Quvisor’s weekly refresher on Legal updates in India : June 29, 2018

GST:

GST provisions on TDS/TCS, reverse charge mechanism deferred by 3 months till September
A senior revenue official said the GST Implementation Committee (GIC), headed by the Revenue Secretary, has decided to keep in abeyance the TDS/TCS provision and GST by way of RCM by another three months.

HC directs authority to accept TRAN-1 manually if it couldn’t filed electronically due to technical glitches
CGST/Uttar Pradesh GST: Where assessee’s application in Form GST TRAN-1 was not entertained on last date, i.e., 27-12-2017, as electronic system of department did not respond, Competent Authority was directed to reopen portal or to entertain application of assessee manually and pass orders on it

High Sea Sale would fall under domain of Customs and not under GST: AAR
GST : High Sea Sale falls in domain of Customs and not under Goods and Services Tax; thus, application filed for advance ruling for taxability on High Sea Sales under section 97(2) of the Central Goods and Services Tax Act was to be rejected

Government prescribes procedure for change of email id and mobile number of authorised signatory
With a view to address this difficulty of the taxpayer, a functionality to update email and mobile number of the authorized signatory is available in the GST System. The email and mobile number can be updated by the concerned Jurisdictional tax authority of the taxpayer

 

Income tax:

Franchise commission earned by ‘Dominos’ from Indian co. not taxable as business income in absence of its PE
IT/ILT: Where assessee, US company, entered into Master Franchise Agreement (MFA) with Indian company (Jubilant) for franchise of Dominos Pizza Store and provided certain store/consultancy services to Jubilant and, assessee was entitled to charge 3 per cent of sales of store of Jubilant, since profit and loss from business belonged to Jubilant and no activities were carried out by jubilant on behalf of assessee, Jubilant did not constitute a Permanent Establishment of assessee in India

Loss from derivative for a trading firm is a normal business loss and not speculation loss
IT : Where decisions of non-jurisdictional High Courts are in conflict with each other, only objective criteria to be followed is to take a view favourable to assessee. Thus, Calcutta High Court in case of Asian Financial Services Ltd v. CIT, [2016] 709 (Calcutta) having held that loss incurred on account of derivatives would be deemed business loss under proviso to section 43(5) and not speculation loss and, accordingly Explanation to section 73 could not be applied and as such, loss would be set off against income from business, however, Delhi High Court having taken a different view on this matter and decided same, in principle, against assessee, view taken by Calcutta High Court being favourable to assessee was to be followed

Reassessment on basis of disallowance in succeeding years was unjustified if there was no disclosure failure
IT/ILT: Where reopening after four years period was resorted to on basis of disallowance of claim of royalty made in succeeding year, but reasons did not show any failure on part of assessee to disclose fully and truly all material facts, reopening was not valid

Proof of address isn’t sufficient; valid TRC is required to claim India-USA treaty benefit: ITAT
IT/ILT: US entity has to furnishing evidences, including tax residency certificate, under section 90(4) in support of its entitlement to benefits of Indo US tax treaty benefits

Form W9 is given for providing correct TIN to person who is required to file an information return with IRS; it is wholly irrelevant in respect of tax withholdings outside United States as it is merely a declaration by a US based entity which cannot be treated as a certification by any authority.

 

Corporate Laws:

Relief to NDTV; Bombay HC directs RBI to consider compounding plea filed by NDTV on alleged FEMA violations
FEMA : Reserve Bank of India directed to consider compounding applications filed by NDTV in a case of alleged violation of Foreign Exchange Management Act (FEMA). The objections raised to compounding proceedings by Enforcement Directorate (ED), which had earlier flagged alleged FEMA violations and issued show-cause notices to NDTV in 2015 were set aside

Now, EPF members can withdraw 75 % of their total PF after one month from cessation of service
The Central Board has approved the proposal for insertion of paragraph 68HH in EPF scheme, 1952 provisioning advance from the fund to member who ceases to be in employment for a continuous period not less than 1 month. Under this proposal a member can avail 75% of the total fund standing to the member’s credit with interest thereon

Revision of price of flat by developer at later stage could not amount to act of oppression: CCI
Competition Act: Where informant, an allottee of a flat in residential housing project developed by OP, filed a complaint that OP had arbitrarily increased price of flat at a subsequent stage, in view of fact that informant had not submitted any cogent material regarding position of dominance of OP in relevant market and, moreover, there was no material on record indicating that price demanded by OP vide its initial demand letter was final price of said flat and same was not subject to further revision, no case of contravention of provisions of section 4 was made out against OP

Person has right to be represented by advocate when he is summoned by DG for investigation
Competition Act: When a person is summoned under section 36 by DG for investigation, he has right to be represented by an advocate because authority investigating is empowered to take evidence

 

Insolvency & Bankruptcy Code:

Application to initiate insolvency process rejected due to existence of dispute between parties
IBC: Where in response to demand notice, corporate debtor raised dispute that nothing was due as they had already made excess payment in view of inflated invoices sent by operational creditor in respect of freight forwarding services provided by it, operational creditor’s application to initiate Insolvency process against corporate debtor was rightly rejected by Adjudicating Authority

Insolvency plea admitted as there was evidence to prove that default had occurred: NCLT
IBC: Where there was overwhelming evidence to prove that default had occurred and application under section 7 preferred by financial creditor through its General Manager against corporate debtor was complete, same was to be admitted

Tenant could not be removed by resolution professional even if he was not paying rent: NCLAT
I & B: Insolvency resolution professional (IRP) cannot remove a tenant if he is not paying rent, however, it is open to IRP to move before appropriate forum for possession of assets of corporate debtor

Insolvency plea filed by SBI against ‘Videocon Industries’ admitted on existence of debt & default
I&B Code : Where debt as defined under section 3(11) taken by corporate debtor i.e. Videocon Industries had been classified as Non-Performing Asset by Consortium of Banks and there was a default of non-payment, basic requirement of admission of an application filed under section 7 by financial creditor-banks against corporate debtor was fulfilled for initiation of Corporate Insolvency Resolution Process (CIRP) and, therefore, IRP was appointed and moratorium was declared

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