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Suvidha Digest
A One Stop Consultancy House

DECEMBER 2014
          Issue XVI

TABLE OF CONTENTS
Indirect Tax:
Cenvat Credit eligible after Six months-Not 21/2014-CE(NT) partially overruled.

Restaurant & Outdoor Catering Services – Taxable Service or Not?

Service Tax not leviable on Chit Fund Business
Direct Tax:
Tax Implication on Conversion of a Private Limited Company into an LLP
Subsidy
Cold Chain Scheme

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•  Cenvat Credit eligible after Six months-Not 21/2014-CE(NT) partially overruled.

In keeping with the new government's resolve to minimize Tax litigation, Circular No.: 990/14/2014-CX-8 was issued on 19th November 2014, clarifying that Cenvat Credit on Inputs/ Input Services can be re-claimed after six months provided within 6 months they once takes CENVAT Credit of input services on the basis of invoice.

Prior to the issuance of above Circular, Rule 4(1) and Rule 4(7) of the Cenvat Credit Rules, 2004 (“the Credit Rules”), as amendment by Notification by 21/2014-CE(NT) read as follows.

“The manufacturer or the provider of output service shall not take CENVAT credit after six months of the date of issue of any of the documents specified in sub- rule (1) of rule 9.]”

more >

•  Restaurant & Outdoor Catering Services – Taxable Service or Not?

In the recent times, the levy of Service Tax on Restaurant, Outdoor Catering and Mandap keeper Services have become quite sensitive and Controversial Topics.

Lately two high courts, i.e., Kerala High Court and The Mumbai High court have given two divergent views on the services in relation to restaurant and outdoor Catering.

The Kerala High Court in the case of Kerala Classified Hotels and Resorts Association vs. UOI, 2013 (7) TMI 431 relied upon the view of the Supreme Court in the case of K.Damodarasamy Naidu which laid emphasis of Article 366(29A)(f) of the constitution which says –

“a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made”

more >

•  Service Tax not leviable on Chit Fund Business

The Hon’ble Supreme Court of India has recently dismissed the SLP filed against the judgment of Hon’ble Delhi High Court in the case of Delhi Chit Fund Association v. Union of India reaffirming the decision of the High Court that chit funds are not liable to service tax.

Facts & Backgrounds:

  • Delhi Chit Fund (hereinafter referred to as assessee) filed a writ petition in High Court challenging the taxability of chit fund business in terms of exclusionary part in the definition of ‘service’ as provided under Section 65B(44) of the Finance Act 1994 (hereinafter referred to as ‘the Act’).

  • Section 65B(44) of the Act defines Service as an activity carried out by a person for another for consideration. Exclusionary part of the definition, states that an activity which constitutes merely a transaction in money or actionable claim shall not form part of ‘service’.

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•  Tax Implication on Conversion of a Private Limited Company into an LLP

The introduction of Limited Liability Partnership (LLP) brings with itself an advantage of doing business in an easier way in comparison to companies and at the same time restricts the liability of partners involved. It is this advantage that has led to many private limited companies to convert themselves into LLPs.

As per section 56 of LLP Act, 2008 mentioned under Chapter X, a private limited company can be converted into a LLP. The Third Schedule to the LLP Act, 2008 provides for the legalities and implications of conversion of private limited company into LLP. However, there are also certain tax implications involved in such a conversion which has not been dealt with in LLP Act. Such tax- implications have been discussed hereunder:

Implication of Section 47

Under sub-section xiiib of Section 47, any transfer of a capital asset or intangible asset by a private company to a limited liability partnership or any transfer of a share or shares held in the company by a shareholder as a result of conversion of the company into a limited liability partnership in accordance with the provisions of section 56 of the Limited Liability Partnership Act, 2008 is exempt from capital gains if:-

  • a. All the assets and liabilities of the company immediately before the conversion become the assets and liabilities of the limited liability partnership.
  • b. All the shareholders of the company immediately before the conversion become the partners of the limited liability partnership and their capital contribution and profit sharing ratio in the limited liability partnership are in the same proportion as their shareholding in the company on the date of conversion.

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•  Cold Chain Scheme

Scheme of Cold Chain, Value Addition and Preservation Infrastructure (for non-horticultural products) under National Mission on Food Processing (2013-2017)

Introduction

Ministry of Food Processing Industries (MFPI) has launched a new Centrally Sponsored Scheme (CSS) – National Mission on Food Processing (NMFP) during the 12th Plan (2013-17) for implementation through States/ UTs. This Scheme may also help to link groups of producers to the processors and markets through well-equipped supply chain.

Objectives

To provide integrated and complete cold chain and preservation infrastructure facilities from the farm gate to the consumer or from the production site to the market, Pre-cooling facilities at production sites, refer vans and mobile cooling.

more >

 
 
Indirect Tax: Direct Tax: Project Consultancy & Loan Syndication Empanelled valuer, Subsidy/Incentives Financial Solutions Recruitment Solutions
Shilpi Bajoria
shilpi@suvidhaconsultants.com
9830931239
R.B Mandal
directtax@suvidhaconsultants.com
Sourav Gupta
9830016263 / 9836599200
Sunil Bhoruka (Projects) - sunil@suvidhaconsultants.com - 9830158714
Dindayal Jajodia (Subsidy) dindayal@suvidhaconsultants.com - 9830550018
Vikash Kumar Kedia
vikash@suvridhi.com
9830040804
Mr. Sandeep Agarwal
9339144910 / 033 22150852/53

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