JOURNAL MAY 2024

Ahmedabad Chartered Accountant Journal May, 2024 125 Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) (Amendment) Regulations, 2024 Amendments to the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 (‘the Principal Regulations’):- - Amendment to Regulation 3.1 of the Principal Regulations: After Sl no. IX, the following shall be inserted:- X. Schedule XI: (Purchase or Subscription of Equity Shares of CompaniesIncorporated in India on International Exchanges Scheme by Permissible Holder) A. Mode of Payment (1) The amount of consideration for purchase / subscription of equity shares of an Indian company listed on an International Exchange shall be paid, - (i) through banking channels to a foreign currency account of the Indian company held in accordance with the Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015, as amended from time to time; or (ii) as inward remittance from abroad through banking channels. Explanation: The proceeds of purchase / subscription of equity shares of an Indian company listed on an International Exchange shall either be remitted to a bank account in India or deposited in a foreign currency account of the Indian company held in accordance with the Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015, as amended from time to time. B. Remittance of sale proceeds The sale proceeds (net of taxes) of the equity shares may be remitted outside India or may be credited to the bank account of the permissible holder maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016. - Amendment to Regulation 4 of the Principal Regulations In sub-regulation (8) of Regulation 4 of the Principal Regulations, the existing provision shall be substituted by the following, namely: “LEC(FII): (i) The Authorised Dealer Category I banks shall report to the Reserve Bank in Form LEC (FII) the purchase / transfer of equity instruments by FPIs on the stock exchanges in India. (ii) The Investee Indian company through an Authorised Dealer Category I bank shall report to the Reserve Bank in Form LEC (FII) the purchase/subscription of equity shares (where such purchase / subscription is classified as Foreign Portfolio Investment under the rules) by permissible holder, other than transfers between permissible holders, on an International Exchange.” Source: FEMA. 395(2) /2024-RB dated April 23, 2024 For full text refer: https://website.rbi.org.in/documents/ 87730/39710850/English+Ver+- amendment+to+FEMA+395-+website.pdf Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) (Amendment) Regulations, 2024 Amendment to Regulation 5 of the Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2015 (‘the Principal Regulations’): In sub-regulation (F)(1) of Regulation 5 of the Principal Regulations, the existing provision shall be substituted by the following, namely: “Subject to compliance with the conditions in regard to raising of External Commercial Borrowings (ECB) or raising of resources through American Depository Receipts (ADRs) or Global Depository Receipts (GDRs) or through direct listing of equity shares of companies incorporated in India on International Exchanges, the funds so raised may, pending their utilisation or repatriation to India, be held in foreign currency accounts with a bank outside India.” Source: FEMA. 10(R)(3)/2024-RB dated April 23, 2024 For full text refer: https://website.rbi.org.in/documents/ 87730/39710850/English+Ver+to+FEMA+10R- +website.pdf ❉ ❉ ❉ 4 5 FEMA Updates

126 Ahmedabad Chartered Accountant Journal May, 2024 [I] IMPORTANT CASE LAWS: [1] Issue: Order to be set aside and matter to be remanded as no reasons were specified for denying ITR: HC: Case Laws: APL Apollo Tubes Ltd. v. STO (Intelligence) [2024] 161 taxmann.com 613 (Mad) Facts: The Petitioner is engaged in the manufacture and supply of tubes and pipes of iron and steel. The department issued SCN and the petitioner replied to the same. Thereafter, the order was passed by the department. It filed writ petition to challenge the order and contended that the order was passed without recording proper reasons. Held: The Hon’ble High Court noted that the petitioner had placed on record sample invoices and also bifurcated amounts paid towards freight for the Hosur Unit, which is the relevant unit and enclosed both a reconciliation statement and a statement from the Chartered Accountant in respect of such bifurcation. However, the department recorded that the petitioner had not filed any documents or evidence with regard to payment of GST on the collected freight charges. The Court also noted that the department had not given proper reasons for rejecting the credit. Therefore, it was clear that the conclusion of department was not justified in light of the evidence placed on record by the petitioner. Thus, the Court held that the impugned order was liable to be set aside and the matter was remanded for reconsideration. CA. Vishrut R. Shah [email protected] CA. Bihari B. Shah [email protected] GST and VAT Judgments and Updates [2] Issue: Appellate Authority should entertain appeal of assessee who failed to attend hearing as his residence was shifted: HC: Case Laws: Johnson Bevisedmond v. Jt. Commissioner of GST & Central Excise [2024] 161 taxmann.com 632 (Mad) Facts: The petitioner is an individual and he received notice from the GST department for personal hearing. He was not able to appear for the aforesaid personal hearing. Thereafter, the department passed the order. He filed writ petition and contended that only two opportunities were provided to him and the impugned order has been passed by the department in violation of principles of natural justice. Held: The Hon’ble High Court noted that the petitioner was provided two opportunities of personal hearings but he couldn’t attend hearing as his residence was shifted. Now, the petitioner was intended to file the appeal and it would be appropriate to grant liberty to the petitioner to approach the Appellate Authority. Therefore, the Court granted liberty to the petitioner to approach the Appellate Authority by filing the appeal within a period of 30 days from the date if receipt of copy of this order. [3] Issue: HC dismissed writ against best judgment assessment order since there was no violation of principles of natural justice:

Ahmedabad Chartered Accountant Journal May, 2024 127 GST and VAT - Judgements and Updates Case Laws: Ashok Varandani v. Central Board of Indirect Taxes and Customs, Jaipur [2024] 160 taxmann.com 616 (Raj) Facts: The petitioner was engaged in the business of trading of jewellery. The department issued a notice to file GSTR-3B return for the month of August, 2023. However the petitioner did not file the return within the stipulated period and the department proceeded to make best judgment assessment under section 62 of the CGST Act, 2017. Thereafter, the petitioner filed writ petition against the best judgment assessment order and contended that assessment was made without collecting necessary information and without affording any opportunity of hearing. It also submitted that the return was filed belatedly due to financial constraints and therefore, best judgment assessment should be withdrawn. Held: The Hon’ble High Court noted that the petitioner did not even file appeal against the best judgment assessment order and now challenged the order through writ petition. The Court further noted that the petitioner can’t complain of violation of principles of natural justice since it failed to file return even when notice was issued and the Assessing Authority was left with no option but to proceed to make best judgment assessment. Therefore, the Court dismissed the writ petition since the petitioner committed default at every stage and the legislative scheme of the CGST Act, 2017 provided remedy of appeal which was not availed by the petitioner. [4] Issue: Application for cancellation of GST registration can’t be rejected merely on ground of pendency of DRC-01 proceedings: HC: Case Laws: Chetan Garg v. Avato Ward 105 State Goods and Services Tax [2024] 161 taxmann.com 468 (Delhi) Facts: The petitioner filed an application for cancellation of registration on the ground that he did not intend to carry on the business under the said GST Number. A query was raised on the said application and petitioner had duly responded to the said query. However, the application for cancellation was rejected due to pendency of the proceedings under DRC-01. Therefore, he filed writ petition and sought direction to cancel GST registration and it was contended that merely pendency of the DRC-01 could not be a ground to decline the request of the taxpayer for cancellation of the GST Registration. Held: The Hon’ble High Court noted that the proceedings under DRC-01 are independent of the proceedings for cancellation of GSY Registration and can continue despite cancellation of GST registration. The recovery of any amount found due can always be made irrespective of the status of the registration. Thus, it was held that merely pendency of the DRC01 can’t be a ground to decline the request of the taxpayer for cancellation of the GST Registration. Therefore, the Court directed that the GST Registration of the petitioner shall be treated to be cancelled with effect from date from which he sought cancellation of GST registration. [5] Issue: HC set aside order since proper officer didn’t consider detailed reply of assessee & failed to apply mind. Case Law: Charu Overseas (P) Ltd. v. Union of India [2024] 161 taxmann.com 513 (Delhi). Continued to page 136

