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Discretion of Appellate Authority in Admitting Appeals Beyond Limitation Period

editor — Tue, 26 Mar 2024 04:48:21 +0000

In the case of Arvind Gupta v. Assistant Commissioner of Revenue State Taxes [Writ Petition Application No. 2904 of 2023 dated January 04, 2024], the esteemed Calcutta High Court determined that the Appellate Authority possesses the discretion to permit the submission of an appeal within one month after the expiration of the prescribed limitation period from the date of order communication, provided sufficient cause is demonstrated, as per Section 107(4) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).

Facts of the case:

The Appellate Authority retains discretion to accept appeals submitted after the limitation period.
The Calcutta High Court, in Arvind Gupta v. Assistant Commissioner of Revenue State Taxes [Writ Petition Application No. 2904 of 2023 dated January 04, 2024], affirmed that the Appellate Authority possesses discretion to entertain appeals within one month after the expiration of the limitation period as per Section 107(4) of the Central Goods and Services Tax Act, 2017 ("CGST Act").
Arvind Gupta, the petitioner, appealed before the Senior Joint Commissioner of Revenue, mentioned in the annexure to FORM GST APL-01 the period of delay and reasons for the delay:

Issue:

Whether the Appellate Authority may exercise discretion to admit appeals submitted within one month after the limitation period?

Held:

Relied on, the Hon’ble Division Bench in the matter of S.K. Chakraborty v. Union of India & Ors. (MAT 82 of 2022) where the Bench held that the provisions of Section 5 of the Limitation Act, 1963 have not been expressly or impliedly excluded by Section 107 of the CGST Act under Section 29(2) of the CGST Act. Therefore, Section 5 of the Limitation Act, 1963 stands attracted. Hence, the Respondent has the discretion to allow an appeal to be presented within one month after the expiry of the period of limitation stipulated from the date of communication of the order upon sufficient cause being shown as per Section 107 (4) of the CGST Act. Paraphrase
Observed that, it was well within the power of the Respondent to consider the prayer of the Petitioner for condonation of delay. The Impugned Order passed by the Respondent that there is no scope to condone the delay beyond four months suffers from infirmity.
Noted that, the delay was evident from the annexure to FORM GST APL-01 and the Petitioner was prevented by sufficient cause for not preferring the appeal within the statutory period.
Held that, the Respondent failed to exercise its jurisdiction. The delay in presenting the appeal before the Respondent was condoned. The Respondent was directed to consider the appeal on merit and decide the same in accordance with law upon giving an opportunity of hearing to the Petitioner.

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ITC Transition not to be denied in case of Input Service Distributor (ISD)

editor — Sat, 23 Mar 2024 06:22:00 +0000

In the case of Siemens India Ltd. v. Union of India [Writ Petition No. 986 of 2019 dated February 09, 2024], the Hon’ble Bombay High Court, drawing upon sub-section (7) of Section 140 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”), postponed the proceedings for further examination. The court upheld the temporary halt granted to the Assessee, who is an Input Service Distributor (“ISD”), emphasizing that Input Tax Credit (ITC) legitimately available to the Assessee before the Appointed Day should not be forfeited due to the absence of an effective procedural mechanism for transferring ITC to the Electronic Credit Ledger for utilization. This situation could lead to the permanent loss of such ITC.

Facts of the case:

Siemens India Ltd. (“the Petitioner”), registered as an Input Service Distributor (ISD), initiated a writ petition regarding the transition of Input Tax Credit (ITC) available to them on July 1, 2017 (“the Appointed Day”). The petition contested the Revenue Department’s (“the Respondent”) refusal to allow transition or utilization of ITC in the Electronic Credit Ledger, citing a defective electronic mechanism.

These proceedings stemmed from a Supreme Court order dated March 24, 2023, in Union of India and Ors. v. Siemens Ltd. and Ors [SLP (Civil) Diary No. 7213 of 2023], directing a fresh consideration of the case, taking into account relevant contentions and legal provisions.

Issue:

Is an Input Service Distributor (ISD) entitled to transition ITC available on the Appointed Day?

