newsletter jun 15 - baroda branch of wirc of...

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MANAGING COMMITTEE

VOLUME - IV JUNE 2015l

Baroda Branch of Western India Regional Council ofThe Institute of Chartered Accountants of India

The Institute of Chartered Accountants of India(Setup by an Act of Parliament)

INDEX

CA. Yash N Bhatt 99243 88339

CA. Viral K Shah 98243 62211

CA. Arpan Dodia 98983 83530

CA. Dhiren Parikh 93762 11099

CA. Abhishek Nagori 94260 75397

CA. Nayan Kothari 98244 33445

CA. Kejal Pandya 98259 77220

CA. Utpal Shah 98250 28960

CA. Hitesh Agrawal 99980 28737

Chairman

Vice-Chairman

Secretary

Treasurer

Ex-officio

Immediate Past Chairman

Committee Member &Study Circle Convener

Committee Member

Committee Member

EDITORIAL TEAM

CA. Yash Bhatt

CA. Hitesh Agrawal

CA. Jay Shah

CA. Sanjay Joshi

Forthcoming Events ... 02

Direct Tax Updates ... 03

Judicial Decisions on Excise andService Tax ... 04

3D ... 05

Indirect Tax Updates ... 06

FAQs on IFRS transactions ... 07

Finance Bill 2015 ... 09

Due Date Planner ... 10

PhotoFlash ... 11

THE INSTITUTE OF CHARTEREDACCOUNTANTS OF INDIA

Tel. :E-mail :

Web :

ICAI Bhawan, Post Box No. 7100,Indraprastha Marg, New Delhi - 110002.

+91 (11) [email protected]

www.icai.org

“ICAI Bhawan”, Kalali-Tandalja Road, Atladra,Vadodara - 390 012. +91 8511077115

+91 8511125959+91 (265) 2681115 / 2680593

[email protected]

BARODA BRANCH OF WIRC OF ICAI

M.:Chairman Mobile:

Telefax :E-mail:

Web :

WESTERN INDIA REGIONAL COUNCIL

Tel. :Email :

Web :

ICAI Tower, Plot no C-40, G BlockOpp MCA Ground, Bandra Kurla Complex,

Bandra (E), Mumbai - 400 051+022-33671400/33671500

[email protected]

Dear Members,

The months of June and July will see members coming back from vacation and getting

immersed in the upcoming tax and audit season. The students will also be back from

herculean task of completing their examination and resuming back to their offices.

The month of May was very special & motivational for us. The month of May’2015 started

with a Seminar for Co-operative sector and programme on investor awareness. The state

Registrar Shri M.N. Narmawala had addressed the participants on new Co-operative

Societies Act. One more feather has also been added in the success glory of the Baroda

Branch as Our Hon’ble Union Minister (Ministry of Railways) had visited our Branch and

inaugurated half day seminar on GST. During his visit, he had addressed more than 300

members of Baroda and conveyed how current Government is marching on the concept

of Make in India by way of encouraging more manufacturing facilities and requested our

fraternity to actively participate in growth of mother India. He has also appealed all the

members to come out with innovative suggestions for development and betterment of

Indian Railway. This was very well appreciated by the participants. We had also

organised full day seminar on FEMA wherein Regional Director of RBI Shri

Prakashchandra Sahoo had visited the Branch & nicely addressed on “Is India ready for

full Convertibility?” Hence in the month of May three dignitaries from different regulatory

branches (State level, Regional Level and National level) had visited the Branch and

addressed the members on the different subjects.

The registrations for conference for members in Industry are going on in full swing. The

conference will see a galaxy of luminaries addressing the delegates and I am sure that

delegates will find this to be a unique and enriching experience. We have also organized

Direct Tax Refresher Course which will be starting from 20th of June, 2015.

We shall be celebrating 67nd Foundation Day of our Institute on 1st July wherein I invite

every member of Baroda Branch to participate and be a proud associate. In July’15, we

shall also be hosting the National Convention for CA students on 23rd & 24th July’15.

CA. Yash N. Bhatt

Chairman

Baroda Branch of WIRC of ICAI

2If you seek authenticity for authenticity’s sake you are no longer authentic.

Forthcoming EventsBRANCH EVENTS

CPE 3HALF DAY SEMINAR ON INCOME COMPUTATION &

DISCLOSURE STANDARD (ICDS)

Day & Date :

Topic :

Speaker :

Timings :

FEES :

Venue :

Friday, June 12, 2015

Felicitation of Team WIRC and Technicalsession on Income Computation & DisclosureStandard (ICDS)

CA. Dhinal Shah, CCM, Ahmedabad

03.30 pm to 07.30 pm

RS.400/- ( followed by Dinner)

ICAI Bhawan, Vadodara

Theme

Day & Date :

Venue :

Fees :

Time Topics & Speakers

Attraction

Trend of Legal Economy in India - “High Hopes & High Ropes”

Saturday , 13thJune 2015

The Gateway Hotel, Akota, Vadodara

Rs. 2,000/- per delegate

Delegates of the Conference can attend and update on talk ofthe profession ‘Income Computation and DisclosureStandards (ICDS)’, which is made effective from 1stApril

09.30 to 10.30 Breakfast & Registration

10.30 11.45 Business Valuation - Growth Capital & Start-ups

11.45 to 01.00 Mergers & Acquisitions –Experience 2014 & Challenges 2015

01.00 to 01.45 Lunch break

01.45 to 02.45 CFO to CEO – a well-deservedJourneyED &CEO, RPG Cables

(a division of KEC International Ltd.), Mumbai

02.45 to 03.00 Tea break

03.00 to 05.30 Panel Discussion on Compliances - changes andchallenges:

New Companies Act- challenges & threats

Accounting & Auditing Standards

Other Regulatory& Legal compliances

CFO, Gammon India Ltd., Mumbai

to

CA. N. P. Sarda, Past President of ICAI, Mumbai

Past President of ICSI, Mumbai

Partner of S R Batliboi and Co. LLP, Mumbai

CA. Sujal Shah, Mumbai

CA. Sanjeev Shah, Vadodara

CA. Nikhil Gupta,

Panel Moderator :

Panelists:

CA. Vardhan Dharkar,

CS. Keyoor Bakshi,

CA. Vijay Maniar,

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CPE 6

CPE 15

CONFERENCE FOR MEMBERS IN INDUSTRIES

DIRECT TAX REFRESHER COURSE (DTRC)

2015 and 15th June is date for payment of first instalment ofAdvance Tax under new regime of ICDS.

