Reference: Central Board of Indirect Taxes and Customs
Update:
Testing of imported food products at FSSAI
FSSAI has notified 150 Point of Entries (PoEs) in order to put in place a robust food import regulatory framework which shall be effective from 01.04.2020. FSSAI has also notified customs officials as Authorised Officers (AC’s) at 128 PoEs while 22 PoEs are manned by FSSAI officials. Further, FSSAI has notified 183 NABL accredited laboratories and 18 referral laboratories across the country for testing of food samples.
Implication:
The testing of samples of imported food is to be carried out in these FSSAI notified labs only.
Update:
GST paid on replacement of existing lift by the society for maintenance purpose is not available as ITC
ITC is not available in respect of goods or services received by a taxable person for the construction of an immovable property on his own account even when used in the course or furtherance of business.
Manufacture, supply, installation and commissioning of lifts or elevators are in the nature of works contract activity resulting in the creation of immovable property. Therefore, the ITC of GST paid on replacement of lift being an immovable property shall not be available.
Implication:
The Authority for Advance Rulings held that GST paid to replace the existing lift shall not be claimed as input tax credit.
Update:
Services provided by restaurant located in hotel premises having tariff of Rs. 7500 & above are taxable @ 18% GST
The applicant has submitted that GST rate on restaurant service shall be 5% as the restaurant is part of the premises of the arcade but not of the hotel and the arcade does not offer lodging and boarding services. he hotel offers rooms for lodging and boarding having declared tariff of more than Rs. 7,500. According to the rate notification for services under GST, if the restaurant is located in the premises of the hotel with a tariff of Rs. 7,500 and above per unit/room per day, the applicable rate of GST will be 18%.
Implication
Authority for Advance Rulings ruled that the applicable GST rate on restaurant services is 18% as the restaurant is located in the same premises as that of hotel and the supply of food and drinks for the consumption shall be made within such hotel premises.
Update:
Liability on the tax payer to assess and pay the interest on delayed payment of tax
CBEC has casted liability wherein the taxpayers have filed their FORM GSTR-3B returns belatedly without discharging the applicable interest payable on the delayed payment of tax. Further, interest payable on such delayed payment of tax can be recovered under the provisions of section 79 of the CGST Act read with section 75(12).
Sub-section (1) of Section 50 of CGST Act
(1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent., as may be notified by the Government on the recommendations of the Council.
Sub-section (12) of Section 75 of CGST Act
(12) Notwithstanding anything contained in section 73 or section 74, where any amount of self-assessed tax in accordance with a return furnished under section 39 remains unpaid, either wholly or partly, or any amount of interest payable on such tax remains unpaid, the same shall be recovered under the provisions of section 79.
The above provisions show that CBEC has casted liability on the taxpayer to assess and pay the interest on delayed payment of tax.
Implication:
The interest liability is to be paid on the tax liability that is paid belatedly, either through cash or through utilization of input tax credit (ITC).
Update:
Implementation of PGA eSANCHIT– Paperless Processing under SWIFT-Uploading of Licenses/Permits/Certificates/Other Authorizations (LPCOs) by PGAs – reg.
A facility to upload digitally signed Licenses/Permits/Certificates/Other Authorizations (LPCOs) by Participating Government Agencies (PGAs) on eSANCHIT at all ICES locations across India was introduced from 16.11.2018 vide Circular No. 44/2018-Cus. dated 13.11.2018.
3 more PGAs with their LPCOs are being brought onboard eSANCHIT platform. With this, the total number of PGAs brought on Board becomes 50 as on date.
To facilitate the members of the trade (beneficiaries), the PGAs are required to upload the LPCOs issued by them during the last 15 days from the stated cut-off date. Any LPCOs issued on a prior date may also be uploaded by the PGAs on eSANCHIT, in order to enable the beneficiary to utilize the same.
Implication:
Since the facility to upload the LPCOs is now being fully made available to these 3 new PGAs, therefore, the beneficiaries i.e. importer/exporters/customs brokers would not be allowed to upload the previously issued LPCOs on eSANCHIT w.e.f 28.02.202.
