CMA Rakesh Bhalla
CMA Rakesh Bhalla

Indirect Taxes Updates:- GST, Customs, Excise, Service Tax & VAT Month – August 2017

(Updated up to 1st Sept. 2017)

Notification No. 28 /2017 – Central Tax, dated- 01st September, 2017- CBEC waives late fee payable under section 47 of the CGST Act, 2017, for all registered persons who failed to furnish the return in FORM GSTR-3B for the month of July, 2017 by the due date.

Notification No. 27/2017- Central Tax, dated- 30thAugust, 2017- Information to be furnished prior to commencement of movement of goods and generation of e-way bill:

> Every registered person who causes movement of goods of consignment value exceeding fifty thousand rupees-

  • in relation to a supply; or
  • for reasons other than supply; or
  • due to inward supply from an unregistered person,

furnish information relating to the said goods in Part A of FORM GST EWB-01, electronically.

> Where the goods are transported by the registered person as a consignor or the recipient of supply as the consignee, may generate the e-way bill in FORM GSTEWB-01 electronically on the common portal after furnishing information in Part B of FORM GST EWB-01.

> Where goods are transported for a distance of less than ten kilometers within the State or Union territory from the place of business of the consignor to the place of business of the transporter for further transportation, may not furnish the details of conveyance in Part B of FORM GST EWB-01.

> Upon generation of the e-way bill on the common portal, a unique e-way bill number (EBN) shall be made available to the supplier, the recipient and the transporter on the common portal.

> Any transporter transferring goods from one conveyance to another in the course of transit shall, before such transfer and further movement of goods, update the details of conveyance in the e-way bill on the common portal in FORM GST EWB-01.

> Where multiple consignments are intended to be transported in one conveyance, the transporter may indicate the serial number of e-way bills generated in respect of each such consignment electronically on the common portal and a consolidated e-way bill in FORM GST EWB-02 maybe generated by him on the said common portal prior to the movement of goods.

> Where an e-way bill has been generated, but goods are not transported, the e-way bill may be cancelled electronically within 24 hours of generation of the e-waybill.

> An e-way bill or a consolidated e-way bill generated shall be valid for the period as mentioned below-

1. Up to 100 km – One day

2. For every 100 km or part thereof thereafter – One additional day

> No e-way bill is required to be generated, where-

  • goods are specified in Annexure to E-Way Rules;
  • goods transported by a non-motorized conveyance;
  • goods transported from the port, airport, air cargo complex and land customs station to an inland container depot or a container freight station for clearance by Customs.

Notification No. 26/2017- Central Tax, dated- 28thAugust, 2017- the Commissioner, hereby extends the time limit for furnishing the return by an Input Service Distributor. Timelines for filing GST Returns for first two months given as below:

Month Last Date for filing of return in FORM GSTR-6
July, 2017 8th September 2017
August, 2017 23rd September 2017

Notification No. 23/2017- Central Tax, dated- 17th August, 2017- Specifies the conditions for furnishing the return in FORM GSTR-3B electronically through the common portal for the month of July, 2017.

GST Rate on certain services revisedNotification No. 11/2017- Central Tax (Rate) amended to revise the rate of GST on various services, including service provided by Goods Transport Agency (GTA) and specified composite supply of works contract to government and others. Corresponding amendments have also been made in notifications issued under IGST and UTGST laws.

Some important changes made by Notification No. 20/2017- Central Tax (Rate), dated- 22ndAugust, 2017.

> Transportation of passengers by motor cab and renting of motorcar, where cost of fuel is included in the consideration – Rate of CGST will be 6%, with input tax credit (ITC).

> GTA service in relation to transportation of goods (including used household goods for personal use) -Rate of CGST will be 6% with ITC. However, GTA opting to pay CGST @ 6% would be liable to pay the same on all services of GTA supplied by it.

> Job work services in relation to all textiles and textile products falling under Chapters 50 to 63 will attract CGST at the rate of 2.5% (total GST rate will be 5%).

> Printing of newspapers, books (including Braille books), journals and periodicals,  where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer, will attract CGST at the rate of 6%.

> Specified composite supply of works contract services would be liable to CGST rate of 6%. The services covered for this rate include construction, erection, commissioning, installation, repair etc., services provided to Government in respect of canal, dam, pipeline for water supply/treatment/sewage treatment, etc. Similarly, such services in respect of road, tunnel, bridge, etc., would also be liable to CGST at the rate of 6%.

