01 January 0001

Tax Amicus: February 2019

Liability to pay interest – An interesting interpretation
by Rahul Jain & Rohan Muralidharan

First article in this issue of Tax Amicus deals with the issue as to whether interest needs to be paid on the ITC availed but not utilized by the assessee. While ineligible or mis-matched credits accrued are being reversed by the assessee, the moot point is whether interest is required to be discharged for such reversals or interest is leviable only when the credits are utilized. Supreme Court has held that interest would be payable on availment itself. However, subsequent High Court decisions have held that mere taking of credit would not trigger interest liability unless the same has been utilized. Section 50 in Chapter X of CGST Act provides for payment of interest in two circumstances - where a person liable to pay tax fails to pay the same [Section 50(1)] and where a person makes an undue or excess claim of ITC under the provisions relating to matching of ITC [Section 50(3)]. According to the author, there cannot be any levy of interest on mere wrongful availment of credit for reasons other than those covered under Section 50(3) viz. wrongful availment on account of mismatch…

Revision of returns & forms – Need for amendments
by Nipun Arora

The procedures for compliance with the provisions of GST law are yet to be streamlined. While, most of the taxpayers are preparing their returns manually due to lesser reach of software and affordability issues, second article in this issue of Tax Amicus discusses the issues related to lack of facility for revising of returns filed. The system of revision which existed in the erstwhile regime is not available in the GST regime for most of the forms. Recent judgment of Calcutta High Court in this regard highlights the issue of absence of provisions and also the requirement to amend the law to provide for the same. It directs that the petitioner should be provided an opportunity to explain Form GST TRAN 2. It saw no reason as to why a person filing form GST TRAN-2 should not be allowed to revise the same after the initial filing. The above judgement may enable aggrieved taxpayers to move respective High Court and seek judicial redressal wherever the provisions are too harsh causing difficulties…

Goods & Services Tax (GST)
Amendments, Notifications and Circulars

  • GST rates on under-construction residential property to be lowered
  • CGST credit to be utilised before SGST/UTGST credit for payment of IGST
  • ITC on motor vehicles for transportation of persons – Amendments in Section 17(5)
  • GST on supplies from unregistered suppliers – Liability on notified persons
  • Budgetary support to units in hilly States clarified
  • GSTR-7 for period October 2018 till January 2019 to be filed on or before 28-2-2019
  • Separate registration of each place of business – CGST Rule 11 substituted
  • In-bond sale of goods during July, 2017 to March, 2018 – Deemed compliance of transaction not reported correctly
  • GST invoices to mandatorily mention place of supply
  • GST Appellate Tribunal with National Bench at New Delhi approved

Ratio decidendi

  • Electricity transmission – Para 4(1) of Circular No. 34 struck down – Gujarat High Court
  • GST TRAN-2 - Calcutta High Court allows revision
  • Goods detained due to multiple invoices in single e-way bill – Kerala High Court grants interim relief
  • GST on TCS collected under Income Tax – CBIC Circular No. 76 stayed – Kerala High Court
  • Non-production of goods is not a ground for imposition of penalty – Kerala High Court
  • Profiteering even when increased base price still lower than pre-GST price – NAA
  • Recovery of part of premium from employees for insurance is not “supply” -Maharashtra AAR
  • Services of sales promotion to principal – Coverage under intermediary service - Karnataka Appellate AAR
  • Filling tea bag pouches is ‘manufacture’ of distinct product - West Bengal AAR
  • Providing information on Indian market falls under Market Research Services - Maharashtra AAR
  • Exemption not available to all activities delegated by a govt. entity – Madhya Pradesh AAR
  • Company within indirect Govt. ‘control’ to comply with TDS provisions - West Bengal AAR
  • Works contract by Govt. entity for commercial purpose to attract 18% GST - AAR West Bengal
  • UK VAT – Input tax deduction of deal partner fees paid for honouring reward - UK’s Upper Tribunal (Tax and Chancery Chamber)
  • EU VAT - Leasing a restaurant with all tangible assets is not transfer of business - Court of Justice of the European Union
  • EU VAT – No VAT on royalty payable based on resale right - Court of Justice of the European Union

Notification and Public Notice

  • All Industry Rates of duty drawback amendments effective from 20-2-2019
  • Advance authorisation - Removal of pre-import condition for IGST exemption
  • Clubbing of Authorisations issued only within 18 months - HoP amended

Ratio decidendi

  • Essential parts can be treated as complete goods for customs but not Motor Vehicle Act – Delhi High Court
  • Mere fact of excess wastage not sufficient to conclude non-use - Gujarat High Court
  • No duty on non-foundry item cleared after segregation from imported scrap - Gujarat High Court
  • Restricted imports without authorisation can be cleared on redemption fine - Larger Bench of Supreme Court
  • Drawback on re-exports - GR declaration when not required - Delhi High Court
  • Demand of anti-dumping duty for imports under Advance Authorisation - CESTAT Mumbai
  • Clarification issued by Ministry to assessee is not a circular - CESTAT Delhi

Central Excise and Service Tax


  • Service Tax exemption to services provided by ADB & IFC

Ratio decidendi

  • Warehouse in foreign land can be a place of removal to avail Cenvat Credit - CESTAT Mumbai
  • No recovery on the basis of self-assessment - Bank accounts defreezed - Bombay High Court
  • Cenvat credit on guest house - CESTAT’s formula set aside - Bombay High Court
  • CAG cannot carry compulsory service tax audit of private agencies, after GST - Gujarat High Court
  • Cenvat credit on maintenance charges for common area of business premises - CESTAT Delhi
  • Interest can accrue on refund of duty, not on restoration of Cenvat credit - CESTAT Mumbai
  • DTA clearance by EOU - Inclusion of basic customs duty not required - CESTAT Ahmedabad
  • Cenvat reversal on inputs cleared as such – FIFO system to be followed - CESTAT Ahmedabad
  • ‘Lead generators’ are not equivalent to ‘Insurance agents’ - CESTAT Mumbai
  • No suppression when non-maintenance of records found out by audit party - CESTAT Mumbai

Value Added Tax (VAT) and other Taxes

  • Sale of goods when in bonded warehouse, not exempt from CST - Bombay High Court
  • Sales tax on replacements during warranty period – Matter referred to Larger Bench - Supreme Court
  • Edible oil, vanaspati and sugar are ‘agricultural produce’ for market fee - Supreme Court
  • Market Fee leviable by State is not abolished after introduction of GST - Rajasthan High Court
  • No liability under VAT on consumables used in hospital for treatment - Kerala High Court

February, 2019/Issue-92 February, 2019/Issue-92

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