Author: Business So Simple

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Judiciary updates (GST)-12th Oct 2021

Posted on by Business So Simple in GST

  1. GST payable on e-procurement services provided to Government (Telangana State Technology Services Limited (GST AAR Telangana dated 04 -10- 2021)
  2. No GST exemption on storage of processed cotton (  In re Kakkirala Ramesh (GST AAR Tealangana) dated 20 Sept 2021)
  3. Provisional attachment of Bank Accounts – lack of application of mind (Monopoly Innovations Pvt. Ltd. Vs Union of India & Ors. (Bombay High Court) dated 24-09-2021)
  4. Pre deposit for appeal under GST should be paid through cash ledger only: HC ( Jyoti Construction Vs Deputy Commissioner of CT & GST (Orissa High Court) dated 07 -10-2021)
  5. HC grant Bail to person accused of issuing Fake Invoices & availing bogus ITC ( * Manoj Bansal Vs Director General of GST Intelligence (DGGI) (Punjab and Haryana High Court) dated 28- 09- 2021)
  6. Wrongful availment of ITC under GST: High Court grants Bail ( Shailesh Chandra Vs DGGI Jaipur Zonal Unit (Rajasthan High Court) dated 01-10-2021)
  7. GST registration cancellation for work from Home; Pass reasoned & Speaking order: HC ( International Value Retail Private Limited Vs. Union of India & Ors (Calcutta High Court) dated 10- 09-2021)
  8. HC stays Provisional Attachments order passed without application of mind

( Kerala Communicators Cable Limited Vs The Commissioner Of Central Tax And Central Excise (Kerala High Court) dated 01-10-2021)

Regards
Bipul Kumar

CCI approves internal restructuring of the TVS Group, under Section 31(1) of the Competition Act, 2002

Posted on by Business So Simple in Competition Law

(CCI Press Release dated 11th Oct 2021)

The Competition Commission of India (CCI) approves internal restructuring of the TVS Group, under Section 31(1) of the Competition Act, 2002.

The proposed combination contemplates an internal restructuring within the TVS group pursuant to the execution of a Memorandum of Family Arrangement dated10 December 2020, the Composite Scheme of Amalgamation and Arrangement dated 29 January 2021 between the Parties and board resolutions dated 30 January 2021 (Proposed Combination).

A brief description of the Parties is provided below:

(a)TVS Mobility Private Limited: It is a holding company and is currently not engaged in any business. It’s shareholders through their affiliates are primarily engaged in investment advisory, manpower support services, wholesale distribution of automotive components, manufacture of repair materials for tyres and tubes, and agricultural activities.

(b)T.S. Rajam Tyres Private Limited: It is the wholly owned subsidiary of TVS Mobility Private Limited and is currently not engaged in any business.

(c)Southern Roadways (Madurai) Private Limited: It is a holding company and is currently not engaged in any business. It’s shareholders through their affiliates are engaged in farm related activities.

(d)Trichur Sundaram Santhanam & Family Private Limited: It is a holding company and is currently not engaged in any business. It’s shareholders through their affiliates are primarily engaged in lending services, business process outsourcing services, distribution of insurance products, investment management, manufacture of automotive components.

(e) TVS Sundram Fasteners Private Limited: It is a holding company and is currently not engaged in any business. It’s shareholders through their affiliates are not engaged in any business activity.

(f) Madurai Alagar Enterprises Private Limited: It is a holding company and is currently not engaged in any business. It’s shareholders through their affiliates are engaged in manufacturing phenol formaldehyde resins and cashew friction dust.

(g) SB TVS Industrial Ventures Private Limited: It is a holding company and is currently not engaged in any business. It’s shareholders through their affiliates are primarily engaged in trading of aluminium, packaging and label printing services…

(h) Cheema Industrial Ventures Private Limited: It is a holding company and is currently not engaged in any business. It’s shareholders through their affiliates are primarily engaged in trading of aluminium, packaging and label printing services.

