Budget 2024 Updates

FM hikes exemption limit for long-term capital gain to Rs 1.25 lakh + hikes tax rate to 12.5% on specified financial assetsCGST - Finance Bill proposes to amend Sec 9 to take ENA out of purview of GST + inserts Sec 11A to regularise non-levy of tax on general practice in tradeCGST - Sub-sections to be inserted in Act to relax time-limit to avail ITC u/s 16(4) + New Sec 74A proposed to provide for common time limit for demand notices in fraud casesCGST - Proviso to be inserted in Sec 30(2) to provide for enabling conditions for revocation of registration + Amendment in Sec 39 to mandate return filing by TDS deductors even if there is no deduction in a particular monthIGST - Amendment proposed to prohibit refund of unutilised ITC on zero-rated supplyCustoms - Finance Bill proposes to amend Sec 28DA for acceptance of different types of proof of origin under FTAsFM hikes standard deduction to Rs 75K for new ITR regime + revises tax rates for all income slabs + Rs 7000 Cr revenue foregoneBudget withdraws 2% equalisation levyFM reduces corporate tax rate for foreign companies to 35%FM proposes vivad se vishwas scheme + hikes monetary limits for filing appealsFM proposes 20% capital gains tax on short-term assets + listed financial assets held for more than one year to be classified as long-termGovt scraps TDS on Mutual Funds + decriminalises delay in depositing TDS + rationalisation of compounding of offences + revamps reassessment periodBudget proposes comprehensive review of I-T Act, 1961 + simplifies provisions for charities and TDSFM reduces customs duty on gold and silver to 6% + Nil BCD on nickel cathodeBudget proposes to reduce BCD on mobile phone and chargers to 15% + exempts 25 minerals from customs dutyFM exempts cancer medicines from Customs duty + amends BCD for various machinesFM proposes Rs 48 lakh expenditure outlay; 4.9% fiscal deficitFM announces Rs 1 lakh crore fund for developing space economyPromotion of Tourism - Vishnupad temple and Bodh Gaya temple corridors to be supportedFM announces over Rs 11 lakh crore capital expenditure in current fiscalGovt to invest in small Nuclear energy plants in partnership with private playersCentre to ask States to lower stamp duty for women purchasers of housesIBC - More Benches of NCLT to be set up to speed up recoveryFM spikes limit of Mudra loan to Rs 20 lakhsBudget offers financial aid to labour-intensive MSMEs in manufacturing sectorGovt announces 3 crore additional houses under PM SchemeGovt to secure Rs 15K loan for AP from multilateral agenciesGovt to frame new policy for all-round development of Bihar, Jharkhand and OdishaGovt to give one-month salary to all new recruits in formal sector through EPFOGovt to promote vegetable clusters closer to urban settlementsGovt to focus on productivity of agriculture with climate-resilient seedsFM allocates Rs 2 lakh outlay for PM's five schemes for job creation and farmersFM Nirmala Sitharaman presents 7th Union Budget in ParliamentBudget 2024: FM arrives at Parliament; Speech to begin at 11AMEconomic Survey 2023-24 - from GST PerspectiveUkrainian FM goes on tour to ChinaI-T- Additions framed u/s 69A are untenable where affidavits submitted by assessee's parents to explain source of cash deposits, were discarded by AO without consideration : ITATSurvey acknowledges productivity loss due to mental health disordersI-T- Short term capital gains returned by the assessee in terms of provisions of section 50 of the Act on assets held for a period of more than 36 months be treated as long term capital gains: ITATExpenditure on social services up from 6.7% to 7.8% of GDP: SurveyI-T-Additions framed u/s 68 are upheld where assessee is unable to prove genuineness of transaction involving purchase and sale of penny stock: ITATTrade deficit contracts to USD 78 bn from USD 126 bn in 2023I-T-Re-assessment is invalidated when there is no failure on part of assessee to make full and true disclosure of facts necessary for assessment: ITATCorporate profitability has peaked to 15-yr-old high between 2020-2023: SurveyI-T- When cash generated out of sales has been credited in the books of accounts, the provisions of Sec.69A could not be invoked: ITATBudget 2024: More relief for senior citizens & individual taxpayers on card; tweaking of capital gains tax likely; steady capital expenditure to stayI-T- If any amount invested is purely a strategic investment & for purpose of commercial expediency, then AO cannot hold such investments to be for non-business purpose: ITATGoogle backpedals on plan to scrap cookies from ChromeCus - For a HNWI individual, an expensive watch of 'Rolex' make would be his personal effect but same may not be the case if the person is of mere means - Pendant studded with diamonds not liable for confiscation: HCGovt amends Recruitment Rules for Debts Recovery TribunalGST - Even if no date, time or place of hearing is indicated in the notice issued, it was the duty of assessee to file his reply to SCN, which was admittedly received - Plea regarding violation of principles of natural justice cannot be countenanced: HCAbhinav Bindra conferred with Olympic OrderGST - Mismatch between value of e-way bills generated on portal and returns filed in Form GSTR-3B - Petitioner did not provide a comprehensive explanation - To remit sum of Rs.3.50 crores within six weeks - Matter remanded: HCHackers mercilessly hack Bangladesh PM’s website along with police portalsGST - Rule 30 of Rules, 2017 - Assessing officer ought to have issued summons and obtained clarification rather than estimating the outward supply value at 110% of purchase value - Order set aside and matter remanded subject to remit of 10% disputed tax demand: HCUS law-makers call for resignation of Secret Service chief in Trump assassination caseGST - Net ITC shown incorrectly - An inadvertent error was committed and such error was rectified, albeit irregularly, however, sum recovered from petitioner's bank account - Order set aside and matter remanded: HCKarnataka IT Industries piling pressure on govt to extend working hoursGST - Since notification is declared unconstitutional, Amount of IGST paid pursuant to Entry No. 10 of Notification No. 10 of 2017 is to be refunded along with statutory interest: HCStudy says earth’s water depleting fastFDI inflows slide to USD 26.5 bn in 2024 from USD 42 bn in 2023: Economic Survey
Thanneer Thanneer

