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Strengthening NFRA & more control on Auditors In India

Posted on by Business So Simple in Miscellaneous

Report of The Company Law Committee (2022) recommends various changes to the Companies Act, 2013 to recognise new concepts, expedite corporate processes, improve compliance requirements, and remove ambiguities from existing provisions. The Report also includes recommendations to enable producer organisations to incorporate under the Limited Liability Partnership Act, 2008.

The CLC has submitted its latest Report (2022) to the Government on 21st March, 2022 which has been placed on the website of the MCA.  It has been decided to invite comments/suggestions on the said Report from all the stakeholders through e-Consultation Platform on the MCA website till 06th May 2022.

One of the recommendations is  strengthening the national financial reporting authority by enhancing NFRA’s ability to take penal action against auditors, provision for dedicated NFRA fund, and  regulations making powers.

Section 132(1) of CA-13 empowers the Central Government to constitute the National Financial Reporting Authority (“NFRA”) for matters relating to accounting and auditing standards for companies.

NFRA seeks to protect public interest and the interests of investors, creditors and others associated with the companies or bodies corporate.

It has powers to investigate misconduct committed by any member or firm of chartered accountants registered under the Chartered Accountants Act, 1949  i.e., it aims to ensure oversight over professionals in their audit and accounting related services to companies.

Sub-sections (3), (3A) and (3B) of Section 132 further provide the composition and manner of appointment of chairperson and members of NFRA.

Section 132(13) obligates NFRA to maintain books of accounts in the form prescribed by the Central Government in consultation with the Comptroller and Auditor General (“CAG”) of India.

While taking note of the provisions concerning NFRA, the Committee deliberated upon the autonomy of NFRA and its powers under CA-13.

In particular, this includes the NFRA’s ability to take penal action against auditors, have a dedicated NFRA fund, and make regulations.

(1) Penal action against companies and auditors for matters other than professional or other misconduct 

Section 132(4) of CA-13 provides that NFRA shall have the power to investigate matters of ‘professional or other misconduct’ committed by any member or firm of chartered accountants.

When such misconduct is proved, it can impose a penalty or debar the member or the firm from being appointed as an auditor or internal auditor or valuer under CA-13 or from undertaking an audit, internal audit and valuation under the Act.

The amount of penalty and period of debarment (both in the case of individuals and firms) has been provided under such provisions.

Professional or other misconduct has the same meaning assigned under Section 22 of the Chartered Accountants Act, 1949, which reads as under:

“For the purposes of this Act, the expression “professional or other misconduct” shall be deemed to include any act or omission provided in any of the Schedules, but nothing in this Section shall be construed to limit or abridge in any way the power conferred or duty cast on the Director (Discipline) under sub-section (1) of Section 21 to inquire into the conduct of any member of the Institute under any other circumstances.”

The First and Second Schedules under the Chartered Accountants Act,1949, contain matters that would be considered “professional misconduct” about chartered accountants in practice, chartered accountants in service, members of the Institute of Chartered

Accountants of India (“ICAI”) generally, and other misconduct about members of the ICAI generally.

The Committee discussed that NFRA does not have the powers to take actions against individuals and firms for non-compliance with CA-13 and requirements thereunder, which do not qualify as ‘professional or other misconduct’. In particular, it was informed that as per data with the MCA, approximately 11,000 auditors had not filed NFRA 2 – an annual return to be filed by auditors under Rule 5 of the NFRA Rules, 2018.

The Committee was accordingly of the opinion that NFRA should be empowered to take appropriate action against other contraventions in addition to its existing powers to take action against ‘professional or other misconduct’. There should also be specific provisions to enable NFRA to initiate appropriate penal action in case its orders are neither complied with nor any appeal against such an order has been filed in the NCLAT.

(2) Constitution of a NFRA fund

Currently, NFRA receives its funding entirely from the Central Government.