(i) TVS Holdings Private Limited: It is a holding company and is currently not engaged in any business. It’s shareholders through their affiliates are primarily engaged in provision of corrosion management, consultancy and management services, insurance broking services, and manufacturing of automotive components.

(j) Geeyes Family Holdings Private Limited: It is a holding company and is currently not engaged in any business. It’s shareholders through their affiliates are primarily engaged in management consultancy and staffing solutions, and property development.

(k) Sundaram Climate Institute Private Limited: It is engaged in the provision of climate change research and implementation. It’s shareholders through their affiliates are primarily engaged in the provision of water management solution, aggregation of transport industry, manufacture and sale of yarn and provision of support services to textile mills.

(l) T V Sundram Iyengar & Sons Private Limited (TVSS): It is directly engaged in manufacture and distribution of automotive components, distribution of automobiles etc. TVSS, through its affiliates, is engaged in various sectors including automotive, logistics, information and technology, power generation, investments, manufacturing components for automotive and non-automotive applications, manufacturing sewing needles, and vocational training etc.

(m) Sundaram Industries Private Limited (SI): It is directly engaged in providing tyre solutions and manufacturing rubber compounds, cured rubber and plastic products. SI, though it affiliates, is primarily engaged in providing tyre solutions, manufacturing of protective gears, manufacture and sale of automotive components and manufacture and sale of yarn.

(n) Southern Roadways Private Limited (SRW): It is directly engaged in road transport, and parcel services. SRW, through its affiliates, is primarily engaged in manufacture and sale of yarn, and automotive components.

(o) TVS Investments Private Limited (TVSI): It is a non-operating financial holding company. TVSI, through its affiliates, is primarily engaged in investment consultancy, wealth management and transaction automation products.

Detailed order of the CCI will follow.

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Power Ministry mandates energy accounting of DISCOMs with a view to reduce electricity losses

Posted on by Business So Simple in Business Consultancy, Financial Prudence

Ministry of Power Press Release dated 11th Oct 2021

As an important step under the ongoing power sector reforms, Ministry of Power today mandated electricity distribution companies to undertake energy accounting on periodic basis. The regulation in this regard was issued by Bureau of Energy Efficiency (BEE) with the approval of Ministry of Power, under the provisions of Energy Conservation (EC) Act, 2001. The notification stipulates quarterly energy accounting by DISCOMs, through a certified Energy Manager, within 60 days. There will also be Annual energy audit by an independent Accredited Energy Auditor. Both these reports will be published in the public domain.  Energy accounting reports will provide detailed information about electricity consumption by different categories of consumers & the transmission and distribution losses in various areas.  It will identify areas of high loses and theft and enable corrective action.  This measure will also enable fixation of responsibility on officers for losses and theft.  The data will enable the DISCOMS to take appropriate measure for reducing their electricity losses.  The DISCOMs will be able to plan for suitable infrastructure up-gradation as well as demand side management (DSM) efforts in an effective manner.  This initiative will further contribute towards India’s climate actions in meeting our Paris Agreement Goals.

These regulations have been issued under the ambit of Energy Conservation Act, 2001, with an overall objective to reduce distribution sector in-efficiency and losses thereby moving towards economic viability of DISCOMs. BEE has certified a pool of National Accredited Energy Auditors and Energy Managers who possess expertise in preparing energy accounting and audit reports, duly providing recommendations for loss reduction and other technical measures. The aforesaid regulations were pre-published in April 2021 for seeking public comments and thereafter Ministry of Power held detailed discussions with various stakeholders before finally issuing these regulations.

In September 2020, through a separate notification, all the Electricity Distribution Companies were notified as Designated Consumers (DCs) under the EC Act. Owing to the potential benefits of energy auditing on the entire distribution system and retail supply business, it was imperative to develop a set of comprehensive guidelines and framework such that all Distribution utilities across India can adhere to and formulate actions.

