Legal Update
1030
Circulars/Notifications
Given below are the important Circulars and Notifications issued by the CBDT, CBEC
and FEMA during the last month for information and use of members. Readers are
requested to use the citation/website or weblink to access the full text of desired circular/
notification. You are requested to please submit your feedback and suggestions on the
column at eboard@icai.in
(Matter on Direct Taxes has been
DIRECT contributed by the Direct Taxes
TAXES Committee of the ICAI)
I. PRESS RELEASES/INSTRUCTIONS/OFFICE
MEMORANDUM
1. Constitution of Task Force for drafting
a New Direct Tax Legislation–Press Release, dated 22-
11-2017
During Rajaswa Gyan Sangam held on 1st and
2nd September 2017, Hon’ble Prime Minister
had observed that the Income-tax Act, 1961 was
drafted more than 50 years ago and it needs to be
redrafted. Accordingly, in order to review the Act
and to draft a new direct tax law in consonance with
economic needs of the country, the Government
has constituted a Task Force with the following
Members:
(i) Shri Arbind Modi, Member (Legislation),
CBDT - Convener
(ii) Shri Girish Ahuja, practicing Chartered
Accountant and non-official Director State
Bank of India;
(iii) Shri Rajiv Memani, Chairman & Regional
Managing Partner of E&Y;
(iv) Shri Mukesh Patel, Practicing Tax Advocate,
Ahmedabad;
(v) Ms. Mansi Kedia, Consultant, ICRIER, New
Delhi;
(vi) Shri G. C. Srivastava, Retd. IRS (1971 Batch)
and Advocate.
Shri Arvind Subramanian, Chief Economic
Adviser- will be a permanent special invitee in the
Task Force.
The Terms of Reference of the Task Force is to draft
an appropriate direct tax legislation keeping in view:
(i) The direct tax system prevalent in various
countries,
(ii) The international best practices,
126 THE CHARTERED ACCOUNTANT JANUARY 2018
(iii) The economic needs of the country and
(iv) Any other matter connected thereto.
The Task Force would set its own procedures for
regulating its work. It has to submit its report to the
Government within six months.
2. Clarification of India’s position on the acceptance
of MAP and bilateral APA in cases of countries where
Article 9(2) of OECD Model Tax Commentary is absent–
Press Release, dated 27-11-2017
A number of references have been received from
time to time regarding the acceptance of applications
pertaining to Transfer Pricing MAP cases and
bilateral Advance Pricing Agreements (APAs) where
the Associated Enterprise (AE) of the Indian entity
is resident of a country with which India has entered
into a Double Taxation Avoidance Agreement
(DTAA) but the Agreement does not contain
Paragraph 2 of Article 9 (or its relevant equivalent
Article) relating to ‘Corresponding Adjustment’.
After examining the matter, the CBDT has
decided to accept Transfer Pricing MAP and bilateral
APA applications regardless of the presence or
otherwise of Paragraph 2 of Article 9 (or its relevant
equivalent Article) in the DTAAs.
3. Indian Advance Pricing Agreement regime moves
forward with signing of two APAs by CBDT in November,
2017–Press Release, dated 1-12-2017
The CBDT has entered into 2 Bilateral Advance
Pricing Agreements (APAs) during the month of
November, 2017. These Agreements are the first
ever Bilateral APAs with Netherlands. With the
signing of these Agreements, the total number of
APAs entered into by the CBDT has gone up to 186.
This includes 171 Unilateral APAs and 15 Bilateral
APAs.
These two APAs pertain to the Electronics and
Technology sectors of the economy. The international
transactions covered in these agreements include
Distribution, Provision of Marketing Support
www.icai.org

