GST App -Act, Rules, Quiz, e waybill app – GSTSEVA https://www.gstseva.com gst login gst.gov.in Sat, 21 Sep 2019 09:56:05 +0500 en-US hourly 1 https://wordpress.org/?v=5.3 https://www.gstseva.com/wp-content/uploads/2017/07/gst-150x150.png GST App -Act, Rules, Quiz, e waybill app – GSTSEVA https://www.gstseva.com 32 32 GST rates reduced on following goods https://www.gstseva.com/gst-rates-reduced-on-following-goods Sat, 21 Sep 2019 09:55:52 +0000 https://www.gstseva.com/?p=10041 GST Rate on following Goods recommended by The GST Council in Its 37th Meeting

The 37thGST Council met in Goa today under the Chairmanship of Union Finance & Corporate Affairs Minister Smt Nirmala Sitharaman  . The meeting was also attended by Union Minister of State for Finance & Corporate Affairs Shri Anurag Thakur besides Chief Minister of Goa Shri Pramod Sawant,  Finance Ministers of States & UTs and seniors officers of the Ministry of Finance .

The council   took the following decisions in respect to rates relating to goods.

 

  1. GST rates reduction, –

 

  1. 18% to 12% on parts of Slide Fasteners

 

  1. 18% to 5% on Marine Fuel 0.5% (FO) 

 

  1. 12% to 5% on Wet Grinders(consisting stone as a grinder)

 

  1. 5% to Nil on:-

 

  1. Dried tamarind
  2. Plates and cups made up of leaves/ flowers/bark

 

  1. 3% to 0.25% on cut and polished semi- precious stones

 

  1. Applicable rate to 5% on specified goods for petroleum operations undertaken under Hydrocarbon Exploration Licensing Policy (HELP)

 

  1. Exemptions from GST/IGST on:-

 

  1. imports of specified defence goods not being manufactured indigenously (upto 2024)
  2. supply of goods and services to FIFA and other specified persons for organizing the Under-17 Women’s Football World Cup in India.
  3.  supply of goods and services to Food and Agriculture Organisation (FAO) for specified projects in India.

 

 

  1. GST rates have been recommended to be increased from, –
  1. 5% to 12% on goods, falling under chapter 86 of tariff like railway wagons, coaches, rolling stock (without refund of accumulated ITC). This is to address the concern of ITC accumulation with suppliers of these goods.
  2. 18% to 28% +12% compensation cess on caffeinated Beverages

 

  1. Measures for Export Promotion
  1. Exemption from GST/IGST:-
  1. at the time of import on Silver/Platinum by specified nominated agencies
  2. supply of Silver/Platinum by specified nominated agency to exporters for exports of Jewellery,
  1. Inclusion of Diamond India Limited (DIL) in the list of nominated agencies eligible for IGST exemption on imports of Gold/ Silver/Platinum so as to supply at Nil GST to Jewellery exporters.
  1. A uniform GST rate of 12% on Polypropylene/Polyethylene Woven and Non- Woven Bags and sacks, whether or not laminated, of a kind used for packing of goods (from present rates of 5%/12%/18%)

 

  1. GST concession in certain cases for specific period: –
  1. Exemption to Fishmeal for the period 01.07.17 to 30.09.19. There were doubts as regards taxability offishmeal in view of the interpretational issues. However, any tax collected for this period shall be required to be deposited.

 

  1. 12% GST duringthe period 1.07.2017 to 31.12.2018, on pulley, wheels and other parts (falling under Heading 8483) and used as parts of agricultural machinery.

 

  1. Passenger vehicles of engine capacity 1500 cc in case of diesel, 1200 cc in case of petroland length not exceeding 4000mm designed for carrying upto 9 persons attract compensation cess of 1% for petrol and 3% for diesel vehicle. Council recommended same compensation cess rate for vehicles having these specifications (length and engine capacity) but designed for carrying more than 10 persons but upto 13 persons. (Presently these vehicles attract compensation cess at the rate of 15%)

 

  1. Other miscellaneous Changes:
  • Aerated drink manufacturers shall be excluded from compositionscheme.
  • Option to pay GST at the rate of 18% on transaction value at the time of disposal of specified goods for petroleum operations (on which concessional GST rate of 5% was paid at the time of original supply) provided that the goods are certified by Director General Hydrocarbon(DGH) as non-serviceable.
  • Restriction on refund of compensation cess on tobacco products (in case of inverted duty structure)
  • Prescribing modalities for allowing concessions on spare parts imported temporarily by foreign airlines for repair of their aircraft, while in India in transit in terms of the Chicago Convention on Civil Aviation.
  • Certain other changes of technical nature for the sake of clarity in application of notification.

 

  1. Clarifications as regards applicability of GST rate in respect of certain goods recommended by GST Council which inter-alia includes: 
      1. Mere heating ofleguminous vegetables (gram/lentil) for removing moisture, or to soften and puff it or removing the skin, and not subjecting to any other processing or addition of any other ingredients (salt, oil etc.) would be classified under HS code 0713.
  1. All “mechanical sprayers” falling under HS Code 8424 would attract 12% GST.
  2. Parts like Solar Evacuation tubes for solar power based devices like solar water heater, solar steam, generation systems, would be eligible to 5% GST rate.
  1. Exclusive parts and accessories suitable for use solely or principally with a medical device (falling under headings 9018, 9019, 9021 or 9022) would fall in respective headings and attract GST at the concessional rate of 12%.
  2. Almond milk is classifiable under HS code 22029990 and attracts GST rate of 18%.
  3. Imported stores for Navy would be entitled to exemption from IGST

The rate changes shall be made effective with effect from 1st October, 2019.

 

[This note presents the decision of the GST Council in simple language for ease of understanding, which would be given effect to through Gazette notifications/circulars, which shall have force of law.]

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GST latest updates 37th council meeting https://www.gstseva.com/gst-latest-updates-37th-council-meeting Sat, 21 Sep 2019 09:49:00 +0000 https://www.gstseva.com/?p=10038 gst council meeting updates

The 37thGST Council met in Goa today under the Chairmanship of Union Finance & Corporate Affairs Minister Smt Nirmala Sitharaman  . The meeting was also attended by Union Minister of State for Finance & Corporate Affairs Shri Anurag Thakur besides Chief Minister of Goa Shri Pramod Sawant,  Finance Ministers of States & UTs and seniors officers of the Ministry of Finance .

 

The GST Council, in its meeting  recommended the following Law & Procedure related changes :

  1. Relaxation in filing of annual returns for MSMEs for FY 2017-18 and FY 2018-19 as under:
  1. waiver of the requirement of filing FORM GSTR-9A for Composition Taxpayers for the said tax periods; and
  2. filing of FORM GSTR-9 for those taxpayers who (are required to file the said return but) have aggregate turnover up to Rs. 2 crores made optional for the said tax periods.
  1. A Committee of Officers to be constituted to examine the simplification of Forms for Annual Return and reconciliation statement.
  2. Extension of last date for filing of appeals against orders of Appellate Authority before the GST Appellate Tribunal as the Appellate Tribunals are yet not functional.
  3. In order to nudge taxpayers to timely file their statement of outward supplies, imposition of restrictions on availment of input tax credit by the recipients in cases where details of outward supplies are not furnished by the suppliers in the statement under section 37 of the CGST Act, 2017.
  4. New return system now to be introduced from April, 2020 (earlier proposed from October, 2019), in order to give ample opportunity to taxpayers as well as the system to adapt and accordingly specifying the due date for furnishing of return in FORM GSTR-3B and details of outward supplies in FORM GSTR-1 for the period October, 2019 – March, 2020.
  5. Issuance of circulars for uniformity in application of law across all jurisdictions:
  1. procedure to claim refund in FORM GST RFD-01A subsequent to favourable order in appeal or any other forum;
  2. eligibility to file a refund application in FORM GST RFD-01A for a period and category under which a NIL refund application has already been filed; and
  3. clarification regarding supply of Information Technology enabled Services (ITeS services) (in supersession of Circular No. 107/26/2019-GST dated 18.07.2019) being made on own account or as intermediary.
  1. Rescinding of Circular No.105/24/2019-GST dated 28.06.2019, ab-initio, which was issued in respect of post-sales discount.
  2. Suitable amendments in CGST Act, UTGST Act, and the corresponding SGST Acts in view of creation of UTs of Jammu & Kashmir and Ladakh.
  3. Integrated refund system with disbursal by single authority to be introduced from 24th September, 2019.
  4. In principle decision to link Aadhar with registration of taxpayers under GST and examine the possibility of making Aadhar mandatory for claiming refunds.
  5. In order to tackle the menace of fake invoices and fraudulent refunds, in principle decision to prescribe reasonable restrictions on passing of credit by risky taxpayers including risky new taxpayers.
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Indirect Tax Updates sep 2019 https://www.gstseva.com/indirect-tax-updates-2 Wed, 04 Sep 2019 02:10:40 +0000 https://www.gstseva.com/?p=10023
  • GST Compliance Calendar – Returns for the M/O Aug. 2019 to be

GST Compliance Calendar – Returns for the M/O Aug. 2019 to be filed in Sept. 2019

Return Last Date
GSTR-1  Outward supply for the month of August 2019 11th September 2019
GSTR-5 Non-resident foreign taxpayers return for the month of August 2019 20th September 2019
GSTR-6  Input service distributor for the month of August 2019 13th September 2019
GSTR-7  Tax Deducted at Source for August 2019 10th September 2019
GSTR-8 Tax Collected at Source by e-commerce operator for August 2019 10th September 2019
GSTR-3B   Summary return tax payment for the month of August 2019 20th September 2019

Recent Notifications and Circulars

  • Due date for filing GST annual return for 2017-18 postponed to 30-11-2019: Due date for filing GST annual return for the period from 1-7-2017 to 31-3-2018 has been extended to 30th November, 2019 instead of the earlier extended date of 31st August, 2019. (Order No. 7/2019-Central Tax, dated 26-8-2019).
  • Requirement to furnish declaration in FORM ITC-04 for the period July, 2017-March 2018 and FY 2018-19 waived off. (Refer Notification No. 38/2019-CT dated 31.08.2019). 
  • State and Area Benches of Goods and Services Tax Appellate Tribunal in specified States and Union Territories notified: Central Government has, on 21st August 2019, notified the creation of State & Area Benches of the Goods and Services Tax Appellate Tribunal (GSTAT). The notification also provides for GSTAT Benches for Union Territories of Andaman & Nicobar, Dadra & Nagar Haveli, Daman & Diu, Lakshadweep, and Chandigarh.  
  • GST rate reduced on electrically operated vehicles from 1-8-2019: Electrically operated vehicles, including two and three wheeled electric vehicles and charger or charging station for such vehicles are liable to GST @ 5% from 1-8-19. Further, exemption provided for hiring electric operated vehicle meant to carry more than twelve passengers by local authorities. (Not Nos. 1/2017-CT (Rate) & 12/2017-CT (Rate) amended by not issued on 31-7-19). 
  • Composition scheme – Due date for Form CMP-08 extended till 31-8-2019: Due date for furnishing the statement containing details of payment of self-assessed tax in Form GST CMP-08, for the quarter April, 2019 to June, 2019, has been extended till 31-8-2019. (Notification No. 35/2019-Central Tax, dated 29-7-2019). 
  • Blocking of e-way bill generation for non-filers of returns, postponed: Rule 138E of CGST Rules relating to restriction on furnishing of information in Part A of Form GST EWB-01 will now be effective from 21-11-2019 instead of 21-8-2019. Hence, no person (including a consignor, consignee and transporter) will be allowed to furnish information in Part A of Form GST EWB-01 and generate e-way bill if he has not furnished the returns for two consecutive tax periods. (Not. No. 22/2019-Central Tax, 23-4-2019 amended by Not. No. 36/2019-CT, 20-8-2019. 
  • GST on monthly subscription charged by RWAs, clarified: Ceiling of Rs. 7500 per month per member for GST exemption is to be applied per residential apartment and not per person. If such ceiling is crossed and RWA’s annual aggregate turnover exceeds Rs. 20 lakh, GST is payable on full amount and not on amount exceeding Rs. 7500. (Circular No. 109/28/2019-GST, dated 22-7-2019).

Important Cases decided

  • Classification of printing service by the assesse – The applicant was engaged in providing printing services and used to print photographs in various sizes as per requirements of photographers or retail customers who shoot images using digital cameras and provide contents to applicant in Pen Drive, CD, memory card, or in any other storage media. The editing or processing is done by professionals or retail customers themselves. Issue involved was – whether activity of merely printing or reproducing content given by photographers/retail customers on pen drive, CD, memory card or any other storage media would be classifiable under Service Code 998912 or 998386?  It is held that the activity of merely printing or reproducing the content given by the photographers / retail customers on pen drive, CD, memory card or any other storage media will be classifiable under Service Code 998386 and liable to tax @18%. (Case Reference – Colo Color [2019] 107 taxmann.com 383 (AAR – MAHARASHTRA).
  • GST applicability on membership fees of co-operative housing society – Applicant is a co-operative housing society who is providing services to their members in form of facilities or benefits to members (for which they receive consideration). Applicant provides both, taxable as well as exempted services. Issue involved – Individuals who own flat/s in society but have opted not to become a member of the society, whether such members of society will be at par with the other individual flat owners who are not members? Observation/Ruling – AAR held that above issue does not fall within purview of Sec 97 of the CGST Act and therefore application for advance ruling rejected. (Refer case of Kabra Galaxy Star 3 Co-op Housing Society [2019] 107 taxmann.com 336 (AAR – MAHARASHTRA).
  • ITC availability on motor vehicles used for demonstration purpose: The applicant is a an authorised dealer for Maruti Suzuki India limited for sale of motor vehicles and  spares and for servicing as also for some other commercial vehicle manufacturers. Applicant show purchased vehicles as capital assets in his books and vehicles are used as demo cars for providing trial run to customers to understand features of vehicle and applicant held those vehicles for 2 years or 40000km whichever is earlier then sold. Issue involve was – whether ITC available on the motor vehicle purchased for demonstration purpose? It has been observed that Section 16(1) of the GST Act provides that every person shall be entitled to take input tax credit on every supply of goods or services or both which are used for intended to be used in course or furtherance of business. Section 17(5) of the Act states that no Input tax credit would be available in respect of motor vehicle except when they are used for making the taxable supply including the further supply of such vehicle. GST law does not prescribe any time frame within which such further supply shall be effected hence AAR held that ITC on the motor vehicle purchased for demonstration purpose can be availed as ITC on capital goods as per section 16(1) of the GST Act. [Chowgule Industries (P.) Ltd. [2019] 107taxmann.com 293 (AAR – GOA)].
  • Lapsing of ITC accumulated due to inverted rate structure on fabrics – Proviso in notification and circular quashed: Gujarat High Court has quashed the relevant proviso (ii) in Notification No. 5/2017-Central Tax (Rate) as inserted by Not. No. 20/2018-Central Tax (Rate) and Cir. No. 56/30/2018-GST by which ITC accumulated due to inverted tax structure as on 31-7-2018 was to be lapsed for manufacturers of fabrics. It observed that Section 54(3)(ii) of Central GST Act, 2017 does not empower the department to frame rules for lapsing of ITC. [Shabnam Petrofils v. UoI – R/Special Civil Application No. 16213 of 2018, decided on 17-7-2019, Gujarat High Court] 
  • Show cause notice is sine qua non to proceed with recovery under GST: Karnataka High Court has reiterated that issuance of show cause notice is sine qua non to proceed with the recovery of interest payable under Section 50 of Central GST Act, 2017 and penalty imposable under CGST Act or the Rules. It observed that notion of the authority that Section 75(12) of CGST Act empowers them to proceed with recovery without issuing SCN is misconceived, as said section is only applicable to self-assessment and not to quantification or determination made by the authorities. [LC Infra Projects (P) Ltd. v. UoI – 2019 VIL 365 KAR] 
  • Summons – High Court rejects plea that summons can only be issued after decision under CGST Section 73: Madhya Pradesh High Court has rejected the plea that proceedings under Section 70 of the CGST Act, 2017, relating to summons, can only be taken recourse to after decision under Section 73, relating to demand of tax. The High Court in this regard declined to quash the notice for personal hearing. [Om Shiv Associates v. UoI – Order dated 26-6-2019 in WP-11822-2019, Madhya Pradesh High Court] 
  • Power of arrest to be exercised with lot of care and circumspection: Gujarat High Court has reiterated that the power to arrest under Section 69 of the Central GST Act is to be exercised with lot of care and circumspection and that prosecution should normally be launched only after completion of adjudication. The Court directed that no coercive steps of arrest against the writ petitioner should be taken. [Vimal Yashwantigiri Goswami v. State of Gujarat – 2019 VIL 391 GUJ] 
  • ITC on vehicle for carrying cash – AAAR Order declining ITC set aside: Bombay High Court has set aside AAAR Maharashtra Order holding that ITC is not available on purchase of motor vehicles to carry cash by assessee engaged in cash management service. The Court was of the view that GST Council recommending ITC on vehicles used for transportation of money, would not by itself conclude that prior thereto, money was not included within definition of goods. The Court restored the question before the AAAR for fresh disposal. [CMS Systems Info. v. Commissioner – Order dated 9-7-2019 in Writ Petition No. 5801 of 2019, Bombay High Court] 
  • ITC – Mere reflection of transitional credit in ledger is not an act of availment:  Patna High Court has held that mere reflection of transitional credit in the electronic credit ledger cannot be treated as an act of availment or utilisation, for drawing a proceeding under Section 73(1) of the Bihar GST Act. The Court noted that legislative intent reflected from reading of Section 140 alongside Section 73 and Rules 117 and 121 is that even a wrongly reflected transitional credit in the electronic ledger on its own is not sufficient to draw penal proceedings until the same is put to use. Supreme Court’s judgement in Ind. Swift Laboratories was distinguished. [Commercial Steel Engineering Corporation v. State of Bihar – 2019 VIL 348 PAT] 
  • Interest on delayed payment of GST & filing of returns – Larger Bench to consider scope of CGST Section 50: Madras High Court has referred to Larger Bench the dispute as to whether interest under Section 50 of the CGST Act, for delayed filing of returns, arises automatically or on assessment and after considering the explanation offered by the assessee. The Court also put the question, as to whether at all the explanation by the assessee must be considered by the assessing officer and then pass further orders. While one Judge dismissed the departmental appeal, other Judge was of the view that the point requires deeper consideration of the scope of Section 50. [Asstt. Commissioner v. Daejung Moparts – 2019 VIL 387 MAD] 
  • Seizure – Unaccounted goods at disclosed place of business are ‘secreted’: Allahabad High Court held that once it was admitted that assessee had not recorded goods found stored at his disclosed place of business, in his books of account, a presumption of goods having been ‘secreted’ as per CGST Section 67 did arise. Upholding seizure of undisclosed goods found at disclosed place, it is observed that there was nothing to restrict meaning of words ‘in any place’ in Section 67 to only undisclosed place of business. Assessee had contended that goods found at disclosed place of business were not ‘secreted’. [Rajeev Traders v. State of UP – 2019 VIL 356 ALH] 
  • Anti-profiteering – Stay on suo motu notice seeking information on all products: Delhi High Court has stayed the suo motu notice issued by the Director General of Anti-Profiteering (DGAP), seeking information on all products of the petitioner. The petitioner had pleaded that without a report of DGAP on the complained product followed by an order of National Anti-Profiteering Authority (NAPA) under CGST Rule 133(5)(a), DGAP cannot suo motuissue a notice requiring submission of information on all its products which were approximately 3500 in number. The Court held that the petitioner had made out a prima facie case for grant of limited interim relief. [Reckitt Benckiser India Pvt. Ltd. v. UoI – Order dated 19-7-2019 in W.P.(C) 7743/2019, Delhi High Court] 
  • ITC need not be reversed in case of post purchase discount: Appellate AAR of Tamil Nadu has held that ITC of full GST charged on undiscounted supply invoice is available to buyer and that proportionate reversal is not required to be done in case of post purchase discount given by supplier. Case involved issuance of commercial credit note subsequently through automated arrangement using software. Overruling the AAR ruling, Appellate AAR observed that the discount was not recorded in invoice or agreement, and hence value would continue to be the value as determined under CGST Section 15(1). It held that if GST charged and paid is not reversed, ITC need not be reversed. CGST Section 16(2) was held as not applicable. [In RE: MRF Ltd. – 2019-VIL-62-AAAR] 
  • Valuation – Supply to distinct person – Applying 2nd proviso to Rule 28 directly not sustainable: Tamil Nadu AAR has referred to Rule 28 of CGST Rules, 2017 and held that in case where ‘open market value’ as per Rule 28(a) was available in respect of supplies made to distinct person (branches), there is no necessity to go further down to Rule 28(b) or (c). Further, it was held that if the applicant does not use option provided under 1st proviso to Rule 28, he has to supply at ‘open market value’ as per Rule 28(a). The AAR held that both provisos were to be read together and not independently, and that the applicant cannot choose whichever proviso was favorable to it. [In RE: Specsmakers Opticians Private Limited – 2019 VIL 233 AAR] 
  • Hotel accommodation booking service – GST payable @ 5% without ITC: Observing that applicant is covered under the definition of agent, supplier and taxable person, AAR Delhi has held that the applicant, booking hotel accommodation in foreign countries for its Indian clients, is required to pay GST on value of hotel accommodation service. Option to pay GST @ 18% (with ITC) was held as not available. The AAR held that value of ‘hotel accommodation’ paid by client to them, which is remitted to foreign hotel / hotel aggregator, cannot be included in taxable value, provided conditions of pure agent are satisfied. [In RE: Tui India (P) Ltd. – 2019 VIL 230 AAR] 
  • No composite supply if all ingredients are equally important: Maharashtra AAAR has held that supply of electro ink along with other consumables is not a composite supply. It observed that printing cannot take place with ink (contended to be principal supply) alone and products like developer or plate are equally important. The Appellate Authority in this regard observed that products may be supplied together initially but not subsequently and that providing customer an option of a tier programme is not an industry practice. It also noted that supply involved compulsion which should not be there in a composite supply. [In RE: HP India Sales – 2019 VIL 53 AAAR] 
  • Supply of food at occasional events taxable @ 18% GST: West Bengal Appellate AAR held that supply of food at events which are occasional in nature like social get-togethers in the premises of club is taxable under Serial No. 7(v) of Notification No. 11/2017-Cental Tax (Rate) @ 18% GST. Upholding AAR ruling, AAAR observed that social get-togethers & parties are occasional in nature & that services provided by the club at such get-togethers are not regular restaurant services. AAAR observed that provisions of Sl. No.7(v) are not restricted to exhibition or marriage halls and include all indoor and outdoor functions. [In Re Bengal Rowing Club – 2019 TIOL 59 AAAR GST] 
  • No ban on separate GST registration to multiple firms in a co-working space: Kerala AAR has held that separate GST registration can be allowed to multiple companies providing services only and operating from a ‘co-working space’. It noted that there is no prohibition for registration to a shared office space or virtual office and that since GST registration is PAN based, identification of taxpayer is not difficult. The Authority observed that such companies need to upload rental agreement or sub-lease as proof of address of principal place of business showing respective suite or desk number. It also stated that in addition, the applicants can upload a copy of ‘monthly utility bill’ in connection with payment towards electricity charges, water charges or other common services availed by the respective suite or desk number. [In RE: Spacelance Office Solutions – 2019 TIOL 255 AAR GST]
  • GST liability on residential flats constructed partially before and partially after introduction of GST – Time of supply: Karnataka AAR while referring to time of supply of service under Section 13 of CGST Act, 2017 on applicability of GST on works contract service pertaining to partially completed flats, has held that GST is not applicable if customers are identified post completion of flats and post issuance of completion certificate. AAR observed that in case customers were identified prior to implementation of GST, applicant would be liable to pay service tax proportionate to services provided prior to GST regime and GST proportionate to services provided under GST regime. In case customers are identified after introduction of GST regime, the applicant was held liable to GST. AAR, for this situation, also rejected the plea that the value of supply under GST shall be only the value of the work carried out after the appointed date. [In RE: Durga Projects & Infrastructure Pvt. Ltd. – 2019 VIL 236 AAR] 
  • Valuation – Amortization cost not includable in transaction cost if tools on FOC supplied under contract: On the question of applicability of GST on tools amortization cost where tools were received for free on returnable basis from the customer under contract, Karnataka AAR referring to Circular No. 47/21/2018-GST, has held that tools amortization cost need not be included in the value of supply of parts. It noted that as per contract/purchase order, the applicant was not under any obligation to use its own tools/moulds for manufacture of components supplied. The applicant was engaged in manufacture, sale and design of plastic moulds as per customers. The AAR also held that the ruling will apply to other contracts if the terms and conditions contained therein are the same. [In RE: Toolcomp Systems Private Limited – 2019 VIL 235 AAR]
Customs 

