Quvisor’s weekly refresher on Legal updates in India : Oct 5, 2018

GST:

Internal Auditor of an entity can’t undertake GST Audit of same entity: ICAI
The ICAI has clarified that an Internal Auditor of an entity can’t undertake GST Audit of the same entity.

Room renting service not covered under definition of ‘mandap keeper service’
GST/Service Tax : Where assessee had let out hotel rooms which were integrally used in connection with functions organized by organizers in adjacent gardens and payment for entire premises was made by organizers under a composite contract, service of renting of rooms not covered under definition of ‘mandap keeper service’

No GST on fees paid for grant of license for sale of liquor for human consumption: HC
CGST : No GST/service tax leviable on fee paid for grant of license for sale of liquor for human consumption

Increase in base price to compensate for denial of ITC post GST rate reduction doesn’t amount to profiteering
CGST: Where applicant had filed application before Anti-Profiteering Authority alleging that respondent had not passed on benefit of reduction in rate of GST in restaurant service, when he had purchased “6 Hara Bhara Kabab Sub” as respondent had increased base price of product when GST was reduced from 18% to 5%, it was held that respondent had increased base price of his products to make good loss which had occurred due to denial of ITC post GST rate reduction and, therefore, allegation of not passing on benefit of rate reduction was not established against respondent and no case of contravention of section 171 was made out against respondent

 

Income tax:

Sec. 50C not applicable if assessee invested entire sale consideration in new house property u/s. 54F
IT : Where after sale of agricultural land, entire net consideration (whatever had physically received and accrued to assessee) had been invested, assessee would be eligible for deduction in respect of whole of capital gains

Delhi HC upheld reassessment as Samsung failed to disclose royalty income
IT : Where pursuant to issuance of re-assessment notice, assessee itself accepted that original return filed by it was incorrect for reason that assessee had failed to disclose income earned by way of royalty and fee for technical service and, accordingly, declared additional income, impugned reassessment was justified

No penalty on late filing of TDS return if tax was deducted and deposited in time: Delhi ITAT
IT : Where on filing belated TDS returns/statements, revenue had not suffered any loss because TDS was already deposited on time, penalty need not be levied for submitting return belatedly due to reasonable cause

AO was justified in restricting provision for warranty as ‘Apple’ wasn’t evaluating it at year end
IT : Where assessee-company created provision for warranty but there was no reversal after expiry of relevant period based on actual utilization, Revenue Authorities were justified in restricting amount of allowable provision at 2.14 per cent of sale as adopted in earlier years

 

Company Laws:

NCLT allows Govt. to takeover IL&FS and suspends entire board of directors
CL : Where Union of India filed petition alleging that Managerial persons of respondent company i.e. IL&FS were responsible for negligence and incompetence and to unearth irregularity and for investigation, provisions of section 212(1)(c ) were invoked for investigation into affairs of company, it was held that it was judicious to invoke jurisdiction prescribed under section 241(2) and Tribunal was of opinion that as per section 242(1) affairs of respondent IL&FS were being conducted in a manner prejudicial to public interest and, therefore, interim prayer of suspending Board of Directors and reconstitution of new Board of Directors was to be allowed

Oppression plea was to be rejected when respondent failed to prove allegations related to increase of share capital
CL: Where appellants had substantial shareholding in respondent company and they alleged that signatures of appellant1 obtained on blank papers in respect of some business dealings were misused, however, they failed to prove documents adverse to their claims to be false or forged, even calling for forensic evidence to testify genuineness of signature of appellant1 was not restored to, Tribunal was justified in dismissing oppression and mismanagement petition of appellants

NCLAT reduced penalty amount for committing default in filing return and financial statement
CA: NCLAT reduced penalty amount for committing default in filing return and financial statement

 

Insolvency & Bankruptcy Code:

Promise to pay admitted dues in future could not stop initiation of insolvency process: NCLT
I&B Code: Mere contention that corporate debtor would clear dues in future would not help corporate debtor as admittedly default continued and once there was a default in repayment of debt applicant had a right to press for initiation of corporate insolvency resolution process under Code

Insolvency plea could not be accepted due to non-submission of post-dated cheques: NCLT
IBC: Non-submission of post dated cheques does not amount to operational debt

Creditors are allowed to appoint their representative to attend committee meetings under IBC
IBC: Creditors are allowed to appoint their representative to attend committee meetings under IBC

NCLT admitted insolvency plea when debtor expressed its inability to pay debt
IBC: NCLT admitted insolvency plea when debtor expressed its inability to pay debt

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