Services, Provision of Business Support Services,
etc.
The APA provisions were introduced in the
Income-tax Act in 2012 and the “Rollback”
provisions were introduced in 2014. The APA
Scheme endeavours to provide certainty to taxpayers
in the domain of transfer pricing by specifying the
methods of pricing and setting the prices of
international transactions in advance. Since its
inception, the APA Scheme has been well-accepted
by taxpayers.
The progress of the APA Scheme strengthens the
Government’s resolve of fostering a non-adversarial
tax regime. The Indian APA programme has been
appreciated nationally and internationally for being
able to address complex transfer pricing issues in a
fair and transparent manner.
4. CBDT extends date for linking of Aadhaar with PAN–
Press Release, dated 8-12-2017
Section 139AA applicable with effect from
01.07.2017 requires all taxpayers having Aadhaar
Number or Enrolment Number to link the same
with Permanent Account Number (PAN). In view of
the difficulties faced by some of the taxpayers in the
process, the date for linking of Aadhaar with PAN
was initially extended till 31.8.2017 and thereafter,
further extended upto 31.12.2017.
It has come to the notice of the CBDT that some
of the taxpayers have not yet completed the linking
of PAN with Aadhaar. Therefore, to facilitate the
process of linking, the CBDT has further extended
the time for linking of Aadhaar with PAN till
31.03.2018.
5. Direct Tax Collections for F.Y. 2017-2018 show
Growth of 14.4% up to November, 2017–Press Release,
dated 9-12-2017
The provisional figures of Direct Tax collections
up to November, 2017 show that net collections
are at R4.8 lakh crore which is 14.4% higher than
the net collections for the corresponding period of
last year. The Net Direct Tax collections represent
49% of the total Budget Estimates of Direct
Taxes for F.Y. 2017-18 (R9.8 lakh crore). Gross
collections (before adjusting for refunds) have
increased by 10.7% to R5.82 lakh crore during April-
November, 2017. Refunds amounting to R1.02 lakh
crore have been issued during April, 2017 to
November, 2017.
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Legal Update
1031
6. Extending the due date of deposit of TDS/TCS–Order,
dated 13-12-2017
Due to certain technical issues faced by NSDL's
gateway for e-payment of tax on 7.11.17, some
taxpayers/deductors were unable to make
e-payment of tax deducted/collected for certain
period on that date. In order to redress genuine
hardship faced by such taxpayers/deductors, the
CBDT, in exercise of powers conferred under
Section 119(2) had extended the due date of deposit
of tax deducted at source/tax collected at source
during the month of October, 2017 from 7.11.17 to
8.11.17.
INDIRECT (Matter on Indirect Taxes has been
contributed by the Indirect Taxes
TAXES Committee of the ICAI)
GOODS & SERVICES TAX
Notifications and Circulars in relation to
Goods & Service Tax have been covered
at page no. 70/974 under GST update section of this
Journal.
CUSTOMS
1. Release of Mid-Term Review of Foreign Trade Policy
2015-2020
The Central Government vide Notification No.
41/2015-2020 dated 05.12.2017 has revised FTP
2015 – 20 in such a way to align with the provisions
of GST.
Highlights of the Foreign Trade Policy 2015-20
Merchandise Exports from India Scheme (MEIS)
• The debits towards basic customs duty in the
transferable reward duty credit scrips would
also be allowed adjustment as duty drawback.
At present, only the additional duty of customs/
excise duty/service tax is allowed adjustment
as CENVAT credit or drawback, as per
Department of Revenue rules.
Service Exports from India Scheme (SEIS)
• SEIS shall apply to ‘Service Providers located
in India’ instead of ‘Indian Service Providers’.
Thus, SEIS provides for rewards to all
Service providers of notified services, who
are providing services from India, regardless
of the constitution or profile of the service
provider.
THE CHARTERED ACCOUNTANT JANUARY 2018 127
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• The reward issued as duty credit scrip, would no
longer be with actual user condition and will no
longer be restricted to usage for specified types
of goods but be freely transferable and usable
for all types of goods and service tax debits on
procurement of services/goods.
• Now the benefit of Incentives (MEIS & SEIS) is
available to units located in SEZs also.
Approved Exporter Scheme - Self certification by
Status Holders
• Manufacturers who are also Status Holders will
be enabled to self-certify their manufactured
goods as originating from India with a view
to qualify for preferential treatment under
different Preferential Trading Agreements
[PTAs].
Boost to "MAKE IN INDIA"
• Specific Export Obligation under EPCG
scheme, in case capital goods are procured
from indigenous manufacturers, which is
currently 90% of the normal export obligation
(6 times at the duty saved amount) has been
reduced to 75%, in order to promote domestic
capital goods manufacturing industry.
Simplification of procedures/processes, digitisation
and e-governance
• Under EPCG scheme, obtaining and submitting
a certificate from an independent Chartered
Engineer, confirming the use of spares, tools,
refractory and catalysts imported for final
redemption of EPCG authorisations has been
dispensed with.
• At present, the EPCG Authorisation holders
are required to maintain records for 3 years
after redemption of Authorisations. Now the
EPCG Authorisation Holders shall be required
to maintain records for a period of two years
only.
New initiatives for EOUs, EHTPs and STPs
• At present, in a period of 5 years EOU units
have to achieve Positive Net Foreign Exchange
Earning (NEE) cumulatively. Because of adverse
market condition or any ground of genuine
hardship, then such period of 5 years for NFE
completion can be extended by one year.
• Time period for validity of Letter of Permission
(LOP) for EOUs/EHTP/STPI/BTP Units
128 THE CHARTERED ACCOUNTANT JANUARY 2018
has been revised for faster implementation
and monitoring of projects. Now, LOP will
have an initial validity of 2 years to enable
the unit to construct the plant and install the
machinery. Further extension can be granted
by the Development Commissioner up to 1
year. Extension beyond 3 years of the validity
of LOPS, can be granted, in case unit has
completed 2/3rd of activities, including the
construction activities.
• EOUs having physical export turnover of
R10 crore and above, have been allowed the
facility of fast track clearances of import and
domestic procurement. They will be allowed
fast track clearances of goods, for export
production, on the basis of pre-authenticated
procurement certificate, issued by customs/
central excise authorities. They will not have to
seek procurement permission for every import
consignment.
Facilitating & Encouraging Export of dual use items
(SCOMET)
• Validity of SCOMET export authorisation has
been extended from the present 12 months to
24 months.
Duty Exemption
• Imports against Advance Authorisation shall
also be eligible for exemption from Transitional
Product Specific Safeguard Duty.
Details of Foreign Trade Policy 2015-2020
are available at https://goo.gl/QSTaWt
[Notification No. 41/2015-2020 dated
05.12.2017]
Highlights of certain interesting changes in GST in
respect to the aforesaid changes:
• EOUs exempted from payment of IGST on
imports vide Notification no. 78/2017-Cus.
Dated 13th Oct, 2017 (only upto 31st March,
2018) even though they have been ‘deemed to
be debonded’ vide Notification No. 44/2016-
Cus. dated 29th July, 2017;
• Suppliers to merchant-exporters are eligible
to pay only 0.1% GST vide Notification no.
41/2107-IGST (Rate) dated 23rd Oct, 2017
subject to safeguards by creating an inverted
tax-rate situation so as to qualify for refund
under Section 54(3) of CGST Act. Suppliers
to take care that recipients indemnify for their
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 Legal Update
1033

