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The week from November 25 to December 1, 2024, saw significant tax and GST developments. Key income tax updates included safe harbour rules for diamond sector foreign companies, exempting Section 194N TDS for diplomatic entities, and extending Section 92E tax return deadlines to December 15, 2024. Notifications also granted exemptions to entities like the National Aviation Security Fee Trust and Haryana District Legal Service Authorities. GST updates included extended GSTR-3B deadlines for Manipur taxpayers and advisory releases on biometric Aadhaar authentication for Madhya Pradesh applicants. Notable judicial rulings included Delhi HC decisions disallowing Section 54 exemptions for plywood structures and rejecting premature bond redemptions under Section 54EC. The GST framework saw amendments in GSTAT territorial jurisdiction and adjudicating officer appointments. Advisory releases focused on TDS reporting for metal scrap and guides for e-invoice compliance. Additionally, Gujarat AAAR affirmed 18% GST on instant mix flours, while West Bengal AAR ruled that food supply to inpatients is GST-exempt. Other updates included modernizing PAN/TAN services under PAN 2.0 and the release of a glossary for GST e-invoicing. These notifications streamline tax compliance and address practical challenges for businesses and taxpayers.

Notifications & Circulars issued during week (25th– 1st Dec 2024)

1. Income Tax

Safe Harbour for Diamond Sector: The amendment introduces safe harbour provisions specifically for foreign companies engaged in diamond mining and selling raw diamonds in designated special zones. The new rules outline criteria for eligible businesses and assessees. A minimum profit margin of 4% on gross receipts is required to qualify for safe harbour, eliminating the need for complex transfer pricing assessments. Additional provisions restrict deductions, loss set-offs, and depreciation claims to simplify compliance. These rules exclude businesses from invoking mutual agreement procedures under double taxation avoidance agreements. (Income Tax Notification 124/2024 Dated 29/11/2024)

Section 194N TDS Exemption for Foreign Diplomatic Entities in India: The notification exempts Foreign Representations approved by the Ministry of External Affairs, including diplomatic missions, United Nations agencies, international organizations, consulates, and honorary consuls’ offices from the provisions of Section 194N (mandate tax deduction at source on certain cash withdrawals) of the Income Tax Act. (Income Tax Notification 123/2024 Dated 28/11/2024)

Transfer of Capital Assets from NLC India to NLC India Renewables: The notification under section 47 notifies the transfer of capital asset from NLC India Limited (NLCIL) being transferor public sector company, to NLC India Renewables Ltd (NIRL), being transferee public sector company, under the plan approved by the Central Government.  The transfer shall not be considered under section 45 for capital gain taxation. (Income Tax Notification 122/2024 Dated 27/11/2024)

SKAN Research Trust, Bengaluru notified under section 35(1)(ii) as Research Association for Scientific Research: The notification notifies SKAN Research Trust, Bengaluru as an ‘Research Association’ for ‘Scientific Research’ for the purposes section 35(1)(ii) of the Income-tax Act, read with rules 5C and 5D of the Income-tax Rules. Section 35 allows for deduction equal to one and half times while computing taxes for expenses relating to scientific research. (Income Tax Notification 121/2024 Dated 25/11/2024)

Exemptions to National Aviation Security Fee Trust: National Aviation Security Fee Trust, a trust established by the Central Government has been notified under section 10(46) for exemption on its income arising from grants as approved by Ministry of Civil Aviation, Aviation security fee, amount transferred from escrow account and Interest on bank deposits. (Income Tax Notification 120/2024 Dated 19/11/2024)

Exemptions to District Legal Service Authority in the State of Haryana: District Legal Service Authority as specified in the Schedule to this notification, constituted by Government of Haryana for every District in the State of Haryana has been notified under section 10(46) for exemption on its income arising from grants received from P&H High Court, National and State Legal Service Authority,  central and state governments, amounts received under orders of the court, fees and Interest on bank deposits. (Income Tax Notification 119/2024 Dated 19/11/2024)

