Allahabad HC quashes Cancellation of DIN of 161 directors by Uttar Pradesh ROC [Read Judgment]

The Allahabad High Court has quashed the order of the Uttar Pradesh Registrar of Companies(ROC) where it declared directors of various companies to be disqualified to continue as directors of the companies where they were holding such positions, cancelled their DIN numbers and barred them from being directors for a period of 5 years.

The Petitioners in these writs were accused of committing default by not submitting financial statements and returns for a consecutive period of three years and therefore stood disqualified under sections 164(2) of Companies Act, 2013. This disqualification was later applied to all other companies in which the petitioner was a director though those companies were not at default.

It was alleged that before disqualifying petitioner, no show cause notice or opportunity was given, facts not verified and mechanically, petitioners’ status was shown as a “disqualified Director” and his DIN was made inactive or suspended. It was further alleged that Section 164 (2) (a), which not only disqualifies a “Director” in respect of Defaulting Companies but extends the same to other companies which have not committed default, as such was irrational and unreasonable and in violation of fundamental right of petitioner under Article 19 (1) (g) and therefore arbitrary and ultra vires of the Constitution.

It was further contended by the petitioners that for cancellation, surrender or deactivation of DIN, provision has been made in Rule 11 of Companies (Appointment and Qualification of Directors) Rules,2014 but none of the conditions mentioned therein is attracted in a case covered by Section 164 (2) is patently illegal and without jurisdiction.

The directors, 161 in number, had also sought a mandamus directing the ROC to reactivate their Director Identification Numbers (DIN) and restore their name in the roll of directors.

The division bench comprising of Justice Sudhir Agarwal and Justice Rajeev Misra while quashing the DIN cancellation order and partly allowing the writ petitions held, “The above discussion leads to the consequence that all writ petitions have to be allowed partly and action of respondents in deactivating DIN of petitioners is to be quashed. We accordingly allow writ petitions partly. We also quash the list published by ROC, declaring petitioners in all these writ petitions as disqualified to be Directors of companies and debarment of being Director for a period of five years. Uttar Pradesh ROC, now, shall be at liberty to give notice to petitioners to verify and establish the facts whether disqualification alleged to have been suffered by petitioners-Directors so as to attract Section 164 (2) of Act, 2013, actually exists or not. After giving them the opportunity and being satisfied that such disqualification has occurred, it will proceed further in accordance with the law.”

Madras HC stays Service Tax proceedings against A R Rahman

The Madras High Court reportedly stayed an order passed by a Commissioner of Goods and Services Tax (GST) and Central Excise on October 17, accusing the Oscar-winning music composer A R Rahman of evading payment of service tax, and directing him to pay arrears amounting to Rs.6.79 crore, excluding interest related to period from April 2013 to June 2017, along with a penalty of another Rs.6.79 crore.

The Commissioner of GST and Central Excise (Chennai South), K.M. Ravichandran in his order stated that intelligence gathered by the Directorate General of GST Intelligence (DGGSTI) indicated that the composer was not discharging service tax correctly on payments received by him. Hence, an inquiry was initiated, and it was found that the composer was earning income by composing music for movies, receiving royalties for public performances of his music works, and by conducting live concerts both within the country as well as in foreign nations. Excluding considerations received in foreign currency directly from the organizers abroad, the official held that all other services were taxable.

The Contentions put forward by A R Rahman attorney was that the show-cause notice has misinterpreted the provisions of the Copyright Act and presumed producer as the first owner of musical works. A composer of a musical work becomes the absolute owner of the copyright for their work under the Copyrights Act and subsequent transfer of such rights to producers of movies is exempted from tax. Moreover, section 65B (44) of the Finance Act, 1994 defines ‘service’ and specifically excludes the transfer of title in goods by way of sale, gift or in any other manner.

Admitting the plea, Justice Anita Sumanth passed the interim order staying the operation of the notice issued by the commissioner of GST and central excise till March 4.

Finance Ministry notifies Redrafted Rules governing the Tenure of various Appellate Tribunal Chairpersons and Members [Read Notification]

The Ministry of Finance on February 12^th has notified a new set of rules called the Tribunal, Appellate Tribunal, and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2020. The government has exercised its powers provided under section 184 of the Finance Act. A similar attempt was made by the government in 2017. But the Supreme Court struck down the move entirely and ordered the central government to reframe the rules back then as the constitutional validity was challenged on account of being introduced as a money bill.

The latest amendment to the qualifications and other service conditions for different tribunals associated with monetary disputes are as follows :

West Bengal Budget proposes Amnesty Scheme to settle Pre-GST Dues

The West Bengal State Budget 2020 has proposed an Amnesty Scheme to collect disputed taxes prior to the GST — under VAT, central sales tax and entry tax.

