CASC WEB USE FILE FINAL - casconline.orgcasconline.org/images/CASC BULLETIN july 2017.pdf · 6 CASC BULLETIN, JULY 2017 RECENT DECISIONS IN VAT / CST Input tax credit: The seller

+91 9940680500 +91 9900093129+91 9940680500 +91 9900093129

in CCH iFirmin CCH iFirmin CCH iFirm

3CASC BULLETIN, JULY 2017

EDITORIALGST – The Biggest Reform FinallyArrives?

By the time this bulletin is in your handswe would have already become part of thehistory which we can proudly share withour future generations as many of us wouldhave not been part of announcement ofIndependence in 1947. The IndianIndependence movement was successfulafter a movement spread over 190 yearsand now we are having one of biggestreform post-independence also has takenalmost 1/10 th of the period taken forattaining Independence. The path for thisreform was also not easy. It is normallysaid that “Man proposes, But GodDisposes” and this also comes true in theGST reforms – the person who was mostvocal in opposing the GST in India finallybecomes the person who is launching thereform overcoming all the opposition frominside (known partially every now andthen) and outside the Government. Eventhe parties who are effected are nowreluctant to come out and oppose. Theprofessionals irrespective of the area ofpractice, whether litigation practice orcompliance practice, whether they wereever in indirect practice or not, are all busyupdating themselves by becomingdelegates at various programs orattempting to become speakers. For the

time being all other issues like ICDS,Aadhaar linking issues in filing of returns,etc., have literally forgotten. For many ithas provided an opportunity to prune theirknowledge as well as presentation skillsin GST.

The Finance Minister had gone on recordby stating that “No excuse for firms not tobe ready for GST” without considering thefact that all the states have not passed theirrespective SGST Acts, and even on theappointed date out all the states except onestate namely Jammu and Kashmir is yet topass the SGST Act and the state of Keralahas done through the Ordinance route.Even in cases where the SGST has beenpassed, many of the stakeholders are yetto have a first look at the Bill or not awarewhether it has become an Act. Take forexample our state the TNSGST Bill hasbeen passed by the Assembly avoiding therisk of going through the Ordinance Routebased on the present political situation.However, the copy of Bill is not availableon the official website of the CommercialTaxes Department nor we are aware as onthe date of penning this article whether theBill has become an Act. However, in thepress release issued by the PressInformation Bureau, Government of India,Ministry of Finance, dated 21st June, 2017,states that Tamilnadu has passed the Act


on 19th June, 2017.It is worth reading thereply given by Mr. Bharat Goenka in oneof the interview to Business line where inreply to a question has stated as under

“Are companies prepared for the roll outof GST from July 1?

There has not been enough time. Peopleare ready for the concept of GST, but thatis different from getting ready with achange in systems and processes. Eventoday, companies don’t have full clarity onGST due to changes in the law and rules.

The extent of clarity has increased over thelast two-three weeks. But, getting readyfor GST in four-five weeks is difficult as itis a complete change in the tax system.”

[Emphasis supplied]

Source: Business Issue - 22nd June 2017

Developments – Direct taxes

The Assessments methodology under theDirect Taxes are going for some majorchanges. The returns selected forassessments through the first round ofselection during the current financial arenow covered by this new format. TheCBDT has issued vide F. No. 225/157/2017/ITA.II dated 23rd June, 2017, whereinthe new format of Notice U/s. 143(2) has

been prescribed, now emphasising on useof “e-proceeding” facility for electronicconduct of assessment. The fourth point inthe format of Notice states that “4. In caseyou do not wish to produce any evidence/information, as mentioned in para 2, youare requested to intimate the sameelectronically on or before _______.” Thesaid notice does not contemplate forpersonal hearing once you have notresponded as per the above clause. Hence,one has to be careful in responding as theAssessing Officer may take a stand thatonce you have not opted in the initial stage,cannot thereafter opt for such personalhearing.

Appeal

Members are requested to attend theprograms conducted by CASC and are alsorequested to send their suggestions and /or value additions to the services providedby CASC including this Bulletin. The samecan be sent by hard copy to the office ofthe CASC or emailed [email protected] or any of theMembers on the Management Committee.

For and on behalf of Editorial Board

Editor

mailto:[email protected]


DISCLAIMER :The contents of this Monthly Bulletin are solely for informational purpose. Itneither constitutes professional advice nor a formal recommendation. Whiledue care has been taken in assimilating the write-ups of all the authors. Neitherthe respective authors nor the Chartered Accountants Study Circle acceptsany liabilities for any loss or damage of any kind. No part of this MonthlyBulletin should be distributed or copied (except for personal, non-commercialuse) without express written permission of Chartered Accountants Study Circle.

COPYRIGHT NOTICE :All information and material printed in this Bulletin (including but not flowchartsor graphs), are subject to copyrights of Chartered Accountants Study Circleand its contributors. Any reproduction, retransmission, republication, or otheruse of all or part of this document is expressly prohibited, unless prior permissionhas been granted by Chartered Accountants Study Circle. All other rightsreserved.

ANNOUNCEMENTS :

1. The copies of the material used by the speakers for the regular meetings heldtwice in a month is available on the website and is freely downloadable.

2. Earlier issues of the bulletin is also available on the website in the “News” column.

The soft copy of this bulletin will be hosted on the website shortly.

READER’S ATTENTION

You may please send your Feedback Contributions / Queries on Direct Taxes, IndirectTaxes, Company Law, FEMA, Accounting and Auditing Standards, Allied Laws orany other subject of professional interest at [email protected]

For Further Details contact :“The Chartered Accountants Study Circle”

“Prince Arcade”, 2-L, Rear Block, 2nd Floor, 22-A, Cathedral Road,Chennai - 600 086. Phone 91-44-28114283

Log on to our Website :www.casconline.org

For updates on monthly meetings and professional news.Please email your suggestions / feedback to [email protected]


http://www.casconline.org



RECENT DECISIONS IN VAT / CST

Input tax credit:

The seller issued invoice cum excise gatepass for sale of the goods to the appellant.It contained all material particulars, suchas name, address and registration numberof the selling and buying dealer, printedinvoice number, date, description, quantityand rate of goods, excise duty charged, saletax charged along with rate thereof, thedate and time of removal of goods fromthe factory, as was specifically requiredunder the 1944 Act and the Rules. The onlydiscrepancy, on the basis of which input-tax credit was sought to be denied to theappellant, was that the invoice did notcontain the words “input-tax credit isavailable to a person against this copy”.The opinion expressed by the authoritiesthat it was a mandatory condition, whichcould not be ignored was erroneous asthese types of technical defects in theinvoices could not be fatal for grant ofinput-tax credit to the claimant. Rule 54 ofthe Rules providing for the particulars tobe mentioned in a VAT invoice was notmandatory, in case the claimant/dealer wasable to prove from other evidence that thetransaction and the claim was genuine. Theinput-tax credit available to the petitionerand the genuineness of the transaction hadnot been examined otherwise by theauthorities to record a finding that the tax,credit of which was being sought by theappellant, had in fact been paid by him tothe selling dealer at the time of purchase

CA. V.V. SAMPATHKUMAR

of goods. Therefore, it was held that, theTribunal was not justified in rejecting theclaim of input-tax credit merely on thegrounds of technicalities when the dealerwas able to show that the tax had beenpaid to the selling dealer and dulydeposited with the State. [2016] 94 VST219 (P&H) AVDESH TRACKS PRIVATELIMITED v. STATE OF PUNJAB ANDANOTHER

Machinery:

when a question arises where certainequipment is machinery which is used inthe execution of the works contract, thefact that it also happens to be a motorvehicle, would be wholly insignificant thattoo when there is no separate entry formotor vehicles. Therefore the loader usedin execution of works contract is machineryfalling under entry 35, of notification issuedunder section 5(2) of the Gujarat ValueAdded Tax Act, 2003. [2016] 94 VST 236(Guj) STATE OF GUJARAT v. GMMCOLTD.


Classification:

Bitumen emulsion is processed bitumen,but the process does not change itscomposition, commercial identity or its use.Bitumen emulsion is regarded andperforms the same function as bitumen. Asa result of processing, neither the primarycharacter nor the composition is lost.Emulsification only eases and providesproficiency to the use of application ofbitumen. Hence, in popular and commercialsense, bitumen emulsion is nothing butbitumen, which is in liquid form and is userfriendly. The Legislature has used the word“bitumen” and treated it as a separateentity. This was not done with theintention and purpose to exclude sometype or variety of bitumen. All bitumenproducts, which share and have commoncomposition and commercial entity, andmeet the popular parlance test, are,therefore, meant to be covered by thatentry. Even the end use test is satisfied inthe instant case. There is nothing in theentry to suggest and show that the entryis required to be given a restrictive and anarrow meaning. It is not correct to saythat the word “Bitumen” must beconferred a narrow meaning for the reasonthat the Legislature has not thought itappropriate to use the prefix or suffix like“all”, in all forms or of all kinds. This isnot the principle or precept applied tointerpret the entries under the Schedule ofthe Act. Bitumen is a generic expressionwhich would include different types ofbitumen. Entry 22 does not exclude or

specify that it would not include bitumenof all types and varieties. There is no otherentry under which bitumen emulsion canbe taxed. The residuary entry would onlyinclude goods, which cannot be coveredunder any other entry in the Schedule onapplication of the threefold criteria. Whenthe word “bitumen” has been used as ageneric expression, it would be erroneousnot to cover a product that is only a typeor form of bitumen and retains all itsessential characteristics, and treat it ascovered by the residuary entry by somekind of ingenuous reasoning. Taking itoutside the purview of the specific entry isincorrect and concluded that Bitumen inits emulsified form also remains bitumen.[2016J 94 VST 258 (SC) COMMISSIONEROF COMMERCIAL TAX, U. P .v. A. R.THERMOSETS (PVT.) LTD.

Service tax:

The petitioners filed writ petitionschallenging the constitutional validity ofsection 66B of the Finance Act, 1994 readwith section 65 B( 40) and section 66D ofthe Finance Act, 1994 as amended by clauseif) of section 107 and clause (2) of section109 of the Finance Act, 2015 respectively,along with Notification No. 14/2015/-ST,dated May 19, 2015, which levied servicetax with effect from June 1, 2015, on personswho manufactured alcoholic liquor forhuman consumption on job-work basis. Itwas the case of the petitioner that theactivity of manufacture of alcoholic liquorfor consumption, whether for oneself or


for another person, was essentially one ofmanufacture of alcoholic liquor for humanconsumption which was squarely coveredby entry 51 of the State List: Dismissingthe petitions, the Court held (i) that, if the“pith and substance” doctrine was appliedin the instant case, it was evident that whileentry 51 of List 11 envisaged manufactureof alcoholic liquor for consumption it didnot contemplate a situation of manufactureof alcoholic liquor by one person or entityfor another. The taxable event was themanufacture and it was amenable to Stateexcise duty. However, when it comes tomanufacture for another, in pith andsubstance it is a service performed by onefor another and could not therefore fallwithin the ambit of entry 51 of List II.Therefore such provision of service whichwas in pith and substance not coveredunder entry 51 of List 11 of the SeventhSchedule to the Constitution of India wascertainly amenable to levy of service taxby Parliament which was competent tolegislate on that aspect with reference toentry 97 of List I. [2016] 94 VST 273 (Delhi)CARLSBERG INDIA PRIVATE LIMITEDv. UNION OF INDIA AND OTHERS

Refund:

The petitioner-dealer was issued a noticeof a refund order in form P for theassessment year 2013-14, of the excess oftax collected from the dealer estimated atRs. 39,33,672. Since no action was takenpursuant thereto, the dealer filed a writpetition which the court disposed of

directing the CTO to consider therepresentation. However, that order hadnot been complied with by the CTO whoissued a notice based on certain queriesraised by the DC. The Court in a writpetition filed, held that it was not clearunder which provision of law, the DC hadissued the proceedings calling upon theCTO to issue the notice. In the absence ofany statutory powers, the proceedings ofthe DC had to be held to be withoutjurisdiction. Nevertheless, the dealer senta detailed objection and in spite of havingreceived such a reply, instead of grantingrefund, the CTO had addressed a letter tothe Additional Commissioner, PR as towhat had to be done in the matter. Therewas no statutory sanction to such procedurebeing adopted by the respondent. Evenassuming that there was some manual ofprocedures formulated by the CommercialTaxes Department, which obviously had nostatutory force, assuming that theCommissioner came to a conclusion thatthe explanation offered by the dealer tothe queries raised by the DC was incorrectand unacceptable and he passed the orderthat would amount to reviewing the orderof assessment which undoubtedly the Actdid not contemplate. The procedureadopted by the CTO as well as the DC (CT)was wholly illegal. The notice was set asideand the CTO was directed to effect refundof the tax. [2016] 94 VST 335 (Mad)GOPAL ENGINEERING WORKS v.CTO, MANALI ASSESSMENT CIRCLE,KODUNGAIYUR, CHENNAI


Natural Justice:

When the vehicle has been stopped, therecord clearly revealed that no notice hadbeen served upon the transporter asrecorded in the order, but it had beenissued to the driver of the vehicle and thetime granted to the driver to respond tothe notice was only one hour. Evidentlytherefore, the order has been passedwithout granting any opportunity ofhearing. There was nothing in the noticeto indicate as to what was the nature ofinformation in respect of the goods thatwas sought, nor was it the case of therespondent that he has sought permissionto inspect the goods. While the notice wasissued calling upon the driver to explainhis statement as to why the goods wererequired to be offloaded at Changodar, thedetention order was totally silent in thatregard. It was recorded in the detentionorder that the transporter could notproduce the required documents/information called for and thereby, failedto produce the same whereas the driverwas not called upon to produce anydocuments or information... Moreover, inthe detention order, a cyclostyled one,there were several blanks. Thus thedetention order suffered from the breachof principles of natural justice as well aslack of application of mind and therefore,stood vitiated. The order was quashed.[2016] 94 VST 338 (Guj) JAY AMBEYTRADERS AND ANOTHER v. STATEOF GUJARAT AND ANOTHER