These funds are used for the

(a) salaries and allowances etc., for Chairperson, Members and other officers and employees of NFRA; and

(b) other expenses of NFRA connected with functions and purposes of NFRA under CA-13.

Given their specialised nature, regulatory authorities like NFRA require the necessary capabilities to discharge their functions.  The Committee deliberated the necessity for augmenting the degree of financial autonomy for NFRA.

The Committee was of the opinion that provisions concerning financial autonomy as is present for other regulatory bodies may also be incorporated for NFRA. For example, Section 222 of the IBC establishes the ‘Board Fund’, which is meant to meet the expenses of the IBBI. The Board Fund receives monies from all grants, fees received by the IBBI; all sums received from such other sources as decided by the Central Government; and such additional funds as may be specified by the IBBI or prescribed by the Central

Government.

Similarly, Section 51 of the Competition Act, 2002 establishes a Competition Fund, which receives monies from Central Government grants; fees received under the Act; and the interest accrued on the amounts received. It is used for the (a) salaries and allowances of

the Chairperson, Members, and officers of the Competition Commission, and (b) other expenses of the Commission in connection with the discharge of its functions and purposes under the Act.

The Committee was of the opinion that suitable amendments be made to CA-13 for the constitution of a NFRA Fund.

(3) Enabling NFRA to make regulations and granting supervisory powers to the NFRA Chairperson

Section 132 of CA-13 enables the Central Government to make Rules for the functioning of NFRA. For example, the Government has prescribed the (i) NFRA (Manner of appointment & other terms and conditions of service of Chairperson and Members) Rules, 2018; (ii) NFRA Rules, 2018; (iii) NFRA (Meeting for Transaction of Business) Rules, 2019; and (iv) NFRA (Recruitment, Salary, Allowances and other Terms and Conditions of Service of Secretary, Officers and other Employees of Authority) Rules, 2019. Presently, NFRA does not have any regulation-making powers under CA-13.

The Committee received suggestions that Section 132 may be amended to include enabling powers for NFRA to make regulations concerning certain matters. In this light, the Committee deliberated that when Section 132 was notified, it did not include regulation making powers. Any divergence would require due consideration. The Committee believed that certain regulation-making powers, sufficiently encumbered by checks and balances, may be given to NFRA.60 As such, the Committee thought it may be prudent to enable NFRA to make regulations in specific instances that shall be outlined in CA-13. This includes instances where autonomy is required for smoother internal functioning and instances that necessitate subject-matter expertise and immediate requirement for regulation.

The Committee thought granting such powers to NFRA would require accountability and good governance. In this regard, the Committee was apprised of the regulation-making powers of other regulators.

As particular examples, Section 52 of the Airports Economic Regulatory Authority of India Act, 2008, which enables the concerned regulator to make regulations, is encumbered by Section 13 (4), which imposes checks and balances on the regulator by mandating consultations with all stakeholders and documenting and explaining all decisions.  

Similarly, Section 240 of the IBC enables the IBBI to make regulations.  Given good governance practices, IBBI has enacted the IBBI (Mechanism for Issuing Regulations) Regulations, 2018, which govern its regulation-making process and ensure accountability.

Other regulators, particularly the RBI, SEBI,  the Insurance Regulatory and Development Authority of India,66 the Pension Fund Regulatory and Development Authority,  also have regulation-making powers under the parent statute, albeit, with adequate safeguards.

Thus, the Committee recommended that NFRA should be enabled to make regulations for specific matters such as form and manner of filing information with NFRA, and place, timing, and procedure to be followed for meetings of the NFRA.

However, it discussed that in accordance with principles of good governance and accountability followed by the Central Government, such powers should be sufficiently encumbered with safeguards.

In keeping with the need for operational autonomy of NFRA, the Committee also deliberated the need to specify that the Chairperson shall have the powers of general superintendence, direction and control regarding administrative matters of NFRA. Similar provisions are included in Section 13 of the Competition Act, 2002  and Section 191 of the IBC.