Reverse charge mechanism for GTA revised Notification No. 13/2017-Central Tax (Rate) amended to revise conditions of RCM in case of services provided by GTA. Henceforth, RCM in respect of GTA services would be applicable only when the GTA has not paid CGST at the rate of 6%. Notification No. 22/2017- Central Tax (Rate) issued for this purpose.

E-commerce Operator liable for house-keeping services provided through themNotifications issued under Section 9(5) of the CGST Act, Section 5(5) of the IGST Act and Section 7(5) of the UTGST Act, amended to cast tax liability on e-commerce operator in respect of house-keeping services such as plumbing, carpentering, etc. provided through them.

Exemption to certain services by and to FIFA, and by Fair Price Shops– Services provided by and to FIFA and its subsidiaries related to any of the events under FIFA U-17 (Under-17) World Cup 2017 to be hosted in India, have been exempted from CGST by amending Notification No. 12/2017- Central Tax (Rate).

Services provided by Fair Price Shops to Central or State governments, in respect of sale of certain products on commission, have also been similarly exempted. Notification No. 21/2017-Central Tax (Rate) issued in this regard on 22-8-2017.

GST (Compensation Cess) Act – Power of Parliament Delhi High Court has observed that power of the Parliament to enact the Goods and Services Tax (Compensation to States) Act, 2017 cannot prima facie be traced to Section 18 of the Constitution 101st Amendment Act.

[Mohit Minerals Pvt. Ltd. v. Union of India–Order dated 25-8-2017 in W.P. (C) No. 7459/2017]

Liability in case of chain of successive supplies the Court of Justice of the European Union has held the first transaction to be liable to VAT, as they constituted internal supplies. [It may be noted that intra- community transactions (supplies between Member countries of EU) are exempt from VAT in EU.

[Toridas UAB v. Valstybinė mokesčių inspekcija prie Lietuvos Respublikos finansų ministerijos–Order dated 26-7-2017 in Case C-386/16, CJEU]

Service by sub-contractor to economic operator in respect of vessel The Court of Justice of the European Union has held that service of loading and unloading cargo onto and off a vessel, when supplied by a sub-contractor which invoices them to the contracting undertaking rather than to the ship owner directly, would qualify for the exemption from value added tax (VAT).

[A Oy v. Veronsaajien oikeudenvalvontayksikko–Order dated 4-5-2017 in Case C-33/16, CJEU]

Circular No. 7/7/2017-GST Dated 01st September, 2017- System based reconciliation of information furnished in FORM GSTR-1 and FORM GSTR-2 with FORM GSTR-3B – In case the registered person intends to amend any details furnished in FORM GSTR-3B, it may be done in the FORM GSTR-1 or FORM GSTR-2, as the case may be.

GSTN launched GSTR-1 off-line tool version 1.2 to help preparation of GSTR-1 offline and thus reduce burden on the network.

Customs

CBEC has clarified that high sea sales of imported goods would not be chargeable to IGST twice., at the time of Customs clearance under Section 3(7) of Customs Tariff Act as well as separately under Section 5 of the IGST Act. Circular No. 33/2017- Cus., dated 1-8-2017 issued in this regard states that IGST shall be levied and collected only at the time of importation i.e. at the time of Customs clearance.

Pre- GST rates for Rebate of State Levies on export of garments and textile made-up articles will continue for a transition period of three months, i.e., up to 30-9-2017.

CBEC has issued detailed guidelines for provisional release of imported goods seized under Section 110 of the Customs Act. Circular No. 35/2017- Cus., dated 16-8-2017 has been issued for this purpose.

Exemption to temporary import of leased machinery, equipment and tools, revisedNotification No. 72/2017- Cus., dated 16-8-2017 issued to provide exemption to machinery, equipment, tools taken on lease by importer for use after import, and for re-export thereafter.

Export of Gold jewellery over 22 carats not allowed The DGFT has issued Notification No. 21/2015-20, dated 14-8-2017 whereby export of gold jewellery, plain or studded, and articles containing gold of 8 carats and above and a maximum of 22 Carats only is permitted from DTA and from EOU/EHTP/STP/BTP Units.

Red Sanders falling under Tariff Item 4403 99 18 is now prohibited for imports Import Policy for the said goods has been revised from ‘Free’ to ‘Prohibited’ by DGFT Notification No. 17/2015-20 dated 1-8-2017.

Valuation -Examination of technical assistance agreement and pricing agreement necessary before addition of royalty Observing that before adding the royalty amounts to the value of imported components, it is necessary for the department to examine both the technical assistance agreement as well as the pricing agreement, CESTAT Delhi has remanded the matter directing the adjudicating authority to examine the agreements.

