Tax Talk
Indian Developments

Direct Tax

CBDT issues additional guidelines TDS on the sale and purchase of goods and e-commerce platforms

[Circular No. 20/2021 dated 26 November 2021]

In order to remove difficulties being faced by stakeholders for provisions relating to TDS on purchase of goods (Section 194Q), TDS on e-commerce operators (Section 194-O), and TCS on sale of goods [Section 206C(1H)], the CBDT has provided the following clarifications:

• E-Auction service providers are not subject to the withholding tax provisions on ‘e-commerce transactions.’However, buyers/sellers of goods, i.e., e-auction participants, would continue to be subject to the tax withholding/collection provisions.
• Non-GST levies (like VAT/Excise/ Sales Tax/CST) have been accorded similar treatment as GST with respect to withholding tax on the purchase of goods.
• Withholding tax on the purchase of certain specified goods would continue to be applicable even if such goods have been utilized for the purposes of generation of power, for tax is not collectible on them.
• Any department of the government would not be subject to withholding tax provisions. However, PSUs or corporations would continue to be subject to withholding tax provisions.

CBDT notifies e-Verification Scheme, 2021 for faceless collection of information

[Notification No. 137/2021 dated 13 December 2021]

CBDT has notified e-Verification Scheme, 2021. The scope of the said Scheme covers the following:

• Calling of information under Section 133;
• Collecting certain information under Section 133B;
• Calling for information by the prescribed income-tax authority under Section 133C;
• Exercise of power to inspect registers of companies under Section 134;
• Exercise of power of AO under Section 135.

Furthermore, the said Scheme provides that all issue and service of notices shall be issued under the digital signature of the prescribed authority. Also, the taxpayers shall be required to appear personally or through an authorized representative before the prescribed authority in connection with any proceedings. In exceptional cases, where the taxpayer requests personal appearance, the prescribed authority may allow personal appearance through video conferencing or video telephony, to the extent technologically feasible.

The Scheme further provides that all communications between the tax department and the persons from whom information is sought will be conducted electronically.

Indirect Tax

Latest developments in GST

[Notification Nos. 38/2021–Central Tax and 39/2021–Central Tax both dated 21 December 2021 and 40/2021-Central Tax dated 29 December 2021]

The government has notified some significant amendments to the provisions of GST law w.e.f. 1 January 2022. The same is explained hereunder.

Requirement of Aadhaar authentication

Aadhaar authentication has been made mandatory for the purpose of:

• Filing of refund application in Form RFD-01 under Rule 89 of CGST Rules, 2017.
• Filing of refund of IGST paid on goods exported out of India under Rule 96 of CGST Rules, 2017.
• Filing application for revocation of cancellation of GST registration in Form GST REG-21.

Amendment to CGST Act, 2017 read with CGST Rules, 2017 vide Finance Act, 2021

Section 7: Scope of supply

• Activities or transactions involving supply of goods and/or services by any person other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration, shall be deemed to be ‘supply’ between separate persons.
• Accordingly, Entry 7 of Schedule II specifying supply of goods by any unincorporated association or body of persons to a member thereof as a “supply of goods” stands omitted retrospectively from 1 July 2017.

Section 16 read with Rule 36(4): Entitlement to Input Tax Credit (ITC)

ITC in respect of invoices and debit notes shall be available only to the extent they are furnished in FORM GSTR-1 by the supplier and further reflected in Form GSTR-2B of the recipient.

Section 74 read with Rules 142 and 144: Recovery of tax under fraud, willful misstatement, or suppression of facts

• Detention, seizure, and confiscation of goods or conveyances shall have separate proceedings for recovery of tax and penalty. If the concerned person makes the payment of penalty as specified in the notice issued within a period of 7 days from the date of issuance of notice but before the issuance of the order and intimates the officer in Form DRC-03, then the officer shall issue an order in FORM DRC-05 concluding the proceedings in respect of the given notice.
• Recovery of the penalty imposed under Section 129 can be initiated if not paid voluntarily within 15 days from the receipt of the order.

Section 75: Recovery of interest on selfassessed tax

The explanation has been inserted to clarify that “self-assessed tax” shall include only the tax payable in respect of details of outward supplies furnished in Form GSTR-1, but not included in FORM GSTR-3B.

Section 83: Provisional attachment

Any property, including bank account, can be attached provisionally to protect the interest of Government revenue, where any proceeding under Chapter XII (assessment), XIV (inspection, search, seizure and arrest), or XV (demands and recovery) has been initiated against a taxable person.

Section 107: Appeal to Appellate Authority

An appeal against an order of detention or seizure of goods or conveyance can be filed only upon payment of 25% of the penalty.

Section 129 and 130: Detention, seizure and confiscation of goods and conveyances

Delinking of the proceedings for detention/seizure and confiscation of goods and conveyances.

Rule 80: Due date of filing GSTR 9 and 9C

For FY 2020-21, the due date for furnishing the Annual Return in Form GSTR-9 and the self-certified Reconciliation Statement in Form GSTR- 9C have been extended until 28 February 2022.

GST Council defers rate hike on textiles

[Excerpts from News18.com]

In the 46^th GST Council Meeting held on 31 December 2021, the GST Council has decided to defer the rate hike on textiles from 5% to 12%. Furthermore, Hon’ble Finance Minister Nirmala Sitharaman has stated that this issue will be sent to the Tax Rationalization Committee, which will submit its report regarding the same by February.

Latest developments in Customs

[Notification Nos. 55/2021-Customs, 56/2021-Customs, 57/2021-Customs, 58/2021-Customs, 59/2021-Customs, and 60/2021-Customs all dated 29 December 2021]

The World Customs Organization (WCO) Convention on Harmonized Commodity Description and Coding System (the HS Convention) came out with the Harmonized System Nomenclature (HSN) 2022 in order to facilitate the standardization of trade documentation and the transmission of data.

In line with this change, Customs authorities have updated the existing HSNs given under Customs Tariff Act, 1975 w.e.f. 1 January 2022 and issued guidance document on the correlation of Customs Tariff between HSN 2021 and HSN 2022.

Latest developments in FTP

[Notification No. 48/2015-2020 dated 31 December 2021]

The government has extended the last date for submitting applications for Scrip-based FTP schemes.

Accordingly, the last date for submitting online applications stand revised to 31 January 2022 for the following schemes, i.e.,

Furthermore, the applicable late cuts stand amended vis-à-vis the new application date.