It was thus of the opinion that Section 132 be suitably amended to provide the NFRA Chairperson with powers of general superintendence and direction within NFRA.

Note: Extract of Section 132 of the Companies Act, 2013

The Companies Act, 2013

Chapter-IX Accounts of Companies

Section 132: Constitution of National Financial Reporting Authority.

132. (1) The Central Government may, by notification, constitute a National Financial Reporting Authority to provide for matters relating to accounting and auditing standards under this Act.

[(1A) The National Financial Reporting Authority shall perform its functions through such divisions as may be prescribed.]

(2) Notwithstanding anything contained in any other law for the time being in force, the National Financial Reporting Authority shall—

(a) make recommendations to the Central Government on the formulation and laying down of accounting and auditing policies and standards for adoption by companies or class of companies or their auditors, as the case may be;

(b) monitor and enforce the compliance with accounting standards and auditing standards in such manner as may be prescribed;

(c) oversee the quality of service of the professions associated with ensuring compliance with such standards, and suggest measures required for improvement in quality of service and such other related matters as may be prescribed; and

(d) perform such other functions relating to clauses (a), (b) and (c) as may be prescribed.

(3) The National Financial Reporting Authority shall consist of a chairperson, who shall be a person of eminence and having expertise in accountancy, auditing, finance or law to be appointed by the Central Government and such other members not exceeding fifteen consisting of part-time and full-time members as may be prescribed:

Provided that the terms and conditions and the manner of appointment of the chairperson and members shall be such as may be prescribed:

Provided further that the chairperson and members shall make a declaration to the Central Government in the prescribed form regarding no conflict of interest or lack of independence in respect of his or their appointment:

Provided also that the chairperson and members, who are in full-time employment with National Financial Reporting Authority shall not be associated with any audit firm (including related consultancy firms) during the course of their appointment and two years after ceasing to hold such appointment.

[(3A) Each division of the National Financial Reporting Authority shall be presided over by the Chairperson or a full-time Member authorised by the Chairperson.

(3B) There shall be an executive body of the National Financial Reporting Authority consisting of the Chairperson and full-time Members of such Authority for efficient discharge of its functions under sub-section (2) [other than clause (a)] and sub-section (4).]

(4) Notwithstanding anything contained in any other law for the time being in force, the National Financial Reporting Authority shall—

(a) have the power to investigate, either suo motu or on a reference made to it by the Central Government, for such class of bodies corporate or persons, in such manner as may be prescribed into the matters of professional or other misconduct committed by any member or firm of chartered accountants, registered under the Chartered Accountants Act, 1949:

Provided that no other institute or body shall initiate or continue any proceedings in such matters of misconduct where the National Financial Reporting Authority has initiated an investigation under this section;

(b) have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, while trying a suit, in respect of the following matters, namely:—

(i) discovery and production of books of account and other documents, at such place and at such time as may be specified by the National Financial Reporting Authority;

(ii) summoning and enforcing the attendance of persons and examining them on oath;

(iii) inspection of any books, registers and other documents of any person referred to in clause (b) at any place;

(iv) issuing commissions for examination of witnesses or documents;

(c) where professional or other misconduct is proved, have the power to make order for—

(A) imposing penalty of—

(I) not less than one lakh rupees, but which may extend to five times of the fees received, in case of individuals; and

(II) not less than [five lakh rupees], but which may extend to ten times of the fees received, in case of firms;

[(B) debarring the member or the firm from—

I. being appointed as an auditor or internal auditor or undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate; or

II. performing any valuation as provided under section 247,

for a minimum period of six months or such higher period not exceeding ten years as may be determined by the National Financial Reporting Authority.]

Explanation.—For the purposes of his sub-section, the expression “professional or other misconduct” shall have the same meaning assigned to it under section 22 of the Chartered Accountants Act, 1949.

(5) Any person aggrieved by any order of the National Financial Reporting Authority issued under clause (c) of sub-section (4), may prefer an appeal before [the Appellate Tribunal in such manner and on payment of such fee as may be prescribed.]