Recent Notifications and Circulars

  • Re-import of goods earlier sent out for exhibition – IGST when not payable: Relying on recent GST Circular holding that sending/taking goods out of India for exhibition, in the absence of consideration, is neither supply nor zero rated supply, CBIC has clarified that Sl. No. 1(d) of Notification No. 45/2017-Cus., requiring payment of IGST on re-import, is not applicable. According to the circular, Sl. No. 5 instead is relevant. Circular No. 21/2019-Cus., dated 24-7-2019 also observes that Sl. No. 5 will apply even in cases where exports are made to related/distinct persons or to principals/agents, for participation in exhibition or on consignment basis. 
  • Re-imports – Recovery of export benefits taken under reward schemes: Importers are required to provide a no incentive certificate from RA of DGFT at the time of re-import of exported goods on which benefit under Chapter 3 of FTP was availed at the time of export. CBIC Instruction No. 3/2019-Cus., dated 13-8-2019 clarifying so, reiterates that before allowing clearance in cases of such re-imports, a no-incentive certificate is to be ensured by Customs field formations. Instruction notes that Para 3.24 of Handbook of Procedures Vol.1 prescribes the procedure for obtaining such certificate. 
  • IGST refund to exporters – Mismatch between GSTR-1 and 3B during FY 2018-19 – Verification procedure extended: CBIC has clarified that the solution provided in Circular No. 12/2018-Cus., in case of payment mismatch between GSTR-1 and GSTR-3B during the period from July 2017 till March 2018, would also be applicable for the period from April 2018 till March 2019. According to Circular No. 25/2019-Cus., dated 27-8-2019, corresponding CA certificate evidencing no discrepancy between the amount refunded and actual amount paid, must be furnished by 30th of October 2019. Circular No. 12/2018-Cus. had provided for mechanism to verify IGST payments in such cases. 
  • IGST refund in invoice mismatch issue – Officer interface facility extended: Alternative mechanism with an officer interface to resolve invoice mismatches errors for IGST refund to exporters, has been extended for shipping bills filed till 31-7-2019. The mechanism was earlier available for shipping bills filed till 15-11-2018 only. Circular No. 26/2019-Cus., dated 27-8-2019, issued for this purpose, notes that despite wide publicity and outreach programmes to make exporters aware about the need to have identical details in invoices given in shipping bills and GST returns, few exporters continue to commit such errors. 
  • Fees for excess utilization of duty saved amount can be paid within 2 years: Regional Authorities have been granted power to condone delay in payment of fee for excess utilisation of duty saved amount. As per the new provisions inserted in Para 5.16(a) of the Handbook of Procedures Vol.1, RA may accept additional fee to cover the excess imports, if the same is furnished beyond one month but within two years of the excess imports. This will however be subject to payment of composition fee of Rs. 5000/- per authorization. DGFT Public Notice No. 22/2015-20, dated 31-7-2019 has been issued for this purpose. 
  • CBIC directs gradual relaxation in percentage of physical examination of exports: CBIC has asked its field formations to gradually taper down the percentage of physical examination in cases wherever the earlier examination has validated the declaration made in the shipping bill. RMCC shall for this purpose consider the feedback received from field formations. Circular No. 22/2019-Cus., dated 24-7-2019 notes that CBIC has received representations wherein exporters have raised the issue of repeated opening of export containers for 100% examination related to risky exporters under the new procedure laid down in Circular 16/2019-Cus. 
  • AIR drawback when not applicable for calculation of Brand Rate: Observing that since central excise duty on inputs and service tax on input services used in the manufacture of export goods have been subsumed in GST for which input tax credit/refund is available, CBIC has clarified that contents of para 3(a) and 3(b) of Circular Nos. 83/2003-Cus. and 97/2003-Cus. are not applicable for exports made in post GST era. Para 3(a) and 3(b) of earlier circulars pertain to brand rate fixation for leather articles, complete bicycles and complete buses. Circular No. 24/2019-Cus, dated 8-8-2019 has been issued for this purpose. 
  • Refund of IGST paid on imports by specialized agencies clarified: Customs field formations will provide refund of IGST paid on import of goods by the specialized agencies notified by Central Government under Section 55 of CGST Act, 2017. Circular No. 23/2019-Cus., dated 1-8-2019 while clarifying so, observes that Section 3(7) of Customs Tariff Act, 1975 provides for a parity between the integrated tax rate attracted on imported goods and the integrated tax applicable on the domestic supplies of goods. It notes that in case of UN and specialised agencies, GST notifications envisage payment and then refund of taxes paid, and therefore, on this principle of parity, specialised agencies ought to get the refund of IGST paid on imported goods.
  • Global Authorization for Intra-Company Transfer (GAICT) of SCOMET Items/Software/Technology – Procedure specified: Para 2.79F has been inserted in the Handbook of Procedures Vol.1, 2015-20 for laying down the procedure for issuance of Global Authorization for Intra-Company Transfer (GAICT) for SCOMET Items/ Software / Technology. Pursuant to the introduction of the said para, no pre-export authorization will be required for re-export of imported SCOMET items, software and technology (excluding SCOMET Categories 0, 1B, 1C2, 3A401, 5 and 6) subject to the conditions laid down therein. DGFT Public Notice No.20/2015-20, dated 24-7-2019 has been issued for this purpose.

Important Cases decided

  • Customs not to recover from legal heirs of deceased noticees/assessees: Customs Department cannot proceed against legal heirs of a deceased noticee/assessee against whom there may be proceedings for recovery of customs duty. The Delhi High Court while holding so, observed that there is no machinery provision in the Customs Act, 1962 whereby the dues owed by a proprietary concern or a partnership firm can be sought to be recovered from legal heirs of proprietor/partner of such concern/firm. The Court in this regard relied upon a Supreme Court judgement in the case of Shabina Abraham v. Collector which was related to Central Excise. [Amandeep Singh Sehgal v. Commissioner – 2019 TIOL 1693 HC DEL CUS]
  • Seizure, absence of SCN – Right to unconditional release when not available: Delhi High Court has observed that second proviso to Customs Section 110(2), stating that in case of provisional release, period of 6 months for SCN would not apply, is to make sure that at least seized goods are provisionally released quickly. The Court held that 2nd proviso, inserted by Finance Act, 2018, did not take away what was already available to assessee and hence the proviso was not applied retrospectively. It also held that right for release of goods might have accrued if no provisional release order was passed before 6 months from seizure. [Wide Impex v. Pr. Commissioner – 2019 TIOL 1819 HC DEL CUS]
  • Classification of goods – Similarity of contents when not a criterion: CESTAT New Delhi has observed that assorted birthday candles with Chlorate, Potassium, Aluminium, etc., (material for fireworks) only in material contents of the central wig, are not classifiable as fireworks. The Tribunal for this purpose, relied upon Rule 3(a) of Interpretative Rules and the essential use criteria. It observed that if similarity of contents is the criteria, even matchstick is a firework. The Tribunal also held that although CHA is obligated with CBLR Regulations but not every breach leads to revocation of license. [Jaiswal Cargo Imports Services Ltd. v.Commissioner – Final Order No. 51004/2019, dated 7-8-2019, CESTAT New Delhi]
  • Classification of goods – No estoppel to raise dispute in subsequent import: Mumbai Bench of CESTAT has held that there is no estoppel in raising classification dispute in subsequent import of a product and that in the absence of appropriate classification there was nothing binding to treat previous classification as the sole option. The Tribunal observed that Granola bar comprised of various products including oats and its character is altered post baking and mixing, and therefore it would not be appropriate to fit it in category of cereals or prepared food in the absence of coverage by residuary entry under Heading 1904. [General Mills India Ltd. v.Commissioner – Final Order No. A/86392 / 2019, dated 13-8-2019, CESTAT, Mumbai]
  • Valuation – Declared value cannot be revised just because it is lower than in NIDB database: CESTAT Chennai has held that the difference in the declared value and the value in the NIDB database does not constitute in itself a “reasonable doubt” needed to reject the transaction value under Rule 12 of Customs Valuation (Determination of Value of Imported Goods), 2007. It was held that simply because the value declared by the appellant is lower than the value found in the NIDB database, the value cannot be revised by the department. [Sai Exports v. Commissioner – Final Order No. 40992/2019, dated 1-8-2019, CESTAT, Chennai]
  • Effective date of STP approval cannot be amended to an earlier point of time, once imports made: The petitioner was granted permission for setting up a ‘Software Technology Park’ and a communication dated 29-11-2005 was sent by the Ministry. Since their imports had already arrived during October-November 2005, an amendment of the effective date of approval to 4-4-2005 was sought, to avail the benefit under Notification No.153/93-Cus. Observing that the petitioner had jumped the gun and made imports even before approval, the Madras High Court held that having imported without any document with regard to approval of application for STP, the effective date of approval cannot be advanced to an earlier point of time. [Khivraj Tech Park Pvt. Ltd. v. Union of India – 2019 TIOL 1812 HC MAD CUS]
  • Demand of duty and interest when delay on part of authorities processing necessary redemption certificate: The assessee was exempted from payment of customs duty by Notification No. 96/2009-Cus. subject to condition that evidence of discharge of export obligation was produced within sixty days of expiry of the period allowed for fulfilment of EO. However, the redemption certificates in proof of fulfilment of such export obligations were issued to the assessee belatedly. Allowing the writ petition, the High Court of Telangana and Andhra Pradesh held that the authorities should put in place a proper mechanism to see that certificates are issued promptly. [Hetero Labs Limited v. Assistant Commissioner – 2019 (8) TMI 339 Telangana and Andhra Pradesh High Court]
  • Denial of cross examination of Directors not violative of principles of natural justice in all cases: Delhi High Court has held that statement of directors of company who were co-noticees cannot be in every case need to be cross examined under Section 9D of the Central Excise Act, 1944 or Section 138 of Customs Act, 1962. It was held that statement of directors cannot be called as statement simplicitor but a statement as that of the company. The Court also held that as these statements are made to the Customs officer, these are out of the ambit of Section 24 of Indian Evidence Act and are readily admissible as evidence. The High Court also held that the co-noticee, if his statement amounts to confession, cannot be compelled to be cross-examined and there would be no violation of principles of natural justice. [Silicone Concepts International Pvt. Ltd. v.Principal Commissioner – 2019 VIL 511 DEL CU] 
  • EPCG scheme – No interest payable on composition fee as same not duty under Customs Section 28: CESTAT Bangalore has held that composition fee paid for extension in export obligation beyond two-years period is not duty under Section 28 of the Customs Act, 1962. It was held that the final duty under EPCG scheme was yet to be assessed and hence, the interest was not liable to be paid on it. The assessee, importing under EPCG scheme, could not fulfil export obligation within the stipulated time and requested for extension. JDGFT directed the assessee to pay 50% duty for unfulfilled export obligation as pre-condition to consider request for extension. The assessee paid the amount with interest on it but subsequently submitted application of refund which was denied holding it as applicable on delayed payment of duty. [Lulu Intl Convention Centre Pvt. Ltd. v. Comm – 2019 VIL 514 CESTAT BLR CU] 
  • Cabling of various parts of agriculture machine is not ‘manufacture’ – Benefit available as full machine and not as parts: CESTAT Delhi has held that mere cabling of various parts of agricultural machine (laser level transmitter, laser receivers, control boxes connecting cables and rechargeable battery packs) so as to let them function as a complete machine does not amount to manufacture and hence benefit of Sl. No. 399(A) of Not No. 12/2012-Cus. cannot be denied. Department’s plea of putting the goods under Sl. No. 399(B) as parts was rejected.[SPL Technologies Pvt. Ltd. v. Principal Commissioner – 2019 VIL 529 CESTAT DEL CU]
Central Excise, Service Tax & VAT

Recent Notifications and Circulars

  • Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 effective from 1-9-2019 – CBIC clarifies on coverage of the scheme: Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 will come into effect from 1st of September 2019. As per Scheme Rules a declaration under the scheme can be made on or before 31st of December 2019, electronically at https://cbic-gst.gov.in. Various forms to be filed electronically prescribed, constitution of designated committee and procedure for verification of the declaration by committee provided.(Notification Nos. 4 and 5/2019-C.E. (N.T.), both dated 21st of August 2019). Clarifying on various issues pertaining to the scheme, the Circular also lists type of cases which are excluded from the coverage of the scheme. The exclusions provided are : Cases in respect of goods still liable to Central Excise duty, Cases for which the taxpayer has already been convicted in Court of law, Cases under litigation where the final hearing has taken place before 30-6-2019, Cases of erroneous refund and Cases which are pending before Settlement Commission.
  • Central Excise and Service Tax – Monetary limit for departmental appeals before CESTAT, High Court and Supreme Court raised: Monetary limits for the department to file appeals to the CESTAT, High Court and Supreme Court in cases relating to Central Excise and Service Tax has been revised. Rs. 50 lakh for CESTAT, Rs. 1 crore for the High Court and Rs. 2 crore for the Supreme Court and will apply to all pending cases as well. (Instruction issued on 22-8-2019) 

Important Cases decided

  • Excise valuation – No basis for adopting cost inflation index of Income Tax: CESTAT Delhi held that there was no legal basis for adopting cost inflation index of Income Tax dept for determination of assessable value under Section 4 of CE Act read with the CE Valuation Rules, 2000, for valuation of captively consumed goods. The Tribunal also noted that cost of manufacture as certified by Cost Accountant in CAS-4 cannot be rejected based on vague reasons and that Commissioner (Appeals) should have provided tenable grounds for rejecting assessable value. [Shri Krsna Urja Project v. Comm–2019 TIOL 2256 CESTAT DEL]
  • Commercial training or coaching service – Only institute issuing certificate for course recognized by law not liable to Service Tax: CESTAT Larger Bench has held that merely because Principal of Junior College also signed the certificate with college stamp, it did not mean that the certificate was issued by the college. The Tribunal observed that the certificate was issued by the Board of Intermediate Education and not by the junior college of the assessee. It observed that emphasis on imparting education for obtaining recognized certificates was misconceived. [Sri Chaitanya Educational Committee v. Commissioner – Misc. Order No. 30344/2019, dated 23-7-2019, CESTAT Larger Bench]
  • Cenvat credit available on product liability insurance: CESTAT Chennai has allowed Cenvat credit on product liability insurance availed by the manufacturer for covering the risk of manufacturing defect arising in finished products. The Tribunal for this purpose observed that the insurance was directly connected with manufacturing activity and was also an input service used in relation to manufacture of finished products. [Wheels India Ltd. v.Commissioner – 2019 VIL 455 CESTAT CHE CE] 
  • Rebate on exports – No condition for export goods to be manufactured inside country: Allahabad High Court has held that there is no specification under Excise Rule 18 that for the purpose of rebate, goods need to be manufactured inside country. The Court held that the rule talks about any goods, which includes both manufactured inside the country and received from outside. The High Court observed that LCD panels and parts were specified in schedule to Central Excise Tariff and had suffered countervailing duty. [Samsung India Electronics v. Union of India – 2019 TIOL 1810 HC ALL CUS]
  • Refund of Cenvat credit – EOU unit is in DTA in respect of SEZ unit: Observing that the definition of DTA under SEZ Act includes everything located outside SEZs, CESTAT Hyderabad has held that 100% EOU located outside SEZ, constitutes DTA as far as SEZ Act is concerned. It also observed that Section 51 of the SEZ Act makes it clear that this Act prevails over any other law. The Tribunal held that the appellant (EOU) is entitled to refund of Cenvat Credit under Cenvat Rule 5 in respect of the goods which they had sold to SEZ units. CESTAT Chennai Order in case of Orbis India (P) Ltd. was relied on. [Mylan Laboratories v.Commissioner – 2019 TIOL 2103 CESTAT HYD]
  • Leasing of work-wear – Maintenance does not mean effective control retained: In a case where the assessee undertook to deliver, wash and service work-wear to his clients, CESTAT Chandigarh has rejected the department’s contention that since goods always remained in the control of assessee, there was no transfer of effective control and hence the transaction is out of the purview of deemed sale and liable to service tax. It held that exclusive possession remained with the clients as use of goods was not controlled by assessee. [Lindstrom Service India v. Commissioner – 2019 VIL 524 CESTAT CHD ST] 
  • GTA exemption for transport of fruit – Any produce of a tree as a result of ripened ovary is ‘fruit’: CESTAT Hyderabad has allowed exemption under Notification No. 33/2004-S.T. to assessee taking service of GTA for transport of palm oil fruit. Contention of the department that anything which is not edible cannot be classified as fruit, was hence rejected. The Tribunal, relying on Stroud’s Judicial dictionary of words, held that any produce of a tree which is a result of ripened ovary, is a ‘fruit’, irrespective of nature of it being edible or not. [Nava Bharat Agro Products Ltd. v.Commissioner – 2019 TIOL 2111 CESTAT HYD]
  • Subsequent curtailment of an incentive scheme – Promissory estoppel: Bombay High Court has allowed petition filed against curtailment of validity period of incentive scheme (New Package Scheme of Incentives, 1993). The scheme incentivised setting up of industrial unit in remote areas of Maharashtra. The Court observed that only liberty available with the State was to modify the Incentive Scheme in such a way that it is consistent with the new tax structure while not reducing or restricting the benefits under the scheme. [K. M. Refineries and Infraspace v. State of Maharashtra – 2019 VIL 377 BOM]

cma rakesh bhalla

CMA Rakesh Bhalla

         

nancybhalla@yahoo.com

*Past chairman NIRC of ICAI (CMA), Ex-Member of ZAC & RAC – Central Excise, Service Tax & Customs Govt. of India, Chandigarh (now GST), Member of Indirect Tax committee SIAM, Member-ASSOCHAM National Indirect Taxes Committee & Special Task Force on GST, Chief General Manager Finance- SML Isuzu Ltd., Member-Chandigarh Branch of Indian Institute of Material Management, Winner Achiever Award 2015 by ICAI (CMA) In addition to above, also a member of 9 council committees of CMA institute.

