During the week of December 1–8, 2024, multiple notifications and rulings were issued. In Income Tax, IIIT Hyderabad was notified for tax deductions under Section 35(1)(ii), and the Delhi HC directed re-examination of unexplained foreign bank deposits in absence of evidence. GST updates included amendments to adjudication processes for DGGI cases, biometric-based Aadhaar authentication for GST registration in four states, mandatory sequential GSTR-7 filing, and rulings denying ITC for mismatched bill names and clarifying GST applicability on leased government buildings. The CBIC rescinded Special Additional Excise Duty on crude and fuel exports. SEBI updated insider trading and intermediaries’ regulations, proposed frameworks for system audit oversight, and solicited feedback on equity market reforms. RBI revised guidelines for offline digital payments, interest rates on FCNR(B) deposits, CRR reductions, and collateral-free agricultural loans. Key judicial rulings addressed employment termination due to absence and reinforced Labour Court findings unless compelling reasons exist.
Notifications & Circulars issued during week (1st – 8th Dec 2024)
A. Income Tax
International Institute of Information Technology, Hyderabad notified under section 35(1)(ii) as Research Association for Scientific Research: The notification notifies International Institute of Information Technology, Hyderabad for ‘Scientific Research’ under the category of ‘University, college or other institution’ for the purposes section 35(1)(ii) of the Income-tax Act, read with rules 5C and 5E 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 125/2024 Dated 02/12/2024)
HC, Estimation of foreign bank account deposit accepted as bank statement not submitted: Case of Pawan Kumar Jaggi vs ACIT, HC Delhi Judgement Dated 5th November 2024. A search was conducted on the premises of the assessee. AO raised a demand of ₹50,00,000/- on account of unexplained credit. CIT(A) reduced the addition to ₹25,00,000/-. Delhi High Court held that estimation of deposit in foreign bank account cannot be questioned in absence of assessee producing the bank account statement of the same. Accordingly, AO directed to re-examine the same provided the relevant statements are submitted. (HC Delhi Judgement Dated 05/11/2024)
B. GST
Amendment to GST Circular on Proper officer under sections 73 and 74 on adjudication of DGGI cases: It amends Circular No. 31/2018 dated 9th February 2018, updating the adjudication process for show cause notices issued by the Directorate General of GST Intelligence (DGGI). Additional and Joint Commissioners of Central Tax in specified Commissionerates have been empowered with All India jurisdiction to adjudicate such notices. This applies when show cause notices involve multiple notices, either with the same or different PANs. It provides procedure for allocating adjudication responsibility based on the highest tax demand in the show cause notice. (CGST Circular 239/2024 Dated 04/12/2024)
Advisory for Biometric-Based Aadhaar Authentication and Document Verification for GST Registration Applicants of Haryana, Manipur, Meghalaya and Tripura: CGST rule was 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 Haryana, Manipur, Meghalaya and Tripura effective from 7th December 2024. (GSTN Advisory Dated 08/12/2024)
Advisory on mandatory Sequential Filing of GSTR-7 Returns: As per CGST Notification 17/2024 dated 27th September 2024, effective from the 1st November 2024, GSTR-7 filing has been made sequential from the October tax period. Hence, GSTR-7 return is to be filed in chronological order, beginning with the return period of October 2024. It is pertinent to mention that for a month in which no deduction have been made, deductors need to file NiL return for the same month. (GSTN Advisory Dated 04/12/2024)
AAR, IGST Input Tax Credit not allowed if Bill of entry not in the name of Buyer: Case of RV Hydraulics Services, AAR AP Ruling Dated 28th November 2024. The machinery was initially imported to India for exhibition purposes at an event in Bangalore under a Bill of Entry made out to the supplier, Promau SRL. Post- exhibition, M/s RV Hydraulic Services finalized the purchase and paid customs duties, including IGST amounting to ₹14,23,964, through a TR-6 challan. However, the Bill of Entry remained in the name of Promau SRL. AAR) denied Input Tax Credit (ITC) due to the reason that the Bill of Entry for the imported machinery was not in the name of the applicant. (AAR AP Ruling Dated 28/11/2024)
