Analysis of Notifications and Circulars for Week Ending 4th August 2024

Summary: The week from 29th July to 4th August 2024 saw a flurry of significant notifications and circulars across various sectors. In Income Tax, the CBDT issued an order under Section 144B specifying conditions for verification purposes, while the Delhi High Court ruled that agricultural income is exempt from MAT calculations and that receipts from Indian customers for services provided outside India are not taxable as royalty. GST developments included the establishment of the GST Appellate Tribunal (GSTAT) from September 2024 and advisories on biometric-based Aadhaar authentication for GST registration in Uttarakhand, Jammu & Kashmir, and West Bengal. The GSTN team also released advisories on GSTR-1A filing and changes to GSTR-8. Central Excise saw a reduction in Special Additional Excise Duty on domestically produced petroleum crude. Custom notifications included revisions to BCD rates on laboratory chemicals and updates under the India-UAE CEPA. The DGFT allowed the export of non-basmati white rice to Namibia and harmonized export policy codes for chapters 40-98. SEBI mandated additional disclosures by FPIs and amended SECC regulations to require quarterly disclosures of shareholding patterns by stock exchanges and clearing corporations. Each notification and circular represents a pivotal update affecting various stakeholders, ensuring compliance and clarity in their respective domains.

A. Income Tax

Order under 144B(5) specifying the circumstances for the purposes of enquiries or verification functions by the Verification: CBDT specified the circumstances, for the purpose of enquiry or verification functions referred to in Section 144B(3)(iii) by the Verification Unit. These include (i) Non-availability of digital footprint in respect of the assessee or any other person, (ii) Electronic or Online verification is not possible on account of no response to notice issued to the assessee or any other person, and (iii) Physical verification of assets or premises or persons is required, regardless of the presence of digital footprint. (Income Tax CBDT Order Dated 01/08/2024)

HC, Agriculture land income not to be added for calculating MAT under section 115JB: Case of PCIT vs Gomantak Eximis Ltd, Delhi HC Judgement Dated 15th July 2024. Delhi High Court held that income of agricultural land is exempt from tax and hence the same cannot be added to the books profit while calculating MAT under section 115JB of the Income Tax Act. (HC Delhi Judgement Dated 15/07/2024)

HC, Receipts from Indian customers for services provided outside India relating to right to use of process not taxable: Case of CIT International Taxation-3 vs Telstra Singapore Pte Ltd, Delhi HC Judgement Dated 24th July 2024. The case relates to whether the receipts from Indian customers for services provided outside the territory of India would be taxable under Section 9(1)(vi) of the Income Tax Act read along with Article 12 of the Double Taxation Avoidance Agreement between India and Singapore. The court considered that since there was no transfer or conferment of a right in respect of a patent, invention or process, customers and those availing of the services provided by Telstra were not accorded a right over the technology possessed or infrastructure by it. The underlying technology and infrastructure remained under the direct and exclusive control of Telstra. Delhi High Court held that the receipts from Indian customers for services provided outside Indian Territory, in connection with use or right to use of process or equipment by the assessee company, cannot be taxed as royalty as per section 9(l)(vi) of the Income Tax Act. (HC Delhi Judgement Dated 24/07/2024)

B. GST

GST Appellate Tribunal (GSTAT) established from September 2024: Ministry of Finance notified the establishment of GSTAT effective September 1, 2023. The GSTAT will have a Principal Bench in New Delhi and several State Benches across India, including locations such as Vijayawada, Patna, Raipur, and Ahmedabad. The State Benches will handle appeals related to GST matters, with certain states having multiple benches or circuit sittings. (Finance Ministry Notification Dated 31/07/2024)

Advisory for Biometric-Based Aadhaar Authentication and Document Verification for GST Registration Applicants of Uttarakhand: CGST rule was amended to provide that an applicant can be identified on the common portal, based on data analysis and risk parameters for Biometric-based Aadhaar Authentication and taking a photograph of the applicant along with the verification of the original copy of the documents uploaded with the application. The said functionality has been developed by GSTN. 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 Uttarakhand on 28^th July 2024. (CGST Advisory Dated 28/07/2024)

