INSITE - INDIA - 27 Dec 2023

BILL TO AMEND CENTRAL GOODS AND SERVICE TAX INTRODUCED IN LOK SABHA

Summary: The Central Goods and Services Tax (Second Amendment) Bill, 2023, was introduced on December 13, 2023, and proposes significant changes to the existing provisions of the Central Goods and Services Tax Act, 2017, in alignment with the Tribunal Reforms Act, 2021. The bill suggests setting the age limit for the president and members of the GST Appellate Tribunals (GSTAT) at 70 years and 67 years, respectively. This is an increase from the earlier specified limits of 67 years and 65 years. Additionally, the amendment allows advocates with 10 years of experience to qualify for membership.

In Detail: The Bill aligns the Central Goods and Services Tax Act, 2017, with the Tribunal Reforms Act, 2021 to set up the administrative process for the functioning of Goods and Services Tax Appellate Tribunals.

As per Bill's statement of objects and reasons, Section 109 of the Central Goods and Services Tax Act, 2017, establishes the Goods and Services Tax Appellate Tribunal as the second appellate authority for hearing appeals against orders issued by the Appellate Authority under the Central Goods and Services Tax Act, 2017, and the State Goods and Services Tax Acts.

The Bill also suggests modifications to section 110, outlining qualifications and terms for appointing the President and Members of the Appellate Tribunal. Key changes involve the criteria for eligibility and the tenure limits for the President and Members.

The changes proposed in the Bill, especially in sections 109 and 110, aim to streamline dispute resolution in the GST system. As the Bill moves through Parliament, we will gain a better understanding of how it will affect taxpayers and the overall tax administration.

Key Links: https://prsindia.org/files/bills_acts/bills_parliament/2023/Central_Goods_and_Services_Tax_(Second_Amendment)_Bill_2023.pdf

AMENDMENTS TO ONLINE DISPUTE RESOLUTION IN THE SECURITIES MARKET

Summary: On December 20, 2023, the Securities and Exchange Board of India (SEBI) issued an important circular, SEBI/HO/OIAE/OIAE_IAD-3/P/CIR/2023/191, updating the guidelines for resolving disputes online in the Indian securities market.

In Detail: SEBI previously issued Circular No. SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/131 on July 31, 2023, providing guidelines for online dispute resolution. Amendments were later made via Circular No. SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/135 on August 04, 2023, and Master Circular No. SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/145 on August 11, 2023.

The recent Circular on December 20, 2023, brings key changes, including clarification on the involved parties, and incorporating institutional/corporate clients. It also amends mediation, conciliation, and arbitration processes, emphasizing online procedures within India. The circular also outlines fees, charges, and costs for mediation, conciliation, and arbitration institutions.

New entities have been added to Schedules A and B, such as Banker to an Issue, Self-Certified Syndicate Banks, Merchant Bankers, Commodities Clearing Corporation, ESG Ratings Providers, and more.

SEBI has clarified the process for online arbitration. If a market participant faces online arbitration initiated by an investor, they must deposit 100% of the admissible claim value and pay the fees within 10 days. Failure to comply may lead to action by Market Infrastructure Institutions (MIIs) or SEBI. If market participants intend to pursue online arbitration, they must inform the Online Dispute Resolution (ODR) institution within 10 days after concluding the conciliation process, followed by a 100% deposit of the admissible claim value and payment of fees within 5 days. SEBI has adjusted the arbitration process fee slab to 'Above Rs 50 lakh-Rs 1 crore.' SEBI previously instructed MIIs to establish a common ODR platform for online conciliation and arbitration on July 3, 2023.

The circular is effective immediately.

Key Links: https://www.sebi.gov.in/legal/circulars/dec-2023/amendment-to-circular-dated-july-31-2023-on-online-resolution-of-disputes-in-the-indian-securities-market_80110.html 

SEBI ESTABLISHES A PROCEDURE FOR CONVERTING AIFS UNITS INTO DEMATERIALIZED FORM

Summary: To promote the dematerialization of Alternative Investment Funds (AIFs) units, the market regulator has issued guidelines on handling situations where investors haven't provided their demat account details. Funds are instructed to transfer such units to a separate demat account, referred to as the Aggregate Escrow Demat Account. These units will be held there until the investor furnishes their demat account details. This move addresses the concern raised by fund managers about investors not having demat accounts or not providing the necessary details, aligning with the Securities and Exchange Board of India (SEBI) dematerialization push for AIF units.

In Detail: SEBI issued a circular on December 11, 2023, stating that AIFs should open an Aggregate Escrow Demat Account to hold demat units on behalf of investors.

New units issued in demat form will be allotted and credited to this account. When investors provide their demat account details, units held in this account must be transferred to their demat accounts within five working days. No transfers from the escrow account for other reasons are allowed.

Schemes of AIFs with a corpus over Rs 500 Crore should credit units into the escrow account by January 31, 2024, for investors without demat details before November 1, 2023. AIFs with a corpus under Rs 500 Crore should do so by April 30, 2024. The same deadlines apply for transferring units to investors' demat accounts if details are provided.

Managers must maintain investor-wise KYC details and report them monthly to depositories and custodians.

Key Links: https://www.sebi.gov.in/legal/circulars/dec-2023/credit-of-units-of-aifs-in-dematerialised-form_79774.html