128 Ahmedabad Chartered Accountant Journal May, 2024 1) Dealer to Pay 18% GST on Reimbursement of Loss from Mercedes Benz on Sale of Demo Cars WBAAR 26 OF 2023 dated 17 November 2023 Order Number 01/WBAAR/2024-25 date 04/04/2024 Facts - The applicant is an authorised agent of Mercedes Benz for supply of cars, related spare parts and is also engaged in providing various services such as repairs, warranties, roadside assistance and servicing. It is responsible for facilitating the sales of Mercedes-Benz passenger vehicles, including the Mercedes-Benz EQ (Electric Cars). As submitted, the Applicant shall function as a selfemployed commercial agent with the responsibility of brokering the sales of vehicles on behalf of MB INDIA. The primary objective is to facilitate and support MB INDIA’s direct sales to end-customers - The nature of relationship between MB INDIA and the applicant is that of a principal and agent. MB INDIA is the principal, and the applicant acts as the agent, representing and working on behalf of MB INDIA in vehicle sales transactions. In recognition of the services provided, the applicant is entitled to receive a commission. - The applicant has entered with an Authorised Agent Agreement with MB INDIA on August 30, 2021. According to paragraph 7.5 of the said agreement, MB INDIA will make available the authorised agent with a sufficient number of Demo vehicles, which are essential for demonstrating the Contract Goods to prospective customers. The said para has further been amended by virtue of which the applicant may buy vehicles on its own account to carry out demonstration of Contract Goods - The major terms and conditions of the contract are as under CA. Monish S. Shah [email protected] a) MB INDIA may sell the Demo vehicles to the authorised agent at a discount as per the Demo vehicles Guideline issued by MB INDIA from time to time. b) The rights of title to and ownership of the Demo vehicles shall vest with the authorised agent in its own capacity and not in its capacity as an Agent c) The authorised agent shall obtain a TC plate registration or any other applicable registration for Demo vehicles and ensure that the Demo vehicles be used for demonstration only with the TC Plate or any other applicable registration d) The authorised agent may request MB INDIA for de-fleeting the Demo vehicle and MB INDIA shall allow de-fleeting the Demo vehicle in accordance with the applicable Demo vehicles Guideline. On defleeting the authorised agent shall liquidate and sell the Demo vehicle to the end customer only and not to a reseller or a broker in its own capacity and not in the capacity as an Agent, by posting the offer for sale on Roadster platform or any other platform as may be recommended by MB INDIA e) In case the authorised agent incurs losses on sale of Demo vehicles, MB INDIA shall reimburse the authorised agent for such losses MB INDIA shall review the loss incurred/profit earned by the authorised agent on the sale of Demo vehicles during a Financial Year. Any profit and loss on Demo vehicles shall be reconciled for the all-Demo vehicles sold by the authorised agent during the Financial Year and not per vehicle basis. In case authorised agent earns profit on sale of Demo vehicles for the Financial Year in which MB INDIA has reimbursed the authorised

Ahmedabad Chartered Accountant Journal May, 2024 129 agent for the loss incurred in any quarter, MB INDIA shall raise a claim on the authorised agent of an amount equivalent to amount which exceeds the losses of the authorised agent for that Financial Year. f) If a demo car has not completed the required number of kilometres as per the policy, the demo discount initially provided will be reversed with GST interest as a cost. g) After the above exercise is completed and if there is a loss on totality basis, MB INDIA reimburses the same to the applicant. The applicant submits that it issues a Tax Invoice to MB INDIA against such reimbursement amount and charges GST @ 18% (IGST or CGST + SGST) considering it as a supply of services in terms of Section 7(1A) of the GST Act and classifying the service vide Schedule II entry 5(e) of the GST Act. Questions Raised 1. Whether the applicant is entitled to claim input tax credit charged and paid on inward supply of car from Mercedes Benz India which are used for demonstration purpose to the potential customer interested in buying Mercedes Benz Car, commonly known as Demo cars? 2. If the answer to the above is in affirmative, what would be the classification and rate of tax at the time of sale of demo car ? And if the answer is negative then what would be the classification and rate of tax at the time of sale of demo car? 3. Whether amount received by the applicant from Mercedes Benz INDIA towards reimbursement of ¯Loss on Sale of Demo Car constitute as supply? If yes, what is the classification and rate of tax of the same under GST? Submission 1. Availablity of ITC on Demo Cars a. Demo cars are purchased from MB INDIA at a discounted price, with the GST liability duly paid during these transactions. Upon purchase, the applicant records demo cars as purchase of inventory (Stock in Trade) in its books of accounts. When these cars are sold, they are removed from the inventory and entire sale proceeds are accounted for in Sales account. Further when demo car is eventually sold, the applicant considers the demo car as old and used motor vehicle and therefore follows the margin scheme specified in Notification No. 8/2018-Central Tax (Rate) dated 25.01.2018 b. The applicant submits that in the motor vehicle industry, a demonstration vehicle is an indispensable tool for promoting sales. It allows potential customers to experience the vehicle firsthand through test drives, helping them make informed purchase decisions. Demo vehicles provide customers with the opportunity to take a test drive, which is a critical step in the car buying process. This first-hand experience can significantly influence a customer’s decision to purchase a vehicle. Motor vehicle dealers are typically required to acquire demonstration vehicles from their principal supplier. These vehicles are acquired as a business necessity to support the dealership’s sales and marketing efforts. Applicant submits that sub-section (1) of section 16 of the GST Act entitles every registered person to take ITC on purchase of goods if the same are used in the course or furtherance of the business. In the present case, the applicant has procured demo cars with the clear intent of using them for test drives and in the furtherance of their business activities. c. The applicant further submits that Section 17(5)(a) of the GST Act which restricts availment of ITC on motor vehicles purchased by a taxpayer even though they may be used in the course of furtherance of business is not applicable in his case on the following reasons: - Section 17(5)(a)(A) does not specify a timeline for when the purchased car must be sold. It simply requires that the intent to resell the car exists. When a reseller acquires a car, their clear intent is to resell it as promptly as possible. Since the car dealers/agents are explicitly involved in the buying and selling of cars, there is no dispute regarding their eligibility for ITC, including for demo cars used in the process of selling cars and subsequently sold Advance Ruling under GST

130 Ahmedabad Chartered Accountant Journal May, 2024 - As per the demo car policy, it is mandatory for the applicant to purchase demo cars, use them as demonstration / test drive vehicles and sell them after they have been used for a specified mileage or periods, as referred in the policy. Failure to comply with this requirement could disrupt the applicant’s business. - As per section 17(5)(a)(A), input tax credit on motor vehicles shall not be allowed except when they are used for further supply of such motor vehicles. The term such refers to the things or goods referred earlier in the sentence, in this case the motor vehicle. Therefore, ‘such’ in “further supply of such motor vehicles” refers to the specific motor vehicle that has been acquired and encompasses all vehicles acquired for the purpose of resale, including demo vehicles. In the given facts, motor vehicle which is purchased by the applicant remains the same make and model motor vehicle at the time of its sale, the provision doesn’t ‘t prefix the word motor vehicle ‘with the word new it merely prescribes that the person should use the motor vehicle in further supply of same vehicle - The provisions can be better understood as 2. Classification : Reimbursement of Loss on Sales of Car a. As per Clause (1)(a) of the Section 7 of the CGST Act, 2017, all kinds of supply of goods or services made or agreed to be made for a consideration by a person in the course or furtherance of business is to be treated as supply. Section 7(1A) of the GST Act, 2017 read with Schedule-II provides a list of activities of transactions which are to be treated a supply of services or goods. It is important to note that the activities or transaction which are treated as a supply as per sub-section (1) can only be classified as supply of goods or services as per Schedule-II. Therefore, for these activities to become supply, firstly it should pass the following conditions specified in Section 7(1)(a): (a) there must be a supply; (b)the supply must be of goods or services or both; (c) there should be a consideration for such supply; (d)the supply should be in the course or furtherance of business b. Thus, if any person agrees to an obligation to refrain from an act or tolerate any act or situation or to do an act which also satisfies the conditions of Section 7(1), then only it can be treated as supply of service under clause 5(e) of ScheduleII read with Section 7(1A) c. In the present case, as mentioned in demo car loss sharing ‘clause of demo car policy, when a loss is incurred at the time of selling a demo car, MB INDIA reimburses this loss to the applicant. Therefore, it can be reasonably concluded that, as per the agreement, the applicant is initially bearing the loss and subsequently recovering it from MB INDIA. This aligns with the concept of ‘tolerating an act or a situation’ as encompassed in the expression of bearing a loss against the agreed consideration. d. In the present case, the initial invoicing for the demo car is based on the agreed pricing. Subsequently, following the guidelines in MB INDIA’s demo car policy, the applicant is required to sell the demo car in the market after a specified holding period of 3 to 6 months. This sale can result in either a profit or a loss. If a loss occurs during the sale, MB INDIA commits to reimburse this loss. Conversely, if a profit is realized, MB INDIA retains the right to recover this profit. The applicant is of the view that such transaction should be treated as a part of the main supply, and hence, MB INDIA is required to issue a credit note for the same e. It is essential to understand that in both situations - the reimbursement of losses and the recovery Advance Ruling under GST