[Erricsson (I) Pvt Ltd. v. Commissioner-2017-VIL-706-CESTAT-DEL-CU]

Valuation of ATF available in fuel tank of aircraft returning from foreign trip CESTAT Delhi has rejected the contention of the Revenue department that valuation of Aviation Turbine Fuel available as remnant fuel in the aircraft returning from foreign trip, has to be done by including 20% as notional freight charges in terms of Rule 10(2) of Customs Valuation Rules.

[Inter globe Aviation Limited v. Commissioner-2017-VIL-731-CESTAT-DEL-CU]

Delhi High Court has held that the assessee is not entitled to re-export the prohibited goods, without payment of demurrage/ ground rent.

[Muscles Fusion FZE v. Principal Commissioner-2017-VIL-405-Del-CU]

Restriction with pre- condition, makes goods ‘prohibited’ Kerala High Court has held that in respect of import of goods requiring prior permission, permission is a necessary corollary to classify the goods as non-prohibited, and that hence classification of goods as ‘prohibited’ and ‘non-prohibited’ is to be in accordance with tenor and terms of the law in force.

[Jagdev Damodaran v. Deputy Commissioner–2017 (352) ELT 5 (Ker.)]

♦ Refund- Payment of duty on interim order of court is protest payment Chennai Bench of the CESTAT has held that discharge of Customs duty on imported goods by the assessee pursuant to the High Court Order is to be treated as payment of duty under ‘protest’.

[RFB Rig Corporation LLC v. Commissioner–Final Order 41108/2017, dated 3-7-2017, CESTAT Chennai]

♦ Refund- No unjust enrichment even when amount not shown as outstanding High Court of Delhi has held that the mere fact that the amount was not shown as outstanding during the relevant year would not mean that the importer is not entitled to claim refund.

[YU Televentures Pvt. Ltd.v. Union of India-2017-VIL-391-DEL-CU]

CESTAT Delhi has reiterated the view that there cannot be demand of Customs duties from two or more persons jointly or severally.

[Thar Dry Port v. Commissioner-2017-VIL-681-CESTAT-DEL-CU]

Classification of sportsman forest tractor it can accommodate only one person i.e. driver of the vehicle, and that it was constructed essentially for hauling with the provision of hook and also with the capacity to haul upto twice the weight of the vehicle, CESTAT Delhi has held the goods to be classifiable under Tariff Item 8701 20 10.

[Polaris India Pvt. Limited v. Commissioner-2017-VIL-641-CESTAT-DEL-CU]

Excise 

♦ Cenvat Rule 3(4) proviso, restricting utilization of credit, is ultra vires the Credit SchemeGujarat High Court has held the proviso to sub-rule (4) of Rule 3 of Cenvat Credit Rules to be ultra vires and unconstitutional to the scheme of Cenvat Credit inasmuch as it restricted the utilization of credit to the extent such credit was available on the last day of the month or quarter, for payment of duty relating to that month or the quarter, as the case may be. [Advance Surfactants India Ltd.v. Union of India-2017-VIL-408-GUJ-CE]

Export under bond– No condition of receipt of foreign remittance– CESTAT Mumbai has allowed benefit of Notification No. 42/2001- C.E. (N.T.) to the assessee in a case where  export proceeds were not received fully, some of the goods being rejected by the foreign importer.

[Gemsons Precisions Engineering Pvt. Ltd. v. Commissioner-2017-TIOL-2744-CESTAT-MUM]

Mumbai Bench of the CESTAT has allowed Cenvat credit on EOT crane received in two consignments under two different invoices.

[Aurangabad Electricals Ltd. v. Commissioner-2017-TIOL-2869-CESTAT-MUM]

Cenvat credit on material used in the laboratory located in the factory premises would be admissible, as per a recent decision of Mumbai Bench of CESTAT.

[Sun Pharmaceuticals Industries Ltd v. Commissioner-2017-TIOL-2997-CESTAT-MUM]

Valuation– Knowledge of trade discount Allowing assessee’s appeal in a case involving trade discount on damages suffered during transit, CESTAT Chennai has held that merely because the assessee did not produce any written agreement, it cannot be said that the trade discount is not known to the buyer at the time of removal of goods.

[Hindustan Lever Ltd. v. Commissioner-2017-VIL-638-CESTAT-CHE-CE]

CESTAT Mumbai has held that availment of any benefit under a scheme of the Foreign Trade Policy would not impact entitlement for refund under Cenvat Rule 5.