Section 92E Income Tax Return due date extended to 15th December 2024: The circular extends the due date for furnishing income tax returns under Section 92E of the Income Tax Act for Assessment Year 2024-25 The original due date of 30th November 2024 has been extended to 15th December 2024. It will ensures compliance by assessees regarding transfer pricing regulations. (Income Tax Circular 18/2024 Dated 30/11/2024)

PAN 2.0 Project, CCEA Approval for unified PAN/ TAN Services:  The decision aims to modernize and streamline the issuance and management of Permanent Account Numbers (PAN) and Tax Deduction and Collection Account Numbers (TAN). By integrating the services previously hosted on three platforms—e-Filing Portal, UTIITSL, and Protean e-Gov—the project introduces a unified portal for all PAN/TAN-related services, including applications, corrections, Aadhaar-PAN linking, and online validation. The key features include free PAN issuance, improved grievance redressal mechanisms, and enhanced security with a PAN Data Vault. Existing PAN cardholders are not required to reapply, and corrections can be made online at no cost. Dynamic QR codes on PAN cards will validate updated details, and PAN will serve as a common business identifier for government agencies. (Income Tax Press Release Dated 26/11/2024)

HC, Allowing premature redemption of section 54EC bonds beyond court scope: Case of Rakesh Kumar Saini vs Power Finance Corporation Ltd (PFC), HC Delhi Judgement Dated 7th November 2024. The petitioner sold his residential property and invested the sale proceed in the bonds issued by PFC in order to avail the benefit of capital gain tax exemption. In the meantime, the Petitioner booked a residential flat in Noida and he wanted to make payment for the final instalment of the flat in lieu of the residential property sold by him. Accordingly, within a month of the bond certificates being issued, the Petitioner requested PFC to cancel the bonds and refund the invested amount, intending to use those funds to pay the final instalment. PFC replied that there was no procedure in place to allow redemption of the investment before maturity of the bonds.

— The terms and conditions governing the bonds, stipulated by the Respondent clearly restrict any withdrawal, redemption, or transfer of these bonds before the completion of the mandated 5-year period. Delhi HC held that it is beyond its scope to allow premature redemption from the bond through judicial intervention. Accordingly, petition for premature redemption from bond dismissed. (HC Delhi Judgement Dated 07/11/2024)

HC, Section 54 exemption not available for plywood structures: Case of Sandeep Hooda vs PCIT, HC Delhi Judgement Dated 11th November 2024. The appellant had sold a residential property for a consideration of ₹6.88 Crores and had earned a capital gain. However, the assessee claimed exemption in respect of the said gains on the ground that he had constructed ‘a residential house’ within a period of three years. Delhi High Court held that putting together a structure of plywood sheets cannot be construed as constructing a residential house for claiming exemption under section 54 of the Income Tax Act. The appeal was dismissed. (HC Delhi Judgement Dated 11/11/2024)

2. GST 

Powers of Additional/Joint Commissioners amended for GST Intelligence Notices: This notification amends earlier Notification No. 02/2017 dated 19th June 2017. The updated Table-V outlines the jurisdiction and powers of Principal Commissioners and Commissioners of Central Tax across India, and specifies their authority to pass orders or decisions on notices issued by officers of the Directorate General of Goods and Services Tax Intelligence under various sections of the CGST Act. (CGST Notification 27/2024 Dated 25/11/2024)

CBIC Appoints GST Adjudicating Officers for SCNs issued by DGGI: The notification appoints specific officers to adjudicate show cause notices issued by the Directorate General of GST Intelligence (DGGI) under sections 73, 74, 122, 125, and 127 of the CGST Act. It relates to notices issued between 2nd to 15th September 2023, pertaining to alleged non-compliance or violations under the GST framework. It details the designated adjudicating authorities responsible for each notice, addressing cases involving various businesses and their respective addresses across India. (CGST Notification 28/2024 Dated 27/11/2024)