Advisory, Detailed Manual and FAQ’s on filing of GSTR-1A: GSTR-1A is an optional facility to add, amend or rectify any particulars of a supply reported/missed in the current Tax period’s GSTR-1 before filing of GSTR-3B return of the same tax period. Detailed manual for filing of GSTR-1A and related FAQs have been issued. (CGST Advisory Dated 01/08/2024)

Advisory for Biometric-Based Aadhaar Authentication and Document Verification for GST Registration Applicants of Jammu & Kashmir and West Bengal: CGST rule was amended to provide that an applicant can be identified on the common portal, based on data analysis and risk parameters for Biometric-based Aadhaar Authentication and taking a photograph of the applicant along with the verification of the original copy of the documents uploaded with the application. The said functionality has been developed by GSTN. 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 Jammu & Kashmir and West Bengal on 2^nd August 2024. (CGST Advisory Dated 02/08/2024)

Advisory in respect of Changes in GSTR-8: TCS rate has been reduced from the current 1% to 0.5% effective from 10/07/2024 vide Notification 15/2024 dated 10th July 2024. GSTN team is working on the changes announced by GST Council in respect of GSTR 8, is expected to be complete in next couple of days, and users would be able to file returns from 06th August 2024 midnight onwards. (CGST Advisory Dated 02/08/2024)

AAR, GST rates or Jal Jeevan Mission Works: Case of Primove Infrastructure Development Consultants Ltd, AAR Maharashtra (MH) Ruling Dated 24th July 2024. Govt of MH as enacted MH Jeevan Authority Act, all water/ drainage/ sanitation/ storm water schemes are implemented through the said authority. It is wholly controlled by government and receive funds from consolidated funds as per budget allocation. For work allotted by Maharashtra Jeevan Pradhikaran (MJP) as part of the Jal Jeevan Mission, the tax rate varies based on the timeline of performance and invoicing. Services performed and invoiced before 01.01.2022 are exempt under Notification No. 12/2017. Work allotted before but performed and invoiced after 01.01.2022 is taxable at 18% under Notification No. 11/2017. For services allotted, performed, and invoiced after 01.01.2022, the same 18% rate applies. The service receiver, as defined under Section 2(93) of GST, is the Maharashtra Jeevan Authority (erstwhile MJP). However, questions regarding whether MJP’s appointment as an agency for water supply schemes constitutes a sovereign function under the Constitution were deemed outside the GST Act’s purview and not answered. (AAR Maharashtra Ruling Dated 24/07/2024)

AAR, GST on cab services by Roppen (Rapido App): Case of Roppen Transport Services Pvt Ltd, AAR Karnataka Ruling Dated 24th July 2024. Roppen is engaged in the business of providing technology based services to their end users for booking passenger transport services offered by third party drivers by means of company website and its mobile app platform. The Applicant satisfies the definition of an e-commerce operator and the nature of supply as conceptualized in Section 9(5) of CGST Act. The supply by the independent cab service provider (person who has subscribed to ‘Rapido’ app) to his passengers (who do not pay any subscription fee) on the App platform amounts to supply by the applicant. The Applicant is liable to pay GST on the supply of services provided by the independent four-wheeler cab service provider to his passengers on the Applicant’s app platform, being an e-commerce operator. 18% GST is applicable on the ride monitoring fee and SAC code 9985 is applicable for the said service. (AAR Karnataka Ruling Dated 24/07/2024)

