Indirect Taxes Updates GST, Customs, Excise, Service Tax & VAT – Month – November 2018
♦ CBIC extended due date for filing Form GSTR-7 till 31st January 2019
CBIC has extended time limit for furnishing return by a registered person required to deduct tax at source under provisions of section 51 of said Act in FORM GSTR – 7 of Central Goods and Services Tax Rules, 2017 under sub -section (3) of section 39 of the said Act read with rule 66 of the Central Goods and Services Tax Rules, 2017 for the months of October, 2018 to December, 2018 till the 31st day of January, 2019. (Refer Notification No. 66/2018 –Central Tax dated 29.11.2018)
♦ TDS provisions under GST –Exemption to supplies from one PSU to another PSU:
Provisions relating to Tax Deduction as Source (TDS) would not be applicable in respect of supply of goods or services or both from a public sector undertaking to another public sector undertaking. This exemption as provided through Notification No. 50/2018-Central Tax has been extended to such supplies with effect from 1-10-2018, the date when TDS provisions came into effect in the GST regime. (Refer Notification No. 61/2018-Central Tax, dated 05-11-2018)
♦ CGST Rules –New Rule notified for recovery of dues under existing’ laws:
New Rule 142A has been inserted in CGST Rules, 2017 for recovery of dues under ‘existing’ laws (i.e., central excise, service tax, VAT, etc.). Accordingly, a summary of order issued under any existing law creating demand of tax, interest, penalty or any other dues will be uploaded in FORM GST DRC-07A on the common portal. Demand will be posted in Part II of Electronic Liability Register in FORM GST PMT-01. FORM GST DRC-07A and FORM GST DRC-08A have also been notified for this purpose. Further, new Rule 83A has been inserted relating to examination of GST Practitioners. (Refer Notification No. 60/2018-Central Tax, dated 30-10-2018)
♦ Job work -Form GST ITC-04 can be filed till 31-12-2018:
Declaration in FORM GST ITC-04, in respect of goods dispatched to a job worker or received from a job worker or sent from one job worker to another, during Jul 2017 to September, 2018 can now be furnished till 31st day of Dec.,2018. (Refer Notification No. 59/2018-Central Tax, dated 26-10-2018)
♦ Valuation–Interest on loan/credit by Del-credere agent when includible:
CBIC has clarified that when del-credere agent (DCA) is not an agent of supplier, temporary short-term transaction-based loan provided by DCA to buyer is an independent supply of service by DCA to recipient on principal to principal basis and will not form part of value of supply of goods. Credit by DCA to recipient is not a separate supply, if DCA acts as an agent for principal. In such cases, value of interest charged for such credit is includible in value of supply of goods by DCA to recipient. Reiterating earlier Circular No. 57/31/2018-GST, dated 4-9-2018, it notes that where the invoice for supply of goods is issued by the DCA in his own name, the DCA would fall under ambit of agent. (Refer Circular No. 73/47/2018-GST, dated 5-11-2018)
♦ Return of goods –Procedure to be followed:
CBIC has listed various procedures which may be followed by manufacturer, wholesaler/retailer for return of time expired goods., return of such goods can be treated either as fresh supply and consequent issue of tax invoice, or by issue of credit note. In fresh supply, manufacturer destroying returned expired goods will be liable to reverse ITC availed on return supply, if any. Tax liability can only be adjusted in case of credit note, if same has been issued within limit specified under Section 34(2) of CGST Act. (Refer Circular No. 72/46/2018-GST, dated 26-10-2018)
♦ Tea Board required to collect TCS from tea producers and auctioneers:
Tea Board of India is required to collect TCS from sellers (i.e. tea producers) on the net value of supply of goods i.e. tea; and from auctioneers of the tea on the net value of supply of Services (i.e. brokerage). Tea Board being the operator of the electronic auction system for trading of tea across the country including for collection and settlement of payments, falls under the category of electronic commerce operator liable to collect tax at source (TCS) under GST law. (Refer Circular No. 74/48/2018-GST, dated 5-11-2018).
