Ergo Newsflash

The Central Board of Indirect Taxes and Customs (CBIC) has issued a circular dated 10 June 2020 (Circular), clarifying the applicability of goods and services tax (GST) on the remuneration paid to whole time directors and independent directors. Services rendered by an employee to his/her employer in the course of, or in relation to, his/her employment are not exigible to GST, and therefore, the moot issue was whether services provided by directors are in the course of employment or not.

Ever since the Hon’ble Finance Minister of India announced the suspension of initiation of corporate insolvency under the Insolvency and Bankruptcy Code 2016 (IBC) in wake of the COVID-19 pandemic, there have been several market speculations about the nature and extent of the proposed suspension and its implications. With the promulgation of the amendment ordinance to IBC, most of these speculations have been put to rest, however owing to the language of the Ordinance, a new set of issues may have arisen.

In the matter of Intellectual Property Attorneys Association and Anr v Controller General of Patents, Designs and Trade Marks and Anr, W.P.(C) No 3059/2020 (Writ Petition), the Delhi High Court (Court) passed an order dated 11 May 2020 (Order) extending the limitation period for various acts, proceedings, filing of any reply/document, payment of fees, etc. relating to any intellectual property matter (IP Filings) due on or after 15 March 2020 until further directions to be passed by the Hon’ble Supreme Court.

India today announced a new policy for foreign direct investment (FDI) from China by way of Press Note 3 of 2020. All such investment from China will now require prior approval of the Indian Government, and this approval requirement also applies to transactions, where the beneficial owner of the investment, (whether directly or indirectly) is from China.

Recently, the Rajasthan Advance Ruling Authority (AAR) in the case of M/s Clay Craft India Private Limited [2020 (4) TMI 228] has held that remuneration paid to Directors would attract Goods and Services Tax (GST).

The Securities Appellate Tribunal, Mumbai (SAT) passed an order in Ravikiran Realty India Ltd & Ors v SEBI, Misc App. Nos. 90 & 382 of 2019 with Appeal No. 231 of 2018 (Order) on 6 March 2020 attaching stridhan of a female director in recovery proceedings against the appellant company.

The National Company Law Appellate Tribunal (NCLAT), in its judgment dated 12 March 2020, has set aside the order of the Competition Commission of India (CCI) imposing a penalty of INR 10,000,000 (Indian Rupees Ten million) on Eli Lilly and Company (Eli Lilly) for not notifying the acquisition of Novartis Animal Health business in India (NAH) (a business division of Novartis India Limited) to the CCI or what is popularly known as ‘gun jumping’.

With an intent to reduce direct tax litigation pending before various courts/ appellate forums  [ie Supreme Court or High Court or Income Tax Appellate Tribunal (ITAT) or Commissioner of Income Tax (Appeals) (CIT(A)), together referred to as Appellate Forum], the Government introduced ‘The Direct Tax Vivad Se Vishwas Bill, 2020’ (Scheme) before the Lok Sabha on 05 February 2020 (please see our Ergo). Thereafter, various representations were made by the stakeholders expressing their concerns and suggested modifications to the Scheme.

On 2 March 2020, the Ministry of Corporate Affairs (MCA) issued a standard operating procedure (SOP) for prosecution of independent directors (IDs) and non-executive directors (NEDs) in respect of non-compliance with the provisions of the Companies Act, 2013 (Act).

The Authority for Advance Rulings (AAR) in its recent verdict in the matter of Bid Services Division (Mauritius) Ltd, In re ([2020] 114 taxmann.com 434 (AAR – Mumbai)), denied the benefits of the capital gains tax exemption under the India – Mauritius Tax Treaty (Treaty) to the taxpayer on the sale of its Indian investment.