The week of 22nd-28th July 2024 saw the release of several important notifications and circulars across various sectors, including Income Tax, GST, Central Excise, Customs Duty, and updates from the Directorate General of Foreign Trade (DGFT). These updates provide crucial information on tax exemptions, advisory guidelines, court rulings, and policy changes that impact businesses and taxpayers alike. This article delves into the key highlights of these notifications and circulars, offering a comprehensive overview for stakeholders to stay informed and compliant.
Notifications & Circulars issued during week (22nd– 28th July 2024)
A. Income Tax
Exemptions to Punjab Skill Development Mission Society, Chandigarh: Punjab Skill Development Mission Society, Chandigarh a society constituted by Government of Punjab, has been notified under section 10(46) for exemption on income arising from grants and contributions received from central and state government, CSR funds received from companies, service charges, administrative charges and Interest on bank deposits. (Income Tax Notification 94/2024 Dated 24/07/2024)
Exemptions to Himachal Pradesh State Load Despatch Centre, Shimla: Himachal Pradesh State Load Despatch Centre, Shimla, a body established by the Government of Himachal Pradesh, has been notified under section 10(46) for exemption on income arising from levy of fees/ charges as per Electricity Act and Interest on bank deposits. (Income Tax Notification 95/2024 Dated 24/07/2024)
Exemptions to Society for Applied Microwave Electronics Engineering & Research (SAMEER), Mumbai: Society for Applied Microwave Electronics Engineering & Research (SAMEER), Mumbai, a Society constituted by Central Government, has been notified under section 10(46) for exemption on income arising from grants received from ministry Meity, fees, design & development charges, royalty, miscellaneous income and Interest on bank deposits. (Income Tax Notification 96/2024 Dated 24/07/2024)
SC, TCS not applicable on liquor vendors who bought vending rights on auction: Case of Excise Commissioner Karnataka vs Mysore Sales International, SC Judgement Dated 8th July 2024. The court considered the issue of tax collection at source in respect of the liquor trade under Section 206C of the Income Tax Act and as to whether a licensee who is issued a licence by the government permitting him to carry on the liquor trade would be a “buyer” as defined in Explanation (a) to Section 206C (11) of the Income Tax Act. This Court held that “buyer” would mean a person who by virtue of the payment gets a right to receive specific goods and not where he is merely allowed/permitted to carry on business in that trade. SC held that Section 206C of the Income Tax Act is not applicable in respect of liquor vendors(contractors) who bought the vending rights from the appellant on auction. (SC Judgement Dated 08/07/2024)
Union Budget Proposals relating to Direct Tax: The details of direct tax proposals are available in Memorandum explaining provisions in the Finance Bill 2024. The budget provides rates of Income Tax, and focus on measures to promote investment and employment, simplification and rationalisation, widening and deepening o tax base, improving tax administration. (Memorandum explaining Finance Bill Pages 1 to 76)
B. GST
Advisory for FORM GSTR-1A: The Government vide notification No. 12/2024 dated 10.07.2024, has introduced FORM GSTR-1A which is an optional Form/ facility. This has been provided to the taxpayers to add or amend particulars of a supply of the current tax period, which was missed out or was wrongly reported in FORM GSTR-1 of the said tax period, before filing of the GSTR-3B return of the said tax period. FORM GSTR-1A would be available to all the taxpayer from August 2024, through which details furnished in FORM GSTR-01 for the month of July 24 can be amended. (CGST Advisory Dated 26/07/2024)
Advisory, Refund of tax paid on Inward supply of goods by Canteen Store Department (FORM GST RFD 10A): Reference Circular No. 227/21/202 dated 11th July, 2024 for online processing of refund applications filed by Canteen Stores Department (CSD), GSTN has developed an online functionality to enable CSDs to file an application for refund in FORM GST RFD-10A in GST common portal. The prerequisites & relevant date for filing refund application under this category have been specified. (CGST Advisory Dated 22/07/2024)