West Bengal finance minister Amit Mitra in the state budget presented said that more than 25,000 disputed cases were still pending. “I propose to introduce a new and more attractive settlement scheme for all VAT, sales tax, central sales tax and entry tax cases which are lying pending up to January 31, 2020,” Mitra said.

The scheme will offer taxpayers the opportunity to settle their cases by depositing 25 percent of the disputed tax by March 31, 2020.

The alternative is to pay 25 percent on half of the disputed tax before Match 31, 2020; on the rest, the taxpayers will have to pay 30 percent in a maximum of six monthly installments from April 2020.

The state government had collected Rs 1,120 crore arrears in disputed tax from 30,000 taxpayers from a settlement scheme in 2018.

Mitra also announced a settlement scheme of tax certificate cases, waiver of penalty on outstanding motor vehicle dues, waiver of 50 percent of compounding fine on motor vehicle offenses, waiver of agricultural income tax on tea gardens and relief under Stamp Duty & Registration Act.

In the Central Government Budget 2020 has announced Direct Tax Vivad se Vishwas Scheme to settle all Income Tax Cases in High Courts and Tribunals across the Country.

Error in Short-Levy of Service Tax can be ratified by Assessee either by Suo-Moto or Paying the Tax ascertained before Serving of Notice: Madras HC [Read Judgment]

The Madras High Court has held that in the case of an error in short-levy of service tax, for the purpose of ratifying the assessee is left with 2 options either by suo-moto or by paying the tax ascertained by the Central Excise and Service officer before the serving of notice.

The assessee M/s Bright Marketing Company has appealed to the High court as it is aggrieved by the decision of learned Central, Excise and Service Tax Appellate Tribunal (CESTAT) imposed reduced 25% of penalty on the appellant. It was also submitted that the appellant has already paid the short-levy along with the interest and so the provisions pertaining to recovery of service tax which is not levied or not paid under Section 73(3) and (4) of Finance Act and Section 78 pertaining to the penalty for the failure to pay service tax because of fraud are not applicable in this case.

Therefore, the issue raised in this case was whether the appellant is liable under Section 73(3), (4) and Section 78 or not?

The division bench comprising of Justice Vineet Kothari and  Justice R. Suresh Kumar while taking into consideration the above facts overruled the decision of Central, Excise, and Service Tax Appellate Tribunal (CESTAT) and held that 25% of penalty is not applicable as the appellant has already paid the short-levy with the interest. Further, it also held that error in short-levy of service tax, for the purpose of ratifying the assessee is left with 2 options either by suo-moto or by paying the tax ascertained by the Central Excise and Service officer before the serving of notice. Therefore the appellant is not liable under Section 73(3) and (4) and Section 78 of the Finance Act.

‘Bulk Milk Coolers’ provided to Co-Operative Societies for Storage eligible for Duty Exemption as ‘Stationary Pre-cooling Equipment’: CESTAT

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Ahmedabad held that Bulk Milk Coolers that are manufactured and supplied to various Co-operative societies for storing milk is to be classified as ‘Stationary Pre-Cooling Equipment’ and is eligible for duty exemption.

The appellant M/s Krish Industries Pvt. Ltd. is engaged in the manufacture of Bulk Milk Coolers and Stainless Steel Bulk Cooking Equipments and Distribution vessels. The Bulk Milk Cooler was manufactured from April 2010 and the Appellant classified the same as Stationary Pre-cooling equipment under CETH 84186990. They claimed exemption from payment of duty in terms of Notification No. 6/2006 – CE dated. 01.03.2006 (Serial No.5) and Notification No. 12/2012 – CE dated. 17.03.2012 (Serial No.232).

The revenue department, after investigation, issued show cause to the Appellant alleging that the bulk cooler manufactured by the Appellant and mentioned as ‘Stationary pre-cooling equipment’ is not supplied for installation of any Cold Storage, Cold Room or refrigerated vehicle but supplied to various Milk Co-operative societies to store milk and cool it at 4 degree Celsius. Consequentially, the revenue department demanded a duty of Rs. 1,52,12,471/- on goods cleared along with interest and to impose a penalty under section 11AC read with Rule 25 of Central Excise Rules(CER),2002.

The revenue believed that the said product cannot be classifiable as refrigerating equipment under chapter heading No. 8418 but as per its specific function, the Bulk Milk Cooler deserves the classification only under Chapter heading No. 8419 of the Central Excise Tariff Act, 1985 (CETA). The heading 8418 of the Central Excise Traffic Act applies to refrigerators, freezers and other refrigerating or freezing equipment whereas the tariff item 8419 of the CETA, 1985 applies to machinery, plant for treatment of material by a process involving a change of temperature.