Information source- M/s LKS, Nitya Tax Associates, Probability GST updates, PwC India Indirect Tax News Flash, cbic.gov.in and other sources-many thanks to all. 

]]> Direct Tax updates- news, circulars, updates and clarification https://www.gstseva.com/direct-tax-updates-news-circulars-updates-and-clarification Wed, 04 Sep 2019 01:58:13 +0000 https://www.gstseva.com/?p=10021 Recent circulars/ notifications/ rules/ clarifications
CBDT has clarified that small start-ups with turnover up to Rs. 25 crore will continue to get the promised tax holiday as specified in Section 80-IAC of the Income Tax Act, 1961, which provides deduction for 100 per cent of income of an eligible start-up for 3 years out of 7 years from the year of its incorporation- Seeking to dispel confusion over the eligible turnover limit, the CBDT said there was no contradiction in DPIIT’s February 19 notification (mentioning turnover of Rs. 100 crore) and the income tax provisions, as the notification clearly mentioned that a start-up shall be eligible to apply for the certificate from the Inter-Ministerial Board of Certification for claiming deduction only if they fulfil the conditions specified in Section 80-IAC (Clarification dated 22.08.2019).

In order to encourage investment in the capital market, enhanced surcharge levied on long/short term capital gains arising from transfer of equity shares/units u/s 111A & 112A has been withdrawn (Finance Minister press conference dated 23rd August 2019).

All tax notices will be issued from a centralised system. All old tax notices will be taken up by October 1 or will be uploaded again through a centralised system. (Finance Minister press conference dated 23rd August 2019).

Startups registered with commerce ministry get relief as angel tax provisions i.e. Section 56 (2)(viib) of the Income Tax Act shall not apply to startups registered with the commerce ministry. (Finance Minister press conference dated 23rd August 2019).

Additional 15 per cent depreciation on vehicles acquired from 23rd August 2019 till March 2020, taking the total to 30 %. (Finance Minister press conference dated 23rd August 2019).

All I-T notices will be cleared within three months of response.

The due date of filling of Income Tax Return for the assessment year 2019-20 has been extended to 31st August 2019 from 31st July 2019 for certain categories of Tax payers (Order u/s 119 dated 23rd July 2019)

CBDT increases income tax appeal limit before Tribunal, High court and Supreme Court to 50lacs, 1 crore and 2 crores respectively (Circular no. 17/2019 dated 8th August 2019).Further, revised monetary limits is applicable to all pending SLPs/ Appeals (Notification no. F. No.279/Misc/M-93/2018-ITJ dated 20.08.2019).

CBDT takes steps to ensure Transparency in Tax Administration by bringing in concept of DIN (Document Identification Number) in Notice/ Order/ Summons/ letter/ correspondence issued by the Income-tax Department, It will be Effective from 1st Oct 2019 (Circular No 19/2019 Dt 14.08.2019)

CBDT has issued Circular No. 18/2019 dated 8.8.2019 to clarify certain issues relating to ITRs of AY 2019 such as non-allotment of TIN (Taxpayer identification number) in case of NRI, Pan related issues in case of director in foreign company etc (Circular No. 18/2019 dated 8.8.2019). Consequently, further circular no. 21 of 2019 dated 27th August 2019 has been released, issuing clarifications in respect of ITR forms for the Assessment Year 2019-20.

CBDT has directed that, all validly filed returns up to Assessment Year 2017-18 with refund claims, which could not be processed under sub-section (1) of section 143 of the Act due to certain technical issues or for other reasons not attributable to the assessees concerned and have become time-barred, can be processed with prior approval of Pr. CCIT/CCIT by 31-12-2019. This relaxation is not applicable in case where ITR is selected for scrutiny or there is demand payable or likely to arise after processing it. (Order u/s 119 dated 5th August 2019)

Income Tax department launched ‘e-filing Lite’, a lighter version of online ITR filing facility, to facilitate the easy and quick filing of returns by taxpayers.

CBDT notified that it is mandatory to quote your Aadhaar number while filing ITR unless specifically exempted. The notification further specifies that tax return cannot be filed either electronically or manually without quoting Aadhaar number. To quote your Aadhaar number in your ITR, additional spaces have been provided.

CBDT has exempted, a non-resident, not being a company or a foreign company, from the requirement of furnishing a return of income under Section 139(1) of the Income Tax Act from Assessment Year 2019-20 onwards, who have any income chargeable under the said Act during a previous-year from any investment in an investment fund set up in an International Financial Services Centre (IFSC) located in India (Notification dated 26th July 2019).

Government notifies Multilateral Convention to implement Measures to prevent BEPS (Base Erosion and Profit Sharing) (Notification No. 57/20019 dated 9th August 2019)

Launch of Income Tax Business Application (ITBA), wherein the functionalities for Refund Blocking/Unblocking, Refund Revalidation and Refund Status in Refund Banker Module are available. (Notification no. ITBA- Refund Banker Instruction No.1 dated 07/08/2019). Further OLTAS function (The functionality for Search and Modify Challan) has been migrated to ITBA (Notification no. ITBA-OLTAS Instruction No. 1 dated 07/08/2019)

Extension of timeline for completion of assessments in OCM (Operation clean Money) cases where no return has been filed in response to notice u/s. 142(1) of the Income-tax Act,1961(‘Act’) and the assessments have to be completed u/s.144 of the Act (F.No.225/363/2017-ITA-11 dated 26.07.2019)

CBDT reduces tax collection target by Rs. 45K crores for the FY 2019-20 i.e. from Rs. 13,80,000.00 crore to 13,35,000.00 crores. (Notification no. F.No. 380/03/2019-IT(B) dated 05.08.2019)

CBDT rebuts incorrect reports about Income Tax notices to Durga Puja Committees in Kolkatta (Press release dated 13.08.2019)

Income Tax Searches in Tamil Nadu net more than Rs 700 crore (Press release dated 10th August 2019)

Income Tax Department detects Benami business of running of petrol outlets in Meghalaya (Press release dated 10th August 2019)

Search on a prominent Real Estate Group in Mumbai- evade income aggregating to about Rs.700 crore (Press release dated 2nd August 2019)

CBDT issues clarification on perceived differential taxation of FPIs and domestic investors- Differential regime between domestic investors (including AIF category III) and FPIs existed even prior to the 2019 budget (Press release dated 28th August 2019)

CBDT notifies the interchangeability of PAN with Aadhaar (Notification no. 59/2012 dated 30th August 2019)

CBDT notifies protocol amending India- Spain DTTA (Notification no 58/2009 dated 27th August 2019)

CBDT issues a clarification w.r.t. TDS on cash withdrawal above 1 crore from 1st September 2019- TDS @2% (Section 194N) to be deducted over cash withdrawals of Rs. 1 crore from Banks & post offices. Cash withdrawals before 1st September during FY 19-20, shall be considered counted for the limit of Rs. 1 crore, but would not be subject to TDS @2%

CBDT constitutes a cell for redressal of grievances related to Startups (Press release dated 30th August 2019)

Income Tax Compliance calendar – August 2019 & September 2019

For the month of September 2019

Date Things to remember
September 2019
7th September Due date for deposit of Tax deducted/collected for the month of August, 2019. However, all sum deducted/collected by an office of the government shall be paid to the credit of the Central Government on the same day where tax is paid without production of an Income-tax Challan?
14th September Due date for issue of TDS Certificate for tax deducted under section 194-IA (Payment on transfer of certain immovable property other than agricultural land) and section 194-IB (Payment of rent by certain individuals or Hindu undivided family) in the month of July, 2019
15th September -Second instalment of advance tax for the assessment year 2020-21-Due date for furnishing statement in Form no. 3BB by a stock exchange in respect of transactions in which client codes been modified after registering in the system for the month of August, 2019?
30th September -Audit report under section 44AB for the assessment year 2019-20 in the case of a corporate-assessee or non-corporate assessee (who is required to submit his/its return of income on September 30, 2019).
-Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194-IA & 194-IB in the month of August, 2019
– Statement by scientific research association, university, college or other association or Indian scientific research company as required by rules 5D, 5E and 5F (if due date of submission of return of income is September 30, 2019)?
– Annual return of income for the assessment year 2019-20 if the assessee (not having any international or specified domestic transaction) is (a) corporate-assessee or (b) non-corporate assessee (whose books of account are required to be audited) or (c) working partner of a firm whose accounts are required to be audited).?
– Application in Form 9A for exercising the option available under Explanation to section 11(1) (exemption of income from property held for charitable or religious purposes) (if the assessee is required to submit return of income on September 30, 2019).
– Statement in Form no. 10 to be furnished to accumulate income for future application under section 10(21) (exemption of any income of a research association) or 11(1) (exemption of income from property held for charitable or religious purposes) (if the assessee is required to submit return of income on September 30, 2019)
-Submit copy of audit of accounts to the Secretary, Department of Scientific and Industrial Research in case company is eligible for weighted deduction under section 35(2AB) (Where a company engaged in the business of bio-technology or in any business of manufacture or production of any article or thing, not being an article or thing specified in the list of the Eleventh Schedule incurs any expenditure on scientific research (not being expenditure in the nature of cost of any land or building) on in-house research and development facility as approved by the prescribed authority) [if company does not have any international/specified domestic transaction]
-Due date for claiming foreign tax credit, upload statement of foreign income offered for tax for the previous year 2018-19 and of foreign tax deducted or paid on such income in Form no. 67. (if due date of submission of return of income is September 30, 2019).?


All about the new Direct Tax Law to replace the Income Act 1961- Key Expectations
The task force, under the Convenorship of senior IRS officer Mr. Akhilesh Ranjan and comprising of members representing different stakeholders, has submitted its report to the Finance Minister Ms. Nirmala Sitharam a short while ago, though the same is pending to be made available on public domain. Below are the Key expectations-
Simplification of law with lesser sections – The current Income Tax Act, has over 700 sections, whereas the draft of the new income tax law is expected to be half the length, containing around 350-400 sections, with every attempt being made to word it in a simple, lucid manner and keeping the Provisos and Explanations that dominate the 1961 Act, at a bare minimum in the new law.

Direct Tax task force recommends new personal income tax slabs- Recommended five tax brackets of 5 per cent, 10 per cent, 20 per cent, 30 per cent and 35 per cent, against the prevailing structure of 5 per cent, 20 per cent and 30 per cent.

Expected changes to the tax brackets that is likely to result in significant tax relief for middle class and upper middle class, i.e. those earning upto Rs. 45 – 55 lacs per annum.

Common Corporate Tax Rate for Foreign Cos & Domestic Cos.- 25% Corporate tax rate is expected for both Domestic as well as Foreign Companies, being a big slash in corporate tax rate for the foreign companies that currently are taxed at a whopping 40%. However, foreign companies will have to shell out a branch profits tax on the amount repatriated to their foreign headquarters.

Change in Tax Assessments Process: The concept of “Assessing Officer” will be replaced by “Assessment Units.” The big change in the new law however is the primacy being given to “Functional Units” that will be made up of IRS officers with Sectoral/Industry knowledge and expertise. Also envisages a Separate Technical Unit of IRS officers to assist the Functional/Assessment Units. Interaction with the tax department is likely to get a boost and facelift with the possible introduction of video-conferencing in certain areas.

Litigation Management units- A separate Litigation Management Unit to manage the entire tax litigation process, right from deciding in which cases the appeals ought to be filed, to devising the strategy to defend a case. In essence the officer who drafts the assessment order, will no longer be the one filing appeals.

Settlement Through ‘Mediation’-Introduction of the concept of ‘mediation’ for the first time in Indian tax law. Taxpayers will now be able to opt for a negotiated settlement before a Collegium of Commissioners once they receive the draft order. Assisting the negotiations will be mediators on both sides, that will be drawn from a panel. It will substantially reduce tax litigations time taken to resolve the cases.

Public Ruling Option for Taxpayers- For the first time again a concept of ‘public ruling’ is being introduced wherein the taxpayers will have the option of approaching the CBDT for clarification on any important point of law, that shall not be case or fact specific.
De-linking of transfer pricing assessments from regular assessments- The TP assessments will be carried out by a separate functional unit and they will be done for a block of 4 years. While there may be fewer TP audits based on risk profile of the MNE entities, they are likely to be more intense.

Dividend Distribution Tax Elimination- DDT may soon be going and the dividends may be taxed in the hands of shareholders.


Important cases decided

Re-depositing funds in assessee’s bank accounts by itself would not be taxable as per section 68, on the mere grounds that there is a gap in depositing the funds in Bank Account. There is no law that funds withdrawn from the banks cannot be held/retained in cash by the parties. There can also be no blanket period which can be judicially considered to be a reasonable time. (IN THE ITAT CHANDIGARH BENCH ‘SMC’- Baljit Singh v. Income-tax Officer, Ward-3(2), Ludhiana)

No Deemed Dividend [section 2(22)(e)] if Assessee was not a Shareholder when amount been advanced. (ACIT Vs M/s. Bhaawani Shankar Ginning Factory (ITAT Pune)). 

Expense on foreign scholarship to promote Professional Profile is allowable as expense- Business expenditure – Allowability to be judged from mindset of the assessee (Shri Harish Narinder Salve Vs ACIT (ITAT Delhi))

Failure to issue notice u/s 143(2) renders assesstment order void even if assesse participated in proceeding. (CIT Vs Laxman Das Khandelwal (Supreme Court))

Interest payable u/s 234 A, 234 B & 234 C on delay in Tax Payment due to disclosure of STCG as LTCG (Tushin T. Mehta Vs CCIT (Madras High Court)

Expense on valuation of Know-how allowable under section 37(1) (M/s. Theis Precision Steel India Private Limited Vs ITO (ITAT Mumbai)

Interest awarded in Motor Accident claim cases not exigible to Tax (Shri Rupesh Rashmikant Shah Vs Union of India & Ors. (Bombay High Court))

Notice u/s 142(1) to amalgamating entity after amalgamation is void (Pr. CIT Vs Maruti Suzuki India Limited (Supreme Court)

Interest (notional) which is part of Purchase price is business income (AGR Matthey of Western Australia v. ADIT – ITA 1341/Del/2010, order dated 5-8-2019, ITAT, Delhi)

 

cma rakesh bhalla

CMA Rakesh Bhalla

CMA Rakesh Bhalla
nancybhalla@yahoo.com


*Past chairman NIRC of ICAI (CMA), Ex-Member of ZAC & RAC – Central Excise, Service Tax & Customs Govt. of India, Chandigarh (now GST), Member of Indirect Tax committee SIAM, Member-ASSOCHAM National Indirect Taxes Committee & Special Task Force on GST, Chief General Manager Finance- SML Isuzu Ltd., Member-Chandigarh Branch of Indian Institute of Material Management, Winner Achiever Award 2015 by ICAI (CMA) In addition to above, also a member of 9 council committees of CMA institute.

Information Source- M/s Lks, Various internet websites including Income tax website, dailyhunt,Hindustan times related links and various notifications, circulars, orders, press releases etc.

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GST annual return GSTR 9, 9A, 9C due date extended https://www.gstseva.com/gst-annual-return-gstr-9-9a-9c-due-date-extended Tue, 27 Aug 2019 05:10:58 +0000 https://www.gstseva.com/?p=10018 The last date for furnishing of Annual Return in the FORM GSTR-9 / FORM GSTR-9A and Reconciliation Statement in FORM GSTR-9C for the financial year 2017-18 has been extended from 31st August, 2019 to 30th November, 2019. RoD Order No. 07/2019-CT dtd. 26.08.2019.

 

GST DUE DATE EXTENSION

 

 

 

 

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Indirect Tax Updates aug 2019 https://www.gstseva.com/indirect-tax-updates-aug-2019 Mon, 05 Aug 2019 06:28:03 +0000 https://www.gstseva.com/?p=10009 GST Compliance Calendar – August 2019

Return Last Date
GSTR-1 Outward supply for the month of April 2019 11th August 2019
GSTR-5 Non-resident foreign taxpayers return for the month of April 2019 20th August 2019
GSTR-6  Input service distributor for the month of April2019 13th August 2019
GSTR-7 Tax Deducted at Source for April 2019 10th August 2019
GSTR-8 Tax Collected at Source by e-commerce operator for April 2019 10th August 2019
GSTR-3B  Summary return tax payment for the month of April 2019 20th August 2019

 

Amendments proposed in CGST Act- Budget-2019

 Penalty for profiteering under GST proposed- Finance     (No.2)     Bill     2019     has     propose amendment in Section 171 of the Central GST Act to provide for imposition of mandatory penalty equal to 10% of the profiteered amount However, according to the proviso to new sub-section (3A) to Section 171, no penalty will be leviable if the profiteered amount is deposited within thirty days of order of the National Anti-profiteering Authority

cma rakesh bhalla

CMA Rakesh Bhalla Central Council Member – ICAI (CMA) Chairman-Direct Tax Committee & Member-Indirect Tax Committee – ICAI (CMA) Past chairman NIRC of ICAI (CMA)

New 3-member National Appellate Authority for Advance Rulings proposed: Finance (No.2) Bill 2019 has proposed amendments in the Central GST Act to provide for constitution of three-member National Appellate Authority for Advance Ruling (NAAAR) to hear appeals when conflicting views are expressed by two or more State Appellate Authorities.

Refund of SGST by Central Government: Central Government is being empowered for disbursement of refund of State GST as well. Finance (No. 2) Bill, 2019, for this purpose, proposes to insert sub-section (8A) in Section 54 of the CGST Act. It may be noted that the scheme of single authority for disbursement of refund was recommended by GST Council in its 31st meeting, and similar amendments will also be made in the State GST provisions by the respective States.

Transfer an amount from one head to another in the electronic cash ledger: Amendment has been proposed in Section 49 of the Central GST Act to provide for facility to the taxpayer to transfer an amount from one head to another in the electronic cash ledger. As per new sub-section (10) being inserted in Section 49, a registered person will be able to transfer any amount from one of the major heads like IGST, CGST, SGST, UTGST or Compensation Cess to another major head. Similarly, amount paid towards minor heads like tax, interest, penalty, fee or any other amount can also be inter- changed with such other minor head.  Such transfer will be deemed to be a refund from the Electronic cash ledger under the Act.

