TIOL-DDT 2864
09 06 2016
Thursday

REGULATION 11 of the Warehouse (Custody and Handling of Goods) Regulations, 2016 requires the licensee to maintain detailed records of the receipt, handling, storage and removal of goods into and from the warehouse and file monthly returns regarding the same. The Board has prescribed Form-A as the record for receipt, handling, storing and removal of the warehoused goods.

The data prescribed in the Form shall be stored electronically. All licensees are required to enter data accurately and immediately upon the goods being deposited in or removed from the warehouse.

A licensee shall file with the bond officer a monthly return of the receipt, storage, operations and removal of the goods in the warehouse, within ten days after the close of the month to which such return relates.

For the purpose of discharging these responsibilities, the licensee may appoint one or more employees as authorised signatories. The specimen signatures of such authorised signatories and the specimen impression of the stamp of the licensee to be affixed on the documents should be kept updated with the Bond officer at all times.

The warehouse shall have facilities such as computer, photocopier, scanner and printer.

CBEC Circular No.25/2016-Customs., Dated June 08 2016

FTP -Revalidation of Authorisation

DGFT has amended paragraph 4.47(a)(ii) of Handbook of Procedures 2015-20 stipulating that While allowing waiver of Bond for exports made first (before effecting imports) on pro-rata basis, Regional Authority may revalidate the Authorization in continuation for further six months for replenishment of inputs used in manufacture of export item's from the date of endorsement provided applicant has made a specific request in ANF 4D and paid requisite fee for revalidation. It will be further subject to condition that the applicant had not obtained revalidation earlier in terms of Para 4.41(a) of HBP 2015-20.

DGFT Public Notice No. 17/2015-2020., Dated June 08 2016

Reducing Cash Transactions - CBDT Clarification

IN order to reduce the cash transactions in sale of goods and services, Finance Act 2016 has expanded the scope of section 206C (1D) to provide that the seller shall collect tax at the rate of one per cent from the purchaser on sale in cash of any goods (other than bullion and jewellery) or providing of any services (other than payment on which tax is deducted at source under Chapter XVII-B) exceeding two lakh rupees.

Further, with a view to bring high value transactions within the tax net, it has been provided in sub-section (1F) of section 206C of the Act that the seller who receives consideration for sale of a motor vehicle exceeding ten lakh rupees, shall collect one per cent of the sale consideration as tax from the buyer.

The Board answers FAQ:

Question 1:  Whether tax collection at source ('TCS') at the rate of 1% is on sale of Motor Vehicle at retail level or also on sale of motor vehicles by manufacturers to dealers/distributors.

Answer:   This is brought to cover all transactions of retail sales and accordingly it will not apply on sale of motor vehicles by manufacturers to dealers/distributors.

Question 2:  Whether TCS at the rate of 1% is on sale of Motor Vehicle is applicable only to Luxury Cars?

Answer:  No, As per sub section (1F) of Section 206C of the Act the seller shall collect the tax at the rate of one per cent from the purchaser on sale of any motor vehicle of the value exceeding ten lakh rupees.

Question 3:  Whether TCS at the rate of 1% is applicable in the case of sale to Government Departments, Embassies, Consulates and United Nation Institutions for sale of motor vehicle or any other goods or provision of services?

Answer:  Government, institutions notified under United Nations (Privileges and Immunities) Act 1947, and Embassies, Consulates, High Commission, Legation, Commission and trade representation of a foreign State and shall not be liable to levy of TCS at the rate of 1% under sub-section (1D) and (1F) of section 206 C of the Act.

Question 4:  Whether TCS is applicable on each sale of motor vehicle or on aggregate value of sale during the year?

Answer:  Tax is to be collected at source at the rate of 1% on sale consideration of a motor vehicle exceeding ten lakh rupees. It is applicable to each sale and not to aggregate value of sale made during the year.

Question 5:  whether TCS at the rate of 1% on sale of motor vehicle is applicable in case of an individual?

Answer:  The definition of "Seller" as given in clause (c) of the Explanation below sub-section (11) of section 206C shall be applicable in the case of sale of motor vehicles also. Accordingly, an individual who is liable to audit as per the provisions of section 44AB of the Act during the financial year immediately preceding the financial year in which the motor vehicle is sold shall be liable for collection of tax at source on sale of motor vehicle by him.

Question 6:  How would the provisions of TCS on sale of motor vehicle be applicable in a case where part of the payment is made in cash and part is made by cheque?

Answer:  The provisions of TCS on sale of motor vehicle exceeding ten lakh rupees is not dependent on mode of payment. Any sale of Motor Vehicle exceeding ten lakh would attract TCS at the rate of 1%.

Question 7:  As per section 206C(1D), tax is to be collected at source at the rate of 1% if sale consideration received in cash exceeds 2 lakh rupees whereas as per section 206C(1F) tax is to be collected at source at the rate of 1% of the sale consideration of a motor vehicle exceeding 10 lakh rupees. Whether TCS will be made under both sub-section(1D) and (1F) of the section 206C @ 2%,where part of the payment for purchase of motor vehicle exceeds 2 lakh rupees in cash?

