GST, Excise, Service Tax, Customs & VAT updates for June 2018

Article contains update for the Month of June 2018 related to GST, Excise, Service Tax, Customs & VAT which includes Summary of Notifications, Circulars, Advance Rulings, Important Case Laws and announcements made by Government.

A. Goods & Services Tax (GST) Tax Update for June 2018

♦ Government has extended the exemption on intrastate and interstate supplies of goods and services or both received by a registered person from any supplier, who is not registered, from whole of the central tax leviable under section 9(4) of the CGST Act, 2017 or Integrated tax leviable under section 5(4) of IGST Act,2017 till 30th September 2018 (Refer Notification No. 12/2018-(CT-R) and 13/2018 – (IT-R), both dated 29^th June 2018).

♦ No e-way bill in respect of movement of goods originating and terminating in the state of Delhi (i.e intra state movement but without passing through any other state) shall be required where consignment value does not exceed Rs. 1,00,000 (Rs. One Lac Only) (w.e.f. 16th June 2018).

Further all goods, irrespective of any value, the supply of which is from the registered business place of a taxable person to an unregistered end consumer and the movement is accompanied by an invoice issued under Sec 31 of the Delhi Goods & Services Tax Act shall also be exempted from the requirement of e-Way Bill for intra-State movement within the state of Delhi.

♦ Refund of ITC in case of inverted tax structure and refund to UIN agencies – Amendments in CGST Rules made retrospective: Amendment earlier made in Rule 89(5) of the CGST Rules on 18-4-2018, relating to refund of ITC in case of inverted duty/tax structure, has been made applicable retrospectively from 1-7-2017. Similarly amendment in Rule 95(3)(a), relating to refund to UIN agencies, which was made on 29-12-2017, is now applicable from 1-7-2017 (Refer to the CGST 5^th Amendment Rules 2018 issued under Notification No. 26/2018-Central Tax, dated 13-6-2018).

♦ Unique Common Enrolment Number for transporters – 6th amendment of CGST Rules: CGST Rules, 2017 have been amended to provide a unique common enrolment number to a transporter who is registered in more than one State or Union Territory having the same PAN. According to the amendment in Rule 58 of the CGST Rules, a transporter who has obtained a unique common enrolment number shall not be eligible to use any of his GSTIN for the purposes of the said Chapter XVI of the Rules providing for E-way Bill Rules.

♦ Time limit to furnish return in Form GSTR-6 by ISDs extended till 31-7-2018: Time limit for furnishing return by an Input Service Distributor (ISD) in Form GSTR-6 for the months of July, 2017 to June 2018 extended till 31-7-2018 (Refer Notification No. 25/2018-Central Tax dated 31-5-2018)

♦ SEZs – Nature of supply of services thereto:

Services of short-term accommodation, conferencing, banqueting, etc., provided to a SEZ developer or a unit are to be treated as inter-State supply. Benefit of zero rated supply is available if event management services, hotel accommodation services, consumables, etc., are received by SEZ developer/unit for authorised operations, subject to provisions of Section 17(5) of the CGST Act. (Refer CBIC Circular No. 48/22/2018-GST, dated 14-6-2018).

♦ Refund on exports – Restrictions under Rule 96(10) clarified: Restriction under Rule 96(10) of the Central GST Rules, 2017 is not applicable to an exporter procuring goods from suppliers who have, in turn, received goods from registered persons availing benefits of notifications listed under said Rule. Restriction under said rule will also not apply in case of specified inward supplies of the exporter (Refer CBIC Circular No. 45/19/2018-GST, dated 30-5-2018).

♦ Refund in case of exports clarified: In case of export of services or supplies to SEZ, where taxpayer showed supplies in column 3.1(a) instead of in column 3.1(b) of Form GSTR-3B, refund can be filed for periods from 1-7-2017 to 31-3-2018, on common portal, if amount is not more than aggregate of tax/cess stated in columns 3.1(a), 3.1(b) and 3.1(c) of GSTR-3B. Exporters making zero-rated supplies under LUT / bond can claim refund of unutilised compensation cess, such refund of compensation cess in case of zero-rated supply on payment of IGST is not available. Refund of unutilised credit is also available on export of non-GST or exempted goods. (Refer Circular No. 45/19/2018-GST, dated 30-5-2018).

