Weekly Round-up on Tax and Corporate Laws | 2nd to 7th June 2025

This weekly newsletter analytically summarises the key stories reported at taxmann.com during the previous week from June 02^nd to 07^th, 2025, namely:

1. Auto-populated liabilities in GSTR-3B to become non-editable from July 2025; corrections to be made via GSTR-1A: Advisory
2. Rxp. incurred on business promotion of another firm in which assessee had share to be allowed to extent of benefit: ITAT;
3. MCA overhauls various statutory forms to improve corporate disclosures and strengthen compliance;
4. GSTN will prohibit filing of GST returns post three-year expiry from due date in July 2025: Advisory;
5. HC stayed GST demand on retailer discounts being not a consideration for service to manufacturers; and
6. Disclosure requirement for related party transactions incurred before establishing the related party relationship.

1. Auto-populated liabilities in GSTR-3B to become non-editable from July 2025; corrections to be made via GSTR-1A: Advisory

The GSTN has clarified that from the July 2025 tax period onwards, auto-populated tax liabilities in Form GSTR-3B will become non-editable, requiring taxpayers to make any corrections through Form GSTR-1A prior to filing GSTR-3B. This was stated in the GSTN Advisory, dated 07-06-2025.

About the Update

GSTN has issued an advisory stating that, starting from the July 2025 tax period (i.e., returns filed in August 2025), the auto-populated tax liability in Form GSTR-3B will no longer be editable. Currently, these amounts—auto-filled from Form GSTR-1, Form GSTR-1A, and IFF can be manually modified during GSTR-3B filing, but such manual editing will be discontinued with this update.

Taxpayers must therefore ensure that any corrections to outward supply details are made through Form GSTR-1A before filing GSTR-3B for the respective period. GSTR-3B will then display the final, non-editable tax liabilities based on the auto-populated data.

Read the Advisory

2. Exp. incurred on business promotion of another firm in which assessee had share to be allowed to extent of benefit: ITAT

The assessee was in the business of building construction and civil contracting. During the year under consideration, the assessee incurred exhibition expenses amounting to Rs. 36,61,750/- on behalf of another firm in which the assessee was a partner. The said firm had hosted an event, and business promotion expenses had been incurred by the assessee in this event.

During the assessment proceedings, the assessee submitted that the expenses were incurred to boost the business of the other firm as a whole. The assessee placed reliance on the principle of business expediency and argued that expenses can be allowable even if a direct benefit does not accrue, provided the business interest is ultimately served.

The AO rejected the contention of the assessee and held that the exhibition and promotion expenses were not connected to any actual or foreseeable business activity and failed to meet the requirement of being incurred “wholly and exclusively” for business purposes under section 37.

Aggrieved by the order, the assessee preferred an appeal to the CIT(A) but could not succeed. The matter then reached the Ahmedabad Tribunal.

The Tribunal held that in the case of business expenses covered under section 37 of the Act, the natural presumption would be that the expenses have been incurred by the assessee for its own business and not the business of a third party entity in which the assessee may be having a shareholding or partnership interest or any other commercial interest or commercial or business relationship, from which any indirect benefit may accrue to the assessee.

In the instant case, the expenses were incurred for a third-party firm, where the assessee had a 10 percent profit share. The assessee claimed that since “brand promotion” was involved, a substantial benefit accrued to the assessee as well, and the entire expenditure was claimed by the assessee in its books. Such a proposition cannot be accepted since this would disturb the concept of the separate entity structure itself, and different entities would start claiming expenditure incurred on third-party businesses on the grounds of commercial expediency and accrual of indirect benefit to the assessee’s business.

The assessee was only eligible for a 10% share in the profits of the third-party firm. CIT(A) has taken a reasonable approach in allowing 25% of expenses to the assessee’s hands. Accordingly, no interference is called for in the order of CIT(A).