AAAR, Car Lease as Perquisites, GST Implications: Case of Tvl.Faiveley Transport Rail Technologies India Pvt Ltd, AAAR Tamil Nadu Ruling Dated 10th July 2024. The Appellant is a Private Limited company under the administrative control of ‘STATE’ and they are engaged in the business of manufacturing, supplying and exporting equipment for the Rolling Stock industry. Appellant has filed the present appeal against decision on the issue relating to the query, viz., “Whether GST is applicable on facility of car extended to the employees of the Applicant-Company in the course of employment”, where the AAR had ruled that GST is applicable on such services. AAAR ruled that within the facts and circumstances of the case, only the actual value in monetary terms extended to the employee concerned in the course of or in relation to employment, qualifies as a `perquisite’, and it squarely falls within the ambit of entry No.1 of Schedule III of the CGST/TNGST Acts, 2017. Whereas, the car lease amount recovered in actual terms by the appellant-company while extending the facility of car to its employees, cannot be considered as a `perquisite’ and accordingly taxes under GST are applicable on the same. (AAAR Tamil Nadu Ruling Dated 10/07/2024)
AAR, ITC on Input Services for Leasing/Renting Motor Vehicles for Women’s Safety: Case of CMA CGM Global Business Services, AAR Tamil Nadu Ruling Dated 15th July 2024. AAR ruled that applicant is eligible to avail input Services in respect of leasing/renting/hiring of motor vehicles to provide transportation facility to ensure safety and security of women employees as per Tamil Nadu Shops and Establishments Act, subject to satisfying and fulfilling the eligibility and conditions provided under Section 16 of the CGST Act, 2017. Input tax credit shall be available to the applicant only on the tax paid on services of leasing, renting or hiring of motor vehicles for providing transport facilities to women employees alone who are arriving or leaving workplace between 8.00 P.M to 6.00 A.M. (AAR Tamil Nadu Ruling Dated 15/07/2024)
AAR, Grant from Food & Agriculture Organization of UN is not a supply: Case of Lake Frost Enterprises Private Limited, AAR Tamil Nadu Ruling Dated 9th July 2024. Last Forest Enterprise Private Limited (LFE) is a social business enterprise engaged in the wholesale and retail trade of various tribal, non-timber forest, organic, natural, and agro foods. The company operates with a mission to support self-help groups among tribals and backward communities in the Nilgiris Biosphere Reserve. During the COVID-19 pandemic, LFE sought financial assistance from the FAO, which granted USD 24,893. AAR concluded that rant from FAO of UN is not a supply in accordance with the provisions of GST Act. (AAR Tamil Nadu Ruling Dated 09/07/2024)
AAR, Turnkey contracts are indivisible for GST purposes: Case of Vijay Electricals Limited, AAR Gujarat Ruling Dated 2nd July 2024. The Applicant is engaged in engineering, procurement, and construction (EPC) contracts. They have a turnkey contract with Paschim Gujarat Vij Company Ltd. (PGVCL) for supply and installation under a single agreement. It was argued that the contract is divisible, with separate billing for supply and installation. The AAR determined that the turnkey contract in question is indeed a works contract as per Section 2(119) of the CGST Act. The outward supply must be treated as a single works contract service, rather than fragmented into separate elements of supply of goods and services. (AAR Gujarat Ruling Dated 02/07/2024)
Union Budget Proposals relating to GST: The details of CGST/ IGST/ UTGST/ GST Compensation proposals are available in Memorandum explaining provisions in the Finance Bill 2024. The Tax Research Unit (TRU), Central Board of Indirect Taxes and Customs (CBIC) DO letter dated 23rd July 2024 addressed to Commissioners summarises the Budget proposals relating to GST. (Memorandum explaining Finance Bill Pages 106 to 113) (TRU-CBIC DO Letter Dated 23/07/2024 Pages 8 to 12 and Annexures)
C. Central Excise
Union Budget Proposals relating to Central Excise: The details of central excise proposals are available in Memorandum explaining provisions in the Finance Bill 2024. (Memorandum explaining Finance Bill Pages 105)
D. Custom Duty
