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ABOUT

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1

SEBI ISSUED FORMAT ON STATEMENT OF DEVIATION OR VARIATION FOR PROCEEDS OF PUBLIC ISSUE, RIGHTS ISSUE, PREFERENTIAL ISSUE, QUALIFIED INSTITUTIONS PLACEMENT (QIP)

3

2

SEBI ISSUES CIRCULAR REGARDING INVESTMENT IN UNITS OF MUTUAL FUNDS IN THE NAME OF MINOR THROUGH GUARDIAN AND EASE OF PROCESS FOR TRANSMISSION OF UNITS

5

3

CBIC NOTIFIES STANDARD OPERATING PROCEDURE TO BE FOLLOWED IN CASE OF NON-FILERS OF RETURNS

7

4

CBIC ISSUED SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019

10

5

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA ISSUES A MASTER CIRCULAR ON POINT OF SALES PRODUCTS AND PERSONS – LIFE INSURANCE

14

6

MINISTRY OF FINANCE HAS NOTIFIED THE INDIAN STAMP (COLLECTION OF STAMP-DUTY THROUGH STOCK EXCHANGES, CLEARING CORPORATIONS AND DEPOSITORIES) RULES, 2019

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7

JUDICIAL INSIGHT

21

About

About

Clonect Solutions is a dynamic next generation company focusing on Enterprise Governance, Risk Management and Compliance Management (GRC) solutions.

In a globalized business environment, organizations need to comply with complex and dynamic regulatory requirements as they grow and expand into different geographies and industry verticals. With the right mix of rich domain & technology expertise, and insights from both CFO & CIO worlds, Clonect helps organizations to leverage technology optimally and innovatively, addressing GRC and GST needs.

Contracts Management

Compliance Management

Insider Trading Policy Management

GST Services

About 1

ricago is a dynamic platform focusing on niche products in the area of Enterprise Governance, Risk Management and Compliance Management (GRC). The suite of products Compliance Management System (CMS), Insider Trading Policy Management System (ITPMS), Contracts and Obligations Management System (COMS) enables firms to efficiently manage end-to-end compliance requirements and address the risk of non-compliance.

ricago GST is a comprehensive GST solution developed by Clonect Solutions, ricago GST is Easy to use, Quick and Reliable and caters to the GST needs of businesses, professionals and large organizations. Our GST Serivecs include GST ITC Reconciliation, Return Filing and Vendor Followup

 

SEBI ISSUED FORMAT ON STATEMENT OF DEVIATION OR VARIATION FOR PROCEEDS OF PUBLIC ISSUE, RIGHTS ISSUE, PREFERENTIAL ISSUE, QUALIFIED INSTITUTIONS PLACEMENT (QIP)

CORPORATE LAWS

About 2

Securities and Exchange Board of India has issued a circular notifying regulations 32(1), 32(2) and 32(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, in which a listed entity is required to submit a statement of deviation or variation on a quarterly basis for public issue, rights issue, preferential issue etc. to the stock exchange indicating,

  1. any deviation made in the use of proceeds of public issue, rights issue, preferential issue etc. and
  2. category wise variation between projected utilisation of funds and the actual utilisation of funds.

Such statement of deviation or variation is to be submitted till the issue proceeds have been fully utilized or the purpose for which these proceeds were raised has been achieved.

For the purpose of compliance with SEBI LODR Regulations and uniformity in the format of statement, listed entities shall follow the format placed at Annex A to this circular.

Salient Features of the Format are as follows:

  • Applicability:

The format shall be applicable for funds raised by listed entities through public issue, rights issue, preferential issue, QIPs etc.

  • Frequency of Disclosure:

The disclosure shall be made on quarterly basis along with the declaration of financial results (within 45 days of end of each quarter / 60 days from the end of the last quarter of the financial year) until such funds are fully utilised or the purpose for which these proceeds were raised has been achieved.

  • Role of the Audit Committee:

The statement of deviation report shall be placed before audit committee of the listed entity for review on quarterly basis and after such review, the comments of audit committee along with the report shall be disclosed/submitted to the stock exchange. In cases where the listed entity is not required to have an audit committee, the word ‘Audit Committee’ shall be replaced with ‘Board of Directors’.

CORPORATE LAWS

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The first such submission shall be made by the listed entities for the quarter ending 31st December, 2019; subsequent submissions shall be made as explained above.