♦ Cancellation of GST registration –Procedure clarified:
Application for cancellation of GST registration is not to be rejected because of violation of 30 days deadline from the occurrence of the event warranting cancellation. Further, debit of ITC on available stock can be done at the time of submitting Form GSTR-10, whose last date has been extended till 31-12-2018, for the cancellations made by 30-9-2018. The requirement to debit the electronic credit and/or cash ledger by suitable amounts is not a prerequisite for applying for cancellation of registration. Taxpayers who have filed application for cancellation will not be required to file other returns. (Refer Circular No. 69/43/2018-GST, dated 26-10-2018)
♦ Registration of Casual Taxable Person & recovery of excess credit distributed by ISD-Clarified
CBIC has clarified that amount of advance tax required to be deposited by casual taxable person (CTP), while obtaining registration, is to be calculated after considering eligible ITC available to such person. It is also stated that a taxable person would not be treated as CTP beyond 180 days and would have to apply for normal registration by uploading document granting him permission to use premises for the exhibition. Also, advance tax is not required if normal registration is taken.
This circular also clarifies on recovery of excess credit distributed by an Input Service Distributor. The excess credit so distributed shall be recovered from recipients along with interest and penalty if any. ISD would also be liable to a general penalty under Section 122(1)(ix) of the CGST Act. (Refer Circular No. 71/45/2018-GST, dated 26-10-2018)
♦ Refund of ITC and IGST clarified:
CBIC has issued a circular clarifying certain issues on refund of ITC and IGST. since common portal at present does not have facility for fresh refund application once deficiency memo is issued, taxpayer will be required to submit rectified applications under earlier ARN only and there is no need to re credit ITC in electronic credit ledger. It also states that a suitable clarification would be issued separately for cases in which such re-credit has already been carried out. Further, clarifying latest amendments in the refund provisions of the CGST Rules, it is stated that exporters who have received capital goods under EPCG, either through import or through domestic procurement, can claim refund of IGST paid on exports. (Refer Circular No. 70/44/2018-GST, 26-10-2018)
♦ Service of notice–‘Affixation’ only when other methods not practicable:
Allahabad High Court has held that use of words ‘if none of the modes is practicable’ in Section 169 of the CGST Act clearly indicates that it is only after that all earlier mentioned methods are found as not practicable for service of notice that resort can be taken for affixation of same at some conspicuous place. The High Court observed that there was violation of natural justice as GST registration was cancelled without serving SCN. It also noted that registration was cancelled on basis of prima facie opinion without indicating material for same, and that there was nothing on record to establish the time, date and place and the manner in which service by affixation was resorted to. [Kashi Bartan Bhandar v.State of UP -2018-VIL-499-ALH]
♦ GST E-way Bill –Missing Zero in the mentioned distance, a typographical mistake:
Observing that distance between Kerala and Uttarakhand is a matter of record and thus verifiable, Kerala High Court has held that distance showed in e-way bill as 280 km, instead of 2800 km (one zero missing), was a typographical error, and a minor error. The High Court observed that CBIC had come across many minor discrepancies in e-way bills, resulting in summary detention of the goods, while it issued Circular No. 64/38/2018-GST dated 14-9-2018. Fact that goods under detention had very short shelf life, was also noted. [Sabitha Riyaz v.UOI -2018-TIOL-156-HC-KERALA-GST]
♦ Manual filing of TRAN-1 and GSTR-3B to avoid lapse of ITC:
In a case where the assessee was not able to distribute Input Tax Credit (ITC) brought forward from the erstwhile regime, due to some technical issues in uploading TRAN-1, Bombay High Court has directed the assessee to manually file copy of the revised TRAN-1, ITC-01 and GSTR-3B at Mumbai. The Court however refrained itself from giving directions to the Commissioners of Delhi, Gujarat and Karnataka where the branches to whom the credit was distributed, were located. [Indusind Media Communications v.UOI -2018-VIL-468-BOM]
♦ Reg: Tool amortisation cost (dies and moulds supplied by vehicle manufacturer to component manufacturer on free of cost (‘FOC’) basis) shall be included in the value of components
The applicant was engaged in the manufacture of automotive components as per the specifications given by its customer. In order to manufacture the same, tailor-made tools were required. Such tools were provided by the customer to the applicant on FOC basis.