This program on ICDS is on Friday, 12th June 2015 (03.30 pmto 06.30 pm at ICAI Bhawan, Baroda), followed by fellowshipDinner.

Get 3 hrs CPE.

Entry by delegate card. Delegate card can be collected at thetime of program (either on 12 or 13th June).

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Day & Date:

Time :

Time :

Fees :Venue :

Saturday, June 20 ,2015

02.00 to 04.00 pmDeeming Fiction Under Income Tax ActCA. Nihar Jambusaria, Mumbai

04.30 to 06.30 pmRecent Trend In Capital GainCA. N. C. Hegde, Mumbai

Appeal & Stay Proceedings (both at first appellate and attribunal)Adv. Tushar Hemani, Ahmedabad

04.30 to 06.30 pmImportant Issues in Business DeductionAdv. Kapil Goel, New Delhi

Saturday, July 4 ,2015

02.00 to 04.00 pmIssues In PenaltiesCA. Sunil Talati, Past President, ICAI

04.30 to 06.30 pmRecent Judgement Of High Court & TribunalAdv. Manish J Shah, Ahmedabad

Saturday, July 11 ,2015

02.00 to 04.00 pmTaxation Of LLP Including ReorganizationCA. Milin Mehta, Vadodara

04.30 to 06.30 pmTaxation Of Private Trust & Representative AssesseeSr. Adv. K. H. Kaji , Ahmedabad

Total 15 hrs (per day 4 hrs)

Saturday, June 27 ,2015

02.00 to 04.00 pm

Rs.1500 /- for all course / Rs. 500/- per dayICAI Bhawan, Vadodara

Topic :Speaker :

Time :Topic :Speaker :

Day & Date :

Topic :

Speaker :


Day & Date :



Day & Date :



Note:

WICASA EVENT

6-7.06.2015 SPOCUL

13.06.2015 Industrial visit to Pharmaceutical Industry

14.06.2015 2nd Students Study Circle on Depreciation under thecompanies Act, 2013

17.06.2015 Understanding of Share Market through Live screening

20.06.2015 Educational Tour

27.06.2015 Full day seminar on How to file Online forms and Returnsunder Income Tax, VAT, ROC, Service Tax

23-24.06.2015 Student National Conference, Vadodara

STUDY CIRCLE EVENTS


If you cannot be a poet, be the poem.3

Day & Date :

Time :

Topics :

Faculty :

Venue :

Fees :

Tuesday, Jun 23, 2015

06 pm to 08 pm

Personal Brand – Importance and Opportunities forCAs

Ms. Meghavi Vyas

Conference Room, ICAI Bhawan

Rs. 200/-

Direct Tax UpdatesWritten by CA. Narendra Hindocha

CPE 2

CPE 2

Day & Date :

Time :

Topics :

Faculty :

Mentor :

Venue :

Fees :

Tuesday, Jun 16, 2015

06 to 08 pm

DCF Valuation of Equity or Enterprise

CA. Tejal Parikh

CA. Bharat Gajjar

Conference Room, ICAI Bhawan

Rs. 200/-

1. Finance Act 2015

Section 36

Mediclaim

2. TDS on payments to nonresidents

The Finance Act 2015 is passed on 14th May, 2015. Someobservations in this regard:

i) It makes following amendments which were not there inthe Finance Bill:

So far, interest on borrowings for acquisition of asset forextension of existing business until the date of putting itto use was not allowed. From A.Y.2016-17, the wordsfor extension of existing business’ are to be deleted. Asa result, interest on borrowings for acquisition of everyasset will be disallowed. This will require working ofinterest relatable to every small asset. This will alsoresult in controversies relating to identification andquantification of interest.

From A.Y. 2016-17, ceiling for allowance of expenditureon Mediclaim increased from Rs. 15000/- to Rs.25000/-and from Rs.20000/- to Rs.30000/-

ii) Deduction of Income-tax at source is not required atpresent in case of payments to transporters who providePA No. Amendment in section 194C now requires, witheffect from 1st June, 2015, deduction of tax at source fromsuch payments unless the transporter additionallyprovides declaration to the effect that he owns ten or lessgoods carriages.

i) The Central Board of Direct Taxes has clarified to fieldofficers that the requirement of deducting tax at sourcewhen a person makes payments to non-residents or

foreign companies should be enforced only on that part ofthe remitted amount that accounts for the recipient'sincome chargeable to tax in India. In the light of theseinstructions, it would appear that tax deductible onpayments to nonresidents for sale of shares or other assetsshould be with reference to the amount of capital gainsalthough the practice at present is to deduct tax on entiresale price. Reference: Instruction No. 2/2014 dated 26-02-2014 and Circular 3/2015 dated 12-02-2015.

ii) Income Tax Appel la te Tr ibunal Pune in ITANo.792/PN/2013, ITA Nos.1601 to 1604/PN/2014 in caseof Dy. Director of Income Tax (IT-II),Pune Vs. SerumInstitute of India Limited, held that in case a nonresident didnot have PA no., provisions of double taxation avoidanceagreement will prevail over section 206AA, so that if therate applicable under DTAA is lower than 20%, the lowerrate will apply.

iii) Finance Act 2015 contemplates reporting requirements inrespect of payments to non-residents, even if not chargeableto tax.