Conclusion:

The circular is issued in exercise of the powers conferred under sections 11 and 11A of the SEBI Act, 1992 read with Regulations 32 and 101 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which has provided for the requirement of submission of a Statement of Deviation and Variation made in utilization of issue funds by all listed companies to the stock exchange after the review of their Audit Committee or the Board of Directors, as the case maybe, on a quarterly basis and shall follow the format placed at Annex A for the same.

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SEBI ISSUES CIRCULAR REGARDING INVESTMENT IN UNITS OF MUTUAL FUNDS IN THE NAME OF MINOR THROUGH GUARDIAN AND EASE OF PROCESS FOR TRANSMISSION OF UNITS

CORPORATE LAWS

About 4

The Securities and Exchange Board of India (SEBI) has issued a Circular, by the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with Regulation 77 of the Securities and Exchange Board of India (Mutual Funds) Regulation, 1996, on 24th December 2019 to bring about the uniform processes across Asset Management Companies (“AMCs”) in respect of investments made in the name of minor through guardian and to make simple and efficient transmission of units. This circular was issued in order to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

By this circular the following decisions have been taken by the SEBI:

  1. Process for Investments made in the name of a Minor through a Guardian:
  • The banks shall accept the payment for investment by means of Cheque, Demand Draft or any other mode from the bank account of the minor or from a joint account of the minor with the guardian only. For existing folios, the AMCs shall insist upon a Change of Pay-out Bank mandate before redemption is processed.
  • When the minor attains majority, the minor in whose name the investment was made

shall be required to provide all the KYC details, updated bank account details including cancelled original cheque leaf of the new account. No further transactions shall be allowed till the status of the minor is changed to major.

  • AMCs shall build a system control at the account set up stage of Systematic Investment Plan (SIP), Systematic Transfer Plan (STP) and Systematic Withdrawal Plan (SWP) on the basis of which the standing instruction is suspended when the minor attains majority, till the status is changed to major.
  1. Process for transmission of units:
  • AMCs shall implement image based processing wherever the claimant is a nominee or a joint holder in the investor folio.

CORPORATE LAWS

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  • AMCs shall have a dedicated central help desk and a webpage carrying relevant information for providing assistance.
  • AMCs shall implement a common transmission request form and NOC form and formats are available on the website of the AMCs, RTAs and AMFI.
  • AMCs shall implement a common set of document requirements for transmission of units to claimant who are nominees or joint holders in the investor account.
  • AMCs shall implement a uniform process for treatment of unclaimed funds to be transferred to the claimant including the unclaimed dividends.
  • AMCs shall not accept requests for redemption from a claimant pending completion of the transmission of units in his / her favour.
  • The stamp duty payable by the claimant with respect to the indemnity bond and affidavit shall be in accordance with the stamp duty prescribed by law.

AMFI is advised to prescribe the forms and formats, common set of documents and uniform process for treatment of unclaimed funds within 30 days from date of issuance of this circular that is by 23rd of January 2020 and shall mandatorily be followed by all Mutual Funds/AMCs.

 

Conclusion:

This circular will help all the investors as well as the general public who are interested to invest in mutual funds in the name of a minor. As well as to know the process involved for investment in the name of a minor. This will also simplify the process of investment from the beginning to the end. This circular is issued in accordance with all the laws mentioned above.

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CBIC NOTIFIES STANDARD OPERATING PROCEDURE TO BE FOLLOWED IN CASE OF NON-FILERS OF RETURNS

TAX

LAWS

About 6

Central Board of Indirect Taxes and Customs (CBIC) has issued a circular in respect of the appropriate procedure to be followed in case of non-furnishing of return under section 39 or section 44 or section 45 of the Central Goods and Services Tax Act, 2017 (CGST Act). It has further notified that divergent practices are to be followed in case of non-furnishing of the said returns.

The purpose of the circular is to clarify the issue and to ensure uniformity in the implementation of the provisions of the law across field formations and clarifies procedure to be followed in case where the registered person fails to file the returns before the due date which is to be followed; punishments prescribed therein and the assessment of tax liability by the proper officers on non-filing of the returns as per prescribed conditions mentioned therein.

