CMA Rakesh Bhalla
CMA Rakesh BhallaGST updates for December 2017

♠ CBEC amended Composition Rates for Manufacturers & easing norms for Traders –

Manufacturers who have opted for composition scheme will now have to pay 1 per cent Goods and Services Tax (GST) as against 2 per cent earlier.

Traders opting for composition scheme would now have to pay the tax at 1 per cent on their turnover of taxable supplies. So far, they were paying GST on total turnover.

(Notification Nos. 1/2018 –Central Tax, dated 01-01-2018) 

♠ Due date for filing GSTR-1Notification Nos. 7172/2017-Central Tax, dated 29-12-2017 Time limit for furnishing details of outward supplies in FORM GSTR-1 by such class of registered persons, having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year

SI No. Months for which the details in FORM GSTR-1 are furnished Time period for furnishing the details in FORM GSTR-1
1 July – November, 2017 10th January, 2018
2 December, 2017 10th February, 2018
3 January, 2018 10th March, 2018
4 February, 2018 10th April, 2018
5 March, 2018 10th May, 2018

having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year

SI No. Quarter for which the details in FORM GSTR-1 are furnished Time period for furnishing the details in FORM GSTR-1
1 July – September 2017 10th January, 2018
2 October – December 2017 15th February, 2018
3 January – March 2018 30th April, 2018

♠ GST Returns –Due date for filing specified returns extendedNotification Nos. 6869/2017 –Central Tax, all dated 21-12-2017 have been issued for this purpose.

Return Month/Quarter Revised due date Additional comments
GSTR-5 For the months July 2017 to December 2017 31-Jan-2018 To be filed by a non-resident taxable person.
GSTR-5A For the months July 2017 to December 2017 31-Jan-2018 To be filed by person supplying online information and database access or retrieval services from a place outside India to a non-taxable online recipient.

♠ Time limit extended for making a declaration, in FORM GST ITC-01 All registered persons, who have become eligible during the months of July to November, 2017 to the effect that they are eligible to avail the input tax credit under sub-section (1) of section 18 of the GST Act, 2017 till the 31st January, 2018. Notification Nos. 67/2017 –Central Tax, 21-12-2017.

♠ CGST Rules amended to revise various forms and Returns GSTR-1 and Form GST RFD-01 and 1A have been amended. While Table 6 of the GSTR-1 relating to zero rated supplies and deemed exports, has been amended, statements under CGST Rule 89(2)(h) and (g) have been inserted in Forms RFD-01 and 1A. [Notification No. 70/2017-Central Tax, dated 21-12-2017]

♠ Late fees for delayed filing of FORM GSTR-4 waivedLate fee payable under section 47 of the GST Act, 2017 by any registered person for failure to furnish the return in FORM GSTR-4 which is in excess of an amount of twenty five rupees for every day. Provided that where the total amount of central tax payable in the said return is nil, waived to the extent which is in excess of an amount of ten rupees for every day, Notification No. 73/2017-Central Tax, dated 29-12-2017.

♠ Last date for submission of Form GST CMP-03 providing for intimation of details of stock held on the date preceding the date from which the option to pay tax under Composition Levy is exercised, has also been extended till 31-1-2018. Order No. 11/2017-GST, dated 21-12-2017.

♠ Nationwide e-way bill system to come into effect from 1-2-2018 Rules for implementation of nationwide e-way bill system for inter-State movement of goods on a compulsory basis will be notified with effect from 1st of February, 2018. As per Press Release dated 16-12-2017 issued by Ministry of Finance after the 24th Meeting of the GST Council, States can choose any date before 1st June, 2018 for implementation of e-way bill for intra-State movement of goods. It is stated that nationwide e-way bill system will be rolled out on a trial basis latest by 16-1-2018.

♠ Lok Sabha passes bill for GST cess hike on luxury cars to 25% The Lok Sabha has approved a bill to hike Cess on luxury vehicles from 15% to 25%. The Cess will be applicable along with the 28% GST that is already applicable on cars that are over the 4-metre length category.

