by Zen Webnet | Apr 2, 2022 | Blog
In the matter of DR. REDDYS LABORATORIES LIMITED V. CONTROLLER GENERAL OF PATENTS DESIGNS AND TRADEMARKS (W.P.(C)-IPD-4/2022) the Delhi High Court vide its order dated 21.03.2022, directed the Office of the Controller General of Patents, Designs, and Trade Marks to adhere to the earlier Order of the Supreme Court dated 10.01.2022, whereby it was directed that the period of 15 March, 2020 till 28 February, 2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings.
The Hon’ble High Court of Delhi held that the Supreme Court’s Order is applicable to the filing of oppositions under Section 21 of the Trademarks Act as well. The fact that this order is applicable to the filing of oppositions is also clear from the public notice issued by the CGPDTM dated 18th January, 2022, which records that the period of limitation shall be computed in accordance with the earlier order of the Supreme Court dated 10th January, 2022.
The Delhi High Court has issued the following crucial directives in the present matter:
In so far as other trademarks advertised during the pandemic are concerned, the advertised application in respect of which the four-month limitation period would have expired after 15/03/2020, the limitation period in terms of the orders of the Supreme Court shall be extended for filing oppositions to the said applications, until the expiry of 90 days from 1/03/2022, i.e. till 30/05/2022.
- Upon filing oppositions, the status of the trademark applications shall be reflected appropriately on the portal within 48 hours.
- Insofar as trademark registration certificates which may have been issued during the pandemic period, the registration certificates shall be dealt with in the following manner:
- In respect of the trademark applications in which no oppositions have been already filed or are received till 30th May, 2022, the said registration certificates shall
remain valid and the said applicants shall enjoy their statutory rights in accordance with law.
- In respect of those trademark applications where oppositions have already been filed or are filed by 30th May, 2022, the registration certificates shall either not be
issued or if already issued, the same shall stand suspended till the oppositions are decided by the office of the CGPDTM.
- In future, whenever emails concerning oppositions are received by the Opposition Section, CGPDTM, the concerned Controller in-charge shall first, ensure that such emails are replied to within a reasonable time, not later than three working days and second, that proper instructions are given by them to the section issuing registration certificates at the CGPDTM/ concerned officials in the Mumbai office, depending upon the correspondence received, so that certificates are not issued while issues relating to opposing the trademark are being raised with the office of the CGPDTM.
- Additionally, during the hearings in these writ petitions, this Court was informed that a large number of oppositions are pending and are yet to be decided. The pendency is due to the lack of officials to hear the oppositions. This Court notes with some consternation that more than 2 lakh oppositions are stated to be pending and a substantial number of them are ripe for hearing, in the office of the CGPDTM. Accordingly, it is directed to the officials of the CGPDTM Office to submit an entire report over the manner in which the CGPDTM intends to deal with the said pending oppositions. A complete year wise chart of oppositions which are pending, where pleadings are complete and the matters have matured for hearing, shall be filed along with the proposed mechanism. Insofar as registered trademarks qua which oppositions are filed are concerned, where trademark registration certificates have been issued, the affidavit shall also inform the procedure in which the said certificates shall either be cancelled or recalled.
by Zen Webnet | Dec 22, 2020 | Blog
It has been three years since the introduction of Goods and Services Tax (‘GST’) in India, still, the aspect of compliances under GST have been quite challenging for the taxpayers. The transition into GST from pre-GST regime was itself a big change in terms of filing a minimum of 36 returns annually as originally proposed, which was later relaxed to 24 returns as compared to two returns each year in the service tax regime. In addition to the complex return filing process, technical glitches at GST portal has also made compliances a cumbersome task for taxpayers.
It is said that simple and smooth compliances are the backbone of taxation system. Considering the same and acknowledging difficulties of taxpayers, the Government is continuously making amendments in relation to compliances, be it the return filing system, introduction of e-invoicing, auto-drafted statement of supplies in Form GSTR 3B from GSTR 1 etc. Further, GST Council in its 42nd meeting announced certain amendments in compliances under GST to achieve its object of automated compliances and a progressive tax regime. Let’s discuss the existing compliance system vis-a-vis proposed system in light of recent amendments and its impact on the industry.