(6) [***]

(7)  [***]

(8)  [***]

(9)  [***]

(10) The National Financial Reporting Authority shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of business at its meetings in such manner as may be prescribed.

(11) The Central Government may appoint a secretary and such other employees as it may consider necessary for the efficient performance of functions by the National Financial Reporting Authority under this Act and the terms and conditions of service of the secretary and employees shall be such as may be prescribed.

(12) The head office of the National Financial Reporting Authority shall be at New Delhi and the National Financial Reporting Authority may, meet at such other places in India as it deems fit.

(13) The National Financial Reporting Authority shall cause to be maintained such books of account and other books in relation to its accounts in such form and in such manner as the Central Government may, in consultation with the Comptroller and Auditor-General of India prescribe.

(14) The accounts of the National Financial Reporting Authority shall be audited by the Comptroller and Auditor-General of India at such intervals as may be specified by him and such accounts as certified by the Comptroller and Auditor-General of India together with the audit report thereon shall be forwarded annually to the Central Government by the National Financial Reporting Authority.

(15) The National Financial Reporting Authority shall prepare in such form and at such time for each financial year as may be prescribed its annual report giving a full account of its activities during the financial year and forward a copy thereof to the Central Government and the Central Government shall cause the annual report and the audit report given by the Comptroller and Auditor-General of India to be laid before each House of Parliament.

IBBI to launch 3rd National Online Quiz on Insolvency and Bankruptcy Code, 2016

Posted on by Business So Simple in Company Law, IBBI

As part of the ongoing ‘Azadi Ka Amrit Mahotsav’ celebrations, the Insolvency and Bankruptcy Board of India (IBBI) in collaboration with MyGov.in and BSE Investors’ Protection Fund is conducting the ‘3rd National Online Quiz on Insolvency and Bankruptcy Code, 2016’, to promote awareness and understanding of the Code among various stakeholders, across the country. The Quiz is open from 16th April, 2022 to 15th May, 2022. 

The 3rd edition Quiz has been launched in continuation to the two quiz organized earlier, in the years 2020 and 2021, which evinced an overwhelming response, with over 1.9 lakh participants, in total, representing all the States and Union Territories of the country. The Quiz received interest from a wide range of stakeholders, including students, professionals and employees. 

The Quiz shall be open on the MyGov portal https://quiz.mygov.in for all Indian citizens above 18 years of age, except for individuals working in IBBI, BSE Investors’ Protection Fund and service providers registered with IBBI, as also their immediate family members.

The best performer will be awarded a Gold Medal along with a cash prize of Rs. 1,00,000/- (One lakh rupees only). The second-best performer will be awarded a Silver Medal along with a cash prize of Rs. 50,000/- (Fifty thousand rupees only) and the third best performer will be receiving a Bronze Medal along with a cash prize of Rs. 25,000/- (Twenty five thousand rupees only). The next ten best performers will be awarded consolation prizes of Rs. 10,000/- (Ten thousand rupees only) each. Additionally, the top 10% performers shall be awarded ‘Certificates of Merit’ and all the participants will receive ‘Certificates of Participation’. The cash prizes and medals are sponsored by the BSE Investors’ Protection Fund, as part of its investor awareness initiatives.

The details of terms and conditions, schedule, awards and commendations being offered are available at https://www.ibbi.gov.in/events/upcoming-events and the Quiz can be played at https://quiz.mygov.in/quiz/3rd-national-online-quiz-on-the-insolvency-and-bankruptcy-code-2016/

The IBBI encourages everyone to participate in the Quiz and have a chance to win attractive prizes along with fostering a heightened awareness and knowledge about the Code.