♠ Refund on account of inverted duty structure, deemed exports and excess balance in electronic cash ledger –Manual procedure Procedure in respect of manual filing and processing of refund claims on account of inverted duty/tax structure, deemed exports and excess balance in electronic cash ledger has been clarified. Refer CBEC Circular No. 24/24/2017-GST, dated 21-12-2017.

♠ Conditions and procedures for manual filing of application for advance ruling and for appeal to the Appellate Authority for Advance Ruling has been prescribed.

Refer CBEC Circular No. 25/25/2017-GST, dated 21-12-2017.

♠ Invoice in case of supply of artwork on approval basis through galleries An art work for supply on approval basis can be moved from the place of business of the registered person (artist) to another place (within the same State or outside it), on a delivery challan along with the e-way bill wherever applicable. Refer CBEC Circular No. 22/22/2017-GST, dated 21-12-2017.

♠ Maintenance of books of accounts at principal place of business instead of additional place Principal and the auctioneer, in case involving stock of goods like tea, coffee, rubber, etc., meant for supply through an auction, have been allowed to maintain the books of accounts relating to the additional place(s) of business at their principal place of business instead of such additional place(s). Circular No. 23/23/2017-GST, dated 21-12-2017.

♠ Absence of TDF only a technical breach After observing that the detaining authority had not formed any opinion on intention of the assessee to evade tax, in a case involving absence of Transit Declaration Form (TDF), the Allahabad High Court has held that it was difficult to sustain penalty. [Ramdev Tr.Co. v. State of UP -Writ Tax No. 779 of 2017,decided on 30-11-17,Allahabad High Court]

♠ Anomalies in ITC availability in hotel bookings Delhi High Court has directed the Central Government to examine the anomalies as asserted by the assessee involved in the business of booking tours and hotel packages. According to the petitioner, since they are not registered in each State, they are unable to avail ITC of SGST charged by hotels located outside Delhi.

[D Pauls Travel and Tours Ltd. v. Union of India -2017-TIOL-37-HC-DEL-GST]

♠ EU VAT -No mandatory requirement to mention address on invoice The Court of Justice of the European Union has held that for the purpose of deduction of VAT [ITC in India] by the recipient of goods or services, there is no requirement that economic activities of the supplier are to be carried out at the address indicated on the invoice issued by that supplier.

[Rochus Geissel v. Finanzamt Neuss–Judgement dated 15-11-2017 in Joined Cases C‑374/16 and C‑375/16, CJEU]

♠ Valuation –Discount deduction under EU VAT The Court of Justice of the European Union has held that discount granted by a pharmaceutical company to a private health insurance company, in case of supply of medicinal products through pharmacies which made supplies to persons covered by such private health insurance, would not be includible in the VAT liability of the pharmaceutical company. [Finanzamt Bingen-Alzey v. Boehringer Ingelheim Pharma GmbH & Co. KG–Judgement dated 20-12-2017 in Case C‑462/16, CJEU]

Customs updates for December 2017                                                                                              

♠ FTP 2015-20 mid-term review unveiled Ministry of Commerce has, after a mid-term review, unveiled the revised Foreign Trade Policy and the Procedures, on 5th of December, 2017.

♠ EPCG Scheme –Revisions Capital goods installed at one unit have been permitted to be shifted to another unit as appearing in the IEC and RCMC of the EPCG holder, subject to production of fresh installation certificate.

♠ EOU Scheme –Revisions Value limit of 50% of FOB value of exports, on DTA sale of goods by an EOU has been removed. Consequently, restrictions on DTA sale of motor cars, alcoholic liquors, books and tea, at concessional rate of duty, have been removed. However, DTA sale of pepper & pepper products and marble is not permissible. Notification No. 41/2015-20 and Public Notice Nos. 43 to 46/2015-20, all dated 5-12-2017.

♠ Exemptions -Norms for Bank guarantee, cash security and surety relaxed CBEC has relaxed the norms for furnishing of bank guarantee, cash security and surety for the purpose of benefit under the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017. Bank guarantee, cash security or surety is not required in case of AEOs, PSUs and Govt. departments. Manufacturers and service providers having a turnover of more than INR 1 crore and filing GST Returns would be required to give bank guarantee / cash security of not more than 5% of import duty foregone. Circular No. 48/2017-Cus., dated 8-12-2017.