Following are the clarifications and guidelines issued by the CBIC in exercise of its powers conferred by Section 168 (1) of the CGST Act:

  1. In case a registered person who fails to furnish return under section 39 or section 44 or section 45 (defaulter) Section 46 of the CGST Act read with rule 68 of the CGST Rules, 2017, a notice to be issued as per FORM GSTR-3A to such defaulter to furnish such return within fifteen days.
  2. Further such registered person/s who fails to furnish returns even after such notice maybe assessed as per section 62 and shall be liable to pay interest and penalty as per to the provisions of the act.
  3. No further communication will be issued for assessing the liability.
  4. In case, the return is filed by such defaulter, the notice shall be deemed to have been withdrawn before issue of the assessment order and no separate notice is required to be issued for best judgment assessment.
  5. Further, in case of failure to file return within 15 days of issuance of FORM GSTR- 3A, the best judgment assessment in FORM ASMT-13 can be issued without any further communication.

Guidelines to ensure uniformity in the implementation of provisions of law across the field formations:

  1. A system generated message would be sent to nudge all the registered persons about filing of the return for the tax period by the due date 3 days prior the due date.

TAX

LAWS

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  1. A system generated mail / message would be sent to all the defaulters, authorized signatory as well as the proprietor/partner/director/Karta, etc., after the due date, notifying about non-filing and furnishing of his return for the said tax period.
  2. A notice in FORM GSTR-3A shall be issued electronically, after five days of the due date, to the defaulter requiring them to furnish such return within fifteen days.
  3. In case, the defaulter doesn’t file the said return within 15 days of the said notice, the proper officer may proceed to assess the tax liability, to the best of his judgment, taking into account all the relevant available material or which he has gathered and would issue order in FORM GST ASMT-13 and shall upload the summary thereof in FORM GST DRC- 07.
  4. The proper officer may, for the assessment of tax liability of such registered person take into account the details of outward supplies available in the statement furnished under section 37 (FORM GSTR-1), details of supplies auto-populated in FORM GSTR-2A, information available from e-way bills, or any other information available from any other source, including from inspection under section 71.
  5. In case, the defaulter furnishes a valid return within thirty days of the service of assessment order in FORM GST ASMT-13, the said assessment order shall be deemed to have been withdrawn.
  6. But in case where the said return remains unfurnished within the statutory period of 30 days from issuance of such order, then proper officer may initiate proceedings under section 78 and recovery under section 79 of the CGST Act.
  7. The Commissioner may resort to provisional attachment to protect revenue under before issuance of FORM GST ASMT-13 in deserving cases, based on the facts and circumstances of the case.
  8. Further, the proper officer would initiate action for cancellation of registration in cases where the return has not been furnished for the period specified in section 29.

Conclusion:

This circular clarifies the standard operating procedure to be followed in case where the registered person/s fails to file the returns before the due date which is followed by punishments of payment of interest and penalty and the assessment of tax liability by the proper officers on non-filing of the returns as per prescribed conditions mentioned therein.

TAX

LAWS

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CBIC ISSUED SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019

TAX

LAWS

About 9

Central Board of Indirect Taxes and Customs Board (CBIC) has issued Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. Certain clarifications has been made on the Scheme and on the issues raised in the context of the various provisions of the Finance (No.2) Act, 2019 and Rules made there-under. Therefore clarification on certain matters has been provided thereunder.

  1. Section 122(a) and (b) specifies enactments which are covered under the Scheme and also includes seven more enactments under the Scheme that includes Cine-Workers Welfare Cess Act, 1981, Industries (Development and Regulation) Act, 1951, Sugar Export Promotion Act, 1958, Sugar (Regulation of Production) Act, 1961, Tea Act, 1953, Finance Act, 2001, Finance Act, 2005 and Finance Act, 2010.
  2. Section 124(2) provides for adjustment of any amount paid during any stage appellate proceedings:

This section provides for adjustment of any amount paid as pre-deposit at any stage of appellate proceedings or as deposit during enquiry, investigation or audit. However, an amount paid after issuance of show cause notice but before adjudication are not mentioned therein and are appropriated/adjusted at the time of adjudication.

Situations where such deposits may have been made but could not be appropriated due to pendency of adjudication proceedings, it is clarified, to facilitate the taxpayer and to recognize and appropriate these deposits as revenue, that such deposits can be deducted/adjusted when issuing the statement indicating the amount payable by the declarant.

  1. Section 130(2) provides for the adjustments of the deposits made under protest, pre-deposits or other deposits paid in excess:

The deposits are made `under protest’ many times. Such deposits need to be adjusted by the designated committee in order to determine the final amount payable by the declarant, once a declaration has been filed by the taxpayer. Section 130(2) provides that in case any pre-deposit or other deposit already exceeds the amount payable under the scheme, the differential amount will not be refunded. Any person who files a declaration under the Scheme undertakes to comply with all the provisions of the Scheme, therefore, question of refund of any excess deposit doesn’t arises in any case.