Current System
At the time of advent of GST regime, a system of filing three returns in Form GSTR 1, Form GSTR 2 and Form GSTR 3 was proposed, wherein outward supplies were to be reported in Form GSTR 1, inward supplies in Form GSTR 2 basis Form GSTR 1 filed by vendor and payment of taxes in Form GSTR 3. The purpose behind this system was to achieve automation in return filing and availment of input tax credit (ITC). However, the said system was never implemented on account of technical glitches at GST portal. To simplify the process of filing returns, the Government then introduced an interim two return format i.e., Form GSTR 1 for outward supplies and Form GSTR 3B which is summary return for payment of taxes till the time old process or other new system is put in place. Further, Form GSTR 2A was also introduced for reconciliation and availment of ITC in Form GSTR 3B returns, resulting in huge manual exercise in the hands of taxpayers. Also, no mechanism of amendment in returns was provided to taxpayers.
Subsequently after much hue and cry by industry and initiation of litigation on validity of returns like Form GSTR 3B, the Government proposed a new return filing process wherein a single return in Form RET 1 was proposed to be filed along with two Annexures i.e., ANX 1 for outward supplies and reverse charge mechanism transactions and ANX 2 for claiming ITC. It is pertinent to note that the proposed system was basically a modification and complex version of old system only. However, the same did not get approval from the GST Council and was ultimately abandoned.
Recent amendments
In the 42nd GST Council meeting going by the call of the day, decision was taken to make the current process of filing of returns in Form GSTR 1 and Form GSTR 3B, as its default return filing mechanism to simplify the compliance process. Further, it was also decided that GST liability shall be auto populated in Form GSTR 3B basis Form GSTR 1 and Form GSTR 2B w.e.f. January 1, 2021. Further suitable amendments have been made in the GST Law to comply with the said proposals made in the meeting.
In addition, to ensure auto-population of GST liability and ITC as mentioned above, decision was taken to make filing of Form GSTR 1 mandatory prior to filing of Form GSTR 3B w.e.f. April 1, 2021.
It is imperative to note that Form GSTR 2B is a static statement unlike Form GSTR 2A, which gets updated on regular basis, due to which taxpayers are required to perform reconciliations on year-to-date basis every month. Further Form GSTR 2B will undoubtedly ease such compliances for taxpayers. Moreover, a matching tool has been launched by department to compare ITC in purchase register with Form GSTR 2B.
Additionally, in order to reduce compliances for small taxpayers having aggregate turnover less than INR 5 Crore, Quarterly Return Monthly Payment Scheme has been rolled out. The scheme provides an option to small taxpayers to file returns on quarterly basis. Such quarterly taxpayers have an option to pay 35% of the net cash tax liability of the last quarter using an auto-generated challan for the first two months of the quarter.
The said scheme will allow small taxpayers to upload invoices on monthly basis at GST portal, which will be reflected in Form GSTR 2A and Form GSTR 2B of the customer. It will allow the customers to take ITC of said invoices monthly, which they were not able to claim due to non-appearing of said invoices in their GSTR 2A on monthly basis.
Conclusion
The mechanism proposed by the GST Council is much simpler in comparison to the complex returns system introduced earlier and would result in ease of doing compliances for taxpayers which is the need of the day. Further, the most welcoming part is that the GST Council has not introduced any new returns this time but has made changes in the existing filing process to which the taxpayers are already used to. Various steps have been introduced to reduce the compliance burden for small taxpayers who have faced the brunt of the complexity of return system, which is a long-awaited move. Further, the matching tool introduced for ITC is also a good initiative to reduce little manual intervention in process of matching of ITC. Thus, such changes are definitely a step towards reducing the complications in GST compliance system which has been one of its criticism.