The West Zonal Bench of the CESTAT Ahmedabad consisting of Judicial Member Mr. Ramesh Nair and Technical member Mr. Raju held that “from the facts of the case no contumacious conduct of the Appellant is appearing. They had a bonafide belief that Bulk Milk Cooler is exempted from payment of duty by virtue of exemption notification supra. In such case, it cannot be said that the Appellant had any intention to suppress the fact . . . we hold that the Appellant being eligible for exemption are not liable for duty. Resultantly we set aside the impugned order and allow the appeal with consequential reliefs to the Appellant, if any, in accordance with the law.”

CBIC issues Standard Operating Procedure for Field Formations for Examining and Forwarding Representations of Taxpayers to GSTN [Read Circular]

The Central Board of Indirect Tax & Custom (CBIC) through the circular stated that in order to avoid the technical glitches on common portal the Central Board of Indirect Tax & Custom (CBIC) the uniformity in the standard Operating procedure will be followed by the field formations for examining and forwarding the details of taxpayers to Goods and Service Tax Networks (GSTN).

The circular was issued by Sanjay Mangal, Commissioner of Goods and Service Tax (GST) addressing the Principal Chief Commissioners or the Chief Commissioner of Central Tax. The subject-matter of the circular pertained to various rules of uniformity which were introduced in the Central Goods and Service Tax (CGST) Rules, 2017 and also the Income Tax Grievance Redressal Mechanism also came into existence by the recommendation of GST Council in order to address the grievances of the GST payers pertaining to the glitches.

Goods and Service Tax Networks (GSTN) issued a Standard Operating Procedure (SOP) in order to remove glitches on the common portal and ensure uniformity in the procedure which is to be followed by the field formation in order to examine and forward the details of the taxpayers to Goods and Service Tax Networks (GSTN).

The subject-matter of the circular also pertains to the following grievances:

1. While referring to the technical glitches under Goods and Service Tax Networks (GSTN)  the nodal officers failed to follow the procedure prescribed by  Standard Operating Procedure (SOP).
2. The representations sent by the taxpayers are also forwarded to Goods and Service Tax Networks (GSTN) without proper scrutiny.
3. The representations are also at the same time sent without the approval of the Principal Commissioner.

Therefore these casualties have resulted in the difficulty for GSTN for the purpose of timely processing it. All these problems were discussed in the ITGRC meetings. And the Nodal officers are requested to follow the due procedure of scrutiny before sending the representations to the GSTN and the procedure which is ought to be followed is:

1. The taxpayer should be properly examined;
2. After receiving the details the nodal officer will get it examined by the IT Commissioner.
3. On the Basis of the decision of the Income Tax Grievance Redressal Mechanism, the GSTN must be implemented.
4. The Nodal GSTN Officer is supposed to intimate about all these decisions and implementations to the IT Grievance Redressal Committee.

Interest payable on Delayed Tax to be calculated on Total Tax Liability as filed in GSTR-3B: CBIC

The Central Board of Indirect Taxes and Customs (CBIC) has said that taxpayers who have filed their returns in GSTR-3B Form are required to pay interest on the total amount of tax liability shown in the form.

The CBIC issued such notice after doubts were raised by field formations, whether the interest has to be paid on gross tax liability or on the net cash liability. The GSTR-3B Tax Liability notice stated section 50 (1) of the Central Goods and Service Tax (CGST) Act and stated that the provision is very clear on the tax liability in this regard.

The Board has requested all Principal Chief Commissioners and Chief Commissioners of Central Tax to look into the issue personally and to urge the field formations under their jurisdiction for making recovery of applicable interest from the identified taxpayers and to furnish a weekly report of GSTIN wise recovery of interest made in this regard.

Rajasthan HC grants bail to Chartered Accountant accused of wrongly availing Input Tax Credit [Read Order]

The Rajasthan High Court has granted bail to Paridhi Jain, a Chartered Accountant accused, based in Jaipur who was involved in the wrongful availing of Income Tax Credit (ITC).

As per the state tax department’s anti-evasion wing, she and her accomplice from Jodhpur Gaurav Maheshwari registered over 2 dozen firms and embezzled GST amounting to an approximate Rs. 17 Crore. The scam came into light when Gaurav was I was picked up by police following a complaint by his drive who claimed that his documents were used without his knowledge by Gaurav for registration of a shell firm.

Justice Vinit Kumar Mathur, while granting the bail observed, “Having regard to the facts and circumstances of the case and upon a consideration of the arguments advanced and the fact that the petitioner is a practising Chartered Accountant and a lady of 27 years is facing incarceration for last more than one month and in view of the undertaking submitted by the petitioner to fully cooperate with the investigating agency and provide the information/documents asked for by the investigating agency, this Court is of the opinion that the bail applications filed by the petitioner deserve to be accepted.”