Amendment Customs Tariff (Identification, Assessment, Collection of Countervailing Duty on Subsidized Articles and for Determination of Injury) Rules: The amendment, introduces New Shippers Review, Rule 23A which allows for periodic reviews to determine subsidy margins for exporters or producers not originally investigated but who wish to enter the Indian market. If such exporters or producers are found unrelated to those already subject to countervailing duties, the Central Government will not levy duties during the review period. However, provisional assessments and guarantees may be required. If the review determines subsidies, duties may be applied retrospectively from the review’s initiation date. (Custom Notification 51/2024 (NT) Dated 23/07/2024)
Increase in value limit for duty free import of commercial samples: The notification amends the duty-free import limits for commercial samples, the value limit has been increased from Rs. 1,00,000 to Rs. 3,00,000. (Custom Notification 29/2024 (T) Dated 23/07/2024)
Basic Custom Duty (BCD) related changes: The notification amends notification No. 50/2017 dated the 30th June, 2017, relating to changes in BCD on various goods. The changes also include the introduction of new entries such as live SPF Vannamei shrimp brood stock, Artemia, and Shea Nuts, with specified duty rates ranging from nil to 15%. (Custom Notification 30/2024 (T) Dated 23/07/2024)
Rates under India-UAE CEPA revised: The notification amends notification No. 22/2022 dated 30th April, 2022 to revise the rates under the India-UAE Comprehensive Economic Partnership Agreement (CEPA). (Custom Notification 31/2024 (T) Dated 23/07/2024)
Revision of AIDC rates applicable on certain items: The notification amends notification No. 11/2021 dated 1st February, 2021 so as to revise Agriculture Infrastructure and Development Cess (AIDC) rates applicable to certain items. (Custom Notification 32/2024 (T) Dated 23/07/2024)
Concessional rate for gold, silver and platinum imported under specified schemes: The notification amends notification No. 57/2000 dated 8th May 2000, to revise the concessional rates for gold, silver, and platinum imported under specified schemes. (Custom Notification 33/2024 (T) Dated 23/07/2024)
Amendments related to conditions in custom rate notifications: The notification amends the conditions of notifications 25/1999, 25/2002 and 57/2017. (Custom Notification 34/2024 (T) Dated 23/07/2024)
Revision in Health Cess on certain items: The notification amends notification No. 8/2020 dated 2nd February, 2020 to revise Health Cess on certain items. (Custom Notification 35/2024 (T) Dated 23/07/2024)
Exemptions/ concessional rate of BCD and SWS to critical minerals: The notification provide exemptions and concessional rates of Basic Customs Duty (BCD) and Social Welfare Surcharge (SWS) on critical minerals. It exempts various minerals, including natural graphite, cobalt, lithium, and others, from the full rate, and provide reduced rates or nil rates for these items. (Custom Notification 36/2024 (T) Dated 23/07/2024)
Amend export duty on specified items of raw hides, skins and leather: The notification amend notification no. 27/2011 dated 1st March, 2011 to revise export duties on specific items related to raw hides, skins, and leather. It introduces new duty rates, including 40% for raw hides and skins (excluding buffalo), 30% for buffalo hides, and 20% for tanned hides and skins of various animals. (Custom Notification 37/2024 (T) Dated 23/07/2024)
Extended time period for re-export of certain foreign origin goods when imported for maintenance, repair and overhaul: The notification amends 32 existing notifications to extend their validity to a further period and also amends notification No. 153/94 dated 13th July, 1994 to extend the time period for re-export of certain foreign origin goods when imported for maintenance, repair and overhaul. (Custom Notification 38/2024 (T) Dated 23/07/2024)
Extended time period of re-import from three years to five years: The notification amends notification No. 45/2017 dated 30th June, 2017 to extend the re-import period from three years to five years. It introduces new provisions for lubricating oil and fuel in aircraft. It clarifies that no drawback of customs duty or refund of integrated tax is allowed on lubricating oil in aircraft engines at departure. It also outlines conditions for non-aviation fuel, ensuring that the quantity and duty rates are consistent for reimported fuel. (Custom Notification 39/2024 (T) Dated 23/07/2024)