i) There are large number of cases relating to reassessment.However I was inclined to write about two of them thatattracted my attention. Earlier decisions have held thatreassessment is not barred even when there is no newinformation received by the Assessing Officer. Hence itwould appear that in case the case was not selected forscrutiny earlier and the Return of income indicatesescapement of income which is noticed after the time forselecting a case for scrutiny is over, it would be in order toinitiate reassessment. However, that is not allowed bysome decisions including that in case of Delta Air Lines INCV. Income- tax Officer[2013] 33 taxmann.com 192(Mumbai - Trib.). I am not sure if this will stand the test ofhigher forums.

ii)

If a person receives any property for a consideration which isless than the market value, Section 56 charges to tax theamount of difference. Assessees have been wonderingwhether the bonus and rights issue of shares fall foul of theseprovisions. In case of Sudhir Menon HUF, ITANo.4887/Mum/2013 , Mumbai Bench of ITAT dealt with thisissue. It did not accept the argument that the provision wouldnot apply on the ground that the shares were not existingearlier. However, it held that the provision will not apply to issue

3. Basis for reassessment

In case of J.V. Agrawal v. Income-tax Officer [2013] 40taxmann.com 8 (Gujarat), the issue was whetherreassessment is permissible in a case where theAssessing Officer allowed certain deduction afterspecifically dealing with the matter during originalassessment, but later he notices certain other aspects orarguments which would justify disallowance. It was heldthat this is not permissible.

4. Whether Bonus and Rights issue of shares attract section 56


When one is pretending the entire body revolts. 4

Judicial Decisions on

Excise and Service TaxReviewed By CA. Anirudh Sonpal

I. STAY ORDER AND MANDATORYPRE-DEPOSIT

1.1 Mandatory pre-deposit as peramended Section 35F of CentralExcise Act,1994 will also apply toadjudication proceedings initiatedprior to 6-8-2014, the effective date ofamendment for mandatory pre-deposit.[Exora Business Parks Pvt Ltd vs CST,Bangalore – Bangalore Cestat][Premier Polyspin Pvt Ltd Vs UoI –Gujarat H.C.]

1.2 A stay order passed by Tribunal and inforce as on 7-8-2014, would continuetill disposal of appeal and there is noneed for filing further stay applicationor making mandatory pre-deposit.[Lykes Line Ltd vs CST – MumbaiCestat]

1.3 While allowing the Petition filed by theassessee, the Hon HC of Keralaobserved ‘Inasmuch as the liscommenced prior to the introductionof the amendment of 2014, thepetitioner would not be required todeposit an amount of 7.5% asrequired, pursuant to the 2014amendment to the Act. He would,therefore, have an efficaciousalternate remedy before the Appellate

of bonus shares as the shareholderdoes not derive any additional value. Incase of Rights issue also theconclusion was similar but it was heldthat if the subscription was not inproportion of existing holding, thereply will be different.

Lease equalization charge debited toprofit and loss account as perAccounting Standard was held to bedeductible in case of CIT, LargeTaxpayers Unit v. Indian RailwayFinance Corporation Ltd. (Delhi) 362ITR 548 It was held to be allowablealso for computing book profit undersection 115JB.

5. Lease equalization charge

Tribunal, where he can file the appeal,together with an application for waiverof pre-deposit and stay of recovery ofthe amounts confirmed against him.’[A M Motors Vs UoI – Kerala HC]

Cenvat credit of input service can beutilized for payment of excise duty ongoods manufactured by the assesseeeven if input service is received inrelation to the output service providedby same assessee; there is norestriction on such cross-utilizationunder the Cenvat Credit Rules, 2004and separate records are not intendedfor such cross utilization.[S.S.Engineers vs CCE, Pune-I-Mumbai Cestat]

3.1 Bar of unjust enrichment can beapplicable where the refund claimed istreated as an expense in the books ofaccounts which implies that theburden of tax demanded to berefunded has been passed on tocustomers.[ C C E , B h o p a l v s P e p t e c hConstructions – Delhi Cestat]

3.2 Service Tax wrongly deposited inanother assessee’s account due toentering incorrect assessee codewhile making electronic payment;thereafter the assessee depositedservice tax with correct code; theassessee was eligible for refund forthe same tax paid twice.[Sundaram Industr ies Ltd vsDepartment Of Central Excise- MadrasHC]

4.1 Unless it is established that value of aproduct manufactured has beensuppressed on account of advanceaccepted, notional interest on suchadvance does not form part of thevalue of the product for payment ofexcise duty.[Otis Elevator Co (I) Ltd Vs CCE –Mumbai Cestat]

4.2 When goods are cleared at factorygate, which is the place of removal,expenses incurred like freight,

II. CENVAT CREDIT

III. REFUND

IV. VALUATION

unloading, insurance etc after theproperty in goods has passed, will notform part of the value; however, wherethe place of removal is the premise ofthe buyer, such costs will form part ofthe value.[CCE, Aurangabad vs Roofit IndustriesLtd – SC]

4.3 Sales Tax incentive not includible inassessable value till 1-7-200 but willform part of the value after this date forlevy of excise duty.[CCE Vs M/s National Eng. Industries –SC]

4.4 The assessee was manufacturingflushing cisterns; the assessee hadpurchased various assemblies thatwere supplied with the manufacturedcisterns to the customers whorequired these assemblies. Sincet h e s e a s s e m b l i e s a r e n o tmanufactured by the assessee but arebought and supplied, value of suchassemblies will not form part of thevalue of the cisterns on which exciseduty is paid by the assessee.[CCE Vs M/s Neycer India Ltd – SC]

5.1 Note 3 to Chapter 18 of the CentralExcise Tariff provides that ‘labelling orrelabelling of containers or repackingfrom bulk packs or retail packs or theadoption of any other treatment torender the product marketable to thec o n s u m e r, s h a l l a m o u n t t omanufacture’ and hence assesseewas eligible to claim cenvat creditclaimed and rebate of duty even if suchlabelling or relabelling did not enhancethe marketability of the product, asclaimed by the revenue authorities.[Jindal Drugs Ltd Vs CCE – MumbaiCestat]

5.2 Mere process of sterilization ofsyringes and needles does not amountto manufacture since these articleswere complete articles even beforesuch process. The HonourableSupreme Court laid down certain teststo determine manufacture:

1. Where the goods remain exactlythe same even after a particularprocess, there is obviously no

V. MANUFACTURE


Be there for others, but never leave yourself behind.5

3-DWritten by CA. Abhay Desai

LIMITS TO THE POWERS OF A CHECK-POST OFFICER

Lao Tzu said “The key to growth is the

introduction of higher dimensions of

consciousness into our awareness”.

