The Open Network for Digital Commerce (ONDC) is actively collaborating with the Ministry of Micro, Small and Medium Enterprises (MSME) to integrate MSMEs into its open e-commerce network. Minister of State in the Commerce Ministry, Som Parkash, highlighted ONDC’s efforts to onboard MSMEs through existing seller applications and integrate MSME-Mart, a B2B portal under the National Small Industries Corporation (NSIC) with over 2 lakh MSMEs. This strategic partnership aims to democratize e-commerce and potentially generate $250-300 billion in gross merchandise value by 2030, according to a report by consultancy firm RedSeer.
Expanding Reach through Industry Collaborations
ONDC is actively engaging with industry associations like the National Restaurant Association of India (NRAI) and the Federation of Hotel & Restaurant Associations of India (FHRAI) to onboard restaurants through various food aggregators. Currently, ONDC boasts over 59,000 food and beverage sellers and a total of more than 2.3 lakh sellers and service providers, including small, medium, and large enterprises.
Empowering Small Businesses and Fostering Awareness
To empower small businesses, ONDC has undertaken initiatives such as awareness workshops in collaboration with industry associations, a Feet on Street program for seller education, and the creation of educational content. The platform, launched in 2021, aims to challenge digital monopolies, standardize operations, and enhance efficiency throughout the e-commerce value chain. The concerted efforts of ONDC align with the vision to support India’s MSME ecosystem and contribute significantly to the digital transformation of e-commerce.
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In a significant development on November 16, 2023, the Delhi High Court declared the Tax Research Unit’s (TRU) clarification on the classification of polypropylene woven and non-woven bags as invalid. The court emphasized that the TRU, a body under the Ministry of Finance, lacks the authority to provide such clarifications, pointing to the exclusive jurisdiction vested in the Central Board of Indirect Taxes and Customs (CBIC) by Section 168 of the Central Goods and Services Tax Act, 2017.
Basis for Quashing Circular No. 80/54/2018-GST
The court scrutinized Circular No. 80/54/2018-GST, issued on December 31, 2018, and highlighted its shortcomings. Notably, the Circular failed to consider Section XI of the Customs Tariff Act, 1975, and neglected references to Chapter 56 or 63. Moreover, the court pointed out the Circular’s omission of acknowledgment of the Notes in Chapter 39, which explicitly exclude textiles from its scope.
Court’s Rationale and Precedent
In the case of Association of Technical Textiles Manufacturers and Processors v. Union of India, the court asserted that conflicting views from Appellate Authorities for Advance Ruling (AARs) cannot be resolved through directives or clarifications like the challenged Circular. Citing the Supreme Court’s decision in Union of India v. Bharat Forge Ltd. [2022 SCC Online SC 1018], the court stressed the importance of a more comprehensive resolution.
Classification Issue Left Open for Competent Authority
While allowing the writ petition, the court decided to leave the matter of classification open for consideration by the competent authority in future proceedings. This decision marks a crucial stance against unauthorized clarification and underscores the need for adherence to statutory procedures in matters of taxation.
The Employees’ Provident Fund Organisation (EPFO) has played a crucial role in supporting its subscribers during the challenging times of the Covid-19 pandemic. According to the draft Annual Report 2022-23, over 22 million subscribers, representing more than one-third of the total EPFO subscriber base, have availed themselves of Covid advances from their retirement savings. This significant financial assistance amounted to a total disbursement of Rs 48,075.75 crore over the course of three fiscal years starting from 2020-21.
Swift and Responsive Settlements
With a subscriber base exceeding 60 million and managing a substantial corpus of over Rs 18 lakh crore, the EPFO efficiently settled the majority of Covid claims within three days. This swift response played a crucial role in mitigating the financial impact on households, showcasing the EPFO’s commitment to providing timely and crucial financial support to its subscribers during times of economic uncertainty.
Alleviating Financial Strain on Households
The expedited disbursement of Covid advances reflects the EPFO’s proactive approach in alleviating the financial burden on its vast subscriber base. By swiftly facilitating access to retirement savings, the EPFO has contributed significantly to helping millions of individuals navigate the economic challenges brought about by the pandemic.