Authored by
Mudita Bhadani, Senior Associate & Smita Singh, Partner Indirect Tax, Customs & Trade Group
by Zen Webnet | Sep 8, 2020 | Blog
The Ministry of Commerce & Industry on 1st September, 2020 has capped benefit under the Merchant Export from India Scheme (‘MEIS’) at Rs. 2 Crore per exporter for the period 1st September 2020 to 31st December 2020, displeasing the manufacturers in India. The ceiling may be subject to further downward revision to ensure that total claim under MEIS during the above-mentioned period does not exceed INR 5,000 Crore allocated towards MEIS by the Government.
MEIS introduced in April 2015, for manufacturers in India, was a pleasant surprise and can be termed nothing less than ‘Cherry on the cake”, in view of the various export incentives provided under Foreign Trade Policy.
The objective of MEIS was to promote the manufacture and export of certain notified goods. It was designed to provide exporters with incentives to offset infrastructural inefficiencies in India and its associated cost by providing duty credit scrips which could be used for payment of a number of duties including the Basic Customs Duty or could be freely traded in the market.
Apuestas de fútbol en Codere: Domina las ligas argentinas
¿Eres un apasionado del fútbol argentino? ¿Te encanta seguir los partidos de las ligas argentinas y disfrutas de la emoción de las apuestas? Entonces, ¡no puedes perderte este artículo sobre las apuestas de fútbol en Codere! En esta plataforma, podrás dominar las ligas argentinas y vivir la emoción del juego de una manera completamente nueva.
En este artículo, te presentaremos todo lo que necesitas saber sobre las apuestas de fútbol en Codere. Descubrirás cómo funciona esta plataforma, qué tipos de apuestas puedes realizar y cómo aumentar tus posibilidades de ganar. También te contaremos sobre las ligas argentinas más emocionantes y te daremos algunos consejos para aprovechar al máximo tus apuestas. Así que prepárate para sumergirte en el mundo de las apuestas deportivas y descubrir cómo dominar las ligas argentinas en Codere. ¡No te lo pierdas!
La emoción del fútbol argentino: una pasión que trasciende las barreras
¿Eres un apasionado del fútbol argentino? En playcodere.com, tienes la oportunidad de vivir la emoción de las apuestas deportivas y dominar las ligas argentinas. Con una amplia variedad de opciones de apuestas y cuotas competitivas, Codere te ofrece una experiencia única para disfrutar del fútbol argentino como nunca antes.
En playcodere.com, encontrarás todas las ligas argentinas disponibles para apostar. Desde la Primera División hasta la Primera Nacional y muchas más, podrás seguir de cerca tus equipos favoritos y poner a prueba tus conocimientos futbolísticos. Ya sea que desees apostar al resultado final, al marcador exacto o a cualquier otro tipo de apuesta, Codere te brinda todas las herramientas necesarias para que vivas el fútbol argentino al máximo.
No pierdas más tiempo y descubre la emoción de las apuestas de fútbol en playcodere.com. Regístrate ahora y aprovecha las promociones exclusivas, los bonos de bienvenida y todas las ventajas que Codere tiene para ofrecerte. Domina las ligas argentinas y demuestra que eres un verdadero experto en el fútbol argentino. ¡Ingresa a playcodere.com y comienza a ganar hoy mismo!
Codere: la plataforma líder para apostar en las ligas argentinas
Codere te ofrece la oportunidad de apostar en los emocionantes partidos de fútbol de las ligas argentinas. Con una amplia variedad de mercados y cuotas competitivas, podrás disfrutar de una experiencia de apuestas única y emocionante. Desde la Superliga Argentina hasta la Primera Nacional, podrás seguir de cerca a tus equipos favoritos y hacer tus pronósticos para cada encuentro.
En Codere, podrás encontrar una gran cantidad de opciones de apuestas, desde el ganador del partido hasta el número de goles marcados. Además, también tendrás acceso a estadísticas actualizadas y análisis de los equipos y jugadores, para que puedas tomar decisiones informadas a la hora de realizar tus apuestas. No importa si eres un fanático del fútbol argentino o simplemente te gusta apostar en los partidos más emocionantes, en Codere encontrarás todo lo que necesitas para vivir la emoción del fútbol y ganar grandes premios.
