers was not includible in the assessable value of imported goods, since the said payments were not a pre-condition for sale of the said goods and the relationship between the parties did not influence the prices.

Demand notice cannot be issued for transition of wrong credit unless the same has been utilised

This is to update you on a recent ruling by the Hon’ble High Court of Bihar in the case of M/s Commercial Steel Engineering Corporation (“Petitioner”) Vs The State of Bihar (“Respondent”) wherein it has been held that, mere transition of credit cannot be considered as availment of credit (unless the same has been utilised) and accordingly no demand notice for recovery of the same along with interest and penalty can be issued.

We have highlighted the key takeaways of the judgement as below for ease of reference-

Facts of the Case

Legal Updates

• NCLAT approves the resolution plan submitted by ArcelorMittal in the resolution proceedings in respect of Essar Steel India Limited while modifying the distribution of money to the financial and the operational creditors
• NCLT states that foreign courts cannot intervene in insolvency proceedings
• Supreme Court: Non-signatory to an arbitration agreement cannot be impleaded in arbitration unless a clear intention can be gathered from the correspondences, even if the non-signatory falls under ‘group of companies’ doctrine
• Madras High Court: Contractual relations between private institutions performing public functions and individuals can be enforced under Article 226 of the Constitution of India

CBIC clarification on issues related to supply of IT enabled services to overseas entity

The government had received various representations from trade and industry seeking clarification under the GST laws on issues related to supply of IT enabled services (ITeS) such as call centre, business process outsourcing services and intermediary services to overseas entities, and whether they qualify as ‘export of service’ or not.

GST Press release on 27-07-2019

Recommendations pertaining to changes in GST law which shall become effective from 1st August, 2019:

1) Last date for filing of intimation, in FORM GST CMP-02, for availing the option of payment of tax under notification No. 2/2019-Central Tax (Rate) dt. 07.03.2019 (by exclusive supplier of services), to be extended from 31.07.2019 to 30.09.2019

2) The last date for furnishing FORM GST CMP-08 for the quarter April to June- 2019 (by taxpayers under composition scheme), to be extended from 31.07.2019 to 31.08.2019.

Salary cost reimbursement and payment towards Global Information Support Services to French Company, not taxable in India

Recently, Pune Bench of Income tax Appellate Tribunal has ruled that the reimbursement of salary cost by an Indian Company to a Foreign Company is not taxable. Further, it also held that the payment towards support services are not taxable in India in view of ‘Most Favoured Nation’ clause in the Double Taxation Avoidance Agreement (DTAA) between India and France. We, at BDO India have summarised the ruling. We hope you will find it useful.

‘Claim of amount forfeited by a builder is not a Financial Debt’

The petition was filed claiming “financial debt” towards the money which was forfeited by the builder in terms of the Builder Buyers’ Agreement on account of default and late payment by the home-buyer. It was held that refund amount was determined in terms of the Buyer’s Agreement and claim for refund of forfeited funds does not amount to “debt” which was due. Further held that there was no question of “default”, when the terms of the Agreement have been followed and there is not even a prima facie case of cancellation of unit by the builder being illegal or forfeiture being arbitrary.

Examples of residential status as per income tax act

According to the Income Tax Act, 1961, taxation depends on the resident status of an individual/company. Although you have read about the different categories classified under the income tax rules, there is a possibility that you are unsure of how they vary. It is recommended to understand it with the following examples:

Clarification on treatment of ITeS services issued

We wish to update you on the recent circular no 107/2019 dated 18 July 2019 clarifying the position/ issue of ‘intermediary’ viz-a-viz ‘zero rated supply’ with regards to supply of Information Technology enabled Services (ITeS services).