AAR, GST on rent for government leased private buildings: Case of Jay, AAP AP Ruling Dated 27th November 2024. M/s Jay, the owner of a commercial building leased to the Andhra Pradesh Lokayukta, sought clarification regarding the application of Goods and Services Tax (GST) on rent. The applicant raised questions regarding who is liable to pay GST on rent—the owner or the tenant (government)—and whether there are any special provisions in the GST Act for government-occupied private buildings. AAR ruled that GST on lease as discussed above is to be paid by the registered service provider (building owner) under forward charge mechanism unless a specific provision shifts the liability to the recipient of the service (tenant) under the Reverse Charge Mechanism (RCM). In the instant case, the service provided by the applicant qualifies as the leasing out of immovable property, a taxable supply under Section 7 (1A), and liable for remitting GST on lease/Rent consideration under Section 9 read with section 15 of the GST Act. There is no specific provision in the GST Act regarding government-occupied private buildings. (AAR AP Ruling dated 27/11/2024)
C. Central Excise
CBIC withdraw Special Additional Excise Duty (SAED) on production of Petroleum Crude and on export of Aviation Turbine Fuel, Petrol and Diesel: The notifications rescinded six notifications including Nos. 03/2022, 04/2022, 05/2022, 06/2022, 07/2022, and 09/2022, all dated 30th June 2022. While these notifications are rescinded, any actions taken or omitted under them prior to this rescission remain unaffected. (Central Excise Notification 29/2024 (T) Dated 02/12/2024)
CBIC withdraw exemption of Additional Duty of Excise on production of Petroleum Crude and on export of Aviation Turbine Fuel, Petrol and Diesel: The notifications rescinded two notifications including Nos. 10/2022, and 11/2022, all dated 30th June 2022. While these notifications are rescinded, any actions taken or omitted under them prior to this rescission remain unaffected. (Central Excise Notification 30/2024 (T) Dated 02/12/2024)
CBIC withdraw exemption notification for Basic Excise Duty (BED) and AIDC on production of Petroleum Crude and on export of Aviation Turbine Fuel, Petrol and Diesel: The notifications rescinded notification 08/2022 dated 30th June 2022. While the notifications has been rescinded, any actions taken or omitted under them prior to this rescission shall remain unaffected. (Central Excise Notification 31/2024 (T) Dated 03/12/2024)
CBIC amends Rule 18 and Rule 19 of Central Excise Rule: The notification has omitted the first proviso in Rule 18 and the proviso in Rule 19 of the Rules. Rule 18 is related to rebate of duty and rule 19 is related to export without payment of duty. (Central Excise Notification 01/2024 (NT) Dated 03/12/2024)
D. Custom Duty
CBIC Rescinds exemption notification for imports of Petroleum Crude and ATF: CBIC has rescind Notification No. 32/2022 dated 30th June, 2022. It was exempting imports of Petroleum Crude and ATF from whole of the additional duty of Customs as is equivalent to the Special Additional Excise Duty leviable thereon. (Custom Notification 48/2024 (T) Dated 03/12/2024)
Anti-dumping Duty on Textured Tempered Coated and Uncoated Glass originating in or exported from China and Vietnam: Anti-dumping Duty has been imposed on imports of Textured Tempered Coated and Uncoated Glass originating in or exported from China and Vietnam, and imported into India. It shall be applicable for a period of 6 months. (Custom Notification 26/2024 (ADD) Dated 04/12/2024)
Corrigendum to Notification 26/2024 (ADD) on Textured Tempered Coated and Uncoated Glass: It modifies the method for calculating the applicable duty rate. Specifically, the text now specifies that the duty rate will be the difference between the landed value of the goods and the amount mentioned as “Duty amount”. (Custom Notification 26/2024 (ADD) Corrigendum Dated 05/12/2024)
E. Directorate General of Foreign Trade (DGFT)
Export of Broken Rice to Senegal and Gambia through National Cooperative Exports Limited (NCEL): This notification extends the time period for the export of Broken Rice to Senegal and Gambia through the NCEL by two months, now allowing shipments until January 31, 2025. (DGFT Notification 42/2024 Dated 05/12/2024)
Launch of Revamped Preferential Certificate of Origin (eCoO) 2.0 System: The launch of the revamped eCoO 2.0 platform on 21st December 2024, includes features like multi-user access, e-signature options (including Aadhaar-based e-signing), an integrated dashboard, and enhanced digitization for easier preparation of cost sheets. Exporters can file Preferential Certificates of Origin through this upgraded system, which will also migrate data from the legacy platform. Issuing agencies are required to register on the new system and ensure accurate data management. The eCoO 2.0 platform will also support an e-wallet facility and provide seamless certificate verification through QR codes or the platform itself. (DGFT Trade Notice 23/2024 Dated 06/12/2024)