GSTR-3B Filing Due Date for October extended for Manipur: The notification extends the deadline for filing FORM GSTR-3B for October 2024 for registered taxpayers in Manipur whose principal place of business is within the state. The new due date for these taxpayers is 30th November 2024. (CGST Notification 29/2024 Dated 27/11/2024)

GSTAT Territorial Jurisdiction of State Benches amendments: The notification revises jurisdiction and seating arrangements for Goods and Services Tax Appellate Tribunal (GSTAT) benches across India. Notable changes include swapping the jurisdictions of Varanasi and Prayagraj in Uttar Pradesh, and Jalandhar and Chandigarh in Punjab/ Chandigarh. The notification also defines district-wise jurisdictions for state benches across states such as Andhra Pradesh, Gujarat, Maharashtra, and Tamil Nadu, among others. (Fin Ministry Notification Dated 26/11/2024)

GSTAT Jurisdiction Correction Alwar/ Ajmer: The original notification detailed the districts forming the jurisdiction of the State Benches of the Goods and Services Tax Appellate Tribunal (GSTAT). The corrigendum specifies a correction in serial number 21: under the Jaipur jurisdiction, “Alwar” has been replaced with “Ajmer” in column 4. This amendment ensures accurate district allocation within the GSTAT framework. (Fin Ministry Notification Dated 29/11/2024)

Advisory, Reporting TDS Deducted by scrap Dealers in October 2024: The registered recipients of metal scrap (classified under Chapters 72 to 81 of the Customs Tariff Act) must deduct TDS under Section 51 of the CGST Act from 10th October 2024. However, some taxpayers faced difficulties in filing TDS for October due to their GST registrations being approved only in November 2024. Under the current GST system, returns for tax periods before the registration month cannot be filed. To address this, taxpayers registered in November but who deducted TDS in October are advised to report the consolidated TDS amount for the period from October 10, 2024, to November 30, 2024, in their November GSTR-7 return. (GSTN Advisory Dated 26/11/2024)

Advisory, Authorised e-Invoice Verification Apps: GSTN has released a consolidated list of authorized B2B e-Invoice verification applications for taxpayers. It will ensure that taxpayers are using the latest, government-approved applications to verify their e-invoices, ensuring compliance with GST regulations. (GSTN Advisory Dated 27/11/2024)

Advisory for Biometric-Based Aadhaar Authentication and Document Verification for GST Registration Applicants of Madhya Pradesh: CGST rule were amended which provide for identification of applicants through biometric- based Aadhaar authentication, which includes taking the applicant’s photograph and verifying the original documents submitted with the application. The new functionality mandates that after submitting Form GST REG-01, applicants will receive an email with either a link for OTP-based Aadhaar Authentication or a link to book an appointment at a GST Suvidha Kendra (GSK). It has been rolled out in Madhya Pradesh effective from 27th November 2024. (GSTN Advisory Dated 27/11/2024)

Advisory, E-Invoice Glossary and Steps for GST Reporting: GSTN has released an e-Invoice glossary and a step-by-step guide to aid taxpayers in understanding the e-invoicing process. E-invoicing refers to the reporting of specified GST documents to a government-approved Invoice Registration Portal (IRP), where taxpayers obtain a unique Invoice Reference Number (IRN). The system allows businesses to continue creating invoices in their own Accounting/Billing/ERP systems and report them to one of six authorized IRPs, free of charge. Eligible taxpayers with an annual turnover exceeding ₹5 crore must comply with the e-invoicing regulations. The guide covers key terms such as IRP, AATO (Annual Aggregate Turnover), and the reporting process, which includes enabling e-invoicing, registering on an IRP, reporting invoices, and receiving an IRN and QR code. Taxpayers can verify their invoices using the GSTN e-Invoice app or IRN search functionality on the portal. The system also auto-populates e-invoice data into the GSTR-1 return. A dedicated e-Invoice master portal is available for taxpayers to access all necessary information, including IRP links, schema, and master codes. (GSTN Advisory Dated 29/11/2024)