Energy Accounting prescribes accounting of all energy inflows at various voltage levels in the distribution periphery of the network, including renewable energy generation and open access consumers, as well as energy consumption by the end consumers. Energy accounting on periodic basic and subsequent annual energy audit, would help to identify areas of high loss and pilferage, and thereafter focussed efforts to take corrective action. The Regulations issued today provides much awaited broad framework for Electricity Distribution Companies to carry out Annual Energy Audit and Quarterly Periodic Energy Accounting with necessary Pre-requisites and reporting requirements to be fulfilled.

Objectives to be achieved through periodic energy accounting are:

  • Development of a comprehensive energy accounting system to quantify and determine actual losses in the power distribution system, segregated across technical and commercial losses.
  • Identify areas of leakage, theft, wastage or inefficient use, thereby paving the way for tackling the present challenges of high Transmission and Distribution (T&D) losses.
  • Enable and ensure an independent 3rd party energy audit of the distribution system to arrive at a true and fair picture of T&D losses.
  • To enable the Distribution utilities to undertake targeted efficiency improvement activities to reduce T&D losses in priority areas / customer segments.
  • Providing a basis for prioritizing energy capital investments and help budget more accurately to achieve maximum results.
  • Identification of overloaded segments of the network for necessary capacity additions.

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MV/IG

CCI imposes penalties upon firms for bid rigging in tender floated by GAIL (CCI Press Release dated 11th Oct 2021)

Posted on by Business So Simple in Competition Law

The Competition Commission of India (‘CCI’) passed a final order against two firms, viz ; PMP Infratech Pvt. Ltd. and Rati Engineering, for indulging into concerted practices leading to bid rigging of tender floated by GAIL in 2017–18 for the  restoration of well site located in Ahmedabad and Anand areas of Gujarat.

Based on investigation and electronic/documentary evidence collected by the DG as well as other evidence available on record, CCI found that the two firms were in regular touch with each other regarding the tender floated by GAIL and even after the submission of their bids. Further the bids of two firms were submitted from same IP address from the premises of PMP Infratech Pvt. Ltd.’s office at Ahmedabad, with a one-day gap. CCI found such conduct to have contravened the provisions of Section 3(3)(d) read with Section 3(1) of the Competition Act, 2002 which prohibit anti-competitive agreements including bid rigging.

The CCI imposed a monetary penalty of Rs. 25 lakh on PMP Infratech Pvt. Ltd., Rs. 2.5 lakh on Rati Engineering and Rs 1 lakh and Rs 50 thousand on their respective individuals who managed and controlled the firms, besides passing a cease-and-desist order.

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Income Tax Judiciary updates -09 Oct 2021

Posted on by Business So Simple in Income Tax

1. Share Transfer without consideration or at a price lower than FMV not attracts Section 56(2)(vii)
(ITO Vs. Shri Rajeev Ratanlal Tulshyan (ITAT Mumbai) order dated 01 Oct 2021)

2. Direct beneficial interest in asset/ bank account is a pre-requisite for issuing Notice u/s 148 (DCIT Vs Ganpat Singhvi (ITAT Mumbai, order dated 01 Oct 2021)

3. Computer accessories & peripherals entitled to higher depreciation rate (Waters (India) Private Limited Vs DCIT (ITAT Bangalore Order dated 01-10-2021)

4 SC defers hearing in Faceless Assessment Scheme for 3 Months
( Central Board of Direct Taxes Vs Lakshya Budhiraja & Anr. (Supreme Court of India dated 01 Oct 2021)

5 TNMM is most appropriate method if transactions are relatable & inter­related (Wieland Metals India Private Ltd. Vs ITO (ITAT Bangalore dated 22 Sept 2021)

6. AO cannot estimate GP rate without rejection of books & without showing defects ( Sanjay Agrawal Vs DCIT (ITAT Raipur) dated 24 Sept 2021)