AAR held that transfer of tools by the customer to the applicant will not qualify as supply under Clause 1 (Permanent transfer of business assets) of Schedule I of the CGST Act. This is because tools were given by customer to applicant temporarily and that too for limited purpose. AAR further states that amortized value of tools will be included in assessable value of components under Section 15(2)(b) of CGST Act which provides for inclusion of amount liable to be incurred by supplier but incurred by recipient. The applicant could not have manufactured components without such tools. Accordingly, the applicant was required to incur such cost which was incurred by the customer on its behalf. (Nash Industries (I) Private Limited, 2018-VIL-266-AAR)
♦ TRANS-1 issue : Condition on exempted goods manufacturer / trader to avail credit of stock in hand only if duty paying document is not more than 12 months old as on July 1, 2017 [Section 140(3)(iv) of the Central Goods and Services Tax Act, 2017 (‘CGST Act’)]
The Bombay High Court held that the provision is constitutional, for the following reasons :
– Assessee cannot pick and choose a condition for challenge by alleging that the availment is undisputedly conditional but one of the conditions having nexus with the availment is unconstitutional, arbitrary and excessive.
-The right to avail transitional credit is neither indefeasible nor absolute under the existing law or in transitional arrangements set out or in the substantive provisions permitting availment of credit.
(JCB India Limited v. Union of India, 2018-VIL-165-BOM)
However, The Gujarat High Court held that provision is unconstitutional, for the following reasons
– The credit was a vested right which cannot be taken away.
– The condition imposed for availing such benefit has no rational or reasonable basis.
(Filco Trade Center Private Limited v. Union of India, 2018-VIL-403-GUJ)
♦ TRANS-1 issue : Restriction on right of a dealer to carry forward credit if the prescribed forms are not furnished within prescribed period [Proviso to Section 140(1) of the Gujarat Goods and Services Tax Act, 2017]
The High Court held that the restriction is constitutional, for the following reasons:
– A combined reading of relevant provisions shows that statutory provisions do not deny the benefit of credit where necessary declarations are furnished. Thus, no existing or vested right has been taken away.
– The prescription of time limit within which necessary declarations must be made, is neither without authority nor unreasonable. (Willowood Chem Pvt Ltd v. Union of India, 2018-VIL-433-GUJ)
♦ TRANS-1 issue : No credit on capital goods that were in transit as on July 1, 2017
The Court held that not granting transitional credit on capital goods in transit on date of introduction of GST is not in violation of Constitution of India, 1950 on following grounds:
– The distinction between inputs and capital goods is in not artificial or arbitrary and both form different and distinct classes
– Taxing statutes contained self-sufficient scheme of levying computation and calculation of tax. The time in which a return is to be filed for purpose of assessment of tax cannot be dependent on will of a dealer (RSPL Limited v. Union of India, 2018-VIL-477-GUJ)
♦ Lotteries are ‘goods’ –GST leviable:
Relying on Supreme Court decision in case of Sunrise Associates, Calcutta High Court has held that lotteries are generally speaking ‘goods’ and come within definition of ‘actionable claims’. It was also held that actionable claims other than lottery, gambling and betting kept out of scope of CGST Act as per Schedule-III and therefore, lottery can be charged to tax under Central GST Act, 2017. Further, High Court held that it is within domain of GST Council to decide rate of tax and differential levy of tax is permissible. It, however, added that if a resolution adopted in the GST Council meeting breachesany fundamental right or any provision of the Constitution of India, the same can be adjudicated upon by a Writ Court. [Teesta Distributors v. Union of India -2018-VIL-455-WB]