The Chartered Accountant accused was released on bail on the conditions of surrender of passport before the investigating authority and a personal bond of Rs 10,00,000/- and two sureties of Rs10,00,000/- each with one surety being a close family member.

GST Paid on Maintenance Charges by Co-operative Housing Society, not eligible to claim ITC in the cases of Replacement of Existing Elevator: AAR [Read Order]

The Maharashtra Authority of Advance Ruling (AAR) on an application filed by the applicant held that Goods and Service Tax (GST) paid by any co-operative housing society on the maintenance charges, which is paid by its members are not eligible to claim the Input Tax Credit (ITC) in the cases of the replacement of existing elevator at its own premises.

The applicant is a Co-operative Housing Society which is registered under the Maharashtra Co-operative Housing Society Act. The Co-operative Housing Society is planning to change the existing lift or elevator in its premises and the vendor of the lift or elevator is registered under the Goods and Service Tax (GST) Act for the purpose of supply, manufacture, installation, and commission of lift or elevator.

Therefore, the question raised by the applicant was whether the applicant which pays the Goods and Service Tax (GST) on all the maintenance charges received from its members is eligible to avail Input Tax Credit (ITC) in the case where the applicant is planning to replace the existing elevator or lift by the vendor who is registered under Goods and Service Tax (GST) Act?

Maharashtra Authority of Advance Ruling (AAR) comprising of Ms. P. Vinitha Sekhar, Additional Commissioner of Central Tax, and Shri A. A. Chahure, Joint Commissioner of State Tax while taking into consideration the decision of the Supreme Court in the cases of Triveni Engg. Industries Ltd. vs. C.C.E. and Quality Steel Tubes (P) Ltd. vs. C.C.E., U.P. held that Goods and Service Tax (GST) paid by any co-operative housing society on the maintenance charges, which is paid by its members are not eligible to claim the Input Tax Credit (ITC) in the cases of the replacement of existing elevator at its own premises. The reason behind such decision was that after the assembling things in the erection of the building those things become the immovable property and immovable property can not be subjected to excise under the heading Tariff which is claimed by the revenue.

18% GST applicable on Transformers supplied to Indian Railways: AAR [Read Order]

The Maharashtra Authority of Advance Ruling (AAR) on an application made by an applicant held that the ‘transformers’ supplied to Indian Railways is covered under HSN ‘8504’ and Sr. No. 371 of Schedule III of the notification 1/2017 pertaining to the central Tax (Rate) and as a consequence the applicant is liable to pay @18% of Goods and Service Tax (GST).

The applicant named Rishab Industries which is engaged in the manufacturing of transformers, panels and magnetic compounds which is authorized by the Research Design and Standard Organisation (RDSO). The applicant developed the transformers for Indian Railway with the purpose to support passenger coaches. The transformers manufactured are the primary source for the generation of electricity in order to run the fan, A/Cs, lights and charging points for the passengers within the coaches. All the inputs such as super enamelled copper strips and wires, electrical steel cold rolled grain oriented silicon steel lamination, stainless steel and other insulating items that are manufactured and used in the transformers are taxable @18% of Goods and Service Tax (GST).

The issue raised in the application was whether the transformers which were supplied to the Indian Railways are classified as ‘part of railway or tramway locomotives or rolling stock i.e. HSN ‘8607’ and as a consequence subjected to @5% of Goods and Service Tax (GST) or the transformers can be categorized under HSN ‘8504’ and as a consequence subjected to @18% of Goods and Service Tax (GST)?

The Maharashtra Authority of Advance Ruling (AAR) comprises Smt. P. Vinitha Sekar, Additional Commissioner of Central Tax and Shri. A.A. Chahure, Joint Commissioner of State tax held that the transformers supplied by the applicant to the Indian Railways are covered under HSN ‘8504’ and Sr. No. 371 of Schedule III of the notification 1/2017 pertaining to the central Tax (Rate) and as a consequence, the applicant is liable to pay @18% of Goods and Service Tax (GST).

Finance Ministry takes Measures to Curb irregularities in GST Claims

To identify cases of fraudulent claims under Goods & Services Tax (GST), the Government of India has taken measures to apply stringent risk parameters-based checks driven by rigorous data analytics and Artificial Intelligence (AI) tools based on which certain taxpayers are taken up for further verification.

Moreover, a standard operating procedure has been prescribed for exporters vide Circular No. 131/1/2020-GST dated 23.01.2020 to mitigate the risk of wrongful refund claims of Integrated Goods and Services Tax (IGST). This was stated by Shri Anurag Singh Thakur, Union Minister of State for Finance & Corporate Affairs, in a written reply to a question in Rajya Sabha yesterday.