GST returns and declaration  Due dates notified

Central Board of Indirect Taxes and Customs has issued Notification No. 27/2019 & 28/2019– Central tax dated 28th June, 2019 regarding the extension of the due date for furnishing GSTR-1 for registered persons for the months of July’19 to Sep’19. Following are the due dates for filing GSTR-1:

Turnover Limit Months Frequency Time Period
Turnover exceeding Rs.1.5 crore July-September Monthly 11th day of month succeeding such month
Turnover up to Rs.1.5 crore July-September Quarterly 31st October, 2019

As per notifications issued on 28-6-2019, time limit for furnishing Form GSTR-7 for October 2018 to July 2019, and Form GST ITC-04 for July 2017 to June 2019, will be 31-8-2019.

GST on taking goods out of India for exhibition, clarified: CBIC has clarified that activity of sending goods out of India for exhibition or for export promotion, except when the activity satisfies tests of Schedule I of CGST Act, is not ‘supply’ and hence not a zero-rated supply. Execution of bond/LUT is not required, however, records as prescribed in the Circular itself, are to be maintained. Supply is deemed to take place after 6 months from the date of such removal, if such goods are neither sold abroad nor brought back within such period. Refund of unutilized ITC can be claimed though bond / LUT was not executed when the goods were sent out of India. (Circular No. 108/27/2019-GST, dated 18-7-2019)

Treatment of     additional     or          post-sales discounts clarified: : In a case where additional discount is given by supplier of goods to the dealer to offer a special reduced price to the customer, this additional discount is liable to be added to the consideration payable by the customer, for arriving at value of the supply, in the   hands     of     the         dealer. It  also clarifies that dealer will be eligible to take ITC of the original amount of tax paid by the supplier of goods  even      if      the      latter      has  issued financial/commercial credit notes for post-sales discount, if the discounted value and said original tax amount are paid.

It has been further clarified that if additional discount given by the supplier of goods to a dealer is a post-sale incentive requiring the dealer to do some act like special sales drive, advertisement campaign, exhibition, etc., then such transaction       would           be         a separate transaction. The additional discount will be the consideration for undertaking such activity, in relation to supply of service by the dealer to the supplier of goods. According to the circular, dealer will charge GST and ITC will be available to supplier of goods.  (Circular No. 105/24/2019-GST, dated 28-6-2019 )

IGST refund to exporters ITC verification only of few risky exporters: identified 5106 risky exporters out of 1.42 lakh total exporter CBIC has instructed its formations to verify correctness of Input Tax Credit (ITC) by few exporters who are perceived as ‘risky’ based on certain pre-defined risk parameters. Since there were fears that even genuine exporters would face trouble in IGST refunds, Ministry of Finance has on 20-6-2019 clarified that all genuine exporters would continue to get their IGST refunds in a timely manner in a fully automated environment.

Important Cases decided

Return in Form GSTR-3B is temporary and not in lieu of return in Form GSTR-3: Press Release dated 18-10-2018 clarifying that the last date for ITC on invoices issued during July, 2017 to March, 2018 is the last date for the filing of GSTR-3B for the month of September, 2018, has been held as illegal by the Gujarat High Court. According to the Court, the clarification is contrary to Section 16(4) read with Section 39(1) of the Central GST Act and Rule 61 of the CGST Rules. The High Court noted that reference in Notification No. 10/2017-CT that Form GSTR-3B is in lieu of Form GSTR-3, was retrospectively omitted and that notifications are being issued from time to time extending the due date of filing Form GSTR-3. (AAP & Co. v. UoI 2019-VIL-314-GUJ)

High Court of Allahabad issued an important judgment, where HC directed GST authorities  to allow manual filing of TRAN-1 in case GST portal not responding  – HC directed the respondents to open the portal before 31st of March 2019 In the event they do not do so, they will entertain the GST TRAN-1 of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner and they will also ensure that the petitioner is allowed to pay its taxes on the regular electronic system. (Gupta Agencies v. union of India [2019] 104 taxmann.com 427 (ALLAHABAD)

Recently AAR gave an important ruling dated 27th June, 2019 regarding GST applicability on service of renting dwelling units for residential purpose – it was held that  Applicant’s service is classifiable as rental or leasing service involving own/leased residential property and  renting/leasing out the dwelling units for residential purpose is exempt under SI. No. 12 of the exemption notification and therefore is not liable to pay tax on supply of such service. (Borbheta Estate [2019] 106 taxmann.com 386 (AAR – WEST BENGAL)

Property to be attached only after notice and assessment: The Gujarat High Court has held that only after the notice is served under Section 46 of the CGST Act and the assessment is done by the proper officer under Section 62, can the goods and the bank accounts of the taxable person be attached under Section 83. The High Court observed that Section 46 indicates that if registered person fails to furnish return under Section 39 or 44 or 45, a notice is to be issued requiring him to furnish return and if he fails to furnish it, proper officer may assess tax liability. Only in such pendency if the Commissioner intends to protect interest of revenue, can property be attached. [Cengres Tiles Ltd. v. State of Gujarat 2019-VIL-294-GUJ]

GST rate @28%  on operating gaming zone in malls – The applicant is an arm of a Japanese video game development company indulged in releasing videos, music and other entertainment products related to its intellectual properties (IP). The applicant had stationed various gaming equipment and machines for different age group, consisting of kids, teenagers, and adults. The equipment and machines are either coin-operated or card-operated involving physical as well as mental skills in its faculty. The services of admission to amusement facility including the one provided by the applicant in form of offering gaming machine were kept under a new S.No.34 (iii) of Notification No. 11/2017-Central Tax (Rate), dated 28.06.2017 which still remain chargeable at the rate of 28% (Bandai Namco India Pvt. Ltd. [2019] 107 taxmann.com 42(AAR-MAHARASHTRA)

Dream 11s fantasy sports is not gambling GST liability clarified: Observing that success in Dream 11’s fantasy sports is not dependent on winning or losing of any team in real world, the Bombay High Court has reiterated that in such case no betting or gambling is involved. Meaning of betting and gambling as provided in the Finance Act 1994 was also relied. The High Court in this regard also held that since amount pooled in the escrow account for distribution to the winners is an actionable claim and not gambling, it will fall under Entry 6 of Schedule III of CGST Act and be not liable to GST. Payment of GST under Entry 998439 for online gaming, was found correct. [Gurdeep Singh Sachar v. UoI Judgement dated 30-4-2019 in Criminal Public Interest Litigation Stamp No. 22 of 2019, Bombay High Court]

Transition of credit of Education Cesses Gujarat High Court issues notice to UoI: The Gujarat High Court has issued notice to Union of India to explain reasons for bringing the amendment in Section 140 of the Central GST Act, seeking to retrospectively disallow transition and carry forward of Education Cess and       Secondary and Higher Secondary Education       Cess in the GST regime. The assessee in this case pointed out that the EC and SHEC qualified as Cenvat credit and that since Section 140(1) referred to Cenvat credit, they were eligible to transition of such credit. It was also argued that the amendment seeks to deny vested and accrued rights and benefit. (Grasim Industries Ltd. v. UoI Order dated 10-7-2019 in R/Special Civil Application No. 11061 of 2019, Gujarat High court )

ITC available on vehicles used for demo by car distributors: Goa AAR has held that ITC on motor vehicle purchased for demonstration purpose is available as ITC on capital goods and be used for setting off output tax. The AAR noted that the applicant capitalized purchase of such demo vehicles in the books of accounts and sold       them after 2 years. It held that CGST Section 17(5) was not applicable as provision does not prescribe time within which further supply is to be affected. The Authority was of the view that demo vehicle is an indispensable tool for promotion of sale by providing trial run to the customer. [In RE: Chowgule Industries Pvt. Ltd. 2019-VIL-213- AAR

Customs

 

Jurisdictional   authority          for        filing    SEIS application clarified: DGFT has clarified on the jurisdictional authority for filing SEIS applications in case where the IEC holder has both DTA and SEZ unit and one of them is having a zero export turnover.      the        correct jurisdictional authority for filing SEIS application would be the one under whose jurisdiction the unit with non-zero export turnover is situated. Provisions of Para 3.06(c) of the FTP-Handbook of Procedure Vol.1 have been further elaborated (Circular No 25/2015-20,            dated    1-7-2019)

Customs duty on reimport of jewellery exported under bond for exhibition: CBIC has clarified that Additional Customs duty is not payable in cases of re-import of jewellery earlier exported under bond/LUT for exhibition abroad or on consignment basis. As there was no sale involved, there was no liability to pay Central Excise duty as the same arises, as per Articles of Jewellery (Collection of Duty) Rules, 2016, only at the time of first sale. The Circular however states that if the jewellery was exported under rebate, repayment of rebate is required at time of re-import  (Circular No. 17/2019-Cus., dated 19-6-2019 )

Redemption   of    authorisations -DGFT stresses  issuing     of            one consolidated deficiency letter: : DGFT has issued a Trade Notice     reiterating     that     in     processing           of redemption           request           of           Advance Authorization/EPCG cases, Regional Authorities are not to issue multiple deficiency letters in piecemeal manner. DGFT has stressed issuing of one consolidated deficiency letter to the importer mentioning     all     deficiencies     in     it.     Second deficiency         letter         under         unavoidable circumstances may be issued only after the approval of head of the RA. (Trade Notice No.20/2019-20, dated 26-6-2019)

Important cases decided

Goods cleared for home consumption do not retain identity of imported goods: Gujarat High Court has held that imported mis-declared goods, which were subsequently cleared for home consumption after payment of duty and furnishing of bond and guarantee, no longer retain identity of imported goods and can be exported. The High Court in this regard noted that there is no question of re-export. It observed that unless there is a statutory bar or statutory requirement for export are not satisfied, authorities cannot deny permission to export. According to the department, it had denied exports to deter the importer from committing same irregularities again.. [Naitik Enterprise v. UoI 2019-VIL-287-GUJ-CU]

Valuation No indication for how market survey conducted, is wrong: CESTAT Delhi has set aside order of rejection of declared value by the adjudicating authority observing that adjudication order did not indicate as to how market survey was conducted and how transaction value was rejected. The Tribunal held that if any transaction value is rejected by the assessing

authority, it must be done under Section 14 of the Customs Act read with Customs Valuation Rules, 2007. It observed that appellant-importer accepted enhanced value and paid duty only to avoid heavy demurrage and detention charges. [Tushar Trading Company v. Pr. Commissioner 2019-VIL-351-CESTAT-DEL-CU]

Penalty on CHA under Customs Section 114 is incorrect: CESTAT Mumbai has held that as separate provisions of Customs House Agents Licencing Regulation, 2004 exist which is a comprehensive            self-contained    scheme for licensing, operations, etc., imposition of penalty under Section 114 of the Customs Act on a CHA is patently incorrect. The Tribunal observed that every agent who has a licence is connected with import/export and if an agent can be proceeded against under Section 114 merely because of being an agent, then every agent must be made a noticee in proceedings under Sections 111 and 113 which is not intended. [Kailash Bahiru Jadhav v. Commissioner Final Order No. A/86092 / 2019, dated 13-6-2019, CESTAT Mumbai]

Computer with integrated CPU, VDU and virtual keyboard is portable PC: Computer having integrated CPU, VDU, but without physical keyboard (having virtual keyboard), and weighing less than 10 kg is classifiable as portable PC under TI 84713010 and not under TI 84715000 of the Customs Tariff Act, 1975. The Tribunal found no literature to support the contention that since product does not have in-built keyboard or mouse, it cannot be classified as portable computer. It ruled that the term portable computer is not merely limited to laptops and notebooks but covers computers that can be relocated easily. [Lenovo India v. Commissioner 2019-VIL-389-CESTAT-MUM-CU]

Central Excise

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019: Finance Ministry has, as part of Budget 2019, proposed a dispute resolution cum amnesty scheme named the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The scheme is being introduced for resolution of disputes relating to central excise, service tax and cesses, all earlier subsumed in Goods and Services Tax (GST) in 2017. While providing relief from a percentage of tax dues (ranging from 40% to 70%), this scheme also provides for waiver of penalty and interest. Additionally, the declarant would not be liable to be prosecuted for the matter. If the tax dues are payable on account of voluntary disclosure by the declarant, then, no relief shall be available with respect to tax dues. Meaning of ‘tax dues’ has also been elaborated in Finance (No.2) Bill, 2019 which also states that all persons shall be eligible to make a declaration under this scheme except as enumerated in clause 124 of the Bill. Further, according to clause 129 of the Bill, any amount paid under this scheme cannot be paid through the input tax credit account and will not be refundable     under    any                        circumstances.The provisions also provide that such amount paid shall not be available as input tax credit.

Important cases decided

Refund of credit of Swachh Bharat Cess on export of services, available: CESTAT Mumbai has held that appellant is entitled to refund of Swachh Bharat Cess paid on input services used for providing export services. It was observed that Swachh Bharat Cess may be considered separate from Service Tax but, will follow the same legal framework. The Tribunal was of the view that as per Section 119(5) of the Finance Act, 2015, rules notified under Finance Act, 1994 which also includes Cenvat Credit Rules 2004, shall be applicable to Swachh Bharat Cess as they apply to service tax. [State Street Syntel Services (P) Ltd. v. Commissioner 2019-VIL- 348-CESTAT-MUM-ST]

Cenvat credit of tax paid on demurrage charges is available: CESTAT Mumbai has held that demurrage was part of handling of import and export shipments of the assessee and therefore  Cenvat credit of tax paid on such demurrage charges would be available. The demurrage charges were paid by the C&F service provider on behalf of the assessee and billed to him as out of pocket expenses. The Tribunal also observed that Customs Clearance Service also qualified to be input service covered by Cenvat Rule 2(l). [Federal Express Corp. v Commissioner Final Order No. A/86087/2019, CESTAT Mumbai]

No refund of Cenvat credit on closure of factory Larger Bench of Bombay High Court: Full Bench of the Bombay High Court has held that Cenvat credit cannot be refunded merely because inputs were lying unutilised or were capable of being utilised, but manufacturing activities came to halt because of closure of factory. The High Court was of the view that cash refund is not permissible in terms of clause (c) to proviso to Section 11B(2) of the Central Excise Act, 1944 where an assessee is unable to utilize credit on inputs. The Court also held that the decision of the Supreme Court in the case of Slovak India cannot be read as a declaration of law under Article 141 of Constitution of India. [Gauri Plasticulture P. Ltd. v. UoI Judgement dated 14-6-2019 in Central Excise Appeal No. 13 of 2007 and Ors., Bombay High Court]

VAT

Sales    Tax       exemption        or         deferment         Availability to units after re-organization of States: Larger Bench of the Supreme Court has accepted the contention of the States of Madhya Pradesh and Chhattisgarh that from the date when new State of Chhattisgarh came into existence, trade between territories of MP and Chhattisgarh would be in the nature of inter-State sales and not intra-State sales. It held that Sales Tax Act in force in unified State of Madhya Pradesh would continue to apply to MP and Chhattisgarh  as two  separate enactments applicable to two different States but within territorial limits.  The Court noted that as per Article 286, States are not competent to enact legislation relating to taxation of inter-State sales and the provisions of relevant statute on reorganization of the said two States did not provide for considering trade between them as intra-State The contention of the assessees that even inter- State            transaction        were     entitled  to         some exemption under the relevant clauses were left open to be raised before authorities as they were not raised before. [State of MP v. Lafarge Dealers Association Judgement dated 9-7-2019 in Civil Appeal No. 5302 of 2019 and Ors Supreme Court Larger Bench]

Property tax payable for use of municipal land for laying cables: Chhattisgarh High Court has held that since Municipal Corporation has passed a resolution to impose property tax for use of land for laying underground cable against all cellular companies, property tax is payable. It observed that levy is not for laying cables but for use of land for laying the telecommunication cables. The Court observed that the definition of land  in Chhattisgarh Municipal Corporation Act was pari materia with that in the Gujarat Provincial Municipal            Corporations      Act,      1949 hence Supreme     Court     judgement     in     Ahmedabad Municipal Corporation v. GTL Infrastructure was applicable. [Bharti Airtel v. State of Chhattisgarh

CMA Rakesh Bhalla

nancybhalla@yahoo.com

*Also,  Member ZAC & RAC Chandigarh – Central Excise & Service Tax (now GST) & Customs, Govt. of India, Member of Indirect Tax committee SIAM , Member, ASSOCHAM National Indirect Taxes Committee, Chief General Manager Finance- SML Isuzu Ltd., Winner Achiever Award 2015 by ICAI (CMA).

 

Information source- M/s LKS, Nitya Tax Associates, Probability GST updates, PwC India Indirect Tax News Flash, cbic.gov.in and other sources-many thanks to all.

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Commissionerate has busted a racket of issuance of fake invoices https://www.gstseva.com/commissionerate-has-busted-a-racket-of-issuance-of-fake-invoices Fri, 02 Aug 2019 17:37:33 +0000 https://www.gstseva.com/?p=10006 Commissionerate has busted a racket of issuance of fake invoices without actual supply of goods and services.

Central GST Delhi North Commissionerate has busted a racket of issuance of fake invoices without actual supply of goods and services. Two individuals – Asrar Akhtar and Vikas Singh have been arrested in this matter and remanded to judicial custody for 14 days by the Chief Metropolitan Magistrate (CMM), New Delhi at Patiala House Courts. The accused and their associates were found to be operating 19 fake firms created to facilitate fraudulent Input Tax Credit (ITC), thus defrauding the Exchequer. Prima facie fraudulent ITC of about Rs 25 crores has been detected to have been passed on using invoices involving an amount of Rs 137 crores.

The modus operandi of these individuals and their associates Sabban Ahmed and Arif, inter alia, involved issuance of fake invoices of firms registered across Delhi NCR from a premise in Azadpur, Delhi. Voluminous incriminating documents such as fake invoices, diaries, letter-heads, rubber stamps of fake firms, cheque books, transporter’s consignment notes as well as electronic devices have been recovered. Investigations are underway to identify other individuals and firms involved in this racket.

The accused have committed offences under the provisions of Section 132(1)(b) of the CGST Act 2017, which are cognizable and non-bailable under Section 132(5) and punishable under Section 132(1)(i) of the said Act. Accordingly, Asrar Akhtar and Vikas Singh were arrested on 01.08.19 and have been remanded to judicial custody for 14 days on 02.08.2019.

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Now GST on Petrol, council has to decide https://www.gstseva.com/now-gst-on-petrol-council-has-to-decide Thu, 27 Jun 2019 05:25:03 +0000 https://www.gstseva.com/?p=9986 GST Council has to decide on levy of GST on Petroleum Products

Article 279A (5) of the Constitution provides that Goods and Services Tax Council shall recommend the date on which goods and services tax shall be levied on petroleum crude, high speed diesel, motor spirit, natural gas and aviation turbine fuel. Thus while, petroleum products are constitutionally included under GST, the date on which GST shall be levied on such goods, shall be as per the decision of the GST Council. As per the section 9(2) of the CGST Act, inclusion of all excluded petroleum products, including petrol and diesel in GST will require recommendation of the GST Council.

All the States and Union Territories (UT) with Legislature are represented in the GST Council by their Minister-in-charge of Finance or Taxation or any other Minister nominated by the State/UT. Any decision regarding levy of GST on petroleum products has to be decided as per recommendation of the GST Council.

This Information was given by the Union Minister for Petroleum and Natural Gas Shri      Dharmendra Pradhan in a written reply in the Rajya Sabha today

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Indirect Tax Updates https://www.gstseva.com/indirect-tax-updates Thu, 27 Jun 2019 05:21:52 +0000 https://www.gstseva.com/?p=9984 GST Compliance Calendar – July 2019

Return

Last Date

GSTR-1

Outward supply for the month of June 2019

11th July 2019

GSTR-5

Non-resident foreign taxpayers return for the month of June 2019

20th July 2019

GSTR-6

 Input service distributor for the month of June 2019

13th July 2019

GSTR-7

Tax Deducted at Source for June 2019

10th July 2019

GSTR-8

Tax Collected at Source by e-commerce operator for June 2019

10th July 2019

GSTR-3B 

Summary return tax payment for the month of June 2019

20th July 2019

35th GST Council Meeting was held on 21 June 2019 at New Delhi, after a long gap of more than three months. This was the first council meeting chaired by the re-elected government and India’s second woman Union Finance Minister, Mrs Nirmala Sitharaman. This GST Council meeting has been called at a time when the countdown to upcoming Union Budget 2019 is less than a month away. A lot of expectations piled up over months concerning various indirect tax issues will be addressed in this meeting.