responsibilities to ensure inclusion of details of 3. Clarification on applicability of GST on goods sold

tax invoice in shipping bill (for export) under
the said notification. Care to be taken that HSN
is in proper alignment in PO, tax invoice, export
invoice and shipping bill to avoid any concerns
at the time of claiming refund;
• Supplies to EOUs/AA-holders/EPCG-holders
are notified under Section 147 as ‘deemed
exports’ but there is no section granting
entitlement to suppliers to claim refund except
Notification No. 49/2017-Central Tax dated
18th Oct, 2017;
• Inter-State movement of rigs, tools and spares
mounted on wheels for purposes such as repairs
and maintenance being movement ‘other than
supply’ are permitted without charging GST
vide Circular 21/21/2017-CGST dated 22nd Nov,
2017. This circular extends clarification earlier
issued vide circular 1/1/2017-IGST dated 7th
July, 2017;
• Manual filing of refund to exporters allowed
vide Circular 17/17/2017-GST dated 15th Nov,
2017. Refund available under this route only
in respect of zero-rated supplies. Please note
that refund of IGST on export of goods; refund
while being in a custom bonded warehouse
The Central Board of Excise & Customs vide
Circular No. 46/2017-Customs dated 24th November,
2017 clarified that goods imported and deposited
in a custom bonded warehouse will be chargeable
to (Custom duty + IGST) at the time of filing of
ex-bond bill of entry at the value determined
at the time of filing into-bond bill of entry to be
collected at ex-bond stage. However, if the importer
sells the customs bonded goods to another person
before clearance of goods from warehouse, IGST
will be leviable on such transaction at the time of
sale which the importer will have to pay by 20th of
next month.
Therefore, IGST leviable on import shall remain
deferred so long as such goods remain in custom
bonded warehouse. However, IGST on sale/transfer
of warehoused goods need to be paid on or before
20th of succeeding month.
Sale of Goods in a Bonded Warehouse and
clearance thereof:
Box-B
Importer files an "into
bond bill of entry"
and the goods are

will be processed based on shipping bill itself. deposited in a Bonded

Warehouse. DOD and

It appears option under Section 16(3)(b) is IGST (Section 3(7) of

Customs Tariff Act Box-C Box-D
relatively simpler in case of credit balance is Box-A 1975) are deferred.
Illustration of duty
"A" sells the goods
to "B" on 21st July
"B" files an