♦ Transport planning–Admissibility of exemption:
GST AAR Andhra Pradesh has held that consultancy services for preparation of transport studies such as Comprehensive Mobility Plan, Transit Oriented Development Plan, Integrated Public Transport Plan and consultancy services of preparation of detailed project reports on Metro Rail Projects, come within functions of municipality under Article 243W read with Twelfth Schedule to the Constitution of India. The AAR observed that urban transportation is part of urban planning which is entrusted to municipality, and that activities are covered under public amenities in the Twelfth Schedule. It was held that hence activities undertaken by applicant as governmental authority are covered by exemption under Not. No. 12/2017-Central Tax (Rate). [In RE: Amaravathi Metro Rail Corp Ltd-Ruling No. AAR/AP/07(GST)/2018, dated 2-7-2018, AAR Andhra Pradesh]
♦ Job work for foreign entity liable to GST @ 18%:
GST AAR Andhra Pradesh has held that process of providing job work service to foreign principal, in premises of applicant as per specifications of recipient of services, is taxable under GST and liable to tax @ 18%. AAR in this regard held that place of supply for the transaction was location of the service where actually performed i.e., business premises of the applicant. [In RE: Synthite Industries -Ruling No. AAR/AP/08(GST)/2018, dated 20-8-2018, AAR Andhra Pradesh]
♦ Toll charge not excludible from value of security service:
GST AAR West Bengal has held that toll charges paid by a security services provider providing services to the bank, are not excludible from value of the supply under Rule 33 of the CGST Rules, 2017. The AAR was of the view that GST will be payable on the entire value of the supply, including toll charges paid. The applicant was held as not acting as a ‘pure agent’ of the bank while paying toll charges. The toll charges were held as cost of service provided to the banks so that the vehicles can access roads/bridges to provide security services to the banks. [In RE: Premier Vigilance & Security Pvt Ltd. -20/WBAAR/2018-19 dated 2-11-2018, AAR West Bengal]
♦ IIMs eligible for both Sl. 66(a) and 67 of Notification No. 12/2017-CT (Rate):
GST AAR West Bengal has held that Indian Institute of Management, Calcutta is an educational institution within the meaning of clause 2(y)(ii) of Notification No. 12/2017-Central Tax (Rate) and is eligible for benefit of Entry No. 66(a) of said notification, applicable to such educational institutions as such. The AAR, however, also observed that applicant would also be eligible for benefit under Entry No. 67 as it specifically concerns IIMs, and courses mentioned therein will be eligible under the specific entry even if not mentioned elsewhere. [In RE: Indian Institute of Management, Calcutta–Order No. 21/WBAAR/2018-19 dated 2-11-2018, AAR West Bengal]
♦ Amount received from contract brewing units for use of IP, liable to GST:
Appellate Authority for Advance Rulings Karnataka has held that by permitting brewers to use trademarks owned by applicant, permitting acquisition of know-how on production and packaging of applicant’s beer, applicant has permitted the brewer to use intellectual property rights covered under clause 5(c) of the Schedule II of the CGST Act. The service supplied by the appellant was held classifiable under Service Code 999799 as ‘other services nowhere else classified’. Amount in the nature of reimbursement of expenses, received from brewers, was held liable to GST @ 18%.
