Quvisor’s weekly refresher on Legal updates in India : Aug 17, 2018


Salary costs at headquarters to attract 18% GST for services given to offices in other states: AAR
CGST : Corporate office and units are distinct persons under CGST Act hence, activities performed by employees at corporate office of applicant a private limited company engaged in providing health care services categorizing them as In-patient (IP) and Out-patient (OP) services in course of or in relation to employment such as accounting, other administrative and IT system maintenance for units located in other states as well i.e. distinct persons as per section 25(4) of Central Goods and Services Tax Act, 2017 (CGST Act) shall be treated as supply as per Entry 2 of Schedule I of CGST Act

Supply of Goods by Café Coffee Day to SEZ units will not be treated as Zero rated supply
GST : Supply of non-alcoholic beverages / ingredients to SEZ units using coffee vending machines, does not qualify as ‘zero rated supply’ as defined under section 16 of IGST Act. Though section 16(1)(b) of IGST Act does not categorically say that supplies of goods and services should be for authorized operations, it is implicit therein when it says that supplies are for SEZ Developer or SEZ Unit. As applicant in instant case has not made a case that its activity is certified as an authorized operation, same would not qualify to be zero-rated supply

Skin care preparations which can’t treat injury to be classified as Soaps & Cosmetics
CGST : Where 31 products supplied or intended to be supplied by appellant, manufacturer of skin care preparations are not used in diagnosis, treatment, mitigation or prevention of disease or disorder in human beings, rather they are more in tandem with definition of cosmetics as defined in Drugs and Cosmetics Act, 1940, because none of the problems that these products treat can be classified as injury or ailment, they are not to be classified under chapter 30 as medicaments, but are to be classified under chapter 33(cosmetics) or chapter 34(soaps) and to be taxed accordingly

Govt. permits use of stickers for revising price of pre-packaged commodities due to reduction of GST rate
Government has granted permission to affix an additional sticker for declaring the reduced MRP on the pre-packaged commodities.

No GST on approved vocational course provided by private ITI’s
Government has clarified that Private ITIs will qualify as an educational institution if the education provided by these ITIs is approved as vocational education course and these education services will be exempt from GST


Income tax:

Indian Olympic Association’ won’t lose charitable status just because it received sponsorship from a Private Co.
IT: Where assessee association was primarily engaged in promotion of sports in country, it would not lose its character of charitable purpose merely because some sponsorship was accepted from a private company in respect of Asian games and Youth Olympic games

AO couldn’t determine cost of construction on estimate basis if assessee duly submitted valuation reports
IT: Where assessee sold land and claimed cost of acquisition on basis of FMV of land as on 1-4-1981, Assessing Officer was justified in adopting cost of acquisition on basis of Gazette Notification of 1999, giving value of properties in vicinity of area, where assessee’s property was situated; IT: Where valuation report of chartered Engineer given by assessee was credible evidence to prove cost of construction of assessee’s property, Assessing Officer was not justified to workout cost of construction of said property on mere estimation

No tax on sale of agriculture land merely because land was to be used for industrial purpose by purchaser
IT: Where assessee was an agriculturist and land owned by him had been shown as agricultural land in revenue records, mere fact that said land had been sold to an industrial unit and had potential to be used for industrial purpose, could not be a determinative factor to treat profit earned by assessee on sale of agriculture land as business income

No concealment penalty just because assessee made wrong claim of deduction: HC
IT : Penalty under section 271(1)(c) could not be imposed merely because assessee had claimed expenditure, which was not accepted or which was not acceptable to revenue

‘Sachin Tendulkar’ entitled to vacancy allowance as he failed to find tenant for vacant flat
IT : Where assessee, a renowned cricketer, could not find tenant for letting out a flat owned by him despite writing various letters to builder of said flat and as a result flat remained vacant throughout relevant year, he was justified in disclosing annual value of flat at nil after claiming vacancy allowance


Corporate Laws:

Merely buying property in name of his wife could not be treated as benami property: Delhi HC
Benami Act : It is legally permissible for a person to purchase an immovable property in name of his spouse from his known sources, and in which position, property purchased will not be a benami property but property will be of de jure owner/plaintiff/husband and not of de facto owner (in whose name title deeds exist), being respondent/defendant/wife in instant case

Investors can hold shares in physical form even after Dec 5: SEBI
The new amendment does not prohibit the investor from holding the shares in physical form, investor has the option of holding shares in physical form even after December 5, 2018,” the Securities and Exchange Board of India (Sebi) said in a statement. Besides, the regulator said that any investor who is desirous of transferring shares, which are held in physical form, after December 5 can do so only after the shares are dematerialized.

NCLT approves merger of LLP into company – A new dimension to corporate re-structuring
It’s been over a year since the National Company Law Tribunal (NCLT) became the approving authority for schemes of arrangement under the Companies Act, 2013. Recently, in a first of its kind order, the Chennai Bench of NCLT, approved a scheme of amalgamation between an Indian Limited Liability Partnership (LLP) and an Indian Private Limited Company in the matter of Scheme of Amalgamation between Real Image LLP and Qube Cinema Technologies Private Limited


Insolvency & Bankruptcy Code:

Moratorium on recovery of debt under IBC doesn’t extend to personal guarantors, rules Apex Court
IBC : Section 14 of IBC, which provides for a moratorium for limited period mentioned in Code, on admission of an insolvency petition, would not apply to a personal guarantor of a corporate debtor

Order passed by Adjudicating Authority without hearing debtor was in violation of principle of natural justice
IBC: Order passed by Adjudicating Authority without hearing corporate debtor was in violation of principle of natural justice

Registration of insolvency professional suspended due to contravention of conduct under IBC
I&B Code: Where IRP continued over 30 days, and held first meeting of CoC with less than 7 days notice and did not consider claim of one financial creditor/Bank, same was in contravention of code of conduct and his registration was to be suspended

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