accumulated and available with exporter. Goods imported

by "A"-on 2rd July
deferment:
A: Value of goods = R100
2017for R300 and
charges IGST of R
Ex-bond Bill of
entry on 5th of
September 2017
2017. B: say BCD is 10°/0 = R10 36 @12% (IGST) and pays R23.20
Importer wants to (10% of Rs. 100) Payment of the above (the deferred
2. Custom Furnishing of Information Rules, 2017 deposit the goods
in a bonded
C: say IGST is 12% = IGST of R36 and duty). (In addition
R13.2 (12% of R110) filing of return for the to duty of R36 paid
The Central Government vide Notification No. warehouse to D: Duty Deferred (B+C) same should be done earlier as indicated
defer duty.
114/2017-Customs dated 14th December, 2017 has = 23.20 by 20th August 2017. in Box-C).

notified Customs (Furnishing of Information) Rules, ILLUSTRATION

2017 which shall come into force from 1st day of
January, 2018.
As per the Customs (Furnishing of Information)
Rules, 2017, the information required to be furnished
under sub-Section (1) of Section 108A of the Customs
Act, 1962 (Statement of accounts or any other
information under any of the specified Acts which
is considered relevant for the purposes of customs
Act) shall be furnished electronically by a Banking
company in respect of details of foreign exchange
transactions made or received by any person
through such banking company to Directorate of
Revenue Intelligence. All such information shall be
verified and signed by the authorised person (person
authorised by banking company).
[Notification No. 114/2017-Customs dated 14th
December, 2017]
Comments: This is a very interesting circular to the
extent it interprets the levy of GST under Section 9
of CGST Act when all imports are leviable to IGST
under Section 3(7) of Customs Tariff Act. In fact,
proviso to Section 5(1) of IGST Act declares that
‘goods imported into India’ will attract tax ‘at the
point’ when customs duties are levied. Goods lying
in-bond do not ‘yet’ attract customs duties because
the ‘date for the rate of duty’ is determined by Section
15 of Customs Act as the date of ex-bond bill of entry
for clearing goods from warehouse under Section 68
of Customs Act. The eventual result–IGST payable
on ex-bond value at the time of clearance from
warehouse–is not different although the approach
seems to be different.
[Circular No. 46/2017-Customs dated 24th
November, 2017]

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4. Drawing of samples for the purpose of grant of guarantee/Cash security/surety shall be taken as per
drawback the following Norms:
The Central Board of Excise & Customs vide Category of Importer Quantum of Bank
Circular No. 47/2017-Customs dated 27th November, Guarantee/ Cash Security
2017 in order to facilitate trade and enhance the and requirement of Surety
a) All importer(s) who are Bank Guarantee/ Cash
ease of doing business has rescinded the Circular either a department of Security-Nil
No. 34/95-Custom dated 6th April,1995 and Central Government or a Surety –Not required
Circular No. 57/97-Custom dated 31st October,1997 Union Territory or a Public
Sector Undertaking or an
and 25/2005-Custom (Circulars prescribing autonomous institute under
monetary limits with respect to drawing of samples the said Governments
for the purpose of grant of drawback and giving b) All importers who are
exemptions from sampling requirements in certain Authorised Economic
Operators.
situations).
c) All importers who are Importers shall give surety for
However, the export shipments shall continue to manufacturers or service the amount of duty foregone.
be subjected to appropriate treatment in terms of providers registered under However, where the importer
GST and have been filing is not able to provide the
risk criteria provided in Risk Management System prescribed GST returns surety, a Bank Guarantee/Cash
(RMS). without fail and whose annual Security equivalent to not
Further, wherever export consignments are turnover in the preceding year more than 5% of duty foregone
is above R1 crore shall be furnished.
selected for assessment or examination, the d) Importers, not covered under Bank Guarantee/Cash
officer of Customs not below the rank of Assistant (a), (b) & (c) above Security- Not more than 25%
or Deputy Commissioner of Customs would of the duty foregone amount
determine the need to draw sample on merits
of each case and the cases are closed in a timely • In order to avail the exemption/relaxation
manner and not later than thirty days from from furnishing Bank Guarantee/Cash security
date of export. Customs may draw samples in case or surety, prosecution should not have been
of any specific intelligence or doubt of misuse, fraud, initiated or launched against the importer
etc. under any Act administered by the Central
[Circular No. 47/2017-Customs dated 27th Board of Excise & Customs or State Goods &
November, 2017] Services Act or Integrated Goods & Services
Tax Act or Union Territory Goods & Services
5. Amendment in Bank guarantee/Cash security/ Tax Act during the previous three financial
surety Norms under Customs (Import of Goods at years.
Concessional Rate of Duty) Rules, 2017 • Where an importer so requests, the bank
As per sub-rule(2) of rule 5 of Customs (Import guarantee/cash security may be taken
of Goods at Concessional Rate of Duty) Rules, consignment-wise to obviate the financial
2017, an importer in order to avail exemption burden. Further, all bank guarantee(s) should
provided vide notification issued under sub- have self-renewal course.
Section (1) of Section 25 of Customs Act is required [Circular No. 48/2017 dated 8th December, 2017]
to submit such surety and security as deemed
appropriate by Deputy Commissioner of Customs 6. Refund/Claim of countervailing duty as Duty
or Assistant Commissioner of Customs having Drawback
jurisdiction over the premises where the imported The Central Board of Excise & Customs vide
goods shall be put to use for manufacture of goods Circular No. 49/2017 dated 12th December, 2017
or for rendering output services. clarified that countervailing Duties which are
leviable under Section 9 of the Customs Tariff Act
However, the Central Board of are rebatable as Drawback in terms of Section 75
Excise & Customs with a view to further simplify of the Customs Act. Since Countervailing Duties
the business procedures and to reduce the burden are not taken into consideration while fixing All
of compliance cost has clarified vide Circular No. Industry Rates of Duty Drawback, the Drawback of
48/2017 dated 8th December, 2017 that the Bank such Countervailing Duties can be claimed under an