AAAR, GST Classification of Flours and Mixes: Case of Gajanand Foods Pvt Ltd, AAAR Gujarat Ruling Dated 12th November 2024. The appellant is engaged in the business of manufacture and supply of fourteen instant mix flours. AAR had previously ruled that the products fell under Heading 2106, thereby attracting 18% GST. The AAAR affirmed that the products fell under Heading 2106 (Miscellaneous Edible Preparations), as they were “food preparations not elsewhere specified.” The significant proportion of added ingredients aligned with the characteristics of products classified under Heading 2106. The Gujarat AAAR upheld the GAAR’s decision, classifying the products attracting an 18% GST rate. (AAAR Gujarat Ruling Dated 12/11/2024)

 AAR, GST exemption on food supply to in-patients: Case of Bamapada Jana, AAR West Bengal Ruling Dated 26th November 2024. The applicant argued that food served to inpatients, as prescribed by medical officers, constitutes a composite supply of healthcare services, which is exempt from GST. As contractual terms, their role involves preparing and serving meals strictly adhering to the dietary recommendations of hospital authorities within the premises. AAR reviewed the applicant’s submissions and contractual obligations. It observed that the hospital provided a designated kitchen area and that the applicant followed dietary guidelines specified by medical practitioners. AAR concluded that since the applicant’s catering services were an intrinsic part of the hospital’s inpatient care and not outsourced in the traditional sense, they are exempt from GST. (AAR West Bengal Ruling Dated 26/11/2024)

3. Central Excise

No Notifications/ Circulars during the week.

4. Custom Duty

Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver: CBDT notified the Tariff Values of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver, which shall come into force w.e.f. 30th November 2024. The tariff value for crude palm oil is set at USD 1119 per metric ton, while gold and silver have tariff values of USD 850 per 10 grams and USD 978 per kilogram, respectively. The tariff value for areca nuts remains unchanged at USD 6552 per metric ton. (Custom Notification 84/2024 Dated 29/11/2024)

SC, Customs Act Cannot Be Amended via mere Press Release: Case of Nabha Power Limited vs PSPCL, SC Judgement Dated 5th November 2024. The appeal arises from the judgment of the Appellate Tribunal for Electricity (APTEL) which had confirmed the order dated 12.11.2012 of the Punjab State Electricity Regulatory Commission (PSERC). The issue relates to Mega Power Policy and the effect of the Press Release dated 1st October 2009. The apex court considered that the press release announcing the cabinet approval of certain modifications envisaged in the existing Mega Power Policy is not law. An exemption under the Customs Act to operate thereon there has to be a notification issued in the manner provided and duly published in the official gazette. Supreme Court held that press release cannot be the basis of changing the law. (SC Judgement Dated 05/11/2024)

5. Directorate General of Foreign Trade (DGFT)

Syncing of ITC (HS) 2022 Schedule-1 (Import Policy) with Finance Act: The amendments to the import policy includes the deletion, amendment, merging, and splitting of ITC (HS) codes. The key changes include the removal of specific codes such as for “Communion wafers” and “Cyclanic menthol,” while others like “E-bicycles” and “Aviation turbine fuel” are now described with updated specifications. Annexures to the notification provide detailed updates on these changes, including revised descriptions, section notes, and supplementary notes on specific tariff items. (DGFT Notification 40/2024 Dated 26/11/2024)

Compulsory Registration under CHIMS Discontinued: The requirement of compulsory registration under Chip Imports Monitoring System (CHIMS) in terms of Policy Condition No. 08 of Chapter 85 of ITC  Schedule-1 (Import Policy) has been “Discontinued”, with immediate effect. (DGFT Notification 41/2024 Dated 29/11/2024)

