Tax Due date – October 2021.

S. No	Due Date	Related to	Compliance to be made
1	11.10.2021	GST	Filing of GSTR 1 for the month of September, 2021
2	20.10.2021	GST	-Payment of GST for the month of September, 2021 -Filing of GSTR 3B for the month of September, 2021
3	07.10.2021	TDS/TCS (Income Tax)	· Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of September 2021. · Deposit TDS from Salaries deducted during the month of September 2021 • Deposit TCS for collections made under section 206C including sale of scrap during the month of September 2021, if any • Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of September 2021, if any
4	31.10.2021	TDS Return	Filing of 2nd Quarter (1st July to 31st September) TDS return.
5	15.10.2021	TCS Return	Filing of 2nd Quarter (1st July to 31st September) TCS return.

CBIC clarifies the issues on wrongly charged GST under Section 77

It is to apprise you about an important Circular No. 162/18/2021-GST dated September 25, 2021, wherein the Central Board of Indirect Taxes and Customs (‘CBIC’) has clarified the intricacies where a taxpayer has charged Integrated Tax (‘IGST’) instead of Central Tax (‘CGST’) and (‘SGST’) or vice-a-versa.

Legal Provisions

• Section 77 of the CGST Act states that where it has been subsequently held that a taxpayer has wrongly charged CGST+SGST instead of IGST, he may pay the correct taxes without interest and claim refund of incorrect taxes paid earlier. An identical provision exists under Section 19 of the IGST Act.

Confusion persisted

• One question which arose was the meaning of the expression ‘subsequently held’. Whether it has to be construed in the context of authorities findings or taxpayers’ own findings?

• Secondly, what is the time limit of filing refund claim for tax wrongly paid earlier?

CBIC Clarification

• CBIC clarified that the expression ‘subsequently held’ would include either authorities findings or taxpayers’ own findings.

• For second question, it has been clarifies that time limit of 2 years shall be counted from the date a taxpayer makes payment of correct taxes.

. | Remarks

• CBIC has, by this circular, addressed the taxpayers’ apprehension of time barred refunds under the aforesaid provisions.

• These cases were very normal in initial 2 years of GST since lot of confusion persisted in construing the place of supply provisions.  In fact, Section 77 of the CGST Act and Section 19 of the IGST Act will forever help taxpayers in situations like above.

• Interestingly, taxpayers under these provisions have the liberty to say that they could not find the mistake and if at all, authorities find it out, taxpayers can follow the procedure without payment of any interest or penalty.

SC ends the extension of limitation period relating to matters under litigation and other proceedings

This Tax Alert summarizes a recent Supreme Court (SC) ruling ^[1] putting an end to the extension of limitation period for filing petitions, appeals, applications and other proceedings.

Due to onset of COVID-19 pandemic, SC had earlier extended the limitation period (prescribed under general law or special law) for filing petitions, applications, suits, appeals and all other proceedings w.e.f. 15 March 2020 till 8 March 2021.

Considering the second outburst of COVID-19, SC restored its earlier order and again extended the limitation period for all judicial or quasi-judicial proceedings till further orders^[2].

Vide current order, SC has decided to put an end to the extension granted and issued the following directions:

• The period from 15 March 2020 to 2 October 2021 shall be excluded while computing the period of limitation for any suit, appeal, application or proceeding.
• In cases where the limitation period would have expired between 15 March 2020 and 2 October 2021, a period of 90 days from 3 October 2021 shall be granted, regardless of the actual balance of limitation period remaining with effect from 3 October 2021.

       However, if the actual balance of limitation period as on 3 October 2021 is greater than 90 days, such longer period shall apply.

It is relevant to note that Central Board of Indirect Taxes and Customs (CBIC) vide Circular No. 157/13/2021-GST dated 20 July 2021 clarified that the SC order is not applicable to any proceedings under GST laws other than appeals, revision and rectification.

CBIC notifies mandatory Aadhaar authentication for claiming GST refund and issues clarification on refund of tax wrongly paid 

Summary

The Central Board of Indirect Taxes and Customs (CBIC) has amended the GST rules in order to provide for mandatory Aadhaar authentication of registration for being eligible for filing refund claim and application for revocation of cancellation of registration. Further, it has also notified restriction in filing GSTR-1 for defaulters of GSTR-3B and issued clarifications for claiming refund of tax wrongfully paid.