7.No disallowance under rule 8D(2)(ii) RW section 14A if interest free funds exceeds investment (Nashik Road Deolali Vyapari Sahakari Bank Ltd. Vs ACIT (ITAT Pune) dated 16 Sept 2021)

8. Deduction of Interest waived under OTS Scheme DCIT Vs K.S. Diesels Ltd. (ITAT Mumbai) dated 29th Sept 2021

Cash seizure of over Rs. 142 crore in searches of Income Tax Department in Hyderabad (MoF Press Release dated 09th Oct 2021)

Posted on by Business So Simple in Income Tax

The Income Tax Department carried out search & seizure operations on 06.10.2021 on a major Pharmaceutical group based out of Hyderabad. This Pharmaceutical group is engaged in the business of manufacturing of intermediates, Active Pharmaceutical Ingredients (APIs) and formulations. Majority of the products are exported to foreign countries i.e. USA, Europe, Dubai and other African countries.  The search operation was carried out at about 50 locations in 6 States.

During the searches, hideouts were identified where second set of books of accounts and cash were found. Incriminating evidence in the form of digital media, pen drives, documents, etc. have been found and seized. Incriminating digital evidences were gathered from SAP @ ERP software maintained by the assessee group.

During these searches, issues relating to discrepancies in purchases made from bogus and non-existent entities and artificial inflation of certain heads of expenditure were detected. Further, evidence of on-money payment for purchase of lands was also found. Various other legal issues were also identified such as personal expenses being booked in the company’s books and land purchased by related parties below government registration value.

During the search, several bank lockers have been found, out of which 16 lockers have been operated. The searches have resulted in seizure of unexplained cash amounting to Rs. 142.87 crore so far. The unaccounted income unearthed is estimated to be in the range of about Rs 550 crore till now.

Further investigations and quantification of undisclosed income detected is in progress.

Tax Department conducts searches in Assam, Meghalaya and West Bengal (Ministry of Finance Press Release dated 08th Oct 2021)

Posted on by Business So Simple in Income Tax

The Income Tax Department carried out search and seizure operations on 05.10.2021 in the case of two groups based in the North-East Region and West Bengal. A total of 15 premises were covered in the search action, which was spread across Kolkata, Guwahati, Rangia, Shillong and Patna.  

One of the groups is engaged in the business of cement manufacturing. During the search action, it was found that this group generated unaccounted income by indulging in out-of-books sales and booking bogus expenses. This unaccounted income is laundered back into the business through shell companies. Evidences found during the search revealed that many paper companies are run by the group to provide accommodation entries to its flagship concern. These paper companies were found to be non-existent at their given addresses. During the search, incriminating evidence indicating bogus unsecured loans, bogus commission paid, bogus share premium received through shell companies etc. was also found. These evidences indicate that an amount of more than Rs. 50 crore may be unaccounted. The group was also found to be wrongly showing tribal individuals as creditors, such amounts being to the tune of around Rs. 38 crore. Further, details of certain offshore entities/ bank accounts were found during the search, which are apparently not declared in the relevant returns of income.

The other group is actively engaged in executing railway contracts in Assam, Mizoram and other parts of North East. During the search action, incriminating documents, loose sheets and digital evidences were seized indicating undisclosed investments in land and properties. Large number of sale deeds pertaining to land and properties have been found, the valuation whereof could be in excess of Rs. 110 crore. During the search, corroborative evidence could not be produced to explain the source of acquisition of these assets. Further, documents containing details of cash transactions amounting to more than Rs. 13 crore in the sale of properties have been found.

These search and seizure actions resulted in detection of undisclosed income in excess of Rs. 250 crore. Unaccounted cash of more than Rs. 51 lakh has been seized. Nine bank lockers have been put under prohibitory orders and are yet to be operated.

Further investigations are in progress.