Ahmedabad Chartered Accountant Journal May, 2024 131 of profits - these financial transactions are inherently linked to the sale of the demo car. Hence, rather than treating these transactions as separate and potentially taxable supplies of services under the category of ‘tolerating an act‘, MB INDIA should issue specific Credit Notes in the case of a loss incurred during the demo car sale and Debit Notes when a profit is realized in alignment with the provisions of Section 34 of the GST Act. Findings 1. In the case of Toplink Motorcar (P.) Ltd., as referred by the applicant, the applicant was engaged in supply of motor vehicles where the applicant, in addition to purchases of motor vehicles which were subsequently supplied to customers, also made purchases of vehicles which were used as demo cars for providing trial run/demonstration to the customers. The demo vehicles were kept by the applicant only for a limited period of time and were supplied thereafter. This authority held that the applicant would be eligible to avail input tax credit on purchases of demo vehicles. However, in the instant case, the business activities of the applicant are not identical with the aforesaid case. Here, the applicant is not engaged in trading of motor vehicles. In the case in our hand now, the applicant has entered into an agreement with MB INDIA to provide facilitation services for sale of motor vehicles where the applicant acts as a self-employed commercial agent with the responsibility of brokering the sales of vehicles on behalf of MB INDIA. Admittedly, the supply of motor vehicles to the endcustomers is made by MB INDIA. 2. Sub-section (1) of section 16 entitles a registered person to take input tax credit on supply of inputs as well as capital goods made to him subject to certain conditions and restrictions which have been prescribed. However, sub-section (5) of section 17 of the GST Act overrides sub-section (1) of section 16 and restricts availment of input tax credit under certain scenarios meaning thereby input tax credit may be denied even in cases where sub-section (1) of section 16 entitles a registered person to take input tax credit. One of such restriction as specified in clause (a) of subsection (5) of section 17 limits the scope of input tax credit with respect to motor vehicles. The same is reproduced below for reference: “(5) Notwithstanding anything contained in subsection (1) of section 16 and sub- section (1) of section 18, input tax credit shall not be available in respect of the following, namely:— (a) motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely:— (A) further supply of such motor vehicles; or (B) transportation of passengers; or (C) imparting training on driving such motor vehicles 3. In other words, input tax credit on motor vehicles used for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), can be availed only when such motor vehicles are (i) supplied further, or (ii) used for transportation of passengers, or (iii) used for imparting training on driving such motor vehicles. The applicant has submitted that the vehicles purchased by him for demonstration purposes qualify the specified seating capacity and the applicant also makes further supply of such vehicles, though at a later point in time. The applicant contends that there is no time limit prescribed in this regard for making such further supplies so as to impose restriction under section 17(5)(a)(A) of the GST Act. It is therefore imperative to decide the issue in terms of the condition laid down in section 17(5)(a)(A) i.e., whether the purchases of vehicles used for demonstration and test drive purpose and subsequently supplied can be regarded as purchases made for further supply of such vehicle. 4. The business model of the applicant delineates that the demo vehicles are initially kept by the applicant for a certain period of time as mandated by its principal namely MB INDIA. The applicant contends that though he has entered into an agreement to carry out the responsibility of brokering the sales of vehicles as an agent for Advance Ruling under GST

132 Ahmedabad Chartered Accountant Journal May, 2024 which he receives commission from the principal, purchases of vehicles from its principal for providing demonstration/ test drive facility to the prospective buyers are made in its own account whereby rights of title to and ownership of the Demo vehicles vest with the applicant. The applicant, after receipt of the demo vehicles, records the same as purchase of inventory (Stock in Trade) in its books of accounts and when the cars are sold, they are removed from the inventory and entire sale proceeds are accounted for in Sales account. 5. The applicant maintains the stock of the demo vehicles for a specified period of time and thereafter supplies the same which may be made at a price lower than the purchase value of the said vehicle. However, the provisions of the GST Act nowhere specifies that input tax credit shall not be available in respect of any outward supplies which is made at a price lower than its procurement value. We like to reiterate that section 17(5)(a)(A) restricts input tax credit in respect of motor vehicles, with a specific seating capacity, for transportation of persons except when they are used for further supply of such motor vehicles. We are of the view that the word such‘ as used in the expression further supply of such vehicles‘ relates to the vehicle only that was purchased. In our considered opinion, the fact that the condition of a demo vehicle at the time of its further supply has undergone some deterioration does not detract from the reality that the vehicle when supplied by the applicant has ceased to be such vehicle that was purchased. The demo vehicles are purchased all along for further supply with the condition that they will be kept for a specific period of time. We therefore hold that restriction of input tax credit as imposed in section 17(5)(a)(A) of the GST Act is not applicable on purchase of demo vehicles which are supplied by the applicant after the specified time for providing test drive facility. 6. Rate of tax of demo car, we hold that the outward supply of demo car would attract same rate of tax of its inward supply subject to the provision of section 14 of the GST Act. The rate of tax of motor vehicle under Chapter 8702 and 8703 is as follows: 7. Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act ‘is a Declared Service as per clause (e) of section 66E of the Finance Act, 1994. Similar activities are classified as supply of services in para 5 (e) of Schedule II of the GST Act. Therefore, where one person, pursuant to an agreement, agrees to an obligation to tolerate an act, such would be treated as a supply of services under the GST Act. The Tax Research Unit, Department of Revenue, Ministry of Finance vide Circular No. 178/10/2022- GST dated 03.08.2022 has clarified that „Service of agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an act is nothing but a contractual agreement. A contract to do something or to abstain from doing something cannot be said to have taken place unless there are two parties, one of which expressly or impliedly agrees to do or abstain from doing something and the other agrees to pay consideration to the first party for doing or abstaining from such an act. There must be a necessary and sufficient nexus between the supply (i.e. agreement to do or to abstain from doing something) and the consideration. The said circular further clarifies that „one of the parties to such agreement/contract (the first party) must be under a contractual obligation to either (a) refrain from an act, or (b) to tolerate an act or a situation or (c) to do an act. Further some “consideration” must flow in return from the other party to this contract/agreement (the second party) to the first party for such (a) refraining or (b) tolerating or (c) doing. It has also been clarified that „The key in such cases is to consider whether the impugned payments constitute consideration for another Advance Ruling under GST

Ahmedabad Chartered Accountant Journal May, 2024 133 independent contract envisaging tolerating an act or situation or refraining from doing any act or situation or simply doing an act. If the answer is yes, then it constitutes a „supply within the meaning of the Act, otherwise it is not a “supply”. 8. In the case at hand, the applicant has entered into an agreement with MB INDIA with a specific condition towards Demo Car Loss Sharing knowing very well that it may suffer a loss at the time of selling of demo vehicle since the vehicle would have undergone some deterioration while providing test drive facility to the prospective buyers. In other words, MB INDIA enters into the agreement with a promise to compensate where the applicant would suffer a loss on sale of demo vehicle. This compensation is paid as a result of the contract and therefore would qualify to be a consideration ‘. In Fazaladdin Mandal vs Panchanan Das (AIR 1957, CAL 92), the Hon ‘ble High Court at Calcutta held that “Consideration is the price of a promise, a return or quid pro quo, something of value received by the promisee as inducement of the promise. An act done or forbearance made in return for a unilateral promise is a sufficient consideration to support the promise.” We are therefore of the view that the applicant has entered into the agreement to tolerate the act of suffering loss for a consideration. Undisputedly, the applicant has chosen to tolerate the act for a consideration as per the agreement and has agreed to tolerate the act in the course or furtherance of the business. We therefore hold that the applicant receives consideration in the form of compensation from MB INDIA against supply of services of agreeing to tolerate the act of suffering loss. We find that agreeing to tolerate an act‘-having SAC 999794 is classifiable under Other Miscellaneous services‘ and is taxable @ 18% vide serial number 35 of Notification No. 11/ 2017-Central Tax I(Rate) dated 28.06.2017, as amended. Ruling Question1: Whether the applicant is entitled to claim input tax credit charged and paid on inward supply of car from Mercedes Benz India which are used for demonstration purpose to the potential customer interested in buying Mercedes Benz Car, commonly known as Demo cars? Answer 1: The applicant is entitled to claim input tax credit charged and paid on inward supply of car which are used for demonstration purpose and supplied further after a specified time period. Question2: If the answer to the above is in affirmative, what would be the classification and rate of tax at the time of sale of demo car? And if the answer is negative then what would be the classification and rate of tax at the time of sale of demo cars? Answer2: The vehicle would be classified under Chapter 8702 or 8703, as the case may be and its outward supply would attract same rate of tax of its inward supply subject to the provision of section 14 of the GST Ac Question 3. Whether amount received by the applicant from Mercedes Benz India towards reimbursement of Loss on Sale of Demo Car constitute as supply? If yes, what is the classification and rate of tax of the same under GST? Answer 3: The amount received by the applicant from Mercedes Benz India towards reimbursement of ¯Loss on Sale of Demo Car shall be regarded as consideration received against supply of services of agreeing to tolerate an act ‘(SAC: 9997974) and would be taxable @ 18% Comments This is a Landmark judgment as this is a peculiar case where the model adopted for selling of cars is different. It is not in normal course of sale or purchase. Here according to the terms of contract the Demo cars are purchased and are sold at the end of the period. The ITC is only available if such Demo are sold at a later stage. If, however, the cars are just for putting up in showroom or using them as Demo without it being offered for sale then ITC is not available in our opinion. In the instant case loss are reimbursed and thus tax was payable if the amount of loss is not reimbursed then in such scenario, we believe that there will not be any outward supply of tax liable on such loss incurred ❉ ❉ ❉ Advance Ruling under GST

