Analysis of Notifications & Circulars for Week ending 27th October 2024

During the week of October 14-20, 2024, various notifications and circulars were issued across different domains of Indian tax and law. In Income Tax, the CBDT extended the due date for filing returns for Assessment Year 2024-25 from October 31 to November 15, 2024. The Supreme Court ruled that broken period interest on government securities is deductible as a revenue expense. In GST, the GSTN announced the validation of bank account details for non-core amendments and introduced new guidelines for registering buyers of metal scrap. Corrections were made to previous notifications regarding property definitions, and several advance rulings clarified tax implications for gift cards, affordable housing, and slaked lime. In Central Excise, amendments were made to the Fourth Schedule, impacting the classification of blended aviation turbine fuel. Custom Duty changes included a reduction of export duty on specific rice varieties and the imposition of anti-dumping duties on various imports from China. Additionally, the RBI designated Hizb-Ut-Tahrir as a terrorist organization under the UAPA. The Supreme Court issued directions for creating awareness about free legal aid, while the Delhi High Court upheld the RTI Act’s exemptions for disclosing personal information.

Notifications & Circulars issued during week (14^th – 20^th Oct 2024)

A. Income Tax

Extension of due date for furnishing return of income for the Assessment Year 2024-25: CBDT in exercise of its powers under section 119 of the Income Tax Act, has extended the due date of furnishing of Return of Income under section 139(1) of the Act for the Assessment Year 2024-25, which is originally set for 31^st October, 2024. The extended due date is 15^th November, 2024. (Income Tax Circular 13/2024 Dated 26/10/2024)

SC, held broken period interest on securities should be allowed as revenue expense:  Case of Bank of Rajasthan vs CIT, SC Judgement Dated 18th October 2024. The Bank was engaged in the purchase and sale of government securities. The securities were treated as stock-in-trade in the hands of assessee. The amount received on the sale of the securities was considered for computing its business income. It consistently followed the method of setting off and netting the amount of interest paid by it on the purchase of securities (i.e., interest for the broken period) against the interest recovered by it on the sale of securities and offering the net interest income to tax.

— The court held that the method of setting off and netting the amount of interest paid by it on the purchase of securities (i.e., interest for the broken period) against the interest recovered by it on the sale of securities and offering the net interest income to tax should be allowed as revenue expense as broken period interest incurred on securities treated as stock-in-trade and that income tax deduction could be allowed on the same. (SC Judgement Dated 16/10/2024)

B. GST

Advisory, Validation of bank account details while adding bank account as Non-Core amendment: GSTN has implemented a validation process for cases where a taxpayer attempts a non-core amendment to update bank account details. Taxpayers are requested to follow the prescribed procedure while adding bank account details on the portal. (GSTN Advisory Dated 22/10/2024)

Advisory, GST Form REG-07 for registration for buyers of Metal Scrap: GSTN has introduced an update to facilitate the registration compliance for buyers of metal scrap through form GST REG-07. Taxpayers in this category are required to select “Others” in Part B of Table 2 under the “Constitution of Business” section. A text box will appear where the taxpayer must enter “Metal Scrap Dealers.” This entry is mandatory for those selecting the “Others” option. Once this is completed, the remaining details in form GST REG-07 should be filled and submitted. (GSTN Advisory Dated 22/10/2024)

Corrigendum to Notification 09/2024, ‘any property’ to be read as ‘any immovable property’:  Refer notification 09/2024 dated 8^th October 2024, in the table under serial number 5AB, the phrase “any property” has been amended to “any immovable property” in column (2), line 12. This correction ensures clarity in the application of the tax rate related to the specified category of property. (CGST Corrigendum Dated 22/10/2024)

— Similar notifications have also been issued under IGST and UTGST. (IGST Corrigendum Dated 22/10/2024) (UTGST Corrigendum Dated 22/10/2024)

AAAR, Supply for gift cards & vouchers, taxability and timing under CGST: Case of Payline Technology Private Limited, AAAR Uttar Pradesh Dated 23rd September 2024. An advance ruling dated 20^th February 2024 issued by the AAR, holding that gift cards and prepaid vouchers supplied by Payline Technology were taxable as goods, was challenged. AAAR clarified that the Supply of Gift cards/ Vouchers/ pre-paid Vouchers are taxable as supply of goods and the time of supply shall be decided as per Section 12(4) of the CGST. It held that the GST shall be applicable on the commission/discount earned in the trading of Vouchers/Coupons by the appellant and the time of supply will be the time when the Vouchers/Coupons are traded or sold. The value of service shall be the margin between the buying and selling price of the Vouchers/Coupons. (AAR Uttar Pradesh Ruling Dated 23/09/2024)

