MM TAX CLUB

Circular No. 08/2023 Dated: 13.03.2023

 Telecom equipment in the context of notification No. 02/2019- Customs dated 29-01-2019 amending notification No. 57/2017-Customs dated 30.06.3017

Attention of the field formations is invited to Notification No. 57/2017- Customs dated 30.06.2017 amended by Notification No. 02/2019-Customs dated 29.01.2019 which, against tariff items 8517 62 90 and 8517 69 90, gives descriptions of certain goods that are telecommunication products or equipment.

2.            In this context, the Board was apprised that some of these technology related descriptions, specifically those at (b) to (h), amongst (a) to (h), in the notification, need to be better understood by all stakeholders for a more effective identification of products and equipment covered therein.

3.            Accordingly, in order to make stakeholders more aware in the matter, and in consultation with the Department of Telecommunications (DoT) –

(a) the identification of products/equipment covered thereunder, at (b) to (h) of the notification, is illustrated in Annexure -1;

(b) it is decided that, in terms of the Bill of Entry (Electronic Integrated Declaration and Paperless Processing) Regulations 2018, an identification of products/equipment under 85176290 and 85176990 shall be enabled from the beginning, that is, from the time of filing of import declarations itself, bringing certainty, for which an alpha numeric code/identifier as provided for in Annexure -2 will need to be additionally declared in bill of entry by the importer with effect from 01.04.2023.

4. Suitable Public Notice, etc may kindly be issued for guidance. Difficulty faced, if any, in implementation may be intimated.

CBDT’s e-Verification Scheme harnesses information technology to facilitate voluntary compliance

On a pilot basis information of financial transactions pertaining to 68,000 cases from FY 2019-20 taken up for e-Verification

e-Verification completed in approximately 35,000 cases out of 68,000 cases in the above pilot study

The Income Tax Department has taken several progressive steps to encourage voluntary tax compliance and facilitate a transparent and non-intrusive tax administration. One such major initiative is the   e-Verification Scheme, 2021 (the “Scheme”) which was notified on 13th December, 2021.

Using information technology effectively, the Scheme aims to share and verify such financial transaction information with the taxpayer which appears to be either unreported or under-reported in the Income Tax Return (ITR) filed by the taxpayer.

The Department has been collecting information of financial transactions from multiple sources. Earlier, a part of it was shared with the taxpayer in the 26AS Statement. However, with a view to effectively utilize the data collected from various sources, the entire information is now displayed to the taxpayer through the Annual Information Statement (AIS). The AIS provides a facility to the taxpayer to object to any information if the Source has misreported any such information. The Department confirms the said information with the Source and if the Source states that there is no error, the said information is subjected to risk assessment for e-Verification.

The entire process of e-Verification is digital, with notices issued electronically and responses by the taxpayers also submitted electronically. On completion of the enquiry, a verification report is prepared electronically without any physical interface with the taxpayer.

The Scheme is extremely beneficial to taxpayers as it enables the taxpayer to explain the financial transaction with evidence. It also helps in data correction/cleaning and thereby prevents initiation of proceedings on misreported information. Further, since the information pertaining to the financial transactions is shared with the taxpayer, it provides an opportunity to correct /update income that may not have been appropriately reported in the ITR filed by the taxpayer. In other words, as the e-Verification Scheme makes the taxpayer aware of the risks, it nudges him/her towards voluntary compliance by providing an opportunity to the taxpayer to Update the return of income under section 139(8A) of the Income-tax Act,1961.

On a pilot basis, in about 68,000 cases, information of financial transactions pertaining to FY 2019-20 has been taken up for e-Verification. Details of the transactions have been initially shared with the individual taxpayer through e-campaign. So far, e-Verification has been completed by the designated Directorate in approximately 35,000 cases and remaining are under verification.

As the Scheme has provided an opportunity to the taxpayers to accept the mismatch of information vis-à-vis the original ITR filed, it is found that many taxpayers have filed Updated ITRs.

To facilitate a better understanding of the Scheme and the various processes involved therein, the FAQs on e-Verification Scheme, 2021 are available on www. incometaxindia.gov.

A 29-year-old city businessman, wanted by the state goods and services tax (GST) department for availing Rs12.59 crore worth of input tax credit (ITC) against fake bills of goods purchase worth Rs 70.22 crore, was arrested on Friday from Siddharth Nagar in Uttar Pradesh.

This is the 68th arrest of tax evaders in 2022-23 by the Maharashtra GST department.