♦ Refund of unutilised ITC to job workers in textile sector: Refund of unutilized input tax credit on account of inverted duty structure under Section 54(3) of the CGST Act, 2017 is available to the fabric processor, i.e. the job worker, even if the goods (fabrics) supplied are covered under Notification No. 5/2017-Central Tax (Rate) (Refer Circular No. 48/22/2018-GST, dated 14-6-2018).

♦ Inspection of goods in movement – Proof of inspection and time period for conclusion of proceedings: Hard copies of the notices/orders issued in the specified forms may be shown by the transporter/registered person as proof of initiation of action by a tax authority to another tax authority. Further, the proper officer has to now conclude the proceedings within 3 days and not 3 working days as stated in the earlier circular (Refer Circular No. 49/23/2018-GST, dated 21-6-2018).

♦ Moulds and dies provided free to unrelated component manufacturer is not ‘supply’: Moulds/dies owned by OEM and provided to component manufacturer (when the OEM and the component manufacturer are not related/distinct persons) on free of cost basis is not ‘supply’ and hence there is no requirement for reversal of input tax credit by OEM. Cost of such moulds is not includible in the value of supply by the component manufacturer. However, if contract is for goods made by using moulds/dies belonging to component manufacturer, but same are supplied free by OEM, amortised cost of such moulds and dies is includible.(Ref Cir No. 47/21/2018-GST, 8-6-2018).

♦ PSLCs and RECs classifiable under Heading 4907 and taxable @ 12%: Priority Sector Lending Certificates (PSLCs) and Renewable Energy Certificates (RECs) and other similar documents are classifiable under Heading 4907 & are liable to GST @ 12%. Duty credit scrips, however, attract Nil GST under S. No. 122A of Notification No. 2/2017-Central Tax (Rate) (Refer CBIC Circular No. 46/20/2018-GST, dated 6-6-2018).

♦ Future contracts when liable to GST: Future contracts are in nature of derivatives and qualify as ‘securities’ as defined in Section 2(101) of CGST Act, and hence are not chargeable to GST. Future contracts having delivery option of underlying commodity/currency would be liable to GST as normal supply of goods. If some service charges/fees or broking charges, etc., are charged, it would be a consideration for supply of service, chargeable to GST.

♦ Farmers not liable to GST on leasing out their land: Support services to agriculture, forestry, fishing or animal husbandry are exempt from GST. Exempted support services include renting or leasing of vacant land with/without a structure incidental to its use. Agriculturists are exempt from GST registration. (Refer Press Release dated 28-5-2018).

♦ Order for seizure of vehicle appealable and not covered under CGST Section 121: In a case involving seizure of vehicle, Calcutta High Court has held that order of seizure of vehicle is appealable under Section 107 of the CGST Act, 2017, and is not covered under exceptions provided under Section 121. Observing that the petitioner has statutory alternative remedy available, the Court directed them to prefer an appeal before the designated appellate authority, either electronically or otherwise.

♦ Valuation of goods supplied to branches – Option of both provisos of Rule 28 available: The applicant, an importer of sunglasses, etc., when supplies goods to its branches in States other than West Bengal, has option to value its goods either in terms of first proviso (90% of price charged by recipient to unrelated customer) or second proviso (value declared deemed as open market value) to Rule 28 of CGST Rules. Further, observing that second proviso to Rule 28 is applicable to both goods used in and for course of business (non-trading stock), it was held that recipient is eligible to take ITC of amount of tax paid by supplier as mentioned in respective invoices or any other valid document. [GKB Lens – Order No. 07/WBAAR/2018-19, dated 30-5-2018, AAR West Bengal]

♦ Works contract – Effect when supply and service contracts have cross-fall breach clause: The primary contract for ex-works supply of equipment and materials and secondary contract for transportation, in-transit insurance, loading/unloading, delivery, etc. are linked by a ‘cross fall breach clause’. First contract cannot be executed independent of the second contract, and hence the price components of both are to be clubbed together to arrive at value of composite supply of works contract to be taxed at 18% GST. [EMC Ltd. – Order dated 11-5-2018, AAR West Bengal]