Estrategias y consejos para dominar tus apuestas en el fútbol argentino
¿Eres un apasionado del fútbol argentino? En Codere, podrás disfrutar de las mejores apuestas deportivas en las ligas argentinas y convertirte en un verdadero experto en tus equipos favoritos. Nuestro amplio catálogo de apuestas te permitirá apostar en los partidos más emocionantes de la Superliga Argentina, la Copa Argentina y mucho más. Ya sea que prefieras apostar en el clásico River Plate vs Boca Juniors o en los equipos de tu ciudad, en Codere encontrarás las mejores cuotas y promociones para aumentar tus ganancias.
No importa si eres un apostador principiante o experimentado, en Codere encontrarás todo lo que necesitas para disfrutar al máximo de tus apuestas de fútbol. Nuestra plataforma intuitiva te permitirá realizar tus apuestas de manera rápida y sencilla, con opciones como apuestas simples, combinadas y en vivo. Además, podrás acceder a estadísticas actualizadas, análisis de expertos y pronósticos para tomar decisiones informadas y aumentar tus posibilidades de éxito. Domina las ligas argentinas con Codere y vive la emoción del fútbol como nunca antes.
Descubre las mejores cuotas y promociones en Codere para las ligas argentinas
Si eres un apasionado del fútbol argentino y te encanta apostar, Codere es el lugar perfecto para ti. Con su amplia gama de opciones de apuestas, podrás disfrutar de todas las emociones de las ligas argentinas y dominar tus pronósticos. En Codere, podrás encontrar una gran variedad de mercados de apuestas para los partidos de la Superliga Argentina, la Copa Argentina y muchas otras competiciones locales. Desde el clásico Boca Juniors vs River Plate hasta los enfrentamientos entre los equipos más pequeños, tendrás la oportunidad de apostar en cada encuentro y vivir el fútbol argentino de una manera única.
Además de las apuestas tradicionales, en Codere también podrás disfrutar de opciones más emocionantes como las apuestas en vivo. Esto significa que podrás apostar mientras el partido se está jugando, aprovechando las fluctuaciones en las cuotas y tomando decisiones en tiempo real. Ya sea que prefieras apostar al ganador del partido, al resultado exacto o a los goleadores, Codere te ofrece todas las opciones que necesitas para vivir la pasión del fútbol argentino al máximo. No pierdas más tiempo y únete a Codere para disfrutar de las mejores apuestas de fútbol en Argentina.
Aprovecha las ventajas de apostar en línea y disfruta de la emoción del fútbol argentino con Codere
¿Eres un apasionado del fútbol argentino? En Codere, te ofrecemos la oportunidad de dominar las ligas argentinas a través de nuestras apuestas de fútbol. Ya sea que sigas a Boca Juniors, River Plate, Independiente o cualquier otro equipo, en nuestra plataforma encontrarás una amplia variedad de opciones para apostar en los partidos de la Superliga Argentina, la Copa Argentina y más.
En Codere, te brindamos la emoción y la adrenalina que solo el fútbol puede ofrecer. Podrás realizar apuestas pre-partido y en vivo, apostar al resultado final, al marcador exacto, al número de goles y a muchos otros mercados. Además, contamos con cuotas competitivas y promociones especiales que te permitirán maximizar tus ganancias. ¡No pierdas la oportunidad de vivir el fútbol argentino de una manera única en Codere!
En conclusión, las apuestas de fútbol en Codere son la opción perfecta para los fanáticos del fútbol argentino que desean vivir la emoción del juego de una manera diferente. Con una amplia variedad de ligas y competiciones para elegir, Codere ofrece a los apostadores la oportunidad de disfrutar de una experiencia única y emocionante. Ya sea que estés buscando apostar en los partidos de la Superliga Argentina o en otros eventos importantes, Codere te brinda las mejores cuotas y promociones para maximizar tus ganancias. ¡No esperes más y únete a la emoción de las apuestas de fútbol en Codere!