TAX

LAWS

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  1. Section 10(1) of the General Clauses Act, 1897 provides for computation of time:

The section provides that if the office is closed on a prescribed day or the last day of the prescribed period, the act or proceeding shall be considered as done if it is done on the next day afterwards on which the office is open.

  • Since, 30/06/2019 was a public holiday being a Sunday, it is, therefore, clarified that for the purpose of the Scheme the relevant date shall be considered as 01/07/2019 instead of 30/06/2019.
  • For the purpose of eligibility under the Scheme in some of the categories such as litigation, audit/enquiry/investigation etc., the relevant date is 30/06/2019.
  • Sometimes the facts of a case may change subsequently. For instance, the tax dues have been quantified on or before 30/06/2019, a show cause notice is issued after 30/06/2019. Similarly, a case, which was under appeal as on 30/06/2019, may attain finality in view of appeal period being over etc. It is clarified that the eligibility with respect to a category in such cases shall be as it was on the relevant date i.e., 30/06/2019.
  1. Rule 3 of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 provides for filing of separate declaration:

This rule provides that a separate declaration shall be filed for each case. Further, in case of audit, a ‘case’ means where the amount has been quantified on or before the 30/06/2019. It is clarified that at times where the audit report contains more than one paras, the option is available with the taxpayer to file separate declarations for each para or file a declaration for two or more paras together.

  1. Form SVLDRS-1 provides for the requirement to indicate PAN:

In case of taxpayers having PAN based CX/ST registration, the relevant details are auto-populated by the system. In some cases of proprietorship firms, name of proprietor is mentioned as declarant and not the name of the firm as it was automatically filled on entering PAN. Such cases can be processed with the name of the proprietor as declarant as per the clarifications.

Further, it has also been informed that the designated committee may waive such requirement in some case based on its facts. For instance, units which were closed before the introduction of PAN based CX registration and overseas service providers who do not have a PAN but want to avail of the scheme. It is clarified that the requirement of PAN is not mandatory in such cases.

TAX

LAWS

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  1. Where the show cause notice were issued on or after 01/07/2019 and such cases are also not covered under an enquiry or investigation or audit and tax dues having not been quantified on or before 30/06/2019. However, such cases become eligible under ‘arrears’ category depending the fulfilment of other conditions, such appeal period being over or appeal having attained finality or the person giving an undertaking that he will not file any further appeal in the matter.

Since the main objective behind the Scheme is to liquidate the legacy cases under Central Excise and Service Tax, the taxpayer in the above mentioned cases are also given an opportunity to avail its benefits. Therefore, the field formations were asked to take stock of such cases, and complete the on-going adjudication proceeding expeditiously following the due process.

Further, it has been advised that in such cases, the process of review to be carried out in an expeditious manner so that the designated committees are able to determine the tax dues within the prescribed time.

  1. Section 129 provides that Issue of discharge certificate to be conclusive of matter and time period:

This section provides that a discharge certificate issued with respect to the amount payable under this scheme shall be conclusive as to matter and time period stated therein and the declarant shall not be liable to pay any further duty, interest or penalty with respect to the matter and time period covered in the declaration.

It has been brought to the notice of the Board that in some cases, the taxpayer has declared and paid lesser duty in the returns filed during subsequent investigation. Therefore, on conclusion of investigation etc., a show cause notice is issued demanding the differential duty. It is clarified that ‘matter’ under Section 129 means a case for which the taxpayer intends to file a declaration under the Scheme. In the instant case, a ‘return filed but duty not paid’ and the SCN issued for ‘differential amount’ both are separate matter.

TAX

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Conclusion:

This circular clarifies the enactments which are covered under this scheme; adjustments of deposits made during stages of appellate proceedings and which are made under protest, pre-deposits or other deposits paid in excess.

It also clarifies the act or proceeding done when the office is closed such act or proceeding shall be considered as done on the next day afterwards on which the office is open except in certain circumstances.

It also clarifies that separate declaration is to be filed for each case and also provides for the requirement to indicate PAN is not mandatory in exceptional cases.