Provisional attachment of bank account(s): The Instructions relates to provisional attachment of bank accounts under Section 110(5) of the Customs Act. It emphasizes the necessity of a written order by a proper officer, approved by the Principal Commissioner of Customs or Commissioner of Customs, to protect revenue interests or prevent smuggling. The extension of attachment periods must follow a structured process, including a hearing for the account holder and must be communicated with a Document Identification Number (DIN). Investigations and adjudications are urged to be completed promptly to fulfil the attachment’s purpose. (Custom Instructions 19/2024 Dated 22/07/2024)
SC, Customs duty and interest payable even when confiscated goods are redeemed after payment of fine: Case of Navayuga Engineering Co Ltd vs Union of India, SC Judgement Dated 23rd July 2024. The court considered that Section 28 would come into operation for assessing and determining the duty and other charges payable with respect to goods redeemed under Section 125(2). SC held that the owner of goods has a liability to pay customs duty, even after confiscated goods are redeemed after payment of fine and other charges. (SC Judgement Dated 23/07/2024)
Union Budget Proposals relating to Custom Duty: The details of custom duty proposals are available in Memorandum explaining provisions in the Finance Bill 2024. The Tax Research Unit (TRU), Central Board of Indirect Taxes and Customs (CBIC) DO letter dated 23rd July 2024 addressed to Commissioners summarises the Budget proposals relating to Customs. (Memorandum explaining Finance Bill Pages 77 to 104) (TRU-CBIC DO Letter Dated 23/07/2024 Pages 1 to 7 and Annexures)
E. Directorate General of Foreign Trade (DGFT)
DGFT simplifies Export Promotion Capital Goods Scheme procedures: It Chapter 5 of the Handbook of Procedures (HBP) 2023 concerning the Export Promotion Capital Goods (EPCG) Scheme. The key changes include extending the period for submitting installation certificates or imported capital goods from six months to three years, updating fees for extending export obligation periods, and introducing new provisions for composition fees. The revised rules allow more flexibility in compliance and adjustments for export obligations. (DGFT Public Notice 15/2025 Dated 25/07/2024)
Verification of authenticity of Licences, Authorisations, Scrips, Certificates, Instruments etc. issued by DGFT using the UDIN: DGFT has introduced an online facility to verify the authenticity of electronically-issued documents such as Licences and Certificates using a Unique Document Identification Number (UDIN). The UDIN, located at the top- right of the document, can be checked on the DGFT website by navigating to the verification section. This system allows stakeholders to download and verify documents without specific login credentials. (DGFT Trade Notice 09/2025 Dated 23/07/2024)
Launch of Steel Import Monitoring System (SIMS) 2.0: DGFT has announced the launch of Steel Import Monitoring System (SIMS) 2.0, the updated system will replace the current SIMS 1.0 effective from 25th July 2024. (DGFT Trade Notice 10/2025 Dated 25/07/2024)
F. Securities and Exchange Board of India (SEBI)
Amendment- Prohibition of Insider Trading Regulations: The Board appoints the 1st day of November, 2024 as the date on which the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2022 shall come into force. These amendments intend to strengthen the legal framework to prevent insider trading, ensuring market integrity and protecting investor interests. (SEBI Notification Dated 25/07/2024)
Consultation Paper on Draft Circular on Amendment to Para 15 of Master Circular for Credit Rating Agencies (CRAs): The draft proposes to remove the term “technical default” and incorporate more practical considerations such as force majeure events and significant changes affecting a firm’s credit risk. This change responds to concerns that classifying technical defaults as actual defaults could mislead the market and create unnecessary panic. The comments are invited rom stakeholders. (SEBI Consultation Paper Dated 25/07/2024)
G. Ministry of Corporate Affairs (MCA)
No Notification/ Circular during the week.