Refunds:

The return for the fourth quarter of 2010-11 was filed by the petitioner. Yet, thenotice was issued well beyond the 15 daytime-limit in term of Circular issued in thisregard. The return for the first quarter of2011-12 was filed and the notice was issuedagain beyond the 15 day time-limit. In bothinstances the notices of default assessmentswere issued. Nothing was found due fromthe petitioner whether under the DVATAct or the CST Act at the time thepetitioner’s return for the said periodsclaiming refund were picked up forscrutiny. Had the Department respondedpromptly as was envisaged, then thepetitioner could have been asked to furnishthe information or particulars as envisagedunder the Act. If there was a failure by thepetitioner thereafter to provide theinformation or documents then possibly thequestion of postponement of time limitmight arise. There was no valid explanationoffered by the Department for the failureto process and issue to the petitioner therefunds for the fourth quarter of 2010-11and first quarter of 2011-12 within the time-frame set out under section 38 of the DVATAct. In this back ground and facts, the courtdirected the Department to issue to thepetitioner the amount of refund claimedwith interest up to the date of paymentwhich should not be later than two weeksand also urged the Commissioner to reviewthe issue of grant of refunds on prioritybasis so that the process was streamlinedand his instructions regarding speedy


disposal of refunds was strictly followed.[2016] 94 VST 347 (Delhi) PRIME PAPERS& PACKERS v. COMMISSIONER OFVAT AND ANOTHER

Refund:

There was a failure by the respondent togrant refund due to the petitioner for thefourth quarter of 2013-14 together withinterest due thereon in terms of section 38of the DVAT Act. While it was open to theDepartment to take appropriate action torecover what it perceived to be turnoverthat might have escaped assessment, suchaction could not result in postponement ofthe refund beyond the mandatory timeframe. Instead of processing refunds withinthe prescribed time, the Assistant ValueAdded Tax Officer compounded theproblem by seeking to reopen theassessments for’ the earlier years includingthe period for which the refund wasclaimed using the order passed by this courtrecording the assurance of the respondenton June 3, 2016 in W. P. that the “admissibleamount of refund together with interestwould be released before the next date ofhearing” as a trigger. This was totallycontrary to the law. Stating so, the courtwhile allowing the petitions challenging thenotices awarded costs of Rs. 20,000 in eachpetition to be paid by the Department tothe petitioner and issued a direction to theCommissioner to issue notices to theAssistant Value Added Tax Officer as wellas the Joint Commissioner to explain whythe costs imposed should not be recoveredfrom their respective salaries and an

adverse entry not be made in their annualconfidential reports and, pass appropriateorders in view of the inexcusable conductof the Assistant Value Added Tax Officerwhich had the endorsement of the JointCommissioner. The court also directed inwrit petition filed earlier that the refunddue to the petitioner for the fourth quarterof 2013-14 together with interest would becredited to the account of the petitionerthrough RTGS. [2016] 94 VST 358 (Delhi)TELEWORLD MOBILES PVT. LTD .v.COMMISSIONER OF TRADE & TAXES

Part or Accessory?

The petitioner-dealer was engaged in saleof mobile phones and accessories. Alongwith the mobile phones it packaged andsupplied mobile chargers, batteries,earphones, data cables, etc., in one singlepackage, so as to make it one compositebox put up for retail sale and value addedtax was charged at the time of sale of thebox containing the battery charger at therate of 5.5 per cent. On the basis of theSupreme Court ruling in State of Punjab v.Nokia India Pvt. Ltd. [2015] 77 VST 427(SC) to the effect that mobile phone chargerwas an accessory to the mobile phone andnot a part of the mobile phone, but aseparate item liable to be taxed in terms ofthe residuary entry, a tax demand wasraised against the dealer bringing thebattery chargers to tax at the rate of 12.5per cent. When a writ petition challengingthis was filed, the court held that there isno ground for interference andconsequently, the WP was hereby


dismissed. [2016] 94 VST 377 (P&H)SAMSUNG INDIA ELECTRONICS PVT.LIMITED v. STATE OF PUNJAB ANDANOTHER

Input tax credit:

The petitioner-dealer had export sales,during the year categorised as zero ratedsale” under section 18 read with section2(44) of the Tamil Nadu Value Added TaxAct, 2006. It claimed input-tax credit on itspurchases and set off proportionate input-tax credit relating to export in thefollowing order: (i) set-off against valueadded tax liability on local sales, (ii) set-off against Central sales tax liability oninter-State sales, and (iii) the balance input-tax credit carry forward to the next year.The Assistant Commissioner made the set-off in the following manner relating to localand Central sales tax sale: (i) local sale (set-off against value added tax liability), (ii)Central sales tax sales (set-off againstCentral sales tax liability), and (iii) balanceinput-tax it in relation to export sale wasdenied on the ground that the petitionerdid not file form W. The Court in writpetition filed in this regard, held thatsection 18 of the Act does not prescribe themethod of preference set-off of input-taxcredit and unless and until the AssistantCommissioner was able to clearlydemonstrate that the procedure adoptedby the dealer was contrary to the statute,the dealer should be permitted to adoptthe preference to set-off. The findingsrendered by the assessing officer withregard to preference of set -off were setaside and the matter remanded to the

assessing officer to redo the assessmentsafter issuing notice to the dealer and afteraffording opportunity of personal hearing.[2016l 94 VST 409 (Mad) XOMOXSANMAR LTD. v. AC (C.T), MYLAPOREASSESSMENT CIRCLE, CHENNAI

Delegated legislation:

The power of delegation of State or CentralLegislature is subject to a limitation, i.e., itcannot delegate uncontrolled power.Delegation is valid only when it is confinedto legislative policy and guidelines. Whatis permitted by the concept of “delegation”is delegation of ancillary or subordinatelegislative functions or what is fictionallycalled as “power to fill up ‘the details”. Asthe power to make subordinate legislationis derived from the enabling Act, thedelegate, on whom such power isconferred, has to act within the limitationsof the authority conferred by the Act andcannot override the Act either by exceedingthe authority or by making provisionsinconsistent with the Act. The court wouldbe justified in giving the provision apurposive construction to perpetuate theobject of the Act, while ensuring that suchrules framed are within the fieldcircumscribed by the parent Act. [2016] 94VST 481 (T&AP) PRATHULAUTOMOBILES PVT. LTD. Vs AC(CT)-II, ENFORCEMENT WING, NAMPALY,HYDERABAD AND-ANOTHER

(The author is a Chennai based CharteredAccountant. He can be reached [email protected])

mailto:[email protected])


CASC CHENNAI, MEMBERSHIP FEE

Corporate MembershipCorporate Annual Membership 3,000.00Corporate Life Membership (20 Years) 20,000.00

Individual MembershipAnnual Membership 750.00Life Membership 7,500.00

CASC - HALL RENTHALL RENT FOR 2 HOURS 1,000.00HALL RENT FOR 2-4 HOURS 1,500.00HALL RENT FOR FULL DAY 2,500.00LCD RENT FOR 2 HOURS 600.00LCD RENT FOR 2-4 HOURS 800.00LCD RENT FOR FULL DAY 1,200.00

The above amounts are EXCLUSIVE of Service Tax. Applicable Taxes will be added.

CASC BULLETIN - ADVERTISEMENT TARIFF - PER MONTH

Full Page Back Cover 2,500.00Full Page Inside Cover 2,000.00Half Page Back Cover 1,500.00Half Page Inside Cover 1,250.00Full Page Inside 1,200.00Half Page Inside 750.00Strip Advertisement Inside 500.00

Minimum 6 months advertisement is required.If advertisement is 12 months or above, special discount of 15% is available

Your demand draft / cheque at par should be drawn in the name of“The Chartered Accountants Study Circle” payable at Chennai.

Kindly contact [email protected] for the updates.

Rs.



LEGAL UPDATE ON DIRECT TAXES

CA. G. PARI & CA. P. PRADEEP KUMAR

I. Whether the provisions of Sec. 139AAof ITA in respect of “Quoting ofAadhaar number” in income taxreturns are constitutionally valid?

Writs have been filed before Hon’bleSupreme Court by public spiritedpersons (claiming them so) challengingthe constitutional validity of section139AA of ITA, for quoting Aadhaarnumber in income tax returns, in thecase of BINOY VISWAM v. UNIONOF INDIA [2017] 82 taxmann.com 211(SC), JUNE 9, 2017

SCHEME OF SECTION 139AA:

1. Section 139AA(1) mandates everyperson to quote Aadhaar number, witheffect from 1 st July, 2017, in theapplication form for allotment of PANand return of income. Proviso tosection 139AA(1) stipulates that in theabsence of having aadhaar number, theenrolment ID of aadhaar application isrequired to be submitted in the bothcases of allotment of PAN and returnof income.

2. Section 139AA(2) mandates everyperson who are having already PANon or before 1st July 2017 to intimate

Aadhaar number in such form and insuch manner as may be prescribed.

3. Proviso to Section 139AA(2) providesthat in case of failure to intimateaadhaar number, the PAN shall bedeemed to be invalid and the otherprovisions of Act would apply as if theperson has not got allotted PAN.

4. Section 139AA(3) provides that theprovisions of section 139AA shall notapply to the notified classes of persons.

5. Meaning of “Aadhaar number”,“Enrolment” “resident” and“Enrolment ID” are provided inExplanation.

AADHAAR (Targeted Delivery ofFinancial and other subsidies, benefitsand services) Act, 2016 [hereinafter referredto as the ‘Aadhaar Act’] – LEGISLATIVEHISTORY:


6. Initially, Government of India [GOI]through Planning Commission by wayof notification constituted UniqueIdentification Authority of India[UIDAI] for implementing UniqueIdentity [UID] Scheme with the objectto eliminate non-duplication and fakeidentity of individuals resorted to thecollection of biometric details such asfingerprints and iris scan of individualsfor identification. This has beenchallenged under Article 32 of theConstitution as it does not have anystatutory back up and Article 21 of theConstitution as it violated ‘Right toPrivacy’.

7. Subsequently, AADHAAR (TargetedDelivery of Financial and othersubsidies, benefits and services) Bill,2016 has been tabled having one of themain objects and reasons viz., issue ofAadhaar numbers to individuals onproviding his demographic andbiometric information to the UniqueIdentification Authority of India fordelivery of benefits, subsidies.

8. Section 3 of AADHAAR Act 2016endorses that enrolment of Aadhaar isvoluntarily and consensual and notcompulsory and as per section 7 ofAADHAAR Act, 2016, a person shallnot be deprived of subsidies for not

having Aadhaar Number and for suchpurposes(subsidy), he shall be offeredalternate and viable means ofidentification.

BASIS OF CHALLENGE ON THE VIRESOF SECTION 139AA OF ITA:

9. On the above backdrop Section 139AAof ITA, which mandated furnishing ofAadhaar numbers for the purpose ofincome tax has been challenged on thefollowing grounds:

i. Though the Scheme of Aadhaar isvoluntary and consensual, Section139AA impermissibly attempted tooverturn them without taking awaytheir basis in Aadhaar Act (as it is the‘Implied limitation’ of Parliament is‘not to pass contrary laws’);

ii. It violates Article 14 of the Constitution- on the application of the twin-test ofclassification viz. ‘there should be areasonable classification and that thisclassification should have rationalnexus with the objective’;

iii. There is a direct infringement to Article19(1)(g) – as it will be impossible tocarry out any business without PAN,which results in a virtual “civil death”;


iv. It violates Article 21 of the Constitution– i.e. Section 139AA coerces theindividuals to part with their privateinformation (finger prints and iris scanare the property of individuals) whichwas a part of human dignity;

v. Section 139AA of the Act is contrary tothe concept of ‘limited Government’(i.e. Governance is controlled by theprovisions of the Constitution such asthe fundamental rights chapter (PartIII);

SC DECISION:

10. Aadhaar Act and Section 139AA of ITAare two different standaloneprovisions/laws and validity of onecannot be examined in the light ofprovisions of other Acts. A harmoniousreading of the two enactments wouldclearly suggests that enrolment ofAadhaar is voluntary for takingbenefits of various welfare schemes,whereas the purpose behind enactingSection 139AA is to check a menace ofblack money as well as moneylaundering and also to widen theincome tax net so as to cover thosepersons who are evading the paymentof tax. There would be no conflict ifthe objects of two statutory provisionsare different and both are intended torun in parallel lines without meetingeach other.

11. Equality under Article 14 cannot becannot be challenged by creatingartificial classes i.e. persons who areobjecting to the said provision as a classand others as a class. Merely becausea section of persons opposes the law,would not mean that it has become aseparate class by itself. Two classes,cannot be created on this basis;therefore classification held forchallenge is not reasonable.Introduction of Aadhaar into taxregime in order to unearth black moneyor checking money laundering cannotbe denounced only because of thereason that the purpose would not beachieved fully; therefore, rationality ofa particular measure cannot bechallenged on the ground that it has nonexus with the objective to be achieved.

12. Furnishing Aadhaar number forapplying PAN in income tax returns asin section 139AA is not violative ofArticle 19(1)(g) of the Constitution;Proviso to Section 139AA (2) wouldoperate prospectively.

13. As the ground of challenge, beingAadhaar scheme/legislation isviolation of Article 21 (‘Right toPrivacy’) of the Constitution is pendingbefore the Constitution Bench, thisBench could not decide the issue.


Till then, partial stay on the operationof proviso to sub-section (2) of Section139AA of the Act, has been ordered.