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INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA ISSUES A MASTER CIRCULAR ON POINT OF SALES PRODUCTS AND PERSONS – LIFE INSURANCE

OTHER

LAWS

About 13

The Insurance Regulatory and Development Authority (herein referred to as “IRDAI”) has issued a master circular dated 3rd December, 2019 in exercise of the powers under Sections 14 (1), 14 (2) (c) and 14 (2) (e) of the Insurance Regulatory and Development Act 1999, and has come into force with immediate effect. This master circular is a consolidation of two guidelines which is Guidelines on Point of Sales Products (POS) – Life Insurance Products bearing No. IRDA/LIFE/GDL/GLD/222/11/2016 dated 7/11/2016 and Guidelines on Point of Sales Person – Life Insurance bearing No. IRDA/LIFE/ORD/GLD/223/11/2016 dated 7/11/2016.

This circular has been issued to provide easy access to life insurance products to people.

This circular is applicable to Point of Sales Persons, Life Insurers engaging Point of Sales Persons and Insurance Intermediaries engaging Point Of sales Persons.

Key Features Document – cum – Proposal Form Format:

The key feature document (KFD) must contain all the important benefits under the insurance plan. Here are some of the key benefits that are to be included in the KFD as mentioned below:

  • Registered name and address of the life insure with the logo
  • Sum assured on death
  • Maturity benefit
  • Surrender value
  • Paid up value, if any

The KDF should contain unique reference number on both parts. In case the proposal fails or is not accepted for any reason, the refund of payment should be done to the proposer within 7 days from the date of the decision. The KDF has to be simple and easy to understand. The application form must contain the certificate of Chief Executive Officer and appointed actuary of the life insurer certifying that the product meets the applicable product fulfills the parameters mentioned In Annexure II of this master circular.

OTHER

LAWS

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Tagging of Proposal Form and Insurance Policy to Point of Sales Person – Life Insurance (POSP-LI)

In order to tag the policy to the POSP-LI who is selling the said policy all proposal form, in paper or in paperless form, insurance policy and other related documents shall carry provision to record the Point of Sale code. If there is any misconduct on the part of the POSP-LI, the life insurer shall be responsible for the misconduct of the POSP-LI representing them and the life insurer shall be liable to penalty as per the provisions of Section 102 of Insurance Regulatory and Development Authority of India Act 1999.

Compliance:

For capturing the identity proof details submitted by the Point of Sales Persons attached to the Point of Sales code to the POSP-LI the life insurance and insurance intermediaries shall make suitable provision in their policy administration system. The POSP who are engaged by the insurer and are authorized to collect and remit the premiums, they shall be mandated by the insurer for issuing acknowledgements on collection of premiums and every insurer shall have procedures to enable POSP to issue such acknowledgements to the customers. The insurers are responsible for such premium acknowledgements issued by the POSP.

Conclusion:

The Insurance Regulatory and Development Authority has issued this master circular to encourage people to buy insurance policy as a part of its development agenda. This master circular also gives guidelines which make it easily accessible to the public.

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MINISTRY OF FINANCE HAS NOTIFIED THE INDIAN STAMP (COLLECTION OF STAMP-DUTY THROUGH STOCK EXCHANGES, CLEARING CORPORATIONS AND DEPOSITORIES) RULES, 2019

OTHER

LAWS

About 15

The Ministry of Finance has notified the Indian Stamp (Collection of Stamp-Duty through Stock Exchanges, Clearing Corporations and Depositories) Rules, 2019 on 10th December 2019, in exercise of the powers conferred by section 73A of the Indian Stamp Act, 1899 (2 of 1899) to introduce a central mechanism for collection of stamp duty by certain authorized entities for the issuance and transfer of securities and subsequent disbursement of the duty collected to the respective States.

These rules shall come into force with effect from 9th January, 2020.

Key definitions in the Rules:

  • “Collecting Agent” means a stock exchange or clearing corporation authorized by it or a depository which is empowered to collect stamp-duty on securities on behalf of the State Government in accordance with the provisions of the Act and these rules;
  • “Settlement Day” means the day on which,
  1. a transaction is settled by a stock exchange or an authorized clearing corporation, by completing the delivery of funds to the seller and delivery of underlying securities corresponding to those funds to the buyer; or
  2. it is reported to a stock exchange or a clearing corporation specifying that the transaction in securities has been carried out provided the security is not held in dematerialized form with any of the depositories; or
  3. an issue or transfer has been effected in a depository in respect of securities held in dematerialized form which may have to be later reported to the stock exchange or a clearing corporation.