6. Securities and Exchange Board of India (SEBI)

Amendment, attestation of documents process across several regulations: The amendments simplify the attestation process across multiple SEBI regulations by replacing notarized or sworn affidavits with self- attestation. The key changes include updates to forms and filings under the Custodian Regulations, Credit Rating Agencies Regulations, Takeovers Regulations, KYC Registration Agency Regulations, Buy-back of Securities Regulations, Depositories and Participants Regulations, Settlement Proceedings Regulations, Delisting of Equity Shares Regulations, and Index Providers Regulations. The changes eliminate the need for notary or affidavit support in documents, and applicants must now provide self-attested documents for various applications and forms submitted to SEBI. (SEBI Notification Dated 28/11/24)

Amendment to Merchant Bankers Regulations: The amendments mainly relates to eligibility and operational requirements. It require merchant bankers to employ at least two professionally qualified individuals in finance, law, accountancy, or business management. It clarifies lead managers’ roles, including mandatory disclosures in offer documents, responsibilities for disclosures, allotment, and refunds. (SEBI Notification Dated 29/11/24)

Valuation of repurchase (repo) transactions by Mutual Funds: The new guidelines mandate that repo transactions, including tri-party repos (TREPS), with a tenor of up to 30 days, be valued on a mark-to-market basis, aligning with the valuation of other money market and debt securities. The revision addresses concerns of regulatory arbitrage due to differing valuation methods across these transactions. Previously, such repos were valued on a cost plus accrual basis. It clarifies that for all repo transactions, except overnight repos, valuation must be obtained from AMFI empanelled valuation agencies. (SEBI Circular Dated 26/11/2024)

Business Continuity for Interoperable Segments of Stock Exchanges:  SEBI had issued a circular in 2023 outlining a comprehensive Business Continuity Plan (BCP) for Stock Exchanges and Clearing Corporations to address trading outages. The now issued circular provides that in the event of a trading venue outage, participants can hedge their positions using interoperable exchanges, minimizing exposure to price risks. Stock exchanges are required to create reserve contracts for scrips exclusively listed on one exchange and, if necessary, introduce index derivatives for uncorrelated products. The affected exchange must notify SEBI and the alternative trading venue within 75 minutes of an outage, and the alternative venue will implement a continuity plan within 15 minutes. The NSE and BSE will serve as alternative venues for each other, drafting a joint Standard Operating Procedure (SOP) for smooth operations. (SEBI Circular Dated 28/11/2024)

7. Ministry of Corporate Affairs (MCA)

No Notification/ Circular during the week.

8. Insolvency and Bankruptcy Board of India (IBBI)

NCLAT, Limitation period for IBC appeal starts from pronouncement of order: Case of Tarandeep Kaur Ahluwalia vs One City Infrastructure Pvt Ltd., NCLAT Delhi Judgement Dated 4th October 2024. The tribunal addressed the issue of the limitation period for filing an appeal under Section 61 of the Insolvency and Bankruptcy Code (IBC). The appellants argued that the limitation period should begin from the date they were notified about the order, which was uploaded on the NCLT website on 18th July 2024, rather than the date the order was pronounced on 3rd July 2024. NCLAT ruled that the limitation period should be calculated from the date the order was pronounced in court, as per the established legal precedent. (NCLAT Delhi Judgement Dated 04/10/2024)

NCLAT, Resolution Professional not allowed to pay pre-CIRP dues outside resolution framework: Case of Avil Menezes vs Ministry of Coal, NCLAT Delhi Judgement Dated 23rd October 2024. NCLAT held that payment of pre-CIRP dues to creditors cannot be made by Resolution Professional (RP) outside the resolution framework. Thus, no proceedings can be instituted against corporate debtor during CIRP to recover Annual Mine Closure Cost (AMCC) deposit which belonged to pre-CIRP period. (NCLAT Delhi Judgement Dated 23/10/2024)

IBBI cancels registration of Insolvency Professional (IP) Amit Gupta for Misconduct in Liquidation: The investigations revealed that he engaged in unethical practices, including bypassing regulations, charging excess fees, and manipulating liquidation timelines for personal gain. Specific instances include unauthorized stock sales, engagement of external agencies for liquidator duties, and unjust fee calculations. IBBI decided to impose penalty and also cancel the registration of Mr. Amit Gupta. (IBBI Order Dated 26/11/2024)

