Section 276CC of the Income Tax Act, 1961, outlines provisions for prosecution in cases of failure to file the return of income. A recent decision by the Madras High Court sheds light on the application of this section and provides relief for genuine assesses.
Provisions and Relief: Section 276CC triggers prosecution for failure to furnish the return of income under specific circumstances, including non-compliance with notices issued under various sections of the IT Act. The proviso to Section 276CC offers relief to genuine assesses. Notably, if the net tax payable after deductions is less than Rs 10,000, prosecution under Section 276CC is not warranted.
Madras High Court Decision: In the case of Manav Menon vs Deputy Commissioner of Income Tax, the Madras High Court clarified the application of the proviso. The taxpayer, facing initiation of proceedings under Section 276CC, had belatedly filed the income return for the assessment year 2013-2014. The High Court ruled that the proviso protects genuine assesses who file returns belatedly but within the assessment year or have paid substantial tax dues.
Key Considerations: The decision emphasizes an objective assessment of the applicability of prosecution provisions based on individual cases. Assessments should consider both Section 276CC and relevant jurisprudence, ensuring a fair and contextual application of the law.
In conclusion, the recent Madras High Court decision reaffirms the importance of the proviso to Section 276CC in providing relief to taxpayers, emphasizing the need for a case-specific evaluation.
Finance Secretary TV Somanathan announced that the Union government has successfully settled 43,904 claims amounting to Rs 700 crore under the Vivad se Vishwas II scheme for micro, small, and medium enterprises (MSMEs). Launched as part of the FY24 Budget, the scheme addresses contractual disputes and aims to provide relief to MSMEs.
Significant Relief for MSMEs
Somanathan highlighted that the resolution of these claims, with approximately 4,000 more yet to be decided, has provided substantial relief to numerous MSMEs. The successful settlements not only address existing disputes but also render these businesses eligible for additional credit and future supplies.
Vivad se Vishwas II Scheme Details
The Vivad se Vishwas II scheme, initiated on July 15, focuses on resolving disputes related to government contracts. Originally, the deadline for claim submissions by contractors was set for October 31, which was later extended to December 31 by the Department of Expenditure. The scheme covers domestic contractual disputes involving either the government of India or government undertakings.
Under the scheme, settlements for court awards passed on or before April 30, 2023, offer contractors up to 85% of the net amount awarded or upheld by the court. For arbitral awards passed on or before January 31, 2023, the settlement amount is up to 65% of the net amount awarded. This initiative aims to streamline dispute resolution and facilitate a smoother business environment for MSMEs
In a strategic collaboration, payment gateway and payout solution provider IppoPay has partnered with Visa to introduce credit card offerings for small business owners. This initiative aims to promote financial inclusion in small cities and rural areas, providing entrepreneurs with crucial access to working capital when needed.
Empowering Small Merchants
Sujai Raina, VP and Head of Business Development at Visa India, expressed optimism about the partnership, stating that the credit card offerings would empower small merchants by providing access to affordable payment solutions and working capital. The collaboration seeks to enhance financial freedom and planning for small businesses.
Visa’s Global Digital Enablement Goals Surpassed
Visa has surpassed its three-year goal of digitally enabling 50 million micro and small businesses globally by June 2023. Having assisted around 67 million businesses in meeting evolving payment needs, Visa focuses on digitizing payment processes, facilitating ways to pay for supplies, and providing financial skills through training and education.
Untapped Opportunity in India’s Small Business Segment
Mohan K, CEO and Founder of IppoPay, highlighted that the small business segment in India, comprising over 100 million businesses, remains underserved by conventional card providers. The partnership aims to address this gap, presenting an opportunity of over $330 billion that has yet to be tapped.
IppoPay’s Diverse Merchant Solutions
IppoPay offers a range of solutions to merchants, including QR UPI, prepaid cards, sound boxes, Point of Sale (PoS) devices, and digital loans. With over 5 lakh merchants already utilizing its services, IppoPay is well-positioned to meet the credit demands of small businesses.
