Notification No. 04/2024- Central Tax (Rate) dated July 12th, 2024

The CBIC has issued notification to exempt several services from levy of GST as recommended in 53rd GST Council Meeting. There shall be no GST on supply of accommodation services having value of supply less than or equal to Rs. 20000 per person per month provided that service is supplied for a minimum continuous period of 90 days. Also, certain services provided by Ministry of Railways are made exempt from GST.

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Notification No. 01/2024- Compensation Cess (Rate) dated July 12th, 2024

The CBIC has issued notification to provide that supply of goods falling under heading 2202 by Unit Run Canteen to authorised customers would be exempted from levy of Goods and Services Tax Compensation Cess.

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Notification No. 03/2024- Central Tax (Rate) dated July 12th, 2024

The CBIC has issued notification to insert new proviso in exemption notification to provide that the supply of agricultural farm produce in package(s) of commodities containing quantity of more than 25 kilogram or 25 litre shall not be considered as a supply made within the scope of expression ‘pre-packaged and labelled’. A similar proviso is also inserted in Notification No. 1/2017-Central Tax (Rate).

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Notification No. 02/2024- Central Tax (Rate) dated July 12th, 2024

The CBIC has issued notification to reduce GST rate from 18% to 12% on several goods such as Solar Cooker, Milk cans, Cartons, boxes and cases of corrugated paper or paper board; or non-corrugated paper or paper board etc. This notification shall come into force on 15th July, 2024.

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GSTN Update dated July 14th, 2024

The GSTN has issued an advisory to inform taxpayers that GSTN is in the process of development of a separate category of refund application in FORM GST RFD-01, for filing an application of refund of additional IGST paid on account of upward revision in prices of goods subsequent to exports. However, till the time such separate category is developed, such exporters may claim refund by filing an application of refund in FORM GST RFD-01 under the category “Any other”.

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Case Details: R. C. Nirula & Sons HUF vs. ACIT - [2024] 164 taxmann.com 308 (Delhi-Trib.)

Judiciary and Counsel Details

• Saktijit Dey, Vice President & M. Balaganesh, Accountant Member
• Gaurav Jain, Adv. & Praveen Kumar, CA for the Appellant.
• Manish Kumar Davas, Sr. DR for the Respondent.

Facts of the Case

The assessee had booked one Villa with the builder vide allotment letter in 2005. However, before the property was completed and possession handed over to the assessee, the assessee agreed to sell the booking rights in March 2008. As per agreement, the transfer was to take place after receipt of the entire consideration and receipt of NOC from the builder.

The Assessing Officer (AO) contended that the transfer of rights in the said property took place in the Assessment Year (AY) 2008-09. On appeal, the CIT(A) confirmed the assessment of the capital gain in AY 2008- 09, applying section 2(47)(vi). Aggrieved by the order, an appeal was filed to the Delhi Tribunal.

ITAT Held

The Tribunal held that as per section 2(47) of the Act, “transfer” in relation to a capital asset includes the sale, exchange or relinquishment of the asset or the extinguishment of rights therein. It speaks about transfer, which involves transferring or enabling the enjoyment of any immovable property. The capital asset here being ‘booking rights of Villa’, transfer of the same happens on the extinguishment or transfer of the rights therein in favour of the other person, which on facts of assessee’s case happened in AY 2009-10.

Mere receipt of advance in terms of an agreement to sell subject to conditions precedent cannot possibly be treated on the same footing as sale or extinguishment or transfer at the time of agreement to sell under any of the clauses of section 2(47). The extinguishment of the rights of the assessee in respect of the said capital asset and the transfer thereof took place in the year when:

• Full and final payment towards sale consideration was received in April 2008, and original documents were handed over to the buyer; and
• The assessee wrote to the Builder to substitute its name by the name of the buyer, which the builder confirmed in May 2008

The agreement to sell was not a transfer and was subject to compliance with conditions by the buyer and by the Builder. The transfer was only to take place after compliance by the buyer of the buyer’s obligations and after permission to transfer by the builder.

In the agreement to sell, it was stated that upon the builder’s refusal of the transfer, the assessee had the right to cancel the agreement and refund the advance to the buyer. Further, even if permission is granted by the Builder, the seller has the right to refuse the transfer of the booking right on payment of double the advance received. This shows that the agreement was cancellable.

Thus, there was no transfer in the totality of facts and circumstances of the assessee’s case. The assessee was vested with all rights in the property until consideration was received and the Builder issued NOC. Thus, there was no extinguishment/ relinquishment of the rights of the assessee. If this Agreement to sell is transferred, then capital gains shall be leviable on all the agreements to sell, even on receiving small advance/earnest money, which is not the case.

The transfer of booking rights contemplated in the agreement to sell was dependent upon the builder’s permission, which was granted only in May 2008. Thus, the transfer of booking rights would be completed only in AY 2009-10. Therefore, AO was directed to delete the capital gain addition.

List of Cases Reviewed

• CIT v. Balbir Singh maini (supra) (para 20) followed.