14. The ground of ‘Limited Government’can be sustained only when thepetitioner demonstrates that theParliament, in enacting the impugnedprovision, has exceeded its powerprescribed in the Constitution or thisprovision violates any of the provision,which has not been made in the presentcase.

BUTTRESSES/GROUNDS for theDECISION:

Scope of Judicial Review by Courts:

15. Article 32 as well as Article 136 of theconstitution empowers Supreme Court[and Article 226 empowers HighCourts] for conducting Judicial Reviewnot only on administrative acts ofexecutive but also on the legalenactments passed by the legislaturebut with different parameters. Alegislature can be struck down if it fallsfoul of federal distribution of powersor it contravenes fundamental rights orother constitutional rights orprovisions of the Constitution of India.

Twin tests for invalidation of particularprovision contained in a statue:

16. “A particular law or a provisioncontained in a statute can beinvalidated on two grounds, namely:(i) it is not within the competence ofthe Legislature which passed the law,and/or (ii) it is in contravention of anyof the fundamental rights stipulated inPart III of the Constitution or any otherright/ provision of the Constitution” -STATE OF MADHYA PRADESH v.RAKESH KOHLI & ANR. [2012] 6 SCC312; Apart from these twin grounds, nothird ground is available to invalidateany piece of legislation - STATE OFA.P. & ORS. v. MCDOWELL & CO.& ORS. [1996] 3 SCC 709.

Unreasonableness cannot be the groundfor challenge:

17. “A legislation cannot be challengedsimply on the ground ofunreasonableness because that by itselfdoes not constitute a ground. Thevalidity of a constitutional amendmentand the validity of plenary legislationhave to be decided purely as questionsof constitutional law.” - ASHOKKUMAR THAKUR v. UNION OFINDIA & ORS. [2008] 6 SCC 1.

Arbitrary cannot be the groundfor declaring a legislation asunconstitutional:


18. The ground of ‘arbitrary’ cannot betaken for declaring a legislation asunconstitutional as it implies a valuejudgment and the courts do notexamine the wisdom of legislativechoices and, therefore, cannotundertake this exercise; to undertakesuch an examination importing thedoctrine of “substantive due process”is essential - RAJBALA & ORS. v.STATE OF HARYANA & ORS. [2016]2 SCC 445

Article 14 for Equality and Article 19(1)(g)for fundamental rights:

19. A legislature can be struck down underArticle 14 only if it is found that it isviolative of the equality clause/equalprotection clause enshrined therein;similarly striking down/challenge asviolative of any of the fundamentalrights guaranteed by clauses (a) to (g)of Article 19(1), can be possible only ifit is found that it not saved by any ofthe clauses (2) to (6) of Article 19 andso on - STATE OF A.P. & ORS. V.MCDOWELL & CO. & ORS. [1996] 3SCC 709

Article 14 – Principle of Equality:

20. Article 14 enshrines the principle ofequality, which has two facets viz.,‘equality before law’ and ‘equal

protection of law’. ‘Equality beforelaw’ endorses that there will be ‘noprivileged person/class be above law’ and‘Equal protection of law’ casts ‘theobligation upon the State to bring about,through the machinery of law, a more equalsociety’ - SRI SRINAVASA THEATRE& ORS. v. GOVERNMENT OFTAMIL NADU & ORS. [1992] 2 SCC643.

Field of taxation enjoys greater latitudein the Constitution:

21. In the field of taxation, the legislatureenjoys a greater latitude forclassification - STEELWORTH LTD. v.STATE OF ASSAM; GOPAL NARAINv. STATE OF U.P.; GANGA SUGARCORPN. LTD. v. STATE OF U.P.; R.K.GARG v. UNION OF INDIA; andSTATE OF W.B. v. E.I.T.A. India Ltd.”

II. Whether transfer of shares by theassesse-company in pursuance tofamily arrangement, among themembers who controlled thecompany, amounted to transfer andliable to capital gains tax?

The issue came up for consideration in thecase of B.A. MOHOTA TEXTILESTRADERS (P.) LTD. v. DCIT,Maharashtra [2017] 82 taxmann.com 397(Bombay HC), JUNE 12, 2017


FACTS:

1. Over 80% of shares in a Private LimitedCompany is held by three families’ viz.Mr. Girdhardas Mohota (referred as‘Group A’), Mr. Gwaldas Mohota(referred as ‘Group B’) and Mr.Ranchhoddas Mohota (referred as‘Group C’) and these families also hadjoint interest in various other LimitedCompanies, Partnership Firms andimmovable properties. Consequent tothe dispute among family members, anarbitration award was rendered byway of family settlement on 30.04.1994and subsequently it has become decreeof Court on 07.11.1994. As per the termsof award (family arrangement), 25,650shares held by the assesse-company inM/s. R.S.Rekchand Mohota SpinningAnd Weaving Mills Ltd., has beentransferred at a consideration ofRs.225/- per share to Group A and1,22,000 shares in M/s. VAIBHAVTEXTILES MILLS LTD., has beentransferred at a consideration of Rs.10/- per share to Group C. Theseconsideration were determined by theArbitrator for sharing the value ofproperty. While filing the return forthe Asst. Year 1995-96, the assesse-company has claimed the transfer asexempted since the same were effected

in pursuance to family settlement/arbitration award. However, the AOdisallowed the claim and madeadditions under Capital Gains byholding that family settlement cannotamount to transfer or create anyinterest only among the familymembers. As in the present case, thecompany being a distinct person fromthe family members, the transfer ofshares held taxable. CIT(A) and ITATconfirmed the order of AO. On furtherappeal;

HC DECISION:

2. The Appellant/assesse-company is nota member of Mohota family andconsequently is not a party of thefamily settlement. Being a distinctperson incorporated under CompaniesAct, the transfer of shares would beliable to tax. Lifting of corporate veil,at the insistence of assesse would meandenying of corporate existence;company being an independent entityliable to pay capital gains tax for thetransfer.

(The authors are Chennai based CharteredAccountants and they can be reachedat [email protected] &[email protected] respectively)




RECENT DECISIONS - SERVICE TAX

CA. VIJAY ANAND

1. Online information access or data basereversal- exemption under notification13/2010 S.T. Dated 27.02.2010 not to bedenied merely because the assessee isa service receiver.

In United News of India V. CST, NewDelhi, 2017(51) S.T.R.23(Tri.-Del), theappellant is registered for renting ofimmovable property service and sale ofspace or time for advertisement serviceclassified under Section 65 of theFinance Act, 1994 and was also claimingexemption (as a recipient) for ‘Onlineinformation and data base accessservice’ vide Notification No.13/2010ST dated 27.02.2010. which wasdenied on the ground that as a recipientof service the benefit contained in thesaid Notification is not available,against which an appeal was filed beforethe Tribunal which observed as under:-.

1. Section 66A stipulates that taxableservice shall be treated as if providedby the recipient of service in India andaccordingly, all the provisions ofChapter V shall apply. It is not legallytenable to hold that such legal fictionwill have limited application only forpayment of service tax and not with

reference to any concession available tosuch service tax. No such implicationcan be read from the provisions ofsection 66 A.

2. Furthermore, the conditions mentionedin the Notification 13/2010 have beenfulfilled and there is no dispute on thatscore.

3. When the provider of service is put toliability to discharge service tax as perprovisions of section 66 A all theprovisions of Chapter V shall have fullforce for charge and collection of servicetax. The exemption claimed is a part andparcel of the provisions of service taxwhen section68 (2) specifies the personto pay service tax as per the rateprescribed under Section 66.

4. The legal fiction cannot be restrictedonly to the collection of tax withoutapplying any concession of the


notification applicable thereto when theconditions of the said Notifications arefulfilled by the recipient of such service.

Hence, the appeal was allowed and theimpugned order set aside.

2. Tyre Re-treading activity - value ofgoods distinctly shown in invoicesnot to be included for Service Taxpurposes.

In Super Transports (P) Ltd., V. CCE,Tiruchirappalli, 2017(51) STR46 (Tri.-Chennai), the assessee was into tyre Re-treading activity and was raisinginvoice separately for the cost ofmaterials and service charges and waspaying service tax on the service chargesalone. The adjudicating authorityconfirmed the demand on the entirevalue including the value of materialson which appeal was filed before theTribunal which observed as under:-

1. It is also submission of appellant thatwhile this Bench was hearing the caseof Safety Retreading CompanyLimited V. CCE, Salem 2012(26) STR225(Tri-Chennai) , there was adifference in opinion between twomembers on the grant of benefit ofabatement under Notification No.12/2003-S.T. dated 20.6.2003 to 30.6.2003in respect of the materials used in Re-treading of tyre and also on the issue

as to whether the gross value of theservice is to be adopted for the purposeof levy of service tax. On such issue,the Third Member answered thequestion presuming that there was noevidence of sale of materials inrendering the service of “maintenanceand Repairs”, which cannot be treatedas service under the category of “WorkContract” and that the assessee has notproved that the conditions underNotification 12/03-S.T.Dated 20.6.2003have been satisfied and, therefore, theyare not entitled to the benefit ofdeduction of cost of raw materialsconsumed improving the impugnedservice.

2. However, the present appeal is neitheron that count nor on the abatementissue and, hence, that decision has noapplication.

3. The controversy as to whether acontract is works contract or not isresolved by the Apex Court in the caseof Kone Elevator India Pvt. Ltd. V.State of Tamil Nadu 2014 (304)E.L.T.161(S.C.) holding that wherethere is involvement of goods alongwith service in a contract to achieve theobject of the parties, that is WorksContract. Consequently, tyre Re-treading is works contract and thegoods used in execution of such


contract is liable to sales tax withoutbeing liable to service tax.

4. Involvement of goods and services ina contract renders that to be workscontract. In the case of Imagic CreativePvt. Ltd. V. Commissioner ofCommercial Taxes reported in 2008 (9)S.T.R.337(S.C.) it was noticed thatwhen the invoices bifurcated serviceelement distinctly showing goods usedin the contract for levy of sales tax andthe court held that the service aspect isonly taxable under Union List and StateGovernment has no jurisdiction toimpose sales tax thereon.

5. The ratio laid down by Apex Court inthe above said judgments of ApexCourt rules out levy of service tax onthe goods used in the tyre Re-treadingcontract.

Hence, it was held that there was no levyof service tax on the value of goods usedin tyre Re-treading as distinctly shown byappellant in its invoices and that theappellant is entitled to refund of taxes sopaid on the value of goods, under protest.

3. Refund – relevant date forcomputation of limit as one year fromthe date of judgment, decree, order ordirection consequent to which amountbecomes refundable.

In Maa Sharda Enterprises V. CCE,Nagpur 2017(51) STR 76 (Tri.-Mumbai), the respondent had paidservice tax on 29/30.03.2010 and theinterest was paid on 20/26.04.2010. Thesaid amount was confirmed videOrderinOriginal dated 29.9.2010. Therespondent challenged the demandbefore Commissioner (Appeals), whovide order dated 7.4.2011 set aside theOrderin Original confirming thedemand, consequent to which refundbecome due to the respondent. Therespondent filed refund claim, whichwas rejected by the originaladjudicating authority on the groundof limitation as this Service Tax/penalty/interest was paid during29.3.2010 to 26.4.2010 whereas therefund claim was filed on 30.5.2011,which was set aside by Commissioner(Appeals). On further departmentalappeal, the Tribunal observed asunder:-

1. As per Explanation (ec) to Section 11Bof the Central Excise Act, 1944, relevantdate’ in case where the duty becomesrefundable as a consequence ofjudgment, decree, order or direction ofthe appellate authority, AppellateTribunal or any Court, is the date ofsuch judgment, decree, order ordirection.


2. Revenue has sought to limit thisexplanation to the judgment, decree,order or direction only in case whererefund is under dispute.

3. There is no such reference in theexplanation which clearly says that itapplies to case where the duty becomesrefundable as a consequence of”judgment, decree etc. This clearlyimplies that the judgment, decree etc.need not be directly refunded and canbe in relation to any precursor ofrefund.

Hence, the departmental appeal wasdismissed.

4. Brand promotion – demand onreimbursement of advertisementexpenses under business auxiliaryservices – not sustainable

In Datamini Technologies (India) Ltd.V. CCE, Thane 2017(51) STR145(Tri.-Mumbai),the adjudicating authorityconfirmed the demand under ‘BusinessAuxiliary Service’ holding that theappellants are engaged in brandpromotion of ‘INTEL’ and‘MICROSOFT’ for which commercialconsiderations were being paid by boththe brand owners periodically. Onappeal, the judicial member observedas under:-

1. The act of mere putting the logo ofMICROSOFT/INTEL does notautomatically tantamount to theproducts of ‘INTEL’ or ‘MICROSOFT’being promoted by the appellant as‘INTEL’ is a common brand forvarious products like ‘CPU Chip’,‘motherboard’ etc. and MICROSOFTbrand name is also common tovarious software like Windows 95,Win98, Win 2000 etc.

2. Moreover, in the advertisementsplaced before us that theadvertisements show the features ofthe computers to be sold by them butdoes not the feature of the products ofINTEL/MICROSOFT. If the activity ofadvertisement of the brand of INTEL/MICROSOFT is sought to be taxedduring the relevant period was the‘Advertisement Service’, on which theservice tax has already beendischarged.

3. 3. Hence, the activity of theappellants during impugned period isnot covered under “Business AuxiliaryService”, relying on the decision inM/s. Jetlite (I) Ltd. vs. CCE New Delhi2011 STR 119 (Tri.Del).

The Technical member concluded as under:

1. The services rendered by theappellants merit classification as‘Business Auxiliary Service’.


2. The invocation of extended periodfor demand of Service Tax is justifiedas the appellants had suppressed facts.

3. Therefore, the demand for Service Taxis not barred by time.

4. The appellants are liable to pay intereston the delayed payment of service taxat appropriate rates as provided forunder Section 75 of the FinanceAct, 1994.