LIST OF SECTIONS/RULES U/CA 2013 – REPLACING AFFIDAVITS WITH SELF-DECLARATION U/CA 2013 (The Company Law Committee Report)

Posted on by Business So Simple in Company Law, Miscellaneous

1. Section 68(6) read with Rule 17(3), Companies (Share Capital and Debenture) Rules, 2014

Where a company proposes to buyback its shares/ securities under this section, an affidavit is required to be filed by two directors before the RoC and SEBI to the effect that the company will not be rendered insolvent for one year

2 Section 374(c)

Company registering under Chapter XXI Part I is required to file an affidavit from all members/ partners that in the event of registration, necessary documents or papers shall be submitted to the registering or other authority with which the company was earlier registered

3. Rule 7(4)(i), Companies (Incorporation) Rules, 2014

A company applying to convert into a One Person Company must apply for the RoC in the prescribed form. Such an application is required to be accompanied by an affidavit from the company’s directors confirming that all members and creditors of the company have given their consent for conversion.

4. Rule 8A(1)(j), Companies (Incorporation) Rules, 2014

A name including the phrase ‘Electoral Trust’ may be allowed for registration of companies to be formed under Section 8 of CA-13 following the Electoral Trusts Scheme, 2013, notified by the Central Board of Direct Taxes. For this purpose, the name application is required to be accompanied by an affidavit to the effect that the name obtained shall be only for registration of companies under the said scheme.

5. Rule 10(3)(b), Companies (Registration of Foreign Companies) Rules, 2014

Foreign companies must attach a translation of their documents, where such documents are not submitted to the RoC in English. Where the translation is done in India, it is required to be authenticated by an affidavit of a competent person, having adequate knowledge of both the original language and English, in the opinion of the RoC.

6. Rule 4(3)(iii), The Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016

An application for removal of the name of a company under Section 248(2) of CA-13 made to the RoC is required to be accompanied by an affidavit, in the prescribed form, by every director of the company.

Key amendments proposed in CA 2013, LLP Act 2008 by The Company Law Committee (2022)

Posted on by Business So Simple in Company Law

Key amendments proposed in CA 2013, LLP Act 2008 by The Company Law Committee (2022)

👉
I. Allowing certain companies to revert to the financial year followed in India;

II. Facilitating certain companies to communicate with their members in only electronic form;

III. Recognising issuance and holding of fractional shares, Restricted Stock Units and Stock Appreciation Rights;

IV. Easing the requirement of raising capital in distressed companies;

V. Replacing the requirement of furnishing affidavits with the filing of self certification/declaration;

VI. Clarifying the inclusion of ‘free reserves’ while determining the limit for buying back of a company’s equity shares;

VII. Prohibiting companies from recording trusts on their register of members;

VIII. Allowing companies to hold general meetings in virtual, physical or hybrid modes;

IX. Creating an electronic platform for maintenance of statutory registers by companies;

X. Clarifying provisions relating to Investor Education and Protection Fund;

XI. Strengthening the National Financial Reporting Authority;

XII. Reviewing and strengthening the audit framework and introducing mechanisms to ensure the independence of auditors;

XIII. Standardising the manner for auditors to provide qualifications;

XIV. Recognising and providing an enabling framework for the constitution of Risk Management Committees;

XV. Clarifying the tenure of independent directors;

XVI. Revising provisions relating to the disqualification and vacation of the office of directors;

XVII. Clarifying the procedure for the resignation of key managerial personnel;

XVIII. Strengthening the provisions relating to mergers and amalgamations;

XIX. Easing the restoration of struck off companies by enabling the Regional Director to allow restoration of names of companies in certain instances;

XX. Recognising Special Purpose Acquisition Companies and allowing such companies, which are incorporated in India, to list on permitted exchanges;

XXI. Prohibiting the conversion of co-operative societies into a company;

XXII. Modernising enforcement and adjudication activities through electronic mode;

XXIII. Strengthening the incorporation and governance framework for Nidhis;

XXIV. Removing ambiguities from present provisions under the Companies Act, 2013 through changes of drafting & consequential nature

XXV. The incorporation of Producer Limited Liability Partnerships under the Limited Liability Partnership Act, 2008 to ease incorporation and compliance requirements for producer organisations.

