01 January 0001

Tax Amicus: August 2017

by Devanu Roy Choudhury


Understanding composite supply under GST

The Legislature has retained the concept of ‘bundled services’ under the erstwhile Service Tax regime as ‘composite supply’ and has further broadened its scope to include supply of goods as well under the new GST regime. Apart from being naturally bundled in the ordinary course of business, for two or more supplies to be construed as a ‘composite supply’, the principal or predominant supply must give the composite supply its essential character. However, if two or more supplies are bundled together into a single supply, which alters the essential character of the principal supply, thereby making the identification of principal supply an improbable task, such supplies are termed as “mixed supply”. Discussing three important cases decided by the Court of Justice of the European Union, the author states that in spite of clarifications arising from such judgments, many uncertainties still remain under the EU-VAT law, and that it would take some time for the courts in India to adjudicate on similar issues...


Goods and Services Tax (GST)


  • GST Rate on certain services revised - GTA service in relation to transportation of goods (including used household goods for personal use) - Rate of CGST will be 6% with ITC
  • RCM in respect of GTA services would be applicable only when the GTA has not paid CGST at the rate of 6%
  • E-commerce Operator liable for house-keeping services provided through them
  • Exemption to certain services by and to FIFA, and by Fair Price Shops 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

  • GST (Compensation Cess) Act - Delhi High Court observes that power of Parliament to enact GST (Compensation to States) Act, 2017 cannot prima facie be traced to Section 18 of Constitution 101st Amendment Act
  • Liability in case of chain of successive supplies – Court of Justice of EU upholds VAT liability
  • Service by sub-contractor to economic operator in respect of vessel, qualifies for exemption – Court of Justice of EU



Notifications & Circulars

  • High sea sales of imported goods would not be chargeable to IGST twice
  • Rebate of State Levies on garment exports – CBEC continues with pre-GST rates
  • Provisional release of seized imported goods pending adjudication – Guidelines issued
  • Exemption to temporary import of leased machinery, equipment and tools, revised
  • Export of Gold jewellery over 22 carats not allowed
  • Prohibition on import of Red Sanders

Ratio decidendi

  • Valuation - Examination of technical assistance agreement and pricing agreement necessary before addition of royalty – CESTAT Delhi
  • Valuation of ATF available in fuel tank of aircraft returning from foreign trip – CESTAT Delhi
  • Payment of ground rent/ demurrage for re-exporting, required – Delhi High Court
  • Restriction with pre-condition, makes goods ‘prohibited’ – Kerala High Court
  • Refund – Payment of duty on interim order of court is protest payment – CESTAT Chennai
  • Refund – No unjust enrichment even when amount not shown as outstanding – Delhi High Court
  • Duty demand jointly and severally is not legally sustainable – CESTAT Delhi
  • Sportsman Forest Tractor/ Forest Tractor – Classification of – CESTAT Delhi


Central Excise

Ratio decidendi

  • Cenvat Rule 3(4) proviso, restricting utilisation of credit, is ultra vires the Credit Scheme – Gujarat High Court
  • Export under bond – No condition of receipt of foreign remittance – CESTAT Mumbai
  • Cenvat credit admissible even when EOT cranes received in two parts – CESTAT Mumbai
  • Cenvat credit on material consumed in laboratory – CESTAT Mumbai
  • Valuation – Knowledge of trade discount – CESTAT Chennai
  • Refund of Cenvat credit when benefit under FTP availed – CESTAT Mumbai
  • Interest payable on refund of confiscated currency – Allahabad High Court


Service Tax

Ratio decidendi

  • Cenvat credit of tax paid under RCM on sitting fees to independent Directors, available – CESTAT Hyderabad
  • Demand – Closure of proceeding under Section 73(3) – CESTAT Delhi
  • Belated submission of required information not fatal for exemption under Notification No. 18/2009-ST – CESTAT Mumbai
  • Construction of residential complexes for military troops, not liable to Service tax – CESTAT New Delhi
  • Finishing services in respect of stadium not covered under Commercial or Industrial Construction service – CESTAT Mumbai
  • Cenvat credit on renting of road situated outside factory, available – CESTAT Mumbai


Value Added Tax

Ratio decidendi

  • Demo cars are capital goods for dealer of cars – Delhi High Court
  • Construction contracts include repair and reconstruction contract – Bombay High Court
  • Fabric whitener – Classification under Rajasthan VAT – Rajasthan High Court
  • Interest liability when same not mentioned in assessment order – Allahabad High Court


August, 2017/Issue-74 August, 2017/Issue-74

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