134 Ahmedabad Chartered Accountant Journal May, 2024 IFSC Updates: 1. Remote Trading Participants on Stock Exchanges in the IFSC: It has been decided to permit foreign entities, not having a physical presence in IFSC, to trade directly on the Stock Exchanges, on a proprietary basis, without a Broker-Dealer. Such an entity shall be referred to as a Remote Trading Participant (RTP). An entity shall be on boarded as RTP by the Stock Exchange only after satisfaction of certain prescribed conditions. An entity incorporated in India will not qualify to be on boarded by the Stock Exchanges as a RTP. For detailed text, please refer: https://ifsca.gov .in/ Viewer?Path=Document%2FLegal%2Fremotetrading-participants-on-stock-exchanges-inifsc03042024074849.pdf&Title=Remote%20Trading %20 Participants%20on%20Stock%20Exchanges %2 0in%20the%20IFSC&Date=03%2F04%2F2024 [IFSCA/CMD-MIIT/RTP/2023-24/001 dated 03.04.2024] 2. Ease of doing business - Filing of Schemes or funds under IFSCA (Fund Management) Regulations, 2022: The IFSCA has decided that henceforth, for all schemes or funds to be launched under Chapter III (except Part C: Retail Schemes), of the FM Regulations, the Fund Management Entity (FME) shall submit the Private Placement Memorandum (PPM) along with other documents ensuring minimum disclosures and other requirements as outlined in this circular, to the Authority. After filing these documents along with the disclosures and CA. Naveen Mandovara [email protected] Update complying with other requirements stipulated in this circular FMEs may launch the respective schemes. IFSCA will also, in due course establish a webportal for filing of scheme documents before an offer is made. [F. No. IFSCA-AIF/32/2024-Capital Markets dated 05.04.2024] SEBI Updates: 1. Standardization of the Private Placement Memorandum (PPM) Audit Report: In order to have uniform compliance standards and for ease of compliance reporting, standard reporting format for PPM Audit Report applicable to various categories of AIF has been prepared in consultation with pilot Standard Setting Forum for AIFs (SFA). The said reporting format shall be hosted on the websites of the AIF Associations which are part of SFA within 2 working days of issuance of this circular. The associations shall assist all AIFs in understanding the reporting requirements and in clarifying or resolving any issues which may arise in connection with reporting to ensure accurate and timely reporting. The said reporting requirement shall be applicable for PPM audit reports to be filed for the Financial Year ending March 31, 2024 onwards. [Circular No.: SEBI/HO/AFD/SEC-1/P/CIR/2024/ 22 dated 18.04.2024] 2. Relaxation in requirement of intimation of changes in the terms of Private Placement Memorandum (“PPM”) of Alternative Investment Funds (“AIFs”) through Merchant Banker:

Ahmedabad Chartered Accountant Journal May, 2024 135 In terms of the SEBI Master Circular dated July 31, 2023 for Alternative Investment Funds (AIFs), intimation with respect to any change in the terms of Private Placement Memorandum (PPM) is required to be submitted to SEBI through a merchant banker, along with a due diligence certificate from the merchant banker in the format specified by SEBI. Through this Circular, the changes in the terms of PPM, as mentioned in Annexure A to this circular, may not be required to be submitted through a merchant banker and may be filed directly with SEBI. Further, Large Value Fund for Accredited Investors (LVFs) shall be exempted from the requirement of intimating any changes in the terms of PPM through a merchant banker. LVFs may directly file any changes in the terms of PPM with SEBI, along with a duly signed and stamped undertaking by CEO of the Manager of the AIF (or person holding equivalent role or position depending on the legal structure of Manager) and Compliance Officer of Manager of the AIF, in a format as specified at Annexure B to this circular. AIFs are regulated by the Securities and Exchange Board of India (SEBI) under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 (AIF Regulations). [Circular No.: SEBI/HO/AFD/PoD/CIR/2024/028 dated 29.04.2024] 3. Nomination for Mutual Fund Unit Holders – exemption for jointly held folios: SEBI, vide their earlier Circulars dated May 19, 2023; September 27, 2023 and December 27, 2023, inter alia, prescribed the requirement for nomination/opting out of nomination for all the existing individual unit holder(s) holding Mutual Fund units either solely or jointly, by June 30, 2024, failing which the folios shall be frozen for debits. In order to simplify, ease and reduce cost of compliance, it has been decided that the requirement of nomination specified under clause 17.16 of the Master Circular for Mutual Corporate Law Update Funds shall be optional for jointly held Mutual Fund folios. All other provisions related to requirement of nomination as provided in SEBI Master Circular No. SEBI/HO/IMD/IMD-PoD-1/P/ CIR/2023/74 dated May 19, 2023 and SEBI Circular No. SEBI/HO/MIRSD/POD-1/P/CIR/2023/193 dated December 27, 2023, shall remain unchanged. [Circular No.:SEBI/HO/IMD/IMD-PoD-1/P/CIR/ 2024/29 dated 30.04.2024] 4. SEBI Board Meeting: The SEBI Board met on April 30, 2024 where it, inter-alia, approved the following: 1) Amendments to SEBI (Infrastructure Investment Trusts) Regulations, 2014 and SEBI (Real Estate Investment Trusts) Regulations, 2014 in order to provide a framework for Unit Based Employee Benefit Scheme. 2) Flexibility to Venture Capital Funds, registered under the erstwhile SEBI (Venture Capital Regulations), 1996, to deal with unliquidated investments of their schemes upon expiry of tenure by opting to migrate into SEBI (Alternative Investment Funds) Regulations, 2012. 3) Amendments to SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 to modify provisions relating to disclosure of financial results in the offer documents, record date, due-diligence certificate and reduction in face value of debt securities and Non-convertible Redeemable Preference Shares. 4) Amendments to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for providing flexibility regarding publication of financial results in newspapers for entities that have listed only Non-Convertible Securities. 5) Flexibility for increased participation by NonResident Indians, Overseas Citizens of India and Resident Indian individuals in SEBI registered Foreign Portfolio Investors based

136 Ahmedabad Chartered Accountant Journal May, 2024 out of International Financial Services Centres in India and regulated by the International Financial Services Centres Authority. 6) Streamlining of prudential norms for passive schemes with respect to exposure to securities of group companies of the sponsor to facilitate a level playing field for mutual funds. 7) AMCs to have an institutional mechanism for deterrence of potential market abuse including front-running. Corporate Law Update 8) Various proposals for Market Infrastructure Institutions (MIIs) with the objective of easing compliance requirements and removing redundant provisions applicable to MIIs under Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018. ❉ ❉ ❉ Continued from page 127 GST and VAT - Judgements and Updates Facts: The Petitioner received a Show Cause Notice (SCN) from the department proposing a demand. It submitted detailed reply but the proper officer passed the order holding that the reply was incomplete, not supported by adequate documents, unclear and unsatisfactory and demand was confirmed. It filed writ petition against the order. Held: The Hon’ble High Court noted that the SCN contained separate headings for different allegations. The petitioner submitted detailed reply but the proper officer passed cryptic order without taking into consideration the reply and not even applied mind to consider reply. The Court also noted that any further details could have been specifically sought from the petitioner if the officer was of the view that any further details were required. However, the record did not reflect that any such opportunity was given to the petitioner. Therefore, the Court held that the impugned order was to be set aside and the matter was remitted to the proper officer for re-adjudication. (Sources: Corporate Professionals Today) ❉ ❉ ❉

