Latest Blogs from SBS and Company LLP

    SBS Wiki E Journal August 2022

    In this 97h edition, we bring you articles on interesting overlapping issues and other items. The article on ‘Remittance of Assets vs LRS – Comparative Study under FEMA and IT’ deals about various issues that we face on day to day from our NRI and resident clients. The recent introduction of TCS on LRS has created an additional layer of complexity for the residents transferring money using the LRS route. Also, there are certain stark differences between the remittance of asset regulations and LRS both under FEMA and IT Act. Hence, we thought to contribute an article around those aspects with FAQs.

    The next article is on the recent Karnataka High Court judgment wherein the Circular 150 under GST laws was struck down. The Circular tried to tax the annuities received by concessionaire naming them as deferred payments for construction and those are not the payments which were referred to Entry 23A of Notification No 12/2017 – CT (R). However, the High Court stated that a circular cannot override the Entry in the notification and accordingly struck down the Circular. The High Court stated that there is nothing in law which prohibits the executive to collect tax on the annuity payment aka deferred payments for construction but that should be stipulated in the law. Though the judgment is favourable to the concessionaries, how the GST Council sees this and try to restrict the benefit of Entry 23A to annuity payments aka deferred payments for construction must be observed in days to come. The ideology behind Entry 23A was to grant exemption for annuities which are paid instead of toll. However, the said intention seems to be put on the back burner by the GST Council after 43rd GST Council meeting which was evident from the issuance of Circular 150. Interestingly, without waiting for the above judgment or contesting before any Courts, the NHAI started sending letters to concessionaries stating that they will the pay the tax on the annuities which were earlier stated by NHAI as exempted at the time of bidding.

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    Analysis on Supreme Court Judgment in Northern Operating Systems – Upholding RCM on Manpower Supply for Secondment Employee


    On 19th May 2022, the Supreme Court delivered two judgments that shaken the foundations of indirect taxation. One in the matter of Mohit Minerals Private Limited[1], which struck down the levy of reverse charge on the importer for ocean freight services (for more on this, please read our article here[2]). Two, in the matter of Northern Operating Systems Private Limited[3], which upheld the revere charge on secondment of employees. Results of both the verdicts are opposite to the most popular public view, thus changing the way we look at the future of indirect taxation.

    In this article, we wish to analyse the judgment of Supreme Court in the matter of Northern Operating Systems Private Limited (supra) and conclude with our remarks as to how the said judgment will impact the position under GST laws.

    The Hit and Miss of Gujarat High Court in Munjaal Manishbhai Bhatt – 1/3rd Deduction for Transfer of Land


    Gujarat High Court strikes again, this time holding that providing an adhoc and standard method to value of undivided share of land involved in provision of construction services as invalid and has Para 2 of Notification No 1/2017 – CT (R) to be read down.

    Before going into the detailed study of ruling for understanding the hit and miss of the Court in Munjaal Manishbhai Bhatt[1],  it is necessary to understand the issue involved, the major arguments by petitioner and revenue and the analysis of High Court. Let us proceed to examine the same. Our analysis on the judgment and way forward is given at the conclusion of this article.

    Management Support Services vis-à-vis Other Income – An Analysis on position under Treaties


    In our previous article[1], the concept of taxability of management support services (for brevity ‘MSS”) under fee for technical services (for brevity ‘FTS’ or ‘FIS’) clause has been analyzed in detail.

    We have concluded that MSS is not taxable under Article 12, since the term ‘managerial’ is not included in the definition of FTS/FIS. However, we cannot conclude the non-taxability of such income only on examining Article 12. The examining of taxation of such income will not be completed without analyzing the taxability of such services under Articles which deals with ‘Other Income’.

    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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