♠ Basic Customs duties enhanced on many electrical/electronic goods Ministry of Finance has enhanced Basic Customs Duty on number of electrical or electronic products, including on microwave ovens, telephones for cellular/wireless networks, CCTV or IP cameras, colour TVs, LED lamps and smart meters for electricity. BCD has also been enhanced on LCD, LED or OLED panels for TVs. Notification Nos. 91 and 92/2017-Cus., both dated 14-12-2017 and the jumbo Notification No. 50/2017-Cus., providing for effective rate of Customs duty.

♠ Chickpeas or Masoor (Lentils) –BCD increased Chickpeas and Masoor are no longer exempted from Basic Customs Duty (BCD). Notification No. 50/2017-Cus., has been amended to remove these two types of pulses from the exemption. Notification No. 93/2017-Cus., dated 21-12-2017.

♠ Ministry of Finance has notified on 14-12-2017, The Customs (Furnishing of Information) Rules, 2017 Coming into force from 1-1-2018, the Rules prescribe for furnishing of information required under Section 108A(1) of the Customs Act, 1962, electronically. No. 114/2017-Cus. (N.T.).

♠ Mandatory e-sealing postponed again CBEC has again postponed the provisions for mandatory e-sealing of export containers. The procedure is now mandatory from 1st of March 2018 for exporters who have been permitted self-sealing, AEO exporters and those availing supervised sealing at their premises for 15 locations (ports and ICDs). E-sealing procedure will be mandatory for all ports and ICDs, other than 15 specified, from 1st of April, 2018. Circular No. 51/2017-Cus., dated 21-12-2017.

♠ Exports -Refund of Countervailing duty as drawback Countervailing duty (CVD) levied under Section 9 of Customs Tariff Act is eligible to be refunded as drawback, in case of exports. CBEC has clarified that drawback of countervailing duties, imposed on inputs which were actually used in exported goods, can be claimed under an application for brand rate. Circular No. 49/2017-Cus., dated 12-12-2017.

♠ Payment allowed in Indian Rupees at duty free shops Facility of payments in Indian rupees, through INR debit cards or credit cards will now be available at Duty Free Shops (DFSs), without any need for conversion of foreign currency into Indian Rupees. Cir No. 50/2017-Cus., dtd. 18-12-2017.

♠ Customs valuation –Utilisation of Transfer Pricing information World Customs Organisation recently finalised Case Study 14.2, covering a scenario where Customs took into account transfer pricing information in course of verifying Customs value.

♠ Valuation based only on Chartered Engineer’s certificate, not correct Setting aside demand against the importer, CESTAT Delhi observed that how the costing was arrived at was not clear. Further, noting that goods were manufactured outside India, and that costing of such manufacture and other incidental charges are not available in India, the Tribunal held that methodology of simply relying on CE Certificate, was not acceptable. [Impex Steel& Bearing v. Commissioner–Final Order No. 57284/2017, dated 18-10-2017, CESTAT Delhi]

♠ Valuation –Not practical to compare one brand with another CESTAT Delhi has held that it is not practical to have a comparison of one brand with another for the purpose of Customs duty. It rejected the assessee’s view that there were comparable goods though of different brands which could have been examined to re-fix the assessable value.

[Anil Kumar v. Commissioner–Final Order No. 57650-52/2017, dated 6-11-2017, CESTAT Delhi]

♦ Refund –Challenge to assessment order In a case where the importer had paid an excess amount of duty in the form of the CVD component paid by it under protest, CESTAT Delhi has held that refund claim shall lie not only in a case, where the Customs Duty has been paid in pursuance of an assessment order, but also where the duty has been borne by the assessee-importer.

[Delhi International Airport Pvt. Ltd. v. Commissioner-2017-VIL-1012-CESTAT-DEL-CU]

Central Excise and Service Tax  updates for December 2017          

♦ Retention fee of hospitals not liable to Service tax under BSS CESTAT Delhi has held that collection charges/facilitation fee retained by hospital out of the amount collected from patients is not liable to Service Tax under Business Support Services.

