♣ Eight State Legislative Assemblies (Haryana, Madhya Pradesh, Uttarakhand, Telangana, Bihar, Rajasthan, Jharkhand and Chhattisgarh) have passed their respective State Goods and Services Tax (SGST) Bills so far.
♣ Rule – making has gained momentum and CBEC has released several draft rules like draft accounts & records rules, draft assessment & audit rules, draft appeals & revision rules, draft advance rulings rules and draft-way bill rules.
♣ Draft accounts & records rules seek to prescribe various obligations for manufactures, service providers, agents, works contract service providers, carriers and C&F agents.
♣ Draft e-way bill rules mandate generation of e-way bill number before transportation / movement of goods of value more than Rs. 50,000 commences.
The Uttar Pradesh government also approved implementation of the Goods and Services Tax (GST) in the state and the same will be passed in the Assembly in the session commencing from May 15.
Not to spring any surprises in fixing tax rates under the new GST regime– Finance Minister , saying they will not be “significantly different” from current levels. He, however, said companies should pass on to consumers the benefit of reduction in taxes under GST which will eliminate the current compounding effect of different central and state levies.
The GST Council, headed by Mr Jaitley and comprising representatives of all the states, is scheduled to meet in Srinagar on May 18-19 to finalise tax rates on different goods and services after unifying at least 10 indirect taxes into the Goods and Services Tax (GST).
President approves amendment to Customs & Central Excise laws for GST- The Taxation Laws (Amendment) Act 2017.
Cenvat credit on capital goods installed away from factory, when eligible:
Cenvat credit on items used in transmission line erected as dedicated line for assessee:
Manufacture – Refining of waste and used oil and sale thereof to industrial customers in bulk packs is not ‘manufacture’:
(a) Relabeling has taken place
(b) Re-packing from bulk packs to retail packs has taken place and
(c) Such treatment has rendered the product marketable.
[IEP Petro Products Pvt. Ltd. v. Commissioner – 2017 (348) ELT 172 (Tri. – All.)]
Interest on delayed refund when Court stipulated period for authority to decide application – Relying on Supreme Court’s decision in the case of Ranbaxy Laboratories Ltd., Gujrat High Court has rejected the contention of the Revenue department that orders sanctioning rebate having been passed and the amount having been paid within the time limit stipulated by the High Court, no interest is payable. [kamakshi Tradexim (India) Pvt. Ltd. v. Union of India – 2017-VIL-209-GUJ-CE]
Area based exemption – Change in ownership, alteration of machinery and addition of new products do not affect eligibility to exemption:
Area based exemption under Notification No. 32/99-C.E., when old machinery sold and fresh investment made – CESTAT Kolkata has held that the spirit of the Notification No. 32/99-C.E. is to boost growth of industries in the North East Region by way of expansion of the old units as well as to set up the new units and that the new unit should not be set up at the expense of old units. In the instant case wherein the total investment in the subsequent plant was of Rs. 34 lakhs and the earlier parts and machineries were sold for Rs. 20 Lakhs, it was held that the appellant never started a new unit or expanded its unit. Therefore the exemption was disallowed. [ATC Agro Industries Ltd. v. Commissioner – 2017 (4) TMI 89-CESTAT Kolkata]
EOU – Epoxy resins used for polishing of granite slabs are not raw materials – The issue involved was whether exemption under Notification No. 22/2003-C.E. was available to an EOU when epoxy resins were imported for polishing of granite slabs.
Milk powder with addition of Maltodextrine and artificial flavouring substance – Classification of : CESTAT Delhi rejected the contention of the Revenue department that with the addition of Maltodextrine and artificial flavouring substance, item manufactured (milk powder) would go out of the purview of Heading 0404 of Central Excise Tariff and would be classifiable under Heading 1901 – food preparation of goods of Heading 0401 to 0404. [Nestle India Limited v. Commissioner -2017-VIL-324-CESTAT-DEL-CE]
Aerated drink with fruit pulp or juice – Use of fruit concentrate – The appellant claimed the benefit of Notification No. 3/2001-C.E. and 6/2002-C.E. for its products, Maaza Orange drink and Maaza Pineapple drink made with imported ‘Authentic Aseptic Pineapple Concentrate’, as drinks which are manufactured out of fruit juice and fruit pulp, CESTAT Chennai however, considering that there was no fruit pulp or fruit juice used in the manufacture of drinks, there being absence of any purchase record produced before any authority to prove purchase of fruit pulp or fruit juice, held the product to be classifiable under sub-heading 2202.99 of Central Excise Tariff. Benefit of the exemption notification for goods falling under said sub-heading was held to be inapplicable. [Hindustan Coca Cola Beverages P. Ltd. v. Commissioner – 2017 (3) TMI 1410 – CESTAT CHENNAI]
Due date for filing ST-3 Returns extended to 30 April – CBEC has extended the last date for filing service tax return (ST-3) for the half-year 1st October, 2016 to 31st March, 2017 to 30-4-2017.