[In RE: United Breweries-Order No. KAR/AAAR/03/2018-19, dated 23-10-2018, AAAR Karnataka]
♦ No concessional GST on works contract carried for business purposes:
Observing that main object of the company was to carry on business of purchasing, selling, trading of electrical energy, AAR GST Madhya Pradesh has held that projects by assesse applicant under various government schemes are carried out for business purposes. The applicant was hence denied the benefit of concessional rate of GST @ 12% to works contract services received by them for construction and erection for power distribution. The applicant was however held to be a government entity as per Notification No. 31/2017-Central Tax (Rate). [In RE: MP Poorv Kshetra Company Ltd. -Advance Ruling No. 14/2018, dated 18-9-2018, AAR Madhya Pradesh]
♦ Bus body building on chassis provided by principal is supply of service:
AAR Goa has held that in a case where bus body builder builds body on chassis provided by the principal for body building, and charges fabrication charges (including certain material that was consumed during the process of job-work), the supply shall merit classification as supply of services under HSN 9988 and hence, should be taxed @ 18% GST. The Authority placed reliance on the ratio of the judgement in the case of Prestige Engineering (India) Ltd. [1994 (73) ELT 497 (SC)],wherein it was held that addition or application of items by job worker would not detract from the nature and character of his work. [In RE: Automobile Corporation of Goa Ltd.-2018-VIL-217-AAR Goa]
♦ ITC available only on services used for business purposes:
Observing that the services received were varied in nature and intended partly for business use (to the extent intended for the plant, plant area or plant building) and partly for non-business use (to the extent intended for use outside the plant area), AAR Odisha has held that the tax paid by the applicant for the services which were used for business purpose only would be eligible for input tax credit. The applicant was engaged in manufacture of calcined alumina in its refinery, and as part of its business had townships and residential colony. It was running hospitals for its employees and had guest houses for touring employees and guests. The applicant received various services of repair and maintenance in the townships, guest houses, hospitals and horticulture, received as part of its business operations. [In RE: National Aluminium Company Ltd. -2018-VIL-208-AAR Odisha]
♦ Service of providing Pollution Control Certificate liable to GST –Not pure service provided by the Govt:
Service provided for issuing Pollution under Control Certificate (PUC) for vehicles on behalf of State Government is liable to GST. AAR Goa while holding so observed that services were not covered under Schedule III to the Central Goods and Service Tax Act, 2017 as well as Goa Goods and Service Tax Act, 2017. It was held that applicant did not provide pure service provided by the Central Government, State Government, Union Territory or Local Authorities or by a Governmental Authority by way of any activity in relation to any function entrusted to a panchayat under Article 243G of the Constitution or relation to any function entrusted to the municipality under the Article 243W of the Constitution. It was also noted that services of testing of pollution were provided on payment of service charge. [In RE: Venkatesh Automobiles-2018-VIL-218-AAR Goa]
♦ Processing natural gas is job work:
GST AAR Kerala has held that the activity of processing natural gas and other inputs received from the oil company (BPCL) on free of cost basis and manufacturing industrial gases shall fall under the scope of ‘job work’ under GST. It was held that the activity was job work as the output would not be owned by the applicant providing the service. It was held that the statute does not specify any restriction that the ‘inputs’ subject to the treatment or process shall be taxable goods. The activity was held to fall under Serial No.(ii) of the HSN 9988 and taxable at the rate of 18% under GST.
[In RE: Podair Air Products India (P) Ltd.-2018-VIL-245-AAR Kerala]
♦ Supply of medicines to in-patients is composite supply –Exemption available under healthcare services:
Supply of medicines, consumables and implants used in the course of providing health care services to in-patients for diagnosis or treatment would be considered as composite supply. The Advance Ruling Authority of Kerala in this regard observed that as far as an in-patient is concerned, the hospital is expected to provide lodging, care, medicine and food as part of treatment under supervision till discharge from the hospital. It was also held that these activities would be eligible for exemption under the category of health care services. [In RE: Kims Healthcare Management Ltd.-2018-VIL-246-AAR Kerala]
♦ IGST refund in invoice mismatch issue–Officer interface facility extended:
Alternative mechanism with an officer interface to resolve invoice mismatches errors for IGST refund extended for shipping bills filed till 15-11-2018. Further, similar mechanism will also be available in cases where refund scroll generated for a much lesser IGST amount than what was actually paid against exported goods, due to errors by exporter or customs officer. As per Circular No. 40/2018-Cus., exporters are required to once submit Revised Refund Request for the differential amount, even in cases where compensation cess was not mentioned in shipping bill.