Shri Anurag Sing Thakur further stated that to curb cases of wrongful claims of the input tax credit (ITC) sub-rule (4) of rule 36 has been inserted to Central Goods and Services Tax (CGST) Rules, 2017 vide notification No. 49/2019 – Central Tax dated 09.10.2019. Vide notification No. 75/2019 – Central Tax dated 26.12.2019, rule 86A has been inserted to CGST Rules, 2017 which empowers tax officer, not below the rank of Assistant Commissioner, to block input tax credit (ITC) available in the electronic credit ledger of a taxpayer if he has reasons to believe that such credit is ineligible or has been availed fraudulently.

Based on the valuable feedback and suggestions received from multiple stakeholders including State Governments, the GST Council makes recommendations and necessary action is taken by the Government.

Provisional Attachment under GST Act to Protect Revenue is not an Omnibus Power: Bombay HC [Read Order]

While allowing a writ petition filed by M/s. Gehna Trading LLP, the Bombay High Court has held that the Provisional Attachment Power is to be used in only limited circumstances and it is not an omnibus power.

The Deputy Commissioner, Central Goods and Service Tax (CGST) informed the Branch Manager where the Petitioner holds a bank account that in view of the proceedings filed against Yusuf Fauzdar Shaikh, proprietor of M/s. Fashion Creations. Proceedings have been launched against the said taxable person and the Respondents were of the belief that amounts were being transferred to various persons, including the Petitioner. Hence, a direction was issued to the bank not to allow any debit.

Section 83 of the Central Goods and Services Tax (CGST) Act, 2017 relating to “Provisional Attachment power to Protect Revenue in Certain Cases”, elaborates as under:

1) Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to the taxable person in such manner as may be prescribed.

(2) Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1).

On relying upon the judgment in Kaish Impex Pvt. Ltd. v/s. Union of India & Ors. Court has observed thus:-

Primary defence of the Respondents is that even if section 62, 63, 64, 67, 73 and 74 mentioned in section 83 of the Act are not referable to the case of the Petitioner since a summons is issued to the Petitioner in pursuant to the inquiry initiated against M/s. Maps Global under section 67 of the Act, by the issuance of summons the proceedings, get extended to the Petitioner also.

The division bench comprising of Justices Nitin Jamdar and M.S. Karnik observed that the legislature has no doubt conferred power on the authorities to provisionally attach bank accounts to safeguard government revenue, but the same is within the well-defined ambit. Wherefore, only upon contingencies provided therein that the power under section 83 can be exercised. This power is to be used in only limited circumstances and it is not an omnibus power.

ICSI notifies Constitution of the Academic Committee

The Institute of Company Secretaries India (ICSI) has notified the inclusion of a new Professional Development Committee and has introduced the Constitution of the Academic Committee.

The new amendment proposes a new regulation to be included after section 105 which states:

Constitution and Functions of the Academic Committee.-

(1) The Council shall constitute an Academic Committee consisting of the members referred to in sub-section (2) of section 17.

(2) To assist the Academic Committee, the Council may appoint such experts as it may deem necessary for the efficient discharge of its functions.

(3) The President shall be the special invitee in the meetings of the Academic Committee.

(4) The ICSI members of the Academic Committee shall hold office for such term as may be determined by the Council and any vacancy in the Academic Committee shall be filled by the Council in the same manner as the member whose vacancy occurred was filled.

(5) The ICSI  members of the Academic Committee shall be entitled to such sitting fee, traveling, conveyance, and other allowances as may be determined by the Council:

Provided that Council Member shall not be entitled to any sitting fee.

(6) The Academic Committee shall be entrusted with the task of planning and implementation of all academic activities related to students including:-

1. (i)  scanning of the economic and regulatory environment;
2. (ii)  designing the syllabus and its contents and periodical review and revision thereof;
3. (iii)  designing mode of education;
4. (iv)  assessing and finalization of the training requirements;
5. (v)  designing the mode of examination and evaluation system;
6. (vi)  recommending necessary changes to the Council as and when required, and
7. (vii)  any other related academic matters:

Provided that the Committee shall regularly monitor the effectiveness of the above and recommend necessary changes to the Council, as and when required; Provided further that the terms of reference of the Academic Committee may include any other area as may be determined by the Council.

(7) The Academic Committee shall meet as and when required, however, at least one meeting shall be held on a half-yearly basis and there shall be a gap of at least four months between two meetings.

(8) The quorum of the Academic Committee shall not be less than one-third of the total members of the Committee.

(9) A member who has any pecuniary interest or perceived to have any pecuniary interest, direct or indirect, in any matter which is brought up for consideration of the Academic Committee, shall disclose the nature of his interest in such matter and such disclosure shall be recorded in the proceedings of the Committee.

(10) The member referred to in sub-regulation (9), shall not take any part in any deliberation or decision of the Committee on such matters.