Highlights of 35th GST council Meeting

Law and Procedure related changes

  • On account of difficulties being faced by taxpayers in furnishing the annual returns in FORM GSTR-9, FORM GSTR-9A and reconciliation statement in FORM GSTR-9C, the due date for furnishing these returns/reconciliation statements to be extended till 31.08.2019
  • To provide sufficient time to the trade and industry to furnish the declaration in FORM GST ITC-04, relating to job work, the due date for furnishing the said form for the period July, 2017 to June, 2019 to be extended till 31.08.2019

In order to give ample opportunity to taxpayers as well as the system to adapt, the new return system to be introduced in a phased manner, as described below:

  • Between July, 2019 to September, 2019, the new return system (FORM GST ANX-1& FORM GST ANX-2 only) to be available for trial for taxpayers. Taxpayers to continue to file FORM GSTR-1& FORM GSTR-3B as at present;
  • From October, 2019 onwards, FORM GST ANX-1 to be made compulsory. Large taxpayers (having aggregate turnover of more than Rs. 5 crores in previous year) to file FORM GST ANX-1 on monthly basis whereas small taxpayers to file first FORM GST ANX-1 for the quarter October, 2019 to December, 2019 in January, 2020
  • For October and November, 2019, large taxpayers to continue to file FORM GSTR-3B on monthly basis and will file first FORM GST RET-01 for December, 2019 in January, 2020. It may be noted that invoices etc. can be uploaded in FORM GST ANX-1 on a continuous basis both by large and small taxpayers from October, 2019 onwards. FORM GST ANX-2 may be viewed simultaneously during this period but no action shall be allowed on such FORM GST ANX-2;
  • From October, 2019, small taxpayers to stop filing FORM GSTR-3B and to start filing FORM GST PMT-08. They will file their first FORM GSTRET-01 for the quarter October, 2019 to December, 2019 in January, 2020; v. From January, 2020 onwards, FORM GSTR-3B to be completely phased out.
  • Rule 138E of the CGST rules, pertaining to blocking of e-way bills on non-filing of returns for two consecutive tax periods, to be brought into effect from 21.08.2019, instead of the earlier notified date of 21.06.2019.
  • Last date for filing of intimation, in FORM GST CMP-02, for availing the option of payment of tax under notification No. 2/2019-Central Tax (Rate) dated 07.03.2019, to be extended from 30.04.2019 to 31.07.2019

Rate related Changes

  • Rate cut decision on electric vehicles, chargers & leasing thereof deferred; Committee to submit its report – The decision to cut GST rates for electric vehicles and electric chargers have been postponed to the next Council meeting. The matter has been referred to the Fitment Committee for checking the feasibility of the rate cut. At present, the GST rates for electric vehicles and electric chargers are 12% and 28% respectively.
  • Solar Power Generating Systems and Wind Turbines– In terms of order of the Hon’ble High Court of Delhi, GST Council directed that the issue related to valuation of goods and services in a solar power generating system and wind turbine be placed before next Fitment Committee.
  • Rate cut for lottery put on hold; Matter to be referred before an Attorney General – The previous council meet had not tabled the rate cut matter for lotteries. The 35th GST Council meeting discussed the matter at length and also brought to light two pending cases on this matter before the high court and supreme court respectively. Although the courts had referred the matter back to GST Council, the Council has decided to consult the Attorney General of India.

Issues other than Rate and Law changes

  • National Anti-profiteering Authority tenure extended by two years – Tenure of National Anti-profiteering Authority (NAA) was due to end by 30 November 2019. GST Council has further extended this tenure by two years, to enable it to take up all the pending cases. Hence, the authority can take up new cases in future due to rate cut issues, indicating that the GST Council has plans for further rationalisation of GST rates.
  • E-invoicing to start from January 2020 –The new system for raising all the tax invoices on the GST portal has received in-principle approval for implementation from 1 January 2020. This applies to only B2B invoicing. By this system, no separate e-way bill will be required in case of e-invoice. Returns to be framed from these e-invoices. A phased implementation is being worked out. Earlier, the government had fixed Rs 50 crore as the limit for the applicability of e-invoicing.
  • GSTAT to be GST Appellate Tribunal- The Council took a decision regarding location of the State and the Area Benches for the Goods and Services Tax Appellate Tribunal (GSTAT) for various States and Union Territories with legislature. It has been decided to have a common State Bench for the States of Sikkim, Nagaland, Manipur and Arunachal Pradesh.

 

Important Cases decided

 

Carrying Lorry receipt is not a requirement under rule 138A- Authority detained the vehicle as well as the goods of the assessee on the ground that the lorry receipt issued by the transporter was photocopy without computerized serial number and contact number details. Reference was made to Rule 138A(1) of CGST Act, 2017 which stipulates that the person in-charge of conveyance is required to carry:

  • the invoice or bill of supply or delivery challan, as the case may be;
  • a copy of the e-way bill in physical form or the e-way bill number in electronic form
  • In so far as the Lorry Receipt issued by the transporter is concerned, carrying the same is not a requirement prescribed under rule 138A(1) of the rules.

By way of further interim relief, the Competent Authority was to be directed to forthwith release the truck along with the goods contained therein (M/s FS Enterprise Vs. State of Gujarat [2019] 105 taxmann.com 303 (GUJARAT)

AAR cannot give ruling on “Place of supply” – The Applicant is engaged in manufacture of Hand-made Cutting Knives for Shoe industries and they serve overseas as well as local customers. They have stated that they get orders from overseas customers, but delivery is made locally (within Tamil Nadu) and payment is received in foreign currency.  It was held that the issue for which Advance Ruling is sought depends on the ‘Place of Supply’ of the goods, which is not in the ambit of this authority.  (Dagger Die Cutting (India) (P.) Ltd. [2019] 105 taxmann.com 319 (AAR-TAMILNADU)

Sweetshop is not rendering composite supply of services – The applicant is running sweetshop and a restaurant in two distinctly marked separate parts of the same premises and is also maintaining separate accounts as well as separate billings for the two types of business. The goods sold from the sweetshop are being billed exclusively as sweetshop sales; whereas the goods supplied from the restaurant are billed under restaurant head.  It was held that Sweetshop shall be treated as extension of restaurant and supplies thereof shall be treated as supply of service. (Kundan Mishthan Bhandar [2019] 105 taxmann.com 364 (AAR-UTTARAKHAND) 

Nodal Officer to consider error committed in TRAN-1 due to taxpayers – Assessee’s after receiving report from the Chartered Accountant, appointed for undertaking audit of the Cenvat Credit for the period between Apr’16 to June’17, realised that they had not reported credit of certain eligible credits in ER-1 and consequently in Form GST TRAN- 1 due to change in ERP Software in 2016-17, which had been already recorded in the books of account.  In this case it was held that even on the technical glitches arising out of the assessee’s inadvertence required to be addressed by Nodal Officers appointed in terms of Circular instructions dated 3-4-2018 . It would be appropriate for this court to direct the petitioner to approach the Nodal Officer appointed for State of Karnataka in terms of Circular dated 3-4-2018. Hence, the writ petition is disposed of with a direction to the petitioner to approach the jurisdictional Nodal Officer.  (M/s Kongovi Pvt. Ltd. Vs. Union of India  [2019] 105 taxmann.com 267 (KARNATAKA)

 Customs

 

Seeks to further amend notification No. 50/2017-Customs dated 30.06.2017 to implement the imposition of retaliatory duties on 28 specified goods originating in or exported from USA and preserving the existing MFN rate for all these goods for all countries other than USA- This notification shall come into force from the 16th day of June, 2019. Notification No.17/2019-Customs

 

Seeks to increase the tariff rate of customs duty on lentils, boric acid and laboratory reagents by amending First schedule to the Customs Tariff Act, 1975 under emergency powers under section 8A of the Customs Tariff Act.

In the First Schedule to the said Customs Tariff Act,-

 

(1) in Chapter 7, for the entry in column (4) occurring against tariff item 0713 40 00, the entry “50%” shall be substituted;

(2) in Chapter 28, for the entry in column (4) occurring against tariff item 2810 00 20, the entry “27.5%” shall be substituted;

(3) in Chapter 38, for the entry in column (4) occurring against tariff item 3822 00 90, the entry “30%” shall be substituted. Notification No.16/2019-Customs

 

Manufacture and other operations in Warehouse Regulations, 2019– In exercise of the powers conferred under section 157 read with section 65 of the Customs Act, 1962 (52 of 1962), and in supersession of the Manufacture and Other Operations in Warehouse Regulations, 1966, except as respects things done or omitted to be done before such supersession, the Central Board of Indirect Taxes and Customs (hereinafter referred as “Board”). These regulations may be called the Manufacture and Other Operations in Warehouse Regulations, 2019. They shall come into force on the date of their publication in the Official Gazette Notification No.44/2019-Customs (NT)

 

Seeks to amend notification No. 23/2013-Customs(ADD), dated the 10th October, 2013 to extend the anti-dumping duty on ductile iron pipes originating in, or exported from China PR till 9th October, 2019Notification 25 /2019-Customs (ADD)

 

Seeks to extend levy of anti-dumping duty till 09.07.2019, on imports of ” Paracetamol” originating in or exported from china PR, extended vide notification No. 39/2018 Customs (ADD), dated the 20th August, 2018, in pursuance of order of Hon’ble High Court of Gujarat in the matter of SCA 5278/2019. Notification 26 /2019-Customs (ADD)

Seeks to impose definitive countervailling duty on “New/Unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres), having nominal rim dia code above 16″ used in buses and lorries/trucks” originating in or exported from, People’s Republic of China. Notification  1/2019-Customs(CVD)

 

 

Central Excise  & Service Tax

 

 

Revised Procedure for electronic filing of Central Excise returns and for electronic payment of Excise duty and Service tax arrears under the new portal www.cbic-gst.gov.in. –  Consequent to the roll out of GST w.e.f 01st July 2017 , GST tax payers are required to transact through common portal www.cbic-gst.gov.in. the tax payers who deals in goods still attracting Excise even after  01st July 2017 continue to access  www.cbic-gst.gov.in to register, file retuns, file refund applications as well as make payments. Service tax payers also access  www.cbic-gst.gov.in to pay arrears as well to file ST-3 along with applicable interest / penalty etc. During migration of data from ACES application to ACES GST application from 02ndMay-2019 to 25th May 2019 both tax payers and departmental officers not able to do any transactions. The taxpayers continue to make payment through e-payment menu or directly on EASIEST portal. On the completion of  integration and migration of data, the application will be available for taxpayers and departmental officer at www.cbic-gst.gov.in and https:/ appstore.cbec.gov.in(Circular no. 1069/2/2019 CX dated 08th May 2019)

 

  Jai Hind

(Naincy Bhalla)

naincybhalla1@gmail.com

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GST EVASION- Government propose to integrate Fastag https://www.gstseva.com/gst-evasion-government-propose-to-integrate-fastag Tue, 25 Jun 2019 05:42:02 +0000 https://www.gstseva.com/?p=9981 New Delhi: PIB report

The Government proposes to integrate a FASTag Bank Mechanism with e-way bill and Logistic Data Services to track movement of goods and check GST evasion. The Government is contemplating integration of E-Way Bill mechanism of GST with FASTag System of National Highway Authority of India (NHAI). The aspect of Logistic Databank integration with FASTag System is being examined. 

A Committee of Officers comprising of officers from Central Government, State Governments, GSTN (Goods and Services Tax Network), NIC (National Informatics Centre), GST Council, to examine the issue of use of RFID data for strengthening of E-Way Bill mechanism under GST, was formed by GST Council. The representatives of NHAI and NPCI (National Payments Corporation of India) were also co-opted in the committee. The Committee of Officers has submitted its report to the GST Council, recommending integration of FASTag system with E-Way Bill mechanism. The recommendations of the Committee are under consideration by GST Council. Further, with regard to integration of FASTag with LDB, a committee comprising of Central Board and Indirect Taxes and Customs (CBIC), NHAI & its associates, NPCI, GSTN, NIC, Delhi Mumbai Industrial Corridor Development Corporation (DMICDC) & its associates was formed to examine the feasibility of the same. The committee has submitted its report, which is being examined.

This was stated by the Union Minister of Finance & Corporate Affairs, Smt. Nirmala Sitharaman in a written reply to a question in Lok Sabha today.

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Know how many GST returns filled till now https://www.gstseva.com/know-how-many-gst-returns-filled-till-now Tue, 25 Jun 2019 05:33:51 +0000 https://www.gstseva.com/?p=9979 New Delhi: PIB, Report, 24 june 2019 Implementation of GST

The implementation of GST has led to the removal of cascading effect of taxes in the economy as well as promoting free movement of goods across States, thereby creating “one nation, one market”. A simplified tax regime has resulted in reduced compliance burden for taxpayers and promoting ease of doing business in the country.

Return filing is a continuous process and technical glitches and system related issues are addressed by the Goods and Services Tax Network (GSTN) to ensure smooth filing. Also, taxpayers committed errors while filing returns due to lack of familiarity with the new system. The data regarding the number of returns filed until 17.06.2019 is as follows:


Return Form Number of returns filed till 17.06.2019

FORM GSTR-1 9,66,74,296

FORM GSTR-3B 17,58,18,725

FORM GSTR-4 99,93,521

 

In order to address these issues, the Government took the following steps:

 

  1. The last date for filing of details of outward supplies in FORM GSTR-1 and that of FORM GSTR-3B has been extended from time to time for the benefit of taxpayers.
  2. Late fees paid for not filing return on due date for the months of July, 2017 to September, 2017 was exempted. For subsequent months, the amount of late fees payable by taxpayers has been reduced.
  3. The Government has waived late fees for non-filers of FORM GSTR-1 and FORM GSTR-3B for the period from July, 2017 till September, 2018, if such forms are filed from 22.12.2018 to 31.03.2019.
  4. Based on the feedback received from taxpayers, Goods and Service Tax Network (GSTN) regularly updates the User Interface for filing of returns so as to improve user experience. For example, a Questionnaire for filing FORM GSTR-3B has been introduced to avoid errors by taxpayers. Also, NIL returns can be filed with just one click.
  5. An IT-Grievance Redressal Committee has been put in place to address the difficulties faced by taxpayers owing to technical glitches on the GST portal. It has the mandate to approve and recommend to the GSTN the steps to be taken to redress the grievance and provide relief to taxpayers.
  6. Awareness campaigns such as seminars, workshops, open houses, use of social media, advertisements in print and electronic media etc. were carried out across the country to educate the taxpayers about return filing and other legal provisions under GST. Help Centres have also been established to provide assistance to taxpayers in return filing and related issues.

 

This was stated by the Union Minister of Finance & Corporate Affairs, Smt. Nirmala Sitharaman in a written reply to a question in Lok Sabha today.

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Due date of GSTR 9 Annual Return Extended https://www.gstseva.com/due-date-of-gstr-9-annual-return-extended Sat, 22 Jun 2019 06:18:56 +0000 https://www.gstseva.com/?p=9975

GST Council decision relating to changes in law and procedure

Posted On: 21 JUN 2019 7:53PM by PIB Delhi

The 35th GST Council Meeting was held here today under the chairmanship of Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman. This was the first meeting of the Council after the swearing in of the new Government. The meeting was also attended by Union Minister of State for Finance & Corporate Affairs Shri Anurag Thakur besides Revenue Secretary Shri Ajay Bhushan Pandey and other senior officials of the Ministry of Finance. The GST Council recommended the following changes related to law and procedure:

In order to give ample opportunity to taxpayers as well as the system to adapt, the new return system to be introduced in a phased manner, as described below:

    1. Between July, 2019 to September, 2019, the new return system (FORM GST ANX-1&FORM GST ANX-2 only) to be available for trial for taxpayers. Taxpayers to continue to file FORM GSTR-1&FORM GSTR-3B as at present;
    2. From October, 2019 onwards, FORM GST ANX-1 to be made compulsory. Large taxpayers (having aggregate turnover of more than Rs. 5 crores in previous year) to file FORM GST ANX-1 on monthly basis whereas small taxpayers to file first FORM GST ANX-1 for the quarter October, 2019 to December, 2019 in January, 2020;
    3. For October and November, 2019, large taxpayers to continue to file FORM GSTR-3B on monthly basis and will file first FORM GST RET-01 for December, 2019 in January, 2020. It may be noted that invoices etc. can be uploaded in FORM GST ANX-1 on a continuous basis both by large and small taxpayers from October, 2019 onwards. FORM GST ANX-2 may be viewed simultaneously during this period but no action shall be allowed on such FORM GST ANX-2;
    4. From October, 2019, small taxpayers to stop filing FORM GSTR-3B and to start filing FORM GST PMT-08. They will file their first FORM GST-RET-01 for the quarter October, 2019 to December, 2019 in January, 2020;
    5. From January, 2020 onwards, FORM GSTR-3B to be completely phased out

On account of difficulties being faced by taxpayers in furnishing the annual returns in FORM GSTR-9FORM GSTR-9A and reconciliation statement in FORM GSTR-9C, the due date for furnishing these returns/reconciliation statements to be extended till 31.08.2019

To provide sufficient time to the trade and industry to furnish the declaration in FORM GST ITC-04, relating to job work, the due date for furnishing the said form for the period July, 2017 to June, 2019 to be extended till 31.08.2019

Certain amendments to be carried out in the GST laws to implement the decisions of the GST Council taken in earlier meeting

Rule 138E of the CGST rules, pertaining to blocking of e-way bills on non-filing of returns for two consecutive tax periods, to be brought into effect from 21.08.2019, instead of the earlier notified date of 21.06.2019

Last date for filing of intimation, in FORM GST CMP-02, for availing the option of payment of tax under notification No. 2/2019-Central Tax (Rate) dated 07.03.2019, to be extended from 30.04.2019 to 31.07.2019

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GST rate changes https://www.gstseva.com/gst-rate-changes Sat, 22 Jun 2019 06:10:35 +0000 https://www.gstseva.com/?p=9972

GST Council decisions on rate changes on supply of good and services

Posted On: 21 JUN 2019 7:52PM by PIB Delhi
 

The 35th GST Council Meeting was held here today under the chairmanship of Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman. This was the first meeting of the Council after the swearing in of the new Government. The meeting was also attended by Union Minister of State for Finance & Corporate Affairs Shri Anurag Thakur besides Revenue Secretary Shri Ajay Bhushan Pandey and other senior officials of the Ministry of Finance. The Council has recommended following GST rate related changes on supply of goods and services.

Electric Vehicles

On issues relating to GST concessions on electric vehicle, charger and hiring of electric vehicle, the Council recommended that the issue be examined in detail by the Fitment Committee and brought before the Council in the next meeting.

Solar Power Generating Systems and Wind Turbines

In terms of order of the Hon’ble High Court of Delhi, GST Council directed that the issue related to valuation of goods and services in a solar power generating system and wind turbine be placed before next Fitment Committee. The recommendations of the Fitment Committee would be placed before the next GST Council meeting.

Lottery

Group of Ministers (GoM) on Lottery submitted report to the Council. After deliberations on the various issues on rate of lottery, the Council recommended that certain issues relating to taxation (rates and destination principle) would require legal opinion of Learned Attorney General.

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GST FRAUD – TWO FIRMS INVOLVE – One Person Arrested https://www.gstseva.com/gst-fraud-two-firms-involve-one-person-arrested Sat, 22 Jun 2019 06:02:44 +0000 https://www.gstseva.com/?p=9970 The Directorate General of GST Intelligence Hqrs. arrests one person in connection with the taking by two firms ITC fraudulently to the tune of more than Rs.16 Crore

 

Posted On: 21 JUN 2019 7:10 PM by PIB Delhi
 
tax fraud gst

imaginary pic

The Directorate General of GST Intelligence Hqrs. (DGGI Hqrs.) has arrested one person, namely, Sh. Munish Kumar, Partner of M/s Sushil Kumar Munish Kumar, Hisar, Haryana and controller of M/s Sushil Kumar Munish Kumar & Co., Ahmedabad. Both of the said firms had taken ITC fraudulently to the tune of more than Rs.16 Crore involving invoice value of Rs.322 Crore on the strength of invoices issued by non-existent fake firms. The said two firms thereafter, passed on such fraudulently taken ITC to some of the well established Cotton Yarn Spinners who availed of the same to discharge their GST liability against the outward supply, with an ulterior motive to defraud the Government Exchequer. Shri Munish Kumar has during the investigations conducted by the DGGI Hqrs. admitted that both of the said firms had taken ITC fraudulently on the invoices issued by non-existent fake firms and then passed on such ITC to the various Spinners. Thus, Sh. Munish Kumar has committed offences under the provisions of Sections 132(1)(b) and 132(1)(c) of the CGST Act, 2017; which are cognizable and non-bailable offences under Section 132(5) of the CGST Act, 2017, being punishable under Section 132(1)(i) of the CGST Act, 2017. Consequently, Sh. Munish Kumar was arrested on 21.06.2019 under Section 69(1) of the CGST Act, 2017, following which he was produced before the CMM, New Delhi at Patiala House Courts. The CMM has consigned Sh. Munish Kumar to judicial custody of 14 days. During the investigations conducted so far into the fake billing racket in the cotton industry, the DGGI Hqrs. has recovered an amount of Rs.28 Crore towards the GST evaded. Further investigations in the matter are in progress.