♦ Re-import of goods earlier exported by post –Exemption clarified:
Customs Notification Nos. 45/17-Cus, and 46/2017-Cus, issued in supersession of Notification No. 94/96-Cus., are also applicable to the re-import of goods which were earlier exported through Post. The concessions available under Notification No.94/96-Cus have been continued through these notifications. This circular also states that reference to Section 51 of the Customs Act in the notification does not seek to deny the benefit to the goods to which Section 51 may not apply. (Refer Circular No. 45/2018-Cus., dated 19-11-2018)
♦ Pharma exports –Track and Trace system for drug formulations postponed:
Date for implementation of Track and Trace system for export of drug formulations extended up to 1-7-2019. The extension is with respect to maintaining Parent-Child relationship in packaging levels and its uploading on Central Portal, for both SSI and non-SSI manufactured drugs. Para 2.90 A (vi) and (vii) of FTP Handbook of Procedure 2015-20 amended in this regard by DGFT Public Notice No. 43/2015-2020, dated 1-11-2018. The system was to be implemented by 15-11-2018.
♦ In-bond manufacturing –Forms consolidated, and procedures clarified:
CBIC has updated procedure for seeking permission for in-bond manufacturing and for maintaining various records. An elaborate Circular No. 38/2018-Cus., dated 18-10-2018 issued for this purpose also prescribes various forms and clarifies duty liability on removal of processed goods from such warehouse. The form for seeking permission for in-bond manufacture will also serve the purpose for seeking grant of license as a private bonded warehouse. Further, a separate form to be maintained by a unit operating under Section 65 of the Customs Act, for receipt, processing and removal of goods, has been prescribed. The circular also prescribes a triple duty bond for the warehoused goods which is required to be executed by the owner of the warehoused goods.
No duty is required to be paid in respect of imported goods contained in resultant product in case resultant product manufactured or worked upon in a bonded warehouse is exported. However, transaction will also be covered under definition of ‘supply’ and consequently be liable to GST if resultant product is cleared for domestic consumption.
♦ EPCG authorisations are now valid for 24 instead of 18 months:
Validity period of Export Promotion Capital Goods (EPCG) Authorisations has been extended from 18 months to 24 months. DGFT Public Notice No. 47/2015-20, dated 16-11-2018 while amending Para 2.16 of the FTP Handbook of Procedures Vol. 1, also states that import validity period of EPCG Authorisations which have been issued prior to 16-11-2018 and whose validity has not expired on this date, shall also be extended to 24 months from the date of issuance of the Authorisation.
♦ Provisional release order appealable before CESTAT:
Punjab & Haryana High Court held that appeal against order passed by Commissioner (Customs) under Section 110A of Customs Act, 1962, for provisional release of the goods, lies before CESTAT. Department’s plea that such order passed by Commissioner is essentially an administrative decision and not adjudicatory, was rejected. Citing various decisions of Apex Court, High Court observed that whenever civil consequences follow from an order passed by an authority, it assumes character of a quasi-judicial order. [Commissioner v.Gaurav Pharma -2018-VIL-484-P&H-CU]
♦ Advance authorisation –Condition of pre-import for IGST exemption, valid:
Madras High Court dismissed writ petitions challenging Notification No. 79/2017-Cus. amending Notification No. 8/201-Cus. and incorporating -import and physical exports, for exemption from IGST and Compensation Cess on imports under Advance Authorisations. The case involved replenishment of inputs post exports. The Court in this regard noted that by not allowing exemption of IGST at time of import, no benefit in AA scheme is altered by Government, though collateral costs get fastened. It observed that DFIA scheme suited existing operation of petitioner in the GST regime,and that petitioner cannot choose one scheme and insist the government to modify it to its convenience. [Vedanta Ltd. v.Union of India -2018-TIOL-153-HC-MAD-GST]
♦ Valuation -Exports need not be by same exporter and within same month:
CESTAT Hyderabad has observed that Rule 4 of Customs Valuation (Determination of Value of Export Goods) Rules, 2007 does not require that exports should be by the same exporter. It also noted that the rule only says that the value comparison must be with the goods exported at or around the same time but does not specify that it must be within the same month. The Tribunal held that lower authority should have examined feasibility of finding price of goods of like kind and quality exported at or around the same time. The rejection of the transaction value under Rule 8 by the lower authority was however held to be correct. [Obulapuram Mining Company v. Commissioner -Final Order No. A/31240-31242/2018, dated 28-9-2018]
♦ Cenvat credit available on towers and shelters used for telecom service:
Delhi High Court has allowed Cenvat credit on towers, shelters and parts thereof used for providing telecommunication services. Allowing assessee’s appeal, it observed that the goods at the time of their receipt were movable, and that CESTAT failed to appreciate the permanency test as laid down by the Supreme Court. The High Court held that machine annexed to earth by fixing with nuts and bolts on a foundation, to provide for stability and wobble free operation would not constitute an immovable property. The goods were held to be capital goods and also inputs. [Vodafone Mobile Services v. Commissioner – CEAC 12/2016 and Ors., dated 31-10-2018, Delhi High Court]
♦ COD clearance –Tribunal not to dismiss appeal in absence of COD: Chhattisgarh High Court has held that it was not permissible for Tribunal to dismiss appeal filed in 2006 only for want of clearance from Committee on Disputes (COD). The Court observed that the Supreme Court in ONGC’s case never empowered any Court/Tribunal to dismiss appeal in absence of COD clearance. The Court agreed with assessee’s view that the Tribunal should have kept appeals pending till clearance was obtained. Tribunal’s Order dismissing restoration application due to long delay was also set aside, considering the case to be exceptional. [Steel Authority of India v. Commissioner -TAXC No. 8, 9 and 11 of 2018, decided on 26-10-2018, Chhattisgarh High Court]
♦ DGCEI has all India jurisdiction, pendency u/s.73 unrelated for s.14 notice:
Delhi High Court has held that Officers of DGCEI have all India jurisdiction and can issue notices and enquire into matters relating to service tax against any assessee/person even if the said person is registered with one or multiple Commissionerates. It also held that pendency of recovery proceeding under Section 73(1) of the Finance Act, 1994 was not a condition precedent for issue of notice under Section 14 of Central Excise Act. The Court also observed that centralised investigation was desirable and necessary to curtail delay. [National Building Construction Company v.UOI -W.P.(C) 1144/2016, decided on 16-11-2018, Delhi High Court]
♦ Cenvat credit on insurance of life of Joint Managing Director, admissible:
CESTAT Chandigarh has allowed Cenvat credit of tax paid on insurance for the compensation of loss incurred to the assessee due to the life loss of the Joint Managing Director. The insurance, in this case, was taken by the assessee-manufacturer for their use and the premium was also paid by the assessee only. The Tribunal observed that merely because insurance was in the name of Joint Managing Director and not in the name of the company, credit could not be denied. [HPL Additives Limited v. Commissioner -Final Order No. 63255/2018, dated 10-10-2018, CESTAT Chandigarh]
♦ Cenvat credit on supplementary invoices issued after opting for VCES:
CESTAT Chennai has allowed Cenvat credit in a case where the service provider had issued supplementary invoices to the appellant-assessee after opting for Voluntary Compliance Encouragement Scheme (VCES) 2013. The Tribunal observed that the department having accepted the declaration in terms of VCES and having issued acknowledgement of discharge, cannot seek to recover or deny Cenvat credit. It noted that department did not challenge issuance of VCES-3 nor issued any notice to service provider alleging fraud, etc. [Sri Balaji Castings Pvt. Ltd.v. Commissioner-Final Order No. 2605/2018, dated 5-10-2018, CESTAT Chennai]