♦ Agreements from single tender notification not separate contracts: A single composite contract with three connected agreements for supply of materials, erection and civil works is indivisible and falls under Works Contract. Noting that the agreements were awarded in response to a single tender, it held that agreements were not separate contracts for supply of goods and services. Applicant is not entitled to concessional rate of GST for providing services to State Government, as entity which awarded contract is registered under Companies Act and is a separate entity. [Skilltech Engineers – Advance Ruling No. KAR ADRG 3/2018, dated 21-3-2018, AAR Karnataka]

♦ Transfer of entire business of one unit is supply of service and covered by exemption: Sale of independent manufacturing unit as a whole along with the transfer of all assets and liabilities to buyer is in the nature of transfer of going concern which constitutes supply of service. This transaction is covered under Sl. No. 2 of Notification No. 12/2017-CT (Rate) attracting Nil GST. [Rajashri Foods Pvt. – Order dated 23-4-2018, AAR Karnataka]

♦ Renting of space different from providing warehousing service: Mere renting of space cannot be said to be in the nature of service provided for storage or warehousing of goods. Since invoice issued by the applicant was for ‘godown rent’, the service was held to be covered under ‘rental or leasing services involving own or leased non-residential property’ (SAC 997212), taxable @ 18%. [Rishi Shipping – 2018-VIL-65-AAR].

♦ Printing of content on customer’s request is supply of service: Activity of printing of contents from media on customer’s requirement is supply of service and not goods, and classifiable under SAC 9989. Relying on Supreme Court’s judgement in Rainbow Colour Lab, it has held that such supply is taxable at 6% CGST (12% GST) under Sl. No. 27(i) of Notification No. 11/2017-Central Tax (Rate). Printed material had no value as independent goods, the matter was not pre-printed and that there was no transfer of ownership which is an essential condition for supply of goods. [Photo Products Co. – Order No. 06/WBAAR/2018-19, dated 30-5-2018, AAR West Bengal]

♦ GST leviable on ‘Abhivahan Shulk’ and exempted on ‘Marg Sudharan Shulk’: No GST is leviable on Marg Sudharan Shulk charged by the applicant, Divisional Forest Officer, Dehradun for using forest road and used for road construction and maintenance. Charges are nothing but toll charges which are included in the list of exempted services. On the other hand Abhivahan Shulk was held to be charged as a consideration for carrying forest produce through road or water. The said service was held to be classifiable under SAC 9997 as ‘other services’ and taxable at 18% GST. [Divisional Forest Officer, Dehradun – 2018-VIL-42-AAR]

♦ Implants for joint replacements taxable @ 5%: Implants for joint replacements fall under HSN Code 9021 31 00 and are covered under S. No. E(9) of List 3 of Entry 257 of Schedule-I of Notification No. 1/2017-CT (Rate) attracting GST @ 5%. Rule 3 of General Rules of Interpretation of First Schedule to the Customs Tariff was relied on to reject coverage under S. No. 221 of Schedule-II to the notification which is a general entry covering artificial parts of body. [Veena Chemicals – Order No. CT/4683/2018-C3, dated 29-5-2018, AAR Kerala]

♦ Roof ventilators powered by wind and used for ventilation attract 18% tax: Roof Ventilators, used for ventilation in industries, warehouses, etc. fall under Schedule-III of Notification No. 1/2017-CT (Rate) and attract GST @ 18% (CGST 9% + SGST 9%). Primary use of said goods is to provide ventilation by continuous extraction of air from the building. Relying on trade parlance and General Rules for Interpretation, AAR rejected contention of applicant that goods are classifiable as windmills as they are powered and function with flow of wind. [Sammarth Overseas & Credits – 2018-VIL-46-AAR]