Update:
Sanction of Prosecution of Group -‘A’ Officers in some cases-reg
CBIC has prescribed the following procedure for approval of competent authority for sanction of prosecution:
In respect of the proposals emanating from the field formations of Customs [including Directorates, except DRI & DGGSTI], the Commissioner (Investigation-Customs) and the Commissioner (GST-Investigation), shall respectively process the proposals pertaining to prosecution of Group ‘A’ officers through the Member in charge of the Zone forwarding the prosecution proposal. In case the proposal of prosecution is received from DRI/ DGGSTI, Commissioner (Investigation- Customs) and the Commissioner (GST-Investigation) wings will route the file through Member (Investigation), CBIC.
Implication:
Prosecution proposals involving charges under Prevention of Corruption Act, 1988 shall be routed to Directorate General of Vigilance (DGoV).
Update:
Regulation of irregularities in GST claims
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.
Implication:
To curb cases of wrongful claims of input tax credit, 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 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.
Update:
Anti-dumping extended on import of Acetone
The Central Government has extended anti-dumping duty imposed on imports of ‘Acetone’ originating in or exported from Korea RP. up to and inclusive of the 15th April, 2020, unless revoked, superseded or amended earlier.
Implication:
Importers of Acetone originating in or exported from Korea RP shall continue to pay anti dumping duty for extended period till 15.04.2020.
Update:
Extension of due date for e-filing GST TRAN-1
The Commissioner has extended the period for submitting the declaration in form GST TRAN-1 till 31st March, 2020 for such class of registered person who could not submit the declaration by the due date on account of technical difficulties on the common portal and whose cases have been recommended by the council.
Implication:
Stakeholders shall have more time to submit the declaration in form GST TRAN-1.
Update:
Electronic sealing — Deposit in and removal of goods from Customs bonded Warehouses-reg
CBIC had prescribed RFID self-sealing for export of containerized cargo also prescribed the use of “RFID tamper proof one-time-bolt seal” and providing of readers / procedure for its use by Customs. It has now been decided by the Board that RFID sealing shall be extended to transport of goods for deposit in a warehouse as well as removal therefrom.
Implication:
Wherever the Warehousing Regulations prescribe affixing of a “One Time Lock”, the importer or owner of the goods shall use RFID anti-tamper one-time-locks.
Reference: Central Board of Direct taxes
Update:
Income Tax Department coducted search at Hyderabad, Vijaywada, Cuddapah, Vishakhapatnam, Delhi and Pune
Income Tax Department carried out Search and Seizure action on 6th February 2020 at Hyderabad, Vijaywada, Cuddapah, Vishakhapatnam, Delhi and Pune. More than 40 premises were covered. The search action included three prominent infrastructure groups based in Andhra Pradesh and Telangana.
The search operations revealed that Infrastructure companies had subcontracted work to several non-existent/bogus entities. Preliminary estimates suggest siphoning of more than Rs. 2000 crore through transactions that were layered through multiple entities with the last in the chain being small entities with turnover less than Rs. 2 crore to avoid maintenance of books of accounts and tax audits etc.
Unexplained cash of Rs. 85 lakh and Jewellery worth Rs. 71 lakh have been seized and more than 25 bank lockers have been restrained.
Update:
Sec.68 not attracted to shares issued for shares under a \’barter\’
Kolkata ITAT dismisses Revenue’s appeal, deletes addition of Rs.5.20 crores made u/s. 68 on account of issue of shares against acquisition of investments. In the remand report, AO did not report anything adverse and it declines to interfere with CIT(A)’s order relying on Madras HC decision in case of B.Jayalakshmi wherein it was held that where CIT(A) on basis of remand report of the AO, allowed claim of assessee, Revenue was not entitled to maintain an appeal before ITAT against said order of the CIT(A).
Update:
Notifies forms for exercising option to avail lower corporate tax rate u/s. 115BAA/BAB
CBDT notifies new Rules 21AE & 21AF for exercising option to avail lower corporate tax rate under newly inserted Sections 115BAA & 115BAB. The forms seek general details of the company along with a declaration that “the option once exercised for any previous year, cannot be subsequently withdrawn for the same or any other previous year.”
Implication:
New Rules “shall come into force on the 1st day of April, 2020.”; Notifies new Forms 10-IC / 10-ID to be furnished electronically by way of an application for exercise of option u/s. 115BAA(5) / 115BAB(7).