In a spectacular Grand Finale and Felicitation Ceremony held earlier today in New Delhi, the ET MSME Awards 2023 recognized and applauded the remarkable accomplishments of 27 winners spanning 26 distinct award categories. This prestigious event marked a momentous celebration of the entrepreneurial spirit and exceptional business achievements exhibited by India’s micro, small, and medium enterprises (MSMEs), widely acknowledged as the backbone of the nation’s economy.
Acknowledging Entrepreneurial Zeal
The awards ceremony showcased the vibrancy and resilience of the MSME sector, underscoring its pivotal role in driving economic growth. Entrepreneurs and businesses from various domains were lauded for their unwavering commitment, innovation, and impact on the nation’s economic landscape.
Comprehensive and Influential Recognition
The ET MSME Awards 2023 stood out as the most comprehensive and influential platform, covering a diverse array of award categories to ensure a thorough acknowledgment of the multifaceted contributions made by MSMEs across the country.
An Inspiring Tribute
The ceremony served as a poignant tribute to the visionaries and trailblazers who have not only navigated the challenges posed by the business landscape but have also significantly contributed to India’s journey towards becoming a global economic force. The event reflected the resilience, creativity, and transformative potential inherent in India’s MSME sector.
Affordable housing finance company, India Shelter Finance, has announced its debut initial public offering (IPO) valued at Rs 1,200 crore. The IPO encompasses a fresh issuance of equity shares amounting to Rs 800 crore and an offer-for-sale (OFS) worth Rs 400 crore by investor shareholders. The subscription window for retail investors is scheduled from December 13 to 15, with the anchor book opening for bidding on December 12.
Price Band and Share Offering: India Shelter Finance has fixed the price band for the shares at Rs 469-493 each. The OFS involves shares offered by entities such as Catalyst Trusteeship Ltd, Madison India Opportunities IV, MIO Starrock, Nexus Ventures III Ltd, and Nexus Opportunity Fund II Ltd. The proceeds from the fresh issue will be allocated for future capital requirements and general corporate purposes, particularly towards onward lending.
Reserved Quotas and Bidding Information: Half of the IPO’s size is reserved for qualified institutional buyers (QIBs), 35% for retail investors, and the remaining 15% for non-institutional investors. Investors can bid for a minimum of 30 equity shares, with subsequent bids in multiples of 30 equity shares.
Company Profile and Backing: India Shelter Finance, supported by Westbridge Capital and Nexus Venture Partners, is a retail-centric affordable housing finance company targeting self-employed customers. The focus is on first-time home loan applicants within the low and middle-income groups in Tier II and Tier III cities in India. ICICI Securities, Citigroup Global Markets India, Kotak Mahindra Capital Company, and Ambit are the appointed book-running lead managers overseeing the IPO.
The government is considering the enforcement of e-invoicing for Business-to-Consumer (B2C) transactions within the next 2-3 years, according to an official announcement on Wednesday. Currently applicable to businesses with a turnover exceeding Rs 5 crore, e-invoicing is mandatory for Business-to-Business (B2B) sales and purchases.
Upgradation of GST Systems for B2C Integration
Shashank Priya, a member of the Central Board of Indirect Taxes & Customs (CBIC) focused on GST, highlighted the ongoing efforts to upscale GST systems for the inclusion of B2C transactions under e-invoicing. Priya emphasized the need for system implementation and sector-wise prioritization, acknowledging that the process is a work in progress.
Challenges and Encouragement for Compliance
Priya noted that businesses with turnovers between Rs 5-10 crore have been slow to adopt e-invoicing, despite CBIC officers actively encouraging compliance. He highlighted the benefits, such as ease of doing business and automated processes like populated GSTR-1 and e-way bills, associated with the implementation of e-invoicing.
Staggered Implementation and Threshold Adjustments
The government has systematically enforced e-invoicing, starting with mandatory compliance for companies with turnovers exceeding Rs 500 crore from October 1, 2020. Subsequently, the threshold was reduced to Rs 100 crore from January 1, 2021, and further lowered to Rs 50 crore from April 1, 2021. The most recent adjustment brought the threshold down to Rs 20 crore from April 1, 2022, for B2B transactions.
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.