[Milan Laboratories India Pvt. Ltd. v. Commissioner-2017-VIL-650-CESTAT-MUM-CE]

Interest payable on refund of confiscated currencyIn a case involving setting aside of confiscation of currency, Allahabad High Court has allowed the appeal of the assessee in respect of payment of interest for the period the currency was retained by the department.

[R.H.L. Profiles Ltd. v. Commissioner–2017 (352) ELT 349 (All.)]

Service Tax

Cenvat credit of tax paid under RCM on sitting fees to independent Directors, availableHyderabad Bench of the CESTAT has allowed assessee’s appeal in respect of Cenvat credit of service tax paid under reverse charge mechanism on sitting fees paid to independent Directors during the course of business activity of manufacturing and clearing the pharmaceutical goods. [Aurobindo Pharma Limited v. Commissioner-2017-VIL-696-CESTAT-HYD-CE]

CESTAT Delhi has held that simply because the non-payment of tax extended beyond normal period, the same by itself would not bar the closure of proceedings in terms of Section 73(3).[Samara India Pvt. Ltd. v. Commissioner–Final Order No. 53132/2017, dated 28-4-2017, CESTAT Delhi]

Belated submission of required information not fatal for exemption under Notification No. 18/2009- STConsidering the issue as to whether fulfillment of conditions prescribed in Notification No. 18/2009- S.T. belatedly, would dis entitle the benefit of said notification to the assessee, CESTAT Mumbai has allowed the appeal of the assessee.

[Praj Industries Ltd. v. Commissioner–Order dated 7-4-2017 in ST/85644/13, CESTAT Mumbai]

♦ CESTAT New Delhi has held that residential complexes built for married military troops are not liable to service tax as they do not require any approval from any authority.

[Purvanchal Construction Works (P) Ltd. v. Commissioner -2017-VIL-670-CESTAT-DEL-ST]

CESTAT Mumbai has set aside demand of service tax on finishing services (laying of synthetic/ wooden flooring)provided in respect of stadium, sports complex, etc., under Commercial or Industrial Construction services.

[Freewill Infrastructure Pvt. Ltd. v. Commissioner–Order dated 19-6-2017 in Appeal No. ST/720/12, CESTAT Mumbai]

♦ CESTAT Mumbai has allowed Cenvat credit of tax paid on renting of immovable property (road), situated outside factory.

[Commissioner v. Heidelberg Cement India Ltd.–Order dated 29-6-2017 in E/1661 and 1663/12, CESTAT Mumbai]

VAT

Holding demo cars as capital goods for the dealer engaged in sale of new cars Delhi High Court has allowed the benefit of Section 6(3) of the Delhi VAT Act. The said provision allows for exemption from VAT in case of sale of capital goods after use, subject to certain conditions. [Triumph Motors v. Commissioner-2017-VIL-412-DEL]

The Bombay High Court has allowed the appeal filed by the assessee that a contract for repairs or reconstruction of building is a “Construction contract” as contemplated by Section 42(3) of the Maharashtra VAT Act.

[Painterior (India) v. State of Maharashtra-2017-VIL-389-BOM]

♦ Fabric whitener- Classification under Rajasthan VAT The Court, relying on several other judgements on the same issue, held that the product though was a highly diluted form of AVP, retained the essential characteristics of AVP. Further, it reiterated the well settled proposition that the residuary tariff entry can be resorted to only if a product does not squarely fall within any of the specified entries. It was also held that where in a case of classification of entries, two views are possible, question of levy of penalty does not arise.

[Asst. Commissioner v. Jyoti Laboratories-2017-VIL-387-RAJ]

♦ Interest liability when same not mentioned in assessment order – It was held that as the petitioner had deposited entry tax after a delay of 15 months, the liability of interest under the Act was attracted, even though the same did not find mention in the assessment order.

[APL Appolo Tubes Ltd. v. Deputy Commissioner Commercial Tax-2017-VIL-344-ALH]

♦ Multi-function network printers- Classification ofThe Madras High Court, considering the nature of the goods and its predominant use, had held that multi-function network printers sold as ‘Image Runner’ were classifiable in Entry No. 18(i) of Part B of the Tamil Nadu General Sales Tax Act as ‘peripherals’ of a computer as the same was an input and output device which worked in conjunction with the computer.

[State of Tamil Nadu v. Canon India Pvt. Ltd. -2017-VIL-26-SC]

*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.

With Warm Regards & Jai Hind

(Author can be reached at nancybhalla@yahoo.com)

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