Regards,
Bipul Kumar

CBIC Chairman releases National Time Release Study, 2022

Posted on by Business So Simple in Custom

Shri Vivek Johri, Chairman, Central Board of Indirect Taxes and Customs (CBIC), presented a set of Time Release Studies (TRS) conducted by the department.

TRS are essentially a performance measurement tool for assessing the cargo clearance process of the international trade, as recommended by the World Trade Organization (WTO) under the Trade Facilitation Agreement (TFA) and the World Customs Organization (WCO). It adopts average cargo release time, i.e. the time taken from the arrival of the cargo at the customs station to its eventual release for import or export, as the case may be.

The National Time Release Study (NTRS) 2022 covered 15 major Customs formations, including four port categories – seaports, air cargo complexes (ACCs), inland container depot (ICDs) and integrated check posts (ICPs), which handle about 80 percent of the bills of entry (imports documents) and 70 percent of the shipping bills (export documents) and is based on the sample period between 1st – 7th January 2022.  

The NTRS 2022 has reported further improvement in the average cargo release time for all the four port categories in 2022 over corresponding period of the previous year: by 2 percent for ICPs to significantly higher 16 percent for ACCs. For the sea cargo cleared through the sea port or inland container depots average release time has improved by 12 percent. With this improvement, the ICPs have achieved the National Trade Facilitation Action Plan (NTFAP) target release time to be achieved by 2023, whereas the other three port categories have reached 75 percent of NTFAP target.

NTRS 2022 and the Custom House level Time Release Studies, which have been conducted using the same data set, obtained from the customs automated system and following the same methodology, have found strong affirmation for the four-fold ‘path to promptness’ , namely:

advance filing of import documents enabling pre-arrival processing,risk based facilitation of cargo,benefits of trusted client program – Authorized Economic Operators, andDirect Port Delivery (DPD) facility.

 

In case of Exports, the Study noted that the documentary clearance of export consignments, measured by the time taken from arrival of the  goods at the customs station to grant of Let Export Order has been significantly minimized, ranging from 4:04 hours in the case of ACCs to 47:41 hours in the case of ICDs. This time is within the differential NTFAP target for the four port categories. However, the studies have found that on account of various logistics processes, the time taken in the eventual export after the regulatory clearance, takes long time – accounting from 60 percent of the total time in the case of integrated check post to 92 percent in the case of air cargo.

 

It may be mentioned that JNCH was the first major Custom House to initiate annual TRS beginning in 2017, and NTRS 2022 shows that the average import cargo release time has been halved since then.

 

NTRS 2022 and local TRSs have also made certain recommendations to further reduce the average release time targets to meet the targets set out in the NTFAP and improve the trade facilitative eco-system in the country. 

 

Copy of the NTRS 2022 is available on the CBIC website [cbic.gov.in] and other Time Release Studies are being made available on the websites of the respective formations.

One arrested by DGGI Gurugram officials for fraudulently availing Input Tax Credit of more than Rs 16 crore (Press release 11 April 2022)

Posted on by Business So Simple in GST

The Directorate General of GST Intelligence (DGGI) Gurugram Zonal Unit (GU), Gurugram, has unearthed a case wherein a series of entities controlled by a person as Proprietor / Director of M/s Umang Overseas, M/s Ulagarsan Impex Put Ltd and M/s Umang Impex Private Limited, was found to be involved in availing and passing fraudulent Input Tax Credit (ITC) of Rs  16.74 crore without receipt of goods from different fake, suspended and non-existent firms.

A search was conducted at various premises on 04.04.2022. During the search, many pen drives, rubber stamps of different firms, documents/ records were resumed and the same are being investigated for estimation of duty evasion.

The key person involved in availment and passing of fraudulent ITC was arrested on 05.04.2022 and produced before the Chief Metropolitan Magistrate, Patiala House Court on 05.04.2022 and ordered judicial custody for 14 days.

