Lawyer Monthly Magazine - November 2019 Edition

tax and service tax before implementation of the Scheme (which provided, inter-alia, for amalgamation of the Transferor Company with Ad2Pro Media Solutions Pvt. Ltd. (the “Transferee Company”)). In the present case, the Transferor Company had certain outstanding liabilities towards income tax and service tax. However, the demand raised by the tax authorities was challenged by the Transferor Company before the competent appellate tribunal. The NCLT, while approving the Scheme, directed the Transferor Company to pay the entire amount of outstanding tax liabilities as per the demands raised by the tax authorities. As a result of this condition imposed by the NCLT, the approved Scheme could not have been made effective till the time the Transferor Company made the payment of the outstanding tax dues to tax authorities. The NCLAT observed that the Scheme approved by the NCLT provided that post amalgamation all the tax assessment proceedings and appeals shall be continued with the Transferee Company and all or any dues payable in accordance with law shall be paid by the Transferee Company. The NCLAT also noted that the Transferor Company and the Transferee Company had undertaken to satisfy all demands emanating from, and raised by, the competent tax authorities depending upon the outcomes of such proceedings. In view of this, the NCLAT modified the Scheme and held that the approved Scheme shall be implemented without insisting upon compliance of demands of tax authorities. DPIIT issues Press Note 4 of 2019 series approving reforms in FDI policy On 18 September 2019 the Department for Promotion of Industry and Internal Trade (“DPIIT”) issued Press Note 4 of the 2019 series approving the Cabinet proposal (announced in the meeting, held on 28 August 2019), for review of the FDI policy in relation to various reforms. The reforms include opening new sectors to FDI and liberalizing FDI related norms in sectors already open for foreign investment. The reforms announced vide the press note no. 4 are: (a) permitting 100% FDI, under the automatic route, in (i) contract manufacturing and (ii) 100% FDI under automatic route for sale of coal, for coal mining activities including associated processing infrastructure. The term “associated processing infrastructure” is defined to include coal washery, crushing, coal handling and separation (magnetic and non-magnetic). (b ) 26% FDI, under government route, is now permitted for uploading/ streaming of News & Current Affairs through Digital Media. (c) easing of FDI related norms in single brand retail trading (SBRT). The following relaxations/amendments have been announced to the policy relating to FDI in SBRT sector: (i) all procurements made from India by the SBRT entity for the relevant single brand shall be counted towards local sourcing, irrespective of Regulatory Update of the Month: India By Clasis Law 19 NOV 2019 | WWW.LAWYER-MONTHLY.COM “ “ “Once a scheme has been sanctioned by a Tribunal… nothing precludes the Tax Authorities from recovering its legitimate and recoverable outstanding tax dues from the Transferor or the Transferee Company, as provided in the scheme.”