AAR, GST on sale of space in Print Media: Case of Lokmat Media Pvt Ltd, AAR Maharashtra (MH) Ruling Dated 24th July 2024. Lokmat Medi, a prominent newspaper house in Maharashtra, provides services related to the sale of advertising space in newspapers and other print media, categorized under SAC Code 9986. The company supplied these services to Pune Municipal Corporation (PMC) and Pimpri Chinchwad Municipal Corporation (PCMC). AAR ruled that, as the content of advertisement is in relation to the function of Education, including primary and secondary schools and Health and sanitation, including hospital, Primary health centres and dispensaries; it is decided that being pure services provided to the Municipal Corporations are covered by Entry No. 3 of the Notification 12/2017 Dated 28^th June 2017, and exempted from tax. (AAR Maharashtra Ruling Dated 24/07/2024)

AAR, GST on penalties, late fees/panel interest fine by RBI: Case of Reserve Bank of India, AAR Maharashtra (MH) Ruling Dated 31st July 2024. AAR ruled that penalties, late fees/panel interest, fine of the nature levied and collected by RBI for contravention or violation of provisions of law are not taxable under GST. Further, the penalty of the nature for non-performance or under-performance as per contractual agreement by RBI with third party vendors are also not taxable under GST. (AAR Maharashtra Ruling Dated 31/07/2024)

AAR, GST on construction and licencing of commercial space adjacent to Airport Metro Station: Case of Maharashtra Metro Rail Corporation Ltd, AAR Maharashtra (MH) Ruling Dated 31^st July 2024. AAR ruled that applicant is not eligible for exemption under Sr No 41 of Notification 12/2017 dated 28^th June 2017. GST @ 18% will be applicable. (AAR Maharashtra Ruling Dated 31/07/2024)

AAR, GST on hostel accommodation services: Case of Maharashtra Jain Education Society, AAR Maharashtra (MH) Ruling Dated 31^st July 2024. Maharashtra Jain Education Society is registered with Charity Commissioner Pune. It is also a registered charitable trust under section 12AA of Income Tax. AAR ruled that hostel accommodation services provided by applicant for duration of stay of 10 months would be eligible or exemption under Sr No 12 of Notification 12/2017 dated 28^th June 2017. For duration of stay of one or two months to old students during vacation period will be also exempt. However, for duration of stay of one or two months to new students during vacation period will not be exempt. (AAR Maharashtra Ruling Dated 31/07/2024)

C. Central Excise

Special Additional Excise Duty on domestically produced Petroleum Crude: Special Additional Excise Duty on domestically produced Petroleum Crude reduced from earlier Rs 7000/- to Rs 4600/-per tonne w.e.f. 1^st August 2024. (Central Excise Notification 19/2024 (T) Dated 31/07/2024)

D. Custom Duty

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 40/2024 (T) Dated 29/07/2024)

Amend BCD rate on Laboratory Chemicals: The notification amends notification No. 50/2017, dated 30^th June 2017, in order to prescribe conditional BCD rate of 10% on Laboratory Chemicals (excluding undenatured ethyl alcohol of any alcoholic strength). It includes a new entry for these chemicals when used for laboratory or research and development purposes. (Custom Notification 41/2024 (T) Dated 31/07/2024)

Appointment of Common Adjudicating Authority for finalization of Provisional Assessment M/s lan Macleod Distillers: The notification appoints Common Adjudicating Authority for the purpose of finalization of Provisional Assessment in SVB case of M/s M/s lan Macleod Distillers lndia Pvt Ltd. (Custom Notification 52/2024 (NT) Dated 26/07/2024)

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 w.e.f. 3rd August 2024. (Custom Notification 53/2024 (NT) Dated 31/07/2024)

Draft notification, Bill of Entry (Post Import Amendment) Regulations: Finance Ministry has introduced Bill of Entry (Post Import Amendment) Regulations to amend the timeline for modifying import documents under Section 149 of the Customs Act. These regulations specify that applications for amendments must be submitted within one year from the date of the clearance order. Extensions of up to one year and six months are possible under certain circumstances. The amendment process will be overseen by the jurisdictional Proper Officer of Customs, who must decide on applications within 30 days. These amendments are subject to conditions, including the absence of any contravention or investigation against the importer and that amendments do not constitute reassessment. (Draft Custom Notification Dated 30/07/2024)