An interstate operation involving officials from the Pune investigation unit of the state GST department and the UP police was carried out to nab the businessman, Sirajuddin Kamaluddin Chaudhary.

He was brought to Pune on a transit remand and produced before a magisterial court on Sunday. The magistrate ordered Chaudhary's remand in judicial custody for two weeks, a press release issued by the office of the Joint Commissioner of State Tax Pune at GST Bhavan here said.

The release stated, "During the investigation, it was found that four major suppliers are non-existent/non-genuine as their GST registrations were obtained by means of fraud, using forged documents. The probes in cases of these suppliers were conducted at multiple places and it is found that Chaudhary, by means of fake bills worth Rs70.22 crore without actual receipt of goods, has availed of fake ITC worth Rs12.59 crore in the firm."

Chaudhary was absconding and hiding in the northern state. A special investigation team (SIT) was formed and sent to UP to nab the culprit.

"The team with special efforts and help from the UP police traced and arrested the accused on March 10. Thereafter, he was brought to Pune under the transit remand accorded by Chief Judicial Magistrate of Siddharthnagar, UP. On production before the Chief Judicial Magistrate of Pune, the accused was remanded to judicial custody of 14 days," the release added.

The operation was conducted under the guidance of additional commissioner of state tax (Pune zone) Dhananjay Akhade, joint commissioner of state tax (Pune 2) Deepak Bhandare, and deputy commissioner of state tax Manisha Gopale-Bhoir; it was led by assistant commissioners of state tax Sachin Sangle, Dattatraya Telang, Satish Lanke and Satish Patil, along with state tax inspectors.

Tax evasions, bogus invoices without any deliveries of goods, cyber frauds using Goods and Services Tax (GST) identification numbers, forging up shell companies, fake business transactions, failure to deposit due taxes to authorities and illegally claiming input tax credit (ITC) have now become the biggest reasons for rise in GST-related offences in the country.

The claim is apparent in the figures provided by the Finance Ministry to the Lok Sabha, where the number of such offences that stood at 12,574 in 2021-22 shot up to 13,492 in 2022-23 (till February).

This jump of around 7.3 percent comes after a slowdown in rise of such offences was seen in FY2 to FY22 which was 0.2 percent. The data provided by the ministry to the Parliament on Monday highlights that in the course of five years from 2017 to February 2023, the total registered GST-related offences are 57,111. For FY18, the number of cases were at their lowest at 424, for FY19, it rose to 7,368, in FY20 the numbers were 10,657, in FY21 it again increased to 12,574, followed with a descending trend last fiscal at 12,574. From 2022 to February 23, the number ascended at an all-time high to 13,492.

In terms of percentage, the rise of cases in FY19 was 44.6 percent, FY21 it was 18.2 percent, 0.2 percent in FY22 and 7.3 percent in FY23.

Among all states, Maharashtra topped the list with a total of Rs 60,000 crore of misappropriation being detected, followed by Rs 40,507 crore in Karnataka, Rs 26,156 crore in Gujarat, Rs 24,217 crore in Delhi, Rs 22,712 crore in Haryana and Rs 17,604 crore in West Bengal. A total of 1,316 offenders have been arrested in these five years, the data stated, adding that the maximum number of accused persons are from Maharashtra.

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According to the Finance Ministry, the total amount of money misappropriated and showed in records in these five years is close to Rs 3.11 lakh crore and the recovery made is around Rs 1.03 lakh crore.

To get a hold over the malpractices and stop embezzlement, the government has said it has put into place various measures which includes, using robust data analytics and artificial intelligence to identify and track risky taxpayers and detect tax evasion, carrying out a nationwide special drive against unscrupulous entities for availing and passing on input tax credit (ITC) fraudulently on the strength of fake/bogus invoices.

Further, availing ITC has been restricted to invoices and debit notes furnished by the supplier in their statement of outward supplies, sharing of data with partner law enforcement agencies for more targeted interventions, mandatory Aadhaar-based authentication for new GST registrations as well as centralised suspension of registrations of registered persons who default in timely-filing of returns, among other regulations

Regarding tax evasion by insurance companies, the revenue department informed the Lok Sabha that cases of evasion of indirect taxes (GST and service tax) have been booked by the Central Board of Indirect Taxes and Customs (CBIC) field formations against various insurance companies. In the last five years, 106 cases have been registered across the country and Rs 7,581.80 was misappropriated out of which Rs 1,347.17 have been recovered.

Ever since the GST rollout in 2017, matters of tax evasion and other related offences have been picking up pace at a significant pace and with time, various modus operandi have come to fore to evade the indirect tax using ingenious methods.