Quvisor’s weekly refresher on Legal updates in India : Jan 16, 2020


No GST on providing goods transportation vehicle on hire by one GTA to another GTA
It is found that services provided as a GTA are different from services provided by way of giving vehicles on hire basis to another GTA and hence are independent of each other so far as tax treatment is concerned. Further there is no provision in law barring person being a GTA from renting vehicle to another GTA

Value of goods for supply by H.O. to branch office shall be ‘open market value’ where branch is eligible for full ITC
GST: Where Competent Authority had detained a vehicle along with goods and assessee, after vehicle came to be intercepted, had paid tax and penalty as computed, Competent Authority was to be directed to release vehicle along with goods

Date of filing GSTR-1 for the period July, 2017 to Nov, 2019 without late fee is Jan 17, 2020
CBIC has extended the due date of waiver of late fee to 17-1-2020 from 10-1-2020 for the registered persons who failed to furnish the details of outward supplies in GSTR-1 for the months/quarters for the period July, 2017 to Nov, 2019 by the due date, if they furnish GSTR-1 between 19-12-2019 to 17-1-2020.

Supply of medical instruments with minimum purchase obligations of reagents does not constitute composite supply: HC
A finding as regards composite supply must take into account supplies as effected at a given point in time on ‘as is where is’ basis. In particular instances where same taxable person effects a continuous supply of services coupled with periodic supplies of goods/services to be used in conjunction therewith, one could possibly view periodic supply of goods/services as composite supplies along with service that is continuously supplied over a period of time. These, however, are matters that will have to be decided based on facts in a given case and not in abstract


Income tax:

‘Performance Bonus’ doesn’t form part of salary for calculation of ‘House Rent Allowance’
INCOME TAX: Performance bonus does not form part of ‘salary’ as defined in clause (h) of Rule 2A purpose of computing exemption under section 10(13A). Thus, assessee would be entitled to house rent allowance to extent of excess of rent paid over 10 per cent of salary

Investment in Chit Fund isn’t prescribed modes of investment u/s 11(5); ITAT disallowed trust exemption
INCOME TAX: Where assessee trust had invested its surplus fund in chit fund during preceding assessment year, it was a clear case of violation of provisions of section 11(5), hence, assessee-trust was not entitled for exemption under section 11

Cash payment made by trust couldn’t be considered as payment made towards non-specified purposes
Addition made by Assessing Officer on ground that assessee-trust withdrew amount from bank to make payment to related persons in violation of section 13 could not be sustained in view of fact that withdrawals made from bank had been duly accounted for in books of account and Assessing Officer had not furnished break-up details of payments alleged to have been made to said persons

No tax if assessee received property on account of family settlement
INCOME TAX: Where assessee had received property from his brothers on account of Family Settlement and Release Deed was also executed in which it was nowhere recorded that assessee paid any consideration to his other three brothers, there being no commercial transaction, provisions of section 56(2)(vii)(b) were not attracted


Corporate Laws:

Transactions made after commencement of winding up are null and void under Cos. Act: HC
Where pursuant to consent terms payments were made by respondent company in liquidation to applicant after commencement of winding up, it was held that various transactions carried out by applicant with respondent company in liquidation post date of commencement of winding up proceedings and thereafter filing consent terms with respondent post date of such commencement of winding up proceeding were not in ordinary course of business and same were not in interest of and for benefit of respondent company in liquidation and, thus, applicant had not made out any case for validation of transactions and consent terms under section 536(2) of Companies Act, 1956 and entire transactions were to be declared as null and void

Apex Court stays NCLAT order restoring Cyrus mystery as executive chairman of Tata Group
The Cyrus Mystery was removed from post of Executive Chairman by board of directors and was also removed from position of directorship in various companies of Tata Group.

Non-disclosure of imposition of provisional duties by China being UPSI violated insider trading norms
COMPANY LAW/SEBI ACT : Where Ministry of China announced provisional duties at rate of 24.6 per cent against products concerning appellant company and 57.4 per cent against other Indian producers but appellant informed stock exchange about said announcement belatedly and vice president of appellant company traded in scrips of company while having information about such announcement, same was in violation of clause 36 of Listing Agreement as well as PIT regulation

Now Private Companies having outstanding loans of Rs. 100 cr. must undergo Secretarial Audit
The Ministry of Corporate Affairs (MCA) has come up with notification which amends ‘Rule 8A – Appointment of Company Secretaries’ and ‘Rule 9- Secretarial Audit Report’ of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The amendments seeks to hike threshold limit of paid up capital for companies to appoint whole time Company Secretary, amendment also seeks to expand scope of Secretarial Audit. The notification will be effective from 01.04.2020


Insolvency & Bankruptcy Code:

Allegation of inflated bill wouldn’t annul services rendered; CIRP to be admitted on default
IBC : Where operational creditor provided transport services, corporate debtor’s allegation that operational creditor raised inflated bill in comparison to other vendors in connivance with some of employees of corporate debtor, would not have any effect of annulling services provided by operational creditor; CIRP was to be admitted on corporate debtor’s default in payment of debt due

CIRP to be initiated when corporate debtor defaulted in repaying amount awarded by arbitrator
IBC: Where interest bearing vehicle loan was taken but corporate debtor defaulted in making payment of amount as awarded by arbitrator in favour of financial creditor, CIRP was to be initiated

Money paid by marketing agency to TV serial producer without interest wouldn’t give rise to financial debt
IBC: Where a marketing agency, appellant, paid amount under marketing agreement to TV programme/Serial producer in lieu of rights of ‘free commercial time’ (FCT), since there was no clause that amount paid by appellant was to be repayable along with interest over a period of time, same would not be give rise to financial debt

CIRP plea filed within 3 years of acknowledgement of debt is not barred by limitation
IBC: Where corporate debtor acknowledged debt and also made offer for one-time settlement, CIRP application filed under section 7 within 3 years of such acknowledgement was not barred by limitation

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