Update:
Banks are required to report the exemption availed at the end of a fortnight under “exemptions/others” in the Section-42 return
I-T Dept to share taxpayers\’ PAN, other data with SEBI to help in stock market-related probes
(CBDT) issued an order on February 10 under section 138 (1) of the I-T Act regarding the I-T department that it will share all taxpayers\’ data like PAN information with Sebi in order to help the capital market regulator in its probe against various entities, including those involved in \’stock market manipulation\’
The CBDT said under the suo moto exchange, information such as list of scrutiny cases marked as having evasion or violation related to \’stock market manipulation\’ and any other information considered necessary for Sebi (Securities and Exchange Board of India), will be provided.
Implication:
While furnishing the information, the specified income tax authority shall form an opinion that sharing of such information is necessary for the purposes of enabling Sebi to perform its functions under its respective laws.
Update:
Procedure of PAN allotment
CBDT has made provisions for the applicants who wish to apply for allotment of permanent account number (PAN), through a common application form notified by the Central Government in thc Official Gazette, and the Principal Director General of Income Tax (Systems) or Director General of Income-tax (Systems) shall specify the classes of persons, forms and format along with procedure for safe and secure transmission of such forms and formats in relation to furnishing of Permanent Account Number (PAN)\”.
A Common Application Form (CAl’) for the purpose of registration, opening of bank and demat accounts and application for Permanent Account Number (PAN) has been notified for the Foreign Portfolio Investors (FPls) in India.
Government has also laid down the classes of persons, forms, format and procedure for Permanent Account Number (PAN) as prescribed in notification.
Reference: Reserve Bank of India
Update:
Micro, Small and Medium Enterprises (MSME) sector – Restructuring of Advances
RBI has decided to extend the one-time restructuring of MSME advances. A one-time restructuring of existing loans to MSMEs classified as \’standard\’ without a downgrade in the asset classification is permitted, subject to the following conditions:
- The aggregate exposure, including non-fund based facilities, of banks and NBFCs to the borrower does not exceed ₹25 crore as on January 1, 2020.
- The borrower’s account was in default but was a ‘standard asset’ as on January 1, 2020 and continues to be classified as a ‘standard asset’ till the date of implementation of the restructuring.
- The restructuring of the borrower account is implemented on or before December 31, 2020.
- The borrowing entity is GST-registered on the date of implementation of the restructuring.
Implication:
This condition will not apply to MSMEs that are exempt from GST-registration. This shall be determined on the basis of exemption limit obtaining as on January 1, 2020.
Update:
Incentivising Bank Credit to Specific Sectors – Exemption from CRR Maintenance
RBI advices the banks that they can claim the first deduction from the NDTL of February 14, 2020 for the amount equivalent to the incremental credit extended to the sectors over the outstanding level of credit as at the end of the fortnight ended January 31, 2020.
An amount equivalent to the incremental credit outstanding from the fortnight beginning January 31, 2020 and up to the fortnight ending July 31, 2020 will be eligible for deduction from NDTL for the purpose of computing the CRR for a period of five years from the date of origination of the loan or the tenure of the loan, whichever is earlier.
Implication:
Banks are required to report the exemption availed at the end of a fortnight under exemptions/others in the Section-42 return.
Update:
RBI has revised guidelines for deferment of DCCO for CRE projects as under:
- Revisions of the date of DCCO and consequential shift in repayment schedule for equal or shorter duration (including the start date and end date of revised repayment schedule) will not be treated as restructuring provided that:
- The revised DCCO falls within the period of one year from the original DCCO stipulated at the time of financial closure for CRE projects; and
- All other terms and conditions of the loan remain unchanged.
- In case of CRE projects delayed for reasons beyond the control of promoter(s), banks may restructure them by way of revision of DCCO up to another one year (beyond the one-year period quoted at paragraph i (a) above) and retain the ‘standard’ asset classification if the account continues to be serviced as per the revised terms and conditions under the restructuring.
- Banks while restructuring such CRE project loans under instructions at (ii) above will have to ensure that the revised repayment schedule is extended only by a period equal to or shorter than the extension in DCCO.
Implication:
This will harmonize the deferment of date of commencement of commercial operations (DCCO) for projects in non-infrastructure and commercial real estate (CRE) sectors.
