MM TAX CLUB

I am directed to refer to the matter regarding refund of TED on supply of fuel to Projects listed for petroleum operations in the Customs Notification No. 50/2017-Customs dated June 30, 2017 under S.No. 404 List 33 subject to conditions mentioned in Para 7.02(f) of FTP, 2015-20. The matter has been examined in consultation with DoR and accordingly, all RAS/DCs are directed to consider the cases of refund of Deemed Exports benefits on supply of fuel for Petroleum Exploration/Operation under FTP 2015-20 (extended upto March 31, 2023) as per the following guidelines:

(i) As clarified by TRU Division of DoR vide D.O. letter dated February 01, 2022 & O.M. No. CBIC- 190354/149/2022-TO(TRU-I)-CBEC dated July 25, 2023, benefit of TED on supply of fuel for Petroleum Operations was available till February 01, 2022 and thereafter discontinued with effect from February 02, 2022 with the issue of Customs Notification No. 02/2022 dated February 02, 2022. Hence claims received by RAS/DCs for refund of TED for supply of fuel for Petroleum Exploration/Operation till February 01, 2022 can only be considered.

(ii) The claims are to be examined in accordance to Para 7.08 (iii) of FTP, 2015-20 which inter-alia states that "Deemed export benefit shall be available on supply of "Fuel" (in respect of eligible fuel items covered under Schedule 4 of Central Excise Act 1944) provided supplies are made to:

a. Project listed for petroleum operations in the Customs Notification No. 50/2017- Customs dated June 30, 2017 under Sr. No. 404, as amended from time to time and covered in Para 7.02 (f) of FTP.

b. EaUs

c. Advance Authorisation holder / Annual Advance Authorisation holder.

(iii) The applicants may be asked to give a declaration that HSD procured by them under the subject invoices in the application has been used for running. (repairing, or maintenance) of helicopters, all types of marine vessels to support petroleum operation including work boats, barges, crew boats, tugs and supply boats etc.

iv) The applicant may also be asked to submit a certificate from a Chartered Accountant saying that the HSD so procured has been included in the detail of expenditure, submitted for the relevant period, by him to Director General Hydrocarbons, Ministry of Petroleum and Natural Gases, Govt. of India. The certificate may also state that these expenses have not been disallowed by DGH.

v) It may also be checked from the invoices that the HSD has been procured by the Applicant from one of the public sector oil marketing companies and the excise duty on the same has been discharged in cash.

vi) Only Basic Excise duty is to be paid. No refund of other duties such as Additional Excise Duty/S. Additional Excise Duty etc. is admissible.

Public Notice No. 01/2023 dated October 13, 2023

Kind attention of SEZ units/developers is invited to the issue of endorsement of invoices pertaining to procurement of goods and services by them for their authorized operations from Domestic Tariff Area (DTA) suppliers.

In this regard it is informed that in order to facilitate smooth, timely and faceless processing, 'DTA Procurement Form' (DPF) and 'DTA Services Procurement Form' (DSPF) on SEZ Online System are to be used for endorsement/approval of goods and services invoices.

Along with the DPF/DSPF, the units/developers are required to upload scanned copies of proper GST invoices issued by the DTA supplier. The service invoices may also be accompanied with payment proofs for verification before endorsement/approval. The unit/developers are also required to ensure that all such invoices are duly reflected in their GSTR-2A monthly returns.

It is hereby iterated that the all endorsements of procurement invoices shall henceforth be online on the SEZ online system only and presentation of physical documents before endorsement would not be required. Physical endorsement may be undertaken only at only at the request of the unit/developer and after endorsement/approval online.

Notification No. 89/2023, dated October 13, 2023

In exercise of the powers conferred by sub-clause (iv) of clause (c) of Explanation 1 to clause (23FE) of section 10 of the Income-tax Act, 1961 (43 of 1961) (hereinafter referred to as the Act), the Central Government hereby specifies the pension fund, namely, the Stichting Pensioenfonds ABP (PAN: AACCS2647E), (hereinafter referred to as the assessee) as the specified person for the purposes of the said clause in respect of the eligible investment made by it in India on or after the date of publication of this notification in the Official Gazette but on or before the 31st day of March, 2024 (hereinafter referred to as the said investments) subject to the fulfilment of the following conditions, namely:-

(i) the assessee shall file return of income, for all the relevant previous years falling within the period beginning from the date in which the said investment has been made and ending on the date on which such investment is liquidated, on or before the due date specified for furnishing the return of income under subsection (1) of section 139 of the Act;

(ii) the assessee shall furnish along with such return a certificate in Form No. 10BBC in respect of compliance with the provisions of clause (23FE) of section 10 of the Act, during the financial year, from an accountant as defined in the Explanation below sub-section (2) of section 288 of the Act, as per the provisions of clause (vi) of rule 2DB of the Income–tax Rules, 1962;

(iii) the assessee shall intimate the details in respect of each investment made by it in India during the quarter within one month from the end of the quarter in Form No. 10BBB, as per the provisions of clause (v) of rule 2DB of the Income-tax Rules, 1962;

(iv) the assessee shall maintain a segmented account of income and expenditure in respect of such investment which qualifies for exemption under clause (23FE) of section 10 of the Act;

(v) the assessee shall continue to be regulated under the laws of the Government of the Netherlands;

(vi) the assessee shall be responsible for administering or investing the assets for meeting the statutory obligations and defined contributions of one or more funds or plans established for providing retirement, social security, employment, disability, death benefits or any similar compensation to the participants or beneficiaries of such funds or plans, as the case may be;

(vii) the earnings and assets of the assessee should be used only for meeting statutory obligations and defined contributions for participants or beneficiaries of funds or plans referred to in clause

