Lakshmi Kumaran & Sridharan AttorneysAn ISO 9001 / 27001 certified law firm

Tax Amicus: December 2014

Will compliance costs actually go down with introduction of GST? The article in this month’s issue of the Tax Amicus while analyzing GST set-up in different countries concludes that though the GST story has not fully been told as yet, it is perhaps right time for the trade to study the likely impact of GST on their compliance costs, and represent to the Empowered Committee and the Government before it is too late.

Under Customs, this issue covers changes in the Drawback Rules prohibiting brand rate application when All Industry Rate (AIR) of drawback has been opted. Delhi High Court has held that neither the Central Government, nor the DGFT has the power to amend the Foreign Trade Policy or withdraw any export benefit with retrospective effect. Further, CESTAT Delhi has held that benefit of re-exports is not deniable when there is delay on part of the customs authorities in clearance of imported goods. These orders have been summarized in this issue.

Central Excise portion of this newsletter covers recent CBEC Circular stating that time limit for availing Cenvat credit is not applicable for re-credit. Gujarat High Court decision holding unconstitutional the provisions providing for payment of excise duty for each consignment at the time of removal without utilizing the Cenvat credit, in case of default in payment of duty beyond prescribed time, is also covered in this segment.

Service Tax Rules have been amended requiring assessees to provide for scrutiny specified documents, to the officers empowered under relevant provision or the audit party deputed by the Commissioner or the Comptroller and Auditor General of India (CAG), or a cost accountant or chartered accountant nominated under Section 72A of the Finance Act, 1994. These amendments are discussed in this issue. Service Tax portion of this newsletter also covers recent decision of the Chhattisgarh High Court holding that expenditure incurred as pure agent is not includible in value of taxable service.

Under part relating to Value Added Tax (VAT), this month’s newsletter also brings Kerala High Court decision holding that Sales Tax is leviable on the whole consideration received, in respect of supply of food in restaurants. The court in a different decision has also held that a works contractor, sub-contracting the entire work, is not liable to pay tax on the amount received from the awarder of the contract which was retained by the petitioner over and above the amount paid to the sub-contractor.

December, 2014/Issue-42 December, 2014/Issue-42
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