Thinking about an issue only from one-

dimension may result in faulty action. This

is also true for indirect taxes. One has to

think from all points of view to get the best

answer. This column attempts to discuss

various issues pertaining to indirect taxes

from all the three dimensions i.e. Central

Excise, Service Tax & VAT.

manufacture involved. Processeswhich remove foreign matter fromgoods complete in themselvesand/or processes which cleangoods that are complete inthemselves fal l within thiscategory;

2. Whe r e t he goods r ema inessentially the same after theparticular process, again there canbe no manufacture. This is for thereason that the original articlecontinues as such despite the saidprocess and the changes broughtabout by the said process;

3. Where the goods are transformedinto something different and/ornew after a particular process, butthe said goods are not marketable.Examples within this group are theBrakes India case and cases wherethe transformation of goods havinga shelf life which is of extremelysmall duration. In these cases alsono manufacture of goods takesplace;

4. Where the goods are transformedinto goods which are differentand/or new after a particularprocess, such goods beingmarketable as such. It is in thiscategory that manufacture ofgoods can be said to take place

[Servo-Med Industries Pvt Ltd vs CCE– SC]

A) INTRODUCTION

B) FACTS OF THE CASE

C) ISSUE BEFORE THECOURT

With effect from 28.04.2015 Gujarat

State has made it mandatory for

dealers to use only online generated

transit forms (i.e. forms 402, 403 &

405) as opposed to manual forms.

With this new requirement, it is

necessary for all the dealers to revisit

the limits of the powers of the check-

post officers to avoid any undue

demands. The following article will

thoroughly analyze the powers of

check-post officers in light of a

decision of Hon. Punjab and Haryana

High Court in case of State of Punjab

and another v. M/s Shreyans

Industries Ltd. [2015] 78 VST 264 (P

& H).

M/s Shreyans Industries Ltd. made

branch transfer of goods from Punjab

to their office in Delhi. As per Punjab

General Sales Tax Act, 1948 (Act),

driver of a vehicle has to obtain

statutory form ST-XXIV at the check-

post of Punjab. In the instant case

three vehicles loaded with paper

showing stock transfer (i.e. stock

invoice & ground receipts) along with

forms ST-XXIV were produced to the

check-post officer. Driver of the truck

was also carrying other papers which

showed that goods were to be

delivered to M/s CWC Stores and not

the branch of the dealer. On the basis

of said documents check-post officer

concluded that it is an inter-state sale

from Punjab to Delhi and not stock-

transfer as goods were to be delivered

to M/s CWC Stores and not the branch.

Having reached the said conclusion,

he ordered for detention of the goods.

After concluding proceedings on the

basis of show-cause notice issued by

check-post officer, an order levying

penalty of Rs.4,49,000/- was passed

under Section 14-B(7)(ii) of the Act.

Question before the Hon. High Court

was whether the action of check-post

officer concluding the transaction as

an inter-state sale and not branch

transfer was within the powers granted

by the Act?

Hon. High Court agreed with thejudgment of Hon. Tribunal and heldthat it was beyond the powers of thecheck-post officer to determine thenature of transaction. Jurisdiction todetermine nature of transaction lieswith the assessing officer and not thecheck-post officer. Reasoning of thecourt is as follows:

Sec. 14-B of the Act deals with theestablishment of check posts or ofinformation collection centers.Under sub-section (7)(ii) of saidsection, officer is given powers toconduct an enquiry. Said sub-section is reproduced below forready reference:

“(7)(ii) The officer authorized bythe State Government shall, beforeconducting the enquiry, serve anotice on the consignor or theconsignee of the goods detainedunder clause (i) of subsection (6),and given him an opportunity ofbeing heard and if, after theenquiry, such officer finds thatthere has been an attempt to avoidor evade the tax due or likely to bedue under this Act, he shall byorder impose on the consignor orconsignee of the goods, a penalty,which shall not be less than twentyper cent and not more than thirtypercent of the value of the goodsand in case he finds otherwise, heshall order the release of the goodsand the vehicle, if not alreadyreleased, after recording reasonsin writing and shall decide thematter finally within a period off o u r t e e n d a y s f r o m t h ecommencement of the enquiryproceedings.”

Question for consideration is thebreadth of enquiry that can beconducted by a check-post officer.Whether he can assume a role of

D) DECISION AND REASONING OF THECOURT

i) LEGAL PROVISIONS


Do what you must, And your friends will adjust 6

an assessing officer and questioneach and every thing or he canmake no further enquiries if he issatisfied with the legality of transitforms produced before him.