Transportation of goods by vessel for import into India where both provider and receiver are located in non-taxable territory – Liability revised:
Cargo Handling service or Packaging service – Scope – Distinguishing between Cargo Handling service and Packaging service, the Supreme Court of India has held that though the word ‘packing’ is included in the definition of ‘Cargo handling service’, the same is referable to the word ‘cargo’ whereas packing activity is defined to mean ‘packaging of goods’ in the definition under Section 65(76b) of the Finance Act, 1994.[Signode India Ltd. v. Commissioner – 2017 (50) STR 3 (SC)]
Reverse charge mechanism – Liability when foreign entity has establishment in India, and in case of repayment of term loan – CESTAT Delhi has set aside the demand of service tax under reverse charge mechanism in a case where assesse had taken loan from a foreign bank and the foreign bank had representative office in India by way of another branch entity of the bank.
(a) The appellant as borrower of loan
(b) ABN Amro Bank, NV, Singapore as lender and
(c) ABN Amro Bank, NV, New Delhi as Security Trustee.
BAS-Activity of physical printing of telephone bills not covered under ‘billing’ – CESTAT Delhi has held that printing of telephone bills and certain post printing operation like stuffing the bills in the envelops and bunching them together as per area code for further dispatch by the telecom company, would not be covered under ‘billing’ in Section 65 (19) (vii) of the Finance Act, 1994 providing for definition of Business Auxiliary Service. [Commissioner v. Ricoh India Ltd. – 2017-VIL-284-CESTAT-DEL-ST]
Support service of business or commerce – Scope: CESTAT Mumbai has held that unless an activity is optional for the continued existence of the organization and permits the flexibility of self-performance vis-a-vis outsourcing, it is not covered under the scope of ‘Support service of business or commerce’,
Cenvat credit when Broadcasting service also rendered in J&K – In a case involving provision of ‘broadcasting service’ and failure to maintain separate records for taxable and exempted services when the services provided in Jammu and Kashmir were not subject to service tax, CESTAT Mumbai has set aside the demand for excess utilisation of Cenvat credit for payment of tax.
BAS – Promotion of trademark, not covered – CESTAT Mumbai has rejected the contention of the Revenue department that since the agreement between the assessee and his supplier required the main assessee to promote the trademark, which is ‘goods’, they would be liable to service tax under Business Auxiliary Service.
Reward scheme scrips (MEIS and SEIS) allowed to be utilised for EO default duty payment under previous FTPs – Duty Credit scrips issued under Chapter 3 of the Foreign Trade Policy can be utilised for payment of Customs duties in case of default of export obligation for authorisations issued under Chapter 4 and 5 of the earlier Foreign Trade Policies as well. Provisions of Para 3.18 (a) of the FTP, before amendment by DGFT Notification No. 4/2015-20, dated 21-4-2017, stated that scrips can be utilised in respect of authorisations issued under the Policy.
EOU – No requirement of refund of deemed export benefit when goods procured indigenously returned back – CBEC has clarified that once applicable Customs duty is paid at the time of transfer/sale back into DTA in respect of goods procured indigenously, there is no requirement of refund of the deemed export benefits or for the production of a certificate from the Development Commissioner regarding refund or non-availment of deemed export benefits. Circular No. 13/2017-Cus., dated 10-4-2017 issued for this purpose further states that this would also be applicable when EOU seeks exit from the scheme.
Exemption when contract registered under Project Import Regulations – CBEC has rescinded Circular F.No. 528/2131/87-Customs (TU) dated 8-8-1987 which stipulated that once a contract has been registered for a project, the imports mede there under lose their identity, become classifiable under Heading 9801, and are to be assessed only at the project import rate. Circular No. 15/2017-Cus., dated 19-4-2017 issued in this regard notes that the Supreme Court has allowed benefit of individual notifications even for imports assessed under Heading 9801.