Key Provisions of the Rules:

  1. Collection of stamp-duty by stock exchange or clearing corporation:

Rule 3 provides that the stamp duty in respect of sale of any securities made through the stock exchange including sale in respect of any listed units of any recognized pooled arrangements or scheme or tripartite repo shall be collected on the settlement day by a stock exchange or clearing corporation authorized by it at the rates specified from the concerned person.

OTHER

LAWS

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  • In case of option instruments including zero or near zero premium instruments, the buyer has to clearly identify premium payable by him on each constituent transaction and report it to the collecting agent.
  • If the transactions are arising from tender offer, open offer or offer for sale or private placements executed through stock exchange, duty shall be collected from the offeror, on the market value of the security being acquired or sold out, at the offer price, once the offer is successfully completed
  • Where the transactions are reported to a stock exchange, the stamp-duty shall be collected on the entire sale consideration. The sale consideration reported to a stock exchange shall be considered as the actual sale value.
  • If transactions reported by the depositories under rule 5(6), the stock exchange shall not collect the duty.
  • If securities are held in dematerialized form, the stock exchange or an authorized clearing corporation shall intimate the relevant depository about the market transfers.
  • The reporting intermediaries shall report domicile details of the clients to the stock exchange.
  1. Determining transactions as on delivery basis or non-delivery basis, differential duty, etc.:

The nature of the particular transfer of securities through a stock exchange or a clearing corporation shall be determined by the clearing corporation at the time of settlement. In case of inter-operability of clearing corporations, the trades of a client across the stock exchanges shall be considered for determining whether the same would result in a delivery or not.

  1. Collection of stamp-duty by depositories:

From transferors

  • The stamp-duty leviable u/s 9A (1) (b) shall be collected before execution of all off-market transfers involving transfer of securities in the depository system.

OTHER

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  • A depository shall collect duty on the amount specified by the transferor in the delivery instruction slip and the consideration as reported shall be considered as the actual consideration amount.
  • In inter-depository off-market transfers, the transferee’s depository shall intimate the transferor’s depository about the transferee’s domicile State within one day to remit the stamp-duty to the buyer’s State.
  • A depository shall put in place a system for –
  1. identifying market transfers and sale consideration;
  2. mandatory disclosure of the reasons for transfer of securities in its system and the consideration amount, if applicable
  • If the consideration is paid in part or in instalments, stamp-duty shall be collected by the depository on the entire sale consideration when a transfer is effected.
  • A depository shall intimate about those dematerialized transfers on which duty has already been collected by it.
  • Where the securities are transferred in pursuant to invocation of pledge, duty shall be collected from the pledgee on the market value of the securities.

From issuer

  • The stamp-duty leviable on issue of securities and change in records in the depository shall be collected from issuer before executing any transaction in the depository system.
  • Issuer of securities shall submit the allotment list and purchases made after an open offer or tender offer or offer for sale, at the time of allotment.
  • A depository shall not collect duty on creation or destruction of securities on account of corporate actions, if it does not involve a change in beneficial ownership, provided that if there is a fresh issue to an investor, such issue shall be subject to stamp-duty.
  • Transactions arising from tender offer or open offer or offer for sale or private placement conducted through a depository, stamp-duty shall be collected from the offeror, on the market value of the security being acquired or sold out, at the offer price, once the offer is successfully completed.
  • In case of acquisition of shares of minority shareholders by majority shareholders implemented by way of a corporate action, the duty shall be collected by the depository from the issuer.

OTHER

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  1. Transfer of stamp-duty:
  • The collecting agent shall transfer the stamp-duty along-with interest earned, if any, in the account of concerned State Government with the Reserve Bank of India or any scheduled commercial bank, as informed to the collecting agent.
  • The value of stamp-duty collected shall be rounded off to the nearest rupee.
  • The collecting agent may deduct 0.2% of the stamp-duty collected towards facilitation charges.
  • The collecting agent shall appoint a principal officer within 15 days from the date of publication of these rules / notification.
  1. Return of stamp-duty:

The collecting agent shall submit a return of stamp-duty collected to the State Government including details of defaulters in the prescribed Form on a monthly basis within seven days of the succeeding month. The collecting agent shall also furnish a consolidated return of stamp-duty collected in the prescribed manner during a financial year on or before the 30th June immediately following that financial year to the State Government and Accountant General of each state.

