Latest Blogs from SBS and Company LLP

    SBS Wiki E Journal July 2022

    In this 96th edition, we bring you detailed articles on certain tax issues, which seemed to be settled but really unsettling the accepted ideology. The article analysing the judgment of Supreme Court in the matter of Northern Operating Systems raises certain important questions which may have a direct impact on the judgment handed over to us by the Supreme Court. The next article is part of the series of various facets of taxability of management support services. In this part, we have analysed the impact of taxability of said services vis-à-vis other income.

    The next article is on the judgment of Gujarat High Court in the matter of Munjaal Manishbhai Bhatt, wherein the High Court read down Para 2 of Notification No 11/2017 – CT (R). We have made certain comments which may have an impact on the judgment in the succeeding forums.

    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.




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    Analysis on Supreme Court Judgment in Mohit Minerals – Striking Down the Levy on Ocean Freight


    The entire country is swayed by the Honourable Supreme Court’s verdict in the matter of Mohit Minerals Private Limited[1]. This is completely unexpected decision after what we have seen in VKC Footsteps India Private Limited. The Supreme Court has struck down the obligation to pay tax under reverse charge mechanism by the importer. Earlier, the Gujarat High Court qua writ petition filed by Mohit Minerals Private Limited[2], has held the notifications bringing the tax under reverse charge mechanism are ultra-vires the law. The said judgment was appealed before the Supreme Court by Revenue, which led to the current judgment. In this write -up, we shall analyse the decision delivered by Supreme Court.

    The entire issue is, whether the importer is liable to pay tax on ocean freight services provided by foreign shipping line qua the foreign supplier under the reverse charge mechanism for the CIF contracts? The position under service tax law[3] and the analysis of the decision of Gujarat High Court[4] can be accessed here.

    The Supreme Court after listening to the appellant (the Union of India) and the respondent (Mohit Minerals Private Limited) has opined on various issues, which are summarised hereunder:

    Certain Interesting Issues in Refund of Old Taxes vis-à-vis Transitional Provisions in GST Laws


    The transition to GST from erstwhile regime is quite a challenging one for the entire country. Though the transitional provisions contained in the GST laws have been substantially improved from the bill stage to the current stage, there is still vacuum prevailing, which is causing great hardship for the tax payers. The GST Council should take stock of all such aspects and provide appropriate relief, so that the tax payers are relieved from the burden of reaching the courts time and again. In this article, we have identified certain issues, which create a problem for the taxpayers.  


    We are aware that the Companies Act, 2013, received the assent of the President on 29.08.2013, and the provisions came into effect in a phased manner from 12.09.2013. The Companies Act, 2013, was enacted on the basis of the various recommendations suggested by the very famous J.J.Irani Committee, in their report.  

    It is needless to say that the Companies Act, 2013, is a rule bases law, with substantive operative part of the provisions forming part of the Rules, unlike the Companies Act, 1956.  The main object for the same being that, the rule based enactment, enables the Government to retain the power to amend the rules by virtue of Amendment rules, Notifications, supported by Circulars, without the requiring to approach the Parliament for amendments, unless they pertain to the provisions contained in the Act. 

    Management Support Services vis-à-vis Ancillary and Subsidiary Clause – An Analysis on position under Treaties


    The concept of Fees for Technical Services (for brevity ‘FTS’) or Fees for Included Services (for brevity ‘FIS’) is a subject matter for constant litigation. The main reason for the litigation is because of the definition of FTS/FIS differs among Income Tax Act (for brevity ‘ITA’) and treaties. Added to this layer of confusion, is that such definition varies from treaty to treaty. Further, there are no hard and fast rules to consider a particular service as FTS/FIS and every transaction has to be decided on facts of each case which results in multiple interpretations and long drawn litigation for FTS/FIS.

    It is known fact, that multinational groups companies incorporate a subsidiary in India and provides various management or business support services to its subsidiary company in India to ensure effective and efficient maintenance of business operations in India.

    These services inter alia include finance, accounting, group taxation, engineering, human resources, marketing and strategic planning, management support, legal etc. (referred as ‘management support services’/’MSS’).

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