Quvisor’s refresher on Legal updates in India: July 24, 2021

GST:

Applicability of IGST levy on re-importation of repaired Aircrafts or its parts: SC granted stay against Dept. Appeal 
EXCISE/ST/VAT : SC admits appeal to decide whether duty of customs referred to in condition of Exemption Notification No. 45/2017-Customs, dated 30-6-2017 would not include integrated tax

Transitional Credit under GST regime- Vested Right or Concession?
Section 140 of the CGST Act contains ‘Transitional Provisions/Arrangement’ so as to ensure smooth transition of CENVAT credit from the erstwhile regime to the present GST regime. Further, to enable seamless flow of credit, these provisions contained certain provisions for claiming credit of tax paid on stock lying as on appointed date i.e. 01 July, 2017.

IGST payable on reimportation of goods after repair: Notification
In order to nullify the impact of the judgement of Hon’ble Delhi CESTAT in the case of M/s Interglobe Aviation Limited vs. Commissioner of Customs [2020] 121 taxmann.com 70 (New Delhi – CESTAT), the Government has made amendment in Notification No. 45/2017 & 46/2017 both dated June 30, 2017 to provide that IGST & Compensation Cess shall be payable on the goods re-imported after repair. Similar amendment is made for import of Cut & polished precious and semi-precious stones.

Service Tax not leviable on secondment of employees: Comm. Appeal Jaipur
EXCISE/ST/VAT : Commissioner Appeal Jaipur held that no Service Tax would be levied on reimbursement made by the Indian Company to its parent company for employee secondment. It was held that there exists an employer and employee relationship between the seconded employee and Indian Company and thus the same is out of the meaning of services as defined under section 65B(44) of the Finance Act, 1994 and thus not exigible to Service Tax

Income tax:

No disallowance u/s 40A(3) if ultimate payments made to labours were below threshold limit: ITAT
INCOME TAX : Where AO made disallowance under section 40A(3) in respect of labour charges of Rs. 18 lakhs paid in cash by assessee, in view of fact that payment was not made on a single day to a single person and it was only a transfer entry for labour charges paid to various workmen at site and all payments were below Rs. 20,000 to each individual, impugned disallowance under section 40A(3) was to be deleted

Forms 15CA/15CB can be filed manually till 15-08-2021: CBDT
In view of difficulties faced by taxpayers in electronic filing of Forms 15CA/15CB on www.incometax.gov.in. The CBDT has decided that taxpayers can submit the aforesaid Forms in manual format to the authorized dealers till June 30, 2021. Said date was extended to July 15, 2021. Now, the board has given further relaxation and allowed manual filing of Forms till August 15, 2021.

Analysis of the provisions related to ‘Legal representatives’ under the Income-tax Act
When the author was contemplating to write an article on the provisions of section 159 of the Income-tax Act (the Act) he came across a decision rendered by the Karnataka High Court in the case of CIT vs. Shri. I. Mahabaleshwarappa by legal heir Manu Ittina in ITA No.561 of 2013- 16th June,2021 wherein the High Court held that when the assessee expired after the hearing was over and the assessment order was passed by the Assessing Officer subsequent to the death of the assessee,

TDS on Payment of Electricity Charges– Sec 194Q
Govt. of India brought new section i.r.o. TDS on purchase of goods w.e.f 01-July-2021 through Finance Act 2021.

Corporate Laws:

SEBI issues norms on Mandatory Nomination for Eligible Trading and Demat Accounts 
The SEBI has issued norms on Mandatory Nomination for Eligible Trading and Demat Accounts wherein it has specified that the Investors opening new trading and or demat account(s) on or after October 01, 2021, shall have the choice of providing nomination or opting out the nomination. In addition, The online nomination and Declaration form to be signed using e-Sign facility

Top-100 listed entities can have extra time for holding Annual General Meeting: SEBI 
After consideration of the request received from the Institue of Chartered Secretaries of India (ICSI), the SEBI has decided to extend the timeline for conduct of AGM by top-100 listed entities by market capitalization. Accordingly, such entities shall hold their AGM within a period of six months from the date of closing of the financial year for 2020-21.

All complaints to be disclosed on website of InvIT/ REITs: SEBI 
In order to further enhance investor protection and to increase transparency in grievance redressal, the SEBI has suggested that all complaints including SCORES complaints received by the InvIT/ REITs shall be disclosed in the specified format on the website of the InvIT/ REITs and also filed with the recognized stock exchange(s), where its units are listed within 21 days from the end of financial year or end of quarter, as the case may be.”

SEBI presents ‘Expected Loss’ based rating scale for rating infra projects/instruments by credit rating agencies 
In addition to the standardized rating scales and subsequent to discussions with various stakeholders, the SEBI has prescribed Expected Loss (EL) based Rating Scale to be used by CRAs for ratings of projects/ instruments associated with infrastructure sector to begin with. SEBI has prescribed Rating symbols E1 to E7 where instruments rated ‘E1’ are considered to have the lowest expected loss, over the life of the instrument and E7 rated to have highest expected loss.

Insolvency & Bankruptcy Code:

NCLT orders dissolution of corporate debtor as it been completely liquidated and liquidator had filed Form H 
IBC : Where from perusal of final report and compliance certificate by liquidator, it was seen that corporate debtor had been completely liquidated, order for dissolution as required under section 54 was to be passed

Validity of Ipso Facto Clauses in Indian Insolvency Regime: The Subsisting Ambiguity 
An Ipso Facto clause is a clause that invites consequences such as termination of an agreement, cessation of supply of goods and services etc. on the ground of bankruptcy, insolvency or any other specified event.

New application for GST registration by Cos. undergoing CIRP couldn’t be rejected on ground of suo motu cancellation 
IBC : Suo motu cancellation of GST registration on an earlier occasion by GST department could not be a ground to reject a fresh registration application by company/corporate debtor undergoing CIRP under IBC

NCLT admits petition filed u/s 7 on existence of debt and its default in repayment by corporate debtor 
IBC : Where corporate debtor had acknowledged disbursement of credit facilities by Assignor bank and its liability to repay same but it failed to pay, application under section 7 would be filed by assignee owing to inability of corporate debtor to pay its dues

 

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