5. The appellants are liable to paypenalties under Sections 75A, 76 and 77of the Finance Act, 1994.

6. Penalty under Section 78 is notwarranted.

The difference of opinion amongst themembers for reference to the thirdmember were as under:-

1. Whether the Member (Judicial) iscorrect in holding that the appellantsare engaged in the activity ofpromoting the brand of Intel/Microsoftconsequently, the activity of‘promotion or marketing of logo orbrand’ does not cover under thecategory of Business Auxiliary Serviceby relying on the judgment of Jetlite(India) Ltd? Or

2. Whether the Member (Technical) iscorrect in holding that the appellantsare engaged in the activity of promoting

the branded goods of Intel/Microsoft,therefore, the judgment of Jetlite(India) Ltd., is not applicable to the factsof this case and the demands arerightly confirmed under the categoryof Business Auxiliary Service and theextended period of limitation hasrightly been invoked.

The Third member who held as under:

1. In scale and reputation, appellants areincomparable with the two globalgiants. It is difficult to conceive that theproducts of these two entities willfind additional acceptability in themarket owing to the inclusion oftheir respective logos. The productsthemselves are amenable to utilizationonly by computer manufacturers andthe publicity, if any, among thepotential customers of the twoappellants is unlikely to derive anyeconomic benefits to the supplier.

2. On the contrary, the products ofthe appellants are likely to findgreater acceptance among potentialcustomers owing to the acknowledgedincorporation of the products of M/sIntel Corporation and M/s MicrosoftCorporation in the computersmanufactured by the appellants. Sucha reversal of roles would alter therelationship in a manner that was notcontemplated in the show cause notice.


3. At best, the scheme incentivizes theappellants to procure more productsfrom the two suppliers and to enhancethe sales of the computersmanufactured by the two appellants.Such a benefit to the appellantswould not qualify as promotion ofproduct of client. Indeed, theimpugned order should haveascertained the existence of aclientprovider relationship betweenthe appellants and the two suppliersalong the nature of the fiscal flowaccruing to the appellants as a preludeto determining the taxability.

4. Hence, the views of the technicalmember does not merit acceptance asthe activity of the appellants ispromotion of the branded goods ofM/s Intel Computers and M/sMicrosoft Computers taxable as‘business auxiliary service’ and theviews of the judicial member meritsacceptance.

Hence, by a majority value the appeal wasallowed and the impugned order set aside.

5. Interest on delayed refund – on theexpiry of 3 months from the date ofreceipt of application till the date ofrefund

In UOI V. Hamdard (Waqf)Laboratories, 2017(51) STR214(S.C.), the

respondent, is engaged in the businessof manufacture and sale of various itemsincluding Rooh Afza which is asweetened nonalcoholic beverage, andthe respondent classified it under thesubheading 2201.90 of the Schedule tothe Central Excise Tariff Act, 1986 (forshort, ‘the Tariff Act’), but the Revenuedid not accept the classification claimedby the assesseerespondent on thefoundation that it was classifiable underthe subheading 2107.91 of The TariffAct. The adjudicating authorityconfirmed the demand, which wassustained by the Commissioner(Appeals) but set aside by the Tribunal.Thereafter, the excess amount wasrefunded without interest, against whichthe High Court directed the payment ofinterest from the expiry of three monthsfrom the date of receipt of receipt ofrefund application. On departmentalappeal before the Supreme Court, it wasobserved as under:-

1. The seminal issue is whether there hasbeen delay in grant of refund andconsequently, whether therespondentassessee is entitled tointerest. In Ranbaxy LaboratoriesLimited vs. Union of India & Ors. (2011)10 SCC 292, the Supreme Court held thatsection 11BB of the Act comes into playonly after an order for refund hasbeen made under Section 11B of theAct where the duty is not refunded


within a period of three months fromthe date of receipt of the applicationto be submitted under u/s 11B(1) andthat interest becomes payable, if on anexpiry of a period of three months fromthe date of receipt of the application forrefund, the amount claimed is still notrefunded.

2. Vide CBEC Circular dated 01.10.2002, adirection was issued to fix responsibilityfor not disposing of the refund/rebateclaims within three months from thedate of receipt of the application.

3. In Mafatlal Industries Ltd. & Ors. UOI,1997(89) ELT247 (S.C.), it was held thatthere was no reason as to why the personwho becomes entitled to refund of duty,as a result of appeal or courts order,should also be made to apply and satisfyall the requirements of subsections (1)and (2) of Section 11B, when he isentitled to such refund as a matter of rightand that all claims for refund, arisingin whatever situations (except where theprovision under which the duty is leviedis declared as unconstitutional), hasnecessarily to be filed, considered anddisposed of only under and in accordancewith the relevant provisions relating torefund, as they obtained from time totime.

4. Although the aforesaid principles arebinding, the facts of the instant case arequite different in as much as it is not acase where the assessee is claimingautomatic refund, but one which pertainsto the grant of interest where the refundhas been granted. The grievance pertainsto delineation by the competent authorityin a procrastinated manner.

5. The principle laid down in RanbaxyLaboratories Limited (supra) wouldapply on all fours to the case at hand.It is obligatory on the part of theRevenue to intimate the assessee toremove the deficiencies in theapplication within two days and, inany event, if there are still deficiencies,it can proceed with adjudication andreject the application for refund.

6. The adjudicatory process can, by nostretch of imagination, be carried onbeyond three months. It is required tobe concluded within three months.

Hence, the departmental appeal wasdismissed.

(The author is a Chennai based CharteredAccountant. He can be reached at reached [email protected])



RECENT DECISIONS IN EXCISE AND CUSTOMS

CA. DEBASIS NAYAK & CA. DIVYA RAMESH

Excise Cases

1. Services involving disposal ofhazardous waste that has emerged inmanufacturing process is doubtlesslyan eligible service for purpose ofCENVAT Credit.

In the case of Commissioner of CentralExcise, Chennai Vs Rane TRW SteeringSystems Limited 2017 TIOL- 2105-CESTAT-MAD, the assesse is amanufacturing unit. For disposingvarious types of hazardous waste, thecompany was strictly following thenorms laid down by the PollutionControl Board. As per these norms,different types of waste that hasemerged in manufacturing processhave not been permitted to be treatedor disposed of within factory ofmanufacturer. Hence, the assesseengaged the services of Tamil NaduWaste Management Ltd to collecthazardous waste from their factoryand effect transportation thereof, forenabling safe disposal thereof aftertreatment, in a designated land fillarea.

Pursuant to audit conducted by thedepartment, it appeared that inputservices credit availed by appellant ofthe service tax paid on servicesrendered for disposal of waste would

not be allowed for the purpose ofCENVAT credit due to the followingreasons:

The expenditure incurred is only tocomply with the norms of the PollutionControl Board.

The waste is not disposed within thefactory of the manufacturer

The said activity is not listed in thefirst part of Rule 2(l) of CENVATCredit Rules, 2004

The commissioner reiterated that thedefinition of “input service” as definedin Rule 2(l) of CENVAT Credit Rules,2004 consists of two parts. The firstpart mandates that such input servicesshould be one that is used either byprovider of output service providingsuch services or used by manufacturer,whether directly or indirectly inrelation to manufacture of finalproducts and clearance of finalproducts up to the place of removal.


Also found illustrated in this part areexamples of such eligible inputservices.

Nonetheless even input services whichare not so listed can very well beconsidered as an ‘eligible input service’so long as the other conditionality ofthe Rule are fulfilled. This is becauseRule2 (l) is an inclusive definition andnot exhaustive one only givingexamples of genre of services thatcould fall within its ambit. Howeversuch ‘input service’ should not bebarred by the exclusion provisions (A),(B), (BA) and (C) in the second part ofthe definition. Not following thenorms laid down by the PollutionControl Board would mean the factorywould have to close down itsoperations.

Therefore, it was held that theservices utilized to collect hazardouswaste from their factory and effecttransportation for enabling safedisposal thereof after treatment, in adesignated land fill area is an eligibleservices for the purposes of CENVATRules.

2. Credit is eligible on Raw die blocks& Inserts used to manufacture Dieswhich is in turn used for themanufacture of finished goods,namely steel forgings.

In the case of Commissioner of CentralExcise, Trichy Vs MM Forgings

Limited 2017 TIOL- 2104- CESTAT-MAD, the assesse is engaged inmanufacture of forgings. They areavailing the facility of credit on inputsand intermediate goods. Thedepartment entertained a view thatRaw Die Blocks and Inserts used tomanufacture Dies which are in turnused in the production of finalproducts is not eligible for credit forthe reason that the appellants areavailing exemption of duty on theintermediate goods namely Dies underNotification No.67/95CEdt. 16.03.95.The show cause notice was issuedproposing to recover wrongly availedcredit along with interest and alsoproposing to impose penalties. Thedemand was confirmed by theOriginal authority. Aggrieved by theOrder, the appellants filed an appealbefore the Tribunal. The counsel onbehalf of the appellants stressed uponExplanation 2 of ”inputs” andsubmitted that the said Explanationstates that input includes goods usedin the manufacture of “capital goods”which are further used in the factoryof manufacture. That by thisExplanation, subjectitems would getcovered under the definitionof “inputs” although they may bementioned as “capital goods”. It wasargued by him that even if appellantpays duty upon such intermediateproduct, namely Dies, the situation


would give rise to revenue neutralityand therefore on this ground also,demand is unsustainable.

Against this, counsel for the Revenuereiterated the findings in theimpugned order. He submitted thatsince Dies which are manufacturedusing the inputs, are exempted fromduty under Notfn No.67/95CE,appellants are not eligible to availcredit on such inputs. He relies uponthe judgement in the case of AmforgeInds. Ltd. Vs CCE PuneI 2004 (176)ELT 702 (Tri.Mumbai) and SrinathjiIspat Ltd. VS CCE Ghaziabad 2010

(262) ELT 849 (Tri.Del). It was heldthat as per the Explanation2to thedefinition of “inputs”, it can be seenthat inputs include any goods whichare further used in the manufacture of‘capital goods’. Appellants haveavailed the exemption notificationtreating the intermediate product as‘capital goods’. The credit has beenavailed on subject items treating themas “inputs” used in the manufacture ofcapital goods, hence it is rightlyallowed.

3. CENVAT on input and input serviceswhen Rectified spirit ismanufactured, in between the processto manufacture denatured spirit isadmissible, as Rectified spirit is sameas ethyl alcohol

In the case of Commissioner of CentralExcise and Service Tax, Lucknow vsM/s OUDH Sugar Mills Ltd 2017-TOIL-2094-CESTAT-ALL the Assesseeis having composite unit comprising ofsugar mills and distillery division.They undertake manufacture of Sugarand Molasses in Sugar mills andmolasses are further utilized indistillery division for manufacture ofethyl alcohol. Revenue contends thatrectified spirit is manufactured inbetween the process to manufacturedenatured spirit and rectified spiritdoes not find a place in Central ExciseTariff w.e.f 01-03-2005 and thereforeCENVAT credit is not admissible.

In their defense, the appellant hadstated that the process of manufactureof denatured spirit is continuous andon fermentation, ethyl alcohol, whichis finding place at tariff itemno.22072000 is manufactured. Ethylalcohol is nothing but rectified spirit.They further contended that there areno provision in CENVAT credit rulesthat if a non-excisable product emergesin between the manufacture ofexcisable product in a continuousprocess, CENVAT is inadmissible.Learned counsel for appellant alsorelied on case of State of UttarPradesh and others vs Modi Distilleryetc.[1996 U.P.T.C -312} by stating thatHon’ble Supreme Court has given itsobservation about ethyl alcohol which


clearly establishes that rectified spiritis nothing but ethyl alcohol whichfinds its place in Tariff items.

The issue to be decided was whetherethyl alcohol and rectified spirit aretwo different things or one and samecommodity. As it was very clear fromthe observation of Hon’ble Supremecourt that both are one and same theimpugned order was set aside and theappeal was allowed with consequentialrelief.

4. CENVAT credit availed on capitalgoods ordered to be recovered onaccount of the fact that such capitalgoods were utilized in themanufacture of fully exemptedfinished products.

In the case M/s CHEEMA PAPERSLTD vs Commissioner of CentralExcise, Meerut –II 2017-TOIL-2081-CESTAT the appellants were engagedin manufacture of Duplex Paper boardand during the period of dispute(April 2002 to July 2003), appellantspurchased certain capital goods andavailed CENVAT Credit thereon andutilized it for payment of excise dutyon the final products cleared duringthe period. The total CENVAT Creditavailed on capital goods were orderedto be recovered on the grounds thatsuch capital goods were utilized in themanufacture of fully exempt finishedproducts.

The learned DR for the Departmentsubmitted that the capital goods wereprocured in order to expand so as toqualify for the area based exemptionunder Notification No.49-50/2003. Theappellants started availing area baseexemption as per Notification No: 49/2003 and 50/2003[dated 10.06.2003]only w.e.f from 07.08.2003. It ispertinent to note that at the time ofprocurement of capital goods, theAppellants were manufacturing andclearing the finished products onpayment of duty. The appellant reliedon the decision in the case ofCommissioner of Central Excise,Rajkot vs Ashok Iron & steelFabricators, 2002 –TOIL-274-CESTAT,wherein Tribunal held that “There isno provision in the rules whichprovides for a reversal of the credit bythe excise authorities except where ithas been legally or irregularly taken,in which event it stands cancelled or,if utilized, has to be paid for.”

The impugned order was notsustainable and in the result the appealfiled by the assesse-Appellants wasallowed by the Tribunal.