Industry Initiatives for Financial Inclusion
This collaboration aligns with broader industry initiatives focused on supporting underserved businesses. In November, Visa and its non-profit arm, Visa Foundation, pledged $100 million to aid underserved and women-led micro and small businesses in APEC economies over five years. Other financial institutions, including SBI Card and AU Small Finance Bank, have also launched credit card products to cater to the unique needs of small businesses.
In a recent landmark ruling, the Madras High Court has clarified the limited authority of the GST council, particularly in matters of product classification. The court’s decision came in response to a petition by Parle Agro challenging the classification of ‘flavored milk’ for GST purposes.
Court Overrides Council’s Recommendation on GST Tariff
Despite the GST council recommending a higher GST tariff of 12% for flavored milk in its December 22, 2018 meeting, the Madras High Court independently determined that the appropriate rate should be a lower 5%. This ruling establishes a crucial precedent, offering protection to taxpayers facing GST demands solely based on council discussions or clarificatory circulars.
Council’s Recommendations Not Binding Law
Citing a Supreme Court ruling in the Mohit Mineral case, the Madras High Court emphasized that GST council recommendations are not binding on the Union and states. Treating these recommendations as binding, the court argued, would disrupt fiscal federalism. The court’s decision highlights the importance of legal amendments or notifications for implementing changes, as the absence of such formalities renders council recommendations non-binding in law.
Implications for Taxpayers and Fiscal Federalism
Sunil Gabhawalla, founder of a CA firm specializing in indirect taxation, noted that the court’s decision underscores the significance of proper legal procedures for implementing GST changes. The ruling safeguards taxpayers from arbitrary decisions based solely on council recommendations, promoting clarity and fairness in the GST regime. Furthermore, it reinforces the constitutional principles of fiscal federalism by limiting the authoritative power of the GST council to advisory roles.
Leading cellulose-based pharmaceutical excipients manufacturer, Accent Microcell, has announced the opening of its Initial Public Offering (IPO) on December 8, with the price band set between Rs 133 and Rs 140 per share. The public issue, conducted through the book-building route, comprises a fresh issue of 56 lakh Equity Shares with a face value of Rs 10/-. The company plans to raise approximately Rs 78.40 crores from the IPO and aims for listing on NSE Emerge. The Anchor portion will open on December 7, and the issue will conclude on December 12.
Utilizing Proceeds for Expansion in Gujarat
Accent Microcell intends to utilize Rs 54.39 crores from the net proceeds to establish a new plant at Navagam Kheda, Gujarat, India. The plant will focus on manufacturing Croscarmellose Sodium (CCS), Sodium Starch Glycolate (SSG), and Carboxymethylcellulose (CMC), with commercialization expected by April 2025.
Diverse Excipient Production Portfolio
The company, known for its production of Microcrystalline Cellulose (MCC), also manufactures other excipients such as Croscarmellose Sodium (CCS) and Magnesium Stearate (MS). MCC finds applications in pharmaceutical, nutraceutical, food, cosmetic, and other industries.
Strong Financial Performance and Growth Plans
Accent Microcell reported a revenue of Rs 58.81 crores in Q1 of FY24, with a notable FY23 revenue of Rs 204.19 crores. The company’s Profit After Tax (PAT) more than doubled to Rs 13.01 crores in FY23, reflecting robust financial performance. The IPO structure includes allocations for Anchor, Market Maker, QIB, NIIs, and Retail (RII) portions.
In a significant move to strengthen its financial capabilities, Share India Fincap has entered into a strategic partnership with the State Bank of India (SBI). SBI has extended credit facilities totaling Rs 200 million to Share India Fincap, thereby augmenting the company’s lending capacity and solidifying its presence in the financial market.