However, it was felt by the Government that MEIS has failed its objective of promoting export and did not yield the desired growth in exports from India. Further, MEIS also in some ways became more of a liability for the Government and did not accentuate the anticipated rate of export of goods made in India worldwide
Statistics reveal that in 2014-15, exports from India were USD 310 Billion, while till 2019-20, it remained range bound to USD 313 billion only. On the other side, liability under MEIS ballooned to about INR 45,000 crore in 2019-20. Wide coverage of MEIS meant that resources were spread across several tariff lines without focus. Additionally, liabilities on accounts of MEIS grew faster than the rate of growth of exports. Apart from the inefficiencies that crept into MEIS, India has also faced hurdles in the WTO with respect to continuation of MEIS, wherein India has been alleged that the export subsidies provided an unfair competitive advantage to recipients which is expressly prohibited under the WTO Rules.
Thus, consecutive effect of above factors combined with newfound fund crunch has forced the Government to cap export benefits under MEIS. Further, any IEC holder who has not made any export with Let Export Order (LEO) date during the period 1st September 2019 to 31st August 2020 or any new IEC obtained on or after 1st September 2020 would not be eligible for submitting any claim for benefits under MEIS. Further, the Government has also discontinued MEIS w.e.f. 1st January 2021. However, no change in the coverage of MEIS and the applicable rates has been made.
It is estimated that 98 per cent of exporters especially MSMEs will benefit under the reward cap as this will remove uncertainty and protect genuine exporters while ensuring “Make in India-Make for the World”. The cap imposed shall save revenue in the hands of the Government which shall be used for supporting the sectors that have potential to grow and contribute towards AtmaNirbhar Bharat and has higher potential for exports.
The Government has already announced a new WTO-compliant scheme called Remission of Duties or Taxes on Export Product (RoDTEP) which may replace MEIS starting 1st January 2021. RoDTEP will allow reimbursement of all embedded taxes including local levies paid on inputs by exporters. This shall lighten up the faces of exporters in India and provide with larger benefits by taking Indian products global.
Authored by
Smita Singh (Partner, Indirect Tax), S&A Law Offices
Rajni Gupta (Senior Associate, Indirect Tax), S&A Law Offices
by Zen Webnet | Apr 20, 2021 | Blog
A tussle of powers – Demands and recovery by DRI in Customs
Similar to other tax legislations, the issue of jurisdiction or multiplicity of the jurisdiction under the Customs Act has been in the news and before the Courts lately specifically in case of demand and recovery. Section 28 of the Customs empower the proper officer for the purpose demanding and recovery of the duties not levied or not paid or short levied or short paid or erroneously refunded by way of issuance of SCN.
Point of tussle
The term proper officer is defined under the Customs Act, as an officer of customs who is assigned those functions by the Board or the Principal Commissioner of Customs or Commissioner of Customs. Further Section 6 of the Customs Act deal with ‘Entrustment of functions of Board and customs officers on certain other officers’ by the Central Government through issuance of notification in the Official Gazette. It is apparently clear from bare reading of the provision that only such officers of customs who have been assigned specific functions would be “proper officers” either the Board or the Commissioner of Customs in terms of Section 2(34) of the Customs Act.
In this regard, although the Central Government has issued Notification conferring various functions under the Customs Act on officers referred. However, point to be noted is that such Notification was issued by deriving powers from Section 2(34) of the Customs Act instead of Section 6 thereof. Thus, the point of tussle in terms of powers to demand and recover is whether the Additional Director General of the Directorate of Revenue Intelligence (DRI) is proper officer to issue SCN for demand and recovery and also whether assessment of one officer can be re-assessed by another officer without jurisdiction.
Jurisprudence on the issue
The Hon’ble Supreme Court in the case of CC vs. Sayed Ali & Ors. had held that only those officers who have been assigned function of assessment/ re-assessment under Section 2(34) of the Customs Act will be “the proper officer” for the purpose of issuance of SCNs under Section 28 thereof. Further the Hon’ble Apex Court has also categorically observed that if Collector of Customs (Preventive) becomes a “proper officer” under the Customs Act, the situation will lead to a situation of utter chaos and confusion.
