CMA Rakesh Bhalla

CMA Rakesh Bhalla
Past chairman NIRC of ICAI (CMA)*

Indirect Taxes Updates on GST, Customs, Excise, Service Tax & VAT for the Month – July 2017 (as updated upto 05th August 2017)

GST Update for the Month of July 2017 as updated upto 05th August 2017

♣ The GST Council in its 20th meeting held on 05th August 2017 appealed to the Indian industry to pass on the input credit to customers.

The major highlights of the meeting are as under:

  • The E-way bill would be rolled out from October 1. Goods more than Rs 50,000 in value to be pre-registered online before they can be moved. There will be no check posts and the whole process will be technology-driven with minimum human intervention.
  • The tax rate on some tractor parts has been reduced to 18% from 28%.
  • The job work rate for all kinds of work in the textile chain has been kept at 5 per cent
  • Work contracts under GST will be taxed at 12% with input tax credit.
  • 71 lakh central and state taxpayers have migrated to the Goods and Services Tax (GST) system. Another 15.67 lakh new applications for registration have been received.
  • The National Anti-profiteering Authority has been proposed a three-tier structure including a committee at the state level to deal with local complaints.

The next meeting of the GST Council will be held at Hyderabad on September 9.

♣ Margin scheme for dealers of second-hand goods: Finance Ministry has on 15th of July clarified that Margin Scheme, as envisaged under Rule 32(5) of the Central Goods and Services Tax Rules, 2017, can be availed by any registered person dealing in buying and selling of second hand goods (including old and used empty bottles), provided the conditions laid therein are satisfied.

♣ Ministry of Finance has clarified that star rating of hotels is not relevant for determining the applicable rate of GST. The Press Release dated 18-7-2017 issued in this regard reiterates that accommodation in any hotel, including 5-star hotels, having a declared tariff of a unit of accommodation of less than INR 7500 per unit per day, will attract GST @ 18%.

♣ GST migration and new registration -Trade advisory: Office of the Commissioner of Sales Tax, Maharashtra has issued an elaborate Trade Advisory to clarify various issues arising during the course of migration of existing taxpayers and in respect of new registration. The Trade Circular dated 15-7-2017 issued for this purpose clarifies that in respect of registration of different vertical with same PAN, taxpayers are expected to use different mobile number and e-mail ID for each business vertical.

♣ N/N 17/2017dated 27th July 2017 specifies rate of exchange of currency, other than Indian rupees, to be used for determination of value of goods as well as services.

  • For goods– Applicable rate of exchange as notified by the Board under section 14 of the Customs Act, 1962 for the date of time of supply of such goods.
  • For services-Applicable rate of exchange determined as per the generally accepted accounting principles for the date of time of supply of such services.

♣ N/N 16/2017 dated 07th July 2017

The following registered person shall be eligible for submission of Letter of Undertaking in place of a bond-

  • a status holder as specified in paragraph 5 of the Foreign Trade Policy 2015- 2020


  • Who has received the due foreign inward remittances amounting to a minimum of 10% of the export turnover, which should not be less than one crore rupees, in the preceding financial year

Customs Update for the Month of July 2017 as updated upto 05th August 2017

Circulars and Trade Notices Issued

♠ Foreign Trade Policy –Changes pursuant to implementation of GST:DGFT has issued a comprehensive Trade Notice to highlight major changes in the provisions of the Foreign Trade Policy consequent to implementation of the Goods and Services Tax (GST) from 1st of July.

[Trade Notice No. 11/2018, dated 30-6-2017 has been issued in this regard.]

♠ EOU operations post implementation of GST –Clarifications:Pointing out various operational issues relating to EOUs after implementation of GST, CBEC has clarified that B-17 bond would suffice and the EOUs are not required to submit separate continuity bond under the new IGCR Rules, 2017. [Circular 29/2017-Cus., dated 17-7-2017 also clarifies various other issues relating to EOUs]

CBEC has prescribed detailed guidelines for allowing re-testing of samples when the first test gives an adverse finding. An application for re-testing is to be made within ten days from receipt of the original test result. The re-test is to be done on the remnants of the original sample. [Circular No. 30/2017-Cus., dated 18-7-2017 issued for this purpose]

CBEC has clarified that Policy conditions under Heading 9804 of the ITC(HS) will not be applicable to imports through courier and that such imports would be eligible to concessional rate of BCD provided these are intended for personal use.

