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April 2018

Tax Amicus: February 2018

by Ekansh Agrawal Tushar Mittal

Legal metrology - New labelling rules could agitate businesses

Amendments in the Legal Metrology (Packaged Commodities) Rules, 2011 which govern the pre-packed commodities, have come into effect from 1-1-2018. The first article in this issue of Tax Amicus discusses at length certain amendments like requirement of declaration of country of origin, amendment in the definition of ‘institutional consumer’, certain doubts in relation to goods in stock as on 31-12-2017, and the additional declaration in terms of “best before” or “use by” for certain commodities. According to the author, the amendments though aimed at enhancing consumer protection, are bound to create difficulties for the trade unless appropriate clarification is issued by the authorities.

 

E-way bill provisions and valuation of goods

E-way bill is required to accompany every movement of goods barring some exceptions. According to the Rules, an e-way bill is required to be generated if value of the consignment exceeds Rs. 50,000. For the purpose of determination of value of the consignment, reference has been made in the CGST Rules to valuation provisions contained in Section 15 of the Central Goods and Services Tax Act, 2017. However, it may be argued that Section 15 may not cover situations when taxable supplies are not made, e.g. in case of job work where delivery challan is issued. Ironically, Rule 138 on e-way bill further seeks to include GST also for the purpose of reckoning consignment value…

 

Goods and Services Tax (GST)

Notifications and Press Releases

  • National E-way Bill System postponed but certain States decide to continue old system
  • GST on construction of affordable flats - Finance Ministry issues Press Release
  • GST Returns – Fees for delayed filing of GSTR-1, 5, 5A and 6, reduced
  • CGST Rules amended to revise provisions for registration and e-way bills
  • Supplies to Railways – Classification and rate of duty clarified
  • GST payable on net quantity when only portion of raw material retained – Clarification issued for particular industry
  • Adjudication under CGST Act & IGST Act – Monetary limits of officers prescribed
  • EU proposes more flexibility to States on VAT rates

Ratio decidendi

  • GST regime not tax (payer) friendly – State of affairs not satisfactory – Bombay High Court
  • Detention not permissible for mere infraction of Kerala State GST Rules 55 and 138 – Kerala High Court
  • Detention of goods cleared under delivery challan when not sustainable – Kerala High Court
  • EU VAT – Tax rate under composite supply where each element of supply identifiable – Court of Justice of the European Union

 

Customs

Finance Bill, 2018 (Budget) and Notifications

  • Edible/food products – Import conditions revised
  • Import duties increased on sugar and chickpeas
  • Customs redemption fine to be paid within 120 days
  • Demand - Pre-consultation before SCN and time limit for adjudication under Customs
  • Exemption to inward and outward processing of goods
  • Finance Bill introduces Social Welfare Surcharge of 10% on imports
  • IGST and Compensation Cess on warehoused goods sold before clearance
  • Customs Act – Scope to be expanded

Ratio decidendi

  • Valuation - Not justified to attribute loading of profit margin of the related unit in Ireland to the goods imported from the related unit in Singapore – CESTAT Bangalore
  • No redemption fine payable when no restriction on import, both at time of placing orders and also when Bill of Entry filed subsequently – CESTAT Mumbai

 

Central Excise & Service Tax

Ratio decidendi

  • Commercial construction service – Nature of occupant’s activities important – CESTAT Delhi
  • Cleaning of railway coaches not liable under Cleaning Service – CESTAT Delhi
  • Classification of service – Separate identifiable service as part of composite contract – Section 65 not applicable – CESTAT Delhi
  • Composite contract – Liability not determined by nature of invoice – CESTAT Chennai
  • Valuation – Quantification of cost of drawings supplied free of cost – CESTAT Mumbai
  • IPR service – Continuous usage is not continuous rendering of service – CESTAT Delhi
  • No charge under RCM on expenditure when income shown in accounts already suffered tax – CESTAT Delhi
  • BAS – Media monitoring services not covered under ‘sales promotion’ – CESTAT Delhi
  • Excise – Software supplied separately when distinct from firmware – CESTAT Chennai
  • BAS – ‘Sales promotion’ does not cover non-compete agreement – CESTAT Chandigarh
  • Commercial Coaching or Training services – Scope of vocational training – CESTAT Delhi
  • Cenvat credit on outward transportation, from place of removal, prior to 1-4-2008 – Supreme Court

 

Value Added Tax (VAT)

  • Mobile phone charger when not to be charged separately from mobiles – Allahabad High Court
  • Valuation – Admissibility of deduction of discounts not shown in invoice – Supreme Court

 

February, 2018/Issue-80 February, 2018/Issue-80

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