(11) The Academic Committee shall work as per the overall policy framework and vision of the Institute as decided by the Council from time to time.

(12) The Council shall have the power to review any decision taken by the Academic Committee in the performance of functions assigned or delegated to it.

(13) The Council shall record the reasons in writing, where it does not accept any recommendation of the Academic Committee and shall disclose the same in the Annual Report of the Institute.

(14) Subject to the provisions of the Act and Regulations, the Academic Committee may delegate by resolution, any of its duty or function to the President or Vice-President or Council Member or Secretary or Chief Executive; or any other Officer of the Institute not below the rank of the Director, as may be deemed necessary and proper.”

CBDT issues Norms for allotment of PAN to FPI’s on Common Application Form [Read Notification]

The Central Board of Direct Tax (CBDT) through a notification dated February 7, 2020, notified that the procedure in the form of norms for the allotment of Permanent Account Number (PAN) to Foreign Portfolio Investors (FPI) on Common Application Form (CAF).

The notification was issued in the name of Subrata Kumar Dash, Pr. Director-General of Income Tax, New Delhi under the Ministry of Finance.

The subject-matter of the notification pertains to the Common Application Form (CAF) which can be used for the purpose of registration, the opening of bank accounts and opening of the Demat account. Furthermore, in India when the application is made for Permanent Account Number (PAN), the Foreign Portfolio Investors (FPI) must be notified by the Department of Economic Affairs under the Ministry of Finance.

Further, the Central Board of Direct Tax (CBDT) has laid down the classes of persons, format, forms, and also the procedure for allotment of Permanent Account Number (PAN) to the Foreign Portfolio Investors (FPI) by the way of Common Application Form (CAF). On January 27, 2020, the CAF was notified in order to use it for the purpose of registration, the opening of the Demat account and Bank Account and application for  Permanent Account Number (PAN) to Foreign Portfolio Investors (FPI) in India.

The board notification aims to introduce a common application form (CAF) for Foreign Portfolio Investors (FPI) in order to access Indian Security market by bringing suitable amendment in Regulation 3(2) of SEBI (FPI) Regulations, 2014.

ICAI to provide Free Accounting Software for Chartered Accountants and CA Firms

The Institute of Chartered Accountants of India ( ICAI ) has joined an association with host books to provide Free Accounting Software for Chartered Accountants and CA Firms.

Gurgaon based FinTech Company HostBooks has signed a Memorandum of Understanding (MoU) with ICAI, the national professional accounting body to encourage the use of technology and automation among chartered accountants, which will help them increase their efficiency and productivity in practice.

The Committee for Capacity Building of Members in Practice (CCBMP) of the ICAI has arranged Cloud-based ‘All-in-One accounting’ software i.e. one Stop Solution for all Accounting, Compliance, Return Preparation and Filing needs of Chartered Accountants in Practice & CA Firms. The aforesaid software is free of cost for 3 years to CA Practitioners & Firms.

‘All-in-One accounting’ software will be offering free of cost three users all-in-one accounting & compliance solutions to ICAI members for three years, bundled with other benefits. Furthermore, the company will provide dedicated support and service center for ICAI members.

Features of All-in-One Automated Accounting & Compliance Solution

‘All-in-One accounting’ software is a single-sign-on application to manage all your Accounting & Compliance needs with:

• Accounting, GST, TDS, E-way Bill, Income Tax –one-stop solution
• Mobile solution on the go any time anywhere
• Auto data back-up, Free Cloud Storage
• Bank-grade security – 128-bit SSL.
• Centralized user dashboard and Role-based access control

Accounting Software Features

• User-Friendly Dashboard & inbuilt Document Management System
• Invoice to Cash Process & Procure to Pay Process
• AI-Based Bank Reconciliations, Inventory Valuation & Fixed Asset Management
• Seamless Integration with Bank Account

GST Software & E-way Bill

• Seamless GST Return Filing & Import of GSTR-2A and reconciliation
• Tally Integration & Auto-OTP Verification
• Integrated with E-Way Bill & Quick Data Import
• Multi GSTIN Management & Multi-currency
• LUT Enabled
• Seamless E-Way Bill Generation & Real-time Integration

TDS Software

• Seamless filing of Forms 24Q, 26Q 27Q, 27EQ, 27A & ITNS 281
• Automatic Data Validation & Auto Calculation of TDS/TCS
• OLTAS Challan Validation & Real-time Integration with TRACES
• Easy Data Import/Export

Income Tax Software

• Hassle-free login to the e-filing website & Computation of Total Income, Tax Payable, Computation of Adv. & Self-Assessment Tax.
• The download of ITR-V, Acknowledgement, ITR & ITR upload and e-verification
• Auto mapping of Income from one head to another head & Auto set-off of HP loss as per u/s 71(3A).