Ahmedabad Chartered Accountant Journal May, 2024 137 Developer’s Extension of Real Estate Project Completion Date Not Binding on Home buyers The real estate sector in India has long been fraught with delays in project completions, often leaving homebuyers in a lurch. In response to these persistent issues, the Indian government enacted the Real Estate (Regulation and Development) Act (RERA) in 2016, aimed at bringing transparency, accountability, and efficiency to the real estate sector. A significant aspect of RERA that stands out is the protection it offers to homebuyers against arbitrary extensions of project completion dates by developers. The Maharashtra Real Estate Appellate Tribunal (“MREAT”) in a recent judgment1 has reiterated several principles of The Maharashtra Real Estate (Regulation and Development) Act, 2016 (“the Act”) applicable when a promoter delays in handing over possession to an allottee beyond a date committed to such allottee. The Allottees had purchased a flat (“the said Flat”) in a project being developed by S.R. & Shah Developers (“Developer”). The allottees had booked the said Flat for a total consideration of Rs.22,75,000/ - (Rupees Twenty Two Lakhs and Seventy Five Thousand) (“Total Consideration”) and on receipt of the payment of the Total Consideration, an Allotment Letter dated 10th February, 2013 (“Allotment Letter”) was issued by the Developer. In terms of the Allotment Letter, the possession of the said Flat would be delivered in 18 to 24 months from the date of work commencement. The Developer received the commencement certificate on 15th April, 2014 and thereby, the possession of the said Flat was agreed to be delivered by 14th April, 2016. However, while registering the project with the Maharashtra Real Estate Regulatory Authority (“MahaRERA”), the Developer revised the possession date of the said Flat as 31st December 2020. Upon not receiving possession of the said Flat before the agreed date and upon the inability of the Developer to provide any specific time for the completion of the project, the Allottees cancelled their booking and demanded a refund of the entire consideration amount paid by them with compensation. The Developer had allegedly agreed to refund the paid amount to the Allottees, but refunded only a part of the Total Consideration. Pursuant to this, the Allottees filed a complaint before the MahaRERA seeking refund of the remaining paid amount together with interest and costs under the Act. MahaRERA Order MahaRERA passed the impugned order dated 18th February, 2020 holding inter alia that: “Since, no agreement for sale has been executed and registered between the parties, provisions of Section 18 of the act do not apply to the present case. In view of these facts, the refund amount, if any, shall be as per the terms and conditions of the said allotment letter or as agreed between the parties.” Section 18 of the Act inter-alia states that if the promoter fails to complete or is unable to give possession of an apartment, plot or building in accordance with the terms of the agreement for sale or as the case may be, duly completed by the date specified therein then the developer shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot or building, as the case may be, with interest at such rates as may be prescribed in this behalf including compensation in the manner as provided in the Act . CA. Manan Doshi [email protected] GujRERA Corner

138 Ahmedabad Chartered Accountant Journal May, 2024 GujRERA Corner Aggrieved by this order of MahaRERA, the Allottees preferred an appeal before the MREAT. Contention of Allottees The allottees referenced the judgment from the Maharashtra Real Estate Appellate Tribunal (MREAT) in the case of Manjit Singh Dhaliwal and Others vs. JVPD Properties Pvt. Ltd. In this case, the tribunal held that “section 2(c) of the Act deals with agreements for sale, which encompass agreements between developers and homebuyers. The terminology used, whether it be ‘letter of allotment,’ ‘agreement,’ or ‘acceptance letter,’ does not alter the terms agreed upon by the purchaser and seller, including the price and property details specified.” Furthermore, the judgment in Manjit Singh Dhaliwal affirmed that as long as the terms in the allotment letter are clear to both parties, allottees have the right to receive interest and compensation according to the Act. In the present case, the project completion date has been postponed to December 2020, which exceeds the originally agreed delivery date. The developer has already consented to provide a refund with interest. Contention of Developer The developer asserts that the construction of the project was delayed due to genuine reasons beyond their control, and homebuyers were informed of these delays well in advance. MahaRERA has approved an extension for the project’s completion, now scheduled for December 2020, as reflected on the MahaRERA website. The developer also contends that the allottees, by accepting a partial refund, have waived their rights to remain allottees of the project. The Maharashtra Real Estate Appellate Tribunal (MREAT) in its order has held the following: The allotment letter issued in this case reflects the agreed terms between the parties and includes essential elements of the sale agreement. Consequently, Sections 12 and 18 of the Act remain applicable. The revised possession delivery date is not valid in light of the Hon’ble Bombay High Court’s judgment in Neelkamal Realtors Suburban Pvt. Ltd vs UOI &Ors. The judgment clarifies that “The RERA does not contemplate rewriting of contract between the flat purchaser and the developer” and further states that “by giving the developer an opportunity to prescribe a fresh timeline, he is not absolved of liability under the sale agreement.” The delivery date listed on the MahaRERA website has been revised without the homebuyer’s consent and, therefore, is not binding on the homebuyer. As a result, the project completion date on the MahaRERA website cannot be considered the agreed possession delivery date. The Developer has been directed to refund the remaining amount paid by the homebuyers, along with interest, from the date of receipt of the respective payments at a rate of 2% per annum above the State Bank of India’s highest marginal cost of lending rate. Conclusion: In summary, without a sales agreement, the terms and conditions outlined in the allotment letter are binding, and the possession date agreed upon between the promoter and the allottee is not affected by any project completion date extensions displayed on the RERA website. ❉ ❉ ❉

Ahmedabad Chartered Accountant Journal May, 2024 139 Summary: The India Economy showed resilience amidst global uncertainity during the month of April. GDP growth surged to 8.4% in Q3, driven by manufacturing, mining and construction sectors. The equity markets continued their bullish run and ended the month with the NSE Nifty 50 and the BSE Sensex closing at 22,605 and 74,483 respectively. Key M&A and PE Deals includes of Manipal Hospitals acquiring majority stake in Kolkata based hospital chain, Medica Synergie Private Limited and PE Fund General Atlantic acquiring majority stake in Ujala Cygnus healthcare. Economic Update: - RBI, in its latest bulletin, said that while global economy is turning fragile with inflation risking global financial stability; there is a growing optimism that India is on the cusp of long-awaited Economic takeoff. Recent indicators point to a quickening of the momentum of aggregate demand asnon-food spending is being pushed up by thegreen shoots of rural spending recovery. - The Indian Economy did show resilience amidst global uncertainty as GDP growth surged to 8.4% in Q3, driven by manufacturing, mining and construction sectors. GDP Projections were revised upwards to 7.6-7.8% by Deloitte and PwC due to stronger-than-expected growth in fiscal 2024. CA. Karan Vora [email protected] - In May, RBI announced to pay record Rs. 2.11 trillion of dividend to government in accounting year 2023- 24. This transfer is higher than what government budgeted at Rs. 1.02 trillion and analysts’ estimates. Record payment came despite the central bank increasing the contingency risk buffer to 6.5% of total asset, from 6% for FY2023. This payout would help government to meet its fiscal deficit target and boost its resources. - The inaugural month of FY 25 saw GST Collections hit and unprecedented high of Rs. 2.10 lakh crore, reflecting 12.4% year-on-year growth. This surge was driven by a strong increase in domestic transactions and imports. Among the states, Mizoram and Lakshadweep registered the highest growth rates at 52% and 57% respectively. - The annual inflation rate based on the CPI stood at 4.83% slightly down from 4.85% in March. - Foreign exchange reserves were around $645 Billion which roughly equaled to 10 months of projected imports for FY25 or total external debt outstanding as on December 2023. Secondary Market: - The BSE Sensex closed at 74,483 up by 1.13% and the Nifty 50 closed at 22,605up by 1.24% in April 2024. Equity Markets Mar-24 Apr-24 % Change BSE Sensex 73,651.35 74,482.78 1.13% Nifty 50 22,326.90 22,604.85 1.24% BSE 500 32,043.20 33,142.57 3.43% BSE Healthcare 35,052.84 35,405.71 1.01% BSE IT 35,644.77 34,094.78 -4.35% BSE FMCG 19,318.40 19,611.99 1.52% BSE Metal 28,196.08 31,250.50 10.83%