E. Directorate General of Foreign Trade (DGFT)

Export of Non-Basmati White Rice through NCEL: Export of 1000 MT Non-Basmati White Rice to Namibia is permitted through National Cooperative Exports Limited (NCEL). (DGFT Notification 21/2025 Dated 29/07/2024)

Inclusion of Kandla and Vishakhapatnam Sea ports for export to Maldives: Kandla and Vishakhapatnam Sea ports have been added to the list of ports for export of essential commodities, which are under Prohibited/ Restricted category, to the Republic of Maldives or fiscal year 2024-24. (DGFT Notification 22/2025 Dated 01/08/2024)

Abeyance of Public Notice No. 05/2024 dated 27^th May 2024: The Public Notice modify the wastage permissible and Standard Input Output Norms relating to Gold/ Platinum/ Silver content in export items. Keeping in view the representation of the Gem & Jewellery Export Promotion Council (GJEPC) highlighting the ensuing difficulties to their sector and MSME & handmade jewellery manufacturers, the Public Notice No. 05/2024 has been kept in abeyance up to 31^st August 2024. (DGFT Public Notice 16/2025 Dated 29/07/2024)

Harmonisation of Chapters 40 to 98 of Export Policy Schedule-II: DGFT is in the process of harmonising the Schedule-II to the 8- digit codes, in lieu of the description-based export policy, as ITC code mapped export policy has become a pre-requisite to streamline the process of export control and facilitation, and also provide greater clarity and easy reference to export policy for all stakeholders. Earlier, vide notification No. 60/2023 dated 13.02.2024 the codes had been notified for Chapters 01 to 39. Now the codes for the remaining Chapters 40 to 98 has also been attempted for seeking comments from stakeholders. (DGFT Trade Notice 11/2025 Dated 02/08/2024)

F. Securities and Exchange Board of India (SEBI)

Amendment mandating additional disclosures by FPIs that fulfil certain objective criteria: It aims to streamline compliance for certain categories of FPIs, specifically university funds and related endowments. University Funds and related Endowments that are registered or eligible as Category IFPIs are now exempt from certain additional disclosure requirements. (SEBI Circular Dated 01/08/2024)

Amendment- SEBI Stock Exchange and Clearing Corporations (SECC) Regulations: The key amendments include revision of regulation 21 to require recognized stock exchanges and clearing corporations to disclose their shareholding patterns quarterly on their websites. The words “and Core Settlement Guarantee Fund” have been removed from regulation 29(2)(a). (SEBI Notification Dated 01/08/2024)

Amendment- SEBI Mutual Funds (MF) Regulations: Asset management companies are required to establish mechanisms to detect and prevent market abuse, such as front-running and fraudulent transactions. Companies must also implement a whistle blower policy providing confidential reporting channels and protection for whistle blowers. Furthermore, the regulations specify that face-to-face communications need not be recorded. (SEBI Notification Dated 01/08/2024)

Consultation Paper Prohibition of Insider Trading (PIT) Regulations: The proposed amendments include aligning the definition of “connected person” with the “related party” definition under the Companies Act, 2013, and updating the definition of “relative” to match that in the Income Tax Act, 1961. The term “immediate relative” will be retained, but its note will be removed, ensuring disclosure requirements remain unchanged. SEBI aims to expand the regulatory scope by including additional categories of “deemed connected persons,” such as those sharing a household with a connected person or having a material financial relationship with them, might access Unpublished Price Sensitive Information (UPSI) and potentially engage in insider trading. The comments are invited from stakeholders (SEBI Consultation Paper Dated 29/07/2024)

Consultation paper on proposal to improve ease of doing business with respect to the additional disclosure framework for large FPIs: Under the current framework, FPIs with assets exceeding INR 25,000 crores must provide detailed disclosures on all their investors to determine if they are domiciled in Land Bordering Countries (LBC). SEBI proposes shifting from exhaustive disclosure to a threshold-based approach, requiring only the disclosure of a majority of stakeholders to classify an FPI as LBC or non-LBC. The revised framework suggests thresholds of 50% for LBC classification and 67% for non-LBC classification. The comments are invited from stakeholders. (SEBI Consultation Paper Dated 30/07/2024)