[Instruction No. 9/2017-Customs, dated 5-7-2017 has been issued in this regard.] 

CESTAT Mumbai has allowing the benefit to machinery which was relocated after import, it was observed that transfer of ownership or re-location of the project after installation and meeting with the project objectives would not erase the classification and assessment that prevailed at the time of import.[Whirlpool of India Ltd.v.Commissioner-2017-VIL-577-CESTAT-MUM-CU]

♠ Refund –Rebuttable presumption of unjust enrichment:Madras High Court has dismissed the appeal against the order of the CESTAT which had held that the Chartered Accountant’s certificate was not conclusive evidence in respect of absence of unjust enrichment.

[Shoppers Stop Ltd.v.Commissioner-2017-VIL-367-MAD-CU]

The Gujarat High Court has allowed the benefit of reimbursement of sales tax in a case involving procurement of raw material from another EOU.

[Asahi Songwon Colors Ltd.v. Union of India-2017-VIL-358-GUJ-CU] 

CESTAT Bench at New Delhi has set aside confiscation made under Section 111(o) of Customs Act in a case arising from import of an aircraft engine.

[International Lease Finance Corporationv.Commissioner-Final Order No. 54324/2017, dated 23-6-2017] 

CESTAT Ahmedabad has allowed the appeal of the importer in respect of refund of SAD under Notification No. 102/2007-Cus., where the commercial invoice did not reflect the description of the accessories in detail but was enclosed with the packing list.

[Equinox Solution Ltd. v. Commissioner–Order No. 11328-33/2017, dated 30-6-2017, CESTAT Ahmedabad] 

In a case where the application for brand rate of Drawback was filed beyond the stipulated period of 60 days, CESTAT Ahmedabad has allowed the appeal of the assessee.

[Adani Wilmar Ltd.v. Commissioner–Order No. 11272/2017, dated 12-6-2017, CESTAT Ahmedabad]

The Bombay High Court has held that Rectification of Mistake (ROM) application under Section 129B of the Customs Act, 1962, is to be filed within six months from date of ‘receipt of order’ and not from date of order.[Allied Fibres Ltd.v. CESTAT-2017-TIOL-1322-HC-MUM-CUS]

Excise  Update for the Month of July 2017 as updated upto 05th August 2017

Central Board of Excise and Customs (CBEC) has clarified that exercise books are classifiable under Heading 4820 of the erstwhile Central Excise Tariff Act, 1985 as printing is only incidental to their primary use.

CESTAT Delhi has held that tyres, tubes and flaps are not parts of automobiles to be valued under Section 4A of the Central Excise Act, 1944.

[J.K. Tyre & Industries Ltd.v. Commissioner-Final Order No. 54322/2017, dated 23-6-2017, CESTAT Delhi] 

CESTAT Delhi has held that goods, i.e. bodies built on chassis received from the customers would be classifiable under Heading 8704 as motor vehicles for transport of goods and not under 8707 as bodies of vehicles.

[Commercial Engineers & Body Builders Co. Ltd.v. Commissioner-Final Order No. 54085-54086/2017, dated 20-6-2017, CESTAT Delhi]

Chandigarh Bench of the CESTAT has held that there is no bar on the assessee under Notification Nos. 49/2003-C.E. and 50/2003-C.E. in respect of availment of credit on similar inputs and clearing the manufactured goods on payment of duty.

[Commissioner v. Varahi Plastic (P) Ltd.–Final Order No. 61074-61076/2017, dated 13-6-2017, CESTAT Chandigarh] 

Multi-media speakers with woofer having FM radio are classifiable as speaker and not as radio communication receiver.

[Global Enterprises v. Commissioner–Final Order No. 54622-54629/2017, dated 4-7-2017, CESTAT Delhi] 

CESTAT Chennai has held that miniature cars covered with gold are to be classified under Chapter 71 as gold article, and not under Chapter 95 covering toys.

[Titan Industries Ltd.v.Commissioner–Final Order No. 41027-41028/2017, dated 19-6-2017, CESTAT Chennai] 

Service Tax Update for the Month of July 2017 as updated upto 05th August 2017

ST-3 or ST-3C Returns for the period from 1st of April, 2017 till 30th of June, 2017 have to be filed by 15th of August, 2017. Rules 7 and 7B of the Service Tax Rules, 1994 have been amended in this regard by Notification No. 18/2017-S.T., dated 22-6-2017.