JUNE 26, 2024

By Vijay Kumar

'THANNEER Thanneer' (water water) is a famous Tamil film of 1981 on exploitation in the name of water.

Beautiful Bengaluru was cringing under a water crisis a few weeks ago till New Delhi took over and Bengaluru was forgotten. A new kind of don has dawned on the horizon - the water mafia.

Most of our metro cities have water supply and sewerage Boards catering to quench the thirst of the city-dwellers. These Boards are fully owned and operated by the Governments but are of course not above the all-encompassing GST.

The Chennai Metropolitan Water Supply and Sewerage Board (CMWSSB) was constituted under an Act of the Tamil Nadu Legislature for the provision of water supply and sewerage in the Greater Chennai area.

Pursuant to an inspection, summons was issued to the Board in September 2021 by the GST Department. The Board replied thereto. The GST Department was not satisfied with the reply and a show cause notice was issued to the Board on 27.09.2023. Eventually, an order was passed on 22.12.2023.

Can you imagine how expensive water is? The Demand by the GST Department was CGST and SGST of Rs. 96,10,02,025/- each along with interest and penalty thereon.

The government-owned Water Board is before the High Court (2024-TIOL-1042-HC-MAD-GST) challenging the order of the GST Authorities on the grounds that:

1. Notification No. 12/2017 provides for an exemption as regards services provided by a governmental authority, including a municipality, under Article 243W of the Constitution of India.

2. Water is expressly exempted under Notification No. 2/2017 - Central Tax (Rate) dated 28.06.2017.

3. Even with regard to purified water, a clarification was issued on 09.08.2018 to the effect that providing drinking water for public purposes is exempt from GST.

4. In fact, by subsequent Notification No. 14/2017 - Central Tax (Rate), dated 28.06.2017, the Central Government, on the recommendation of the GST Council, has notified that services by way of activity in relation to functions entrusted to a panchayat under Article 243G of the Constitution are to be treated as neither supply of goods nor supply of services.

5. Therefore, the impugned order is unsustainable.

6. Without prejudice, they agreed to remit a sum of Rs. 3 Crore as a condition for remand.

The Counsel for the Revenue submitted that:

1. An alternative remedy is available to the petitioner and that this writ petition should not be entertained.

2. GST is leviable in relation to distribution services, including distribution of water.

3. The petitioner not only provides water supply and sewerage facilities through pipelines to the general public, but also supplies water including purified water, in tankers at commercial and dynamic rates to commercial establishments and large industrial units.

4. Therefore, the impugned order contains no infirmity in as much as the petitioner is engaged in a composite supply and the respondent correctly identified the principal supply from and out of such composite supply.

5. The distribution of water is subject to GST since it falls under "Heading 9969".

6. The petitioner was supplying purified water, and that such factual determination cannot be interfered with in course of these proceedings.

The High Court held:

1. It is evident that the adjudication turned on two factors. First, the adjudicatory authority concluded that the petitioner was purifying the water and that the same would not fall within the scope of exemption. The counsel for the petitioner placed on record a note with regard to the difference between potable water and purified water. The counsel points out that potable water is required to conform to norms laid down in BIS:10500-2012, whereas purified water is required to fulfil the norms laid down in BIS:14543:2016. Without taking these aspects into consideration, the impugned order proceeded on the basis that the petitioner was supplying purified water.

2. The adjudicating authority concluded that the activity of the petitioner is a composite supply and that supply through mobile units falls within the scope of "Heading 9969" (Serial No.13), which is taxable at 18%. On such basis, CGST and SGST of Rs. 96,10,02,025/- each was imposed along with interest and penalty thereon.