Division bench of Hon. P & H HighCourt in case of M/s Devi DassGopal Krishan Ltd., Moga v. StateofPunjab) [2009] 25 VST 434while interpreting the above sectionheld that as per provisions of sub-section 6, if the officer in-charge ofthe check post or InformationCollection Centre has reason tosuspect that the goods undertransport are meant for trade andnot covered by proper and genuinedocuments or for other reasonsfind that the person transportingthe goods is attempting to evadepayment of tax then for reasons tobe recorded in writing, a detentionorder of goods along with vehiclecould be passed and the goodshave to be released on executing abond with suret ies in theprescribed form or furnishing asecurity or even bank guaranteeetc. The expression ‘reason tobelieve’ used in sub-section (6) ofSection 14-B of the Act imposes anobligation on the officer in-chargeof the check post to act objectivelyand not merely on the basis of hisarbitrary opinion formed. Theexample could be if the detailsgiven in all the documents do nottally with the goods in the vehiclethen there may be justification fordetention of the goods. However,the provisions

Karnataka High Court in the case of

also held thatcheck-post officer once satisfiedwith the declaration forms cannotgo into the nature of transaction. At

ii) APPLICATION OF LAW

do not permit theofficer to go to the extent ofdetermining the nature of thetransaction, which, in fact, lieswithin the jurisdiction of theregular assessing authority.

Automobile Products of IndiaLimited v. State of Karnataka,[1991] 081 STC 414

best he could have sent theinformation gathered at the check-post to the assessing officer of theconcerned dealer.

In

itwas held that check post officerwas not competent to go into thenature of transaction which couldonly be decided in regularassessment proceedings. It washeld that he over-stepped hisjurisdiction to impose penalty byholding that it was evasion ofpayment of tax.

On the basis of above judgmentsand provisions of law, Hon. HighCourt in the instant case held thatcheck-pos t o f f ice r cannotd e t e r m i n e t h e n a t u r e o ftransaction. He can only verify thecorrectness of the forms and onlyorder detention and levy penalty ifduring the verification he finds anymismatch in the forms and actualgoods.

Sec. 68 of GVAT Act deals with theestablishment of check-posts andpower of check-post officers. As perSec. 68(3) driver of a vehicle has tocarry followings records/documents:

i) Log book

ii) Bill of sale or delivery note andsuch other documents relating tothe goods carried in the vehicle

iii) Goods vehicle record and a tripsheet

iv) Declaration forms (i.e. forms402, 403 & 405)

As per Sec. 68(4), check-post officer candetain the goods and impose penalty only if:

(i) goods under transport are notcovered by goods vehicle record,trip-sheet or log book, or

(ii) goods under transport are not inaccordance with the documentsprescribed under clause (a) ofsub-section (3), or

(iii) a dec lara t ion re la t ing to

Parry and Company Ltd. v.Commissioner of Sales Tax, U.P.,Lucknow, [2004] 138 STC 437,

E) APPLICABILITY TO GVAT ACT

particulars of goods as madeunder clause (c) of sub-section(3) is false, or

(iv) the signature appearing in any ofthe documents referred to inclause (a) of subsection (3) doesnot match with the signaturefurnishedby the registered dealerunder section 66A, or

(v) if the driver or other person incharge of a vehicle, boat oranimal carrying goods does notmake a declaration or if he makesa declaration,hedoes not keep acopy thereof with him as requiredb y c l a u s e ( c ) o f s u b -section(3)

Thus only in above five eventualities, check-post officer can detain the goods andimpose penalty. Relying on the decision ofHon. Punjab and Haryana High Court incase of State of Punjab and another v. M/sShreyans Industries Ltd. [2015] 78 VST 264(P & H) as well as legal provisions of law inmy view check-post officer’s jurisdiction islimited to the verification of factualdiscrepancies in the consignment. Hecannot go into the questions relating to thenature of transaction, rate of tax, filing ofreturns, payment of tax, etc. as that fallswithin the jurisdiction of an assessingofficer.

Indirect Tax UpdatesWritten by CA. Manilal Parsiya

NOTIFICATION NO.12/2015-ST, DATED30-4-2015

NOTIFICATION NO.14/2015-ST, DATED19-5-2015:

amends notification 25/2015 soat to extend exemption on:

a) Services of general insurancebusiness provided under scheme ofPradhan Mantri Suraksha Bima Yojna

b) Service of life insurance providedunder scheme of Pradhan MantriJeevan Jyoti Bima Yojana and PradhanMantri Jan Dhan Yojana

c) Services by way of collection ofcontribution under Atal Pension Yojana(APY)

the Central Government herebyappoints the 1st day of June, 2015 as thedate on which the provisions of clauses (a),


Just let awareness have its way with you completely.7

(c) and (f) of section 107, section 108, sub-sections (2), (3) and (4) of section 109,section 153 and section 159 of the FinanceAct, 2015 shall come into force. The effectof the notification shall be as under w.e.f. 1stJune, 2015:

a) The rate of Service Tax is beingincreased from 12% to 14% (includingcesses).

b) Education Cess and Secondary andHigher Education Cess should alsocease to have effect.

c) Service Tax shall be levied on theservice provided by way of access toamusement facility providing fun orrecreation by means of rides, gamingdevices or bowling alleys inamusement parks, amusementarcades, water parks and themeparks.

d) Service tax shall be levied on serviceby way of admission to entertainmentevent of concerts, pageants, musicalper formances concer ts, awardfunctions and sporting events otherthan the recognized sporting event, ifthe amount charged is more than Rs.500 per person for the right toadmission to such an event

e) Service Tax shall be levied on contractm a n u f a c t u r i n g / j o b w o r k f o rproduction of potable liquor for aconsideration. A consequentialamendment in S. No. 30 of notificationNo. 25/2012-ST dated 20th June,2012, to exclude intermediateproduction of alcoholic liquor forhuman consumption from ambit of theexemption, will also come into effectfrom 1st June, 2015.

f) To include an explanation that “betting,gambling or lottery” shall not includethe activity carried out by a lotterydistributor or selling agent in relation topromotion, marketing, organising,selling of lottery or facilitating inorganising lottery of any kind, in anyother manner. The objective of makingthese exclusions was to make itexplicitly clear that while lottery per seis not subject to service tax, aforesaidservices in relation to lottery will betaxable.