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 Legal Update
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application for Brand Rate under Rule 6 or Rule 7

of the Customs, Central Excise Duties and Service
Tax Drawback Rules, 1995 and/or the Customs and
Central Excise Duties Drawback Rules, 2017, as
the case may be. This would necessarily mean
that drawback shall be admissible only where the
inputs that suffered Countervailing Duties were
actually used in the goods exported as
confirmed by the verification conducted for fixation
of Brand Rate.
However, where imported goods subject to
Countervailing Duties are exported out of the
country as such, then the Drawback payable under
Section 74 of the Customs Act, 1962 would also
include the incidence of Countervailing Duties as
part of total duties paid, subject to fulfilment of
other conditions
[Circular No. 49/2017 dated 12th December,
2017]

7. Eligibility of Dumpers imported for Coal Mines for

benefits under Project Import Regulations Detailed procedure for manual disbursal is
The Central Board of Excise & Customs vide available at https://goo.gl/RYNkQr
Instruction No. 17/201-Customs dated 20th [Circular No. 1060/9/2017-CX dated 27th
November, 2017 clarified that the dumpers November, 2017]
designed for mining activities and to be used
in coal mines, whether for captive use or
otherwise, are eligible for project import benefits FEMA (Matter on FEMA has been
contributed by CA. Manoj Shah,
when duly certified by the concerned sponsoring Mumbai and CA. Hinesh Doshi,
Authority. Mumbai)
[Instruction No. 17/2017 dated 20th November,
2017]
(A.) A.P. (DIR Series) Circular No. 14
EXCISE dated December 12, 2017
1. Procedure for manual disbursal of budgetry support Investment by Foreign Portfolio Investors (FPI) in
under Goods and Service tax regime Government Securities
The Central Board of Excise & Customs vide The limits for investment by FPIs for the quarter
Circular No. 1060/9/2017-CX dated 27th November, January – March 2018 is increased by INR 64 billion
2017 has prescribed the Procedure for manual in Central Government Securities (Central G-Secs)
disbursal of budgetary support under Goods and INR 58 billion in State Development Loans
and Service Tax Regime to the units located in (SDLs). The revised limits are allocated as per the
States of Jammu & Kashmir, Uttarakhand, modified framework prescribed in the RBI/2017-
Himachal Pradesh and North East including Sikkim- 18/12 A.P.(Dir Series) Circular No.1 dated July 3,
reg. 2017, and given as under.
Further, the Central Board of Excise & Customs Limits for FPI Investment in Government Securities RBillion
vide Circular No. 1061/10/2017-CX dated 30th Central Government State Development Aggregate
November, 2017 amended the Circular No. Securities Loans
1060/9/2017-CX dated 27th November, 2017 by Existing 1,897 603 2,500 300 93 393 2,893
Limits
virtue of which provides the manner of allocation Revised 1,913 651 2,564 315 136 451 3,015
of the budget by DIPP and direct transfer of the Limits
sanctioned amount into bank account of the The revised limits will be effective from January 01,
beneficiaries through PFMS. 2018. 

www.icai.org THE CHARTERED ACCOUNTANT JANUARY 2018 131

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