3. The order does not contain any details of the value of supply of water to households and other premises through pipelines; the value of supplies made through tankers on account of insufficiency of water in the relevant areas; and the value of supplies made through mobile units on account of the establishments concerned requiring higher quantities of water, which are supplied at commercial rates. Without such classification, the adjudicating authority could not have arrived at the conclusion that the principal supply is through mobile units at commercial rates. As a corollary to the above conclusion, the adjudicating authority further concluded that the supply does not fall within the scope of the exemption notification. Since such conclusion was arrived at without differentiating between the services provided by the petitioner, the matter requires re-consideration.

4. Although a remand is warranted to enable reconsideration of both the applicability of exemption notifications and the conclusion regarding principal supply, it is also necessary to balance the interest of CMWSSB and revenue interest. Upon considering all relevant factors, the petitioner should remit a sum of Rs. 3 Crore.

5. The impugned order is set aside and the matter is remanded for reconsideration subject to the condition that the petitioner remits a sum of Rs. 3 crores within six weeks from the date of receipt of a copy of this order.

It is not as if water was entering GST for the first time.

This very Chennai Metropolitan Water Supply and Sewerage Board had once taken its water problem to the GST AUTHORITY FOR ADVANCE RULING in 2020 - 2021-TIOL-106-AAR-GST seeking advance ruling on

Whether GST is applicable on supply of safe drinking water for public purpose by Chennai Water Desalination Plant Limited (CWDL) to Chennai Metro water Supply and Sewerage Board (CMWSSB).

They submitted that:

1. Water whether supplied at a price or not are exempted as per Notification 2/2017 irrespective of whether supplied to different categories like domestic, industrial, institutions and commercial.

2. Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 treats CMWSSB as a Government authority.

Governmental authority is defined as:

(i) Set up by an Act of Parliament or a State Legislature; or

(ii) established by any Government, with 90 percent or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243W of the Constitution or to a Panchayat under article 243G of the Constitution.

3. Notification No.32/2017 and AAR Tamil Nadu ruling order No. 22/AAR/2018 dated November 28, 2018 = 2019-TIOL-35-AAR-GST confirms CMWSSB as a government Authority.

The AAR observed:

(i) It is seen that the applicant seeks ruling on the applicability of GST on the water received from Chennai Water Desalination Limited through Pipeline. The admissibility of the application was examined during the hearing extended to them. The applicant stated that they had sought ruling regarding applicability of GST on receipt of the water, the activity in which they are recipient and not supplier of Water. Thus, the question is on the liability to pay tax on the supply made to them and not on the supply made by them.

(ii) An applicant can seek an Advance Ruling only in relation to supply of goods or services or both undertaken or proposed to be undertaken by them. Further, as per Section 103(1) of the GST Act, the ruling is binding only on the applicant and the concerned officer or the jurisdictional officer of the applicant. In the case at hand, the applicant is the recipient of the services and not supplier of such service. Accordingly, this question is not liable for admission and therefore rejected without going into the merits of the case.

In Vijayavahini Charitable Foundation, the Andhra Pradesh AAR in AAR No. L4 /APIGSTI2O2l dated:20.03.2021 dealt with a similar water problem.

Vijayavahini Charitable Foundation (VCF), undertakes, encourages, supports and aids charitable activities in relation to poor in the areas of medical relief, education, health, vocation, livelihood etc. VCF has proposed to undertake the activity of providing pure and safe Drinking Water at an affordable cost for the under privileged people in villages in the state of Andhra Pradesh where clean and potable drinking water is not available.

They proposed to draw water from the local water source (Open Well/Borewell/ground water) and treat the water through reverse osmosis (RO) process and provide this purified drinking water to the general public.

They wanted advance ruling on Whether supply of drinking water to general public in unpacked/unsealed manner through dispensers/mobile tankers by a charitable organisation at a concessional rate is covered under exemption of GST as per Sl. No 99 of Notification 02/2017 central tax (Rate) dated 28/06/2017?

The Advance Ruling Authority ruled:

The said supply is not covered under exemption and taxable @ 18% Vide Notification No. 1/2017-Central Tax (Rate), dated, 28th June 2017 as amended from time to time.

As per the Budget Estimate 2023-2024, the Chennai Metropolitan Water Supply and Sewerage Board has a surplus of Rs. 92.82 crores and the GST demand now is more than Rs. 200 crores. If the demand is really confirmed and they have to pay this amount, what will happen to water for Chennai citizens?

The recent GST Council meeting has clarified the serious issue of uniform rate of GST on 'milk cans' - steel, iron, aluminium, for they have a standard shape so that will determine what is a milk can and what is not. And 'milk cans' dominated the news in the last few days.

Can this water problem be solved? I don't mean the water crisis, but the problem of GST on water.

Until next week


TIOL Tube Latest

Dr. Shailendra Kumar, Chairman, TIOL Knowledge Foundation, addressing the gathering

Shri Ram Nath Kovind, Hon'ble 14th President of India, addressing the gathering at TIOL Special Awards event.