B. Customs Update for June 2018

♦ India set to increase import duty on certain goods from USA: has amended the First Schedule to Customs Tariff Act and revised the jumbo exemption notification, on being satisfied that import duty leviable on goods under Chapter 7, 8, 28, 38, 72 and 73 should be increased immediately on imports from USA. Effective from 4-8-2018 this increased rate of duty will be levied on commodities such as almonds fresh and dried, shelled almonds, apples fresh and other diagnostic reagents. The increase in BCD has been made in response to additional duty being imposed by USA on aluminium and steel articles from India and other countries. (Refer Notification Nos. 48 and 49/2018-Customs dated 20-6-2018)

♦ Customs Regulations for audit at premises of importer/exporter replaced: has replaced the on-site Post Clearance Audit at the Premises of Importers and Exporters Regulations, 2011 with the Customs Audit Regulations, 2018. Defining the term ‘auditee’, the new regulation substantially expands scope of person who can be audited. While the proper officer has to mandatorily inform outcome of audit to auditee, audit at premises of auditee is to be completed within 30 days, extendable for 30 days by Commissioner. Audit Officers from the Department can also take assistance of professionals (Refer Notification No. 45/2018-Customs (N.T.) dated 24-5-2018).

♦ Postal export of goods through e-commerce – New procedure prescribed: All exporters holding a valid IE Code have been permitted to export goods (through E-Commerce) through Foreign Post Offices, by filing a Postal Bill of Export (PBE) under new Export by Post Regulations 2018. CBIC prescribing elaborate procedure for filing manual PBE by firms and companies (other than natural persons), observes that such exporters are eligible for zero rating of exports. Further, as per another circular, CBIC has permitted use of PBE-II in case of multiple shipments addressed to multiple consignees. The new Regulations have come into effect from 21-6-2018 (Refer Circular No. 14/2018-Cus., dated 4-6-2018 & 18/2018-Cus., dated 13-6-2018).

♦ E-sealing mandatory from 1-8-2018 for movement of goods to/from warehouses: RFID sealing is mandatory for transport of goods for deposit in warehouse as well as in case of removal there from, w.e.f. 1-8-2018. RFID one-time bolt seal or RFID wire cable seal has to be used depending upon the vehicle. Procedure and data elements have been prescribed to be captured for removal from customs station to bonded warehouse, for export, or for removal to another warehouse (Refer Circular No. 19/2018-Cus., dated 18-6-2018).

♦ EOU–DTA clearance of specified services covered as ‘goods’: Sale in DTA by EOU in respect of services classified under Heading 9988 and 9989 under GST are covered under Para 6.08(a) of Foreign Trade Policy. Such services covered in LOP/Para 9.31 of FTP as manufacturing of goods, will continue to be covered under Para 6.08(a) dealing with goods other than by gems and jewellery units. Amendment in Para 6.08(b) in this regard also states that at the time of DTA clearance, applicable GST & compensation cess would apply. (Refer Notf. No. 10/2015-20, dated 7-6-2018)

♦ SFIS/SEIS benefit available to actual service provider and not aggregators: Benefit under Served from India Scheme (SFIS) or Service Exports from India Scheme (SEIS) is available to actual exporters providing port related services and not to ports who are aggregators of services. ports would be eligible to the benefit for services exclusively rendered by them and cannot claim benefit in respect of foreign exchange earnings simply routed through them (Refer Policy Circular No. 6/2018, dated 22-5-2018).

Service providers like steamer agents are also entitled to the benefit of SEIS for services exclusively rendered by them and for which foreign exchange earnings are received and retained by them (Refer Policy Circular No. 8, dated 21-6-2018).

♦ Digital Signature not required for online/digital payment through e-MPS: Requirement of Digital Signature Certificate removed for making payments for miscellaneous applications through e-MPS. Now by using PAN details, exporters or importers can login in e-MPS for making online/digital payment, and there is no requirement of having digital signature.

♦ MEIS application for project exports – DGFT notifies procedure: DGFT has issued elaborate guidelines to solve the problem faced by project exporters in filling of shipping bills under Chapter 98 for the purpose of claiming MEIS benefit. As per the guidelines NIC will create an ‘identification tag’ and exporter will submit online application and submit few documents to DGFT HQs. NIC will revise the application on instructions from DGFT and RA will issue duty credit scrip after change is communicated by NIC.