(vi) and no portion of the earnings or assets of the pension fund inures any benefit to any other private person; barring any payment made to creditors or depositors for loan or borrowing [as defined in sub-clause (b) of clause (ii) of Explanation 2 to clause (23FE) of section 10 of the Act] taken for the purposes other than for making investment in India;

(viii) the assessee shall not have any loans or borrowings [as defined in sub-clause(b) of clause (ii) of Explanation 2 to clause (23FE) of section 10 of the Act], directly or indirectly, for the purposes of making investment in India; and

(ix) the assessee shall not participate in the day to day operations of investee [as defined in clause (i) of Explanation 2 to clause (23FE) of section 10 of the Act] but the monitoring mechanism to protect the investment with the investee including the right to appoint directors or executive director shall not be considered as participation in the day to day operations of the investee.

2. Violation of any of the conditions as stipulated in clause (23FE) of section 10 of the Act and this notification shall render the assessee ineligible for the tax exemption.

3. This notification shall come into force from the date of its publication in the Official Gazette

Circular No. 16/2023 dated October 09, 2023

Issuance of separate notices to the same taxpayer under sections 73 and 74 of the Kerala State Goods and Services Tax Act, 2017 (the KSGST Act)

In exercise of powers conferred under section 168 of KSGST Act 2017, the following circular instructions are issued to bring out uniformity in issuing notices while proceeding under section 73 and section 74.

Section 73 of the Kerala State Goods and Services Tax Act/Central Goods and Services Tax Act, 2017 (hereinafter referred to as “the said Acts”) provides for the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful-misstatement or suppression of facts. Section 74 of the said Acts provides for the detenaination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful-misstatement or suppression of facts.

Section 6(2)(b) of the Kerala State Goods and Services Tax Act, 2017 reads as follows “where a proper officer under the Central Goods and Services Tax Act, 2017 (Central Act 12 of 2017) has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under this Act on the same subject matter.”. Similarly, Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 reads as “where a proper officer under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under this Act on the same subject matter.”

Therefore, GST law envisages a subject matter-based litigation system primarily based on the self-assessed returns filed by the taxpayer. Each subject matter of a taxpayer is to be treated independent of the other subject matters of the same taxpayer so that the Central GST administration is at liberty to initiate proceedings on a different subject matter of a taxpayer who is already under a proceeding of the State GST administration.

This being the position, situations can arise wherein the nature of issues involved against a single taxpayer are such that simultaneous actions are to be initiated under both the sections 73 and 74. Certain subject matters identified therein may not .satisfy the conditions of Section 74, especially the definition of suppression as per Explanation 2 to Section 74, whereas some others may satisfy the conditions of Section 74. This situation may arise when action is initiated under relevant provisions of the Act in Audit/Intelligence/Tax Payer Services verticals.

Under these circumstances, it is clarified that in case a taxpayer is found to have multiple subject matters for which determination of tax is required under both Sections 73 and 74 of the said Acts, separate notices shall be issued to the taxpayer under each section for the respective subjects matters. All the subject matters that fall under Section 73 should be covered in a notice issued under that section, while the remaining matters pertaining to Section 74 shall be dealt in a separate notice under the said Section. Therefore, the JC Intelligences who approve the investigation report, the audit monitoring committee which considers draft audit paras, the proper officer in Taxpayer services who undertakes scrutiny of returns etc. are required to clearly delineate the subject matters between Sections 73 and 74.

Further, it is also seen that the process of closure of proceedings in Section 73 and 74 speaks of conclusion at the notice level and not at the subject matter level. For instance, a notice issued under section 73(1) is concluded entirely in section 73(8), rather than on a specific subject matter within that notice. Similar situation exists in Section 74. Therefore, the subject matters that fall under Section 73 and those matters which fall under Section 74 should not be combined into a single notice as it creates difficulty in operationalizing the subsequent adjudication/closure provisions under each of those Sections.

Needless to say, in line with existing instructions and the provisions of Section 73 and 74, the adjudication and closure of each notice/proceeding under Section 73 and 74 shall be independent of each other.

Income Tax Department conducted a search and seizure operation in the Kashmir Valley on a prominent business group, engaged in various sectors namely, Cement, Steel, Glass, Plywood, Real Estate, Tourism, Textiles and Healthcare, etc. on 09.10.2023.   More than 40 premises were covered in Srinagar, Sopore, Budgam, Sonmarg, Pulwama areas of Kashmir Valley and at Delhi.

During the search operation, incriminating documents, hand written diaries, and digital devices have been seized. Variation in stock has also been noticed in the various factories and retail outlets. Evidence of undisclosed investments in immovable properties located in Kashmir Valley of more than Rs. 50 crore has also been found from various premises.

Investigations so far made, has shown that the group has been suppressing its taxable income by grossly under-reporting its sales in the cement sector by more than Rs. 60 crore over the past several years. In this regard, evidence in the form of cash vouchers and sales invoices has been seized, which is found to have not been recorded in the books of account. Similarly, evidence of undisclosed sales in the books of account exceeding Rs. 50 crore in textile and plywood sectors has also been found.

In the real estate business of the group, being carried out in Kashmir and Delhi, documents evidencing the receipt of on-money have been recovered. The Such suppression of receipts in the books of account are estimated to be about Rs. 10 crore.

The key person of the group has admitted the above modus-operandi being followed for generation of undisclosed income.

The search action has resulted in seizure of unaccounted cash exceeding Rs.1.70 crore. In addition, unaccounted bullion worth Rs. 16 lakh has also been seized.

Further investigations are in progress.