♣ Import of services – Commission paid to foreign agent when not liable to tax: Observing that the Indian assessee involved in hotel industry had never advised its foreign clients to approach persons appointed in foreign countries for booking of accommodation in its hotel, CESTAT Delhi has held that the hotel would not be liable to service tax under reverse charge mechanism.[Indian Hotel Co. Ltd. v. Commissioner–Final Order No. 54779/2017, dated 7-7-2017, CESTAT Delhi]

CESTAT Delhi has held that Cenvat credit on input services used in trading would not be available even for the period prior to 1-4-2011 when ‘trading’ was included in the definition of ‘exempted services’.

[Commissioner v. Machine Tools (India) Pvt. Ltd.–Final Order No. 54773/2017, dated 6-7-2017, CESTAT Delhi] 

In a case where under an agreement, the assessee undertook to stop the buses carrying the guests, in front of certain shops or emporia who had signed agreement with the assessee,CESTAT Delhi has held the activity would be covered under the definition of Business Auxiliary Service.

[Rajasthan Tourism Development Corp. Ltd. v. Commissioner–Final Order No. 54546/2017, dated 4-7-2017, CESTAT Delhi] 

♣ Renting of immovable property service –Renting out building for residence along with personal office, not covered- Rejecting the view of the department that since the term ‘personal office’ was also mentioned along with word ‘residential’ in the lease agreement of the immovable property, the amount received would be liable to tax under Renting of Immovable Property Service, CESTAT Delhi has set aside the demand of Service tax.

[Jumera Promoters and Developers Ltd. v. Commissioner–Final Order No. 53733/2017, dated 5-6-2017, CESTAT Delhi] 

♣ CESTAT Ahmedabad has held that co-owners of the property receiving lease rent separately in proportion to share in a property, are all eligible for threshold exemption under Notification No. 6/2005-ST separately.

[Commissioner v. Sarojben Khusalchand-Order No.A/10772-10816/2017, dated 28-4-2017, CESTAT Ahmedabad]

♣ CESTAT Delhi has set aside the demand of service tax under the Club or Association service, Observing that loyalty program for customers entitling them for various discounted services in affiliated hotels, does not lead to formation of a club or association.

[Bharat Hotels Limited v. Commissioner-Final Order No. 53354/2017, dated 18-5-2017, CESTAT Delhi] 

♣ Business Exhibition service –Allowing display of advertisement:CESTAT Delhi in the abovementioned dispute has also held that by allowing display of an advertisement board in the premises of the hotel, the assessee did not become an organizer of a business exhibition.

[Bharat Hotels Limitedv.Commissioner-Final Order No. 53354/2017, dated 18-5-2017, CESTAT Delhi]

VAT Update for the Month of July 2017 as updated upto 05th August 2017

Deduction of VAT at source from payment made to works contractors is not required to be made by the deducting authorities with effect from 1-7-2017 as the provision for deduction of tax at source from such payments has been omitted by the Odisha VAT (Amendment) Act, 2017.

By Circular No. 9/2017, dated 16-6-2017, the Kerala sales tax authorities have asked dealers to submit ‘C’ forms, ‘F’ forms, certificates in E-I and E-II for the period up to March 2017, by 30th June, 2017. Regarding subsequent period transactions, the statutory forms shall be submitted by 30th September, 2017.

Moment of transfer of right in goods, relevant – In a case involving movement of goods (packaged drinking water) outside the State, the Advance Ruling Authority has held the transaction to be an intra-state transaction.[Shuchi Beverages Ltd.-2017-VIL-05-ARA]

Gujarat High Court has held that Advance deposit and acceptance of goods at own risk do not make sale an intra-state sale.

[State of Gujarat v. Ahmedabad Jilla Sahkari Doodh Utpadak Sangh Ltd.-2017-VIL-355-GUJ] 

Gujarat High Court has held that Dry Dock and Fit out Berth which are necessary for the purpose of business of the assessee are to be treated as plant/capital goods.

[State of Gujarat v. Pipavav Defense and Offshore Engineering Company Limited-2017-VIL-302-GUJ] 

The High Court held that the products Bhrungraj hair oil, Brahmi hair oil, Bhallatak dantmanjan and Ayurvedic dantmanjan are drugs and medicines, and not cosmetics or toilet preparations, since they are manufactured from Ayurvedic or homeopathic substances.

[State of Gujarat v. Sintex International Limited-2017-VIL-321-GUJ] 

*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.

 (Author can be reached at )

GST rate Schedule for Goods in 2017

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November 2020