♦ DFIA exports – Single application required for exports from any EDI port: Exporters have been allowed to file single DFIA application for exports made from any EDI port. However separate applications are required to be filed for exports made from each non-EDI port. Separate application is to be made for EDI and non-EDI ports. Exports under DFIA were required to be made from a single port as mentioned in Para 4.37 of Handbook of Procedures (Refer Notification No. 13/2015-20, dated 20-6-2018)

♦ IGST refund on exports – Correction facility and officer interface: For refund of IGST on exports, CBIC has extended the facility of officer interface to shipping bills filed up to 30-4-2018. This interface, in order to resolve invoice mismatches, was earlier available for shipping bills filed till 28-2-2018. Further, a correction facility is now available for cases involving mismatch between GSTIN of entity mentioned in shipping bill and the one filing GSTR-1/GSTR-3B. This facility would be available where GSTIN of both entities are different but PAN is same.

♦ Duty free import of certain inputs in specified sectors, restored: Entitlement for duty free import of certain sector specific inputs, which was available in Chapter 1B of Foreign Trade Policy 2009-14, has been re-inserted in Chapter 1 of FTP 2015-20 with effect from 1-4-2015. Notification No. 9/2015-20, dated 28-5-2018 inserting Para 1.41 however states that term ‘Duty’ shall mean Basic Customs Duty with effect from 1-7-2017. These special focus initiatives for handlooms, handicraft, leather, marine, sports goods and toys sectors will be provided according to specified percentage of exports made in preceding financial year.

♦ FTP Appendix 3A – Scope of word ‘Duty’ clarified: DGFT has clarified that the word ‘Duty’ appearing in Sl. No. 3 of Appendix 3A of Foreign Trade Policy 2015-20 has to be read as Basic Customs Duty (BCD) and not all customs duties (BCD + IGST). Appendix 3A of FTP 2015-20 provides list of items which are not allowed for import under Export From India Schemes (MEIS and SEIS) under Chapter 3 of the FTP, unless otherwise specified. Sl. No. 3 of said Appendix covers all spices with a ‘duty’ of more than 30% under Chapter 09 of ITC (HS) Classification (except cloves)

(Refer Policy Circular No. 7/2015-20, dated 23-5-2018).

♦ FTP benefit available even if Customs department delays exemption notification: Relying on Supreme Court judgement in State of Punjab v. Nestle India, CESTAT Mumbai has held that failure of Customs authorities to issue notification on time cannot be held against assessee when Foreign Trade Policy was already amended. It noted that importer was issued EPCG authorization prescribing 3% rate of duty, though Customs Department delayed issuance of corresponding notification revising duty from 5% to 3%. Tribunal also observed that Ministry of Finance was required to act in tandem with DGFT and Ministry of Commerce. [Commissioner Chiripal Industries – Order No. A/86379 / 2018, dated 16-5-2018, CESTAT Mumbai]

♦ Job work imports – Benefit not deniable to imports made not free of cost: In a case where the assessee had imported human hair for processing and re-exported on payment of security as agreed in MoU, Tribunal has allowed benefit of Notification No. 32/97-Cus. The department had denied the benefit alleging that goods were not supplied free of cost by foreign supplier. The Tribunal however was convinced that intended purpose of notification, including prescribed value addition, was complied with and there was no allegation of any diversion of imported goods. [Hritik Exim v. Commissioner – Final Order No. 41658 / 2018, dated 24-5-2018, CESTAT Chennai]

♦ Project imports – Registration by importer not direct party to contract and classification under water supply project: In a dispute involving classification of imports under water supply project or irrigation project, CESTAT Mumbai has allowed benefit of Notification No. 14/2004-Cus. The imports were held to be covered under water supply project observing that though entire project may be of irrigation, but the disputed parts were related to movement of water from one point to another. It was held that the project can be registered under the regulations by the importer even if the assessee-appellants are not a direct party to import contract. [Commissioner Hindustan Construction – Order No. A/86528-86529/2018, dated 25-5-2018, CESTAT Mumbai]

♦ SAD refund not deniable even if words in invoice differ from that prescribed in Notification: Karnataka High Court has held that even if Notification No. 102/2007-Cus., prescribes words which should be included in an invoice to avail benefit of refund of SAD, the benefit cannot be denied if invoices contain other words, conveying the same intention. The High Court in this regard observed that non-declaration of SAD in commercial invoice is an affirmation that no Cenvat Credit was available, thus satisfying the condition in the notification. Allowing refund, it was also observed that the said condition in the notification was procedural. [Commissioner Schneider Electric IT Business – CSTA No. 8 of 2015, decided on 5-6-2018, Karnataka High Court].

