In this edition, we bring you two articles. The article on refund claim of transitional credit is quite an interesting issue. The second article is part of three article series which deals with the taxation of gains arising from alienation of shares of Flipkart Singapore by Tiger Global Holdings. I urge all the readers to read all the parts to comprehend the issue involved.  

I hope that you will have good time reading this edition and please do share your feedback. I will also urge clients to mail us topics or issues on which you want us to deliberate in our future editions, so that we can contribute to the same.

Introduction:

Claim of credit accumulated in the returns of erstwhile regime under GST ^[1] regime by filing TRAN-01 return i.e. transitional credit is subject to vexatious litigation as many of the taxpayers failed to meet the due date prescribed in Rule 117^[2]. The reasons for not meeting the due date are due to inefficiency of GST Portal^[3], taxpayers are not vigilant of the time limit or due to confusion and chaos that was prevailing at the time when this new tax was introduced. A large number of writ petitions were filed between various High Courts expressing the inability to meet the due dates mainly due to inefficiency of GST Portal and accordingly requesting the courts to permit the filing of these returns.

Based on various courts directions, Central Government admitted the inefficiency of GST Portal and sub-rule (1A) has been introduced in Rule 117 through which the due date has been extended to those categories of taxpayers who could produce evidence of their attempt to file the TRAN-01 return within due date but were unsuccessful due to technical difficulties of GST Portal. But the plight of those taxpayers who could not gather evidence relating to their attempt to file the TRAN-01 return was not addressed.

In this backdrop, the vires of Rule 117 which imposed the time limit for filing TRAN-01 was challenged on the ground that no such power was conferred under Section 140^[4] of CT Act^[5] and is taking away the vested right over the accumulated transitional credit of previous regime. The High Courts have taken different stand on this issue and some of them ruled in favour of taxpayers while others were in favour of Revenue. The Finance Act, 2020 made retrospective amendment^[6] to read timelines into Section 140 in order to nullify those judgements that were ruled in favour of the taxpayer.

Read more: The Vires, Right & Retrospectivity - Transitional Credit

In a recent judgment of Fowler v. Her Majesty’s Revenue and Customs^[1], the Supreme Court of United Kingdom had an occasion to deal with the role of deeming fiction in the domestic legislation and their applicability in the context of tax treaties. The said judgment elucidates certain important aspects which would have bearing on the international taxation. In this article, we would detail the facts, the reasonings and conclusions arrived by the Honourable Supreme Court of United Kingdom (UK SC) and also try to apply such principals to the Indian context to see the consequences arising thereof.

Read more: Role of Deeming Fiction in Domestic Legislation vis-à-vis Tax Treaty - An Exposition by UK Supreme...

The taxation when a personal asset is contributed as capital to a partnership firm and the taxation of amounts received when the partner retires from the firm or the firm dissolves is quite a complex one and no straight answers can be found. There are conflicting judgments on the said aspects and one has to carefully study between the lines to make a conscious decision as regards to taxability. In this article, we would like to dwell on the major judgments which have contributed to the resolution (or complexity) of issue.

Read more: Partner vis-à-vis Capital Gains