AAR, GST Rates on Affordable & Non-Affordable Apartments: Case of Castle Realtors, AAR Rajasthan Dated 20th September 2024. Castle Realtors is engaged in providing construction and related services for both affordable and non-affordable residential apartments. It sought an advance ruling on the GST rates applicable under the revised tax structure. AAR ruled that The tax rates specified in Notification No. 3/2019 are applicable to Castle Realtors for services rendered in constructing both affordable and non-affordable apartments, with conditions regarding size, cost, and location of the property. The taxpayer cannot claim input tax credit on materials and services used in the construction of immovable property. (AAR Rajasthan Ruling Dated 20/09/2024)

AAR, Classification and rate for Slaked Lime under GST: Case of Balveer Singh, AAR Rajasthan Dated 20th September 2024. AAR held that the slaked lime manufactured by the applicant, containing less than 98% calcium oxide and calcium hydroxide, is classified under HSN 2522 20 00. The GST rate applicable is 5% (2.5% CGST and 2.5% SGST) as per Schedule I, Entry No. 131, of Notification No. 1/2017 dated 28^th June 2017. (AAR Rajasthan Ruling Dated 20/09/2024)

HC, Retention of refund claim as amount deposited voluntarily is not justified in law: Case of Ashok Leyland vs Comm VAT, HC Delhi Dated 16/10/2024. Retention of amount as voluntarily deposited is not justified. Delhi HC directed refund of the amount along with statutory interest. (HC Delhi Dated 16/10/2024)

C. Central Excise

Amendment to Fourth Schedule to Central Excise Act: This amendment relates to ‘Mineral Products’ category in Chapter 27. It substitutes the existing supplementary notes, emphasizing that references to Bureau of Indian Standards must point to the most recently published versions. The notification also clarifies the definition of “Blended Aviation turbine fuel” as any aviation fuel comprising 70% or more by weight of petroleum oils or oils derived from bituminous minerals, blended with synthesized hydrocarbons according to the IS 17081:2019 specifications. A new tariff item for Blended Aviation turbine fuel has been introduced, subject to a 14% excise duty. (Excise Duty Notification 26/2024 Dated 23/10/2024)

D. Custom Duty

Govt amends Export Duty on Certain Varieties of rice: The notification amends the export duty on certain rice varieties. It modifies the previous notification No. 27/2011 dated 1^st March 2011. The export duty for items listed under serial numbers 6A, 6B, and 6C is now reduced to ‘Nil’, thus eliminating the export duty on these rice varieties. (Custom Notification 46/2024 (T) Dated 22/10/2024)

Amendment to Passenger Name Record Information Regulations: The key change involves the substitution of wording in Regulation 5(4), where the phrase “departure time; or” has been updated to “departure time and.” The amendment aims to provide clarity in reporting passenger departure details. (Custom Notification 68/2024 (NT) Dated 22/10/2024)

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. 24^th October 2024. (Custom Notification 69/2024 (NT) Dated 23/10/2024)

Non-Levy of Customs Duty on the import of Simply Sawn Diamonds:  Earlier notification No. 50/2017 dated 30^th June 2017 permitted duty-free import of rough diamonds, later expanded to include Simply Sawn Diamonds under specific conditions vide Notification No. 02/2022 dated 1^st February 2022. The government recognized the common practice not to levy customs duties on Simply Sawn Diamonds during the period 1^st July 2017 and 1^st February 2022. This notification has formally waived the requirement to pay customs duties for such imports during that period. (Custom Notification 70/2024 (NT) Dated 23/10/2024)

Anti-dumping Duty on Unframed Glass Mirror originating  in or exported from China: Anti-dumping Duty has been imposed on imports of Unframed Glass Mirror originating in or exported from China, and imported into India. It shall be applicable for a period of 5 years. (Custom Notification 18/2024 (ADD) Dated 21/10/2024)

Anti-dumping Duty on Thermoplastic Polyurethane (TPU) originating  in or exported from China: Anti-dumping Duty has been imposed on imports of Thermoplastic Polyurethane (TPU) originating in or exported from China, and imported into India. It shall be applicable for a period of 5 years. (Custom Notification 19/2024 (ADD) Dated 22/10/2024)