Further investigation in the matter is under progress.

IBBI amends the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 (MCA Press release dated 08th April 2022)

Posted on by Business So Simple in Company Law, IBBI

The Insolvency and Bankruptcy Board of India notified the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) (Amendment) Regulations, 2022 (Amendment Regulations) on 05th April, 2022.

The Insolvency and Bankruptcy Code, 2016 read with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 provide mechanism for voluntary liquidation of solvent corporate person. It has been noticed that there has been substantial delay in completion of voluntary liquidation process, though the process, in general, involve nil or negligible claims of creditors, fewer assets, if any, to be realized and few litigations, if any, to be concluded. To curtail such delay and ensure faster exit for firms, the Amendment Regulations modify timelines for some stipulated activities undertaken during the process as under:

  • The liquidator shall prepare the list of stakeholders within fifteen days (against the previously stipulated forty-five days) from the last date for receipt of claims, where no claim from creditors has been received till the last date for receipt of claims. 
  • The liquidator shall distribute the proceeds from realization within thirty days (against the previously stipulated six months) from the receipt of the amount to the stakeholders.
  • It has been further provided that the liquidator shall endeavour to complete the liquidation process of the corporate person within two hundred and seventy days from the liquidation commencement date, where the creditors have approved the resolution under section 59(3)(c) or regulation 3(1)(c), and ninety days from the liquidation commencement date in all other cases (against the previously stipulated 12 months in all situations). 

To provide summary of actions taken by the liquidator during the voluntary liquidation process, the Amendment Regulations specify a compliance certificate which is required to be submitted along with application under section 59(7) to the Adjudicating Authority, by the liquidator. It shall facilitate the Adjudicating Authority to adjudicate dissolution applications expeditiously. 

The Amendment Regulations are effective from 05th April, 2022. These are available at www.mca.gov.in and www.ibbi.gov.in.

Tax Revenues in 2021-22 exceed the Union Budget estimates by ₹5 lakh crore (Press release 08 April 2022)

Posted on by Business So Simple in GST, Income Tax

The tax revenue in the Union Budget for 2021-22 was estimated at ₹22.17 lakh crore against the revised estimates of ₹19 lakh crore, with a growth of 17%. The Union Budget was presented on 1st February, 2021 when the 1st COVID wave had tapered off in India but the world was facing successive waves.

Against the Union Budget estimates of ₹22.17 lakh crore, the revenue collections as per the pre-actual figures is ₹27.07 lakh crore, almost ₹5 lakh crore above the budget estimates. This is a growth of 34% over last years revenue collection of ₹ 20.27 lakh crore, led by growth of 49% in direct taxes and supported by 20% growth in indirect taxes. This revenue growth has been propelled by rapid economic recovery after successive waves of COVID, supported by one of the largest immunization programme of the world run by the Government. It also signifies a robust recovery in the economy. These was also supplemented with better compliance efforts in taxation. Various efforts were taken by tax administration on direct as well indirect taxes to nudge higher compliance through use of technology and artificial intelligence.

2021-22 marks the highest tax-GDP ratio of 11.7%, with direct tax to GDP ratio at 6.1% and indirect tax to GDP ratio at 5.6%. The tax buoyancy (which is a measure of growth in tax revenues as compared to GDP growth) is at a very healthy figure of 1.9, with 2.8 for direct taxes and 1.1 for indirect taxes. The ratio of direct to indirect taxes recovered from 0.9 in 2020-21 back to 1.1 in 2021-22.

The gross corporate taxes during 2021-22 was ₹8.6 lakh crore against ₹6.5 lakh crore last year, which shows that the new simplified tax regime with low rates and no exemptions has lived upto its promise. During the year, Income tax department gave refunds of ₹2.24 lakh core. During last two years, the effort has been to clear backlog of refunds to infuse liquidity into the hands of businesses. During the year, 2.4 crore refunds were issued that included 2.01 crore related to the year 2021-22, for which the returns were filed till 31st March 2021.