F. Securities and Exchange Board of India (SEBI)
SMS and E-mail alerts to investors by stock exchanges: The new guidelines allows stock brokers to upload the same mobile number or email address for multiple clients under exceptional circumstances, provided the clients belong to the same family or, in the case of non-individual clients, are authorized persons of entities such as HUFs, partnerships, trusts, or corporates. The family definition includes self, spouse, dependent children, and dependent parents, while authorized persons for non- individual clients may include Karta or Co-parceners in an HUF, partners in a partnership firm, trustees or beneficiaries in a trust, and corporate authorized persons based on board resolutions. (SEBI Circular Dated 03/12/2024)
Repository of documents relied upon by Merchant Bankers during due diligence process in Public issues: Under Merchant Bankers Regulations, these bankers must maintain records related to both pre- and post-issue activities for a minimum of five years. To facilitate efficient document management, SEBI has directed that these documents be uploaded to a Document Repository platform set up by Stock Exchanges. The timelines are within 20 days of listing from 1st January 2025, reduced to 10 days from 1st April 2025. The uploaded documents must be accessible only to the respective Merchant bankers, with SEBI retaining supervisory access. (SEBI Circular Dated 05/12/2024)
Master Circular for Depositories: This circular consolidates all applicable directions and communications issued up to September 30, 2024, ensuring users can access these in one document. It is divided into four sections, i.e. Beneficial Owner (BO) accounts, Depository Participants (DP) related, Issuer related, and Depositories related. it includes cross-references for comprehensive compliance guidance. (SEBI Master Circular Dated 03/12/2024)
Amendment to SEBI Prohibition of Insider Trading Regulations: The key updates include redefining the term “connected person” to expand its scope, thereby bringing in more individuals and entities with access to unpublished price-sensitive information (UPSI). The amendment also modifies the definition of “relative” to include spouses, parents, siblings, and children of the connected person. Additionally, it alters the conditions under which individuals are considered insiders, clarifying that anyone with access to UPSI is an insider, regardless of how they gained access. (SEBI Notification Dated 04/12/2024)
Amendment to SEBI Intermediaries Regulations: This amendment introduces Regulation 30A, which outlines procedures for summary proceedings against stock brokers, clearing members, depository participants, and individuals found in violation of securities laws, non-payment of fees, or failure to submit periodic reports. It provides a process for issuing notices, receiving written submissions, and imposing penalties such as suspension or cancellation of registration certificates. The entities whose registration is cancelled are required to comply with specific actions such as transferring assets and liabilities or ceasing operations. (SEBI Notification Dated 04/12/2024)
Amendment to SEBI Depositories and Participants Regulations: The amendment includes a new regulation (60A) on “Nomination”. It mandates that every participant provide beneficial owners with the option to nominate a person to whom their securities will transfer upon their death. It also allows for the nomination of an authorized person who may conduct transactions on behalf of the owner if they become incapacitated. In the case of joint ownership, the owners can collectively nominate a person to receive the securities in the event of their collective death. (SEBI Notification Dated 28/11/2024)
Consultation Paper on Online Monitoring of System Audit of Stock Brokers: The proposed web- based portal would enable stock exchanges to oversee system audits in real-time, ensuring quality audits and that auditors physically visit broker premises. Currently, system audits are conducted without physical visits or adequate evidence, leading to inconsistencies. The new system will monitor audit activities, improve auditor accountability, and provide a platform for auditors to submit reports and evidence digitally. The comments/ suggestions from stakeholders are invited. (SEBI Consultation Paper Dated 03/12/2024)
