TMI Tax Updates - e-Newsletter
January 24, 2023
Case Laws in this Newsletter:
Articles
By: DR.MARIAPPAN GOVINDARAJAN
Summary: The liquidation process begins if the corporate insolvency resolution process is not completed within the stipulated timeframe or if the Committee of Creditors (CoC) decides to liquidate the corporate debtor with at least 66% approval. The Adjudicating Authority appoints a liquidator, who assumes control from the board and manages the process until dissolution. Stakeholders must submit claims within 30 days of liquidation commencement. Various forms exist for different creditors, including operational, financial, and employee claims. Secured creditors must decide on their security interest within 30 days. The liquidator verifies claims, prepares a stakeholder list, and handles appeals or modifications.
By: Bimal jain
Summary: The CESTAT, Ahmedabad ruled that Drishty Communication Private Limited, acting as an intermediary in the sale of space or time for media agencies on a commission basis, is not liable for Service Tax as an advertising agency. The case involved a Show Cause Notice alleging that the services provided by Drishty to a sub-agent were not exempt from Service Tax. The tribunal found no evidence classifying Drishty's services as "Advertising Agency Services" under the Finance Act, 1994, and set aside the tax demand, affirming that Drishty merely facilitated transactions between media agencies and clients.
By: Bimal jain
Summary: The Supreme Court ruled that an assessee cannot be denied relief under the Sabka Vishwas (Legal Dispute Resolution) Scheme, 2019, due to an inability to pay within the prescribed time because of a legal moratorium under the Insolvency and Bankruptcy Code, 2016. M/s Shekhar Resorts Limited faced a moratorium during its insolvency proceedings, preventing payment of dues. Despite the moratorium ending, the Joint Commissioner refused payment, citing a missed deadline. The Supreme Court held that the High Court erred in denying relief, quashed the Impugned Order, and directed the payment to be appropriated under the SVLDR Scheme.
By: Bimal jain
Summary: The Andhra Pradesh High Court ruled that the Revenue Department cannot retain taxes paid due to an inadvertent error. In the case involving a petitioner who mistakenly issued tax invoices to the wrong entity, the court determined that such errors should be rectifiable, even if the statutory period for rectification has passed. The court emphasized that the amounts paid in error are not legally owed taxes and cannot be retained by the department. The petitioner was directed to file a manual refund application, and the department was instructed to process it within four weeks, rejecting the argument that the claim was time-barred.
News
Summary: A government official urged businesses to adopt sustainable practices, aligning with the G20 theme of "one earth, one family, one future." He emphasized intergenerational equity and India's commitment to environmental goals, noting the country's achievements in renewable energy. Highlighting India's economic growth and government initiatives, he praised the Prime Minister's focus on infrastructure, integrity, inclusivity, and international collaboration. The official cited examples of successful foreign companies manufacturing in India, attributing their success to India's competitiveness and innovation. The B20 forum, part of the G20, will focus on climate action, innovation, and digital cooperation, aiming to foster global economic collaboration.
Notifications
Companies Law
1.
G.S.R. 40 (E) - dated
20-1-2023
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Co. Law
Companies (Accounts) Amendment Rules, 2023
Summary: The Ministry of Corporate Affairs issued a notification amending the Companies (Accounts) Rules, 2014, effective from January 23, 2023. This amendment, known as the Companies (Accounts) Amendment Rules, 2023, involves the substitution of Form No. AOC-5 in the Annexure of the original rules. The changes are made under the authority granted by various sections of the Companies Act, 2013. The principal rules were initially published in 2014 and last amended in August 2022.
2.
G.S.R. 39 (E) - dated
19-1-2023
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Co. Law
Companies (Authorised to Register) Amendment Rules, 2023
Summary: The Companies (Authorised to Register) Amendment Rules, 2023, effective from January 23, 2023, amend the Companies (Authorised to Register) Rules, 2014. Key changes include the substitution of sub-clauses in rule 3 to require a No Objection Certificate from secured creditors and charge holders, if applicable, while omitting certain sub-clauses. Additionally, Form No. URC-1 has been replaced. These amendments are made under the authority of specific sections of the Companies Act, 2013, as exercised by the Central Government.