Anti-dumping Duty on Cellophane Transparent Film originating  in or exported from China: Anti-dumping Duty has been imposed on imports of Cellophane Transparent Film originating in or exported from China, and imported into India. It shall be applicable for a period of 5 years. (Custom Notification 20/2024 (ADD) Dated 22/10/2024)

Anti-dumping Duty on Sulphur Black originating  in or exported from China: Anti-dumping Duty has been imposed on imports of Sulphur Black originating in or exported from China, and imported into India. It shall be applicable for a period of 5 years. (Custom Notification 21/2024 (ADD) Dated 22/10/2024)

Anti-dumping Duty on Isopropyl Alcohol originating  in or exported from China: Anti-dumping Duty has been imposed on imports of Isopropyl Alcohol originating in or exported from China, and imported into India. It shall be applicable for a period of 5 years. (Custom Notification 22/2024 (ADD) Dated 22/10/2024)

Clarification on certain aspects of origin procedures under free trade agreements (FTAs): The instructions relates to the origin status of products imported under the ASEAN- India FTA (AIFTA), particularly when discrepancies occur between the value in the Certificate of Origin (COO) and the third-party invoice. The third-party invoicing is a common practice recognized by certain trade agreements. The COO serves as proof of the product’s origin under the FTA, while the sales invoice is used for customs valuation. The instruction outlines that customs officials may request further documentation to verify the origin status, but the importer is not obligated to disclose commercially confidential information. (Custom Instructions 23/2024 Dated 21/10/2024)

Issuance of Equipment Type Approval (ETA) for License, Exempt Wireless Equipment Devices: The Office Memorandum from the Department of Telecommunications, dated 9^th September, 2024, allows applicants to obtain ETAs on a self-declaration basis. The applications must be submitted through the SARAL Sanchar portal, providing necessary documents and fees. The applicants can download their ETA certificates directly from the portal. Additionally, ETA holders are required to secure a NOC or other clearances from the DGFT before importing the equipment. (Custom Instructions 24/2024 Dated 22/10/2024)

E. Directorate General of Foreign Trade (DGFT)

Amendment in Export Policy of Non-Basmati Rice: The notification amends the export policy for Non-Basmati White Rice. The previous requirement for a Minimum Export Price (MEP) of USD 490 per tonne for exporting this rice variety has been lifted. Thus Non- Basmati White Rice can now be exported freely without the stipulated price condition. (DGFT Notification 37/2024 Dated 23/10/2024)

Procedure for export of sesame seeds to the United States of America (USA):  The updated policy provides that exports of sesame seeds, will be permitted with additional conditions. The India Oilseeds & Produce Export Promotion Council (IOPEPC) has been designated as the competent authority responsible for issuing export certifications. Exporters must request certification, which the IOPEPC will provide within two working days, contingent upon a ‘Certificate of Analysis’ from a NABL-accredited laboratory. The notification also refers to procedure document concerning the control of pesticide residue contamination in sesame seeds for export to the USA. (DGFT Notification 38/2024 Dated 23/10/2024)

Filing of Annual RODTEP Return (ARR):  The exporters seeking benefits under the Remission of Duties and Taxes on Exported Products (RODTEP) scheme must submit their ARR via the DGFT portal by March 31 of the following financial year. This requirement applies to exporters with total RODTEP claims exceeding ₹1 crore across all HS Codes. Failure to file the ARR will result in the denial of benefits, with a grace period of three months allowed for delayed submissions, subject to a composition fee. The ARR must include detailed records of actual taxes and duties incurred during the financial year, and all supporting documentation must be retained for five years. (DGFT Public Notice 27/2024 Dated 23/10/2024)

F. Securities and Exchange Board of India (SEBI)

Inclusion of Mutual Fund units in the Prohibition of Insider Trading (PIT) Regulations:  The mutual funds units were included under the PIT Regulations, vide notification dated 24^th November 2022, the notified amendments to be applicable from 1^st November, 2024. AMCs shall disclose the details of the holdings of Designated Persons of AMCs, trustees and their immediate relatives on aggregate basis on quarterly basis. The transactions involving mutual fund units exceeding INR 15 lakhs must be reported to the AMC’s Compliance Officer within two business days. The circular also modifies existing guidelines to ensure that the insider trading regulations take precedence over previous investment restrictions for AMCs and their employees. (SEBI Circular Dated 22/10/2024)