Empowering Financial Growth and Inclusivity
This collaboration between Share India Fincap and SBI is more than a financial arrangement; it represents a strategic alliance aimed at promoting financial empowerment and inclusivity. The credit facilities provided by SBI will empower Share India Fincap to diversify its loan portfolio, explore new business avenues, and consistently deliver high-quality financial services to its clients.
Enthusiastic Partnership and Growth Strategies
Aastha Gupta, CEO of Share India FinCap, expressed enthusiasm about the partnership, highlighting the honor of aligning with SBI—a distinguished institution committed to excellence. The collaboration signifies a mutual dedication to fostering financial growth and expanding their collective impact on the financial landscape. The Rs 200 million credit facilities from SBI will play a pivotal role in fueling Share India Fincap’s growth strategies and meeting the evolving needs of its clients.
Commitment to Economic Development
Share India Fincap remains dedicated to upholding the highest standards of financial integrity and customer satisfaction as it enters this new phase of growth. The financial institution sees the collaboration as an opportunity to enhance its lending capabilities, particularly in supporting small and medium-sized enterprises (SMEs) and contributing to the overall economic development of the region.
Creating Value and Strengthening Market Position
Looking ahead, Share India Fincap aims to leverage this collaboration to create value for stakeholders, strengthen its market position, and continue its mission of providing innovative and reliable financial solutions. The partnership reflects a commitment to excellence, growth, and making a positive impact on the financial landscape.
India’s adoption of the dual GST model, with both the Centre and States levying taxes, has led to the emergence of parallel tax investigations. This article explores the intricacies of this dual administrative structure, where both Central and State Governments have the authority to administer GST, potentially resulting in parallel proceedings.
Legislative Safeguards: Section 6 of the CGST Act
To prevent undue scrutiny of a single transaction by both tax authorities, Section 6 of the Central Goods and Services Tax Act (CGST Act) empowers Central and State Tax officers. Notably, Section 6(2)(b) restricts the initiation of proceedings by one authority if the other has already started proceedings on the same subject matter. This legislative provision aims to uphold the principles of “Comity of Courts” and protect taxpayers from multiple, concurrent investigations.
Judicial Interpretations and Challenges
Recent cases, such as GK Trading, highlight the challenges in interpreting terms like ‘inquiry,’ ‘proceedings,’ and ‘subject matter’ in the context of the CGST Act. The judiciary’s role is crucial in ensuring a balanced application of Section 6, preventing overlapping jurisdiction, and safeguarding individuals’ rights. However, diverse judicial views and the evolving nature of GST implementation underscore the need for continual legal scrutiny and refinement.
Balancing Act for a Unified National Market
Section 6 serves as a legal bulwark against the infringement of individuals’ rights and the burdensome prospect of facing multiple investigations for a single event. While providing clarity on jurisdiction, the delicate balance between Central and State tax authorities requires ongoing legal evolution to fortify the integrity of India’s GST framework. As the system matures, harmonization and legal clarity will be paramount to protect the interests of taxpayers and ensure a streamlined taxation process.
Ashv Finance, the Mumbai-based cash-flow focused lender to Micro, Small, and Medium Enterprises (MSMEs), and a part of the NBFC Aavishkaar Group, has secured $10 million in funding from Encourage Capital. The funds are earmarked for the expansion of Ashv Finance’s footprint across India and the launch of a significant initiative—financing rooftop solar projects for micro and small businesses.
Encourage Capital’s Commitment to Impact
Encourage Capital, an impact investment and advisory firm with a focus on the financial sector, expressed enthusiasm about partnering with Ashv Finance. Tarun Arora, Partner at Encourage Capital, highlighted Ashv Finance’s tech-led and data-driven lending model, aiming to empower the underserved MSME market. The investment aligns with Ashv Finance’s commitment to launching rooftop solar financing as its inaugural climate finance product.
Ambitious Plans and Sectoral Focus
Ashv Finance aims to deploy the raised funds to strengthen its nationwide presence and disburse loans totaling Rs 390 crore to micro and small enterprises involved in rooftop solar ventures over the next five years. The lender aspires to scale its Assets Under Management (AUM) to Rs 1,800-2,000 crore.