Read the Ruling

3. MCA overhauls various statutory forms to improve corporate disclosures and strengthen compliance

In a significant move aimed at enhancing regulatory disclosures and improving procedural clarity, the Ministry of Corporate Affairs (MCA) vide. Notification dated May 30, 2025, undertook a comprehensive review of several statutory e-forms under the Companies Act, 2013. The revised forms aim to capture detailed disclosures, reflect procedural changes and align with evolving regulatory needs. These changes seek to promote transparency, strengthen corporate governance and ensure timely and accurate reporting by companies. Accordingly, the MCA has made amendments to the following rules:

Amendment to Rule 6 of Companies (Cost Records and Audit) Rules, 2014; Substitution of Forms CRA-2 & CRA-4

The MCA has notified the Companies (Cost Records and Audit) Amendment Rules, 2025, substituting Forms CRA-2 and CRA-4 with the revised versions. Form CRA-2 pertains to intimating the appointment of a cost auditor by a company to the Central Government, while Form CRA-4 relates to filing the Cost Audit Report with the Central Government.

In Form CRA-2, new fields have been introduced to capture details regarding the nature of the cost auditor’s appointment, such as filings due to amalgamation, demerger, or casual vacancy. A written confirmation of the auditor’s consent is also now required.

Form CRA-4 has been revised to include disclosures regarding the auditor’s lead status. Also, details of any AGM extension, including the SRN of Form GNL-1 and the revised AGM date must be provided.

Amendment to Rule 12 of Companies (Registration Offices and Fees) Rules, 2014; Substitution of Form GNL-1

The MCA notified the Companies (Registration Offices and Fees) Amendment Rules, 2025, substituting Form GNL-1 with a new version. Form GNL-1 is used to submit applications to the Registrar of Companies under the Companies Act, 2013.

Under the revised Form GNL-1, details relating to the period of default, reasons leading to default, whether the default was made good, whether any investigation against the company has been initiated under the Companies Act, 2013, the agency conducting an investigation and brief particulars of the investigation are to be provided. Also, details related to the payment of stamp duty have been removed.

Amendment to Rules 11 and Rule 31 of Companies (Management & Administration) Rules, 2014; Substitution of Forms MGT-7, MGT-7A and MGT-15

The MCA notified the Companies (Management and Administration) Amendment Rules, 2025, substituting Forms MGT-7, MGT-7A, and MGT-15.

The revised Form MGT-7(Annual Return) will provide a summary of debenture indebtedness and a category-wise breakup of shareholders.

The revised Form MGT-7A (Abridged Annual Return for OPCs and Small Companies) will include a photograph of the registered office showing the external building and the company’s name.

Details relating to the FY to which AGMs pertain are to be disclosed in Form MGT-15 (Report on AGM). These forms will be launched on the V3 portal on 14.07.2025.

Amendment to Rules 4, 7, 8 and 13 of Companies (Audit and Auditors) Rules, 2014; Overhaul of ADT forms

The MCA notified Companies (Audit and Auditors) Amendment Rules, 2025, substituting Forms ADT-1, ADT-2, ADT-3 and ADT-4. In Form ADT-1 (Appointment of Auditor), details on the nature of the auditor’s appointment and the prior audits conducted by the auditor/firm/member are to be disclosed.

Form ADT-2 (Removal of Auditor) requires proof of service of notice to the defending auditor. Form ADT-3 (Resignation by Auditor) needs the SRN of ADT-1. In Form ADT-4 (Report to Central Government), the company’s email ID, office details where the offence was committed and details of the officers involved are to be disclosed.

Amendment to Rules 5 and 8 of Companies (Accounts) Rules, 2014; Replacement of Forms AOC-1 and AOC-2 with e-forms

The MCA notified the Companies (Accounts) Amendment Rules. As per the amended norms, Forms AOC-1 (statement containing features of financials of subsidiaries or associate companies or joint ventures) and AOC-2 (disclosure of particulars of contracts/arrangements entered into by company with related parties) will now be electronic forms.

Further, in Rule 8(5), the Board report shall also include details about the number of sexual harassment complaints received in a year, those disposed of during the year, and cases pending for more than 90 days. Also, a company must provide a statement concerning compliance with the provisions of the Maternity Benefit Act 1961 in its Board Report.