GST - States
3.
80-F.T. - dated
17-1-2023
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West Bengal SGST
Seeks to amend notification No. 1136-F.T., dated 28th June, 2017 regarding Nil rated services relating to renting of residential accommodation.
Summary: The Government of West Bengal has amended notification No. 1136-F.T., dated June 28, 2017, concerning nil-rated services related to renting residential accommodation. The amendment, effective from January 1, 2023, includes an explanation under S. No. 12, specifying that the exemption applies to services involving the renting of residential dwellings by a registered person who is a proprietor of a proprietorship concern, renting in a personal capacity for personal residence. Additionally, S. No. 23A and its related entries have been omitted. This amendment is made under the West Bengal Goods and Services Tax Act, 2017.
4.
79-F.T. - dated
17-1-2023
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West Bengal SGST
Seeks to amend notification No. 1128-F.T., dated 28th June, 2017 regarding reverse charge on certain specified supplies of goods under section 9(3) regarding essential oils.
Summary: The Government of West Bengal has issued an amendment to Notification No. 1128-F.T., dated June 28, 2017, under the West Bengal Goods and Services Tax Act, 2017. This amendment, effective from January 1, 2023, modifies the reverse charge mechanism for certain essential oils. Specifically, it updates the entries for essential oils other than those of citrus fruits, including peppermint and various mint oils, under section 9(3). The amendment specifies that these oils, when supplied by any unregistered person to any registered person, fall under the reverse charge provisions.
5.
78-F.T. - dated
17-1-2023
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West Bengal SGST
Seeks to amend notification No. 1126-F.T., dated 28th June, 2017 regarding exempted goods namely, husk of pulses and aquatic feed.
Summary: The Government of West Bengal issued a notification amending a previous notification (No. 1126-F.T. dated 28th June 2017) concerning exempted goods under the West Bengal Goods and Services Tax Act, 2017. The amendments include changes to the description of exempted goods such as aquatic feed, poultry feed, and cattle feed, now including shrimp and prawn feed, grass, hay, straw, supplements, additives, wheat bran, and de-oiled cake, excluding rice bran. Additionally, a new entry for the husk of pulses, including chilka, concentrates like chuni or churi, and khanda, has been added. These amendments are effective from January 1, 2023.
6.
77-F.T. - dated
17-1-2023
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West Bengal SGST
Seeks to amend notification No. 1125-F.T., dated 28th June, 2017 regarding rates of taxable goods like ethyl alcohol supplied to oil marketing companies and petroleum refineries for blending with petrol, husk of pulses, fruit pulp and fruit based drinks etc.
Summary: The Government of West Bengal has issued an amendment to Notification No. 1125-F.T., dated June 28, 2017, concerning the rates of taxable goods under the West Bengal Goods and Services Tax Act, 2017. The amendments involve changes in tax rates for various goods. Ethyl alcohol supplied to oil marketing companies or petroleum refineries for blending with petrol is now specified under Schedule I with a 2.5% rate. Bran and other residues are also specified under the same schedule. Fruit pulp or fruit juice-based drinks are listed under Schedule II with a 6% rate, while mathematical, geometry, and color boxes are similarly categorized. Ethyl alcohol and other spirits, except those supplied for blending with petrol, are listed under Schedule III with a 9% rate. These changes are effective from January 1, 2023.
Circulars / Instructions / Orders
DGFT
1.
Policy Circular No. 45/2015-20 - dated
23-1-2023
Implementation of Paper Import Monitoring System (PIMS) -Clarification
Summary: The Directorate General of Foreign Trade (DGFT) issued a circular clarifying the implementation of the Paper Import Monitoring System (PIMS) for products under Chapter 48 of the Import Policy. Registration under PIMS is mandatory for all modes of transportation and purposes, including imports through schemes like Advance Authorization and SEZs. Exceptions include sample imports below a certain value and non-commercial imports by individuals or government agencies, subject to specific conditions. PIMS registration is required at the point of import into SEZs/EOUs but not at customs clearance if no processing has occurred.