Furthermore, the company will provide dedicated support and service center for ICAI members after the installation of the integrated accounting and compliance software. To ease the transition process, the accounting professionals will also get a dedicated team for implementation from time to time to provide training.

Homeowner Association liable to pay GST on Contributions made by Members and can avail Exemption If contribution does not exceed Rs.7,500: AAR [Read Order]

The Authority of Advance Ruling (AAR) in Karnataka on an application made by the applicant held that the homeowner association is liable to pay Central Goods and Service Tax (CGST) and State Goods and Service Tax (SGST). Further, the applicant can also avail of the exemption only on the condition that the contribution made by the members is not more than Rs. 7,500/-. And the corpus funds are not taxable.

In this case, the applicant is M/s Vaishnavi Splendour HomeOwner Association, which is an association that comprises 88 members. These members maintain common areas such as gardens, corridors, pathways, swimming pools, etc. This association collects annual contributions from its members which can be calculated on the basis of the super built-up area owned by the members. Furthermore, they collect contributions in the name of corpus funds for future contingencies.

These were 4 issues raised in this application namely:

1. Whether the association is liable to pay CGST and SGST on the number of contributions received from the members?
2. If in case the answer to the above issue is ‘yes’ then can the association avail the exemptions?
3. If in case the answer to the above issue is ‘yes’ whether the claim of Input Tax Credit (ITC) can be restricted?
4. Whether the corpus funds are taxable under CGST and SGST or not?

The Authority of Advance Ruling (AAR) in Karnataka comprised of Sri Harish Dharnia, Additional Commissioner of Central Tax and Dr. Ravi Prasad M.P., Joint Commissioner of Commercial Tax while addressing the above issues held that, the association is liable to pay both Central Goods and Service Tax (CGST) and State Goods and Service Tax (SGST) on the sum of amount received from its members.

The AAR also said that the benefit of exemption can be granted to the applicant only in the case when the contributions i.e. the maintenance charges are not more than Rs. 75,00 per month.

In the case of inward supply of goods, the applicant can claim Input Tax Credit (ITC) in accordance with the restrictions prescribed under Section 172(2) of the CGST Act and Rule 42 of CGST Rules.

Lastly, it was held that the applicant is not liable to pay CGST or SGST in the case of corpus funds.

ICSI allows Members to Form Multi-Disciplinary Firm [Read Notification]

The Institute of Company Secretaries India (ICSI) has notified an amendment to the Company Secretaries Regulations, 1982 wherein the Institute has permitted its members to form a multi-disciplinary firm with professionals in other bodies.

As per regulation 168 of the company secretaries regulations, a company secretary in practice was not allowed to engage in any other business or profession. They were allowed, under the discretion vested in the Council in this behalf, a Company Secretary in practice may act as a secretary, trustee, executor, administrator, arbitrator, receiver, appraiser, valuer, internal auditor, management auditor, management consultant or as a representative on financial matters including taxation and may take up an appointment that may be made by the Central or any State Government, Court of Law, Labour Tribunals, or any other statutory authority.

This regulation has been relaxed in the newly notified amendment which states:

“A member in practice may form a multi-disciplinary firm with a member of other professional bodies as prescribed under regulations 168A and 168B in accordance with the regulating guidelines of the Council for functioning and regulation of such multidisciplinary firm. 

In the said regulations, in regulation 169.- 

1. (a) in sub-regulation (1), after the words “Company Secretary in practice”, the words “or ICSI Multi-disciplinary Firm” shall be inserted”; 
2. (b) in sub-regulation (2), after the words “Company Secretaries in practice”, the words “or ICSI  Multi-disciplinary Firm” shall be inserted; 
3. (c) after sub-regulation (2), the following sub-regulation shall be inserted, namely:- 

“(2A) An application in such form as may be determined by the Council, is required to be made to the Institute for obtaining prior approval of the trade or firm name proposed to be used by the company secretary in practice or by a firm of Company Secretaries in practice or Multidisciplinary Firm.”

The other professional bodies include:

(a)       The Institute of Chartered Accountants of India (ICAI)

(b)       The Institute of Cost and Works Accountants of India (ICWAI)

(c)       Bar Council of India

(d)       The Indian Institute of Architects (IIA)

(e)       The Institute of Actuaries of India (IAI)

Receipts from Carbon Credit is not Business Income: ITAT disallows Deduction Claim [Read Order]

The Income Tax Appellate Tribunal (ITAT) held that the receipts from the sale of the carbon credit are liable to be treated as the capital receipts on an appeal filed by M/s. Rajshree Sugars and Chemicals.