Launch of I-Sprint’21: IFSCA’s Global FinTech Hackathon Series “Sprint01: BankTech” (MoF Press release dated 08th Oct 2021)

Posted on by Business So Simple in Financial Prudence

International Financial Services Centres Authority (IFSCA) and GIFT City launched I-Sprint’21, the global FinTech Hackathon Series of IFSCA on 7th October 2021 at 11.30 AM IST. The first Sprint of the series “Sprint01: BankTech” is focussed on FinTechs for the Banking sector.

The IFSCA is a unified authority for the development and regulation of financial products, financial services and financial institutions in the International Financial Services Centres (IFSCs) in India. IFSCA endeavours to encourage the promotion of financial technologies (‘FinTech’) initiatives across the spectrum of banking, insurance, securities and fund management in IFSC. In this context, a series of Hackathons cutting across these sectors have been planned under the banner of I-Sprint’21. This hackathon is first under the I-Sprint series focussing on the Banking Sector and is one of its kind being backed by a Regulator. It shall be conducted virtually and is open to eligible FinTechs from across the Globe.

Following the announcement by Hon’ble Finance Minister in Union Budget 2020-21 on supporting a “World Class FinTech Hub” at GIFT IFSC, IFSCA had introduced a framework for “Regulatory Sandbox” in October 2020 which allows the FinTech entities to have facilities and flexibilities to experiment with innovative FinTech solutions in a live environment with a limited set of real customers for a limited time frame. The finalists of this Hackathon shall be allowed direct entry into IFSCA Regulatory/Innovation Sandbox.

Sprint01: BankTech is hosted jointly by IFSCA and GIFT city in collaboration with NITI Aayog. The Partners to the Hackathon are ICICI Bank, HSBC Bank, iCreate, Zone Startups and Invest-India.

The aim of the Hackathon is:

(a) to connect IFSCA and GIFT IFSC with FinTech Ecosystem

(b) to solve Business Problems for the Banking Units at GIFT IFSC and

(c) to promote retail business for the Banking Units at GIFT IFSC.

Major rewards and recognition proposed under Sprint01: BankTech are:

  1. FinTech finalists to be allowed direct entry into IFSCA Regulatory/Innovation Sandbox.
  2. FinTechs will work directly with the Partner Banks on the problem statement who will provide the APIs, mentoring, guidance, etc.
  3. Opportunity for the FinTechs to show-case during the Flagship FinTech Forum of IFSCA scheduled during Dec’2021
  4. iCreate sponsored Price money of Rs 24 lakh
  5. Business Support Solution Partner benefits of upto $25,000 per startup from Zone Startups India’s network.

Further details and application process are available at  www.isprint.in or www.ifsca.gov.in.

Hawala Transactions, it’s origin, size, reasons & how to control Hawala Transactions ?

Posted on by Business So Simple in Financial Prudence

Dear Sir,

Please find below YouTube video link on Hawala Transactions, it’s origin, size, reasons & how to control Hawala Transactions ?

🖊️ हवाला कारोबार  क्या है ?

🖊️ हवाला कारोबार का इतिहास

🖊️ ये लेनदेन गुप्त तरीक़े से क्यों किए जाते हैं ?

🖊️ कितना बड़ा है हवाला का व्यापार?

🖊️ हवाला कारोबार के फलने फूलने के कारण

🖊️ इसपर कैसे लगे लगाम ?

Regards,
Bipul Kumar

Government Approves Air India DisinvestmentTatasons’ SPV – Talace Pvt Ltd – Wins Bid for Air India

Posted on by Business So Simple in Business Consultancy, Entrepreneurship, Financial Prudence

The Cabinet Committee on Economic Affairs  (CCEA) – empowered Air India Specific Alternative Mechanism (AISAM) comprising of Union Minister for Home Affairs and Cooperation Shri Amit Shah; Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman; Union Minister for Commerce and Industry Shri Piyush Goyal and Union Civil Aviation Minister Shri Jyotiraditya Scindia approved the highest price bid of M/s Talace Pvt Ltd, a wholly owned subsidiary of M/s Tata Sons Pvt. Ltd for sale of 100% equity shareholding of Government of India in Air India along with equity shareholding of Air India in AIXL and AISATS. The winning bid is for Rs 18,000 crore as Enterprise Value (EV) consideration for AI (100% shares of AI along with AI’s shareholding in AIXL and AISATS).  The transaction does not include non-core assets including land and building, valued at Rs 14,718 crore, which are to be transferred to GoI’s Air India Asset Holding Limited (AIAHL).

