Page 49 - GSTL_18th June 2020_Vol 37_Part 3

2020 ] NEWS DESK J83
Consulting firm AKM Global Tax Partner Amit Maheshwari said this
new angle of analysing holding structures with respect to management and con-
trol will lead to more litigation and challenge by Tax Authorities.
“The (India-Mauritius) treaty does not have the minimum standards to
prevent treaty abuse as yet. The Tax Authorities are bound to challenge these
structures by taking recourse to GAAR (General Anti-Avoidance Rule) and using
these judgments to allege lack of substance and treaty abuse,” Maheshwari said.
Experts said the AAR ruling emphasises on the substance over form of
holding structure of an entity.
The Tax Department in future will seek details of bank account signato-
ry, how decision making is happening and where is the Board of Directors to
decide on where the ‘head and brain’ of a particular entity is, they said.
CA firm Rajeshree Sabnavis & Associates founder Rajeshree Sabnavis
said, “This decision of AAR will definitely give impetus to tax officers to go be-
yond the legal form of the entity to assess the management and control aspect of
holding structure also in cases of indirect transfer of shares routed through Mau-
ritius to deny the beneficial claim that such indirect transfer by Mauritius resi-
dent should only be taxable in Mauritius under the Indo-Maurltius Tax Treaty.”
Walmart Inc. had completed the acquisition of 77 per cent stake in Flip-
kart for about USD 16 billion in August, 2018.
As many as 44 shareholders of Flipkart had sold their holdings to
Walmart.
As per the provisions of the income tax law, Walmart had to deduct
withholding tax on payments made to sellers and deposit it with the Indian au-
thorities.
As per domestic tax law, long-term capital gains tax is levied at 20 per
cent for shares sold by foreign investors after 24 months of purchase.
[Source : Asian Age, New Delhi, dated 8-6-2020]

Get ITC accumulated on imports via refunds now
In a move to provide relief to industry, the Central Board of Indirect
Taxes and Customs has said input tax credit accumulated on imports can now be
availed through refunds. The clarification was issued after trade flagged that in-
put tax credit claims were being rejected by Tax Authorities since invoice details
of the unused credit in several cases were not getting reflected in the return Form
GSTR-2A - which has details of all inward supplies.
[Source : The Economic Times, New Delhi, dated 12-6-2020]

Air cargo operators’ body urges Government to reverse
GST paid on bad debt

The Government must reverse the GST paid on bad debtors, as service
providers are suffering huge losses following the COVID-19 lockdown, urged the
Domestic Air Cargo Agents Association of India (DACAAI).
“On one side, there has been no business for the past 2.5 months, and on
GST LAW TIMES  18th June 2020  49