Aftermath to Sayed Ali
Considering impact of decision of the Supreme Court in Sayed Ali (supra) in recovery of tax dues in a large number of cases where SCNs were issued by non-jurisdictional officers such as DRI, the Government amended Section 28 of the Customs Act with addition of Explanation 2 stating that for any non-levy/ short-levy prior to April 2011, the old Section 28 will apply. Furthermore, sub-Section 11 was inserted in Section 28 to make /deem all officers (appointed as customs officers under Section 4(1) of the Customs Act) as proper officers to issue show cause notices.
Without prejudice to the legality of Section of 28(11) of the Customs Act, the defect pointed out by the Supreme Court in the case of Sayed Ali to the extent it held that re-assessment by different officer was not dealt with in the amended provision and remained alive. Despite the facts that there are numerous litigations ongoing and pending before various forums on this issue, DRI is still issuing SCN for the recovery of the duty where goods have been assessed by the jurisdictional customs officers at the time of import.
Issue settled by the Apex Court
Putting the issue to rest, the Hon’ble Supreme Court of India in the matter M/s Canon India Private Limited has held that the Additional Director General of DRI was not the proper officer to exercise power under Section 28(4) of the Customs Act where the goods were cleared at the time of import by jurisdictional Deputy Commissioner of Customs.
The Apex Court held that where a particular officer has exercised his power of assessment, the power to order re-assessment must also be exercised by the same officer or his successor and not by another officer of another department (referring to DRI) though he is designated to be an officer of the same rank. The Hon’ble Apex Court observed that power conferred vide Section 28(4) of the Customs Act to recover duties having escaped assessment is in the nature of an administrative review of an act and therefore, it should be construed as conferring the power of such review on the same officer or his successor or any other officer who has been assigned the function of assessment. The Hon’ble Supreme Court further held in definite terms that allowing an officer, who has not passed the original order of assessment, to re-open the assessment is impermissible and specifically emphasised on the relevance of article “the” used by the legislature instead of ‘a’ or ‘an’ before proper officer.
Additionally, the Hon’ble Apex Court held that exercise of powers in the same case, where statute confers the same power to perform an act on different officers, especially when they belong to different departments, would result into an anarchical and unruly operation of a statute which is not contemplated by any canon of construction of the statute. The Hon’ble Supreme Court in Canon India case also went into the legality of the Notification issue for the appointment of proper officers. It has been held that Notification of 2012 does not confer any powers on any authority to entrust any functions to officers but merely defines a proper officer since this notification has been issued in exercise of non-existent power under Section 2(34) of the Customs Act and not under Section 6 thereof which is specifically for entrustment of powers to the proper officers.
Conclusion
Undoubtedly the preposition laid by the Hon’ble Supreme Court in Canon India (Supra) will have its far-reaching impact and definitely limit the powers of the investigative non-jurisdictional officer to demand duties which were originally assessed by the jurisdictional officer. Keeping in view anticipated moves by the Government to keep the stake of heavy-duty demand by the DRI in ongoing matters, as of now the Judgment can be seen as sigh-of-relief for the industry facing demand and tussle with DRI on the jurisdiction, however, for how long the status quo is maintained is a matter of speculation.
Authored by
Smita Singh,Partner Indirect Tax, Customs & Trade, S&A Law Offices
Co-Authored
Ajay Sharma, Associate, Indirect Tax, Customs & Trade, S&A Law Offices
by Zen Webnet | Feb 26, 2021 | Blog
Business restructuring from Goods and Services Tax (GST) perspective
The speed of business dynamics demands business entities not only to revamp their internal business strategies but also expects the corporates to devise inorganic business strategies like mergers, acquisitions, takeovers etc., that results in faster pace of growth and effective utilization of resources. In order to ensure a smooth transition to the new business structure, analyzing the implications from a GST perspective becomes crucial for every practitioner.
Under GST an activity qualifies as supply in order to attract leviability. For this, the activity should be made for a consideration by the person in the course or furtherance of business. Transfer of business or its restructuring is a one-time activity and does not constitute an activity taking place in the course of business. However, since the word ‘includes’ has been used in the definition of supply, the scope thereof widens. Therefore, transfer of business as a going concern falls within the ambit of ‘supply’ under GST.