Read the Notification

Read the Notification

Read the Notification

Read the Notification

Read the Notification

4. GSTN will prohibit filing of GST returns post three-year expiry from due date in July 2025: Advisory

The GSTN has clarified that taxpayers will be prohibited from filing GST returns after the expiry of three years from the due date prescribed under Sections 37, 39, 44, and 52 of the CGST Act, effective from the July 2025 tax period. This was stated in the GSTN Advisory, Dated 07-06-2025.

About the Update

The GSTN has issued an advisory clarifying that taxpayers will not be allowed to file GST returns after the expiry of three years from the due date prescribed for filing returns under Section 37 (Outward Supply), Section 39 (Payment of Liability), Section 44 (Annual Return), and Section 52 (Tax Collected at Source). This restriction covers returns including GSTR-1, GSTR-3B, GSTR-4, GSTR-5, GSTR-5A, GSTR-6, GSTR-7, GSTR-8, and GSTR-9, as per Notification No. 28/2023 – Central Tax, dated 31-07-2023.

This restriction will be implemented on the GST portal starting from the July 2025 tax period. Taxpayers are advised to reconcile their records and file any pending returns promptly to comply with the prescribed time limit for return filing.

Read the Ruling

5. HC stayed GST demand on retailer discounts being not a consideration for service to manufacturers

The Hon’ble Delhi High Court held that discounts granted by manufacturers to retailers do not prima facie constitute consideration for taxable services rendered by the retailer in promoting the manufacturers’ goods under GST. The Court reasoned that the transaction’s nature does not amount to a supply of service in exchange for such discounts, thereby negating the levy of GST on these amounts at the prima facie stage. This was held in Vardhman Electronics vs. Additional Commissioner, CGST Delhi West [2025].

Facts

The petitioner, a retailer engaged in the sale of household appliances and electronic goods, challenged a show cause notice and a consequential adjudication order issued by the jurisdictional Additional Commissioner of CGST, which confirmed a demand of short-paid tax amounting to several crores along with penalties. The proceedings were initiated on the basis that the petitioner had received discounts from various manufacturers, which the Revenue Department treated as consideration for services rendered by the petitioner in promoting the goods of the manufacturers. It was the Department’s stand that such promotional facilitation amounted to a taxable supply of service under GST. The petitioner approached the Delhi High Court seeking interim relief against the demand.

Held

The Hon’ble Delhi High Court held that discounts given by manufacturers to retailers, prima facie, could not be considered as a consideration for services rendered by the retailer to promote the goods of the manufacturer. It observed that the nature of the transaction did not reflect a supply of service in exchange for the discount, and therefore, no GST could be levied on such amounts on the face of it. In view of this preliminary finding, the Court stayed the operation of the impugned adjudication order.

Read the Ruling

6. Disclosure requirement for related party transactions incurred before establishing the related party relationship

Under Ind AS 24, Related Party Disclosures, the primary objective is to promote transparency by requiring entities to disclose the nature of related party relationships, transactions, and outstanding balance including commitments if the parties are related either at the time of the transaction or as on the reporting date, thereby enabling users of financial statements to understand the potential impact of such relationships on the entity’s financial position and performance.

A key issue arises when a related party relationship is established partway through the reporting period. Specifically, there is uncertainty about whether transactions that occurred before the relationship was created, along with any resulting outstanding balances, require disclosure.

As per Ind AS 24, related party transactions need to be disclosed only if the parties were related at the time the transaction occurred. This means transactions that happened before a related party relationship was established are not required to be disclosed. However, the Standard also makes it clear that any outstanding balances with related parties must be disclosed if they exist as on the reporting date.

Thus, even if outstanding balances come from transactions before the relationship started, they must still be disclosed. This includes details like the amount, terms, whether they are secured, any guarantees, and provisions for doubtful debts. Not disclosing these balances when a related party relationship exists at year-end goes against the purpose of Ind AS 24 and reduces transparency.

For example, consider a scenario where a company acquires a controlling stake in another entity during the financial year, making it a subsidiary. While transactions between them before the acquisition, when they were unrelated, do not require disclosure, any outstanding balances from those earlier transactions that remain unsettled as of the reporting date must be disclosed since the entities are related at that time.

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