Highlights / Catch Notes
GST
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Court Condones 2-Year Delay in Appeal Due to Manager's Death, Reverses Company Registration Cancellation.
Case-Laws - HC : Conditions of delay in filing appeal before the first Appellate Authority - Appeal belated by two years and one month - person concerned looking after the affairs of the company, had passed away - delay condoned - The cancellation of registration is revoked - HC
Income Tax
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Non-resident payments without PAN allow 10% tax deduction if covered by Tax Treaties; no extra tax demand.
Case-Laws - AT : Rate of TDS - Non-availability of PAN - Benefit of treaty - in case of payments made to non-residents, the assessee was entitled to deduct taxes at source at the rates applicable in the respective Tax Treaties in case PAN of non-resident payee is not available - In the instant facts, the assessee has deducted taxes at the beneficial rate of 10% as applicable in the respective Tax Treaties in respect of all payments made to non-resident payees - No further demand can be made - AT
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Assessing Officer Skips Draft and Final Orders, Violating Section 144C of Income Tax Act; Revenue Must Fix Compliance Issues.
Case-Laws - AT : Assessment u/s 144C - it is for the revenue to devise its own means and ways to correct the software and pass the final assessment order in accordance with the law. In the present case, the AO had straight way passed the assessment order instead of passing the draft assessment order as per section 144C(1) of the Act and further, the Assessing Officer has not passed the final order as per section 144C(10) of the Act. - AT
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Taxpayer's Reimbursement Considered Salary, Not Technical Fees; Subject to TDS u/s 192, Not Section 195.
Case-Laws - AT : TDS u/s 195 OR 192 - the payment made by the assessee towards reimbursement of expenses is in the nature of salary cost of the assigned employees subject to TDS u/s 192 of the Act, hence, cannot be treated as FTS u/s 9(1)(vii) of the Act and Article 12 of the tax treaty - No TDS liability u/s 195 - AT
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Assessee eligible for Section 80P(2)(a)(i) deduction if income return filed by 31.10.2018 with complete ITR-5 info.
Case-Laws - AT : Deduction u/s. 80(P)(2)(a)(i) - Due date for filing the return of income u/s 139(1) - The assessee cannot be denied deduction under Section 80P(2)(a)(i) of the Act if the assessee filed the return of income on or before 31.10.2018 and the same has been disclosed in the return of income as required in ITR-5 stating that assessee is liable to audit under Cooperative Society Act and mentioned the date of audit in the return of income filed by the assessee. - AT
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Trust Donations Taxable Without Section 12A Registration: Infrastructural and Corpus Funds Considered Income Under Amended Section 2(24)(iia).
Case-Laws - AT : Exemption u/s 11 - donation received - if it is taken that the said fund was for infrastructural development or to say it was towards corpus fund of the trust, still as per the amended provisions of section 2(24)(iia) as amended vide Finance Act 1987 and further amended vide Amendment Act 1989, the trust being not registered u/s. 12A for the year under consideration, the corpus donation will form part of the taxable income of the assessee trust. - AT
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No Penalty for Mistaken Account Entry: Reasonable Cause Accepted u/ss 271D & 273B of Income Tax Act.
Case-Laws - AT : Penalty u/s. 271D - contravention to Section 269SS - reasonable cause - staff filled the name of the depositor correctly but the account number was wrongly mentioned - Assessee has proved a reasonable cause of wrongly coating the bank account number of the sister concern which was rectified the next day itself. Thus it is not a fit case for imposition of penalty u/s. 271D r.w.s. 273B of the Act. - AT
Customs
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Court Advises Petitioner to Submit New Request for Export Release and Bank Account De-freezing to Respondents.