9. Reserve Bank of India (RBI)

Amendment to FEMA Foreign Currency Accounts by a Person Resident in India Regulations:  The amendments modify Regulation 5 and Schedule I, and redefine the term “startup” in alignment with the Department for Promotion of Industry and Internal Trade (DPIIT) notification dated 19th February 2019, including any subsequent amendments. (RBI FEMA Notification Dated 19/11/2024)

10. Miscellaneous

SC, Light Motor and Transport Vehicles Not Separate Classes for Licensing: Case of Bajaj Alliance General Insurance Co Ltd vs Rabha Devi, SC Judgement Dated 6th November 2024. The apex court (constitution bench of five judges) held that a driver holding a license for Light Motor Vehicle (LMV) class, under Section 10(2)(d) for vehicles with a gross vehicle weight under 7,500 kg, is permitted to operate a ‘Transport Vehicle’ without needing additional authorization under Section 10(2)(e) of the Motor Vehicle Act specifically for the ‘Transport Vehicle’ class. For licensing purposes, LMVs and Transport Vehicles are not entirely separate classes. An overlap exists between the two. The special eligibility requirements will however continue to apply for, inter alia, e-carts, e-rickshaws, and vehicles carrying hazardous goods. (SC Judgement Dated 06/11/2024)

SC, Eligibility Criteria for Recruitment Cannot Be Changed Midway: Case of Tej Prakash Pathak vs Rajasthan High Court, SC Judgement Dated 7th November 2024. The aoex court held that eligibility criteria, notified at the commencement of the recruitment process, cannot be changed midway through the recruitment process unless the extant rules so permit, or the advertisement, which is not contrary to the extant rules, so permit. Even if such change is permissible under the extant Rules or the advertisement, the change would have to meet the requirement of Article 14 of the Constitution and satisfy the test of non-arbitrariness. (SC Judgement Dated 07/11/2024)

SC, Claim of compassionate appointment is not vested right: Case of Tinku vs State of Haryana, SC Judgement Dated 13th November 2024. The Appeal has been preferred by the son of Shri Jai Prakash, a deceased constable in Haryana Police, seeking appointment on compassionate grounds, as his father and another constable died while on duty in 1997. The Appellant then was seven years of age, and the policy which was in force, provided for ex-gratia appointment confined to Class III and IV posts. The widow of the other police constable, who died along with the father of the appellant, was granted compassionate appointment as a constable upon her application. Supreme Court held that compassionate appointment is not a vested right thus rejection of claim justified since appellant attained majority 11 years after the unfortunate death of his father. (SC Judgement Dated 13/11/2024)

SC, Disciplinary proceedings without oral evidence in support of charge is non-est: Case of Satyendra Singh vs State of Uttar Pradesh, SC Judgement Dated 18th November 2024. The appellant, while being posted as Assistant Commissioner, Commercial Tax, Ghaziabad faced disciplinary proceedings. The Inquiry Officer submitted an Inquiry Report dated in November, 2012. The Disciplinary Authority being the Principal Secretary issued a Show Cause Notice accompanied with the Inquiry Report to the appellant. The appellant submitted his reply/objections to the said Show Cause Notice. The Disciplinary Authority, considered the reply of the appellant awarded the punishment of Censure Entry as well as stoppage of two grade increments with cumulative effect to the appellant.

— The apex court held that the recording of evidence in a disciplinary proceeding proposing charges of a major punishment is mandatory. Mere production of documents is not enough, contents of documentary evidence have to be proved by examining witnesses. It held that the inquiry proceedings conducted against the appellant pertaining to charges punishable with major penalty, were totally vitiated and non-est in the eyes of law since no oral evidence whatsoever was recorded by the department in support of the charges. (SC Judgement Dated 18/11/2024)

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Disclaimer: The contents of this article are for informational purposes only. The user may refer to the relevant notification/ circular/ decisions issued by the respective authorities for specific interpretation and compliances related to a particular subject matter)

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