♦ Tractor Cess not imposable on parts and accessories of tractors:
CESTAT New Delhi has held that Tractor Cess imposed under a notification issued under Industrial (Development and Regulation) Act, 1951, was not leviable on parts and accessories of tractors. It observed that parts and accessories of tractor cannot be compared with that of the tractor itself. Reliance in this regard was placed on Ministry of Finance Circular No. 41/88, dated 31-8-1988 relating to cess on automobiles. The Tribunal noted that the principle enunciated in the said circular was applicable. [Gatiman Auto Pvt. Limited v. Commissioner -Final Order Nos. 53087 –53089/2018, dated 9-10-2018, CESTAT Delhi]
♦ Export of services when outflow of foreign exchange reduced:
In a case involving remittance of net charges to the foreign parent company, after deduction of service charge or commission, CESTAT Mumbai has allowed refund of service tax paid on export of Business Auxiliary Services. Relying on Income Tax case, it observed that since Indian Rupees were obtained in lieu of foreign exchange, same will be deemed to be convertible exchange. The Tribunal observed that in this way outflow of foreign exchange was reduced to the extent of commission/service charge retained in India. [Import Express India v. Commissioner-Order No. A/87580/2018, dated 10-10-2018, CESTAT Mumbai]
♦ Full Cenvat credit available even when service used by others also:
CESTAT Hyderabad has allowed full Cenvat credit to the assessee when the services of lift maintenance and security were enjoyed by other companies also in the same complex. The department had allowed proportionate credit in such case. Comparing it with the enjoyment of one’s porch light by passers-by, the Tribunal observed that assessee-appellant had hired and paid for these services, and there was no rule under which the department can vivisect and partly deny the credit. [AVR Storage Tank Terminals Pvt. Ltd. v. Commissioner -Final Order No. A/31208/2018, dated 20-9-2018, CESTAT Hyderabad]
♦ Cash refund of amount paid through Cenvat credit, once GST regime in force:
Relying on Section 142(3) of Central GST Act, 2017, CESTAT Chennai has held that once GST regime is in force, pending refund claim, if sanctioned, will necessarily have to be paid in cash irrespective of the fact whether refund amount pertains to Cenvat account or was paid from account current. The Tribunal was dealing with refund of amount of 6% paid through Cenvat account mistakenly to take benefit of exemption. Allowing cash refund, it observed that any other interpretation will leave assessee high and dry. [Toshiba Machine (Chennai) v. Commissioner-Final Order No. 42462/2018, dated 25-9-2018, CESTAT Chennai]
♦ Reassessment order under Karnataka VAT, after GST regime, is valid:
Karnataka High Court has held that merely because a reassessment order under Karnataka VAT Act for year 2012-2013 was passed after coming into force of GST regime in 2017, it would not make such order void in eyes of law. The Court further noted that Section 174 of KGST Act, 2017 saves all rights, liabilities acquired, accrued or incurred under repealed Acts enumerated under Section 173 thereof which includes KVAT. It was also held that ground of attack on Section 174 of KGST Act does not affect validity of KVAT Act. [Prosper Jewel LLP v. Deputy Commissioner-Writ Petition No.20642/2018 (T-RES), decided on 25-10-2018, Karnataka High Court]
♦ Limitation for ITC-Tamil Nadu VAT Section 19(11) constitutionally valid:
Supreme Court has upheld constitutional validity of Section 19(11) of Tamil Nadu VAT Act which restricts input tax credit beyond a certain period. It held that statutory scheme delineated by said provisions was neither arbitrary nor violate right guaranteed to a dealer under Article 19(1)(g) of Constitution of India. The Court held that use of word ‘shall’ in Section 19 (11) indicated that compliance with the same was mandatory and the same was not directory. [ALD Automotive Pvt. Ltd. v. CTO -Civil Appeal Nos.1041210413/2018 and Ors., decided on 12-10-2018, Supreme Court].
*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).
With Warm Regards & Jai Hind
CMA Rakesh Bhalla
Information source- M/s LKS, Nitya Tax Associates, Probability GST updates, PwC India Indirect Tax News Flash, cbic.gov.in and other sources-many thanks to all.