H. Insolvency and Bankruptcy Board of India (IBBI)
SC, Assets of subsidiary company of corporate debtor cannot be part of resolution plan: Case of BRS Ventures Investments Ltd vs SREI Infrastructure Finance Ltd, SC Judgement Dated 23rd July 2024. Supreme Court held that a holding company and its subsidiary are always distinct legal entities. A holding company is not the owner of the assets of its subsidiary and hence assets of the subsidiary company of the corporate debtor cannot be part of the resolution plan of the corporate debtor. (SC Judgement Dated 23/07/2024)
NCLT, Adjudicating Authority cannot review Commercial aspects when resolution plan is approved by CoC: Case of N Kumar vs Religare invest Limited, NCLT Chennai Judgement Dated 16th July 2024. NCLT held that once the resolution plan is approved by Committee of Creditors, only limited judicial review is available for the Adjudicating Authority u/s. 30(2) and Section 31 of IBC, 2016. It cannot venture into the commercial aspects of the decisions taken by the Committee of Creditors. (NCLT Chennai Judgement Dated 16/07/2024)
I. Reserve Bank of India (RBI)
Domestic Money Transfer, Review of Framework: The framework for Domestic Money Transfer (DMT) was introduced in 2011. RBI has updated the framework to reflect advancements in banking, payment systems, and KYC procedures. The changes include enhanced record-keeping for cash pay-out services, stricter verification for cash pay-in services, and compliance with the Income Tax provisions for cash deposits. The transactions must now be authenticated with an additional factor, and the remitter’s details must be included in transaction messages. Card-to-card transfers are excluded from this framework and will be governed separately. (RBI Notification 52/2024 Dated 24/07/2024)
Small Value Loans, Primary (Urban) Co-operative Banks (UCBs): As per existing guidelines, UCBs were required to have at least 50 per cent of their aggregate loans and advances comprising of Small Value Loans, i.e., loans of value not more than ₹25 lakh or 0.2 per cent of their Tier I capital, whichever is higher, subject to a maximum of ₹1 crore, per borrower. The target date for complying with the above requirement has been extended to 40% by 31st March 2025 and 50% by 31st March 2026. (RBI Notification 53/2024 Dated 25/07/2024)
Bank Finance against Shares and Debentures: As per extant guidelines, Primary (Urban) Co- operative Banks (UCBs) aggregate of all loans against the security of shares and debentures should be within the overall ceiling of 20 per cent of their owned funds. On review, it has been decided that the aforementioned overall ceiling of 20 per cent shall be linked to Tier I capital of the bank as on 31st March of the previous financial year. (RBI Notification 54/2024 Dated 25/07/2024)
Prompt Corrective Action (PCA) Framework for Primary (Urban) Co-operative Banks (UCBs): The for UCBs has since been reviewed. The revised framework, replacing the existing Supervisory Action Framework (SAF), under the nomenclature Prompt Corrective Action (PCA) Framework is issued. The PCA framework is largely principle-based with fewer number of parameters as compared to the SAF, without any dilution in the supervisory rigour. The new framework will focus on Capital, Asset Quality, and Profitability indicators such as CRAR, Net NPA Ratio, and net profit. It outlines specific actions and thresholds for capital adequacy, asset quality, and profitability, with potential corrective actions including restrictions on capital expenditures and expansion. (RBI Notification 55/2024 Dated 26/07/2024)
Master Directions on Overseas Investments: The directions compiles the rules and regulations governing overseas investments by residents in India. It outlines the procedures and definitions for various investment types, including Overseas Direct Investment (ODI) and Overseas Portfolio Investment (OPI), and provides reporting instructions. The direction aims to ensure compliance and effective implementation of these rules by authorized dealers in their foreign exchange dealings. (RBI Master Directions Dated 24/07/2024)