C. Central Excise and Service Tax Update for June 2018

♦ Place of removal’ in Central Excise Section 4 clarified: Considering various Supreme Court judgements on ‘place of removal’, CBIC has, by Circular No. 1065/4/2018-CX, dated 8-6-2018, rescinded Circular No. 988/12/2014-CX and omitted clause (c) of para 8.1 and para 8.2 of Circular No. 97/8/2007-CX. ‘Place of removal’ is required to be determined with reference to ‘point of sale’ with condition that place of removal(premises) is to be referred with reference to premises of manufacturer, except in case of FOR sales. Any new show cause notice issued on basis of circular should not invoke extended period of limitation as issue is in nature of interpretation of law.

♦ Monetary limit for departmental appeals before Commissioner (Appeals): Monetary limit for filing appeals to Commissioner (Appeals) introduced. The new threshold limit for such departmental appeals will be Rs. 250,000/-. According to Instruction F. No. 390/Misc/116/2017-JC, dated 25-5-2018, this limit is applicable only for matters under legacy Central Excise and Service Tax laws and will also apply to cases currently pending before Commissioner (Appeals). Withdrawal process in respect of such pending cases will be according to current practice being followed in withdrawal of departmental cases from CESTAT and High Court.

♦ Activity before giving land ownership right is self-service: In a case involving non-payment of service tax by land owner on sale of his share of flats received in lieu of transfer of land to the developer, CESTAT Delhi has set aside penalty observing absence of intention to evade. Tribunal rejected department’s view that since land owner had to get the drawing/plan approved, he was liable as developer and hence non-payment amounted to suppression. It observed that any act done for getting sale consideration and the sale finalized, before parting with ownership right in land, will be a self-service. [Subhash Chand Surana Commissioner – Final Order No. 52002/2018, dated 22-5-2018, CESTAT Delhi]

♦ Cenvat credit on scrap re-purchased from first stage dealer: Dealer is one who purchases goods from manufacturer, and not limited to somebody who only purchases goods ‘manufactured’ by the manufacturer. CESTAT Chennai while holding so has allowed Cenvat credit on scrap earlier cleared as such to first stage dealer by importer which was later resold back to assessee-importer. [Vignesh Alloys Private Ltd. v. – Final Order No. 41291/2018, dated 13-4-2018, CESTAT Chennai]

♦ Exposure fee paid to foreign banks for availing ECBs is ‘interest’: CESTAT Mumbai has held that exposure fee paid to US Exim Bank is not liable to service tax as the same is not with respect to any service provided by the bank. [Commissioner Sasan Power Order No. A/86503/2018, dated 22-5-2018, CESTAT Mumbai]

♦ Manufacture of moulds for use within factory not covered under Design service: CESTAT Kolkata has set aside the demand of service tax in a case involving preparation of moulds based on designs and mould preparation charges received from customers, where such moulds were further used in manufacture of forgings within the factory for those customers. The Tribunal held that levy of service tax under category of Design service under Section 65(105) (zzzzzd) of the Finance Act, 1994 was not justified, as the activity was of manufacture of moulds which werse liable to Central Excise duty if cleared out of factory. [Ramkrishna Forgings v. Commissioner – Order No. FO/ST/A/75921/2018, dated 2-5-2018, CESTAT Kolkata]

♦ Classification of vehicle designed to carry both goods and passenger: CESTAT Hyderabad has held that vehicle ‘Mahindra Camper’ is classifiable under Heading 8704 and not Heading 8703 of the Central Excise Tariff. It observed that the vehicle is not principally designed for transportation of passengers but for transportation of goods. Relying on Apex Court decision in Telco, Tribunal noted that the load carrying capacity of the vehicle was more than its passenger capacity. It also observed that vehicle was registered as goods vehicle by the transport authorities. [Mahindra & Mahindra Commissioner – Final Order No. A/30430-30437/2018, dated 17-4-2018, CESTAT Hyderabad]