Consultation Paper on Measures to strengthen index derivatives framework for increased Investor protection and Market stability: The focus is on mitigating risks associated with speculative trading, particularly in index derivatives, where increased retail participation and short-tenure contracts have led to high volatility and market instability around expiry dates. The paper suggests measures to address these issues, aiming to balance investor protection with market stability and ensure sustainable capital formation. The comments are invited from stakeholders. (SEBI Consultation Paper Dated 30/07/2024)

SEBI clarifies on reports regarding T+0 settlement cycle: SEBI discussed a report highlighting transformative shifts in Indian capital markets, including a potential Rs. 2,800 crore annual benefit if ASBA (Application Supported by Blocked Amount) is fully adopted by retail investors in the secondary market. It corrected media reports that inaccurately suggested it was pushing for a mandatory T+0 settlement system. (SEBI Press Release Dated 31/07/2024)

SEBI launches chatbot “SEVA” for investors: SEBI’s Virtual Assistant (SEVA) is an Artificial Intelligence (AI) based conversation platform for investors. The Beta version of the chatbot includes features like citations for generated response, speech-to-text and text-to-speech functionality for accessibility, follow-up questions, etc. The chatbot is presently enabled to answer questions relating to general information on securities market, latest master circulars, grievance redressal process, etc. The additional areas will be added to the chatbot based on feedback. (SEBI Press Release Dated 29/07/2024)

G. Ministry of Corporate Affairs (MCA)

No Notification/ Circular during the week.

H. Insolvency and Bankruptcy Board of India (IBBI)

IBBI suspends registration of IP Rakesh Kumar Gupta for acting against IBC code: It was noted that Mr. Rakesh Kumar Gupta has erred in his judgement to constitute the CoC with operational creditors despite having knowledge of existence of a Financial Creditor. This act of omission is against the fundamental design principle as enshrined in the Code. He further erred in his judgement to include relevant numbers of the OCs in the CoC. The pretext that their presence ought not have affected the outcomes, as OC with dominant share any way would have called the shots, defies any logic and goes against the principle of inclusive decision making. hereby suspends the registration of Mr. Rakesh Kumar Gupta for a period of one year. (IBBI Order Dated 30/07/2024)

NCLAT, Electricity supply during CIRP essential hence RP can take coercive step to collect amount for its payment: Case of Sanskriti Allottee Welfare Association vs Gaurav Katiyar, NCLAT Dehli Judgement Dated 19^th July 2024. The Corporate Debtor, Earthcon Infracon Pvt. Ltd was developing a residential project named ‘Sanskriti’ with another housing project named ‘CASA’. The Resolution Professional (RP) was appointed to manage the operations of the Corporate Debtor as a going concern during the moratorium period, which included providing maintenance services and electricity to the Home Buyers. NCLAT Delhi held that electricity supply by Noida Power Supply Company (NPCL), being in nature of supply of essential goods, was necessary to be continued during the CIRP period. Accordingly, order granting liberty to the RP to take coercive steps with regard to payment of the same justified. (NCLAT Delhi Judgement Dated 19/07/2024)

NCLAT, Resolution Professional (RP) not personally liable for payment made with approval of CoC: Case of Jet Aircraft Maintenance Engineers Welfare Association Vs Ashish Chhawchharia, NCLAT Delhi Judgement Dated 19^th July 2024. Corporate Insolvency Resolution Process relates to Corporate Debtor Jet Airways (India) Ltd. The 103 employees, who were part of Asset Preservation Team, insisted for some lumpsum payment for working in the Asset Preservation Team and the payment was made with the approval of Committee of Creditors (CoC). Subsequently, 103 employees left the Asset Preservation Team. NCLAT Delhi held that personal liability cannot be fastened on RP for any payment made after CIRP, where such payment is made with the approval of CoC. (NCLAT Delhi Judgement Dated 19/07/2024)