Draft Circular on Settlement of Account of Clients who have not traded in the last 30 days: The current regulation mandates that Trading Members (TMs) settle the accounts of clients who have not traded in the last 30 days within three working days. However, this requirement has been flagged as inefficient due to the daily identification of such clients. SEBI proposes to allow TMs to settle the accounts of these clients on the upcoming settlement dates within the monthly running account settlement cycle, as per exchange calendars. The comments/ suggestions from stakeholders are invited. (SEBI Consultation Paper Dated 05/12/2024)
Consultation Paper on Introducing Close Auction Session in Equity Cash segment: The introduction of a Close Auction Session (CAS) in India is proposed, to determine the closing price of stocks in the equity cash market. Currently, the closing price is determined by the last 30 minutes’ volume-weighted average price (VWAP), which may result in volatility and tracking differences, especially on index rebalancing and derivative expiry days. Major global markets with CAS, like Hong Kong and South Korea, show more stable closing prices and reduced volatility. With the growth of passive funds in India, the introduction of CAS could help minimize tracking differences and improve market efficiency. The comments/ suggestions from stakeholders are invited. (SEBI Consultation Paper Dated 05/12/2024)
Consultation Paper on of In-The-Money (ITM) single stock options contracts to futures devolvement framework: SEBI has proposed a framework to devolve In-The-Money (ITM) single stock option contracts into futures, one day before expiry. This change is designed to address the risks associated with sudden shifts from Out-of-The-Money (OTM) options to ITM options near expiry, which can create unexpected obligations due to the physical settlement requirement in stock derivatives. The comments/ suggestions from stakeholders are invited. (SEBI Consultation Paper Dated 05/12/2024)
Draft Circular on association of persons regulated by the Board, MIIs and their agents with persons carrying on prohibited activities: The draft circular clarify provisions related to associations between regulated entities, Market Infrastructure Institutions (MIIs), and their agents with individuals involved in prohibited activities. These activities include offering unregistered investment advice or making unapproved performance claims related to securities. It aims to ensure that entities regulated by SEBI, including stock exchanges, depositories, and their agents, do not indirectly engage with individuals participating in such activities. (SEBI Consultation Paper Dated 06/12/2024)
SEBI Clarifies on Specified Digital Platforms (SDPs): The regulated entities, including market intermediaries and agents, are prohibited from associating with entities that provide unregistered investment advice or make unapproved claims about securities. However, this restriction does not apply to associations through an SDP. Regulated entities can associate with digital platforms, whether or not they are recognized as SDPs, but they must comply with the relevant regulations if not using an SDP. (SEBI Press Release Dated 04/12/2024)
SEBI Warns Public About Unregistered Debt Platforms: The unregistered online platforms offering unlisted debt securities to investors, operate without regulatory oversight, fail to provide basic investor protections and grievance redress mechanisms. The public is advised to avoid engaging with unregistered intermediaries and instead use online bond platforms operated by SEBI registered stock brokers. (SEBI Press Release Dated 05/12/2024)
SEBI Investor Charter key enhancements and protections: SEBI has updated its “Investor Charter” to improve investor protection, market transparency, and confidence in the securities market. SEBI has enhanced the grievance redressal and dispute resolution processes through the launch of SCORES 2.0 and SMART Online Dispute Resolution (ODR) Portal. SCORES 2.0 facilitates direct handling of complaints by SEBI-registered intermediaries and regulated entities, while SEBI reviews complaints at the second level. SMART ODR provides online conciliation and arbitration for dispute resolution. Investors are encouraged to deal only with SEBI-recognized institutions, update personal details regularly, and promptly address grievances. Additionally, they must be aware of transaction risks, fees, and maintain relevant records. (SEBI Press Release Dated 06/12/2024)
G. Ministry of Corporate Affairs (MCA)
No Notification/ Circular during the week.