  1. Erroneous entries:

If a transfer was erroneously indicated as not involving sale consideration and the person wishes to rectify it, he shall inform the collecting agent within three weeks from the end of the month and pay the required stamp-duty.

  1. Recovery of Stamp duty:

Any fresh or revised demand of stamp duty payable pursuant to any dispute or adjudication proceedings may be recovered by the State Government in accordance with the provisions of the Act.

Conclusion:

OTHER

LAWS

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These rules contain various provisions regarding the procedure of collection of stamp-duty on different instruments; determining transactions as on delivery basis or non-delivery basis, differential duty, depending upon the nature of the transaction etc. Collection of stamp-duty by depositories from transferor and issuer and transfer of such duty to the concerned states; submission of return on a monthly basis and a consolidated return to the Central Government and how adjustments of some erroneous entries are made.

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JUDICIAL INSIGHT

JUDICIAL

INSIGHT

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Repudiation Letter of Insurance Company must be Exhaustive on Grounds of Denial

The appellant purchased a standard fire and special perils policy from the respondent Insurance Company, insuring the risk of loss/damage to the stock of coal and lignite stored in its factory compound. Additional premium of Rs. 59,200/- was paid by the appellant company to cover the risk of loss of the aforesaid stock on account of spontaneous combustion. The factory remained closed from 17.02.2006 to 09.08.2006 and was re-opened on 10.08.2006. After re-opening it was noticed between the period from 11.8.2006 to 20.8.2006 that some amount of stock of coal and lignite has been diminished/destroyed on account of spontaneous combustion, causing loss and damage. Intimation in this regard was sent to the respondent-insurer on 12.09.2006.

The claim lodged by the appellant was however repudiated by the respondent-insurer on the ground that since spontaneous combustion did not result into fire thus loss had not been caused by fire as stipulated in the relevant endorsement with respect to spontaneous combustion of the insurance policy. The appellant was further informed through the letter that unless spontaneous combustion results into fire, there is no liability under the policy.

On denial of the claim the appellant approached the National Consumer Disputes Redressal Commission. Insurance company inter alia stated that the intimation of claim was sent with considerable delay of over a month thereby violating condition of the General Conditions of Policy. NCDRC rejected the claim holding that since the complainant had contravened Clause 6(i) of the General Conditions of Policy, no claim is payable.

In appeal before the Supreme Court it was held, if the insurer has not taken delay in intimation as a specific ground in letter of repudiation, they cannot do so at the stage of hearing of the consumer complaint before NCDRC. The Respondent insurer was directed to make payment of Rs. 63,43,679/-, as assessed by the surveyor, to the appellant with interest @ 8% from the date of the filing of the claim of petition till date of payment.  The payment is to be made within eight weeks from date of judgement. Judgment and the order of the NCDRC was set aside.

#Source: Civil Appeal No. 2059 OF 2015; Supreme Court- Decided on 13th December 2019

Expansion of Projects Require Environment Clearance Prior to the Expansion under EIA Notification

EIA Notification requires the project proponent to secure an EC from the relevant regulatory authority prior to undertaking any “expansion” of an existing project, hence the project proponent needs to get EC from the relevant regulatory authority prior to undertaking any “expansion” of an existing project. All applications for an EC in cases of “expansion” resulting in the increase of production capacity or lease area beyond the capacity/area stipulated in the previous EC shall be made in the manner set out in Form 1 or 1A (as applicable). Even after obtaining an EC if the project is expanded beyond the limits for which the prior EC was obtained, a fresh application would need to be made even if the expansion is within upper the limit prescribed in the Schedule of EIA Notification. A project proponent may incrementally keep increasing the size of the project area over time resulting in a significant increase in the project size without an assessment of the   environmental impact resulting from the expansion. Such an outcome would defeat the entire scheme of the EIA Notification which is to ensure that any new or additional environmental impact is assessed and certified by the relevant regulatory authorities. As the NGT has already directed the appellant to deposit Rupees one crore and has set up an expert committee to evaluate the impact of the appellant’s project of expansion and suggest remedial measures. In view of these circumstances, Supreme Court upheld the directions of the NGT and directed that the committee constituted shall continue its evaluation of the appellant’s project so as to bring its environmental impact as close as possible to that contemplated in the EC and also suggest the compensatory exaction to be imposed on the appellant.

#Source: Civil Appeal No. 2435 OF 2019; Supreme Court – 3rd December 2019

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