Exemption to specified medicines for supply under Patient Assistance Programmes – Complete exemption from BCD has been extended to specified drugs and medicines for supply under Patient Assistance Programmes run by the specified pharmaceutical companies, subject to conditions mentioned therein. Notification No. 16/2017-Cus., dated 20-4-2017 lists some 27 medicines which would be eligible for the benefit, if supplied free of cost to the patients under the specified Patient Assistance Programmes.
Exemption to goods imported by Navy, Air Force or CRPF – Complete exemption from BCD and CVD has been extended to all goods imported into India by or along with a unit of the Army, the Navy, the Air Force or the Central Paramilitary Forces on the occasion of its return to India after a tour of service abroad. Notification No. 17/2017-Cus. dated 21-4-2017 issued in this regard states that such exemption would be available provided that such goods are proved to have been exported by or along with such unit on the occasion of its departure from India.
Valuation of goods imported from sister concern, when correct – In this case, CESTAT Mumbai has upheld the transaction value. Observing that there was absence of sale transaction as material supplied was purchased from third party, the Tribunal was of the view that value as declared being value of third party, was correct. [GKN Sinter Metals Ltd. v. Commissioner – Order dated 1-2-2017 in Appeal No. C/46/07-Mum, CESTAT Mumbai]
Refund of SAD – Absence of sale invoice for imported goods when not fatal – In a case involving import of sanitary fittings, CESTAT Hyderabad has allowed refund of SAD under Notification No. 102/2007-Cus., rejecting department’s contention that there was no evidence for sale of the imported goods as the imported goods were fixed in the bathroom of apartments sold by the assessee. It was observed that non-issuance of invoices was not a choice but a composite shceme. [Lodha Healthy Construction and Developers Pvt. Ltd. v. Commissioner – 2017-VIL-323-CESTAT-HYD-CU]
Second hand furniture imported by service provider covered under ‘ capital goods’ – CESTAT Mumbai has held that import of second hand furniture (not more than 10 years old) by service provider would be covered under the term ‘plant’ in the definition of ‘capital goods’ in the EXIM Policy. [Warburg Pincus India Pvt. Ltd. v. Commissioner – 2017-TIOL-1359-CESTAT-MUM]
Certified copy of Country of Origin certificate can be produced post import – CESTAT Hyderabad has allowed refund of BCD on production of certified copy of the Country of Origin certificate at a later stage. The Tribunal in this regard relied upon Rule 3(f) of the Implementation Procedures provided in Appendix-A to Annexure-2 of Notification No. 55/2011-Cus. (N.T.).
Conversion of Shipping Bill from Duty drawback to DFIA Scheme – Limitation – CESTAT Mumbai has held that CBEC Circular No. 36/2010-Cus., dated 23-9-2010, seeking restriction on time limit for conversion of shipping bill goes beyond mandate of the law. [Products Pvt. Ltd. v. Commissioner – Order dated 6-2-2017 in Appeal No. C/87134/16, CESTAT Mumbai]
Rajasthan VAT and Entry Tax – Amnesty Schemes introduced –
Karnataka – Amnesty Scheme introduced – By Order No. FD 24 CSL 2017, Bengaluru dated 31st March, 2017, Karasamadhana Scheme, 2017 has been introduced by Government of Karnataka.
Entry Tax on machine brought from outside, used and then sent back, valid – On appeal by the department before the Allahabad High Court, while examining Section 2 (c) of the Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007 that defines “entry of goods”.
ITC on goods received back from job worker – Period of 90 days prescribed in Punjab VAT Rule 20 is directory – The petitioner engaged in the business of manufacture of jewellery was entitled to Input Tax Credit of the tax paid on purchase of gold used in the manufacture of jewellery. ITC was claimed on purchase of bullion which was not received back from the job workers after it was processed and reconditioned, within the time prescribed in Rule 20 of the Punjab VAT Rules, 2005.
*Member ZAC Chandigarh, Service Tax, Govt. of India, Member RAC Chandigarh, Central Excise & Customs, Member Indirect Tax committee SIAM , Member, ASSOCHAM Indirect Taxes Committee, Chief General Manager Finance- SML Isuzu Ltd. Winner Achiever Award 2015 By ICAI (CMA)
Information source- M/s LKS, M/s Nitya tax Associates, Economic Times, Financial express, GST.com and other sources-many thanks to all.
Do you think CBDT should extend Tax Audit Report and relevant ITR Due Date? Please Comment, Vote, Retweet and Like.— Tax Guru (@taxguru_in) September 18, 2018