5. CENVAT credit allowed on expensesundertaken to upkeep Heavy EarthMoving Machines [HEMM] whichare used for mining and further usedas a raw material for obtaining zinc


In the case M/s Hindustan Zinc LTDvs Commissioner of Central Excise,Jaipur–I 2017-TOIL-2079-CESTAT-DEL, the appellants were engaged inthe manufacture of lead and zinc. In itscaptive mines, the appellants employseveral Heavy Earth MovingMachineries (HEMM) mining &procurement of ore, which is furtherused as a raw material by theappellant. CENVAT credit thereon isavailable as capital goods under theCENVAT Credit Rules, 2004. Forbetter upkeep and maintenance ofHEMM’s, the appellants were availingthe services of maintenance of tyresused in various HEMM’s.

Proceedings were initiated by thedepartment against the appellantwhich resulted in the issuance of theshow cause notice alleging that theaforesaid services were not utilised inor in relation to the manufacture offinal products and therefore, CENVATcredit therein is not admissible to theappellants.

The commissioner rejected the creditbased on the following grounds:

(i) Input services are not covered underthe “means” clause of the definitionof input services since these servicesare not used in or in relation to themanufacture of the final products.

(ii) Activity of management &maintenance of tyres is not a servicerelating to procurement of inputs perse, but this is just a justificationshowing chain of activities leading tosome service eligible as inputs serviceas per the definition.

(iii) The phrase “activities relating tobusiness” covers only those activitieswhich occurred not specifically in thefactory area of production e.g. in theoffices or outside the factory and itdoes not even remotely cover thoseactivities which have nothing to dowith the manufacture.

(iv) Expanding the meaning of the termstoo much amounts to challenging thewisdom of the legislature. Further, inview of the above discussion, it isclear that the impugned service isneither used in or in relation to themanufacture of final products orclearance of final products up to theplace of removal and therefore do notget covered under the definition ofinputs service.

It was held that tyres have been usedin the process which is integral to themanufacturing process, any serviceused in relation to those tyres withinthe captive mines, would be eligible toCENVAT credit. It is furthersubmitted that the impugned servicesalso fall within the inclusive portion ofdefinition i.e. as services used in


relation to procurement of ore whichis an input for the appellant andtherefore, covered under theexpression “services used in relation toprocurement of inputs”. Withoutprejudice, the services involved canalso be considered to have been usedin “activities related to business” asprovided in the definition of inputservice. The said input service qualifiesfor credit under Rule 2(l) of theCENVAT Credit Rules, 2004.

It was held that HEMM were used formining and procurement of ore whichwas further used to process ofbeneficiation, for obtaining thedutiable metal, being zinc, etc. -accordingly, the said input servicequalifies for credit under rule 2(l) ofthe CCR, 2004.

Customs Cases

6. Eligibility for refund on SAD paidon import of goods when Tax Invoicewas issued but No VAT charged onsupplies

In the case M/s ABB LTD vsCommissioner of Central Excise, Jaipur2017-TOIL-2077-CESTAT-DEL theappellant imported goods for supply toDMRC and paid SAD at rate of 4%,however at the time supply of thesegoods, even though tax invoice wasissued, no VAT was charged on thesesupplies as per notification issued by

Rajasthan Govt. Order was passeddisallowing the appellant fromclaiming refund of SAD undernotification no.102/2007.

No VAT was charged by the appellanton the supplies as, Govt of Rajasthanexempted payment of VAT on ‘transferof property in goods involved inexecution of works contract relating toMetro Rail Project in Jaipur Cityawarded to DMRCL vide notificationissued under Section 8(3) of RajasthanVAT. The Learned commissionerrejected the appeal on the groundsthat SAD refund claim will only beeligible when appropriate VAT hasbeen paid. The appellant also relied onthe case of Gazal Overseas vs CC NewDelhi 2015-TIOL_2454-CESTAT-DEL,which said that “so long asappropriate VAT was paid, SADrefund was admissible even if theappropriate VAT was less than SAD;even if the VAT was Nil, so be it.

It was held that the issue was no moreres integra and by following the abovedecision, it was stated that NIL rate ofVAT to be considered as AppropriateVAT. The impugned order was setaside and appellant was allowed theSAD refund with consequential relief.

(The authors are Chennai based CharteredAccountants. They can be reacheda t c a d e b a s i s @ g m a i l . c o m &[email protected])



COMPOSITION SCHEME- GST LAW - AN ANALYSIS

Goods and Services Tax is geared up to bring along a newregime of business tax reforms in India. GST is more of atechnology (IT) driven scenario wherein majority of theprocedures and filings are on the e-mode. Many start-upsand Small and Medium Enterprises (SMEs) and other smallbusinesses may struggle with the burden of compliance withrecurrent complex tax procedures. To resolve suchchallenging scenarios, the Government has provided forComposition Scheme under GST Law, which is merely anextension of the current scheme under the existing VAT CA. MONICA CHALLANI

laws. The scheme is intended to make compliance with tax laws hassle free for eligiblebusinesses opting for the scheme when compared to a regular taxable person.

The Government, by exercising the powers conferred under section 1(3) and section 164 ofCentral Goods and Services Tax Act, 2017 (12 of 2017), brought into force certain sections, interalia, Section 10 and related rules relating to “Composition Scheme” with effect from22nd June, 2017. The appointed day is notified as 1st July, 2017. In this article an attempt hasbeen made to analyse the said composition scheme.

GST Composition Scheme is an option available to a registered person who needs to intimate(electronically) the tax authorities of his intention to be so registered. All Registered persons(including manufacturers except as notified under Section 10(2)(e)) supplying goods areeligible to opt for the composition scheme. As per Section 10(2), Service providers havebeen kept outside the scope of this scheme except persons providing composite service inrestaurant sector (as specified in 6(b) of Schedule II) who may also opt for this scheme.Section 10(2) further stipulates persons who are ineligible namely, persons engaged insupply of non-taxable goods or persons who have interstate outward supply or e-commercetraders.

Further restrictions have been brought through the notified Rules. On plain reading ofSection 10(1) it is understandable that the scheme applies based on turnover limits and italso stipulates the rate of taxes applicable based on the three specific categories. Section10(2) specifically stipulates the restrictions on eligibility as mentioned above. However,the last line of section 10(1) reads as “subject to such conditions and restrictions as may beprescribed”. Does it mean that the conditions and restrictions can be prescribed only inrelation to the turnover and / or rates of tax? Further, such a proviso is not available


under section 10(2) which essentially deals with the eligibility conditions. The mutequestion now could be whether such further conditions including further categories ofpersons to be ineligible to opt for the scheme can merely be brought in through Rulesparticularly when the relevant clause of the section does not authorise so.

The Rule 5 read as under:

“Conditions and restrictions for composition levy

a) he is neither a casual taxable person nor a non-resident taxable person;

b) the goods held in stock by him on the appointed day have not been purchased in the course ofinter-State trade or commerce or imported from a place outside India or received from his branchsituated outside the State or from his agent or principal outside the State, where the option isexercised under sub-rule (1) of rule 3;

c) the goods held in stock by him have not been purchased from an unregistered supplier and wherepurchased, he pays the tax under sub-section (4) of section 9;

d) he shall pay tax under sub-section (3) or sub-section (4) of section 9 on inward supply of goods orservices or both;

e) he was not engaged in the manufacture of goods as notified under clause (e) of sub-section (2) ofsection 10, during the preceding financial year;

f) he shall mention the words “composition taxable person, not eligible to collect tax on supplies” atthe top of the bill of supply issued by him; and

g) He shall mention the words “composition taxable person” on every notice or signboard displayedat a prominent place at his principal place of business and at every additional place or places ofbusiness. “

Aggregate turnover in the previous financial year is limited to Rs.75 Lakhs to be eligibleunder the scheme as decided in the GST Council meeting held on 18-06-2017. However, incase of special category States (i.e. Arunachal Pradesh, Assam, Jammu and Kashmir,Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh andUttarakhand), the aggregate turnover remains limited to Rs.50 lakhs.

A registered taxpayer, who is opting for the Composite Scheme, will pay tax withoutcollecting the same from the buyers, at the rate of

• 1% of turnover in case of a manufacturer,• 2.5% of turnover in case of Composite service provider - restaurant sector (Paragraph

6(b) of Schedule II)• 0.5% of turnover for other eligible suppliers.


Form. No. Purpose Time limit Effective Date of

Composition Scheme

GST CMP-01

Intimation to pay tax under Section 10 (composition levy) – Transitional

Prior to appointed day (or) within 30 days or further extended period from appointed day

Appointed Date

GST REG-01

Application For Registration - (choose option to pay tax u/s10 In Part B of the form)

Within 30 days of being liable to tax (or) date of voluntary application

Date from which registration is granted. * (Refer Note)

GST CMP-02

Intimation to pay tax under Section 10 (composition levy) (For persons registered under the Act)

Prior to commencement of the FY in which scheme is to be opted

1stday of such financial year

* Note: If application is filed within 30 days, effective date shall be becomes liable to taxand if filed after expiry of 30 days, effective date shall be the Date of grant of registration.In other cases, the registration will be granted within a period of 3 working days of filingthe application.

Once the scheme is opted for by a registered person, itis implied that itis opted for allregistrations obtained under the same PAN i.e. all business segments/units quoting samePAN in all the states. Also, the scheme, once lapsed for any one of the business segments,implies lapse for the all of such registered persons. The scheme does not require anyrenewal every year as long as the provisions of the Act with regard to Composition Schemeare duly complied (Rule 5(2) and 6(1) of the notified rules).

Summary of General Restrictions and conditions for Composition Scheme:

(Provisions and Rules related to transition have been detailed later in this article)

a) Eligible as per Section 10(2) - Not engaged in (a)supply of services except personsproviding composite service in restaurant sector (as specified in 6(b) of Schedule II);(b) supply of goods or not leviable to GST; (c) interstate outward supply; (d) supplythrough e-commerce operator; (e) manufacture of goods as notified to be ineligible.

b) Neither a casual taxable person nor a non-resident taxable person (Rule 5(1)(a))

c) Non-permissibility to collect taxes from the buyers and ineligibility of availing inputTax credit.


d) Obligatory to issue a Bill of Supply in lieu of invoice with all the requisite informationas per relevant rules and formats given therein. Issue of tax invoice is not permissible.

e) Mandatory display of “composition taxable person, not eligible to collect tax on supplies”at the top of each bill of supply issued by them.( Rule 5 (f))

f) Mandatory display of “composition taxable person” on every notice or signboarddisplayed at a prominent place at all business places.

g) Requirement to comply with provisions under Reverse Charge Mechanism (RCM) asper section 9 (3) and 9(4) and pay tax on inward supplies (i.e. RCM notified supplies orfrom unregistered persons) alike any other regular taxpayer. Opting for this schemedoes not resolve their obligation in such cases.

h) The goods held in stock not to be purchased from an unregistered supplier and wherepurchased, tax under RCM is paid on such stock as per Section 9(4).

It is worth noting that a person is not deprived of opting the scheme in case, one is notregistered on the date of purchase of goods (from a registered dealer) and subsequentlygets registered as per provisions of section 25.

The basic feature of the scheme is payment of tax at a lower rate and unavailability ofinput tax credit not only for the composition supplier but also for the buyer who buysfrom such supplier. The composition taxable person can neither take input tax credit norcan pass on any credit to the buyer and therefore, issue of tax invoice is not permissible.Such a setup disrupts the input credit chain especially in case of B2B transactions and shalllead to price distortion and cascading effect.

When opting for the Composition Scheme under GST, a taxpayer will be required to filesummarized returns (GSTR-4) on a quarterly basis (instead of monthly returns) and anannual return (GSTR-9A). He will also not be required to maintain detailed books andrecords as applicable for normal taxpayers. GST- 4 is to be filed within 18 days after theend of each quarter.

The schemes validity may terminate under three scenarios

1. An eligible person for scheme may anytime opt out of the scheme by filing an application.

2. The registered person ceases to satisfy any of the conditions specified therein underthe Scheme, his eligibility shall cease and he shall be assessed as a normal tax payer andadministered accordingly (i.e. issue of tax invoices, monthly tax returns etc.).

3. If such composition person contravenes any provisions, his eligibility of the schememay be denied.

The procedures to be followed in all the above circumstances have been prescribed in theRules specifically and forms have been devised for the same.


Contravention: If the proper officer has reason to believe that a composition supplier haswrongly availed the benefit of the scheme that he is not otherwise eligible or contravenedany provisions of the Act or the Rules, he may issue show cause notice followed by anorder denying the entailment of scheme either from the date of the option itself or fromthe date of occurrence of such events concerning contravention based on each case. Suchperson shall be liable to pay all the taxes which he would have paid under the normalscheme. Also, he may be liable to pay a penalty which may be equivalent to an amount oftax payable.

Transitional provisions:

Migration of all existing taxpayers is essential.

Intimation for Composition levy for such provisional registered persons is to be filed“prior to the appointed day, but not later than thirty days after the said day, or such furtherperiod as may be extended by Commissioner in this behalf” - to be eligible under the schemefrom appointed day.

There is ambiguity whether it has to be understood as July 30th or July 31stin case it has tobe read as 30 days after 1stJuly 2017 (appointed day). Clarity regarding the same is to bereceived by the Government at the earliest.

Such person shall not collect any tax and issue bill of supply for all supplies made from1st July even if the intimation is filed after 1st July but before the time-limit prescribed.

The situation where the person who is unregistered under the existing law, purchasesfrom a registered dealer during the current month and he has time to get registeredunder the existing law, which, however, is presently closed for registration. How doessuch person deal with transition? Also, in case he registers under GST, his effectivedate of Composition shall be only from the date of grant of registration. Clarityregarding such cases and treatment of such purchased stock is not covered in the rules.

a) Details of stock, including stock purchased from unregistered persons, held on 30th

June to be furnished in Form GST CMP-03 within 60 days of exercise of option orfurther period extended by Commissioner. The Form provides for disclosure ofregistered purchases and unregistered purchases distinctly. In the said form GST CMP-03, in item no. 8 “Stock of purchases made from unregistered person under the existinglaw”, columns 6, 7, 8 & 9 ask for “Value of Stock”, “VAT”, “Central Excise” and “Servicetax (if Applicable)” respectively. The question that arises is that how are there possibilityof taxes if the purchases are made from an unregistered dealer. Also, the treatment ofsuch stock from unregistered persons has not been indicated anywhere in theComposition rules.


b) The goods held in stock on the appointed day, i.e. 1st July, should not consist of anygoods purchased outside the State, i.e. Interstate purchases or interstate Branch transfersor Principal-agent Interstate transfer and Imports.