Reference: Securities Exchange Board of India
Update:
An online system for detecting misuse of clients’ securities by brokers
SEBI has developed an in – house online system by which it would be able to prepare client level securities holding register of the brokers. SEBI collects the details of the clients’ securities submitted in weekly report filed by brokers with the Exchanges and updates the same with trades conducted in the accounts of said clients using the data available with SEBI in DWBIS as well as data provided by Exchanges, Clearing Corporations and Depositories pertaining to auction trades, corporate actions, SLBM transfers, off market trades etc.
Implication:
These reports are being generated by SEBI on a weekly basis and three such mismatch reports have already been forwarded to Exchanges for reconciliation with members. This system is likely to timely detect the misuse of clients’ securities collected by brokers as collateral or received in pay-out of securities.
Update:
Guidelines for Portfolio Managers
SEBI, based on the recommendations of a Working Group and inputs from public consultation, reviewed the framework for regulation of Portfolio Managers and the SEBI (Portfolio Managers) Regulations, 2020 (“PMS Regulations”) has been notified on January 16, 2020.
Certain changes to the regulatory framework for Portfolio Managers are mandated as under:
- Fees and Charges
- Direct on-boarding of clients by Portfolio Managers
- Nomenclature \’Investment Approach\’
- Periodic reporting by Portfolio Managers
- Reporting of Performance by Portfolio Managers
- Disclosure Documents
- Supervision of Distributors
This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with the provisions of Regulation 43 of the SEBI (Portfolio Managers) Regulations, to protect the interests of investors in securities market and to promote the development of, and to regulate the securities market.
Implication:
The provisions of this Circular shall be applicable with effect from May 01, 2020. This will protect the interests of investors in securities market and also promote the development of, and will regulate the securities market.
Update:
Monetary penalty on Indovision Securities Limited :
SEBI has imposed a monetary penalty of ₹10,00,000/-(Rupees Ten Lakh only) on the Noticee i.e Indovision Securities Limited under Section 23D of the SCRA collectively for the violation of above circulars relating to mis-utilisation of clients’ funds, non-segregation of clients’ funds and own funds and mis-use of pledging of clients’ securities.
Implication:
The Noticee shall remit / pay the said total amount of penalty within 45 days of receipt of this order in either of the way of demand draft.
Update:
Monetary penalty on Ambica Capital Markets Limited
SEBI has imposed a monetary penalty of ₹5,00,000/-(Rupees Five Lakh Only) on Ambica Capital Markets Limited(Noticee) under section 15HA of the SEBI Act for such trades have created a misleading appearance of trading in the scrip and the market abuse and fraudulent practices have been carried out by the Noticee.
Implication:
The Noticee shall remit / pay the said total amount of penalty within 45 days of receipt of this order in either of the way of demand draft.
Update:
Exemption Order in the matter of Motilal Oswal Financial Services Limited
SEBI grants exemption to the Proposed Acquirer, viz. Motilal Oswal Family Trust, from complying with the requirements of Regulations and 5 of the SAST Regulations with respect to the proposed acquisitions in the Motilal Oswal Financial Services Limited, by way of proposed transactions as mentioned:
- The proposed acquisition shall be in accordance with the relevant provisions of the Companies Act, 2013 and other applicable laws.
- On completion of the proposed acquisition, the Proposed Acquirer shall file a report with SEBI within a period of 21 days from the date of such acquisition, as provided in the SAST Regulations.
- The statements/averments made or facts and figures mentioned in the Application and other submissions by the Proposed Acquirer are true and correct.
- The Proposed Acquirer shall ensure compliance with the statements, disclosures and undertakings made in the Application. The Proposed Acquirer shall also ensure compliance with the provisions of the SEBI Circular dated December 22, 2017.
- The Proposed Acquirer shall also ensure that the covenants in the Trust Deed are not contrary to the above conditions and undertaking provided by the transferors. In such case, the Trust Deed shall be suitably modified and expeditiously reported to SEBI.
Implication:
The exemption granted above is limited to the requirements of making open offer under the SAST Regulations and shall not be construed as exemption from the disclosure requirements.
