Quvisor’s weekly refresher on Legal updates in India : July 14, 2018


 Cold storage services in respect of agricultural produce exempt from GST: AAR
GST : Fennel (Saunf), Coriander (Dhaniya), Cumin Seeds (Jeera), Carom Seeds (Ajwain), Fenugreek Seeds (Kasoori Methi), Mustard Seeds (Sarson), Brown Mustard Seeds (Rai), Nigella Seeds (Kalonji), Poppy Seeds (Posara Dana) fall under definition of agricultural produce in terms of notification no. 11/2017 dated 28.06.20017; and so supply of cold storage service in relation to these is exempt from levy of GST

Cleaning of agricultural produce away from agricultural farm not entitled to GST exemption: AAR
CGST : Whether as per Entry No. 24(i)(i) of the Notification No. 11 of 2017, Central tax (Rate) dated 28-6-2017 and Entry No. 54(c) or Entry No. 55 of the Notification No. 12 of 2017 Central Tax(Rate) dated 28-6-2017, NIL rate of GST is applicable on given processes only if undertaken at an agriculture farm and not otherwise. Whether where applicant engaged in activities of cleaning of various Agriculture products like Saunf(Fennel), Dhaniya (Coriander), Jeera(Cumin seeds) etc. was undertaking specialized activity of cleaning whereby they remove various impurities but do not change essential character of agriculture produce but make product marketable for primary market using specific machines and equipments which are installed at its premises and away from Agricultural farm, applicant will not be covered by above notifications and will not attract NIL rate of tax

Bio-fertilizers, other than those put up in unit container & bearing brand name, are exempt from GST: AAR
GST : Bio Fertilizer or Organic Manure other than those put up in Unit Container and bearing a brand name, will be covered under Schedule I of rate of GST on goods and attracts NIL rate of duty & Bio Fertilizer or Organic Manure put up in Unit Container and bearing a brand name, will be taxable under GST at rate of 5 per cent

No ITC on packing materials used for exempted supply of seeds: AAR
GST : Where applicant supplies seeds (exempted item) in packaged form using such packing materials (taxable item), to its own branches in other States, then no ITC could be claimed on packaging material used for said exempted supply of seeds, whereas, if applicant supplies only packing material to own branches in other States, then ITC involved in purchase of such packing material could be availed as per section 17(2) of Chhattisgarh Goods and Services Tax Act, 2017

GST is chargeable on surplus profit transferred by beer manufacturer to brand owner
GST : Where applicant has manufacturing arrangement with contract brewing/bottling units (CBU) who manufacture brands of beer belonging to applicant and supply such beer to market by procuring raw materials, packaging materials, incurring overheads and other manufacturing costs etc. on its own and sell beer directly, since material is purchased by CBUs and ownership of raw material required to manufacture beer rests with manufacturer and not with applicant, manufacturing activity undertaken by CBUs does not qualify classification under Heading 9988, as a result CBUs are not engaged in supply of any service to applicant


Income tax:

Sale of land was taxable as capital gains though dep. was claimed on staff quarters built on it
IT: Where land on a part of which staff quarters were situated was sold and though on such staff quarters depreciation was claimed, no depreciation being claimed on land in earlier years, profit on sale of land would give rise to LTCG

CBDT raises threshold limit for filing of appeal before ITAT, High Courts and Supreme Court
With a motive to reduce the litigation on Income-tax matters the CBDT has sharply increased the threshold limit for filing of appeal before judicial authorities. The revised limit for filing of appeal before ITAT, High Courts and Supreme Courts shall be Rs. 20 lakhs, Rs. 50 lakhs and Rs. 1 Crore respectively.

Assessee could file application for restoration if ITAT dismissed appeal without deciding it on merits
IT : Where Tribunal dismissed assessee’s appeal for non-prosecution instead of deciding it on merits, Tribunal exceeded its jurisdiction and in such circumstances, having regard to provisions of rule 24 of Appellate Tribunal Rules, it was open to assessee to approach Tribunal with a suitable application for restoration of appeal


Corporate Laws:

NCLT dismisses Cyrus Mistry’s petition against removal of Tata Sons
The NCLT observed that the board and majority of its members lost confidence in Mistry after he sent out certain crucial information about the company to the Income Tax department, leaked details to the media and came out openly in public against the company’s shareholders and its board

300 days instead of 30 days for intimation related to satisfaction of charge: A big relief to cos.
The Ministry of Corporate Affairs (MCA) has notified the Companies (Registration of Charges) Amendment Rules, 2018 wherein Rule 12 related to time period for filing the CHG-4 for satisfaction of charge has been amended. Now, Companies have an extra-time for filing the satisfaction of charge with MCA.

MCA imposes penalty of Rs. 5,000 on directors if they fail to file their e-KYC on or before due date
The Ministry of Corporate Affairs (MCA) has amended the Companies (Registration Offices and Fees) Rules, 2014 wherein Rs. 5000 penalty has been specified for those directors who fail to file their KYC with the MCA within prescribed time.


Insolvency & Bankruptcy Code:

Reason for default of payment could not be ground to reject insolvency resolution plea: NCLAT
I&B Code : Adjudicating Authority is only supposed to see whether application is complete or not and whether there is any ‘debt’ or ‘default’ and, therefore, what is reason for default of payment cannot be a ground to reject application filed under section 7

Dishonoring of cheque could not bar of initiating insolvency resolution process
IBC: Pendency of mediation proceedings on dishonour of cheque for payment, could not be said to give rise to a pre-existing dispute barring initiation of Corporate insolvency resolution process

Insolvency plea was to be admitted when dispute raised by debtor wasn’t supported by any proof: NCLT
IBC: Where existence of trades payable in name of operational creditor in balance sheet of operational debtor was accepted and debtor’s contention that no goods were supplied by operational creditor and its financial statement relied upon by operational creditor had been made in connivance with ex-employee of debtor was not supported by any proof, petition filed by operational creditor under section 9 was to be admitted

Insolvency resolution process was to be rejected due to existence of prior dispute between parties
IBC: Where there was illegal retention of bottles and filling materials of corporate debtor medicine trader by financial creditor drug manufacturer it could be said that outstanding liability was disputed; CIRP was to be rejected

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