Our comments

As a measure to check anti-evasion and gaps, the CBIC has made Aadhaar authentication mandatory for the purposes of registration and claiming of refund. It has further notified that GST refunds shall be disbursed only in bank accounts which have been linked with the same PAN on which GST registration has been obtained. The changes have been made to ensure reduction in cases of fraudulent refunds and disbursal of refunds to verified taxpayers. Besides, various long-awaited clarifications relating to refund have also been issued by the government to bring more clarity and reduce litigations.   

CBDT directs to exclude set-aside and reassessment/assessment proceedings from faceless assessment

Background

With a view to bring transparency in assessment proceedings, the Faceless Assessment Scheme, 2019 (the Scheme) was introduced. Subsequently, the Taxation & Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020 codified this Scheme¹ by introducing section 144B in the Income-tax Act, 1961 (IT Act). In order to implement the Scheme, CBDT issued an order² directing that all the Assessment Orders shall be passed by the National Faceless Assessment Centre (NFAC) through the scheme except the following:

• Assessment Orders in cases assigned to Central Charges
• Assessment Orders in cases assigned to International Tax Charge

Subsequently, CBDT issued another order3 to extend the exemption from the Scheme to assessment orders in cases where pendency could not be created on the ITBA portal because of technical reasons or cases not having PAN.

Recently, the CBDT had issued another order4 to further expand the exemption list. We, at BDO in India, have analysed and summarised the said order hereunder:

The exemption is extended to which Assessment Orders?

Assessment Orders in cases:

• Set aside to be done de novo; or
• to be done under section 147 of the IT Act.

Are there any conditions attached?

Yes. The exemption will be applicable to these orders only if following conditions are satisfied:

• The time limit for completion expires on 30 September 2021
• Such cases should be pending with the jurisdictional Tax Officer as on 11 September 2021 or thereafter
• It could not be completed as per the procedure laid down under section 144B of the IT Act due to technical / procedural constraints in the given period of limitation

Is this exemption applicable for orders whose time limit for completion is other than 30 September 2021?

No. The CBDT has reiterated that this exception is applicable only to cases for which the time limit for completion expires on 30 September 2021.

What is the effective date?

The order is effective immediately (i.e., from 22 September 2021)

Comments

The income tax portal was revamped with an intent to provide a seamless experience to the taxpayer. However, since its launch, taxpayers are facing technical glitches. Considering this issue, this seems to be a welcome move for the taxpayers as well as tax officers.  However, till date, no announcement had been made with respect to extension of timelines for assessment getting barred on 30 September 2021.

Government notifies facility to avail extension in export obligation period under AA and EPCG authorisations till 31 December 2021

The government has notified an option to avail extension in export obligation (EO) period under the advance authorisation (AA) and Export Promotion Capital Goods (EPCG) authorisations without paying composition fees as under:

Scheme	Original or extended EO period coverage	Extended EO period	Condition
AA	1 August 2020 to 31 July 2021	31 December 2021	5% additional export obligation in value terms (in free foreign exchange) on the balance export obligation on the date of expiry of export obligation period
EPCG	1 August 2020 to 31 July 2021	31 December 2021	5% additional export obligation in value terms (in free foreign exchange) on the balance export obligation on the date of expiry of export obligation period

Further, export obligation extension facility upon payment of composition fees in case of AA and EPCG would remain available for authorisations as per the eligibility. Refund of composition fees shall not be permitted in case AA holders and EPCG holders have already obtained export obligation extension upon payment of composition fees.

Government notifies the list of eligible services and rates under SEIS for services rendered in FY 2019-20

Please find below alert in relation to recent notification issued by the Ministry of Commerce & Industry, wherein Vide Notification no. 29/2015-20 dated 23 September 2021, the Ministry of Commerce & Industry has notified the list of eligible services and rates thereof under for the FY 2019-20.

Key points for your immediate consideration are summarised below:

• SEIS application after 31 December 2021 will be time barred.   