NOTIFICATION NO.17/2015-ST, DATED19-5-2015

the Central Government herebyappoints the 1st day of June, 2015 as thedate on which the provisions of clauses (a),(c) and (f) of section 107, section 108, sub-sections (2), (3) and (4) of section 109,section 153 and section 159 of the FinanceAct, 2015 shall come into force.

Vide above notification, in respect of certainservices like money changing service,service provided by air travel agent,insurance service and service provided bylottery distributor and selling agent, theservice provider has been allowed to payservice tax at an alternative rate subject tothe conditions as prescribed under rules6(7), 6(7A), 6(7B) and 6(7C) of the ServiceTax Rules, 1994. Consequent to the upwardrevision in Service Tax rate, the saidalternative rates shall also be revisedproportionately.

(a) the existing exemption, byway of the Negative List entry, to service byway of admission to entertainment event,namely, exhibition of cinematographic film,circus, recognized sporting event, dance,theatrical performance including drama andballet shall be continued, through the routeof exemption. (b) Entry 47 and definition of“recognised sporting event” [paragraph 2entry 'zab'] has been inserted in notificationNo. 25/2012-ST vide S.No.1.(xii) and S. No.2. (c) respectively of notification No.06/2015-ST dated 1st March, 2015. Thisentry will also come into effect from 1stJune, 2015. (b) A consequentialamendment in S. No. 30 of notification No.25/2012-ST dated 20th June, 2012, toexclude intermediate production ofalcoholic liquor for human consumptionfrom ambit of the exemption, will also comeinto effect from 1st June, 2015.[Notification No. 06/2015-ST dated 1stMarch 2015 Entry at Sl. No. 1.(ix)]

exempts taxable servicesprovided under the Power SystemDevelopment Fund Scheme of the Ministryof Power, from the whole of the service taxleviable thereon by way of:

(A) re-gasification of Liquefied NaturalGas imported by the Gas Authority of

India Limited (GAIL);

(B) transportation of the incremental Re-gasified Liquefied Natural Gas (RLNG)(e-bid RLNG) to the power generatingcompanies or plants as specified inthe Annexure-I and Annexure -II to thisnotification,

amendsRule 6(3) of CENVAT Rules, 2004 so as toprovide reversal of CENVAT credit at the rateof Seven per cent of the value of exemptedservice where the provider of outputservice, opting not to maintain separateaccounts for taxable and exemptedservices.

NOTIFICATION NO. 14/2015-CENTRALEXCISE(N.T.) DATED 19-5-2015

FAQs on IFRS: IAS 21:Ind AS 23: Borrowing Cost:

Written by CA. Prashant Upadhyay

1) What is a related party transactionand who is a related party?

A transaction involving transfer ofresources, services or obligationsbetween a reporting entity and relatedparty, regardless of whether a price ischarged is a related party transaction.

A person or an entity that is related toreporting entity in preparation of itsfinancial statements as under:

a) A person or a close member of thatperson’s family is related to areporting entity,

b) An entity is related to an reportingentity if :

I) The entity and reporting entityare members of the samegroup (ie. each parent,subsidiary or fellow subsidiaryis related to the other)

ii) One entity is an associate orjoint venture of the other entity

i) If he has control or joint controlover the reporting entity

ii) Has significant influence overthe reporting entity or

iii) I s a m e m b e r o f k e ymanagement personnel (KMP)of the reporting entity or of aparent of the reporting entity


We must be our own before we can be another’s. 8

or associate or joint venture ofa member of a group of whichthe other entity is a member.

iii) Both entities are joint venturesof the same third party

iv) One entity is a joint venture ofthe third party and the otherentity is an associate of thethird entity

v) T h e e n t i t y i s a p o s t -employment defined benefitplan for the benefit of theemployees of the reportingentity or an entity related to thereporting entity or sponsoringemployers of the plan whereplan is itself reporting entity.

vi) Entity is controlled or jointlycontrolled by a person in a)above

vii) A person has significantinfluence or a member of keymanagement of the entity or itsparent.

Close member of family of aperson means “relative”defined under Companies Act,2013 and that person’sdomestic partner, children ofthat person’s domestic partnerand dependents of thatperson’s domestic partner.

Compensa t ion inc ludesemployee benefits as definedin Ind AS 19, EmployeeBenefits, including employeebenefits to which Ind AS 102Share Based paymentsapplies. It also includes suchconsideration paid on behalf ofa parent of the entity in respectof the entity.

The “control” and “investmententity”, “joint control” and“significant influence” aredefined in Ind AS 110, Ind AS111, Joint Arrangements andInd AS 28, Investments inAssociates and Joint Ventures,respectively and are used inth is Standard wi th themeanings specified in thoseInd ASs.

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2) Which are type of entities notcovered within the standard?

3) What are disclosure requirementscovered under the standard?

Disclosures shall be separatelymade for :

a) Two entities simply havingcommon director or manager,

b) Providers of finance, trade unions,public utilities and departmentsand agencies of a Govt. that doesnot control, jointly control ors ign i f icant ly in f luence thereporting entity simply by virtue ofnormal dealings with an entity

c) A single customer, vendor,franchiser, distributor or generalagent with whom an entitytransacts a significant volume ofbusiness merely by virtue ofresulting economic dependence.

Para 17 & 18 of the standard requiresdisclosure of

a) N a t u r e o f r e l a t e d p a r t yrelationship,

b) Amount of transactions,

c) Amount of outstanding balances,including terms and conditionsand guarantees

d) Provisions for doubtful debtsrelated to outstanding balances

e) Expense recognized during theperiod in respect of bad or doubtfuldebts due from related parties

f) C o m p e n s a t i o n t o K e ymanagement personnel like shortterm employee benefits, postemployment benefits, other longterm benefits, termination benefitsor share based payments.