The process for disinvestment of Air India and its subsidiaries commenced in June 2017 with the ‘in-principle’ approval of CCEA. The first round did not elicit any Expression of Interest. The process re-commenced on 27 January 2020 with issue of Preliminary Information Memorandum (PIM) and request for Expressions of Interest (EOI). The original construct as per the January 2020 PIM envisaged (i) pre-determined, fixed amount of debt to be retained in AI (with balance to be transferred to Air India Asset Holding Limited (AIAHL) and (ii) the sum of certain identified current and non-current liabilities (other than debt) to be retained in AI and AIXL would be equal to the sum of certain identified current and non-current assets of AI and AIXL (excess liabilities to be transferred to AIAHL).

The timelines had to be extended on account of the situation arising from the COVID-19 pandemic. In view of the excessive debt and other liabilities of Air India arising out of huge accumulated losses, the bidding construct was revised in October 2020 to Enterprise Value (EV) to allow prospective bidders an opportunity to resize the balance sheet and increase chances of receiving bids and competition. The EV construct allowed the bidders to bid on the total consideration for equity and debt instead of a pre-determined, fixed debt with minimum cash consideration of 15% for equity. As per both the original and revised construct, all non-core assets (land, buildings, etc.) are to be transferred to AIAHL and are therefore not a part of the transaction. It has been ensured that the interest of the employees and retired employees would be taken care of.

The transaction saw keen competition with seven EOIs being received in December, 2020. Five of the bidders, however, had to be disqualified as they could not meet the requirements set out in the PIM/EOI, even after allowing them an opportunity for clarification. The Request for Proposal (RFP) and draft Share Purchase Agreement (SPA) was issued on 30 March, 2021. Air India provided comprehensive information through the Virtual Data Room to the qualified bidders who were also provided access to inspect the assets and facilities being offered as a part of the transaction. A large number of queries from bidders were responded to. On request of bidders, the bid due date was extended to 15 September, 2021 so that they could complete their due diligence before submission of bid. The final SPA containing detailed terms and conditions and the respective responsibilities to meet the conditions precedent for closing the transaction including release of Government guarantees prior to closing was agreed upon prior to bid submission. Two sealed bids were received on the due date along with non-financial bid documents and bid security from the two qualified bidders.

In line with the approved procedure for strategic disinvestment, a reserve price was fixed after the receipt of sealed financial bids for the transaction, based on valuation using methodologies as per the established process. After the independent fixation of Reserve Price, the already received sealed financial bids were opened in the presence of the bidders, who were as follows:

  1. M/s Talace Pvt Ltd, a wholly owned subsidiary of M/s Tata Sons Pvt Ltd for an EV of Rs 18,000 crore
  2. Consortium led by Sh Ajay Singh for an EV of Rs 15,100 crore.

Both the bids were above the reserve price of Rs 12,906 crore.

The entire disinvestment process has been carried out in a transparent manner, with due regard to confidentiality of the bidders, through multi-layered decision making involving Inter-Ministerial Group (IMG), Core Group of Secretaries on Disinvestment (CGD) and the empowered Air India Specific Alternative Mechanism (AISAM) at the apex Ministerial level. Transaction Adviser, Legal Adviser, Asset Valuer, professionals in their respective fields, have supported the entire process.

The next step will be to issue the Letter of Intent (LoI) and then sign the Share Purchase Agreement following which, the conditions precedent would need to be satisfied by the successful bidder, the company and Government. It is expected that the transaction will be completed by December 2021.

Ministry of Finance Press Release dated 08 Oct 2021