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DEEMED REGISTRATION OF TRUST U/S 12AA OF INCOME TAX ACT - IF APPLICATION NOT DISPOSED OF WITHIN 6 MONTHS: SUPREME COURT

CIT v. Society for the Promotion of Education, Adventure Sport & Conservation of Environment (Supreme Court)

“Section 12AA of the Income Tax Act, 1961: Non disposal of an application for registration before the expiry of six months as provided u/s 12AA (2) results in deemed grant of registration”

In Society for the Promotion of Education, Adventure Sport & Conservation of Environment vs. Commissioner of Income Tax (2008) 216 CTR (All) 167, the Allahabad High Court held that non disposal of an application for registration before the expiry of six months as provided u/s 12AA (2) Income Tax Act, 1961 would result in deemed grant of registration. However, this was reversed by the Full Bench of the Allahabad High Court in CIT vs. Muzafar Nagar Development Authority (2015) 372 ITR 209.

Thereafter the Department filed an appeal against the above verdict before the Supreme Court.

Supreme Court disposed of the Appeal and HELD that:

(i) The short issue is with regard to the deemed registration of an application under Section 12AA of the Income Tax Act, 1961. The High Court has taken the view that once an application is made under the said provisions and in case the same is not responded within six months, it would be taken that the applicant is registered under the provisions;

(ii) The learned Additional Solicitor General appearing for the appellants, has raised an apprehension that in the case of the respondent, since the date of application was of Feb 24, 2003, at the worst, the same would operate only after six months from the date of the application;

(iii) SC perceives no basis for such an apprehension since that is the only logical sense in which the Judgment could be understood. Therefore, in order to disabuse any apprehension, SC made it clear that the registration of the application under Section 12AA of the Income Tax Act in the case of the respondent shall take effect from August 24, 2003;

(iv) Subject to the above clarification and leaving all other questions of law open, the appeal is disposed off with no order as to costs.

NOTE : Though the Supreme Court left “all other questions of law open”, the impact of the verdict is that the law laid down in Society for the Promotion of Education, Adventure Sport & Conservation of Environment vs. Commissioner of Income Tax (2008) 216 CTR (All) 167 that there is a deemed registration after six months of the application and the law laid down by the Full Bench in CIT vs. Muzafar Nagar Development Authority (2015) 372 ITR 209 is no longer good law.

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NO SERVICE TAX ON SERVICES PROVIDED BY GOVERNMENT TO BUSINESS ENTITY, IF THE TURNOVER DOES NOT EXCEEDS RS. 10 LAKH

SECTION 66B OF THE FINANCE ACT, 1994 - CHARGE OF SERVICE TAX ON AND AFTER

FINANCE ACT, 2012 - MEGA EXEMPTION NOTIFICATIONS - AMENDMENT IN NOTIFICATION NO.25/2012-ST, DATED JUNE 20, 2012

NOTIFICATION NO.7/2016-ST, DATED FEBRUARY 18, 2016

In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No.25/2012- Service Tax, dated the June 20, 2012, published in the Gazette of India, Extraordinary, Part II, section 3, sub-section (i) vide number G.S.R. 467 (E), dated the 20th June, 2012, namely:—

1. In the said notification, in the opening paragraph,

(i) after entry No. 47, the following shall be inserted, namely—

"(48) Services provided by Government or a local authority to a business entity with a turnover up to rupees “Ten Lakh” in the preceding financial year."

2. The amendment shall come into effect on April 1, 2016.

This is in view of Modi’s ease of doing business in India, helping small scale service providers.

PROCEDURE FOR FILING APPLICATION FOR OBTAINING MSME(SSI) AND NOW UAM

UDYOG AADHAAR MEMORANDUM

Ministry of Micro, Small and Medium Enterprises (“MSME”) has issued a Notification No. S.O 2576(E) dated 18th September, 2015 under the MSME Development Act, 2006 and as per the recommendations made by Kamath Committee, the Ministry of MSME, in consultation with the National Board of MSMEs and the Advisory Committee in this behalf.

It has been notified that, in order to obtain registration, every MSME unit shall file Udyog Aadhaar Memorandum (“UAM”) only and the old procedure which was so intricate has been taken away by the central government.

BENEFITS OF FILING UDYOG AADHAAR MEMORANDUM

Udyog Aadhaar registration will enable the units/enterprises to seek information and apply online about various services being offered by all Ministries and Departments. Earlier only medium enterprises were insisted to file EM2 as it was very cumbersome to file, the simplified Udyog Aadhaar will enable all enterprises to file and register themselves so that simply by using Udyog Aadhaar Number, they can access other services. The process of obtaining Udyog Aadhaar Number is free-of cost, paperless and results in instant registration

BENEFITS OF FILING UDYOG AADHAAR MEMORANDUM

Udyog Aadhaar registration will enable the units/enterprises to seek information and apply online about various services being offered by all Ministries and Departments. Earlier only medium enterprises were insisted to file EM2 as it was very cumbersome to file, the simplified Udyog Aadhaar will enable all enterprises to file and register themselves so that simply by using Udyog Aadhaar Number, they can access other services. The process of obtaining Udyog Aadhaar Number is free-of cost, paperless and results in instant registration.