Association of persons regulated by the Board and their agents with certain persons: The circular relates to associations among persons regulated by the Board, including stock exchanges, clearing corporations, and depositories. As per the amended regulations, these entities and their agents are prohibited from associating with individuals who provide investment advice or make performance claims related to securities unless they are registered with SEBI. The restrictions do not apply to associations through specified digital platforms that meet SEBI’s criteria for preventive and curative measures. (SEBI Circular Dated 22/10/2024)

Modification in Annexure to Common Application Form (CAF): The circular modifies Common Application Form (CAF) for Foreign Portfolio Investors (FPIs) based in International Financial Services Centres (IFSCs). It inserts a new option under Section B- II, applicable to applicants based in IFSCs, confirming that NRI/OCI/RI contributions can exceed 50% of the FPI’s corpus, provided single NRI/OCI/RI contributions remain below 25%. It also outlines the necessary documents and declarations for such participation, effective immediately. (SEBI Circular Dated 22/10/2024)

Clarification with respect to advertisement code for Research Analysts (RAs):  This clarification is regarding whether research reports and recommendations issued by RAs are subject to advertisement regulations. SEBI clarified that such reports are not classified as advertisements unless they promote the RA’s products or services. The circular specifies that communications falling under the advertisement code include various forms of media, such as pamphlets, brochures, and digital communications. However, a research report will be deemed an advertisement if it promotes the RA’s offerings, whether explicitly or implicitly. (SEBI Circular Dated 24/10/2024)

Periodic reporting format for Research Analysts(RAs) and Proxy Advisers (PAs):  As per the Research Analysts Regulations, RAs and PAs must submit specified information to SEBI. BSE Limited have been designated as the Research Analyst Administration and Supervisory Body (RAASB) for overseeing compliance. The reporting formats have now been defined as detailed in Annexures I and II of the circular. RAs and PAs are required to submit their reports every six months, with the first reporting period ending on March 31, 2025, and submissions due by April 30, 2025. (SEBI Circular Dated 25/10/2024)

Compliance for Non-Individual Investment Advisers (IAs): The circular allows non-individual IAs to obtain an annual compliance certificate regarding client level segregation from any auditor, instead of solely from a statutory auditor, enhancing operational flexibility. Secondly, it revises the timeline for submitting periodic reports to the Investment Adviser Administration and Supervisory Body (IAASB), granting a 30-day period following each half-yearly reporting period for submissions. (SEBI Circular Dated 25/10/2024)

Consultation paper, Draft circular on recognition as Specified Digital Platform: The draft outlines preventive and curative measures these platforms must demonstrate to receive this designation under various SEBI regulations. addresses concerns related to unregistered entities and misleading claims in the securities market. It emphasize that regulated entities must not associate with individuals providing unregistered advice or making unpermitted claims about securities. (SEBI Consultation Paper Dated 22/10/2024)

Consultation Paper, Valuation of repurchase (repo) transactions with tenor of up to 30 days:  Currently, Mutual Funds value most investments on a mark-to-market basis, while repo transactions are valued on a cost plus accrual basis. This inconsistency may lead to regulatory arbitrage, as adverse market events could affect the valuation of commercial papers more swiftly than repos for the same issuer. To address this issue, SEBI proposes that the valuation of repo transactions also be conducted on a mark-to-market basis, aligning it with other money market and debt instruments. The comments from stakeholders are invited. (SEBI Consultation Paper Dated 24/10/2024)

G. Ministry of Corporate Affairs (MCA)

NFRA, Disclaimer of Opinion not exempts auditors from statutory obligations: The NFRA found significant lapses in CA Chirag Doshi’s duties (statutory auditor of Ushdev International), including a failure to report fraud, inadequate audit evidence for valuation, and non- compliance with auditing standards. It highlighted that Doshi issued a Disclaimer of Opinion on both the financial statements and the internal financial controls over financial reporting. However, he was found to be grossly negligent in fulfilling his responsibilities, particularly regarding indicators of fraud. He relied excessively on a valuation report provided by management without adequately challenging the assumptions or conducting independent assessments, despite the report’s lack of due diligence. A monetary penalty of ₹5,00,000 was imposed. (NFRA Order Dated 21/10/2024)

H. Insolvency and Bankruptcy Board of India (IBBI)

NCLAT, Look back period extension beyond 2 years for related party transaction under section 43 of IBC not allowed: Case of Sidharth Bharatbhushan Jain vs State Bank of India, NCLAT Delhi Judgement Dated 14th October 2024. M/s Sysco Industries Ltd, the Corporate Debtor, went into CIRP on 8th September, 2021, and thus look back period under section 43 of Code commenced w.e.f. 8th September, 2019.  The tribunal held that extension of look back period beyond 2 years for related party transactions under section 43 is not allowable. (NCLAT Delhi  Judgement Dated 14/10/2024)