Answer:  Sub-section (1F) of the section 206C of the Act provides for TCS at the rate of 1% on sale of motor vehicle of value exceeding 10 lakh rupees. This is irrespective of the mode of payment. Thus if the value of motor vehicle is 20 lakh rupees, out of which 5 lakh rupees has been paid in cash and balance amount by way of cheque, the tax shall be collected at source at the rate of 1% on total sale consideration of 20 lakh rupees only under sub-section (1F) of section 206C of the Act. However, if a vehicle is sold for 8 lakh rupees and the consideration is paid in cash, tax shall be collected at source at the rate of 1% on 8 lakh rupees as per sub-section(1D) of section 206C of the Act.

CBDT Circular No. 22/2016., Dated June 08 2016

Music to Sony - Income Tax obtained Statement from Ricky Martin by threat and duress - High Court quashes Summons Issued in 1998

"THE applause and the energy of the public are my addiction- they are my vice."

The pop sensation Ricky Martin loves India. He once said "India has been an important part of my spiritual growth. Whenever I get the chance, I go to India, and especially visit Puri (Odisha), where I practice Yoga. It has helped me a lot in my personal and professional life. I was in Rishikesh (Uttarakhand). I found some great ashrams and spiritual retreats there."

During his visit to India in 1998, he had a strange encounter with India's Income Tax Department. See what he said in a letter to the Deputy Commissioner of Income Tax, Non-Resident Circle, New Delhi in 1999.

"I refer to the statement on oath recorded by you on December 7, 1998 at the Hotel Radisson in New Delhi, India. I was coerced and forced to sign this statement on oath and was overwhelmed by the duress exercised by you on me. This statement under oath was extracted by you from me under threats from you that I would not be allowed to leave India until I signed this statement under oath.

After returning to my home country, I have examined my records and I am now in a position to confirm that I do not have any contract with Sony Music Entertainment (India) Pvt. Ltd. India for my live performance in New Delhi on December 6, 1998 or for any sale of CD's or cassettes in India or for any other matter.

I also wish to clarify that there is no direct artist recording agreement between myself, in my individual capacity, and Sony Music USA or its associated companies.

I hope that this letter will clarify this issue and enable you to close the matter."

This letter formed part of an order by the Delhi High Court recently. It was a petition by Sony Music Entertainment Pvt Ltd in 1999 against the summons and letter dated 7th December 1998, letter and notices dated 14th December 1998, summons dated 11th January 1999 and letter dated 18th January 1999 issued to it by the Income Tax Department (ITD) and the guarantee dated 7th December 1998 furnished by it in connection with a live concert of the renowned performer Mr. Ricky Martin in New Delhi on 6th December 1998.

It seems that the ITD proceeded on the basis that there could be a possible evasion of tax on the earnings of Sony in India as a result of the agreements signed by Ricky Martin with Sony Corporation of America ('SCA'). The ITD proceeded on the footing that there should have been a corresponding agreement between the Assessee which is the Indian subsidiary of SCA and Mr Martin.

In the writ petition, Sony alleged that it was coerced by the ITD into furnishing a guarantee on 7th December 1998 agreeing inter alia to meeting any tax demand that may become payable as a result of the performance of Mr. Ricky Martin. The guarantee further stated that the Petitioner had no objection to being appointed as an agent of Mr. Ricky Martin under Section 163(1) of the Income Tax Act, in connection with income deemed to accrue or arising to him if any, from manufacturing and sale of audio cassettes in India by Sony Music Entertainment India Pvt. Ltd. under the matrix agreement with Sony Corporation USA.

The Delhi High Court decided this 1999 writ petition last month. The High Court observed,

1. There is nothing brought on record by the ITD to show that there was a contract between the Petitioner and Mr. Ricky Martin in regard to his concert in Delhi on 6th December 1998.

2. The ITD has also not denied that DNPL, the organiser of the concert, had no contract with the Petitioner.

3. This writ petition has been pending since 1999 and there was a sufficient time for the ITD to have placed on record the outcome of the investigation which it was supposed to undertake pursuant to the impugned notices issued to the Petitioner.

4. The counter affidavit was filed way back on 17th February 1999 at a stage when the investigation was still incomplete. Nothing has been placed on record in these seventeen years by the ITD to inform the Court of the consequent result of said investigation.

5. Court is constrained to conclude that the case of the Petitioner as has been made out in the petition remains un-rebutted by the ITD.

The Court quashed the impugned summons, notices, and letters and orders. The guarantee furnished by the Petitioner to the Department on 7th December 1998 shall stand discharged.

The High Court also made it clear that no further coercive steps shall be taken by the ITD against the Petitioner pursuant to the impugned summons, letters, notices and guarantee.

You can see this case in 2016-TII-27-HC-DEL-INTL

Until Tomorrow with more DDT

Have a nice day.

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