Held:

The Bombay High Court, in Writ Petition 986 of 2019, made the following determinations:

The primary concern revolves around the legal ramifications of sub-section (1) and sub-section (7) of Section 140 of the CGST Act, outlining transitional arrangements for the carry-forward and utilization of ITC by ISDs.
Citing sub-section (7) of Section 140 of the CGST Act, the Court emphasized that legitimately available ITC with the Petitioner before the Appointed Day cannot be forfeited due to the absence of an effective procedural mechanism for transferring ITC to the Electronic Credit Ledger for utilization, thus preventing permanent loss of such ITC.
The Court suggested that a thorough examination of these issues by the GST Council would aid in the adjudication process.
It was decided that interim relief granted to the Petitioner would remain in force.
The case was adjourned until August 9, 2024.

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Optimizing Tax Planning with Political Party Donations

editor — Fri, 22 Mar 2024 07:21:06 +0000

The difference between tax saving and tax evasion becomes apparent when individuals seek deductions under sections 80GGB/80GGC of the Income Tax Act 1961 for contributing funds to a political party or an electoral trust.

Eligibility for Deductions

Deduction Limits

Tax Savings Example

Gross Total Income	Donation Amount	Deduction Claimed	Tax Savings
Rs. 10,00,000/-	Rs. 2,00,000/-	Rs. 2,00,000/-	Substantial

Risks of Bogus Donations

Consequences of Failure to Prove Genuineness

Steps to Prove Genuineness

Obtain Registration Certificate: Confirm party registration under section 29A.
Verify on Official Website: Check legitimacy on eci.gov.in.
Request PAN Card: Obtain PAN of the political party.
Cross-Verify Bank Details: Use cancelled cheque.
Get Stamped Receipt: Ensure a physical receipt from the party.

Supporting Documentation

Conclusion

Donating to political parties can offer tax benefits but requires careful consideration, documentation, and compliance to avoid penalties. Proper evidence is crucial to substantiate the genuineness of the transaction.

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CBDT Issues Guidelines on Income Tax Appeal Filing to Reduce Litigation

editor — Tue, 19 Mar 2024 06:24:06 +0000

The Central Board of Direct Taxes (CBDT) has issued Circular No. 5/2024 dated March 15, 2024, under Section 268A of the Income-tax Act, 1961, providing guidelines for the Department’s appeal filings before the Income Tax Appellate Tribunal (ITAT), High Courts (HCs), and for Special Leave Petitions (SLPs)/appeals before the Supreme Court (SC) with the aim of reducing litigation. This circular supersedes Circular No. 3/2018 from July 11, 2018, Circular No. 17/2019 from August 8, 2019, and a board letter dated August 20, 2018.

In line with the guidelines, monetary limits and other conditions for filing departmental appeals under the Income-tax Act, 1961 have been specified for ITATs, HCs, and SC. However, exceptions have been provided where the decision to appeal or file an SLP shall be based on merits without regard to the tax effect and the monetary limits.

These exceptions include cases where:

It contained Any provision of the Act or the Rules or notification issued thereunder has been held to be constitutionally invalid.on both external and internal assets generated or acquired during the relevant financial year under various tax categories such as CGST, SGST & IGST, and HSN codes.
Any order, notification, instruction, or circular of the Board or the Government has been held to be illegal or ultra vires the Act.
The assessment is based on information related to any offence received from law enforcement or intelligence agencies.
Prosecution has been filed by the Department in the relevant case and the trial is pending.
Strictures/adverse comments have been passed against the Department.
The tax effect is not quantifiable or not involved, such as in the case of registration of trusts or institutions.
Addition relates to undisclosed foreign income/undisclosed foreign assets.
Cases involving organized tax evasion or accommodation entries.
Mandated by a Court’s directions.
Writ matters.
Matters related to wealth tax, fringe benefit tax, equalization levy, and other matters outside the Income Tax Act.
Litigation arising out of disputes related to TDS/TCS matters.

The Circular further clarifies that appeals or SLPs shall not be filed in cases where the tax effect does not exceed specified monetary limits for ITAT, HCs, and SC. The tax effect is defined as the difference between the tax on the total income assessed and the tax that would have been chargeable had the total income been reduced by the amount of income in respect of the disputed issues.

Additionally, procedures for calculating the tax effect in cases involving TDS/TCS are outlined, and reporting mechanisms are established to ensure compliance with the Circular’s provisions.

The Circular aims to streamline the appeals process, reduce unnecessary litigation, and provide clarity to taxpayers on their Income-tax assessments. It emphasizes the importance of deciding on appeal filings based on the merits of each case and encourages the resolution of disputes in a fair and efficient manner.

Source: https://www.nyca.in/wp-content/uploads/2024/03/Circular-No.-5-2024-Filing-of-appeals-by-Dept.pdf

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