News Update

GST - Profiteering - While the petitioner wants to pay, the State CWFs are neither operational nor functional - Strange : HCJoe Biden promises Commission to recommend changes to Supreme CourtGST - Anti-Profiteering - Directions of NAA to undertake further investigation with regard to other projects, notice and summons issued by respondent stayed: HCBihar Polls - BJP manifesto promises 19 lakh jobs + free-vaccination for COVID-19 + lentils under MSPCus - Notification prohibiting export was uploaded digitally on 14.09.2020 at 22:28:11 hours - Export of onions in respect of shipping bills which were presented and generated prior to this date/time shall be allowed: HCBihar CM Sushil Modi tests positive for CoronavirusCus - When the Court is in session of a matter, an administrative or executive authority cannot start parallel proceeding on very same subject matter at its own ipse dixit and record finding: HCSutherland 'take two' and the Transition of Cess (See 'TOG Insight' in to go for graded relaxation in visa and travel restrictionsTax Returns & Politicians - They necessarily make quaint & strange bedfellows!Amendment to Rule 142(1A) is anti-taxpayerCBIC grants Customs & Excise duty exemption to goods imported against duty credit scrip under RoSLVAT - Orders directing recovery of duty from an assessee are unsustainable, where they are non speaking orders & contravene the principles of natural justice: HCCus - CBLR - It is established principle of law that mere facilitation without knowledge of consequences, would not amount to abetting an offence: CESTATIFSCA prescribes regulatory framework for REITs and InvITs in IFSCCX - Only for reason that M/s Vedanta paid duty amount much prior to issue of SCN & without contesting went for settlement, no adverse inference can be drawn so as to deny CENVAT availed by their consignee on supplementary invoices: CESTATGlobal trade to shrink by 9%, says UNCTADST - Insurance service provided to banks by Deposit Insurance Corporation, qualifies as input service - CENVAT credit can be availed of service tax paid by banks for such service provided to them in course of rendering output services: CESTATPM to meet global fund houses to woo FDI inflowsCus - SCN has tripped upon itself in its haste to carry the impugned goods beyond the scope of eligibility of the exemption notification: CESTATSearch assessment order passed u/s 153A is unsustainable where no material incriminating the assessee is found in course of search proceedings: ITATMaharashtra Govt revokes standing approval granted to CBI to enter State for probesClub expenses incurred by assessee cannot be allowed as business expenses, where they are found to have been incurred for personal use: ITATECI sets up panel to examine issues concerning expenditure limitsProviso to section 36(1)(iii) mandates capitalization of interest only in respect of capital assets purchased out of borrowed funds: ITATLimitation period of six months for deciding the application for registartion u/s 12AA is applicable to remanded matters: ITATIncome tax raids two govt contractors; detects bogus claimsPure consultancy services (without supply of goods) provided to private individuals is taxable @18%: AARProliferate Litigation as much as you can
Deficits and fulfilling promises to States - A different view

SEPTEMBER 22, 2020

By V Ranganathan

MUCH is being discussed about the fiscal situation, de growth, deficit, stimulus and source of funding to meet all needs including fulfilling promises made to states on GST compensation. Disinvestment is often deeply discussed but it is largely non-starter and even when implemented it is handled in a highly ham-handed fashion.

LIC has figured in the list for the first time in the budget papers of 2020. It may be many years away considering the more than normal challenges it may face. But one aspect which somehow has not attracted much discussion is the shares in listed companies held predominantly by LIC, PSU insurance companies and the erstwhile UTI. Perhaps there may be other players but that can surface later. Between these entities, the shareholding in some of the top companies can be a strategically significant percentage. Historically, whenever opportunities arose to make strategic sale by these government bodies, the incumbent promoters would somehow pull political strings and ensure the stakes were retained and they held on to their driving seats. Interested persons can search the archives to find past instances, some reported but many may not have been.

It is quite possible such strategic sale by PSUs can help generate lot more funds with no disinvestment of any kind, presently. The point may not be misunderstood as if disinvestment is being discouraged. 

Not only can funds be raised for the government, significant foreign capital may come in, but most importantly some of the incumbent management which has destroyed shareholder value can be replaced. If the idea makes sense, the money so raised can be used to plug deficits to Compensation cess funding as ultimately the States pooled their taxing powers and subsumed in view of a larger guarantee in spirit. It is time for a resurgent India and GOI to shake off the slack, degrowth and morbidity with something out of its own hat and the above suggestion can be seriously considered.

[The author is Former Director, Tax, E&Y Chennai and the views expressed are strictly personal.]

(DISCLAIMER : The views expressed are strictly of the author and doesn't necessarily subscribe to the same. Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the site)