All the Forms that are to be filed electronically and digitally signed or e-verified, eitherdirectly in the Portal or through a Facilitation Centre notified by the Commissioner.

The Composition rules are beneficial to the small scale businesses as it envisages ease ofbusiness and simpler compliance with tax provisions for such businesses with limitedresources. This scheme is beneficial majorly only to persons involved in the last limb of thesupply business chain (i.e. B2C transactions) or when the registered buyer in B2B transactionis also a composition person. However, since Small service providers have been kept outof the scope of this scheme, they will still face difficulties.

These composition businesses will be registered persons even though there is ineligibilityof ITC claim for persons procuring from them, they will not fall prey to provisions ofsection 9(4) (i.e. RCM in case of inward supply from unregistered persons).

(The author is a Chennai based Chartered Accountant. She can be reached [email protected])

Form No. Purpose Time limit

GST CMP-03

Intimation of details of stock on date of opting for Composition Levy – Transitional

Within 60 days from the date of exercise of Composition Scheme

GST CMP-04

Intimation / Application for withdrawal from Composition Levy

Within 60 days of occurrence of the event (i.e. ceases to satisfy conditions under the Scheme)

GST CMP-05

Notice for denial of option to pay tax under section 10

GST CMP-06 Reply to the notice to show cause Within 15 days of receipt of

Form. GST CMP-05

GST CMP-07

Order for acceptance/ rejection of reply to show cause notice

Within 30 days of receipt of Form. GST CMP-06

GST ITC-03 (not notified)

Declaration for intimation of ITC reversal/payment of tax on inputs held in stock, inputs contained in semi-finished and finished goods held in stock and capital goods under sub-section (4) of section 18

Within 60 days of commencement of relevant Financial Year



EXEMPTIONS AND RELAXATIONS TO PRIVATE COMPANIES -FROM FEW PROVISIONS OF COMPANIES ACT, 2013

On 5th June, 2015, the Ministry of Corporate Affairs had notifiedthe much awaited and anticipated exemptions for PrivateCompanies, Government Companies, Nidhi Companies andCompanies registered under Section 8 of the Companies Act, 2013(Act).

Two years down the line, the MCA has once again soared thetemperature by issuing three new notifications in amendment tothe original notifications issued on 05.06.2015. Barring thenotification issued for Nidhi Companies, the other threenotifications have been amended.

CS. S. DHANAPAL

This write-up presents an insight on the exemptions provided by means of these notificationsto Private Companies i.e. both the original notification issued on 05.06.2015 as well asamendment notification issued on 13.06.2017.The exemptions / relaxations inserted /substituted / modified vide notification issued on 13.06.2017 are shown in red whereasthose of original notification are shown in black.

Before understanding these exemptions, lets us have a look at the most significant changewhich the 13th June, 2017 notification has brought.

Which companies can claim these exemptions?

The exceptions, modifications and adaptations provided shall be applicable to a private company which has not committed a default in filing its financial statements under section 137 of the Act or annual return under section 92 of the Act with the Registrar.

Only those Private Companies which have filed all their financial statements and AnnualReturns up to date shall be eligible to claim any of the exemptions or relaxations statedbelow.


EXEMPTIONS TO PRIVATE COMPANIES

Exemption to Cash Flow Statement for start-up Private Companies

Definition of Related Party

Nature of Exemption Impact of the Exemption

Section 2(40), proviso will be substituted as below

Provided that the financial statement, with respect to one person company, small company, dormant company and private company (if such private company is a start-up) may not include the cash flow statement;

Explanation. - For the purposes of this Act, the term 'start-up' or "start-up company" means a private company incorporated under the Companies Act, 2013 (18 of 2013) or the Companies Act, 1956 (1 of 1956) and recognised as start-up in accordance with the notification issued by the Department of lndustrial Policy and Promotion, Ministry of Commerce and Industry."

The relaxation of not including cash flow statement as part of financial statement has now been extended to a Start Up Private Company also, apart from a One person company, small company and dormant company which was available since commencement of the Act.


Section 2(76), sub-clause VIII shall not apply with respect to Section 188

Following companies shall not be treated as related party to a company:

Holding Company Subsidiary Company Associate Company Subsidiary Company of

Holding Company to which the company is also a subsidiary.


Kinds of Share Capital and Voting Rights


Section 43 and 47 shall not apply where MOA or AOA of the Private Company so provides

Provisions relating to kind of share capital, being only equity (with or without differential voting rights) and preference shall not apply to a Private Company (Section 43)

Provisions relating to voting rights of equity shareholders and preference shareholders, as contained in Section 47, shall not apply to a Private Company.

Day from when and duration for which rights issue offer to be kept open


Following proviso to be added in Section 62, after Sub-section (1), clause (a), sub-clause (i):

Provided that notwithstanding anything contained in this sub-clause and sub-section (2) of this section, in case 90% of the members of a private company have given their consent in writing or in electronic mode, the periods lesser than those specified in the said sub-clause of sub-section shall apply.

The provision relating to keeping rights issue open for a minimum of 15 days and maximum of 30 days and also the provision that the letter of offer has to be sent at least 3 days before opening of the offer shall not apply in case of a Private Company, provided at least 90% of the members agree in writing for a shorter period.

Nature of resolution for ESOPNature of Exemption Impact of the Exemption

In Section 62, sub-section (1), clause b; the word ordinary resolution shall be substituted in place of special resolution

A private Company can issue shares to its employees under a scheme of Employee Stock option by passing an Ordinary resolution. Earlier, special resolution was required to be passed.


Restriction on purchase by company or giving of loans by it for purchase of its shares

Acceptance of deposits from members by Private Companies


Section 67 shall not apply to Private Companies –

(a) in whose share capital no other body corporate has invested any money;

(b) if the borrowings of such a company from banks or financial institutions or anybody corporate is less than twice its paid up share capital or Rs. 50 Crores whichever is lower; and

(c) such a company is not in default in repayment of such borrowings subsisting at the time of making transactions under this section

Restriction on purchase by a private company or giving of loans by it for purchase of its shares shall not apply to those Private Companies which satisfy all the 3 conditions given in the left hand column.


Provisions of Section 73, sub-section (2), clauses (a) to (e), shall not apply to a private company which satisfies any of the following requirements –

(A) Which accepts from its members monies not exceeding 100%. of aggregate of the paid up share capital, free reserves and securities premium account; or

(B) which is a start-up, for 5 years from the date of its incorporation; or

(C) which fulfils all of the following conditions, namely:- (a) which is not an associate or a subsidiary

Private Companies as mentioned in the first column can accept deposits from its members without having to comply with the procedural requirements prescribed under Section 73 like issuing circular, maintaining repayment reserve etc., provided details of the deposits so accepted is filed with the ROC in the manner to be specified.


Disclosure of Managerial Remuneration in Annual Return by small companies


Section 92, sub-section 1, clause g – For Private

Companies which are small companies, the

clause shall read as below:

(g) aggregate amount of remuneration drawn by

directors

Instead of

(g) remuneration of directors and key managerial

personnel

Small Companies can henceforth

disclosure the total remuneration

paid to their directors during the

year in the annual return instead of

remuneration paid to each of the

directors and key managerial

personnel.

(a) which is not an associate or a subsidiary company of any other company;

(b) if the borrowings of such a company from banks or financial institutions or anybody corporate is less than twice of its paid up share capital or Rs. 50 Crores, whichever is lower; and

(c) such a company has not defaulted in the repayment of such borrowings subsisting at the time of accepting deposits under this section:

Provided that the company referred to in clauses (A), (B) or(C) shall file the details of monies accepted to the Registrar in such manner as may be specified."


Signing of Annual Return in case of start-up private companies

Notice of general meeting, explanatory statement, quorum, chairman etc.


Section 101 to 107 and 109 shall apply unless otherwise specified in the respective sections or the articles of the company provide otherwise.

The provisions of the following section shall apply in the manner contained in the AoA of the Company :

Section No.

Section Heading

101 Notice of Meeting

102 Statement to be annexed to notice

103 Quorum for Meetings

104 Chairman of meetings

105 Proxies

106 Restriction on voting rights

107 Voting by show of hands

109 Demand for poll


Section 92, sub-section 1, proviso has been substituted as below

Provided that in relation to One Person Company, small company and private company (if such private company is a start-up), the annual return shall be signed by the company secretary, or where there is no company secretary, by the director of the company.

The Annual Return of Private Companies, being start-up companies can henceforth be signed only by their Company secretary, or in absence of Company Secretary, by one of the directors. This relaxation was earlier available only to OPC, Small and Dormant Companies.


Filing of certain resolutions passed by the Board of Directors in e-form MGT 14


Section 117, sub-section (3), clause(g) shall not apply to a private company

The requirement of filing e-form MGT 14 for resolutions passed by the Board in exercise of its powers u/s. 179(3) is no longer applicable to a private company.

Number of Companies in which a person can act as Auditor

Right of person other than retiring director to stand for directorship


Section 141, sub-section (3), clause (g) shall apply with the modification that the words “other than one person companies, dormant companies, small companies and private companies having paid up share capital less than Rs.100 crores” shall be inserted after the words “twenty companies”

While calculating the limit of 20 Companies on which a person can be appointed as a statutory auditor, the following companies shall be excluded:

one person companies, dormant companies, small companies, and private companies having

paid up share capital less than Rs.100 crores

Nature of Exemption Impact of the Exemption Section 143, sub-section 3, clause (i) shall not apply to following companies: (i) OPC; (ii) Small Company; (iii) A Private Company which have turnover less than Rs. 50 Crores as per latest audited financial statement; (iv) A Private Company which has aggregate borrowings from banks or financial institutions or anybody corporate at any point of time during the financial year less than Rs. 25 Crores.

For the class of companies has mentioned in the first column, the Audit Report need not comment on the following: “whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls”


Right of person other than retiring director to stand for directorship


Section 160 shall not apply Various provisions of Section 160 like seeking deposit of Rs. 1 Lakh, notice of candidature etc. shall not apply to a private company in case of appointment of a director in a general meeting.

Appointment of Director to be voted individually


Section 162 shall not apply A private company can pass a single resolution for appointment of 2 or more persons as directors.

Number of Board Meetings to be held in a year and gap between them

Nature of Exemption Impact of the Exemption Section 173, sub-section 5 shall be substituted as below: (5) A One Person Company, Small Company, Dormant Company and a Private Company (if such company is a Start Up Company) shall be deemed to have complied with the provisions of this section if at least one meeting of the Board of Directors has been conducted in each half of a calendar year and the gap between two meetings is not less than ninety days.

For Start Up Private Companies, henceforth it will be sufficient to conduct and hold a minimum of 2 board meetings in a calendar year such that at least one meeting is held in each half of the calendar year and gap between the said two meetings is not less than 90 days. This relaxation is already available to OPC, Small and Dormant Company.

Inclusion of interested director for purpose of Quorum


Section 174, sub-section 3 shall apply with the exception that the interested director may also be counted towards quorum in such meeting after disclosure of his interest pursuant to Section 184.

In case of Private Companies, for any Board Meeting if the number of interested directors equal or exceed 2/3rd of its total strength, the interested directors may be counted for the purpose of quorum provided they make disclosure of their interest as per Section 184 prior to participation.


Restrictions on powers of Board

Nature of Exemption Impact of the Exemption Section 180 shall not apply A private company is no longer required to seek

members approval by means of special resolutions for: selling, leasing or otherwise disposing whole

or substantially the whole of undertaking of the company,

investing in trust securities, the amount of compensation received by it as a result of any merger or amalgamation,

borrowing money where the money to be borrowed exceeds the paid up capital and free reserves,

remitting or giving time for repayment of any debt due from a director

Participation of an interested director in a Board Meeting

Nature of Exemption Impact of the Exemption Section 184, sub-section 2 shall apply with the exception that the interested director may participate in such meeting after disclosure of his interest

A director, being an interested director u/s 184, can now participate in the Board Meeting where the any contract, transaction or arrangement in which he is interest is to be discussed or approved, provided he discloses his interest, before him so participates in the meeting.

Loans and Advances to Directors and other interested entitiesNature of Exemption Impact of the Exemption

Sections 185 shall not apply to a private company – (a) in whose share capital no other body corporate has invested any money; (b) if the borrowings of such a company from banks or financial institutions or anybody corporate is less than twice its paid up share capital or Rs. 50 Crores whichever is lower; and (c) such a company is not in default in repayment of such borrowings subsisting at the time of making transactions under this section

The restriction on giving of loans, advances and guarantees etc. to directors and other entities in which directors are interested will not apply to those Private Companies which satisfy all the 3 conditions given in the left hand column.


Restriction on voting in general meeting by a related party


Section 188, sub-section (1), second proviso shall not apply

The restriction on a member, being a related party, to vote on a special resolution, to approve a related party transaction, is no longer applicable in case of a private company.

Appointment of Managerial Personnel


Section 196, sub-section (4) and (5) shall not apply

The following provisions of Section 196 have been exempted for private companies:

Requirement of seeking approval of Board and Members at a meeting for appointment of managerial personnel and also of Central Government where such appointment/remuneration of managerial personnel is not in accordance with provisions of Schedule V.