Treatment of sale of business as a going concern or slump sale
The Authority for Advance Ruling, Karnataka in Rajashri Foods (P.) Ltd. has held that transfer of business as a going concern means transfer of business as a whole, including transfer of immovable property, goods, unexecuted orders, employees, goodwill, etc., along with an intention to carry on the existing business in future.
In terms of clause 4(c) of Schedule II to Section 7 of the CGST Act, 2017 transfer of business as a going concern is not regarded as supply of ‘goods’. Further, as per Section 2(102) of the CGST Act, service means anything other than goods. Thus, since such business is excluded from the list of supply of goods, it becomes very apparent that transfer of business as a going concern is considered to be a supply of service. Therefore, the transaction of transfer of whole business as a going concern amounts to supply of service.
The Central Government vide Notification No. 12/2017- CT (Rate) dated June 28, 2017, brought “service by way of transfer of a going concern, as a whole or an independent part thereof” in Serial No. 2 thereof to constitute supply of service. Further, activity of transfer of a going concern shall have ‘Nil’ rate of tax on such supply.
Thus, activity of transfer of a going concern as a supply of service and the same is exempt from the purview of GST. Similarly, Schedule II of the CSGT Act excludes transfer of business as a going concern as supply of goods, the same shall be considered as a supply of service and GST shall be levied.
It shall be inferred that transfer of a going concern as a whole or a part there or transfer of business as a going concern is tax-exempt under GST and transfer of business assets will have GST implications.
The above finds support in advance ruling in the case of Rajashri Foods (P) Ltd. where it has been decided that where the unit is being transferred as a going concern, it will be considered as a supply of service and the same shall be exempt from the payment of GST to the extent leviable under Section of Section (9)(1) of the CGST Act, 2017.
Another point to be noted is that in such cases, the unutilized balance of input tax credit (ITC) lying in the electronic credit ledger of the transferor can be transferred to the transferee under Section 18(3) the CGST Act, 2017. Further a fresh GST registration certificate will be required by the transferee only if there is a change in PAN of the business.
However, there is one area where further clarity is required. Since such transfers have been specifically exempted from tax, ITC reversals under Section 17(3) read with Rule 42 of the CGST Rules, 2017 may be required due to the provision of exempt supplies in total turnover of the transferor. However, both GST law as well as the advance rulings have remained silent on this issue and do not provide clarity.
Transfer of business assets
Instead of transferring business as a whole for a consideration, a registered person may also decide to sell his business assets individually. For instance, the registered person may decide to sell his raw material, furniture and fixtures, building, trademarks etc. to another person for a consideration.
As per clause 4(c) of Schedule II to Section 7 of the CGST Act, 2017 such sale of assets shall be construed as supply of goods and tax will be levied on these goods as per applicable rate under Notification 1/2017- CT (Rate) dated June 28, 2017 as amended for time to time.
Schedule I to Section 7 of the CGST Act, 2017 specifically deals with the activities which shall be treated as supply even if there is no consideration involved. As per clause a) of this Schedule, permanent transfer or disposal of business assets made without consideration will be regarded as supply. Accordingly, the transferor will be required to reverse ITC already availed on business assets which have been transferred without consideration.
Transfers by way of sale and purchase of securities
A company may change its ownership structure by transfer/issuance of equity shares. Such transactions have been kept outside the purview of GST. This is because definition of ‘goods’ under Section 2(52) of CGST Act, 2017 specifically excludes securities.
Taxability of Intermittent supplies during the amalgamation/merger/demerger process
In case of amalgamation or merger by order of the court or tribunal, the effective date of order may be prior to the date of passing such order.
As per Section 87 of the CGST Act, 2017 supplies effected between these two dates between the transferor and transferee Company shall be taxed in the hands of respective old companies and not the new entities.
Conclusion
In view of the above, it is clear that a person restructuring his business model may be required to analyze its impact keeping in mind various implications under GST in different scenarios, which shall consequently ensure smooth conduct of the business and avoid future enquiries and questioning by tax authorities.
Authored by
Smita Singh, Partner, Indirect Tax, Customs & Trade Group and Ayush Gupta, Associate.