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GST Transition plan for new GST returns. https://www.gstseva.com/gst-transition-plan-for-new-gst-returns Fri, 14 Jun 2019 05:55:59 +0000 https://www.gstseva.com/?p=9966 Transition plan to the new GST Return

The GST Council in its 31st meeting decided that a new GST return system will be introduced to facilitate taxpayers. In order to ease transition to the new return system, a transition plan has been worked out. The details of the indicative transition plan are as follows: –

  1. In May, 2019 a prototype of the offline tool has already been shared on the common portal to give the look and feel of the tool to the users. The look and feel of the offline tool would be same as that of the online portal. Taxpayers may be aware that there are three main components to the new return – one main return (FORM GST RET-1) and two annexures (FORM GST ANX-1 and FORM GST ANX-2).
  2. From July, 2019, users would be able to upload invoices using the FORM GST ANX-1 offline tool on trial basis for familiarisation. Further, users would also be able to view and download, the inward supply of invoices using the FORM GST ANX-2 offline tool under the trial program. The summary of inward supply invoices would also be available for view on the common portal online. They would also be able to import their purchase register in the Offline Tool and match it with the downloaded inward supply invoices to find mismatches from August 2019.
  3. Between July to September, 2019 (for three months), the new return system (ANX-1 & ANX-2 only) would be available for trial for taxpayers to make themselves familiar. This trial would have no impact at the back end on the tax liability or input tax credit of the taxpayer. In this period, taxpayers shall continue to fulfil their compliances by filing FORM GSTR-1 and FORM GSTR-3B i.e. taxpayers would continue to file their outward supply details in FORM GSTR-1 on monthly / quarterly basis and return in FORM GSTR-3B on monthly basis. Non-filing of these returns shall attract penal provisions under the GST Act.
  4. From October, 2019 onwards, FORM GST ANX-1 shall be made compulsory and FORM GSTR-1 would be replaced by FORM GST ANX-1. The large taxpayers (i.e. those taxpayers whose aggregate annual turnover in the previous financial year was more than Rs. 5 Crore) would upload their monthly FORM GST ANX-1 from October, 2019 onwards. However, the first compulsory quarterly FORM GST ANX-1 to be uploaded by small taxpayers (with aggregate annual turnover in the previous financial year upto Rs. 5 Crore) would be due only in January, 2020 for the quarter October to December, 2019. It may be noted that invoices etc. can be uploaded in FORM GST ANX-1 on a continuous basis both by large and small taxpayers from October, 2019 onwards.  FORM GST ANX-2 may be viewed simultaneously during this period but no action shall be allowed on such FORM GST ANX-2.
  5. For October and November, 2019, large taxpayers would continue to file FORM GSTR-3B on monthly basis. They would file their first FORM GST RET-01 for the month of December, 2019 by 20th January, 2020.
  6.  The small taxpayers would stop filing FORM GSTR-3B and would start filing FORM GST PMT-08 from October, 2019 onwards. They would file their first FORM GST-RET-01 for the quarter October, 2019 to December, 2019 from 20th January, 2020.
  7. From January, 2020 onwards, all taxpayers shall be filing FORM GST RET-01 and FORM GSTR-3B shall be completely phased out.

  Separate instructions shall be issued for filing and processing of refund applications between October to December, 2019.

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GST on education https://www.gstseva.com/gst-on-education Thu, 06 Jun 2019 07:22:23 +0000 https://www.gstseva.com/?p=9955 GST- Taxation on Education Services

What is Education?

“Education” is not defined in the CGST Act but as per Apex Court decision in “Loka Shikshana Trust v/s CIT”, education is process of training and developing knowledge, skill and character of students by normal schooling.

Applicability of GST on educational services?

Should GST levy on education- In simple one word answer is a big NO. When government talks about education for all than any tax on it seems unreasonable. Also when there is an obligation to provide free and compulsory elementary education to all education under right to education, charging tax is always sensitive.

Thus, to promote education, it would be beneficial if educational services are exempted from tax.

However, commercialisation of education is also a reality. The distinction between core and ancillary education is blurring and education is now an organised industry with huge revenues. The GST Act tries to maintain a fine balance whereby core educational services provided and received by educational institutions are exempt and other services are sought to be taxed at the standard rate of 18%.

Educational services in GST

Education Services are classified in heading 9992 (as per Notification No. 11/2017-Central Tax (Rate)) and are further sub-divided into six groups (as per the Annexure to the same notification) comprising of Pre-primary, primary, secondary, higher, specialised and other educational & support services as below in the table:

Heading and Group

Service Code

Service Description

Heading no. 9992

 

Education services

Group 99921

 

Pre-primary education services

 

999210

Pre-primary education services

Group 99922

 

Primary education services

 

999220

Primary education services

Group 99923

 

Secondary Education Services

 

999231

Secondary education services, general

 

999232

Secondary education services, technical and vocational

Group 99924

 

Higher education services

 

999241

Higher education services, general

 

999242

Higher education services, technical

 

999243

Higher education services, vocational

 

999249

Other higher education services

Group 99925

 

Specialised education services

 

999259

Specialised education services

Group 99929

 

Other education & training services and educational support services

 

999291

Cultural education services

 

999292

Sports and recreation education services

 

999293

Commercial training and coaching services

 

999294

Other education and training services n.e.c

 

999295

services involving conduct of examination for admission to educational institutions

 

999299

Other Educational support services

Rate of GST on Educational Services

Rate of GST The rates of GST on education services (as per Notification No. 11/2017-Central Tax (Rate), Notification No. 11/2017-Central Tax (Rate) and Notification No. 12/2017-Central Tax (Rate) all dated 28.06.2017 as amended) are as below:

Chapter/ Section/ Heading

9992

Description of Service

 

 

Education Services

Rate / Notification

 

 

18% ( 9% Central Tax

+ 9% State Tax)/ Serial No. 30 of Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017

 

9992

Services provided –

(a) by an educational

institution to its students,

faculty and staff;

(b) to an educational

institution, by way of, –

(i) transportation of

students, faculty and staff;

(ii) catering, including any

mid-day meals scheme

sponsored by the Central

Government, State

Government or Union

territory;

(iii) security or cleaning

or housekeeping services

performed in such

educational institution;

(iv) services relating to

admission to, or conduct

of examination by, such

institution; up to higher

secondary: Provided that

nothing contained in

entry (b) shall apply to

an educational institution

other than an institution

providing services by way

of pre-school education

and education up to

higher secondary school or

equivalent

NIL / Serial No. 66

of Notification No.

12/2017- Central Tax

(Rate) dated 28th

June, 2017

 

 

 

 

 

 

 

Chapter/ Section/ Heading

Description of Service

Rate / Notification

 

9992

Services provided  by the Indian Institutes of Management, as per the guidelines of the Central Government, to their students, by way of the following educational programmes, except Executive Development Programme: – (a) two year full time Post Graduate Programmes in Management for the

Post Graduate Diploma in Management, to which admissions are made on the basis of Common Admission Test (CAT) conducted by the Indian Institute of Management;

(b) fellow programme in Management; (c) five year integrated programme in Management.

NIL / Serial No. 67 of Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017

5%/ Serial No. 257

of Schedule I of

the Notification

No.1/2017-Central

Tax (Rate) dated

28th June, 2017

 

90 or any

chapter

Technical aids for

education, rehabilitation,

vocational training and

employment of the blind

such as Braille typewriters,

braille watches, teaching

and learning aids, games

and other instruments and

vocational aids specifically

adapted for use of the

blindBraille instruments,

paper etc.

 

 

 

9023

Instruments, apparatus

and models, designed for

demonstrational

purposes (for example, in

education or exhibitions),

unsuitable for other

uses

28 %/ Serial No. 191

of Schedule IV of

the Notification

No.1/2017-Central

Tax (Rate) dated

28th June, 2017

 

Meaning of Educational Institute in GST

Educational Institution means an institution providing services by way of:

  • Pre-school education and education up to higher secondary school or equivalent;
  • Education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;
  • Education as a part of an approved vocational education

Within   the   term   “educational   institution”,   sub-clause   (ii)   covers institutions   providing   services   by   way   of  education   as   a   part   of curriculum for obtaining a qualification recognised by any law for the time being in force.  

This is an area where doubts have persisted as to what  would  be  the  meaning  of  “education  as  part  of  curriculum for obtaining  qualification  recognised  by  law”.   GST  on  services  being  a legacy  carried  forward  from  the  Service Tax  regime,  the  explanation given  in  the  Education  guide  of  2012  can  be  gainfully  referred  to understand the meaning of the term which reads as under;

What is the meaning of ‘education as a part of curriculum for obtaining a qualification recognized by law’?

It means that only such educational services are in the negative list as are related to delivery of education as ‘a part’ of the curriculum that has been prescribed for obtaining a qualification prescribed by law. It is important to understand that to be in the negative list the service should be delivered as part of curriculum. Conduct of degree courses by colleges, universities or institutions which lead grant of qualifications recognized by law would be covered. Training given by private coaching institutes would not be covered as such training does not lead to grant of a recognized qualification.

 

Are services provided by way of education as a part of a prescribed curriculum for obtaining a qualification recognized by a law of a foreign country covered in the negative list entry?

 No. To be covered in the negative list a course should be recognized by an Indian law.

 Vocational education course under GST

Within  the  term  “educational  institution”,  sub-clause  (iii)  covers institutions   providing   services   by   way   of  education   as   a   part of   approved   vocational   course,   and   institutions   providing   the above courses will come within the ambit of the term educational institution.  Notification  No.  12/2017-  Central  Tax  (Rate)  dated  28th June, 2017, defines approved vocational education course as under: An  “approved vocational education course” means, –

  • A course run by an industrial training institute or an industrial training center affiliated to the National Council for Vocational Training or State Council for Vocational Training offering courses in designated trades notified under the Apprentices Act, 1961 (52 of 1961); or
  • A Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered  with the Directorate General of Training, Ministry of Skill Development and

It is to be noted that only those institutions whose operations conform to the specifics given in the definition of the term “Educational Institution”, would be  treated  as  one  and  entitled to avail exemptions provided by the law. This would mean that private coaching centers or other unrecognized institutions, though self-styled as educational institutions, would not be treated as educational institutions under GST and thus cannot avail exemptions available to an educational institution.

Thus, educational institutions up to Higher Secondary School level do not suffer GST on output services and also on most of the important input services. Some of the input services  like  canteen,  repairs  and maintenance etc. provided by private players to educational institutions were subject to service tax in pre-GST era and the same tax treatment has been continued in GST regime.

Thus output services of lodging/boarding in hostels provided by such educational institutions which are providing pre-school education and education up to higher secondary school or equivalent or education leading to a qualification recognised by law, are fully exempt from GST. Annual subscription/fees charged as lodging/ boarding charges by such educational institutions from its students for hostel accommodation shall therefore, not attract GST.

Similarly, output services related to the specified courses provided by IIM’s would be exempt. Executive Development Programs run  by the IIM’s are specifically excluded, hence such courses would be subject to GST.

Input service for Educational Services

Regarding, input services, it may be noted that where output services are  exempted,  the  Educational  institutions  may  not  be  able  to  avail credit  of  tax  paid  on  the  input  side.  The  four  categories  of  services known as Auxiliary Education services, which educational institutions ordinarily carry out themselves but may obtain as outsourced services from any other person, have been exempted (as per Notification No. 12/2017-  Central  Tax  (Rate)).  Auxiliary  education  services  other  than what is specified above would not be entitled to any exemption.  The exemption also comes with a rider.  Such services are exempt only for educational  institutions  providing  services  by  way  of  education  upto higher secondary or equivalent. (from pre-school to HSC).  Thus if such auxiliary  education  services  are  provided  to educational  institutions providing degree or higher education, the same would not be exempt. For instance, the services of conducting admission tests for admission to colleges in case of educational institutions are providing qualification recognized by law for the time being in force shall not be liable to GST.

 

What will be the Place of Supply of Educational Services where the location of supplier of services and the location of the recipient of services is in India?

 As per section 12(6) of the IGST Act, 2017, the place of supply of services provided by way of admission to an educationalor any other place and services ancillary thereto, shall be the place where the event is actually heldor such other place is located.

As per section 12(7) of the IGST Act, 2017, the place of supply of services provided by way of, — (a) organisation of a cultural, artistic, sporting, scientific,   educational   or   entertainment   event   including   supply   of services  in  relation to  a  conference,  fair,  exhibition,  celebration  or similar  events;  or  (b)  services  ancillary  to  organisation  of  any  of the events or services referred to in clause (a), or assigning of sponsorship to such events: –

  • To a registered person, shall be the location of such person;
  • To a person other than a registered person, shall be the place where the event is actually held

and if the event is held outside India, the place of supply shall be the location of the recipient.

What will be the Place of supply of Educational Services where the location of the supplier of services or the location of the recipient of services is outside India?

 As  per  section  13(5)  of  the  IGST  Act,  2017,  the  place  of  supply  of services  supplied  by  way  of  admission  to,  or organisation  of  a cultural,  artistic,  sporting,  scientific,  educational  or  entertainment event, or a celebration, conference, fair, exhibition or similar events, and of services ancillary to such admission or organisation, shall be the place where the event is actually held.

 

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GST- clarifications on annual return GSTR 9 https://www.gstseva.com/gst-clarifications-on-annual-return-gstr-9 Wed, 05 Jun 2019 05:07:55 +0000 https://www.gstseva.com/?p=9953 Clarifications on filing of Annual Return (FORM GSTR-9)

The last date for filing of Annual return in FORM GSTR-9 is 30th June 2019. The trade and industry have raised certain queries with respect to filing of this Annual return which are being clarified as follows:

    1. Information contained in FORM GSTR-2A as on 01.05.2019 shall be auto-populated in Table 8A of FORM GSTR-9.
    2. Input Tax Credit on inward supplies shall be declared from April 2018 to March 2019 in Table 8C of FORM GSTR-9.
    3. Particulars of the transactions for FY 2017-18 declared in returns between April 2018 to March 2019 shall be declared in Pt. V of FORM GSTR-9. Such particulars may contain details of amendments furnished in Table 10 and Table 11 of FORM GSTR-1.
    4. It may be noted that irrespective of when the supply was declared in FORM GSTR-1, the principle of declaring a supply in Pt. II or Pt. V is essentially driven by when was tax paid through FORM GSTR-3B in respect of such supplies. If the tax on such supply was paid through FORM GSTR-3B between July 2017 to March 2018 then such supply shall be declared in Pt. II and if the tax was paid through FORM GSTR-3B between April 2018 to March 2019 then such supply shall be declared in Pt. V of FORM GSTR-9.
    5. Any additional outward supply which was not declared by the registered person in FORM GSTR-1 and FORM GSTR-3B shall be declared in Pt.II of the FORM GSTR-9. Such additional liability shall be computed in Pt.IV and the gap between the “tax payable” and “Paid through cash” column of FORM GSTR-9 shall be paid through FORM DRC-03.
    6. Many taxpayers have reported a mismatch between auto-populated data and the actual entry in their books of accounts or returns. One common challenge reported by taxpayer is in Table 4 of FORM GSTR-9 where details may have been missed in FORM GSTR-1 but tax was already paid in FORM GSTR-3B and therefore taxpayers see a mismatch between auto-populated data and data in FORM GSTR-3B. It may be noted that auto-population is a functionality provided to taxpayers for facilitation purposes, taxpayers shall report the data as per their books of account or returns filed during the financial year.
    7. Many taxpayers have represented that Table 8 has no row to fill in credit of IGST paid at the time of import of goods but availed in the return of April 2018 to March 2019. Due to this, there are apprehensions that credit which was availed between April 2018 to March 2019 but not reported in the annual return may lapse. For this particular entry, taxpayers are advised to fill in their entire credit availed on import of goods from July 2017 to March 2019 in Table 6(E) of FORM GSTR-9 itself.
    8. Payments made through FORM DRC-03 for any supplies relating to period between July 2017 to March 2018 will not be accounted for in FORM GSTR-9 but shall be reported during reconciliation in FORM GSTR-9C.

All the taxpayers are requested to file their Annual Return (FORM GSTR-9) at the earliest to avoid last minute rush.

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Latest Indirect Tax Updates https://www.gstseva.com/latest-indirect-tax-updates Wed, 05 Jun 2019 05:00:36 +0000 https://www.gstseva.com/?p=9951 GST Compliance Calendar – June 2019
Return Last Date
GSTR-1 Outward supply for the month of May 2019 11th June 2019
GSTR-5 Non-resident foreign taxpayers return for the month of May 2019 20th June 2019
GSTR-6  Input service distributor for the month of May 2019 13th June 2019
GSTR-7 Tax Deducted at Source for May 2019 10th June 2019
GSTR-8 Tax Collected at Source by e-commerce operator for May 2019 10th June 2019
GSTR-3B  Summary return tax payment for the month of May 2019 20th June 2019

 

  • Time provided to apply for revocation of cancellation of registration – A one-time opportunity to apply for revocation of cancellation of registration has been provided to persons whose registrations were cancelled till 31-3-2019 due to non-furnishing of returns in Form GSTR-3B or GSTR-4. Such persons can apply for revocation of cancellation on or before 22-7-20 As per new proviso in CGST Rule 23(1), if registration is cancelled with retrospective effect, returns, for the period from effective date of cancellation till date of order of revocation of cancellation, shall be filed within 30 days from date of order of revocation (Removal of Difficulty Order (RoD) No. 05/2019-Central Tax).

 

  • Ongoing project and liability on cancellation of bookings clarified: In cases where more than one completion certificate is issued for one real estate project, it will be considered as an ongoing project unless all completion certificates, for every part (block) of the project, are received for the entire proj Clarifying so, FAQ released by CBIC with reference F. No. 354/32/2019-TRU, dated 7-5-2019 also states that where commencement certificate is issued prior to 1-4-2019.