List of Cases Referred to

• Smt. Shail Moti Lal v. CIT [2013] 35 taxmann.com 46/218 Taxman 298 (Punjab & Haryana) (para 11)
• CIT v. Balbir Singh Maini [2017] 86 taxmann.com 94/251 Taxman 202/398 ITR 531 (SC) (para 14)
• Ushaben Jayantilal Sodhan v. ITO [2018] 93 taxmann.com 453/255 Taxman 454/407 ITR 276 (Gujarat) (para 14)
• Asstt. CIT v. Shree Ami Office Owner’s Association [2023] 148 taxmann.com 130/199 ITD 670 (Ahmedabad – Trib.) (para 14).

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Mayank Mohanka – [2024] 164 taxmann.com 293 (Article)

Friends, the much-awaited Union Budget 2024-25 (full) is slated to be presented in the Parliament by our hon’ble FM Smt. Nirmala Sitharaman on July 23rd, 2024. This Budget presentation will distinguish her as the first Finance Minister of India to deliver seven consecutive Union Budgets, surpassing Shri Morarji Desai’s previous record of six budgets.

This special occasion demands a special pre-budget wishlist, instead of the routine ones. So, in this piece, I have penned down my poetic pre-budget wishlist, in the form of a few poetic verses, highlighting some much-needed relaxations and incentives and a few critical and relevant grey areas and gaps currently being experienced by all of us in the direct tax domain, and which require timely redressal by the Legislature in the upcoming full Union Budget 2024.

On July 23rd, the Union Budget 2024 will be Presented,
Poised to make our Country’s Growth & Economy Augmented.

Extra sweetened with a two-time Halwa Ceremony,
The Budget should iron out Common Man’s Agony.

For gaining the Middle Class’s Trust,
Our beloved FM should give their aspirations a major Thrust.

Middle Class yearns an increase in Basic Exemption limit in Tax Slab,
Waiting for the Basic Exemption limit of 5 lacs to Unwrap.

Salaried Class yearns an increased Standard Deduction,
As they have their major Contribution in Tax Collections.

Click Here To Read The Full Article

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Case Details: Vaibhav Aggarwal v. Sunil Sachdeva - [2024] 164 taxmann.com 313 (NCLAT-New Delhi)

Judiciary and Counsel Details

• Ashok Bhushan, Chairperson & Barun Mitra, Technical Member
• Virag Gupta, Ashok Kumar Jain, Vishal Arun Mishra & Umang Mangal, Advs. for the Appellant.
• Rajesh Ranjan, Archit Chauhan & Ishwar Mohapatra, Advs. for the Respondent.

Facts of the Case

In the instant case, a lease agreement was executed between lessors, i.e., late RS and CS and lessee, i.e., respondent no.2 (the corporate debtor), for a property in New Delhi with a lease term of 12 years from 28.08.2016 to 27.08.2028. After RS and CS passed away, their son ‘SS’ claimed to be their legal heir.

Thereafter, due to non-receipt of rent and GST, ‘SS’ issued a notice to the corporate debtor for Rs. 52.64 lakhs, followed by a termination notice on 28-4-2019, claiming a default amount of Rs. 85.44 lakhs. Despite these notices, no payments were made. Consequently, ‘SS’ issued a demand notice under section 8 and filed a section 9 application before NCLT, which the Adjudicating Authority (NCLT) admitted.

It was noted that the lessee was solely responsible for paying conversion charges. Further, the corporate debtor had been irregular in paying rent since 10.03.2017 and had not made a payment towards rent and GST since 30.08.2018.

NCLAT Held

The NCLAT noted that the operational creditor had been consistently pressing for the release of their outstanding amount. There was nothing on record to show that the corporate debtor had objected to or controverted claims raised by an operational creditor prior to the issue of the section 8 demand notice, the first two conditions of operational debt exceeding Rs. 1 lakh and having become due and payable but not yet paid would be squarely met.

The NCLAT held that although the corporate debtor had raised various grounds of pre-existing disputes, there was no real and substantial pre-existing dispute that could thwart the admission of the section 9 application against the corporate debtor. Therefore, the impugned order passed by the NCLT admitting the application u/s 9 and initiating the CIRP was justified.

List of Cases Reviewed

• Sunil Sachdeva v. Haldiram Fincap (P.) Ltd. [2024] 164 taxmann.com 312 (NCLT -New Delhi) (para 27) affirmed see annex.

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Notification No. SEBI/LAD-NRO/GN/2024/192; Dated: 09.07.2024

SEBI has notified the SEBI (InvITs) (Second Amendment) Regulations and SEBI (REITs) (Second Amendment) Regulation, 2024. A framework for a ‘unit-based employee benefit scheme’ has been inserted. As per the new framework, the unit-based employee benefit scheme must be based on the nature of the employee unit option scheme. Also, SEBI has inserted a definition of “employee unit option scheme’ which refers to a scheme under which a manager grants unit options to its employees via employee benefit trust.

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Circular No. SEBI/HO/MIRSD/MIRSD-POD-1/P/CIR/2024/101; Dated: 12.07.2024

SEBI has recognized ‘BSE Limited’ as the supervisory body for research analysts and investment advisers for a period of 5 years starting from July 25, 2024. Accordingly, BSE must formulate bylaws regarding its activities as Research Analyst Administration and Supervisory Body (RAASB) and Investment Adviser Administration and Supervisory Body (IAASB). Also, BSE must issue circulars, SOPs and FAQs to provide guidance and ensure smooth adoption of RAASB and IAASB framework by RAs and IAs

Click Here To Read The Full Circular

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