Update:
Monetary penalty on Tarini International Limited and others (Noticee)
Tarini International Limited and others (Noticee) has disturbed the equilibrium of securities market by not disclosing material information to investors and misappropriating IPO proceed for the purpose other than that mentioned in the prospectus, thus violating the provisions of Section 12A (a), (b) and (c) of the SEBI Act r/w Regulation 3 (a), (b), (c) and (d), Regulation 4(1), 4(2)(f) and 4(k) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Markets) Regulations.
Hence, SEBI has imposed a penalty of Rs. 12,00,00,000/- and on Noticee no. 1 under section 23E of SCRA for violation of provisions of clause 45 and 46 of the SME Listing agreement with respect to section 21 of the SCRA additional penalty of Rs. 5,00,000/-
Implication:
Noticee shall remit / pay the said amount of penalties, as mentioned in the table above, within 45 days of receipt of this order.
Update:
Monetary penalty on Shree A J Patel Charitable Trust and others (Noticee)
Shree A J Patel Charitable Trust and others (Noticee) has failed to disclose the number and percentage of shares or voting rights held by him and by persons acting in concert with him, in that company to the company, thus violating the provisions of Regulation 8(2) of Takeover Regulations, 1997. Hence, SEBI has imposed a penalty of Rs. 13,50,000/-
Implication:
The Company shall pay jointly and severally the amount mentioned in order within a period of 45 days from the date of service of this order.
Update:
Monetary penalty on M/s Sunness Capital India Private Limited
M/s Sunness Capital India Private Limited (Noticee) has failed to carry out following duties:
- The settlement of funds and securities of the clients at least once in a calendar quarter or month, depending on the preference of the client.
- Send to the client a ‘statement of accounts’ containing an extract from the client ledger for funds and securities displaying all receipts/deliveries of funds/securities, explaining the retention of funds/securities and the details of the pledge, if any.
- Display all the documents executed by a client, client’s position, margin and other related information, statement of accounts, etc. in its web-site and allow secured access by way of client-specific user id and password during/ prior to the period of inspection period.
- To settle the credit balance of its two inactive clients, who had more than Rs.10,000/-balance
Thus notice has violated the provisions of SEBI Circular ref. no. SEBI/MIRSD/SE/Cir-19/2009 dated December 3, 2009, and Clauses A(2) and A(5) of the Code of Conduct for stock brokers contained in Schedule II read with Regulation 9(f) of Broker Regulation. Hence SEBI has imposed a penalty of Rs 3,00,000/- on the notice.
Implication:
The Company shall pay the amount mentioned in order within a period of 45 days from the date of service of this order.
Reference: Insurance Regulatory and Development Authority of India
Update:
Amendments on guidelines on Standardization of Exclusions in Health Insurance Contracts and Modification Guidelines on Standardization in Health Insurance
IRDAI has made the following amendment in the said guidelines:
- Amended the definition of pre existing diseases
- Expenses incurred towards treatment in any hospital or by any Medical Practitioner or any other provider specifically excluded by the insurer and disclosed in its website/notified to the policy holders are not admissible. However, in case of life threatening situations or following an accident, expenses up to the stage of stabilization are payable but not the complete claim.
- Expenses related to sterility and infertility. This includes:
(i) Any type of contraception, sterilization
(ii) Assisted Reproduction services including artificial insemination and advanced reproductive technologies such as IVF, ZIFT, GIFT, ICSI
(iii) Gestational Surrogacy
(iv) Reversal of sterilization
Implication:
lnsurers and Third Party Administrators, wherever applicable, are advised to make a note of the above changes and ensure compliance.
Update:
Obligatory Cession for the financial year 2020- 21
IRDAI has prescribed that the percentage cession of the sum insured on each General Insurance Policy to be reinsured with the Indian Re-insurer(s) shall be 5% (five percent) in respect of insurance attaching during the financial year beginning from 1st April, 2020 to 31st March, 2021, except the terrorism premium and premium ceded to Nuclear pool, wherein it would be made „NIL‟. The entire Obligatory Cession is to be placed with General Insurance Corporation of India (GIC Re) only.
There would be no limit on sum insured applicable for the cessions made during the period from 1st April, 2020 to 31st March, 2021.
Implication:
The Indian Re-insurer may require the ceding insurer to give immediate notice of underwriting information of any cession exceeding an amount as specified by the former. The ceding insurer shall inform the Indian Re-insurer at all times whenever the cession exceeds such specified limits.
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