♦ Cenvat Credit not  deniable  applying  any thumb  rule/formula:  CESTAT  New  Delhi  has          held that restricting Cenvat Credit on the basis of thumb rule/formula (ratio of output taxable service to total expenditure incurred) as adopted by the department has no legal basis. CESTAT also held that insertion of Explanation 3 in Cenvat Rule 6(1) on 1-4-2016 was not retrospective (ONGC v. Commissioner –Final Order No.  51950/ 2018, dated 22-5-2018, CESTAT Delhi).

♦ Pre-deposit under Excise Section 35F for second appeal includes deposit made for first appeal:

Delhi High Court has held that for second appeal before the CESTAT, assessee is required to deposit 10% of duty/penalty as confirmed by the first appellate authority which is inclusive of 7.5% pre-deposit made for the first appeal. Quashing CESTAT Circular dated 27- 4-2017 based on a Larger Bench decision, it noted that earlier deposit will not get obliterated or become inconsequential. [Santani Sales Org. v. CESTAT-Writ Petition (Civ) No. 4551/17, decided on 31-5-18, Delhi High Court]

♦ Cenvat credit available to insurance firm on sum paid for repair of insured vehicle:

In a case where the assessee (insurance company) had paid for repairs of the insured vehicle to  Authorized Service Stations, CESTAT Chennai has held that insurance company would be the service recipient though beneficiary would be the owner of the vehicle. Cenvat credit was hence allowed on such services utilised for provision of insurance service. Further, CESTAT was of the view that Cenvat credit was available even though the invoice was not in favour of the assessee (insurance company) [United India Insurance v. Comm.-Final Order No. 41708/2018, 1-6-18, CESTAT Chennai]

♦ Supplementary invoice -Interest on delayed duty payment when not payable:

CESTAT Delhi has set aside demand of interest on delayed payment of Central Excise duty in a case involving supplementary invoices due to subsequent price escalation. The Tribunal observed that both the parties were not aware of escalated price or possibility of escalation at the time the goods were removed. Distinguishing Apex Court judgment in SKF India, it was held that duty was not short-paid. [Indo Alusys Inds. v. Comm.-Final Order No. 2003/2018, dated 22-5-2018, CESTAT Delhi]

♦ Cenvat credit –Bar of limitation when not applicable:

Right available under Cenvat Rule 3(2) cannot be extinguished by making reference to Rule 4(1). Rejecting department’s plea of bar of limitation in availing Cenvat credit, CESTAT Delhi has allowed credit to an assessee who was availing SSI exemption and took credit of inputs on coming out of exemption. [Sanwariya Tiles Pvt. Ltd.v. Commissioner -Final Order Nos. 52101-52102/2018,dated 1-6-2018, CESTAT Delhi]

D. VAT Update for June 2018

♦ Tamil Nadu VAT – ITC not to be reversed for non-payment of tax by seller: Madras High Court has rejected the contention of the Revenue department that input tax credit will not be available to the assessee (buyer) when their selling dealers had not paid the tax collected from the petitioner to the Government Treasury. Observing that this cannot be a reason for reversing the Input Tax Credit, the Court noted that there was no default committed by the buyer-petitioner. [Elite Furniture Mart Assistant Commissioner – 2018-VIL-255-MAD]

♦ ‘Samosa’ classifiable as cooked food and not as ‘Namkeen’: High Court of Uttarakhand has held that, Samosa is classifiable as cooked food, and not as Namkeen. The product was hence held liable to tax @ 8% for the first six months (from 1-4-2005 to 30-9-2005), and @ 4% for next six months (from 1-10-2005 to 31-3-2006), as per Section 3 of the U.P. Value Added Tax Act, 2008. It noted that samosa satisfied all requirements of cooked food, being consumable without any further act. [Sarva Shri Neeraj Misthan Bhandar Commimssioner – [2018] 67 GST 17/92 taxmann.com 162 (Uttarakhand)]

*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).

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

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