Introduction
We are pleased to present the latest edition of
- The '
Focus Point ' explores the implications of the retrospective amendment to the scope of 'Supply' in the Finance Act, 2021. - Under the 'From the Judiciary' section, we provide in brief, the key rulings on important cases, and our take on the same.
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Our 'Tax Talk' provides key updates on the important tax-related news from
India and across the globe. - In the 'M&A Tax and Regulatory' section we highlight the critical rulings and significant updates in the M&A tax and regulatory arena.
- Under 'Compliance Calendar', we list down the important due dates with regard to direct tax, transfer pricing and indirect tax in the month.
We hope you find our newsletter useful and we look forward to your feedback. You can write to us at taxstreet@nexdigm.com. We would be happy to hear your thoughts on what more can we include in our newsletter and incorporate your feedback in our future editions.
Retrospective amendment to the scope of 'Supply' in Finance Act, 2021: Unsettling the settled?
"The health of our economy will not improve until we inject the 'S' factor into our fiscal laws, and make them Sane, Simple and Stable."
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The amendment to Section 7 of the CGST Act, 20171 with retrospective effect from
Further, with the aid of an Explanation, it has been clarified that the person and its members or constituents shall be deemed as separate persons notwithstanding anything contained in any other law for the time being in force, any judgment, decree or order of the Court, Tribunal, or authority. Simultaneously, entry 7 of Schedule II to the CGST Act which classified "Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration" as 'supply of goods' for the purpose of GST, stands omitted with retrospective effect.
Before delving into the implications of the above provision, let us look at the legislative background and judicial history of taxation of such transactions.
Legislative and judicial background
Over the years, the 'doctrine of mutuality' has been invoked in a myriad of cases, both under the Income-tax as well as erstwhile indirect tax laws, viz. Service tax and VAT laws.
Pre-GST regime
The doctrine stems from the common law principle that a person cannot make a profit from himself. In the context of Indian law, some Hon'ble High Courts had upheld the doctrine of mutuality vis-ŕ-vis levy of sales tax by following the English cases of Graff vs. Evans2 and
This issue once again came up before the Hon'ble
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Footnotes
1. To be notified by way of separate Notification
2. [(1882) 8 Q.B. 373]
3. [(1940) 1 K.B. 576]
4. [(1968) 2 SCR 421]
5. [(1970) 1 SCC 462]
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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