  • GST applicability on Seed Certification Tags- clarified – Seed testing and certification is a multi-stage process, the charges for which are collected from the seed producers at different stages. Supply of seed tags to the seed producer is nothing but an element of the one integrated supply of seed testing and certification. All the above charges, including those for issue of seed certificates/tags by the Seed Certification Agency of Tamil Nadu and Uttarakhand to the seed producing organization/ companies are collected for the composite supply of seed testing and certification, which is exempt under Notification No. 12/2017-Central Tax (Rate) Sl. No. 47 (services by Central/State Governments by way of testing/certification relating to safety of consumers and public at large, required under any law). This clarification would apply to supply of seed tags by seed testing and certification agencies of other states also following similar seed testing and certification procedure (F. No. 354/27/2019-TRU ) guidance

  • Seeks to extend the due date for furnishing FORM GSTR-3B for the month of for the month of April, 2019 for registered persons in specified districts of Odisha till 20.06.2019– Following amendment in notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 13/2019 – Central Tax, dated the 07th March, 2019, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R.195(E), dated the 07th March, 2019, namely:– In the said notification, in the first paragraph, the following proviso shall be inserted, namely:

“Provided that the return in FORM GSTR-3B of the said rules for the month of April, 2019 for registered persons whose principal place of business is in the districts of Angul, Balasore, Bhadrak , Cuttack , Dhenkanal , Ganjam, Jagatsinghpur, Jajpur, Kendrapara, Keonjhar, Khordha, Mayurbhanj, Nayagarh and Puri in the State of Odisha shall be furnished electronically through the common portal, on or before the 20th June, 2019.” (Notification No. 24/2019 – Central Tax)

  • Seeks to extend the due date for furnishing FORM GSTR-1 for taxpayers having aggregate turnover more than Rs. 1.5 crores for the month of April, 2019 for registered persons in specified districts of Odisha till 10.06.2019 – Following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 12/2019- Central Tax, dated the 07th March, 2019, published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i) vide number G.S.R. 194(E), dated the 07th March, 2019, namely:– In the said notification, in the first paragraph, the following proviso shall be inserted, namely

“Provided that the details of outward supply of goods or services or both in FORM GSTR-1 of the Central Goods and Services Tax Rules, 2017 for the month of April, 2019 for registered persons whose principal place of business is in the districts of Angul, Balasore, Bhadrak , Cuttack , Dhenkanal , Ganjam, Jagatsinghpur, Jajpur, Kendrapara, Keonjhar, Khordha, Mayurbhanj, Nayagarh and Puri in the State of Odisha shall be furnished electronically through the common portal, on or before the 10th June, 2019.” (Notification No. 23/2019 – Central Tax)

Important Cases decided

  • Re-credit of amount of rejected refund claim to the electronic credit ledger in the absence of mechanism on GST portal – The GST law provide for re-credit of ITC on rejection of refund claim. However, GST portal did not have functionality regarding the same. The Court held that the revenue cannot deny re-credit of the amount on account of lack of mechanism on GST portal. Accordingly, the taxpayer was given option to take credit of the said amount manually in its return in case such amount is not credited electronically. Garden Silk Mills Limited v. UOI, 2019-VIL-165-GUJ

 

  • Nature of business: Manufacturer – Complaint: There was a reduction in rate of tax in November 2017. The taxpayer neither reduced the price of the goods nor passed on the benefit of rate reduction to the consumer. Held Profiteering: No Reasoning: The taxpayer did not resort to profiteering as the taxpayer maintained base price of the goods post rate reduction. (Rosata Vitrified Private Limited, 2019-VIL-18-NAA ) The NAA has consistently held that there is no profiteering where base price of goods has remained same after introduction of GST or rate changes in GST regime.

  • Interest payable on total tax liability including portion of ITC available for set off- Telangana High Court has held that liability to pay interest under Section 50 of the CGST Act, 2017 is confined not only to the net tax liability. The High Court held that interest is payable on total tax liability including the portion liable to be set-off against Input Tax Cred The High Court in this regard observed that until a return is filed as self-assessed, there is no entitlement to credit and no actual entry of credit in the electronic credit ledger takes place. (Megha  Engineering  & Infrastructures Ltd. v. Commissioner – 2019-VIL-175-TEL)

  • Detention of conveyance Carrying LR issued by transporter is not mandatory –

Gujarat High Court has directed to release the truck carrying goods which was detained by authorities under Section 129(1) of the CGST Act. The truck was detained on the ground that the lorry receipt issued by the transporter was a photocopy without the computerized serial number and contact number details. The Court observed that carrying lorry receipt issued by the transporter is not mandatory under Rule 138A (1) of CGST Rules, 2017 and that the detention was without the authority of law. (F S Enterprise v. State of Gujarat – 2019-VIL-154-GUJ)

 

  • Seizure of goods from premises of job-worker, when not valid: Observing that allegations regarding evasion of tax, against person engaged in the business of hallmarking, can only be with reference to its business activity, Kerala High Court has held that seizure of the gold jewellery, belonging to petitioners but seized from the premises of the hallmarker, was not justified. The Court also observed that goods entrusted by principal, with hallmarker, and covered by delivery challan, cannot be subject matter of confiscation order under Section 130 of the CGST Act, passed in relation to the hallmarker. (Josco Bullion Traders P Ltd. v. Commissioner – 2019-VIL-151-KER)

 

  • Imprisonment Power invokable only post determination of demand: Madras High Court has held that power to punish under Section 132 of the CGST Act, relating to imprisonment, is invocable only when it is established post determination of demand that assessee has committed offence. The High Court held that when recovery is made subject to assessment, The High Court in this regard was of the view that exceptions to this rule are only where     assessee     is     a     habitual     offender Judgement in Make My Trip was relied o It was, however, observed that revenue interest can be protected by provisional attachment. (Jayachandran Alloys v. Superintendent – Writ Petition No.5501 of 2019, decided on 4-4-2019, Madras High Court)

 

  • Anti-profiteering Comparison with pre-GST rate Delhi HC stays NAA order: Delhi High Court has stayed the order passed by the National Anti-profiteering Authority wherein NAA had rejected the plea that CGST Section 171 was not applicable to reduction in rate of tax as compared with pre-GST indirect tax regime, and that only reduction of tax rate in GST regime can be considere NAA had ruled that assessee had indulged in profiteering as tax incidence was reduced from 30.06% during pre-GST to 28% and later 18% under GST regime. The petitioner, however, undertook to pay certain sum along with interest in the Consumer Welfare Fund. (Abbott Healthcare Pvt. Ltd. v. Union of India 2019-TIOL-1016-HC-DEL-GST)

  • Anti-profiteering ITC benefit to be passed on periodically: In a case alleging non-passing of ITC benefit, where the real estate developer had pleaded that benefit be calculated at time of completion of project after considering the unsold flats, NAA has held that assessee had profiteered by not reducing basic p It was held that benefit needs to be passed on periodically. The NAA also held that there was no provision to withdraw the complaint and the DGAP had rightly pursued the investigation. Further, objections against method  for calculating profiteered amount, was also rejected noting that there is no straight jacket formula and no set prescription The contention that the respondent made purchases from traders who did not pass the benefit of ITC to him, was also rejected (Pallavi Gulati v. Puri Constructions Pvt. Ltd. Case No. 30/2019 decided on 8-5-2019, National Anti-profiteering Authority)

  • Valuation Cost of diesel provided by service recipient includible for charging GST: AAR Chhattisgarh has ruled that cost of diesel provided by the service recipient has to be included by the transporter in the freight amount for charging GS The Authority in an advance ruling observed that diesel provided by service recipient for vehicles of applicant formed an integral component of business process, without which supply of cement could not materialize. It noted that any amount supplier is liable to pay and which has been incurred by the recipient and not included in the price actually paid is includible in the taxable value. [In RE: Navodit Agrawal -2019-VIL-117-AAR]

 

  • Sale of ice cream in retail pack and in scoop is supply of goods In a case involving sale of ice creams both in retail packs and as scoops, AAR Maharashtra has held that since retail packs were sold at MRP the same constitutes sale of goods with no service being involved. With respect to the ice cream scoops, the Authority was of the view that the transaction of receiving ice cream in bulk and selling them in scoops is akin to sales made by grocery shops in the case of sale of edible oil wherein the grocer sells such oil in various lesser quantities after receiving the same in bulk quantity. Accordingly, it was held that since the predominant element of the transaction is that of sale of goods, the said transaction was held to be a “supply of goods”. (In Arihant Enterprises – 2019-VIL 116 AAR)

  • Work Books which test child’s knowledge classifiable as ‘Printed books’: Delhi High Court has held that work books (Sulekh Sarita) which test child’s knowledge and facilitate evaluation of his understanding are classifiable under HSN 49.01, ‘printed books including braille books’ that are exempt from GST ( Sonka Publication (India) Pvt. Lt v. Union of India – W.P.(C) 10022/2018, decided on 7-5- 2019, Delhi High Court)

 

Customs

 

  • Exports New Shipping Bill Regulations – introduced: CBIC has introduced Shipping Bill (Electronic Integrated Declaration and Paperless Processing) Regulations,               The         new Regulations issued in supersession of Shipping Bill          (Electronic             Integration       Declaration) Regulations, 2011 requires authorised person to retain assessed copy of shipping bill and all supporting documents in original, for a period of 5 years. Provision has also been made for generation of authenticated copy of shipping bill As per the Regulations issued on 25-4-2019 penalty upto Rs. 50,000 is imposable in case of any contravention

  • SEZ Management and Business Consultant services is authorized service: SEZ Approval in its 85th meeting has decided that “Management and Business Consultant Services may be included in the list of default authorized services in S As per SEZ Instruction No. 94, dated 8-5-2019, such services would be limited to the extent of such value of services availed of/consumed by the SEZ entity only. Further, the unit will have to produce evidence that the said service was consumed in relation to their authorized operations only. It may be noted that 66 services are already permitted as default authorized services..

  • Exports 250 shipping bills can now be filed online in single ANF 3D: The number of entries of shipping bills/ airway bills which can be filed in a single online ANF 3D application has been increased from 50 to 250 for claiming Merchandise Exports from India Scheme (MEIS) benef ANF 3D which itself was notified recently has been amended for this purpose by DGFT Public Notice No. 7/2015-2020 issued on 7-5-2019. MEIS is a duty credit scrip issued under Chapter 3 of the Foreign Trade Policy with an objective to provide rewards to exporters to offset infrastructural inefficiencies and associated costs

 

  • FTP No requirement to submit physical copy of RCMC for incentives: The requirement to submit physical copies of RCMC for the purpose of availing incentives under the Foreign Trade Policy 2015-20 will be discontinued from 1-7-201 According to DGFT Trade Notice dated 13-5-2019, validity of RCMCs will be checked directly from the DGFT’s database which has the uploaded data of RCMCs from EPCs. The Trade Notice while noting that as on 31stApril, 32,060 valid RCMCs are available on DGFT’s data base, also advises all exporters to ensure that their valid RCMCs are duly uploaded by their respective EPC in the DGFT server

  • Belated payment of redemption fine not to return excess amount from auction: Larger Bench of Delhi High Court has held that Government can retain excess auction proceeds after adjusting customs duty, redemption fine, etc., where order under Section 125 of the Customs Act, 1962 has attained finality and the payment is made belatedly but prior to the auction date. The High Court noted that Sections 125 and 126 are not to be read disjunctively. It observed that once there is failure to pay redemption fine in time, whether goods are prohibited goods or other goods, transient nature of confiscation ends and vesting of goods with the govt. becomes absolute. (Gillette India Ltd. v. Commissioner – Judgement dated 23-4-2019 in W.P. (C) No. 1735/2016, Delhi High Court Larger Bench)

  • FTP Clubbing of Advance authorisations when not possible: In a case involving clubbing of Advance Authorisations issued in 2004 and 2010, Delhi High Court has held that clubbing can be provided only if export obligation period of authorization issued at a prior point of time allowed under Paragraph 4.22 of the HoPv1 has not expired. The High Court rejected clubbing as petitioner had made no application for extension of export obligation period under license dated 22-8-2004 and maximum period for extension had also expir It also held that amendment in HoP on 13-10-2011 was not applicable. (Jindal Poly Films Ltd. v. DGFT – Judgement dated 22-4-2019 in W.P.(C) 7806/2014, Delhi High Court )

  • IGST refund not deniable even if shipping bill is shut in computer system: Madras High Court, in the light of alternate mechanism under CBIC Circular 8/2018-GST, has held that IGST amount on exported goods must be refunded to petitioner who mistakenly availed higher drawback by selecting Drawback code 680203A instead of 680203B in the shipping bill. The High Court held that the petitioner cannot be made helpless just because computer system did not enable refunding the IGST amount as Export General Manifest for the shipping bills was closed. [VSG Exports (P) Ltd. v. Commissioner -2019-TIOL-977-HC-MAD-GST]

  • No confiscation under Customs Section 113(d) when attempt to export absent: In a case where goods were not presented to proper officer for export and thus formalities as per Regulation 6 of the Courier Imports & Exports (Clearance) Regulations were not completed, CESTAT Mumbai has set aside confiscation of goods seized from the courier agency. The Tribunal observed that language of Sections 113(d) and 2(19) of Customs Act, 1962 convey that only goods which are attempted to be exported are liable to confiscati It also observed that the appellant had filed FIR for missing goods and that goods were booked for export by somebody else. (Dalumi Hongkong Ltd. v. Commissioner – Order No. A/85757/2019, dated 18-4-2019, CESTAT Mumbai)

 

Central Excise  & Service Tax

 

 

  • Interest payable on differential duty payable due to retrospective price escalation: Larger Bench of Supreme Court has held that interest for delayed payment of Central Excise duty is liable to be paid on the differential excise duty payable due to retrospective price escala Earlier, doubting the correctness of the Supreme Court decision in the cases of CCE v. SKF India Ltd. [2009 (13) SCC 461] and International Auto [2010 (2) SCC 672], the matter was referred to the Larger Bench in Steel Authority of India case [2015 (16) SCC 107]. The Referring Bench was of the view that excise duty paid on the date of clearance of goods was not treatable as ‘short-paid’ as it was not possible to pay duty based on price escalation which took place later. Rule 7 of the Central Excise Rules relating to provisional assessment, according to which interest is to be paid, was relied on. The Apex Court observed that assessee had not opted for provisional assessment, and that the law will have to be interpreted in a manner that it is fair and equal to similarly situated group of assessees. (Steel Authority of India Ltd. v. Commissioner – Civil Appeal No. 2150/2012 and Ors, decided on 8-5-2019, Supreme Court Larger Bench)

  • Bagasse not a manufactured product Allahabad High Court quashes CBIC Circular: Allahabad High Court has held that Cenvat credit need not be reversed in respect of bagasse which is an agricultural waste and not a manufactured final produ The High Court quashed CBIC Circular No.1027/15/2016-CX, dated 25-4-2016 which treated bagasse as exempted product. It also            observed               that amendment in 2015 in the Cenvat Credit Rules may have the effect of treating bagasse as exempted good but cannot result in it being manufactured goods. Judgement in UoI v. DSCL Sugar Ltd. was relied on. (Balrampur Chini Mills Ltd v. Union of India – 2019-VIL-157-ALH-CE)

  • Valuation of goods self-used but not in production Excise Valuation Rule 8 not applicable: CESTAT Chennai has held that goods cleared to sister units and also used internally in construction activity, in various expansion projects, are not covered under Excise Valuation Rule 8. It was held that such goods cannot come under          the fold             of        “self-consumption”. Department’s view that for Rule 8, goods     are required     to be     consumed                in manufacture of other articles and not merely utilised in expansion, was uph The Tribunal upheld adjudication orders requiring adoption of Rule 4 read with Rule 11 for valuation in such case. (JSW Steels Ltd. v. Commissioner – 2019-VIL-262-CESTAT-CHE-CE)

 

  • Cenvat credit on input/capital goods not confined to registered site: CESTAT New Delhi has allowed Cenvat credit on capital goods, input services and inputs received in one SSA (Secondary Switching Area) and distributed to anothe The assessee had, for convenience, taken registration in different areas but undertook maintenance through its wing which catered to different SSAs. The Tribunal noted that Cenvat credit of inputs or capital goods, was not confined to registered premises, but can be availed even if capital goods were received beyond registered premises for providing output services. (Bharat Sanchar Nigam Limited v. Commissioner – Final Order No.50553/2019, dated16-4-2019, CESTAT Delhi)

 

  • Cenvat credit available on photography, repair of MD car and debris removal: CESTAT Bangalore has held that Cenvat credit of service tax can be availed in respect of repair of MD’s car and on service of car used to ferry employees inside manufacturing unit and also to transport work-in-progress. It held that both are indirectly related to manufactur The Tribunal also held that photography for ground breaking function, hiring charges as well as cleaning and debris removal also fell within the definition of input service, being directly or indirectly related to manufacture. (Plansee India High Performance Materials Pvt. Ltd. v. Commissioner – 2019-VIL-240-CESTAT-BLR-ST)

  • Excise No appeal before High Court if matter involves valuation also: In a case involving clandestine removal along with under-valuation, Bombay High Court has held that even if the order of the Tribunal has dealt with other issues besides valuation, the appeal against such order must be brought before the Supreme Cou Denying own jurisdiction, the High                     Court observed that order of the Tribunal cannot be bifurcated and must be challenged as a whole before one forum. It relied on Central Excise Section 35L   and directed the  return of Memorandum     of     Appeal     to     enable     the department to file appropriate proceedings before Supreme     Court.     (Commissioner     v.     Durian Industries – 2019-TIOL-847-HC-MUM-CX)

 

Value added Tax (VAT)

 

  • No power with State gov./Municipal to legislate on advertisement tax: Allahabad High Court has set aside demand of advertisement tax from the petitioners for the period after 1-7-2017. The High Court in this regard observed that provision of Section 172(2)(h) of the Municipal Corporation Act was omitted by Section 173 of the U.P. GST Act with effect from 1-7-2017 and even the power of the State legislature to legislate with regard to advertisement tax stood deleted with effect from 12-9-2016 by the Constitution (101) Amendment Act. It held that there is no power left with the State Government or the Municipal Corporation to legislate tax on advertisement. (Selvel Media Services Private Limited v. State of U.P. – 2019-VIL-215-ALH)

  • Delivery of possession, not custody of goods, sine qua non for VAT: Allahabad High Court has reiterated that unless possession and control of the vehicle are transferred there cannot be transfer of right to use the goods under Section 3F of the P. VAT Act. The High Court set aside the order of Assessing Officer and the Tribunal on demand of tax under Section 3F on contractor operating tank trucks for haulage and delivery of petroleum products belonging to Hindustan Petroleum. Relying on Rashtriya Ispat Nigam Ltd., High Court reiterated that delivery of possession of thing must be distinguished from its custody. (Gopal oil Company v. Commissioner – 2019-TIOL-1009-HC-ALL-VAT)

 

– Prepared By

Naincy Bhalla 

naincybhalla1@gmail.com

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Latest Indirect Tax Updates- April 2019 https://www.gstseva.com/latest-indirect-tax-updates-april-2019 Sat, 04 May 2019 06:11:43 +0000 https://www.gstseva.com/?p=9933 Latest Indirect Taxes updates

GST, Customs, Excise, Service Tax & VAT Updates

GST Compliance Calendar – May 2019

GSTR-1 Outward supply for the month of April 2019 11th May 2019
GSTR-5 Non-resident foreign taxpayers return for the month of April 2019 20th May 2019
GSTR-6  Input service distributor for the month of April2019 13th May 2019
GSTR-7 Tax Deducted at Source for April 2019 10th May 2019
GSTR-8 Tax Collected at Source by e-commerce operator for April 2019 10th May 2019
GSTR-3B  Summary return tax payment for the month of April 2019 20th May 2019

-Reversal of ITC availed  under Composition scheme for suppliers of goods or services or both –Suppliers of goods or services or both upto an aggregate turnover of Rs. 50 lakh, can opt to pay GST @ 6% (3% CGST + 3% SGST) and not collect any tax from the recipient on such supplies. Benefit of ITC is also not available to suppliers taking benefit of this notification (Notification No. 2/2019-Central Tax (Rate)

Also, as per Circular No. 97/16/2019-GST, dated 5-4-2019, a registered person who wishes to opt for benefit of said notification shall file intimation in Form GST CMP-02 by selecting the category of registered person as “Any other supplier eligible for composition levy”. Such person would also be required to furnish a statement in Form GST ITC-03.

-Refund of accumulated ITC to merchant exporter clarified: Refund of accumulated input tax credit to merchant exporter where supplies are received by him after availing benefit under Notification No. 40/2017-Central Tax (Rate) or 41/2017-Integrated Tax (Rate) has been clarified by CBIC. As per  Circular No. 94/13/2019-GST, dated 28-3-2019, this refund of accumulated ITC under CGST Rule 89(4B) must be applied under the category ‘any other’ instead of ‘refund of unutilized ITC on account of exports without payment of tax’. Refund claim shall be filed in the Form GST RFD-01A.

-Clarification regarding order of utilisation of ITC of IGST to set-off output tax liability – Rule 88A of the Central Goods and Services Tax Rules, 2017 (‘CGST Rules’) was inserted and relaxed the order of setting off IGST credit against CGST and SGST liability (in any order). The CBIC has now clarified that the taxpayers can utilise excess credit of IGST towards payment of CGST or SGST in any sequence and proportion provided that IGST liability is fully discharged first. [Circular No. 98/2019 dated April 23, 2019]

-Non-filing of GST Returns to debar generation of e-way bill – Rule 138E of the CGST Rules was introduced on December 31, 2018 to provide that taxpayers who have not furnished their GST returns for consecutive two tax periods, will not be able to generate e-way bill. This provision was not notified till date and has been made effective from June 21, 2019. Rule 138E allows Commissioner to relax this provision on sufficient causes.