Case-Laws - HC : Freezing of Bank Account of petitioner - non-release of the export shipment made by the petitioner - Since the petitioner has not given separate representation for de-freezing of its bank account by the respondents, this Court is of the considered view that the petitioner will have to send a fresh comprehensive representation to the respondents requesting them to release the subject export consignment of the petitioner as well as for de-freezing of the petitioner's bank account. - HC
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Customs Officers' Jurisdiction Confirmed: Can Seize Materials in Domestic Tariff Areas Under Customs Act 1962.
Case-Laws - HC : Jurisdiction of Customs Officers for seizure or recovery of material in a search carried out in a DTA - Smuggling - In the case on hand, the search and seizure have occasioned in DTA. Therefore, the Officers of the Customs Department, vis-à-vis the alleged illegality noted against both the importer and the individuals who handled the gold moved out of SEZ, have jurisdiction under Act 1962. The denial of jurisdiction to the Officers of the Customs Department for offences or violations noticed in DTA would enhance the area of an SEZ and diminish the jurisdiction of the Act 1962. - HC
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Appellant's EPCG certificate delayed by DGFT despite on-time application; issued three days past deadline.
Case-Laws - AT : EPCG scheme - Failure to fulfill the conditions of the Notification - the appellant had applied for the issuance of the Certificate on November 09, 2016 before the expiry of ten years but it was issued to the appellant by the DGFT only on December 09, 2016. The appellant cannot be blamed for delay of three days since the appellant had admittedly applied for issuance of the certificate on November 09, 2016.- AT
Corporate Law
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Prosecution Valid for Additional Director; Responsibilities Align with Director, Not Independent Director; Quashing Attempts Misuse Court Powers.
Case-Laws - HC : Validity of prosecution against the petitioner/director - The responsibility of an Additional Director being the same as that of a director (but different from an independent director) they remain responsible, as the statute provides for the same - Thus to quash the proceedings by exercising this Courts inherent powers would amount to an abuse of the process of Court and would also amount to serious miscarriage of justice. - HC
IBC
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Section 66(1) targets fraudulent trading, holding individuals accountable in insolvency, unlike sections focused on transaction avoidance.
Case-Laws - HC : Fraudulent/wrongful trading - It is clear from the language of section 66(1) that unlike application provided under section 43, section 45, section 50 and section 47 or avoiding of such transaction and dehors these provisions. - An application contemplated exclusively under section 66(1) is not made for avoidance of any transaction. Even if fraudulent but to fix the liabilities of the persons reasonable for conducting the business of corporate debtor which is fraudulent or wrongful, that too an application made by resolution professional during the CIRP or a liquidation process. - HC
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Court Allows Condonation Application for Potential Delay in Insolvency Appeal; No Actual Delay Found.
Case-Laws - AT : Delay in filing appeal - Period of limitation - There are no delay in filing of the application and as Counsel for the Appellant has submitted that the Application for condonation of delay has been filed with abundant caution, in case there is any delay, the Appellant has been successful in providing the sufficient cause for condonation of delay - Ultimately result is that the application is allowed. - AT
Service Tax
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Service tax demand on renting immovable property dismissed as appellant neither owns property nor receives rent.
Case-Laws - AT : Short payment of service tax - Renting of Immovable Property Services - When the property is not owned by the appellant and they have not received the rent, the demand of service tax raised on the appellants alone, therefore, cannot be sustained. - AT
Central Excise
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Cenvat Credit Can Be Carried Forward u/r 11(3) If Exemption Is Conditional, Not Absolute.
Case-Laws - AT : Lapse of Cenvat Credit - Carry forward of Cenvat credit - In terms of strict provision of Rule 11(3) of Cenvat Credit Rules, 2004, the bar of lapsing of credit is applicable only when the assessee avail the absolute exemption notification. Therefore, in the present case exemption notification No. 30/2004-CE, being a conditional one, bar of lapsing of credit shall not apply. - AT
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