Amount paid by entity for KeyManagement Personnel services thata r e p r o v i d e d b y s e p a r a t emanagement ent i ty sha l l bedisclosed.

a) The parent,

b) Entities with joint control of, orsignificant influence over, theentity:

c) Subsidiaries,

d) Associates,

e) Joint ventures in which the entity isjoint venturer,

f) Key management personnel of theentity or its parent and

g) Other related parties

Para 24A has been added in thestandard which is clarificatory asreproduced below:

“Disclosure of details of particulartransactions with individual relatedparties would frequently be toovoluminous to be easily understood.Accordingly, items of a similar naturemay be disclosed in aggregate by typeof related party. However, this is notdone in such a way as to obscure thei m p o r t a n c e o f s i g n i f i c a n ttransactions. Hence, purchases orsales of goods are not aggregatedwith purchases or sales of fixedassets. Nor a material related partytransaction with an individual party isclubbed in an aggregated disclosure”.

In terms of Para 25 reporting entity isexempt from disclosure requirementsof Para 18 in relation with transactionswith:

a) A government that has control orjoint control of, or significantinfluence over, the reporting entityand

b) Another entity that is a relatedp a r t y b e c a u s e t h e s a m egovernment has control or jointcontrol of, or significant influenceover, both the reporting entity andthe other entity.

Para 26 stipulates, in case reportingentity applies exemption in paragraph25, it shall disclose the following :

a) The name of the government andthe nature of its relationship withthe reporting entity (ie. control,joint control or signif icantinfluence);

4) In case of voluminous related partytransactions, can the same beaggregated?

5) What are the provisions in thestandard as to Government relatedentities?


9 This above all: to thine own self be true.

b) The following information insufficient detail to enable users ofentity’s financial statements tounderstand the effect of relatedparty transactions on its financialstatements:

i) The nature and amount of eachi nd i v i dua l l y s i gn i f i c an ttransaction; and

ii) For other transactions that arecollectively, but not individuallysignificant, a qualitative orquantitative indication of theirextent. Types of transactionsinc lude those l is ted inparagraph 21.

6) What are deviations from AS 18 byInd AS 24:

1)

2)

3)

4)

5)

6)

There is ex tendedcoverage of governmententerprise, as it defines agovernment relatedentity as “an entity that isc o n t r o l l e d , j o i n t l yc o n t r o l l e d o rsignificantly influencedby a government”.

Requires disclosure of“amount of transactions”

Covers KMP of entity aswell as parent.

Also requires extendedd i s c l o s u r e s f o rcompensation of KMPu n d e r d i f f e r e n tcategories.

Uses the term “a closemember of that person’sfamily”

Requires disclosure asto the name of the nextmost senior parentw h i c h p r o d u c e sconsolidated financialstatements for publicuse if neither the entity’sparent nor the ultimatec o n t r o l l i n g p a r t yproduces consolidatedfinancial statements forpublic use.

Requires disclosure ofcertain information bythe government relatedentities

D e f i n e s s t a t e -controlled enterpriseas “an enterprisewhich is under thecontrol of the CentralGovernment and/ora n y S t a t eGovernment”.

G i v e s o p t i o n t odisclose the volume oftransactions either asan amount or as ana p p r o p r i a t eproportion.

Covers KMP of theentity only.

Does not requireextended disclosures.

U s e s t h e t e r m“ r e l a t i v e s o f a nindividual”.

Not covered.

E x e m p t s t h edisclosure of suchinformation

Sr. Ind AS 24 AS 18

Continue from Volume III/May 2015...

IV. Residential Status of a Company

V. Filing of return is mandatory if assessee

has foreign assets

The Finance Bill, 2015 as presented earlier

proposed to amend Section 6 to provide that

a company shall be said to be resident in

India if its place of effective management, at

any time in that year, is in India. In other

words, the concept of Control or

Management (wholly in India) is replaced

with Place of Effective Management (at any

time in India).

The amendment proposed in the original

Finance Bill, 2015 might have caused

difficulty in establishing the place of effective

management as a company might have

place of effective management in more than

one country at any point of time during the

year.

Thus, the Finance Bill, 2015 as passed by

the Lok Sabha has proposed to omit the

words 'at any time' which shall have effect

that a company shall be deemed to be

resident in India if its place of effective

management is in India.

The Finance Bill, 2015 as passed by the Lok

Sabha has proposed mandatory filing of

return by a person, being a resident other

than not ordinarily resident in India, who at

any time during the previous year:

(a) holds, as a beneficial owner or

otherwise, any asset (including

financial interest in any entity) located

outside India or has signing authority in

any account located outside India; or

(b) is a beneficiary of any asset (including

any financial interest in any entity)

located outside India.

However, filing of return shall not be

mandatory under this proviso for an

individual, being a beneficiary of any

asset (including any financial interest

in any entity) located outside India, if

income arising from such an asset is

includible in the income of the person

Changes Made In

Finance Bill, 2015Written by Team Baroda

who is beneficial owner of such an

asset.

The meaning of the 'beneficial owner' and

'beneficiary' has been proposed as under:

(a) 'Beneficial owner' in respect of an asset

means an individual who has provided,

directly or indirectly, consideration for

the asset for the immediate or future

benefit, direct or indirect, of himself or

any other person;

(b) 'Beneficiary' in respect of an asset

means an individual who derives

benefit from the asset during the

previous year and the consideration for

such asset has been provided by any

person other than such beneficiary.

There had been dispute between the revenue

and the taxpayers about the treatment of the

subsidy received from Government or any

other authority. The issue whether subsidy

shall be treated as capital receipt or revenue

receipt became a debatable issue.

Various Courts have pronounced on this

issue taking into consideration the purpose

and object for which the subsidy has been

given, which are as follows:

(a) In case of Sahney Steel & Press Works

Ltd. v. CIT [1997] 94 Taxman 368

(SC), it was held by the Supreme Court

that subsidy given to assessee by way

of refund of sales tax to enable the

assessee to run the business more

profitably is to be treated as revenue

receipt.