• With respect to FY 2019-20
  • Deadline for submission of SEIS applications with respect to FY 2019-20 shall be 31 December 2021.
  • Late cuts provisions for such application shall not apply.
  • total entitlement under SEIS for services exports capped at INR 5 crore per Import Export code (IEC)
  • the list of services/rates is  notified vide Notification no. 29/2015-20 dated 23 September 2021. 
  • the rates of reward are 3% and 5% (of Net Foreign Exchange Earnings) depending upon the nature of services.

CBDT directs to exclude set-aside and reassessment/assessment proceedings from faceless assessment

This Tax Alert summarizes an order issued by the Central Board of Direct Taxes (CBDT) on 22 September 2021 which, in addition to exclusion of assessment orders in cases assigned to central charges/international tax charges or cases where pendency could not be created on income tax business application (ITBA) portal or cases with no permanent account number (PAN), directs to further exclude assessment of cases set aside to be done de novo or reassessment proceedings from the scope of faceless assessment under the Indian Tax Laws (ITL).

However, the present exclusion is restricted to cases where assessment/ reassessment is pending with the Jurisdictional Tax Authority as on 11 September 2021 or thereafter and the time limit for completion of such assessment/reassessment proceedings expires on 30 September 202

Refund of CVD/SAD paid for non-fulfilment of export obligation

In an important decision, in the case of Flexi Caps and Polymers Private Limited v. Comm. CGST & CE, Excise Appeal No. 50114 of 2020, the Hon’ble Delhi Tribunal held that where the taxpayer has not fulfilled export obligation under advance licenses and consequently paid Countervailing Duty (CVD) and Special Additional Duty (SAD) post July 1, 2017, refund of such CVD and SAD is allowed.

Facts of the case

• The Appellant imported goods against advance licenses but could not meet the export obligation. Consequently, the Appellant paid the amount of duty saved which included Countervailing Duty (CVD) and Special Additional Duty (SAD).

• Since, the amount of CVD and SAD was paid under GST regime, the Appellant could not avail the cenvat credit of such amount. Thus, the Appellant claimed refund of such CVD and SAD in terms of Section 142 of the Central Goods and Services Tax Act, 2017 (‘CGST Act’).

• The Revenue authorities denied the refund claim on the ground that no assessment or adjudication order is passed by the Customs or Central Excise authorities and redemption order issued by Directorate General of Foreign Trade (‘DGFT’) cannot be considered for processing the refund.

Tribunal decision

• Section 142 of the CGST Act expressly provides the refund of cenvat credit in cash if found admissible under the erstwhile regime.

• Department’s objection that DGFT order is not an assessment order is unsustainable for the reason that the requisite duties were paid and the Appellant was entitled to cenvat credit of such payment.

Remarks

• The decision is absolutely correct in law and will give huge relief to taxpayers.

• The decision will also apply to all those cases where erstwhile taxes were paid in the GST regime for which they could not avail the Input Tax Credit under GST regime. For example, service tax liability arising under Reverse Charge Mechanism post GST.

• Therefore, it is advisable that taxpayers must follow a proper approach to get their refund claims.

Taxation of software payments.

Pune ITAT has passed yet another favorable judgement on the prolonged litigation on taxability of computer software as Royalty. ITAT relying on the SC’s dictum in ‘Engineering Analysis Centre of Excellence Private Limited’ held that the receipts in relation to access provided for mere usage of copyrighted software without parting with the copyright, as envisaged within the meaning of Section 14 of the Copyright Act, cannot be taxed as royalty. 
 
As a brief background, the assessee granted a right to Trigo India to use a software, which could not be modified, duplicated, reproduced, licensed etc. without its prior consent under a software license agreement. The Revenue, in the instant case, held the consideration received by the Assessee to be in the nature of royalty under Article 13(2) of India-France DTAA. The ITAT held that “There has been no parting with copyright as envisaged within the meaning of Section 14 of the Copyright Act by the Licensor (assessee) to Licensee who is given access to only use the copyrighted software against which assessee’s receipts cannot be taxed as royalty”. 
 
Furthermore, with respect to the consideration received from Trigo India for various management services, held to be in the nature of managerial, technical or consultancy services and taxable as FTS u/s 9(1)(vii) by CIT(A), ITAT noted that the management services were consumed immediately on delivery, wherein no part of technical know-how was made available, thus the same is not taxable as FTS.