Tax Road – Could 2021 – Taxes

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We are pleased to present you the latest edition of Tax Street – our newsletter, which covers all important developments and updates in the field of taxation in India and worldwide for the month of May 2021.

  • The ‘Focus point’ examines the effects of the retrospective change in the scope of “delivery” in the Finance Act 2021.
  • Under the “From the judiciary”
    Section we briefly give the most important decisions on important cases and our opinion on them.
  • Our ‘Tax Discussion’ provides critical updates on important tax-related news from India and around the world.
  • By doing ‘M&A Tax and Regulatory Law’
    In this section, we highlight the critical judgments and important updates in the area of ​​M&A tax and regulation.
  • Under ‘Compliance Calendar’, we list the important due dates for direct taxes, transfer pricing and indirect taxes in the month.

We hope you find our newsletter useful and look forward to your feedback. You can write to us at [email protected]. We would be happy to hear your thoughts on what else we can include in our newsletter and to incorporate your feedback into our future issues.

Focus point

Subsequent change to the scope of “delivery” in the Finance Act 2021: Uncertainty about what has been processed?

“The health of our economy will not improve until we incorporate the ‘S’ factor into our tax laws and make them healthy, simple and stable.”

The amendment to Section 7 of the CGST Law 20171, with retroactive effect from July 1, 2017, aims to impose taxes on activities or transactions that involve the supply of goods and / or services by any person other than a natural person to its members or include members, or vice versa for cash, deferred payment or other valuable consideration.

It was also clarified with the help of an explanation that the person and his or her members or members are to be regarded as independent persons, court or authority independent of all other currently applicable laws, judgments, orders or orders of the Court of Justice. At the same time there is entry 7 of Annex II of the CGST Act, which classifies “delivery of goods by an unincorporated association or association of persons to a member thereof in return for cash payment, deferred payment or other valuable consideration” as “delivery of goods” for the purposes of GST retrospectively away.

Before delving into the implications of the above provision, let us review the legal background and legal history of taxing such transactions.

Legal and legal background

Over the years, the “doctrine of reciprocity” has been invoked in a myriad of cases, both under income tax and previous indirect tax laws such as taxation. Service tax and VAT laws.

Regime before the GST

The teaching comes from the common law principle that a person cannot make a profit from himself. In the context of Indian law, some Hon’ble High Courts had affirmed the doctrine of reciprocity in relation to the collection of sales tax by referring to the English Graff vs. Evans2 and Trebanog Working Men’s Club and Institute Ltd. cases. vs. Macdonald3 pursued. However, a three-judge bench in the Hon’ble Apex Court overturned this view in Enfield India Ltd4 on the grounds that this doctrine did not apply to tax law.

This issue was raised again in the Constitutional Bank of the Hon’ble Supreme Court in CTO vs. Young Men’s India Association5, this time the club (although a separate entity) was only a representative of its members and there was no “sale” related with the delivery of various preparations to them, as the element of “transfer” was missing.

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1. To be notified by separate notification

2. [(1882) 8 Q.B. 373]

3. [(1940) 1 K.B. 576]

4th [(1968) 2 SCR 421]

5. [(1970) 1 SCC 462]

The content of this article is intended to provide general guidance on the subject. You should seek expert advice regarding your specific circumstances.


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