01 January 0001

Tax Amicus: August 2016


GST – Designing a compliance friendly regime

India is now set to introduce its biggest indirect taxes reform by launching the Goods and Services Tax (GST) regime. Though Parliament has passed the Constitution Amendment Bill, there lies a tough road ahead to be crossed. Discussing few important issues in this regard, the author of the article in this issue is of the view that since indirect taxes are regressive in nature, there is hardly any justification for governments to aim at a high rate for GST. It is opined that though tax compliance will be simplified considerably, there is no escape from the dual tax administration, and hence simpler laws and procedure, common forms and formats, low rate of GST and automation of transactions hold the key to smooth transition. According to the author, gains of a GST regime are in efficiency, competitiveness and increased revenues, but these gains are possible only when, by design, GST is a compliance friendly regime.


GST – Statutory Update

* Constitution Amendment Bill to empower the Parliament and State Legislatures to make law for levy of GST has been passed by the Indian Parliament. Till 17-8-2016, it has been ratified by the States of Assam, Bihar and Jharkhand.


Central Excise

Notifications & Circulars

  • Revised returns – Provisions have come into effect from 17-8-2016
  • Excise duty on jewellery – SSI exemption revised

Ratio decidendi

  • Valuation when processing on job-worked goods is not ‘manufacture’ – Supreme Court upholds Tribunal Order which held that though there is value addition, yet value at the end of job worker is to be adopted
  • Cenvat credit on structural steel – CESTAT Mumbai & Delhi allow credit while CESTAT Kolkata denies it
  • Cenvat Rule 6(3A) is only a procedure contemplated for application of Rule 6(3) – CESTAT Bangalore
  • Manufacture – Loading of software in a device does not amount to manufacture – Authority for Advance Rulings
  • Exemption to pipes for carrying water also covers casing pipes – CESTAT Delhi
  • Recovery of dues of proprietorship firm from successor company when permissible – CESTAT Kolkata
  • Clandestine removal – Duty payment during investigation is not admission of evasion – CESTAT Delhi
  • Anchor rings and load spreading plates are parts of tower for wind operated electricity generators – CESTAT Larger Bench



Notifications and Circulars

  • Special Advance Authorisation Scheme for export of apparels, notified
  • Minimum Import Price (MIP) requirement abolished for many iron and steel products – List pruned to 66 items
  • Exports under MEIS Scheme using E-commerce platform – CBEC notifies procedure

Ratio decidendi

  • Valuation – No case for enhancement of value just by citing contemporaneous imports – CESTAT Bangalore
  • Valuation – Additions under Rule 10(1)(c) on the basis of answer to a question, not correct – CESTAT Chennai
  • Finance Act, as enacted, represents ultimate will of Parliament and not Budget Proposals and FM’s Speech – Supreme Court
  • Provisional clearance under bond and undertaking when denial of EPCG licence challenged – Kerala High Court
  • SCN issued by Customs Authority on identical facts based on which earlier SCN issued by DGFT quashed, not correct – Delhi High Court
  • Ship demurrage charges not includible in value of imported goods – Imports made prior to current Valuation Rules – CESTAT Chennai
  • Direction to pay EDD while remanding matter back to SVB to decide on merits, is illegal – CESTAT Chennai


Service Tax


  • Freight Forwarding service – Capacity in which service is provided is important

Ratio decidendi

  • Tax liability discharged under different Acts on advice of department – Penalty not imposable – Delhi High Court
  • Extended warranty provided by dealer – Manufacturer not liable under BAS – CESTAT Delhi
  • Tax deposited under mistake of law – Limitation under Excise Section 11B not applicable – Jharkhand High Court
  • Sale of space for advertising - Levy of service tax and VAT mutually exclusive – Delhi High Court
  • Adjustment of excess service tax paid – Provisions not to be given narrow interpretation – CESTAT Hyderabad
  • Cenvat credit of GTA service availed outside factory when available – CESTAT Kolkata
  • Runway – Activities pertaining thereto, liable to service tax – Bombay High Court


Value Added Tax


  • Assam VAT - Rate of tax increased for specified goods
  • Telangana VAT – Cell phones to be taxed @ 5%

Ratio decidendi

  • Setoff when sales also made to exempted units – No distinction, under UP Trade Tax Act, between sales made to exempted units and taxable sales – Allahabad High Court
  • Replacement of damaged and defective goods under warranty when constitutes ‘sale’ – Tribunal
  • Toothpaste and mouthwash not covered as medical drugs - Tribunal


August, 2016/Issue-62 August, 2016/Issue-62

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