MSMEs Embracing Solar Energy
The funding aligns with the broader trend of MSME lenders supporting businesses adopting solar energy for sustainability. Ashv Finance joins the ranks of financial institutions contributing to India’s energy goals through the financing of rooftop solar projects. The move reflects the growing recognition of solar energy’s reliability and its crucial role in achieving renewable energy targets.
Industry Initiatives for Solar Adoption
This strategic funding follows similar initiatives by other entities in the financial sector, such as Tata Power Solar Systems partnering with SIDBI and Yes Bank launching the YES KIRAN program for MSMEs installing solar panels. The sector’s growth, as highlighted by Power Minister R.K. Singh, hinges on supportive regulatory structures for power generation and transmission within the solar energy domain.
In a recent ruling, the National Company Law Tribunal (NCLT) Ahmedabad Bench, led by Mrs. Chitra Hankare (Judicial Member) and Dr. Velamur G Venkata Chalapathy (Technical Member), clarified the status of dues owed to the Employees State Insurance Corporation (ESIC) under the Insolvency and Bankruptcy Code (IBC). The NCLT determined that ESIC dues do not hold an equivalent standing to the dues of Provident Fund, Pension Fund, or Gratuity Fund under the IBC.
Differential Treatment of ESIC Dues:
The NCLT’s decision emphasized that the dues owed to ESIC do not fall within the category of ‘workmen dues’ at the same level as Provident Fund, Pension Fund, or Gratuity Fund. This implies a distinct classification for ESIC dues in the context of insolvency proceedings.
Implications for Liquidation Estate:
Importantly, the ruling clarified that ESIC dues are neither treated at par with other statutory dues nor are they excluded from the liquidation estate. This distinction underscores the unique position of ESIC dues in comparison to other financial obligations, providing clarity on their treatment within the insolvency framework.
The NCLT’s nuanced interpretation of ESIC dues in relation to other financial obligations sheds light on the prioritization and categorization of dues within the IBC framework, ensuring a clearer understanding of the hierarchy of payments during insolvency proceedings.
Reserve Bank of India (RBI) reported a substantial increase in credit to Micro, Small, and Medium Enterprises (MSMEs), constituting 15% of the banks’ non-food credit totaling Rs 154 lakh crore during the month. This marked a notable uptick from the 14.6% recorded in October the previous year. Specifically, credit to Micro and Small Enterprises (MSEs) experienced a robust growth of 24.2%, reaching Rs 18.53 lakh crore compared to Rs 14.92 lakh crore in the corresponding period last year.
Sectoral Deployment Highlights
Scheduled commercial banks deployed Rs 23.15 lakh crore in gross bank credit to MSMEs under priority sector lending in October. This figure represented a significant 22.8% increase from the previous year’s Rs 18.8 lakh crore and an 11.8% rise from September’s Rs 20.6 lakh crore. Credit deployment to Medium Enterprises also saw a noteworthy uptick, rising by 17.3% to Rs 4.61 lakh crore from Rs 3.93 lakh crore in October last year.
Challenges and Survey Insights
Despite this surge, a survey by FICCI highlighted challenges faced by SMEs, indicating that collateral-free credit, though outlined on paper, is not effectively implemented. The survey, involving 610 respondents, noted banks’ hesitancy to provide financing to SMEs without collateral. Additionally, the implementation and accessibility of government schemes, such as the Credit Guarantee Fund Trust for Micro and Small Enterprises Scheme, faced hurdles post-COVID.
Asset Quality and Outlook
Addressing concerns about asset quality, the gross non-performing assets (GNPAs) in MSME loans by scheduled commercial banks decreased by 14.3% to Rs 1.31 lakh crore for FY23 from Rs 1.54 lakh crore in FY22. This positive trend suggests a potential improvement in the health of MSME loans.