140 Ahmedabad Chartered Accountant Journal May, 2024 Capital Market - Foreign portfolio investors (FPIs) recorded net outflows of Rs 16,260 Crores. Conversely, domestic institutional investors (DIIs) reported net investments of Rs 44,186 Crores. - In the month of April, Crude Oil prices and also the dollar index was impacted. The dollar index, a barometer of dollar strength, sobered to below the 105 levels, which was positive for the rupee and consequently for FPI flows too. While, a spike in US crude inventories and expectations of record supplies by the US pulled down the price of crude oil sharply. - The decline in IT Indice is attributed to the persisting weakness in the global demand environment which keeps the outlook for the sector hazy. - And, the major surge in metal stock indice is due to growth in manufacturing sector of China increasing the global demand of metals as it stands being the world’s largest metal consumer. Primary Market Update: There were 3 main board IPOs in April 2024 of Bhart Hexacom Limited, SRM Contractors Limited and JNK India Limitedas against 08 main board IPOs in March 2024. There were 08 SME IPOs in April2024 as against 07 SME IPOs in March 2024. Bharti Hexacom Limited: About the Established in July 1995, Bharti Company Hexacom Limited is a telecommunications provider offering consumer mobile services, fixed-line telephone and broadband services to customers that operates in the North Eastern and Rajasthan circles of India under the Airtel brand. Bharti Airtel is the promoter company and holds 70% of the company’s equity shares. Bharti Hexacom Limited’s revenue increased by 7.75% to Rs. 7,089 Crores and EBITDA Margin increased from 43.5% to 49% during the financial year 2024. Funds The company’s RHP stated no fresh Utilization issue component to the Bharti Hexacom IPO and but solely an offer-for-sale (OFS). The company’s selling stakeholder, Telecommunications Consultants India, intended to sell off 7.5 crore equity shares, or 15% of the OFS. Since, OFS Section was the only part of IPO, there will be no fund raising from the issue but instead all the offer proceeds were received by selling stakeholder, TCIL. IPO Per- The initial public offer (IPO) of Bharti formance Hexacom Limited was subscribed over 29.88 times by the end of third day. QIB’S subscribed the most at 48.57 times to the issue, followed by NII’s at 10.52 times and retail investors at 2.83 times. The shares made a stellar debut on Dalal Street as the shares got listed at a premium of 32.5% on NSE at Rs. 755 as against the IPO price of RS. 570. On BSE, the stock listed at Rs. 755.2, up by 32.49%.

Ahmedabad Chartered Accountant Journal May, 2024 141 Funds Mobilization by Corporates (Rs. In Crore) Particulars Feb-24 Mar-24 I. Equity Issues 20,869 15,165 a. IPOs (i+ii) 7,684 3,829 i. Main Board 6,920 3,115 ii. SME Platform 764 714 b. FPOs 0 27 c. Equity Rights Issues 7,959 420 d. QIPs/IPPs 3,400 8,388 e. Preferential Allotments 1,826 2,501 II. Debt Issues 81,793 1,01,770 a. Debt Public Issues 517 703 b. Private Placement of Debt 81,276 1,01,067 Total Funds Mobilized (I+II) 1,02,662 1,16,935 Mergers and Acquisitions (M&A) and Private Equity (PE) key deals: M&A:Manipal Hospitals acquire majority stake in Medica Synergie Transaction: - Manipal Hospitals acquired an 87% stake in Kolkata-based hospital chain Medica Synergie for around Rs. 1400 Crores. - This acquisition also aligns with Manipal Hospitals’ strategy of expanding its footprint and presence in Eastern India, including Kolkata, Siliguri, and Ranchi. Capital Market About Manipal Hospitals: - Manipal Hospitals is one of India’s foremost multispeciality healthcare providers catering to both Indian and international patients. With a group of 33 hospitals spread over 17 cities, they are the second-largest hospital chain in India. - Manipal Hospitals has a talented pool of over 5600 doctors, along with an employee strength exceeding 18,600,and striving to its commitment of clinical excellence, patient-centric care and ethical practices. About Medica Synergie Private Limited: - Medica Synergie Private Limited was established in the year 2006 and is one of the leading healthcare chains in eastern India today, based out of Kolkata. - It has built and managed 11 multispecialty and super-specialty healthcare facilities across the region of West Bengal to Jharkhand, Bihar, Odisha and Assam over the past few years for the number of more than 1000 beds. Rationale: - The addition of Medica will push the current hospital bed count of Manipal from over 9,500 to more than 10,500. This will make it India’s largest hospital chain, overtaking Apollo Hospital Enterprise in terms of total bed capacity. - With this acquisition, Manipal Hospitals builds on its strong presence in Eastern India, enabling them to expand the reach and meet the healthcare needs of this under-served region by integrating Medica Synergie into their portfolio and rebranding it. - With the completion of acquisition of Medica Synergie & IMRI Hospitals, the integrated network will have pan India footprint of 37 hospitals spanning across19 cities in 14 states. - By leveraging the clinical expertise and infrastructure of Medica Synergie, along with the combined operations of its extensive network, Manipal Hospitals will be well-positioned to meet the increasing demand for high-quality tertiary and quaternary healthcare services in Eastern India.

142 Ahmedabad Chartered Accountant Journal May, 2024 - Manipal Hospitals acquired 5 hospital chains namely, AMRI Hospitals, Columbia Asia, MedantaThe Medicity, Ankur Hospitals and has spent more than Rs. 9000 Crores on its acquisitions. - Singapore-based investment firm Temasek holds 51% stake in Manipal Health after selling the 8% stake to other insititutional investors in less than a year after acquiring the major share of 59% in a big deal. (We had covered this here : https:// vorafin.com/insights/pe-temasek-buys-59- controlling-stake-in-manipal-health-enterprises/) - Manipal Hospitals reported a 14% y-o-y improvement in the average revenue per occupied bed (ARPOB) at Rs. 58,810 the consolidated level for FY 23. PE:General Atlantic buys majority stake in Ujala Cygnus Healthcare Transaction: - Ujala Cygnus, a leading healthcare provider in Northern India with a network of 21 hospitals, across tier II and tier III cities entered into a partnership with General Atlantic, a leading global growth investor with an aim to further amplify its reach and advance its vision of providing affordable healthcare services. - The company’s early investors, Eight Roads Ventures, Somerset Indus Capital, and Evolvence Capital, made a full exit with the deal, reaffirming the company’s growth and track record of creating value for shareholders and investors. - As reported by ET, General Atlantic acquired 70% stake in Ujala Cygnus Healthcare Services, valuing the hospital chain at an EV of Rs. 1600 Crores. About Ujala Cygnus: - The hospital chain was founded in 2011.Ujala Cygnus was formed in November 2019 as a result of merger of Ujala Healthcare and Cygnus Medicare. - It operates in Northern pan India with multi-super speciality NABH accredited hospitals and has a team of over 300 highly qualified doctors. · Since 2018, it expanded its hospital network from nine to 21 facilities across 17 cities in five states namely Haryana, Uttar Pradesh, Uttarakhand, Jammu & Kashmir and Delhi increasing its bed capacity from 1,000 to over 2,500 beds. About General Atlantic PE Firm: - General Atlantic is a leading global growth investor with more than four decades of experience providing capital and strategic support for over 500 growth companies throughout its history. - Established in 1980 to partner with visionary entrepreneurs, management teams and deliver lasting impact, the firm combines a collaborative global approach to scale innovative businesses around the world. - Its investments in India in the healthcare sector include Rubicon Research, ASG Eyecare and the Hyderabad-based KIMS Hospitals. Rationale: - The funds from General Atlantic will be used to upgrade clinical and civil infrastructure across the Ujala Cygnus’ network and to augment comprehensive care capabilities across key specialties in each of the markets it serves. - Additionally, the investment will facilitate the expansion of Ujala Cygnus’ network to deliver on its mission to ensure improved healthcare access in underserved regions and to support healthcare professionals seeking to serve closer to their roots across Northern India. - It also aims to pursue both organic and inorganic growth strategies, including collaborations with local hospitals through leasing and revenue-sharing models. - General Atlantic will play an active role in supporting the Company with its expansion plans, leveraging its value- add capabilities and expertise in thoughtfully scaling healthcare platforms. - Earlier in January, Asian Development Bank (ADB) had signed a deal to provide 1.5 billion Indian rupees (equivalent to $18.4 million) in debt financing Capital Market Continued to page 146