The assessee had claimed that the receipt from the sale of carbon credits had originally been offered by the assessee as business income and the assessee had claimed the same as eligible for deduction u/s.80IA of the Income Tax Act, 1961.

The Assessing Officer submitted that in the course of the assessment had denied the assessee’s claim of deduction u/s.80IA in respect of the receipts on the sale of the carbon credits.

In an additional ground, the assessee has raised an alternative prayer that the receipts from the sale of the carbon credit are liable to be treated as the capital receipts.

“Additional Ground: An amount of Rs.5,76,72,595/- realized to transfer of Carbon Credits – CER (Certified Emission Reductions) was not a receipt in the nature of revenue, but only a capital receipt and therefore not liable to be included in the total income of the appellant for the assessment year.”

Section 115 BBG(1) has been brought to the statute elaborate as follows:

(1) Where the total income of an assessee includes any income by way of transfer of carbon credits, the income-tax payable shall be the aggregate of:-

(a) The amount of income-tax calculated on the income by way of transfer of carbon credits, at the rate of ten percent; and

(b) The amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (a).”

In the light of the decision of the Co-ordinate Bench of the Tribunal, Hyderabad Benches in the case of Commissioner of Income Tax Vs. My Home Power Limited and Assistant Commissioner of Income Tax Vs. M/s. Chemplast Sanmar Limited the bench held that the receipts from the sale of the carbon credits are liable to be held as capital receipts only.

The Tribunal observed that the expenditure incurred by the assessee in respect of the sale of the carbon credits cannot be treated as Revenue expenditure at all.

The Bench comprising of Judicial Member, George Matham and Accountant Member S. Jayaraman further directed to see to it that when the capital receipt is computed, the said expenditure is reduced from the said capital receipts for determining the net capital receipt.

MCA simplifies process for Incorporation of Companies, notifies New Forms ‘SPICe+’ and ‘AGILE-PRO’

The Ministry of Corporate Affairs (MCA) has simplified the process for incorporation of the Companies and also notified two new forms to ‘ SPICe+ ’ and ‘AGILE-PRO’ to ease the process.

The MCA through the notification has amended the Companies (Incorporation) Rules, 2014 and the amendment came to be known as Companies (Incorporation) Amendment Rule, 2020.

The Companies (Incorporation) Amendment Rule, 2020 will be effective from February 15, 2020. The amendment brought the following changes in the Principal Act:

1. Reservation of name or change of name under Rule 9 certain things were substituted namely:

• The reservation of the name of the company through an application can be made with the help of web service namely Simplified Proforma for Incorporating Company Electronically Plus: INC-32 (SPICe+), which is available at the website i.e. mca.gov.in.
• In case there is a change in the name of a company than a web service named Reserve Unique Name (RUN) and the registration fee as prescribed under Companies (Registration Offices and Fees) Rules, 2014. The Registrar after the due analysis may accept or reject the application in accordance with the circumstances.
• The central government may allow the resubmission of the web from the 15 days of the ratification of the defects.

2. In  Rule 10, 12, 19(1) and 38(1),(2),(3),(4),(7),(9) in place of words, letters, figures, and brackets Form No. INC-32 (SPICe), wherever they occur, the letter, brackets, words, and figure must be substituted with Simplified Proforma for Incorporating Company Electronically Plus: INC-32 ( MCA rules SPICe+).

3. In MCA Rule 38 the letter ‘Electronically (SPICE)’ was substituted with ‘Electronically Plus (SPICE+).

4. In Rule 38A the following changes were made:

• In the marginal heading, the word “Employees Provident Fund Organisation (EPFO) Registration and Profession Tax Registration and Opening Bank Account” substituted  “Employees Provident Fund Organisation (EPFO)”.
• “Agile-Pro” was substituted in the place of “Agile”.

Further, there were other substitutions that were made in the annexures in accordance with the above amendments.

ICSI notifies New Expanded definition of ‘Register of Members’ [Read Notification]

The Institute of Company Secretaries India (ICSI) has notified an amendment to the company secretaries regulations in section 3 where the predominance of the register of members has been elaborated.

As per the new amendment, the register of members requisites:

(1) The ICSI shall maintain a Register of Members in the proforma referred to in Schedule ‘A’ manually or electronically or in any other mode as may be determined by the Council.

(2) The Register of Members shall contain full name, date of birth, domicile, professional address, residential address, membership number, date of acquiring membership, qualifications, certificate of practice number if holding, email id, mobile number, telephone number if any, and such other particulars as may be determined by the Council.

(3) The member shall communicate to the Institute any change of his details entered in the Register, within thirty days of such change.

Earlier section 4 of the company secretary regulations only mentioned, “ The Register of members of the ICSI shall be maintained in the proforma as provided in Schedule A and every member shall be required to communicate to the Institute any change of professional address, within one month of such change.”

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