Words from the notification issue by the department in this regard:

1. there shall be no fee for filing the Udyog Aadhaar Memorandum;
2. Udyog Aadhaar Memorandum shall be filed online at http://udyogaadhaar.gov.in, the Udyog Aadhaar Portal maintained by the Ministry of Micro, Small and Medium Enterprises, by every micro, small and medium enterprise, but in exceptional cases where online filing is not possible for any reasons, a hard copy of the form as in Annexure 1, duly filled in may be submitted to the concerned District Industry Center which shall file the Udyog Aadhaar Memorandum online, on the behalf of such enterprise;
3. UAM Acknowledgment as per Annexure 2 shall be generated and mailed to the email address provided in the UAM which shall contain unique Udyog Aadhaar Number;
4. Existing enterprises, which have filed Entrepreneurship Memorandum-I or Entrepreneurship Memorandum-II or both, or the holders of Small Scale Industry registration, prior to the coming into force of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006) shall not be required to file Udyog Aadhaar Memorandum, but if they so desire, they may also file the Udyog Aadhaar Memorandum;
5. in filing the UAM, the Aadhaar Number of the Authorized Person shall be provided. There shall be no restriction on filing more than one UAM using the same Aadhar Number;
6. The UAM shall be filed on self-declaration basis, and no supporting document is required to be uploaded or submitted while filing the UAM. However, the Central Government or the State Government or such person as may be authorized in this behalf may seek documentary proof of information provided in the UAM, wherever necessary.

GUIDELINES FOR FILING THE ONLINE UDYOG AADHAAR FORM

• Aadhaar Number - 12 digit Aadhaar number issued to the applicant should be filled in the appropriate field.
• Name of Owner- The applicant should fill his/her name strictly as mentioned on the Aadhaar Card issued by UIDAI. E.g. if Raj Pal Singh has his name as Raj P. Singh, the same should accordingly be entered if the name does not match with the Aadhar Number, the applicant will not be able to fill the form further.
• To Validate Aadhaar:-
• Validate Aadhaar- The applicant must click on Validate Aadhaar button for verification of Aadhaar, after that only user can fill the form further.
• Reset- The applicant can click on reset button to clear the field of Aadhaar No and Name of the owner for different Aadhaar.
• Social Category- the Applicant may select the Social Category (General, Scheduled Caste, Scheduled Tribe or Other Backward Castes (OBC). The proof of belonging to SC, ST or OBC may be asked by appropriate authority, if and when required.
• Name of Enterprise- the Applicant must fill the name by which his/her Enterprise is known to the customers/public and is a legal entity to conduct business. One applicant can have more than one enterprises doing business and each one can be registered for a separate Udyog Aadhaar and with the same Aadhaar Number as Enterprise 1 and Enterprise 2 etc.
• Type of Organization- the Applicant may select from the given list the appropriate type of the organization for his/her enterprise. The Applicant must ensure that he/she is authorized by the legal entity (i.e. enterprise being registered for Udyog Aadhaar) to fill this online form. Only one Udyog Aadhaar number shall be issued for each enterprise.
• Postal Address- the Applicant should fill in the appropriate field the complete postal address of the Enterprise including State, District, Pin code, Mobile No and Email.
• Date of Commencement- The date in the past on which the business entity commenced its operations may be filled in the appropriate field
• Previous Registration Details(if any)- If the Applicant's enterprise, for which the Udyog Aadhaar is being applied, is already issued a valid EMI/II by the concerned GM (DIC) as per the MSMED Act 2006 or the SSI registration prevailing prior to the said Act, such number may be mentioned in the appropriate place.
• Bank Details- the Applicant must provide his/her bank account number used for running the Enterprise in the appropriate place. The Applicant must also provide the IFS Code of the bank's branch where his/her mentioned account exists. The IFS code is now a day’s printed on the Cheque Books issued by the bank. Alternatively, if the Applicant knows the name of the Bank and the branch where his/her account is there, the IFSC code can be found from website of the respective Bank.
• Major Activity- The major activity i.e. either "Manufacturing" or "Service" may be chosen by the enterprise for Udyog Aadhaar.
• NIC Code- the Applicant may choose as appropriate National Industrial Classification-2008 (NIC) Code for the selected "Major Activity". The NIC codes are prepared by the Central Statistical Organisation (CSO) under the Ministry of Statistics and Program implementation, Government of India..
• Person employed- The total number of people who are directly been paid salary/ wages by the enterprise may be mentioned in the appropriate field.
• Investment in Plant & Machinery / Equipment- While computing the total investment, the original investment (purchase value of items) is to be taken into account excluding the cost of pollution control, research and development, industrial safety devices, and such other items as may be specified, by notification of RBI. If an enterprise started with a set of plant and machinery purchased in 2008 worth Rs. 70.00 lakh has procured additional plant and machinery in the year 2013 worth Rs. 65.00 lakh, then the total investment in Plant & Machinery may be treated as Rs. 135.00 lakh.
• DIC- the Applicant, based on the location of the Enterprise, has to fill in location of DIC. This Column will be active and show option only when there are more than one DIC in the district. In fact if there is only one DIC in the district system will automatically register you in the same DIC.
• Submit- The Applicant must click on Submit button to generate Acknowledgment number.

ANNEXURE-1- UDYOG AADHAAR MEMORANDUM

ANNEXURE-2- ACKNOWLEDGMENT:-

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