In this context,   it is advisable that the taxpayers file their GST returns on time to avoid any obstruction in business due to non-generation of e-way bill. The taxpayers who could not file returns for genuine reasons (including IT issues), should approach their jurisdictional Commissioner for relaxing applicability of this provision. [Refer Notification No. 22/2019 dated April 23, 2019]

-Changes in e-way bill portal – To improve operational efficiencies in e-way bill system, following changes have been integrated in the e-way bill portal:

  • Auto calculation of route distance: The portal has been designed to auto-compute the distance basis the PIN code of source and destination locations. The user also has an option to enter actual distance, with maximum 10 percent variation of auto calculated distance.
  • Single e-way bill for single invoice: Until now, where consignee or transporter originally generated an e-way bill, the consignor had an option to generate e-way bill for the same invoice. This option will no longer be available with consignor.
  • Extension of e-way bill can now be sought for goods in transit or in movement. For availing the extension, the taxpayer is required to choose one of the following reasons and add remarks thereon:
  • Natural calamity,
  • Law and order,
  • Transhipment
  • Accident,
  • Others  

-On selection of the reason, the taxpayer needs to fill details of mode of transportation, location of goods and vehicle details for which the extension is required. Extended date is auto-calculated basis the reason and the distance between location of goods and final destination of goods.

Report on expiry date of e-way bills: Taxpayers can now view list of e-way bills that are about to expire in next four days from the date of view

-Transfer of ITC in case of death of sole proprietor – Clarification- Transferee / successor shall be liable to pay any tax, interest or any penalty due from the transferor  –  CBIC has clarified that transfer or change in the ownership of business will include transfer or change in the ownership of business due to the death of the sole proprietor. It is also stated that the transferee / successor shall be liable to pay any tax, interest or any penalty due from the transferor in cases of transfer of business due to death of sole proprietor. Circular No. 96/15/2019-GST, dated 28-3-2019 further clarifies that in case of transfer of business on account of death of sole proprietor, the transferee / successor shall file Form GST ITC-02 in respect of the registration which is required to be cancelled on account of death of the sole proprietor, before filing the application for cancellation of such registration by the legal heirs

Important Cases decided

-Fraudulent availing of ITC – Summon justified on MD- Plea of residing in USA and not involved in day-to-day activities was rejected : Rajasthan High Court has upheld the summons issued to MD of a company in a case of ITC availment on the basis of fake invoices. Plea of residing in USA and not involved in day-to-day activities was rejected, observing that petitioner was receiving managerial remuneration from the company since 2012 and became its MD in 2018. Dismissing the petition with costs, the High Court also observed that allegation of fraudulent ITC was not controverted, and that determination of tax was not required in an offence under Section 132. Delhi High Court decision in Make My Trip, was distinguished. [Bharat Raj Punj v. Commissioner 2019 VIL 113 RAJ]

-Issue – Whether the exemption from payment of GST on reverse charge basis under section 9(4) of the CGST Act/SGST Act for receipt of supply of goods and/or services by us from an unregistered person is applicable since 1 July 2017 – Held  in case of M/s Famous Studios Ltd [2019] 103 taxmann.com 279 (AAR-TAMILNADU) that  RCM is applicable to the transactions effected from 1.7.2017 to 12.10.2017

The court ruled that Principal Secretary/Commissioner of Commercial Taxes, to consider and pass orders upon the application of the petitioner, wherein the petitioner would seek to pay pending GST dues in six monthly installments – Recently High Court of Madras gave an important Judgment in a case, where he directed authority to pass order allowing assessee to pay GST dues in six monthly installment in case of Asean Aromatics (p) Ltd. V. Assistant Commissioner (Circle) [2019] 103 taxmann.com 353 (Madras). Held that  Goods and Service Tax is nascent in its application and is an evolving regime. The interests of small traders have thus weighed consideration with the authorities in granting the relaxation in time limits.

-No GST on interest free deposit if not withheld at completion of lease – In case   amount or part of it is withheld as charge against damages, then that amount would be liable to GST: In a case involving interest free security deposit, taken from lessee as security against damages during lease of premises, Maharashtra AAR has held that deposit received is not a consideration for supply. The AAR, however, observed that if at time of completion of lease tenure, the amount or part of it is withheld as charge against damages, then that amount would be liable to GST. [ E-Square Leisure Pvt. Ltd. – 2019 TIOL 121 AAR GST]

-Exemption available only to clinical establishments providing healthcare – Must satisfy the dual condition of providing healthcare services as well as being a clinical establishment.: Madhya Pradesh AAR has held that exemption provided under S.No.74 of Notification No.12/2017-Central Tax (Rate) is service specific and service provider specific, therefore to qualify an establishment must satisfy the dual condition of providing healthcare services as well as being a clinical establishment. The applicant had pleaded that it is ancillary to other clinical establishment accredited by National Accreditation Board for Testing and Calibration Laboratories (NABL). However, the AAR held that mere involvement in sophisticated testing and consultancy will not be sufficient to qualify as a clinical establishment. It was also observed that applicant was functioning as sub-contractors to the said accredited companies and not as an independent clinical establishment. [J C Genetic India Pvt. Ltd. – 2019 VIL 108 AAR]

-Works contract pertaining to railways – Lower tax rate for sub-contractor: In a case involving works contract services provided by a sub-contractor to the main contractor in respect of work relating to railways, AAAR has held that benefit under Sl. No. 3(v) of Notification No. 11/2017-Central Tax (Rate) as amended by Notification No. 1/2018-Central Tax (Rate) is available to the sub-contractor. AAAR Maharashtra held that composite supply of works contract is ultimately going to the use of railways without being subjected to any change or modification, and thus said works contracts is ‘pertaining to the railways’. The work was hence held as eligible for concessional rate of GST. Department’s contention that there is no specific mention of sub-contractor providing services in Sr. 3(v), was rejected. (Shree Construction – 2019 VIL 33 AAAR)

-ITC available only on discounted invoice value: In a case involving post-invoice discount where discount cannot be pre-determined or recorded in invoices and supply of goods is made, AAR Tamil Nadu has held that buyer can avail ITC only on proportionate GST as applicable on invoice value less the discounts. Proviso to CGST Section 16 on payment towards value of supply along with tax amount to supplier within 180 days was relied on. The Authority in this regard held that Section 15(3) will not apply where discount is given after invoices are raised and supply of goods is made. The AAR observed that if ITC is availed on full tax amount, difference should be reversed to avoid liability. The applicant had argued that since the discount was not eligible for exclusion from taxable value and tax would be paid on full invoice value, no credit was reversible and the entire tax amount would be available as credit. [MRF Ltd. – 2019 VIL 71 AAR]

-No ITC if goods supplied under CSR activity on FOC basis: Referring to Section 17(5)(h) of the CGST Act, 2017 which restricts ITC with respect to goods that are disposed of by way of gift or free samples, Kerala AAR has held that ITC will not be available to the manufacturer on supply of electrical items to the flood affected people under CSR activity on FOC basis. The Authority, however, held that the distributors of the applicant-manufacturer who had supplied goods to Kerala State Electricity Board on the instructions of the applicant will be entitled to avail ITC on such goods as the goods were supplied to KSEB and GST was paid to the Government by the distributors with respect to the goods. [ Polycab Wires Pvt. Ltd. – 2019 VIL 100 AAR]

 

-No ITC on goods supplied free under sales promotion scheme: Maharashtra AAR has held that ITC is not available to the assessee on procured gold coins to be distributed to its customers for free of cost under a sales promotion scheme at the end of scheme period for achieving the stipulated lifting or payment criteria. It was held that only use of goods in the course of furtherance of business as mentioned in Section 16(1) of CGST Act does not entitle one to avail ITC since Section 17(5) starts with “Notwithstanding anything contained in sub-Section (1) of Section 16”. The Authority was of the view that considering the bar to avail credit by virtue of Section 17(5)(h), even in a case where the goods are used in the course or furtherance of business, ITC shall not be available on distribution of gold coins for free as gifts under a sales promotion scheme. It also elaborated on the meaning of “gifts” as assigned under the Gift Tax Act, 1958 and observed that gift was a transfer of property without consideration which was given voluntarily. [Biostadt India Limited – 2019 VIL 60 AAR]

-Job work – Dispatch of consumables to job worker is not ‘supply’: The question before the Authority was whether dispatch of consumable materials (zinc, furnace oil, nickel, etc.) for galvanization, would be treated as supply from the principal to the job worker, if they were not returned within the time allowed under Section 143(1)(a) of the CGST Act, 2017. Answering this question, the AAR West Bengal held that as the goods were consumed in the process, the return of the galvanized goods to the applicant would satisfy the condition of receiving back the inputs in accordance with Section 143(1)(a). It was also held that as the goods were consumed in the process of galvanizing and became inseparable from the galvanized goods, they shall not be treated as supply in terms of Section 143(3) provided they have been entirely used up in the process of galvanizing.  [Ratan Projects & Engineering Co. Pvt. Ltd. – 2019 VIL 91 AAR]

-ITC of Compensation Cess paid on motor vehicles not available for supply of rental service: The applicant was engaged in supply of renting of motor vehicles and then their disposal after some time. The Kerala AAR has held that such applicant was eligible to claim ITC of Compensation Cess paid at the time of purchase of motor vehicles but would be required to reverse proportionate amount of ITC of such cess every month based on the turnover of rental service as the same was an exempt supply, not being liable to cess under GST (Compensation to States) Act, 2017. It held that such ITC can be utilized for discharging liability of Compensation Cess arising at the time of sale of such vehicles. The Authority in this regard relied on Section 2(p) of the GST (Compensation to States) Act which defines the term “taxable supply” under the said Act and referred to definition of ‘exempt supply’ as provided in CGST Act. [ Orix Auto Infrastructure Services Limited – 2019 VIL 98 AAR]

-Fabrication of body on chassis supplied by principal is supply of service: Kerala AAR has held that the activity of fabrication of a body is in the nature of adding a structure (any treatment done) on the chassis owned by the customer, and hence even when the job worker used his own material to do the fabrication on the chassis, it will be considered as supply of service and will be classified under SAC Code 9988, thereby attracting 18% GST. The Authority observed that chassis was a semi-finished good owned by the principal and any treatment done by any other party on the chassis of the principal was in the nature of job work activity. [Kondody Autocraft (India) Pvt. Ltd. – 2019 VIL 97 AAR]

Customs

 

-Physical copies of MEIS/SEIS scrips phased out for EDI ports: Physical copies of MEIS or SEIS duty credit scrips will not be issued by the DGFT from 10-4-2019 onwards, in cases where the port of registration is an EDI port., the scrips will continue to be transmitted electronically by the DGFT to the Customs system and would be visible to concerned officers involved in imports. While no TRA shall be issued in respect of these paperless scrips issued electronically, DGFT will continue to issue scrips in physical form as per current practice for non-EDI ports. (CBIC Circular No. 11/2019-Cus. dated 9-4-2019)

-Advance authorisation, EPCG and EOU – IGST and Cess exemption extended: Exemption from Integrated tax and Compensation Cess for imports under Advance authorisation, EPCG scheme and by EOUs has been extended again. This time the exemption has been extended for full one year, and would now be available till 31st of March 2020, instead of 31st March 2019. Amendments have been made in Paras 4.14, 5.01(a) and 6.01(d)(ii) of the Foreign Trade Policy by DGFT Notification No. 57/2015-20, issued on 20-3-2019. Ministry of Finance has also issued notifications to amend the Customs notifications

-Peas and pulses – Import of certain quantities relaxed from 1-4-2019: Ministry of Commerce has relaxed import of Moong, Urad and Peas. Such products will be subject to annual (fiscal year) quota of 1.5 Lakh Metric Tonne. Import of Toor Dal shall be subject to an annual quota of 2 Lakh MT as per procedure notified by DGFT. Import of these products was earlier fully restricted. As per DGFT Trade Notice dated 1-4-2019, Ministry of Commerce Notifications S.O. 1478(E), 1479(E), 1480(E) and 1481(E) amend the import policy conditions of certain items in Chapter 07, and are effective from 1-4-2019.

Important Cases decided

-Rectification in Bill of Entry under Customs Section 154 on error by importer: In a case where the importer accidently paid duty twice on same invoice, Madras High Court has remanded the matter to assessing officer to pass order after exercising power under Section 154 of the Customs Act. The High Court observed that the error was apparent on the face of the order and the bill of entry should have been verified to avoid litigation. It observed that powers of Section 154 can be exercised by the authority when error is pointed out by an importer/exporter for reasons attributable to latter, but only in respect of clerical/arithmetical error. [Commissioner v. Symrise (P) Ltd. – 2019-VIL-141-MAD-CU]

 

-Advance authorisation – Use of surplus inputs for goods cleared in DTA: In a case where actual use of inputs in export goods was less than SION norms and surplus was used in the manufacture of domestic goods, CESTAT Ahmedabad has allowed benefit of advance authorisation. Observing that export obligation was fulfilled and off-grade goods, considered as waste, were cleared in DTA, the demand on ground of use of inputs being less than that prescribed in SION was set aside. The Tribunal placed reliance on Para 4.1.5 of FTP and the Tribunal decision in the case of Areva T & D India Ltd. (K L J Organics Ltd. v. Commissioner – 2019-VIL-208-CESTAT-AHM-CU)

 

-Demurrage charges are justified unless waiver mandated by Rules: Delhi High Court has held that the warehousing service provider was justified in not waiving and returning demurrage charges deposited in a case where detention was held justified, even when penalty and confiscation by Customs were set aside. The High Court held that fee payable for duration for which warehousing was done cannot be removed by the court unless rules or relevant policy provided for the same. It observed that even otherwise warehousing is a commercial activity for which service provider invests in resources, deploys manpower and creates infrastructure. [International Lease Finance Corp. v. UoI – Order dated 27-3-2019 in W.P.(C) No. 6490/2018, Delhi High Court]

 

Central Excise  & Service Tax

 

-NCCD exemption available to units exempted from Excise duty: Supreme Court has held that manufacturing units in special category States which were exempt from Central Excise duty would also be exempt from National Calamity Contingent Duty (NCCD), since NCCD was of the nature of an excise duty. The Court held that same view on this exemption would apply as taken for Education Cess and Secondary & Higher Education Cess by the Court in the case of SRD Nutrients (P) Ltd., even if NCCD was levied on the product and not on the excise duty payable. The Apex Court in this regard was of the view that exemption notifications, like the one in question must be read in a manner that give them a liberal interpretation, provided that no violence is done to the language employed. [Bajaj Auto Ltd. v. UoI Judgement dated 27-3-2019 in Civil Appeal No. 3239 of 2019, Supreme Court]

-Service tax audit after introduction of GST – Saving clause under CGST Section 174(2)(e): Jharkhand High Court has prima facie rejected the contention that saving clause in CGST Section 174 did not protect Service Tax Rules and hence action taken pursuant to such rules was without authority of law, after introduction of GST. Dispute pertained to inquiry/audit under Rule 5A. The Court however prima facie held that the expression ‘instituted’ in CGST Section 174(2)(e) implied that proceeding stood already instituted at time of repeal of Finance Act, 1994. Decisions of Gujarat and Delhi High Courts were referred while directing status quo till next date of hearing. [Sulabh International v. UoI Order dated 4-4-2019 in W. P. (T) No. 1599 of 2019, Jharkhand High Court]

-Mere consumption of goods during service cannot turn it into work contract: CESTAT Ahmedabad has held that consumption of goods by a service provider during the provision of service does not automatically convert the service into a works contract. The Tribunal observed that if the scope of work contract was extended to include consumables then there would be no service which can fall outside the purview of works contract. It also observed that even consultancy service provided by an engineer or an advocate involves consumables like paper, ink, pen, etc. [Krishna Engineering Works v. Commissioner – 2019 (22) GSTL 409 (Tri. – Ahmd.)]

 

-Supply of electricity in the absence of licence, exigible to service tax: Observing that petitioner was not a person authorised to transmit, supply, distribute or undertake trading in electricity, Calcutta High Court has ruled that receiving high-tension electricity and converting into low-tension for supply to occupants of a mall, was classifiable as services. It held that any interpretation that violates Electricity Act, should be avoided. The Court held that although electricity is goods, in the absence of licence under Section 12 of the Electricity Act, would be termed as a service liable under Section 65B(23) of the Finance Act, 1994. [Srijan Realty Pvt. Ltd. v. Commissioner 2019 TIOL 594 HC KOL ST]

 

-Excise valuation – Dharmada charges not includible: Larger Bench of the Supreme Court has held that ‘Dharmada’ collected as optional payment from buyer, cannot be part of transaction value for goods. It held that the amount to be credited to charity and not forming part of income was not includible. The Court held that no amount not paid as consideration for goods can go to make transaction value and if an amount paid at the time of sale transaction was for a purpose other than the price of the goods, it cannot form part of transaction value as such payment is not for transaction of sale i.e. for transfer of possession of goods. Observing that payment of dharmada was meant for charity and was received and held in trust by the seller, the Court was of the view that if such amounts were meant to be credited to charity and did not form part of the income of the assessee they cannot be included in the transaction value or assessable value of the goods. [D.J. Malpani v. Commissioner – Judgement dated 9-4-2019 in Civil Appeal No. 5282 of 2005, Supreme Court]

 

Value added Tax (VAT)

 

-Karnataka Sales Tax – Turnover not limited to ‘taxable turnover’: Supreme Court has held that levy under Section 6B of the Karnataka Sales Tax Act, must be on the total turnover and not only on the taxable turnover. It rejected the contention that ‘total turnover’ in Section 6B(1) for purpose of turnover tax, cannot include turnover on which State has no power to levy tax. Applying strict rule of interpretation of taxing statutes, the Court held that except the deductions provided under the first proviso to Section 6B(1), nothing else can be deducted from total turnover as defined under Section 2(u-2). [Achal Industries v. State of Karnataka Judgement dated 28-3-2019 in Civil Appeal No(s). 4837 of 2011 and Ors., Supreme Court]

 

-Rusk and toast are bread as per composition, hence not liable to VAT: Chhattisgarh High Court has held that Rusk and Toast are to be treated as Bread under Entry-7 of Schedule-I to the Chhattisgarh VAT Act making them tax free goods. The goods were held not classifiable under the residuary entry of Part IV of Schedule II of the Act. Upholding the single Judge Order, the Court observed that as per judicial precedents, it was required to find out if contents of the product fits the description of the basic entry and only if the same was not possible, residuary entry can be taken as a resort. [State of Chhattisgarh v. Saj Food Product (P) Ltd. – 2019-VIL-138-CHG]

 

-Mobile crane wire rope classifiable as part of mobile crane: Supreme Court has held that wire ropes used in mobile cranes are a part of such cranes and liable to 4% tax as per Entry 155 of Schedule IV to Rajasthan VAT Act. The Apex Court observed that in order to make mobile cranes operational, use of wire ropes was essential and hence mobile crane wire rope was an essential part of the mobile crane. Relying on judgement in Annapurna Carbon Industries, the Court reiterated the test that a thing is a part of the other if the other cannot function without it. [Commissioner v. Prasoon Enterprises Judgement dated 26-3-2019 in Civil Appeal No. 3198 of 2019 and Ors., Supreme Court]

 

These updates prepared and compiled by :-

(Naincy Bhalla)

naincybhalla1@gmail.com

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Highest collection since GST implementation here is the figure https://www.gstseva.com/highest-collection-since-gst-implementation-here-is-the-figure Thu, 02 May 2019 09:13:21 +0000 https://www.gstseva.com/?p=9931 GST Revenue collection for April, 2019 recorded highest collection since GST implementation

The total gross GST revenue collected in the month of April, 2019 is Rs 1,13,865 crore of which CGST is Rs 21,163 crore, SGST is Rs 28,801 crore, IGST is Rs 54,733 crore(including  Rs 23,289 crore collected on imports) and Cess is Rs 9,168 crore (including Rs 1,053 crore collected on imports). The total number of GSTR 3B Returns filed for the month of March up to 30th April, 2019 is 72.13lakh.

2.   The government has settled Rs 20,370 crore to CGST and Rs 15,975 crore to SGST from IGST as regular settlement. Further, Rs 12,000 crore has been settled from the balance IGST available with the Centre on provisional basis in the ratio of 50:50 between Centre and States. The total revenue earned by Central Government and the State Governments after regular and provisional settlement in the month of April, 2019 is Rs 47,533 crore for CGST and Rs 50,776 crore for the SGST.

3.   The revenue in April, 2018 was Rs 1,03,459 crore and the revenue during April, 2019 is a growth of 10.05% over the revenue in the same month last year. The revenue in April, 2019 is 16.05% higher than the monthly average of GST revenue in FY 2018-19 (Rs 98,114 crore).

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