Quvisor’s weekly refresher on Legal updates in India : Oct 26, 2018


CBIC extended rectification facility to shipping bills filed upto November 15, 2018
The IGST refunds of exporters were struck due to mis-match errors between the Shipping bills and GSTR-1, i.e., SB005 error. Earlier, the rectification was allowed to shipping bills filed upto June 30, 2018. The CBIC has further extended the rectification facility to shipping bills filed upto November 15, 2018.

Supply of food items to employees for consideration in canteen run by co. is taxable under GST: AAR
CGST : Supply of food items to employees for consideration in canteen run by company comes under definition of ‘outward supply’ and therefore, taxable as supply of service under GST, The applicant had submitted that the service provided to the employee was not being carried out as a business activity and it was according to the provisions in the Factories Act, 1948.

Supply of event management support services to Maharashtra taxpayer in Goa is inter-State supply: AAR
GST/IGST : Event Management support services provided in Goa by a Goa concern to a registered person in Maharashtra is governed under section 12(7)(i) of IGST Act; hence, same should be treated as inter-state supply of services and IGST at rate of 18 per cent is applicable

Foreign company not required to get registered under GST for liaison activities specified by RBI: AAR
CGST/SGST : Where RBI has permitted German-company to establish a liaison office as they are engaged in trading of clothing and textiles and operates clothes-shops and markets, and liaison activities undertaken by applicant were strictly in line with condition specified by RBI permission letter, same do not amount to supply under CGST and SGST Act and it is not liable to pay CGST, SGST or IGST, as applicable, nor is it required to get itself Registered under GST for liaison activities

ITC of Real Estate Consultancy services allowed for providing Renting of immovable services
CGST/SGST : Applicant engaged in business of letting out property and receiving rental income is eligible to take credit of CGST and SGST charged by property consultant for providing real estate services in renting of property, subject to conditions as per section 16, 17 and 18 of CGST and SGST Act


Income tax:

Bad debts of acquired co. don’t form part of operating cost for computing operating profit
IT/ILT : Where relevant bad debts related to sales made in earlier years by company acquired by assessee, same could not be added as part of operating cost for computing operating profit of assessee

Revenue couldn’t raise objections to CBDT circular as it was binding on revenue: HC
IT: Mere raising objection in terms of CBDT Circular is not enough, CBDT Circulars continue to bind revenue and if they contain any conditions, whether such conditions are attracted or not would have to be proved and established by revenue

No denial of sec. 80G renewal without change in circumstances if it was being renewed every year; SC dismissed SLP
IT: SLP dismissed against High Court ruling that where assessee was granted and renewed certificate of exemption under section 80G every year since its registration as charitable organisation, Commissioner was not justified in denying renewal application during relevant assessment year without there being any new circumstances

HC dismissed writ petition as there was unreasonable delay in claiming refund of cash seized by dept.
IT : Where as per assessment order dated 12-2-2009 passed after search, seized cash was to be refunded to assessee but despite such order cash was not refunded, writ petition filed by assessee on 4-7-2018 for refund of cash seized was liable to be dismissed on ground of delay and laches


Corporate Laws:

Conversion of public into private co. allowable in absence of any objection raised by RoC
CL: Where petitioner company, passed a special resolution for conversion of its status from public limited company to private limited company, in view of fact that petitioner did not have any creditors and, moreover, Registrar of companies and any other member of public had not raised any objection to proposed conversion, application seeking approval of said conversion was to be allowed

No extra time allowed for repayment of deposit as extension of time already given to co.
CL: Once in view of bad financial position of company, CLB had given relief of huge extension of time as well as reduced interest rate while sanctioning scheme of repayment of deposit, no further extension of time could be allowed to company


Insolvency & Bankruptcy Code:

Existence of an undisputed debt is an essential condition for initiating insolvency resolution process
IBC : Existence of an undisputed debt is sine qua non of initiating Corporate Insolvency Resolution Process. It also follows that Adjudicating Authority shall satisfy itself that there is a debt payable and there is operational debt and corporate debtor has not repaid same. Whenever there is existence of real dispute, the IBC provisions cannot be invoked. IBC is not intended to be substitute to a recovery forum

Resolution plan couldn’t be accepted as it was not approved by 75% of lenders: NCLAT
IBC: Where Adjudicating Authority by an impugned order approved resolution plan which was accepted by 66.67 per cent of voting shares of Committee of Creditors, since, resolution plan was to be approved by minimum seventy five per cent of voting shares of committee of creditors, Adjudicating Authority was not justified in approving said resolution plan

Insolvency plea to be admitted when debtor failed to prove pre-existence of disputes between parties
IBC: Where corporate debtor claimed that there was pre-existence of dispute regarding quality of goods supplied by operational creditor, but test report of goods supplied and email sent by corporate debtor raising disputes were not at all helpful to prove that dispute raised by corporate debtor was in fact in respect of goods supplied by operational creditor, application under section 9 against corporate debtor was to be admitted

Adjudicating Authority is empowered to direct ex-directors of debtor co. not to leave country without permission
IBC : Adjudicating Authority is empowered to direct ex-directors of debtor co. not to leave country without permission

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