Quvisor’s refresher on Legal updates in India: September 18, 2021

GST:

Supply of readily available cakes & not accepting immediate orders by bakery can’t be treated as restaurant services : AAAR 
GST : Where applicant engaged in production and sale of bakery products is only preparing birthday cakes, as per order for take out service and it does not prepare birthday cakes immediately from customers order, applicant is not serving food to customer on table and in most cases is selling items from counter and, therefore, applicant should not be considered as providing restaurant service in terms of Sl. No. 7 of Notification No. 20/2019 – Central Tax (Rate), dated 30-9-2019,

Refund under inverted duty structure allowed even if input and output supplies are same: Gauhati HC
GST : Refund claim of assessee was rejected by Assistant Commissioner on ground that, as input and output supplies made by assessee were of same material and goods, therefore, although rate of tax on input supply may be higher than rate of tax in output supply, but by referring to provisions of paragraph 3.2 of Clarificatory Circular No.135/05/2020-GST dated 31-3-2020 it was held that assessee was not entitled to refund.

ITC of inputs used in manufacturing cakes & pastries which were expired has to be reversed: AAR
GST : Expired cakes & pastries that were kept in display for use in course or furtherance of business of bakery being destroyed are covered under non obstante clause (h) of section 17(5) of CGST Act and thereby ITC on inputs used in manufacturing expired cakes & pastries is not admissible and required to be reversed

Income tax:

Roads are eligible for dep. as building includes roads; HC upholds tribunal ruling
INCOME TAX : Assessee engaged in business of improvement and development of State Highways was entitled to claim depreciation allowance on roads.

Marked to Market loss incurred on account of foreign exchange fluctuations is allowable as deduction: HC
INCOME TAX : Where assessee-company had borrowed working capital loan with foreign swap option for business purpose and had entered into a foreign currency contract to protect itself from foreign exchange fluctuation, loss incurred by assessee on account of foreign exchange fluctuations was to be allowed as deduction under section 37(1),

No disallowance of deduction just because gratuity scheme wasn’t approved by Competent Authority: ITAT
INCOME TAX : Where assessee had filed application to Competent Authority for approving gratuity scheme, non-approval of said scheme even after more than 14 years would not disentitle assessee to claim deduction of contribution made towards gratuity fund of employees

Corporate Laws:

HC sets aside disqualification of director for lack of notice to director before disqualification 
COMPANY LAW : Where no notice was given to petitioner before disqualifying him as Director of company, impugned order passed by MCA disqualifying petitioner as Director of company under section 164(2)(a) was to be set aside.

SEBI rightly rejected preferential allotment as issuer failed to comply with minimum public shareholding requirement 
COMPANY LAW : Preferential allotment can be issued by issuer company, however, before issuance of preferential allotment certain conditions are required to be complied which is mandatory as per Regulation 160 of ICDR Regulations. Regulation 160(d) provides that issuer is required to be in compliance with LODR Regulations.

NCLT doesn’t have jurisdiction to deal with issues relating to contractual provisions between parties: NCLAT 
COMPANY LAW : NCLT under companies Act is concerned only with affairs of company and does not have jurisdiction to deal with issues relating to contractual provisions between parties

Insolvency & Bankruptcy Code:

CIRP plea filed after 3 years of date of default was to be dismissed as barred by limitation: NCLAT 
IBC : Where CIRP application under section 7 was filed beyond three years from date of classification of account of corporate debtor as NPA or even from date of issuance of recovery certificate, said application was barred by limitation and was to be dismissed

Moratorium ordered u/s 14 of IBC is not applicable to proceedings against promoters of Corporate Debtor: SC 
IBC : Where developer abandoned project and NCDRC allowed claim of petitioners/home buyers directing developer to refund amount paid by petitioners together with interest, and meanwhile proceedings were initiated against respondent/developer under section 9 by an operational creditor and same was pending before NCLT for approval of resolution plan, NCLT was to be directed to ensure that application for approval was disposed of expeditiously,

NCLT rightly dismissed a plea to set aside withdrawal of CIRP as CoC had already approved of withdrawal with a majority 
IBC : Where Corporate Debtor has already settled issue with erstwhile financial creditors, and NCLT considering that resolution of CoC approving withdrawal of CIRP proceedings was supported by requisite supporting majority allowed application for withdrawal of CIRP, application filed by operational creditor seeking to set aside resolution passed in CoC meeting thereby approving withdrawal of CIRP initiated against Corporate debtor was rightly dismissed by NCLT having been rendered infructuous

 

 

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