Requirement that notice convening the Board or General Meeting for considering such appointment shall include the terms and conditions of such appointment, remuneration payable and such other matters including, interest, of a director or directors, in such appointment, if any

Requirement of filing return of appointment of managerial personnel within 60 days with the ROC

Provision that where an appointment of a managing director, whole time director or manager is not approved by the company at a general meeting, any act done by him before such approval shall not be deemed to be invalid.

(The author is a Chennai based Company Secretary. He can be reached at [email protected])



EXCEL TIPS

Eliminating records with duplicate fields:

Excel has "Remove Duplicates" feature which quickly finds andremoves duplicate records from a list (or rows from a table).This is a great feature especially when you're dealing witha really large data list especially where several different peopledo the data entry and there should not be any duplicaterecords (such as client lists, personnel files, and the like).

CA. DUNGAR CHAND U JAIN

To have Excel remove all duplicate records from a data list or table, the following simplesteps need to be followed:

1. Place the cell cursor in one of the cells of the data list or table.

2. Click the Remove Duplicates command button on the Ribbon's Data tab (Alternativelyor Alt+AM can be also be used to activate the command)

Once clicked, Excel selects all the cells in the data list while at the same time displayingthe Remove Duplicates dialog box


When this dialog box first opens, Excel automatically selects all the fields in the list (byplacing check marks in the check boxes in front of their names in the Columns list box).When all the fields are selected and you click OK in this dialog box, Excel deletes onlycomplete duplicates (in other words copies) of the records in the list.

If you want the program to remove records where there's any duplication of entries inparticular fields (such as the File No.), you remove the check marks from all the columnsexcept for those whose duplication are sufficient reason for deleting the entire record(as described in forthcoming Step 3). Otherwise, you proceed directly to Step 4.

3. [Optional] Remove the check marks from all fields in the Columns list box except forthose whose duplicates are reason for deleting the record.

Where the field list is long and If only one or two fields out of many need to be selectedin the Columns list box, Click the Unselect All button to remove the check marks fromall field check boxes and then individually click the fields that can't have duplicate entries.

4. Click OK to have Excel close the Remove Duplicates dialog box and remove the duplicaterecords (rows) from the selected data list.

(The author is a Madurai based Chartered Accountant. He can be reached [email protected])



CASE STUDIES AND ITS REPLY

CA. E. CHAITANYAQuestion No. 4: Income from Other Sources

Mr. Innovative is an assessee engaged in Real estate business in his Individual Capacity.Apart from the above activity, he is also a partner in two partnership firms and he isalso the managing director and major shareholder in a Private Limited Company. Thetwo firms and the Pvt Ltd Company are engaged in the business of Real Estate. TheBalance Sheets of Mr. Innovative are as follows,

Balance Sheet

CA. E. Chaitanya presented a paper based on case studies whichwere discussed in group discussion and thereafter the learnedauthor had presented the keys to his case study. This was donein the recently conducted Residential Refresher Course held inJanuary 2017. The RRC seminar committee acknowledges andthanks the author for the gesture of giving the keys to casestudies. There are total of 9 case studies and this month fourthcase study is published. The balance case studies will bepublished in future monthly Bulletin.

Liabilities 31.03.13 31.03.14 Assets 31.03.13 31.03.14 Amount Rs Amount Rs Amount Rs Amount Rs Capital Cash and Bank

Balances 1.94 9.83

Opening Balance 77.50 1107.33 (+) Income 50.38 67.47 Vacant Sites 7.85 7.85 (+) Gift from brother 9,94.70 - Debtors 35.00 4.50 (-) Expenses 15.25 76.79 Investment in ------------ ------------- P.Firms 0.95 (35.73) Closing Balance 11,07.33 10,98.01 Pvt Ltd Comp. 5.00 5.00 Unsecured Loans taken

3,68.00 7,83.55 Unsecured Loans given to :

(Several Persons) P.Firm 10,72.74 12,61.24 Pvt Ltd Company 1,20.75 3,85.47 Land Advance 2,00.00 2,00.00 Other Income

receivables 31.10 43.40

Grand Total 14,75.33 18,81.56 Grand Total 14,75.33 18,81.56


Facts of the case:

a. During the FY 2013-14, Mr. Innovative received Rs 35.63 Lakhs as Interest on theunsecured loan given to the Pvt. Ltd Company. He admitted the same in his ROIunder the head “Income from Other Sources”. He also admitted Rs 1.05 Lakhs in hisROI under the same head, as interest from other debtors.

b. During the same financial year, Mr. Innovative paid Rs 51.26 Lakhs as interest onunsecured loans. However, in his ROI, he adjusted Rs 29.35 lakhs (interest paid) againstthe interest income admitted. He claimed that the interest expenditure was incurredto earn the interest income and hence he was eligible to adjust the same and offeredonly the balance to tax.

c. The case was taken up for Scrutiny. The AO asked Mr. Innovative to prove that theloans to Pvt. Ltd Company and P.Firms were given out of funds taken from UnsecuredLoans. The AO also stated that only if the above requirement is fulfilled, Mr. Innovativewould be eligible to claim setoff of interest paid against the interest earned.

d. Mr. Innovative stated that the loans to Pvt. Ltd Company and P.Firms were givenduring the FY 2011-12. The date of receipt of loans from unsecured creditors precedethe date of payment of loans to Pvt. Ltd Companies and P.Firms.

e. Further, due to operation of just one or two bank accounts, there was an interlacingof funds and exact one to one matching cannot be done. In fact on verification of bankaccounts, funds received from brother (as gift) were also temporarily used foradvancing the loans to P.Firms and Pvt. Ltd Company (although this fact was notdisclosed to the AO). But on an overall basis, Mr. Innovative stated that funds fromUnsecured Loans were fully given as Loans to P.Firms and Pvt. Ltd Company.

f. The AO did not agree with the argument of the assessee. The AO stated that thefollowing reasons for justifying his stand.

(i) There was no receipt of interest from Pvt. Ltd Company during the FY 2011-12. Onlyduring FY 12-13, there was receipt of interest income. Further, there is no receipt ofinterest income from P.firms during FY 11-12 and FY 12-13.


(ii) The assessee himself admitted the interest income and the interest expenditure underthe head “Income from other Sources”. Hence exact matching of funds must be shownto prove that allow ability of interest expenditure under Sec 57.

(iii) Since, no interest is received from P.firms, interest expenditure cannot be allowedunder Sec 57.

g. The AO made the addition of entire interest expenditure of Rs 29.35 Lakhs andcompleted the assessment.

h. Mr. Innovative intends to take an opinion before filing an appeal. He approaches youfor your opinion on the following issues.

(i) Is Mr. Innovative eligible to claim interest expenditure against nil income receivedfrom P.Firms (i.e., against loans advanced to P.Firms)? Can it be claimed before theCIT (A) although not claimed before the AO? (Note : Mr. Innovative claimed Rs 29.35lakhs, out of the total interest paid of Rs 51.26 Lakhs, in the ROI)

(ii) Is Mr. Innovative required to prove exact matching of funds to claim deduction ofinterest expenditure under Sec 57?

(iii) Is it advisable to offer the interest income (and deduction of interest expenditure)under the Head “Profits and Gains from Business/Profession” for subsequent years?

(iv) Does Mr. Innovative has a greater chance of winning in the appeal?

Reply to Question No.4:

Deductions U/s 57: Brief Introduction.

Supreme Court in Vijaya Lakshmi Sugar Mills Vs CIT 191 ITR 641 held that expenditureshould be incurred for the “purpose of making or earning of such income” means that theaim, intention of spending or subject of spending should be for earning income.


Connection between expenditure and earning of income need not be direct. It may beindirect. It is not necessary that purpose should be fruitful and income must have beenearned.

CIT Vs Rajendra Prasad Moody 115 ITR 519 (SC)

1. Mr. Innovative is eligible to claim interest expenditure

Precaution: Interest on loans borrowed for investment in sisters concern that were runningat loss and had no expectation of earning profits is not allowable as deduction. CIT VsSwapna Roy 331 ITR 367

He can claim it before CIT (A) although not claimed before AO. Powers of CIT (A) arecoterminous with that of AO.

CIT Vs Jai Parbolic Springs Ltd 306 ITR 42 (Del)

CIT Vs Jindal Saw Pipes Ltd 328 ITR 338

2. Exact matching of funds not required to be shown.

3. Sec 37 uses the words “incurred wholly and exclusively for the purpose of business”.Sec 57 uses the words “incurred wholly and exclusively for the purpose of making orearning any income”. In view of wider scope of Sec 37, it would be advisable to claimunder “PGBP”. But in order to claim under the head “Profits and Gains from Business/Profession” there must exist a business.

4. Yes - Greater chance of winning in the appeal.

(The author is a Chennai based Chartered Accountant. He can be reached at [email protected])



Press Information BureauGovernment of IndiaMinistry of Finance

Postponement of provision relating to TDS (Section 51) and TCS ( Section 52) of the CGST / SGST Act 2017

With the objective of ensuring smooth rollout of GST and taking into account the feedbackreceived from the trade and industry regarding the provisions of deduction of tax atSource under Section 51 of the CGST / SGST Act 2017 and collection of tax at sourceunder Section 52 of the CGST / SGST Act 2017, the following has been decided :-

1. The provisions of Tax Deduction at Source (Section 51 of the CGST / SGST Act 2017)and Tax Collection at Source (Section 52 of the CGST/SGST Act, 2017) will be broughtinto force from a date which will be communicated later.

2. Persons who will be liable to deduct or collect tax at source will be required to takeregistration, but the liability to deduct or collect tax will arise from the date therespective sections are brought in force.

3. The persons who were liable to be registered under clause (ix) of Section 24 of theCGST / SGST Act, 2017 (as they were supplying goods or services through electroniccommerce operator who is required to collect tax at source under Section 52) will notbe liable to register till the provision of Tax Collection at Source is brought underforce. In other words, persons supplying goods or services through electroniccommerce operator liable to collect tax at source would not be required to obtainregistration immediately, unless they are so liable under Section 22 or any othercategory specified under Section 24 of the CGST / SGST Act, 2017 .

This step has been taken to provide more time for persons liable to deduct tax atsource / E-Commerce

Companies and their suppliers to prepare for the historic tax reform.

* * * * * * * * * * * * * * *

SBS/VL/PM


THE CHARTERED ACCOUNTANTS STUDY CIRCLE (Regd)Prince Arcade, 2L, Rear Block, Second Floor, 22A, Cathedral Road, Chennai - 600 086

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the THIRTY NINTH ANNUAL GENERAL MEETING of TheChartered Accountants Study Circle will be held on Thursday, 10th August 2017 at5.45 P.M. at Hindustan Chamber of Commerce, “Greams Dugar”, South Wing, V Floor,149, Greams Road, Chennai - 600 006 to transact the following business:

1. To adopt the minutes of the 38th Annual General Meeting held on 30th June 2016.

2. To adopt the audited financial statements for the year ended 31st March, 2017, alongwith the report of the Auditors thereon and the annual report for the said year.

3. To elect two members to the committee of Management, in place of CA SomasundaramS and Mr. Yanmanthram Sathyanarayanan who retire by rotation from the Committeeat the end of the ensuing Annual General Meeting.

4. To appoint auditor for the year 2017 - 2018.

5. To distribute out of Endowment Funds created :a. Scholarships for deserving students pursuing CA Courseb. Prizes for meritorious students successful in CA Examinationsc. Prize for Best Young Paper Presenter for the year 2016-17d. Prize for the Best Article contributor for the CASC Bulletin for the year 2016-17.

6. Any other matter that may be taken up with the permission of the Chair.

Explanatory notes to the notice:

1. The regular meeting of CASC will follow the Annual General Meeting.

2. Nomination for election of Committee Members should reach the Office of the StudyCircle, in the enclosed format, before 17.00 hrs. (5 p.m.) on 3rd August 2017.

For The Chartered Accountants Study Circle

Sd/-Place : Chennai CA. R. SundararajanDate : 24.06.2017 Committee Member


INDEPENDENT AUDITOR'S REPORTTo the Members,The Chartered Accountants Study Circle, Chennai – 600 006.Report on Financial StatementsI have audited the accompanying financial statements of The Chartered Accountants Study Circle,which comprise the Balance sheet as at March 31, 2017, and the Income and Expenditure Accountfor the year then ended, and a summary of significant accounting policies and other explanatoryinformation.Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation of these financial statements that give a true andfair view of the financial position and financial performance of the Study Circle. This responsibilityincludes the design, implementation and maintenance of internal control relevant to the preparationand presentation of the financial statements that give a true and fair view and are free from materialmisstatement, whether due to fraud or error.Auditor’s ResponsibilityMy responsibility is to express an opinion on these financial statements based on our audit. I haveconducted our audit in accordance with the Standards on Auditing issued by the Institute ofChartered Accountants of India. Those Standards require that I comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor's judgement, includingthe assessment of the risks of material misstatement of the financial statements, whether due tofraud or error. In making those risk assessments, the auditor considers internal control relevant tothe Study Circle's preparation and fair presentation of the financial statements in order to designaudit procedures that are appropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of Study Circle's internal control. An audit also includes evaluatingthe appropriateness of accounting policies used and the reasonableness of the accounting estimatesmade by management, as well as evaluating the overall presentation of the financial statements. Ibelieve that the audit evidence I have obtained is sufficient and appropriate to provide a basis forour audit opinion.OpinionIn my opinion and to the best of my information and according to the explanations given to me, thefinancial statements give a true and fair view in conformity with the accounting principles generallyaccepted in India.(a) in the case of the Balance Sheet, of the state of affairs of the Study Circle as at 31st March, 2017;(b) in the case of the Statement of Income & Expenditure, of the excess of Expenditure over Income

of the Study Circle for the year ended on that date.For Manikandan & CoSd/-

S. ManikandanChartered AccountantMembership No : 211190FRN.011761S

Chennai24.06.2017


FOR THE CHARTERED ACCOUNTANTS STUDY CIRCLE (REGD)

For The Chartered Accountants Study Circle (Regd.)