Ahmedabad Chartered Accountant Journal May, 2024 143 Business Combinations - Annual Reports 2022-23 Hindustan Unilever Limited Business combinations are accounted for using the acquisition accounting method as at the date of the acquisition, which is the date at which control is transferred to the Company. The consideration transferred in the acquisition and the identifiable assets acquired and liabilities assumed are recognised at fair values on their acquisition date. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. The Company recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. Consideration transferred does not include amounts related to settlement of pre-existing relationships. Such amounts are recognised in the standalone statement of profit and loss. Transaction costs are expensed in the standalone statement of profit and loss as incurred, other than those incurred in relation to the issue of debt or equity securities which are directly adjusted in other equity. Any contingent consideration payable is measured at fair value at the acquisition date. Subsequent changes in the fair value of contingent consideration are recognised in the standalone statement of profit and loss. Aditya Birla Finance Limited A common control business combination, involving entities or businesses in which all of the combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combination and where the control is not transitory, is accounted for in accordance with Appendix C to Ind AS 103 ‘Business Combinations’. Business combinations involving entities or businesses under common control are accounted for using the pooling of interest method as follows: The assets and liabilities of the combining entities are reflected at their carrying amounts. No adjustments are made to reflect fair values, or recognize new assets or liabilities. Adjustments are made only to harmonize significant accounting policies. The financial information in the financial statements in respect of prior periods are restated as if the business combination had occurred from the beginning of the preceding period in the financial statements, irrespective of the actual date of the combination. The identity of the reserves is preserved and appears in the financial statements of the transferee in the same form in which they appeared in the financial statements of the transferor. The difference, if any, between the amounts recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount of share capital of the transferor is transferred to capital reserve and is presented separately from other capital reserves with disclosure of its nature and purpose in the notes. Reliance Industries Limited Business Combinations are accounted for using the acquisition method of accounting, except for common control transactions which are accounted using the pooling of interest method that is accounted at carrying values. CA. Pamil H. Shah [email protected] From Published Accounts

144 Ahmedabad Chartered Accountant Journal May, 2024 The cost of an acquisition is measured at the fair value of the assets transferred, equity instruments issued and liabilities assumed at their acquisition date i.e. the date on which control is acquired. Contingent consideration to be transferred is recognised at fair value and included as part of cost of acquisition. Transaction related costs are expensed in the period in which the costs are incurred. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Goodwill arising on business combination is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the fair value of net identifiable assets acquired and liabilities assumed. After initial recognition, Goodwill is tested for impairment annually and measured at cost less any accumulated impairment losses if any. Common control business combination: Business combinations involving entities or businesses that are controlled by the group are accounted using the pooling of interest method. WIPRO Limited Business combinations are accounted for using the purchase (acquisition) method. The cost of an acquisition is measured as the fair value of the assets transferred, liabilities incurred or assumed, and equity instruments issued at the date of exchange by the Company. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at fair value at the date of acquisition. Transaction costs incurred in connection with a business acquisition are expensed as incurred. The cost of an acquisition also includes the fair value of any contingent consideration measured as at the date of acquisition. Any subsequent changes to the fair value of contingent consideration classified as liabilities, other than measurement period adjustments, are recognised in the statement of profit and loss. From Published Accounts INFOSYS Limited Business combinations have been accounted for using the acquisition method under the provisions of Ind AS 103, Business Combinations. The purchase price in an acquisition is measured at the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of acquisition, which is the date on which control is transferred to the Group. The purchase price also includes the fair value of any contingent consideration. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value on the date of acquisition. Contingent consideration is remeasured at fair value at each reporting date and changes in the fair value of the contingent consideration are recognized in the Consolidated Statement of Profit and Loss. The interest of non-controlling shareholders is initially measured either at fair value or at the non-controlling interests’ proportionate share of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition-byacquisition basis. Subsequent to acquisition, the carrying amount of noncontrolling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity of subsidiaries. Business combinations between entities under common control is accounted for at carrying value of the assets acquired and liabilities assumed in the Group’s consolidated financial statements. The payments related to options issued by the Group over the non-controlling interests in its subsidiaries are accounted as financial liabilities and initially recognized at the estimated present value of gross obligations. Such options are subsequently measured at fair value in order to reflect the amount payable under the option at the date at which it becomes exercisable. In the event that the option expires unexercised, the liability is derecognized. ❉ ❉ ❉

Ahmedabad Chartered Accountant Journal May, 2024 145 CA. Kunal A. Shah [email protected] From the Government CA. Ashwin H. Shah [email protected] modification and in continuation of the Circular No 3 of 2023, hereby specifies that for the transactions entered into upto 31/3/2024 and in cases where the PAN become operative (as a result of linkage with Aadhar) on or before 31/5/204, there shall be no liability on the deductor/collector to deduct/collect the tax under section 206AA/206CC, as the case may be, and the deduction/collection as mandated in other provisions of Chapter XVII-B or Chapter XVII-BB of the Act, shall be applicable. (Circular No 7 dated 25/04/2024) 2) Circular relating to Extension of due date for filing of Form No 10A/10AB under the Income tax Act,1961 The CBDT in pursuance of section 119 of the Income Tax Act extended the due date for filing Form No 10A to 31/08/2021 by Circular No 12/2021 dated 25/06/21, to 31/03/2022 ……………………. and further to 30/09/2023 by Circular No 6 /2023 dated 24/05/2023. The Board after considering the representations and to avoid and mitigate genuine hardship , hereby extends the due date of making an application/intimation electronically in :- (i) Form No 10A, in case of an application under clause (i) of the first proviso to clause (23C) of section or under sub-clause (i) of clause (ac) of sub-section (1) of section 12A or under clause (i) of the first proviso to sub-section (5) of section 80G or in case of an intimation under fifth proviso of sun-section (1) of section 35 of the Act, till 30/06/2024; (ii) Form No 10AB, in case o fan application under clause (iii) of the first proviso to clause INCOME TAX 1) Circular relating to partial modification of Circular No 3 of 2023 dated 28/03/2023 regarding consequences of PAN becoming inoperative as per rule 114AAA of the Income tax Rules, 1962:- In pursuance of section 139AAA read with rule 114AAA, the following consequences occurred as a result of PAN becoming inoperative:- (i) Refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made to him; (ii) Interest shall not be payable to him on such refund for the period , beginning with the date specified under sub-rule (4) of rule 114AAA and ending with the date on which it becomes operative; (iii) Where tax is deductible under Chapter XVIIB in case of such person, such tax shall be deducted at higher rate, in accordance with the provisions of section 206AA; (iv) Where tax is collectible at source under Chapter XVII-BB in case of such person , such tax shall be collected at higher rate, in accordance with the provisions of section 206CC. As per sub-rule (4) of rule 114AAA of the Income –tax Rules, 1962, the above consequences shall have effect from the date specified by the Board. The Board vide Circular No 3 of 2023, dated 28/03/2023 had specified that the consequences shall take effect from 1st July, 2023 and continue till the PAN becomes operative. After receiving several grievances from the deductors/collectors, the board in partial

146 Ahmedabad Chartered Accountant Journal May, 2024 (23C) of section 10 or under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A or under clause (iii) of the first proviso to sun-section (5) of section 80G of the Act, till 30/06/2024. It may be also noted that extension of due date as mentioned in paragraph 3(ii) shall also apply in case of all pending applications under clause (iii) of the first proviso to clause (23C) of section 10 or sub-clause (iii) of clause (ac) of sub-section (1) of section 12A or under clause (iii) of the first proviso to sub-section (5) of section 80G of the Act, as the case may be. Hence, in cases where any trust, institution or fund has already made an application in Form No AB under the said provisions on or before the issuance of this Circular, and where the Principal Commissioner or Commissioner has not passed an order before the issuance of this Circular, the pending application in Form No AB may be treated as a valid application. In case of rejected application, it may furnish a fresh application in Form No 10AB within the extended time provided in above (ii) i.e. 30/06/ 2024. It is also clarified that if any existing trust, institution or fund who had failed to file Form No 10A for AY 2022-23 within the due date as extended by the CBDT circular no 6/2023 dated 24/05/2023 and subsequently, applied for provisional registration as a new trust, institution or fund and has received Form No 10AC, it can avail the option to surrender the said Form No 10AC and apply for registration for AY 2022-23 as an existing trust, institution or fund in Form No 10A within the extended time provided in paragraph (i) ie. 30/06/2024. (Circular No 7, dated 25/04/2024) ❉ ❉ ❉ From the Government to Cygnus Medicare Private Limited. This financial support aims to facilitate the expansion of affordable and high-quality healthcare services in northern India. - India’s under-tapped hospital sector has attracted substantial investments from global PE funds. Notably, Blackstone Canada’s Ontario Teachers’ Pension Plan Board (OTPP), Asia-focused Baring PE Asia, and Singapore government-owned Temasek, are having significant stakes in leading Indian healthcare chains. The leading hospital chains are also lined up with CAPEX to increase their bed count in coming years. Continued from page 142 Capital Market · The Indian healthcare segment has shown a robust compounded annual growth rate (CAGR) of around 22 percent since 2016. However, it further necessitates an investment of approximately $245 billion over the next 20 years. A PWC report underscores the need to add 3.6 million beds, 3 million doctors, and 6 million nurses to meet the growing healthcare demands in the country. Acknowledgements: RBI Bulletin (www.bulletin.rbi.org.in), SEBI (www.sebi.gov.in), NSE (www.nseindia.com), BSE (www.bseindia.com) ❉ ❉ ❉