[Sir Ganga Ram Hospital v. Commissioner–Order dated 6-12- 2017 in Appeal No. ST/1844/2010, 51751/2014, 51815/2015, 50125/2014, 51764/2014, 50367/2016, CESTAT Delhi]

♦ GTA service -Service in public interest CESTAT Kolkata has allowed appeals of the Government department (Sikkim Nationalized Transport) providing vehicles to Army for transport of goods and personnel. [Sikkim Nationalized Transport v. Commissioner-2017-TIOL-4365-CESTAT-KOL]

♦ Refund -Unjust enrichment when duty promised to be refunded CESTAT Delhi has rejected the appeal filed against denial of refund, in a case where the assessee had agreements with their buyers that they would continue to contest the issue with the department and in case the same is settled in their favour, the assessee would return the extra amount to buyers.

[BSL Ltd. v. Commissioner–Final Order No. 57653/2017, dated 6-11-2017, CESTAT Delhi]

♦ Convention service –Scope of words ‘general public’ CESTAT Delhi has upheld liability of an assessee involved in holding seminars to discuss various subject matters in different fields and topics, under Convention service. Rejecting the plea that seminars were organised for general public, when a person takes part in an activity with reference to his expertise, skill, etc., he is no more a part of general public. [IIM v. Commissioner –Final Order No. 57349, dated 25-10-2017, CESTAT Delhi]

♦ Valuation –Depot sale invoice subsequent to factory clearance, not relevant CESTAT Delhi has held that mandate given by Section 4(1)(b) of Central Excise Act read with Rule 7 of the Valuation Rules, for taking contemporaneous depot prices in case of depot sales, cannot be extended to depot sale invoice which is nearly one month subsequent to the date of clearance from factory. [India Yamaha Motor Pvt. Ltd. v. Commissioner –Final Order No. 57444/2017, dated 24-10-2017, CESTAT Delhi]

♦ Branded jewellery -Mere use of minute-sized two letters not to be called assessse’s ‘brand name’ CESTAT Delhi has held that mere use of minute sized two initial letters “AT” cannot be called brand name of the assessee.

[Commissioner v. Anopchand Trilokchand Jewellers P.Ltd. -2017 (356) ELT 271 (Tri. -Del.)]

♦ No liability under BAS for services rendered to Health authorities or State Government CESTAT Delhi has held that there can be no tax liability, under Business Auxiliary Service, on the services rendered by the assessee to the Health Authorities or State Government.

[Smriti Television Media & Films (P) Ltd. v. Commissioner-Final Order No.57434/2017, dated 27-10-2017, CESTAT Delhi]

♦ Dummy packs distributed as advertising material not dutiable Allahabad Bench of CESTAT has held that the dummy packs do not attract Central Excise duty and thus, the question of their classification does not arise. [International Tobacco Company Limited v. Commissioner -2017 (356) ELT 254 (Tri. –All.)]

♦ Cenvat credit not available on capital goods received directly at job worker’s premises CESTAT Chennai has held that Cenvat credit was not available to the assessee on capital goods which were received directly at job worker’s premises.

[Sterlite Industries (I)Ltd. v. Commissioner-2017-VIL-1029-CESTAT-CHE-CE]

♦ Air jet filters and super jet filters designed to be used solely or principally with machines of Heading 8437, classifiable under Heading 8437 Bangalore Bench of the CESTAT has held that air jet filters and super jet small filters, which find application in the rice milling industry, are classifiable under Heading 8437 of the Central Excise Tariff as parts suitable for use solely or principally with machines of Heading 8437, in terms of Note 2 to Section XVI.

[Commissioner v. Bulhar (India) Ltd. -2017 (356) ELT 264 (Tri-Bang.)]

VAT updates for December 2017         

Contract for supply and erection of equipment when not ‘works contract’ but only Sale In a case where the assessee was to supply equipment and erect it on the site, the Bombay High Court, while referring to various provisions of the contract, has held the transaction as of sale, and not of works contract. [Bharat Heavy Electricals Ltd. v. State of Maharashtra-2017-VIL-638-BOM]

*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, and other sources-many thanks to all.

With Warm Regards & Jai Hind

(Author can be reached at [email protected])

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