01 January 0001

Tax Amicus: April 2019

Expenses incurred on CSR – Not so GST friendly?
by Koushal Sonthalia

Corporate Social Responsibility (CSR) activities are mandatory under Companies Act, 2013. Companies may incur expenses on procurement of either goods or services for distribution and if credit is not available for any such expense, it will amount to an additional cost. In pre-GST period, Cenvat credit was allowed in the case ofEssel Propackv.Commissioner where CESTAT observed that CSR was not in nature of charity as it had direct bearing on manufacturing activity of company. However authorities are not so generous under GST. In Polycab Wires Pvt Ltd, Kerala AAR, relying on CGST Section 17(5)(h), held that ITC would not be available for articles distributed on free basis. It may be noted that such restriction under Section 17(5)(h) is not applicable on free provision of services. It appears that there are two different tax treatments for the very same nature of expense - goods and services. It is time that the government brings benevolent amendment to ensure that ITC is allowed in respect of goods and services alike used for CSR activities...

Goods & Services Tax (GST)
Notifications and Circulars

  • New regime for residential realty sector implemented
  • Composition scheme for suppliers of goods or services or both – Reversal of ITC availed
  • Refund of accumulated ITC to merchant exporter clarified
  • E-way Bill – New forthcoming system for extension
  • E-way Bill – Auto calculation of distance
  • Transfer of ITC in case of death of sole proprietor – Clarification

For GST Acts, GST Rules and Notifications (Central and States), Circulars, Press Releases and Notes, please use Knowledge tab in www.gst.lakshmisri.com.

Ratio decidendi

  • Confiscation when case on search validity pending before HC, not correct - Allahabad High Court
  • Fraudulent availing of ITC - Summon justified on MD - Rajasthan High Court
  • No GST on interest free deposit if not withheld at completion of lease - Maharashtra AAR
  • Exemption available only to clinical establishments providing healthcare - Madhya Pradesh AAR
  • Exemption from GST on reverse charge basis under Section 9(4) not retrospective - Maharashtra AAR
  • Works contract pertaining to railways – Lower tax rate for sub-contractor - Maharashtra AAAR
  • ITC available only on discounted invoice value - Tamil Nadu AAR
  • IGST liable on hospitality services provided in SEZ to visitors from DTA - Gujarat AAAR
  • No ITC if goods supplied under CSR activity on FOC basis - Kerala AAR
  • No ITC on goods supplied free under sales promotion scheme - Maharashtra AAR
  • Job work – Dispatch of consumables to job worker is not ‘supply’ - West Bengal AAR
  • ITC available on cars further leased out - Madhya Pradesh AAR
  • ITC of Compensation Cess paid on motor vehicles not available for supply of rental service - Kerala AAR
  • Fabrication of body on chassis supplied by principal is supply of service - Kerala AAR
  • EU VAT - Place where educational course takes place is ‘place of supply’ – Court of Justice of the European Union
  • UK VAT – Supply of skates along with right to admission, separate supply - UK’s Upper Tribunal (Tax and Chancery Chamber)

Notifications and Circulars

  • Customs duty reduced on import of specified goods from Japan
  • Rebate of State and Central Taxes and Levies scheme – FTP and HoP amended
  • Transport and Marketing Assistance for agri. products – FTP and HoP amended
  • Physical copies of MEIS/SEIS scrips phased out for EDI ports
  • Advance authorisation, EPCG and EOU - IGST and Cess exemption extended
  • Peas and pulses - Import of certain quantities relaxed from 1-4-2019

Ratio decidendi

  • Rectification in Bill of Entry under Customs Section 154 on error by importer - Madras High Court
  • Advance Authorisation – Use of surplus inputs for goods cleared in DTA – CESTAT Ahmedabad
  • DFIA scheme – Import of popcorn maize – Word ‘maize’ is not generic - Bombay High Court
  • Demurrage charges are justified unless waiver mandated by rules - Delhi High Court
  • Skin barrier Micropore Surgical Tapes - Customs exemption - CESTAT Chennai
  • Difference between ‘wrench’ and ‘plier’ – Classification - US Court of Appeals for the Federal Circuit

Central Excise and Service Tax

Ratio decidendi

  • Excise valuation – Dharmada charges not includible - Supreme Court Larger Bench
  • NCCD exemption available to units exempted from Excise duty - Supreme Court
  • Service tax audit after introduction of GST – Saving clause under CGST Section 174(2)(e) - Jharkhand High Court
  • Construction exclusively or primarily for commerce alone liable to service tax - Bombay High Court
  • Omission/substitution included in meaning of ‘repeal’ - Bombay High Court
  • Cenvat credit refund – CESTAT when can interpret GST transitional provisions - CESTAT Hyderabad
  • Mere consumption of goods during service cannot turn it into work contract - CESTAT Ahmedabad
  • Supply of electricity in the absence of licence, exigible to service tax - Calcutta High Court
  • No automatic vacation of stay after 6 months - CESTAT Bangalore
  • Supply of tangible goods - Possession and effective control are relevant - CESTAT Delhi

Value Added Tax (VAT)

Ratio decidendi

  • Karnataka Sales Tax – Turnover not limited to ‘taxable turnover’ - Supreme Court
  • Rusk and toast are bread as per composition, hence not liable to VAT - Chhattisgarh High Court
  • Mobile crane wire rope classifiable as part of mobile crane - Supreme Court

April, 2019/Issue-94 April, 2019/Issue-94

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