(b) In case of CIT v. Ponni Sugars &

Chemicals Ltd. [2008] 174 Taxman 87

(SC), it was held by the Supreme Court

that it is the object for which subsidy is

given which determines nature of

incentive subsidy and where subsidy is

given to utilize it for repayment of term

loans undertaken by assesse for

setting-up new unit/expansion of

existing business, it would be treated

as capital receipt.

(c) In case of CIT v. Reliance Industries

Ltd. [2010] 8 taxmann.com 218

(Bom.), it was held by the Bombay

VI. Subsidies are no longer capital

receipts

DATES COMPLIANCE PERIOD

05-Jun-15 Payment of Service Tax - Monthly Cases / Excise Duty (for NON SSI) May'15

06-Jun-15 E-payment of Service Tax - Monthly Cases / Excise Duty (for NON SSI) May'15

07-Jun-15 TDS / TCS Payment / E-payment May'15Submission of form for non-deduction of TDS / TCS

09-Jun-15 VAT / CST E-Return - Monthly (with Jan.'15 to March'15 Stock Details) (For VAT or CST > Rs. 5,000/-) March'15

10-Jun-15 Excise return (Large Units / EOU / Units paying more than Rs. One Crore of Duty) May '15

14-Jun-15 VAT / CST E-Return - Quarterly (with Oct.'14 to Mar. '15 Stock Details) Qtr. 4 (F. Y.: 2014-15)

VAT /CST E-Return - Quarterly - for Lumpsum Tax Payers Jan.'15 - March'15

15-Jun-15 Payment of Professional Tax / PF / Excise Duty (for SSI) May' 15

Advance Income Tax E-payment - Companies only Asst. Yr.: 2016-17

Professional Tax return May '15

16-Jun-15 Excise Duty E-Payment (for SSI) May '15

21-Jun-15 ESIC Payment May' 15

22-Jun-15 VAT / CST Payment / E-payment - Monthly / Lumpsum Cases May'15

25-Jun-15 Provident Fund return May'15

29-Jun-15 VAT / CST E-Return - Monthly (For VAT or CST <= Rs. 5,000/-) April'15

30-Jun-15 Annual VAT / CST E-Return for Regular & Lumpsum cases (other than cases under VAT Audit) Fin. Yr.: 2014-15

VAT Audit (extended date) Fin. Yr.: 2013-14


To find yourself, think for yourself 10

Important Due Dates for June, 2015 Written by CA. Abhijit J. Kotecha

High Court that subsidy in the form of

sales tax incentive would be treated as

capital receipt if it is given to set-up a

new unit in a backward area to

generate employment.

To end the dispute, it is proposed to amend

the definition of 'Income' under Section

2(24) in the Finance Bill, 2015 as passed by

the Lok Sabha.

A new sub-clause (xviii) is proposed to be

inserted in Section 2(24) to provide that

assistance in the form of a subsidy or grant

or cash incentive or duty drawback or waiver

or concession or reimbursement (by

whatever name called) by the Central

Government or a State Government or any

authority or body or agency in cash or kind to

the assesse [other than one considered

under Explanation 10 to Section 43(1)]

would be included in assessee's income.

Thus, any subsidy which is not reduced

from the actual cost of the asset in view of

provisions of Explanation 10 to Section

43(1) shall be taxable as revenue receipts of

the assessee.

VII. Bad debts could be claimed without

writing off debt in books of account

Bad Debts of a business are allowed as

deductions under Section 36(1)(vii). The

deduction is available in respect of any bad

debt or part thereof which is written off as

irrecoverable in the accounts of the

assessee for the previous year.

However, deduction is allowed subject to

conditions laid down under section

36(2),inter-alia, debt should have been

taken into account in computing the income

of the previous year in which the amount of

bad debt is written off or of an earlier

previous year.

Till Assessment Year 1988-89, there was no

requirement of writing off of the bad debt in

the books of account. From Assessment

Year 1989-90, the law was amended to

provide for deduction in the year of write-off

of the bad debt. So, the amendment made

writing-off of bad-debts in books of account

mandatory to claim deduction thereof.

In view of current provisions, no deduction is

allowed to an assessee if any income, not

recorded in books of accounts but offered to

tax as per Income Computation and

Disclosure Standards, turns into bad-debts.

In other words, assessee cannot write-off a

debt which was not recorded in the books of

account but was actually offered to tax. In

this case, no deduction is allowable to

assessee as debts are not written-off from

books of accounts.

In order to remove this anomaly, it is

proposed in the Finance Bill, 2015 as passed

by the Lok Sabha that bad-debts could be

claimed without writing off in books of

account if the amount of debt or part thereof

has been taken into account in computing

the income of the assessee of the previous

year in which the amount of such debt or

part thereof becomes irrecoverable or of an

earlier previous year on the basis of income

computation and disclosure standard

notified under section 145(2) without

recording the same in the accounts.

Thus, Section 36(vii), once again, proposed

to be amended to get back to original

position (i.e., the position that stood till

Assessment Year 1988-89) but to a limited

extent.

PHOTOFLASH


11 Be yourself; everyone else is already taken

FULL DAY SEMINAR ON CO-OPERATIVE BANKS & SOCIETIES ON 9 5 2015

Public Program on Investors' Awareness on 9 5 2015

CA. C.I.Shah Mr. Nakul Thakkar CA. Samir Parikh

Shri N V Patel, VUDA Chairman

Shri M A Narmawala, State Registrar

Study Circle Meeting on Important Aspectsof Project Financing CMA data from Banksperspective on 12 5 2015

Mr. Trilok Lalwani

CA. S P. Tulsian

Shri P K Pradhan, GM- UBD,RBI

Mr. Kartik Mehta

WICASA EVENTS

Full Day seminar on BE Different Study circle on GST by Tanay Mehta Workshop on English Laungage


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