Sd/- Sd/-R Sundararajan Goutham Chand NCommittee Member Committee Member


BALANCE SHEET AS AT

Rs. Rs.

Liabilities Sch. No. 31-Mar-17 31-Mar-16

Capital Fund 1 4,070,136 4,226,045

Life Membership Fund 2 1,477,900 1,425,400

Endowments & Funds 3 326,000 326,000

TDS Payable 426

5,874,462 5,977,445

Assets

Fixed Assets 4 288,361 320,986

Investments 5 5,367,320 5,280,561

Loans and Advances 6 89,533 83,668

Cash & Bank Balances 7 129,248 292,230

5,874,462 5,977,445

Notes On Accounts 12

Place : ChennaiDate : 24.06.2017

As per our report of even date

For Manikandan & Co

Sd/-S. ManikandanChartered AccountantMembership No : 211190FRN.011761S



INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDEDRs. Rs.

Income Sch. No. 31-Mar-17 31-Mar-16Annual Membership 22,500 25,500Conference/Sponsorship Receipts 8 1,118,479 1,672,861Other Receipts 9 77,932 116,153Interest Receipts 455,115 460,916News Letter Advertisement 20,400 34,500Excess of Expenditure Over Income 155,909

1,850,335 2,309,930ExpenditureConference/Seminar/Course Expenses 10 1,150,532 1,551,968Newsletter Printing Expenses 11 315,029 267,969Salary & Bonus 124,720 124,900Electricity Charges 18,213 15,994Bank Charges 2,768 2,507Repairs & Maintenance 71,468 51,530Telephone / Web Charges 27,621 29,587Printing & Stationery 4,665 8,957Property/Water Taxes 20,036 20,036Local Conveyance 16,980 17,720Printing Charges - Books 37,500 50,000Scholarships To Students 10,000 6,000Miscellaneous Expenses 8,178 8,287Audit Fees 10,000 9,160Depreciation 32,625 30,398Excess Of Income Over Expenditure - 114,917

1,850,335 2,309,930For The Chartered Accountants Study Circle (Regd.)



As per our report of even dateFor Manikandan & Co




Rs. Rs.Schedule 1 - Capital Fund 31-Mar-17 31-Mar-16Opening Balance 4,226,045 4,111,128Add: Excess of Income Over Expenditure - 114,917Less: Excess of Expenditure Over Income 155,909 -

4,070,136 4,226,045Schedule 2 - Life Membership FundOpening Balance 1,425,400 1,350,400Add: Received During The Year 52,500 75,000

1,477,900 1,425,400Schedule 3 - Endowments & FundsAshok Kumbhat Fund 5,000 5,000B.B. Naidu Memorial Charitable Trust Fund 40,000 40,000Development & Communication Skills Fund 11,000 11,000T.R. Parthasarathy Endownment Fund 10,000 10,000N. Rajagopalan Endownment Fund 25,000 25,000G. Balasubramaniam Memorial Fund 25,000 25,000Itta Parthasarathy Fund 5,000 5,000K. Srinivasan Endowment Fund 35,000 35,000Raman Endowment Fund 25,000 25,000R. Ramakrishnan Endowment Fund 20,000 20,000Yanmantram Education Fund 50,000 50,000Sukumar & Associates Education Fund 50,000 50,000D Rangasamy Endowment Fund 25,000 25,000

326,000 326,000Schedule 5 - InvestmentsCanara Bank 1,932,485 1,878,668Lakshmi Vilas Bank - FD 1,350,000 1,350,000City Union Bank Ltd 1,439,835 1,406,893TN Transport Dev. Corporation Ltd 330,000 330,000TN Power Finance Corporation Ltd 315,000 315,000

5,367,320 5,280,561Schedule 6 - Loans And AdvancesService Tax Input 28,720 5,682Tax Deducted At Source 45,699 60,872Receivables 7,264 9,264Electricity Deposit 7,850 7,850

89,533 83,668



Rs. Rs.

Schedule 7 - Cash & Bank Balances 31-Mar-17 31-Mar-16Cash On Hand 2,848 270Cash At Bank 126,400 291,961

129,248 292,231

Schedule 8 - Conference / Sponsorship ReceiptsAnnual Residential Conference 1,010,131 1,333,301Other Conferences/Seminar/Refresher Course 108,348 339,560

1,118,479 1,672,861

Schedule 9 - Other ReceiptsHall Maintenance Charges Recovery 47,300 46,000Miscelleneous Income 15,122 4,183Sale of CASC Publications 15,510 65,970

77,932 116,153

Schedule 10 - Conference/Seminar/Course ExpensesSeminar/Refresher Course/AGM 170,677 376,275Annual Residential Conference 979,855 1,175,693

1,150,532 1,551,968

Schedule 11 - Newsletter Printing ExpensesPrinting Charges 300,627 259,518Postage & Courier Expenses 14,402 8,451

315,029 267,969


THE

CH

AR

TER

ED

AC

CO

UN

TAN

TS

STU

DY

CIR

CLE

(R

egd)

Prin

ce A

rcad

e, 2

L, R

ear B

lock

, Sec

ond

Floo

r, 22

A, C

athe

dral

Roa

d, C

henn

ai -

600

086

Sche

dule

4 -

Fixe

d A

sset

s

LAN

D

BUIL

DIN

GS

PLA

NT

& M

AC

HIN

ARY

FURN

ITU

RE &

FIX

TURE

S

CO

MPU

TER

CU

RR

ENT

YEA

R

PREV

IOU

S YE

AR

PAR

TIC

ULA

RS

AM

OU

NT

Rs.

DEP

REC

IATI

ON

TO

TAL

AD

DIT

ION

S

MO

RE

THA

N 1

80 D

AYS

W.D

.V.

As

on1-

Apr

-16

RA

TE %

173

,600

29,

296

76,

981

13,

036

28,

073

320

,986

311

,383

- - - - - -

40,

000

173

,600

29,

296

76,

981

13,

036

28,

073

320

,986

351

,383

- 10

15

10

60

-

2,9

30

11,

547

1,3

04

16,

844

32,

625

30,

398

W.D

.V.

As

on31

-Mar

-17

173

,600

26,

366

65,

434

11,

732

11,

229

288

,361

320

,986



SCHEDULE 12 - NOTES ON ACCOUNTS

SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PREPARATION

The accounts are prepared on cash basis.

INCOME RECOGNITION

Membership Fees and Bulletin Subscription

The membership fees and bulletin subsciption are recognized as and when received.

InterestInterest on fixed deposits and bonds are recognized as and when received.

INVESTMENTSInvestments comprise of fixed deposits and bonds and are shown at cost

FIXED ASSETS AND DEPRECIATIONFixed assets are accounted at cost less depreciation.

GENERAL INFORMATIONFigures of the previous year have been regrouped / classified wherever necessary.

For The Chartered Accountants Study Circle (Regd.)



As per our report of even dateFor Manikandan & Co



39th ANNUAL REPORT FOR THE YEAR 2016-2017 The Committee of Management of The Chartered Accountants Study Circle

have great pleasure in presenting the 39th annual Report for the year 2016 – 2017

THE ACTIVITY REPORT OF YOUR STUDY CIRCLE FOR THE YEAR ENDED 31.03.2017

We are pleased to inform that many of the above speakers are first time speakers and CASC iscontinuing its tradition of promotion of young talent professional arena in this process.


RESIDENTIAL SEMINAR

Your Study Circle conducted the 18th Annual Residential Conference from 26rd January2017 to 28th January 2017 at Haailand Resorts, Guntur with 54 delegates participating withfamily members aggregating to 106. The conference was a roaring success on par withearlier successful conferences. The members and their family members were enthralled onthe excellent conference arrangements and also the ambience of the venue.

NEWS LETTER

Your Study Circle’s bulletin which was started in the year 2000 continues to be popular inthe Professional circle. The Editorial Board members are as follows:

1. CA Uttamchand Jain P - Chairman

2. CA C.S. Ramesh Babu

3. CA Anil Kumar Khicha

The bulletin with enriched contents and articles has attracted nationwide readership andreceived appreciative letters from readers for its quality and content.

MEMBERSHIP

The Study Circle added a steady growth of Life Members during the year. The details ofmembership are as follows:

Total Members as at the beginning of the year 422 Nos

New Members enrolled during the year 07 Nos

Resignation or Removal of members during the year Nil

Total Members on Roll as at the end of the year 429 Nos.

The Committee of Management hopes to improve the no. of Life Members in the comingyears.


COMMITTEE MEETINGS

The Management Committee met formally five times from the day the present Committeehas taken over. The committee member’s attendance in the meetings is as follows:-

Total No. of Meetings – 5

The Management Committee were ably assisted by Special invitees CA R Ravi and CA K RSathiyanarayanan by providing valuable inputs.

Other than the regular meetings, Conference Committee, Conference Sub Committee andother Sub Committee Meetings have been held during the year and attended by therespective Committee Members and special invitees.

MC Members Name No. of Meeting Attended Percentage

CA. SUNDARARAJAN R. 5 100

CA GOUTHAM CHAND N. 4 80

CA. UTTAMCHAND JAIN P. 2 40

CA. SOMASUNDARAM S. 5 100

Mr. SATHYA YANMANTRAM 4 80

CA. THULASIDARAN V. 4 80

CA. GANESH PRAKASH M. 4 80

CA. RAMESHBABU C.S. 5 100

CA. MURALI J. 2 40


Date Venue Subject Speakers Jointly with

02.03.2017 TAG – P SDakshinamurthiHall, Mylapore

Union Budget 2017 CA T. BanusekarCA P. RajendrakumarMr. K.R. Srivarahan

Society of Auditors, Association ofChartered Accountants,International Fiscal Association IB- SRC, D Rangasamy Academy ofFiscal Research, Securities &Timeshare Owners WelfareAssociation, Revenue BarAssociation, SV ResearchFoundation and InternationalChamber of Indirect TaxProfessionals.

The Joint Meeting held during the period:

ENDOWMENT SCHOLARSHIPS & PRIZES:

As in the past, the Study Circle has continued supporting meritorious students from Chennaipursuing CPT, PE-I, PE-II and Final Examinations conducted by ICAI.

The Study Circle continued to support poor and deserving students pursuing CharteredAccountancy Course by offering scholarships.

During the year, the Study Circle presented the best young speaker award to Mr.Aadithyaand the award for the best article published in the newsletter was presented toMr.E.Chaitanya.

KNOWLEDGE SHARING

As part of Knowledge Sharing, the members of Study Circle have been provided with acopy of the Budget Publication brought out by the Association of Chartered Accountants,Chennai.

ACKNOWLEDGEMENTS

The management committee places on record their sincere thanks appreciation for thewhole-hearted support extended by Members, Speakers, other professional organizations,Bankers, Sponsors, Advertisers, Endowment Donors and Staff of the Study Circle.


THE CHARTERED ACCOUNTANTS STUDY CIRCLE (Regd)Prince Arcade, 2L, Rear Block, Second Floor, 22A, Cathedral Road

Chennai - 600 086. Phone : 044-28114283

NOMINATION FORM

ToMr. R.G.RajanReturning OfficerThe Chartered Accountants Study Circle (Regd.),Prince Arcade, 2-L Rear Block, Second Floor,22-A Cathedral Road, Chennai - 600 086.

We, the undersigned, members of The Chartered Accountants Study Circle, nominatethe under mentioned person as a candidate for election as a Member of the Committeeof Management at the Annual General Meeting to be held on 10th August 2017.

Name of the Candidate :

Father's / Husband's Name :

Address :

Membership Details : Life / Annual

Signature of the Proposer Signature of the Seconder

Name & Address with Name & Address withMembership details : Membership details :

Signature of candidate consenting to the nomination:


"Inten

tiona

lly le

ft Blan

k"


THE CHARTERED ACCOUNTANTS STUDY CIRCLE (Regd)Prince Arcade, 2L, Rear Block, Second Floor, 22A, Cathedral Road

Chennai - 600 086. Phone : 044-28114283

ToThe Chartered Accountants Study Circle (Regd)Prince Arcade, 2L, Rear Block, Second Floor, 22A, Cathedral Road Chennai - 600 086.

Kindly enrol me as a

K Life Member Rs. 7,500/- plus service tax

K Annual Member Rs. 750/- plus service tax

K Corporate Life Member (20 Years) Rs. 20,000/- plus service tax

K Corporate Annual Member Rs. 3,000/- plus service taxCorporate Member can nominate 2 Persons

1. Name : .......................................................................................................................................................

2. Address : ...................................................................................................................................................

...................................................................................................................................................................

...................................................................................................................................................................

3. Telephone : Office : ................................. Home : ................................. Mobile : ...................................

4. Email : .................................................................................................... Date of Birth : .........................

5. Membership Detail of Professional Bodies : ....................................................... Blood Group : ................

6. Qualification : FCA/ACA/FCS/ACS/FCWA/ACWA/OTHERS ...........................................................................

7. Occupation : ............................................................. Designation : ...........................................................

8. Area of Interest : Direct Taxes Indirect Taxes Corporate Laws Accountancy Auditing

9. Payment Details : Cheque/Draft should be drawn in favour “The Chartered Accountants Study Circle”

Cheque No. : ........................................... Drawn on ............................... Amount ..........................................

Date : Thanking you

Place : Yours Sincerely


"Inten

tiona

lly le

ft Blan

k"

Documents

CASC WEB USE FILE FINAL - casconline.orgcasconline.org/images/CASC BULLETIN july 2017.pdf · 6 CASC BULLETIN, JULY 2017 RECENT DECISIONS IN VAT / CST Input tax credit: The seller