H. Insolvency and Bankruptcy Board of India (IBBI)
IBBI Extends Deadline for Filing Liquidation Process Forms: IBBI extends the deadline for filing forms related to liquidation and voluntary liquidation processes under the IBC to 31st December 31, 2024, following representations from liquidators and Insolvency Professional Agencies. (IBBI Circular Dated 02/12/2024)
Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals, and Bankruptcy Trustees Guidelines, 2024: The guidelines outline procedures for preparing a panel of Insolvency Professionals (IPs) for appointments by the National Company Law Tribunal (NCLT) and Debt Recovery Tribunal (DRT). These are effective from 1st January to 30th June 2025. Eligibility criteria for IPs include no pending disciplinary actions, a clean conviction record in the past three years, valid Authorization for Assignment (AFA), and submission of an expression of interest in Form A. The IBBI will prepare a zone-wise panel based on IPs’ registered offices and their experience in completed assignments under the Insolvency and Bankruptcy Code. The panel will also consider the IP’s expertise in specific sectors. (IBBI Guidelines Dated 02/12/2024)
NCLAT, Issue of closure of factory to be raised under Industrial Disputes Act: Case of Rakesh J Shah vs Sanjay Kumar Aggarwal, NCLAT Delhi Judgement Dated 22nd November 2024. The CIRP of the Corporate Debtor commenced in January 2018, and on an application filed by the Resolution Professional, an order was passed in December 2018 by the Adjudicating Authority (AA) directing for liquidation of the corporate debtor. Liquidator made publication inviting claims from the stakeholders. The appellants in their capacity as authorised representative of 271 workmen submitted their claims. Liquidator asked the appellants to submit the proof of employment in the company in the period of two years preceding the liquidation commencement date in order to admit their claims. The corporate debtor has ceased to do business from June 2010, and closure of factory was not in compliance with Industrial Disputes Act. The liquidator communicated the rejection of the claims. Aggrieved by the rejection of the claims by the liquidator, appellant preferred an appeal before the AA. The AA after hearing the appellants as well as the liquidator has passed the impugned order rejecting the claims. NCLAT Delhi held that issue of closure of the factory is to be raised against Industrial Court or Labour Court under the Industrial Disputes Act, and not against AA, i.e. NCLT. Thus, appeal dismissed. (NCLAT Delhi Judgement Dated 22/11/2024)
I. Reserve Bank of India (RBI)
Inoperative Accounts / Unclaimed Deposits in banks: RBI is concerned regarding the high number of inactive or frozen accounts, attributed to prolonged inactivity or pending KYC updates. It urged banks to reduce such accounts by improving the process of account activation and enabling smooth KYC updates through mobile/internet banking and other methods. It recommended conducting special campaigns to help activate such accounts, particularly for underprivileged customers. The circular also emphasizes the importance of facilitating uninterrupted credit to beneficiaries of government schemes like DBT/EBT, even if their accounts have become inoperative. (RBI Notification 91/2024 Dated 02/12/2024)
Implementation of Section 51A of UAPA, 1967, Sanctions List Amendments: MEA has informed about the UNSC amendments on its ISIL (Da’esh) and Al-Qaida Sanctions List of individuals and entities, which are subject to the assets freeze, travel ban and arms embargo. Regulated Entities (REs) are advised to take note for necessary compliance in terms of Master Directions on KYC. (RBI Notification 92/2024 Dated 04/12/2024)