Draft circular on Basel III Framework on Liquidity Standards – Liquidity Coverage Ratio (LCR) – Review of Haircuts on High Quality Liquid Assets (HQLA) and Run-off Rates on Certain Categories of Deposits: While increased usage of technology has facilitated the ability to make instantaneous bank transfers and withdrawals, it has also led to a concomitant increase in risks, requiring proactive management. The central bank reviewed LCR framework for banks in India and decided that banks shall assign an additional five percent run-off factor for retail deposits which are enabled with internet and mobile banking facilities (IMB) i.e., stable retail deposits enabled with IMB shall have 10 percent run-off factor and less stable deposits enabled with IMB shall have 15 percent run-off factor. The comments from stakeholders are invited. (RBI Draft Circular Dated 25/07/2024)
RBI Digital Payments Index for March 2024: The Digital Payments Index (RBI-DPI) capture the extent of digitisation of payments across the country with base as March 2018. The index for March 2024 stands at 445.50 as against 418.77 for September 2023. (RBI Public Notice Dated 26/07/2024)
J. Miscellaneous
SC, Royalty is not a Tax, States Can Tax Mineral Lands: Case of Mineral Area Development Authority vs Steel Authority of India, SC Judgement Dated 25th July 2024. The court determined that royalty paid for mineral rights is a contractual obligation, not a tax, and cannot be classified as a tax merely because it is recoverable as arrears. It upheld that the power to tax mineral rights lies with state legislatures under Entry 50 of List II, and Parliament cannot tax these rights under Entry 54 of List I. The judgment affirmed that states can levy taxes on mineral-bearing lands, considering the mineral yield as a measure. The court also clarified that limitations imposed by Parliament on mineral development laws do not affect state powers under Entry 49 of List II. (SC Judgement Dated 25/07/2024)
HC, Only parties to arbitration proceedings can challenge an arbitral award: Case of Mukesh Udeshi vs Jindal Steel Power Ltd, Delhi High Court Judgement Dated 2nd July 2024. Jindal Steel Power Ltd. (JSPL), filed a complaint concerning the disputed domain name “jsplsteel.in.” The arbitrator reviewed the pleadings and concluded that any use of the disputed domain name by the respondent would mislead the public and divert internet traffic from JSPL. The award by the arbitrator was challenged under Section 34 of the Arbitration and Conciliation Act. Mukesh Udeshi, the petitioner, argued that he was the beneficial owner of the disputed domain name and that the award had been passed without hearing him, violating principles of natural justice. The court considered that despite being aware of the proceedings, Mukesh Udeshi chose not to appear before the arbitrator. The Delhi High Court upheld the arbitrator’s decision, emphasizing that only parties directly involved in arbitration proceedings can challenge an arbitral award. (Delhi High Court Judgement Dated 02/07/2024)
HC, Disputes on Lock-In Periods in Employment Contracts are Arbitrable Under Arbitration Act: Case of Lily Packers Pvt Ltd vs Vaishnavi Vijay Umak, Delhi High Court Judgement Dated 11th July 2024. The respondents, who were employees of Lily Packers Private Limited, entered into service employment agreements, which included a clause stipulating a lock-in period of three years. The respondents sought to terminate their employment before the end of this period, leading to the current dispute. The Delhi High Court decided that lock-in period clauses in employment contracts, when reasonable, do not violate fundamental rights and are enforceable. Also, the disputes arising from such clauses are arbitrable under the Arbitration and Conciliation Act, 1996. (Delhi High Court Judgement Dated 11/07/2024)
Conclusion: In summary, the notifications and circulars issued during the week of 22nd-28th July 2024 encompass a wide range of updates across income tax exemptions, GST advisories, customs amendments, and more. Staying abreast of these developments is essential for businesses and individuals to ensure compliance and take advantage of any new benefits or changes in regulations. By understanding these updates, stakeholders can better navigate the complexities of the tax and regulatory environment, ultimately fostering a more informed and proactive approach to their financial and legal obligations.
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