Greetings for the New Year

This Diwali and New Year festivities are different than the earlier years because of the corona pandemic still prevailing. The visits to temples were forbidden so also visit to friends and relatives. Yet we could enjoy the festival of Diwali with a greater sense of satisfaction and joy as valuable moments were shared with family and near and dear ones. I wish all the members a very happy, healthy and prosperous New Year, peaceful year yet full of fun.

Foundation Day Ceremony on 11th November 2020

The day was the completion of 44 years of establishment of AIFTP. At the National Conference organized under the team led by Late B.C. Joshi on 11th November 1976, the Federation was formed under the guidance of Hon’ble Justice J.C. Shah, Former Chief Justice of India and the distinguished Jurist, Padmabibhusan Dr. Nani A. Palkhivala, Senior Advocate and Mr. Ram Rao Adik, Sr. Advocate, Advocate General of Maharashtra. Mr. N.C. Mehta, renowned Chartered Accountant was selected to be the first National President and Mr. P C Joshi became the first Secretary General. I am happy to say although I was a college going student at that time, I do remember the famous advocates and personalities like Mr. Ram Jethmalani, Mr. Sushil Kumar Shinde and the likes being present in the function. The seeds of the Federation sowed in 1976 has culminated into a big banyan tree now. We must put on record our gratitude for the tremendous hard work and dedication by all the past office bearers who ensured that while growing and spreading the wings of Federation to each and every part of India, the bond of fraternity remained strong and the Federation continued to achieve its noble goal of educating the members and the public at large.

On account of Covid-19 pandemic and ongoing Diwali festival it was not possible to allow holding of multiple meetings on the Foundation Day. However, I am happy to inform that the East Zone under Chairman Sandeep Gadodia, Vice Chairman Dr. Ranjit Pandhi and Secretary Mr. Vivek Agarwal organized a digital foundation day celebration. In the West zone Mr. Santosh Gupta and Mr. Nitin Gautam active members from Nagpur celebrated the foundation day by unfurling the flag of the Federation at Nagpur.

I am sure, the flag of the AIFTP will be taken to greater heights by the future office bearers with the help and cooperation of the members of the Federation. The strength of the membership as on today is more than 8500. The membership fee is increased on recommendation of the National Executive Committee to ensure that prompt and effective service is rendered. Needless to add, the cost of administration has escalated manyfold. Nonetheless, the reputation and the activities of the Federation would attract many more professionals to become our life members. Let us adopt the principle that each member should bring one new member. The Federation would be able to achieve the mark of 15000 members by the end of next year.

Blessings by the Hon’ble Finance Minister, Smt. Nirmala Seetharaman

First time in the history of the Federation the Union Finance Minister consented to inaugurate the virtual National Tax Conference on 6th November 2020. In a nationwide address, the hon’ble Finance Minister Smt. Nirmala Seetharaman openly applauded and accepted the pivotal role played by the members of the AIFTP members; be the chartered accountant, advocates or tax practitioners, in being the valuable bridge between the Tax administrator and the taxpayers. The Hon’ble Finance Minister’s speech would be available on the website of AIFTP. I request all of you to please listen to it, if you were not present in the conference.

While we fully endorse the views expressed by the Hon’ble Finance Minister, it should also remind us about the onerous duty and responsibility cast upon us as tax Practitioners

GST – Alleged Fraud

Recently there has been much publicity about the fraud detected by the GST officials. It is stated that there was a fraud of around ` 5000 crore on account of new and easy procedure for registration under the GST Act. While I fully support the technicalities and formalities to be completed by the tax officials while granting the fresh registration I cannot help but comment on “alleged fraud”. Section 132(1)(b) and (c) of the CGST Act refers to the offences committed by issuing invoice or bill without supply of goods or services or both, thereby leading to wrongful availment of input tax credit or refund of tax. As I understand all the cases of alleged fraud are not of the same nature.

Traditionally a trader who purchases the goods on receiving the requisition from the buyer, never has the storage facility. The business has been run by traders for over decades of buying and selling of goods without taking actual delivery and directing the supplier to deliver the goods directly to their customers. In addition to not having the storage facility the business of the trader runs on very thin margin and hence they cannot afford the cost of loading, unloading and transportation. This has been the practice of almost all types of trading namely chemical, cotton metal and the likes. In such cases, the goods exist. Merely because the supplier of goods had not delivered the goods himself cannot be the reason to doubt such transaction and allege them as fraud to the Revenue. Take for example, the oldest case of trading in gunny bag by transfer of delivery order [Bayyana Bhimayya (12 STC 147); State of AP v. Kollasree Ramamurthy (13 STC 522); These 1961 judgments are confirmed in the year 2005 by the Hon’ble Bombay High Court in case of CST v. BM Shah & Co (142 STC 291) Bombay]. The judgment of Kolla sree is worth reading. The Constitution Bench of the Supreme Court has in case of Bayyana approved the tradition and stated that the goods can be transferred to number of persons by endorsing a single delivery order till the delivery of goods taken by the last person, all the traders in between have effected genuine transaction of sale and purchase. Therefore, as long as each and every person in the chain of event has declared the transaction in their books of account and paid the tax on value added, it cannot be labelled as fraud on the Revenue. The fact remains that the ultimate delivery of the goods is taken by the last person in the chain of event. This principle is accepted under the GST Act. Kindly see Section-10(1)(b) of the IGST Act 2017. The transaction which we normally call as ‘bill to’ ‘ship to’ are very common in the trading community. Therefore it is only when mere paper trading is done, without existence of the goods, that there can be a fraud on the revenue. Here also, I must immediately add that in the chain of transactions although everybody has disclosed the turnover and paid their share of tax, the GST authority are collecting full tax on the total turnover from each and every person in the chain which may result in unjust enrichment by the Government. In past under the VAT regime we had seen many such instances being adjudged by High Court and Supreme Court.

My purpose of pointing out the above types of transactions is not to support the fraudulent assessees but to stop the harassment to the genuine traders who have followed the traditional method of working. The Hon’ble Maharashtra Sales Tax Tribunal has in the year 2009 taken note of such genuine transactions in the case of Zenith Computers. As tax consultants therefore it becomes our moral duty to go deep into such transactions.

Physical hearing to commence

Recently I came across news that ITAT would commence the physical hearing from 23rd November 2020. While it can be an ideal move to restore the normalcy, we must all remember that the lockdown is lifted but Covid-19 has not gone. Therefore, when a consultant seeks adjournment on account of him being in the containment zone or being infected by corona virus, the Hon’ble Bench should take a lenient view to give adjournment. It is also equally true that the hon’ble High Court would continue to hear the matters virtually thereby reducing remote chance of spreading the virus. Whether in India we would have further critical wave of corona or not would depend on the responsible behavior of each and every citizen. As long as everybody continues to wear the mask, the chances of spreading the virus further would be minimized. I call upon each and every member to follow the Government guidelines and the protocol and be a responsible citizen.

23rd National Convention by South Zone

The 23rd National Convention for the first time would be held virtually by the South Zone on 5th & 6th December 2020. I request all of you to register in large number and make it successful.

Nikita R. Badheka
National President, AIFTP

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