Ahmedabad Chartered Accountant Journal May, 2024 147 ChatGPT, Google Gemini, and Microsoft Copilot: AI Tools Explained Artificial Intelligence (AI) is transforming how we interact with technology. AI-powered tools like ChatGPT, Google Gemini, and Microsoft Copilot are designed to assist us in various ways, from answering questions to generating code. Let’s take a closer look at each tool, highlighting their unique features and use cases. ChatGPT: The Conversational AI ChatGPT, developed by OpenAI, is a large language model trained on vast amounts of text data. It excels at understanding natural language and generating human-like responses. - Examples: o Ask ChatGPT to “Write a poem about a cat who loves to chase lasers.” o Request it to “Summarize the main points of this article about climate change.” o Upload financial statements for it to analyze and ask questions. o Have it brainstorm “Creative marketing ideas for a new coffee shop.” - Pros: o Documents: It can read and analyze the uploaded documents. o The GPT-4o model can engage in real-time verbal conversations without any real noticeable delays (it can now converse in certain Indian languages as well) CA. Margik H. Doshi [email protected] o The multimodal capabilities of GPT-4o can support real-time translation from one language to another (such as Gujarati, Hindi) o The model can analyze images and videos, allowing users to upload visual content that GPT4o will understand, be able to explain and provide analysis for. o Accessibility: It’s available as a web interface and mobile apps and can be integrated into various applications. - Cons: o Knowledge cut-off: Its knowledge is based on data up to a certain point (currently, October 2023)), so it might not be aware of the latest information. o Writing Style: GPT has an over-the-top default writing style that’s easy to identify like usage of words such as “exciting announcement”, “navigate through ….”, is predictable and sounds cliches. Google Gemini: The Information Powerhouse Google Gemini is Google’s ambitious project to build a multimodal AI model. It aims to combine the capabilities of language models with other AI technologies to create a more comprehensive and capable tool. - Examples (potential use cases): o Ask Gemini to “Summarize this YouTube video about quantum computing.” o Request it to find an email from your Gmail where you vaguely remember the content

148 Ahmedabad Chartered Accountant Journal May, 2024 o Ask it to prepare the proposal based on the pointers mentioned in the image. o Have it analyze “The latest trends in social media marketing.” - Strengths: o Access to vast information: Gemini is expected to leverage Google’s massive knowledge base. o It has real-time information and does not have any cut-off date for the knowledge base. o Multimodal capabilities: It might be able to process and generate not only text but also images, videos, and other forms of data. o Integration with Google ecosystem: It could seamlessly integrate with Google Search, Google Photos, and other Google products. - Limitations: o Documents: It does not have option for uploading the documents. Only the images can be uploaded. Microsoft Copilot: The Productivity Booster Microsoft Copilot is designed to enhance productivity by integrating AI assistance directly into Microsoft’s products, like Word, Excel, and PowerPoint. - Examples: o Use Copilot in Word to “Suggest different ways to rephrase this sentence”, o Request it in Excel to “Create a chart summarizing this sales data” or to “Create a pivot based on the specified filter”. o Have it in PowerPoint to “Generate design ideas for this presentation”. o Ask it to attend online Teams’ meeting and summarize the discussion for you. - Strengths: o Deep integration: It seamlessly fits into the workflow of Microsoft users. o Accessibility: It’s available within the familiar Microsoft environment. o Integration into the Microsoft products makes it accessible and practical to use. - Limitations: o Limited to Microsoft ecosystem: Its full potential is primarily realized within Microsoft products only. o Since it is still in the beta stage, it has limitation on the tasks it can perform. o An office 365 subscription is required to run copilot. Which One Should You Choose? The best AI tool for you depends on your specific needs and preferences: - ChatGPT: Ideal for general-purpose conversations, creative writing, and brainstorming and analysis of documents. - Google Gemini: Keep an eye on this tool if you need help with research, information gathering, and complex tasks. - Microsoft Copilot: A great choice for Microsoft users who want to boost their productivity within those applications. I hope the brief comparison helps you understand the differences between these exciting AI tools! ❉ ❉ ❉ I T Corner

Ahmedabad Chartered Accountant Journal May, 2024 149 CA. Ashish Sharma Hon. Secretary Association News 1. Glimpses of Past Events. Day & Date Program Speaker Venue 27th April, 2024 Annual General Meeting Shantinath Hall, Saturday ICAI Bhavan, Ahmedabad 3rd May, 2024 Re-assessment proceeding CA. Mehul Thakkar Physical cum Online Friday under Income Tax Act, on Zoom platform Practical insights for tax professionals 8th May, 2024 Meaning of work contract under CA Nitesh Jain Physical cum Online Wednesday GST and issues on ITC of work contract on Zoom platform 16th May, 2024 Lending, Investment and RPTs under CS Premnarayan Physical cum Online Company Act, 2013 – Tripathi on Zoom platform Compliances and Disclosures 17th May, 2024 Wealth Management : CA. Devagnaya Physical cum Online F & O and Hedging R. Shah on Zoom platform 2. Forthcoming Events. Day & Date Program Speaker Venue 22nd May, 2024 Direct Tax Home Refresher Course-5 Various Speakers Online on Zoom To jointly with other association platform 5th June, 2024 31st May, 2024 Summer Cricket Tournament League 2024 Friday 1st June, 2024 Analysis of Pre-import Condition and CA Amrin Alwani Physical cum Online Saturday Rule 96(10) on Zoom platform 6th June ,2024 55th Residential Refresher Course-RRC, Various Speakers Essentia Luxury to in the city of lakes- Udaipur Resort and Spa 8th June 2024 Umarda, Udaipur ❉ ❉ ❉ CA. Prakash B. Nandola Hon. Secretary

152 Ahmedabad Chartered Accountant Journal May, 2024 Across 1. A significant aspect of RERA is the protection it offers to ___________ against arbitrary extensions of project completion dates by developers. 2. If a person agrees to an obligation to refrain from an act or tolerate any act which also satisfies conditions of section 7(1) (CGST) then only it can be treated as _______________ of service under clause 5(e) of Schedule II read with section 7(IA). 3. For augmenting funds without diluting control, a prevalent method and practice is through acceptance of funds in form of _________ from directors, relatives, members and from public. ACAJ Crossword Contest - 35 ❉ ❉ ❉ Notes: 1. The Crossword puzzle is based on this issue of ACA Journal. 2. Two lucky winners on the basis of a draw will be awarded prizes. 3. The contest is open only for the members of Chartered Accountants Association and no member is allowed to submit more than one entry. 4. Members may submit their reply either physically at the office of the Association or by email at [email protected] on or before 20-06-2024. 5. The decision of Journal Committee shall be final and binding. Prize Courtesy Winners of ACAJ Crossword Contest – 34 1. CA. Monil Shah 2. CA. Ajit Shah ACAJ Crossword Contest 34 - Solution Across: Down: 1. Prosecution 4. Beneficial 2. Existence 5. Democracy 3. Penalty 6. PayTM Down 4. Under the GST regime, the taxation of sponsorship services depends on the nature of the ___________. 5. 55th RRC of CA Association is to be held in _________ city. 6. Remote trading _______________ , not having physical presence in IFSC is permitted to trade directly on Stock Exchanges on a proprietary basis without a broker dealer. 5 6 4 1 2 3