NCLAT, Adjustment against financial debt not permissible for calculating threshold prescribed under section 4 of IBC: Case of Kailash Motilal Kakrania vs Apurva Oil and Industries, NCLAT Delhi Judgement Dated 15th October 2024. The Appellants in their petition uuder section 7 of the Code have claimed a default of Rs. 1,22,42,927/- which includes Rs. 1,01,50,009/- towards principal amount and Rs. 20,92,918/-towards interest calculated at the rate of 9% per annum till 30^th June 2021 as per the Balance Sheet of the Corporate Debtor. The petition of appellants was rejected by NCLT primarily for the reason that the appellants do not meet the threshold prescribed u/s. 4 of the Code as no interest on the said loan appears to have been agreed by the Corporate Debtor in the relevant period and that there was a counter claim of the Corporate Debtor of Rs. 10,85,850/- which brought the debt to less than Rs. One Crore.

— NCLAT Delhi held that there is no dispute regarding financial debt of Rs. 1,01,50,009/- which is duly reflected in the balance sheets for various years. Further, there is no provision under IBC which allows set of/adjustment/ counter claim against financial debt for calculating threshold limit prescribed under section 4 of the Code. The order of NCLT is set aside. (NCLAT Delhi Judgement Dated 15/10/2024)

NCLT, Raising interest in insolvency petition without prior intimation to corporate debtor untenable: Case of Janus GBAC Limited vs Beloorbaybir Biotech Limited, NCLT Bengaluru Judgement Dated 4th October 2024. NCLT held that interest cannot be raised unilaterally in the Insolvency petition, without prior intimation to Corporate Debtor. Accordingly, petition dismissed as alleged amount not sufficient enough to maintain petition under section 4 of the IBC. (NCLT Bengaluru Judgement Dated 4/10/2024)

RTI Act does not permit using it for grievance resolution or compel action by public authorities:  The IBBI’s response to RTI filed by Ishrat Ali, indicated that no action was taken due to the pending adjudication of a related matter before the NCLT in Mumbai. In his appeal, he requested documentation explaining the decision to refrain from action on his complaint and updates on its status. The First Appellate Authority reviewed and decided that RTI Act does not permit using RTI requests for grievance resolution or to compel actions by public authorities. (IBBI-FAA Order Dated 21/10/2024)

IBBI suspends registration of IP Rattan Chaudhary for negligence resulted in significant losses to corporate debtor: The committee found that he has failed in his responsibilities as the Interim Resolution Professional (IRP) during his tenure, resulting in financial burdens on the Corporate Debtor, including GST and electricity charges, without any revenue generated to offset these costs. It concluded that his negligence resulted in significant losses to the Corporate Debtor and, therefore, decided to suspend the registration of Mr. Rattan Chaudhary for a period of two years. (IBBI Order Dated 22/10/2024)

I. Reserve Bank of India (RBI)

Designation of Hizb-Ut-Tahrir (HuT) as terrorist organisation under Unlawful Activities (Prevention) Act:  The MHA vide Gazette notification dated 10^th October 2024, has listed Hizb-Ut-Tahrir as a terrorist organization due to its aims of establishing an Islamic state and Caliphate globally including in India, through jihad and other terrorist activities. (RBI Notification 84/2024 Dated 19/10/2024)

J. Miscellaneous

SC, Directions issued to create awareness about free legal aid: Case of Suhas Chakma vs Union of India, SC Judgement Dated 23^rd October 2024. It has been held explicitly that in the success of the functioning of the legal aid mechanism, “awareness is the key”. A robust mechanism needs to be put in place and should be periodically updated to ensure that the various beneficial schemes promoted by the Legal Services Authorities reach the “nook and corner of the nation”. SC issued directions on various aspects of access to free legal aid. (SC Judgement Dated 23/10/2024)

HC, RTI Act exempts disclosure of personal information of employees: Case of Ryan International School vs CIC, HC Delhi Judgement Dated 4th October 2024. The HC held that order passed by Central Information Commission directed disclosure of information which is entirely personal information of employees is unsustainable in law since the same stands exempted from disclosure u/s. 8(1)(j) of the RTI Act. (HC Delhi Judgement Dated 04/10/2024)

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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)