GBCA & Associates LLP Chartered Accountants

Newsletter - October 2021

The UN Climate Change conference starts in Glasgow next week. The COP26 as it is called, it is an important event where companies, technologists, policymakers, environmentalists and philanthropists will congregate and set the climate change agenda.

We are running out of time to do enough to arrest climate change and avoid its ill effects and we have seen only in the last couple of years the damage and destruction caused by unseasonal and excessive Cyclones and rainfall in many parts of world while we saw unbearable heat waves in many others.

The latest deluge in Uttarakhand and other parts of India and Nepal were another reminder that this threat is real. We are paying for this with loss of human lives, damage to wealth and the overall ecosystem.

As more people make more climate friendly choices, companies will soon have no option but to be sensitive to sustainability in their processes and products. Shifting consumer preferences is a strong way to push everyone to have an economic incentive to adopt sustainability.

India lost against Pakistan in cricket. Amongst the disappointment across India, a few people have been booked for celebrating Pakistan's victory. That's an act that cannot be excused but in this hyper polarized world, we forget that we can appreciate the effort put in by the competing team while still lamenting our loss and reflecting on what we could have done different.

Climate change is similar. We can appreciate the advances made through industrialization in the last two and the benefits and comforts that have accrued to us in the process. Advances in technology has made our life's longer and healthier and more comfortable. The side effects of that have been climate change. We are building our understanding and awareness of how to battle this and we need to reflect on what actions we need to change and what we need to take to protect our planet and our future. Decisions businesses take on products and processes and choices made by consumers shall go a long way in ensuring we meet our climate change goals.

INDIRECT TAX (GST)

GST Refund on Tax wrongfully paid under incorrect head

Recently, CBIC has clarified the time limit in respect of GST refund application for tax wrongfully paid under incorrect head by paying the Tax under correct head without Interest as per section 77 of CGST Act and section 19 of IGST Act.

The time limit for application of Refund is two years from relevant date for every type of refund application as per Rule 89 of CGST Rules. Now, what is this relevant date in case of refund application involving payment under wrong head which is subsequently corrected by payment in correct head was question for interpretation.

To know more in detail, please click here.

VKC FOOTSTEPS INDIA PVT. LTD. V/S. UNION OF INDIA & ORS. (THE SUPREME COURT OF INDIA) [13.09.2021] - REFUND OF TAX PAID ON INPUT SERVICES CANNOT BE CLAIMED UNDER INVERTED DUTY STRUCTURE, TAXPAYERS CAN CLAIM ONLY REFUND OF TAX PAID ON INPUT GOODS.

In GST, accumulation of Input Tax Credit happens when the tax paid on inputs is more than the output tax liability. Such accumulation will have to be carried over to the next financial year till such time as it can be utilised by the registered person for payment of output tax liability.

However, the GST Law permits refund of unutilised ITC in two scenarios, namely if such credit accumulation is on account of zero-rated supplies or on account of inverted duty structure. In case of Supreme Court judgment VKC Footstep India Pvt. Ltd. held that Refund of tax paid on input services cannot be claimed under Inverted Duty Structure, taxpayers can claim only refund of tax paid on input goods. Here we present an analysis of said judgment.

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OTHER TRANSACTION ADVISORY

LISTING BY OFFER OF SALE – TAX IMPLICATIONS

Currently, India is witnessing list of large number of IPOs in the form of fresh issue or Offer for sale (OFS) or combination. While the process of listing is more of a regulatory process, one (promoters and existing investors of an unlisted entity) has to be mindful of tax implications arising on IPO more specifically on OFS. We have covered in this article key the tax implications and nuances in respect of OFS mode of an IPO.

To know more in detail, please click here.