This has been possible due to faster processing of returns. During 2021-22, 22.4% returns were processed on the same day and around 75% returns were processed in less than a month time. The average processing time for returns during 2021-22 was 26 days. During the year, 7.14 crore returns were filed as compared to 6.97 crore last year.

On the indirect taxes, GST has seen an exemplary growth during 2021-22 despite two waves of COVID-19 pandemic. CGST revenues increased from ₹4.6 lakh crore last year to ₹5.9 lakh crore in 2021-22. The average monthly gross GST revenue in 2021-22 was ₹1.23 lakh crore as compared to ₹94,734 in 2020-21 and ₹1.01 lakh crore in 2019-20.

This again signifies a robust rebound in the economy. This has been complemented due to various measures taken to improve compliance. The GSTR-3B filing (percentage of returns of previous month filed till end of the month) improved from 74% in September 2020 to 87% in February 2022. The GSTR-1 filing has significantly improved from

54% in September 2020 to 82% in February 2022. This also shows that the gap between GSTR-3B filing and GSTR-1 filing has completely narrowed down to the level of elimination. This shows that the GST ecosystem has appreciated the invoice-based discipline in GST, which not only benefits GST revenues but also contributes to overall formalization in the economy.

The level of economic recovery can also be seen from the value of e-way bills generated every month, which has improved from ₹16.9 lakh crore in January 2021 to ₹25.7 lakh crore in March 2022.

During 2021-22, Customs duty has witnessed a growth rate of 48%. During last two years, Government has undertaken comprehensive review and rationalization of the Customs tariff structure through extensive consultations and crowd sourcing and has rationalized various exemptions and simplified the tariff structure.

It is expected that the trend of recovery in the economy and tax revenues of the Government will continue to grow.

Use Of Advance Technology At Courts (Press Release 07th April 2022)

Posted on by Business So Simple in Legal awareness

With its objective of universal computerisation and Information and Communication Technology enablement of all the District & Subordinate Court complexes, Department of Justice in close coordination with eCommittee of Supreme Court of India is implementing eCourts Mission Mode Project. To explore the use of artificial intelligence (AI) in judicial domain, the Supreme Court of India has constituted Artificial Intelligence Committee which has mainly identified application of AI technology in Translation of judicial documents, Legal research assistance and Process automation. However, in the eCourts Phase II, which is under implementation since 2015, AI and Blockchain Technology have not been used.

As Phase II of the eCourts project is coming to an end, a draft Vision Document has been formulated by the eCommittee of the Supreme Court for eCourts Project Phase III. Based on this document, a Detailed Project Report (DPR) is being prepared by the eCommittee of Supreme Court of India. In the draft DPR, the eCommittee of the Supreme Court of India mentions about use of AI and Blockchain technology.

Disposal of cases in courts is within the domain of the judiciary.  No time frame has been prescribed for disposal of various kinds of cases by the respective courts. Government has no role in disposal of cases in courts. Timely disposal of cases in courts depends on several factors which, inter-alia, include availability of adequate number of judges and judicial officers, supporting court staff and physical infrastructure, complexity of facts involved, nature of evidence, co-operation of stake holders viz. bar, investigation agencies, witnesses and litigants and proper application of rules and procedures. There are several other factors which may lead to delay in disposal of cases. These, inter-alia, include vacancies of judges, frequent adjournments and lack of adequate arrangement to monitor, track and bunch cases for hearing. However, as per the draft DPR, AI might be used for Prediction and Forecast, Improving Administrative Efficiency, Automated Filing, Smart Scheduling of Cases, Enhancing the Case Information System & Communicate with litigants through chat bots which may assist in early disposal of cases.

This information was given by the Union Minister of Law and Justice, Shri Kiren Rijiju in a written reply in Rajya Sabha, today.