Amendment to Framework for Facilitating Small Value Digital Payments in Offline Mode: The limits for UPI Lite transactions have been enhanced. Previously, the upper limit for offline payments was ₹500 per transaction, with a total limit of ₹2,000 per payment instrument. The new limits allow ₹1,000 per transaction, with a total limit of ₹5,000 at any given time. (RBI Notification 93/2024 Dated 04/12/2024)
Interest Rates on Foreign Currency Non-resident Accounts (Banks) [FCNR(B)] Deposits: RBI announced an increase in the interest rate ceilings for FCNR(B) deposits applicable to fresh deposits raised by scheduled commercial banks, small finance banks, regional rural banks, local area banks, and cooperative banks. For deposits with a maturity period of 1 year to less than 3 years, the ceiling is Overnight Alternative Reference Rate (ARR) for the respective currency or swap, plus 400 basis points. For deposits with a maturity period of 3 years to 5 years, the ceiling is ARR plus 500 basis points. (RBI Notification 94/2024 Dated 06/12/2024)
Maintenance of Cash Reserve Ratio (CRR): RBI announced a reduction in the CRR for all banks by 50 basis points. The CRR will be decreased in two equal tranches, of net demand and time liabilities (NDTL). The first reduction, to 4.25%, will take effect from 14th December 2024, while the second reduction, to 4.00%, will be effective from 28th December 2024. (RBI Notification 95/2024 Dated 06/12/2024)
Credit Flow to Agriculture, Collateral free agricultural loans: RBI has raised the limit for collateral-free agricultural loans from ₹1.6 lakh to ₹2 lakh per borrower. The revised guidelines include loans for allied activities and require banks to waive collateral security and margin requirements for loans up to ₹2 lakh. (RBI Notification 96/2024 Dated 06/12/2024)
J. Miscellaneous
SC, Termination justified for employee’s long absence without notice: Case of LIC of India vs Om Prakash, SC Judgement Dated 13th November 2024. The respondent who was serving as an Assistant Administrative Officer in the LIC, since 25th September 1995 absented himself from duties without informing his employer. The LIC’s letters addressed to him to resume duties remained unanswered by the delinquent. Then the chargesheet-cum-show cause notice was issued on 14th February 1996 proposing his removal from service. But the same was also not answered. The apex court held that employee remaining absent from duty for 90 days without intimating employer and employee not responding to notice addressed to delinquent justifies employer action of terminating employee by treating as abandonment of service. (SC Judgement Dated 13/11/2024)
SC, Labour Court’s factual findings shouldn’t be disturbed by a writ court without compelling reasons: Case of Ganpati Bhikarao Naik vs Nuclear Power Corporation of India, SC Judgement dated 13th November 2024. The appellant obtained employment with the respondent as a family member of the land loser whose land was acquired for the Kaiga Atomic Power Project. The appellant, son-in-law of the land-loser, was then interviewed for the job and given appointment as a ‘Helper’ in the respondent corporation. In course of time there was a matrimonial dispute aroused in the family and a divorce petition was filed. The father-in-law of the appellant made a complainant to the respondent stating that appellant is not a family member and not entitled to get the job in the land loser quota. The matter was investigated and respondent terminated the services of the appellant, resulting, the appellant raised an industrial dispute.
— The Labour Court relying on the documentary evidence held that appellant is son-in-law of the land loser and ordered reinstatement with back wages. The High Court reversed the decision of the Labour Court. The apex court considered that factual finding of the Labour Court should not normally be disturbed by a Writ Court without compelling reason. With this observation SC passed an order with reinstatement without back wages. (SC Judgement Dated 13/11/2024)
******
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)
Author Bio