I. Reserve Bank of India (RBI)

Fully Accessible Route for Investment by Non-residents in Government Securities: RBI) amends the Fully Accessible Route (FAR) for investment by non-residents in government securities. New issuances of 14-year and 30-year tenor securities will be excluded from the FAR, although existing stocks of these securities will remain available for non­resident investment in the secondary market. Future investments by Foreign Portfolio Investors (FPIs) in these securities will be subject to specific investment limits and conditions as per relevant circulars. (RBI Notification 56/2024 Dated 29/07/2024)

Guidelines on treatment of Dividend Equalisation Fund (DEF) for Urban Cooperative Banks (UCBs): As per existing guidelines, UCBs could not use accumulated profits or reserves for dividend payments and could only pay dividends from the net profit of the current year. It has been decided that as a one-time measure, UCBs are now allowed to transfer DEF balances to general or free reserves, which will qualify as Tier-I capital. (RBI Notification 57/2024 Dated 30/07/2024)

Prudential Treatment of Bad and Doubtful Debt Reserve (BDDR) by Co-operative Banks: This guidelines aim to standardize the accounting and regulatory treatment of BDDR to ensure compliance with Accounting Standard (AS) 52. Co-operative banks must now recognize provisions for Non-Performing Assets (NPAs) directly as expenses in the Profit and Loss (P&L) account. Additionally, BDDR can be counted as Tier 1 capital, but it should not reduce Gross NPAs to determine Net NPAs. (RBI Notification 58/2024 Dated 02/08/2024)

Withdrawal of ₹2000 Denomination Banknotes Status: RBI had announced the withdrawal of ₹2000 denomination banknotes from circulation vide Press Release dated 19th May 2023. These notes can be exchanged/ deposited/ send through India Post from any post office in the country, to any of the 19 RBI Issue Offices for credit to their bank accounts in India. The ₹2000 banknotes continue to be legal tender. The total value of ₹2000 banknotes in circulation, which amounted to ₹3.56 lakh crore, has declined to ₹7409 crore as at the close of business on 30^th April, 2024. Thus, 97.92% of the banknotes has since been returned. (RBI Press Release Dated 01/08/2024)

Draft Framework on Alternative Authentication Mechanisms for Digital Payment Transactions: The digital payments ecosystem has primarily adopted SMS-based OTP as Additional Factor of Authentication (AFA). While OTP is working satisfactorily, technological advancements have made available alternative authentication mechanisms. The drat framework aims to expand the choice of authentication methods available to Payment System Operators and users. It also outlines exemptions for small value transactions and certain recurring payments. The comments from stakeholders are invited. (RBI Press Release Dated 31/07/2024)

Draft Directions, Aadhaar Enabled Payment System (AePS) Due Diligence of Touchpoint Operators: In recent times, there have been instances of frauds perpetuated through AePS due to identity theft or compromise of customer credentials. To protect bank customers from such frauds, and to maintain trust and confidence in the safety and security of the system, it has been considered necessary to enhance the robustness of AePS. Accordingly, RBI released the draft directions on Due Diligence of AePS Touchpoint Operators. The comments from stakeholders are invited. (RBI Press Release Dated 31/07/2024)

Master Directions on Cyber Resilience and Digital Payment Security Controls for non-bank Payment System Operators: To ensure that the authorised non-bank Payment System Operators (PSOs) are resilient to existing and emerging information systems and cyber security risks, covering robust governance mechanisms for identification, assessment, monitoring and management of these risks. (Master Direction Notification 123/2024 Dated 30/07/2024)

Master Direction on Treatment of Wilful Defaulters and Large Defaulters: The directions prescribe regulatory framework and procedures for classification of borrowers as wilful defaulters. It will maintain the integrity of the financial system by outlining the measures and consequences for those borrowers who deliberately default on their financial obligations. (Master Direction Notification 122/2024 Dated 30/07/2024)