01 January 0001

Tax Amicus: January 2017


Inter-State supplies under Model IGST Law - Treatment of FOR & Ex-works supplies

One of the perennial issues in taxation of goods is the determination of the nature of transaction as inter-State sale subject to Central Sales Tax or local sale subject to VAT. First article in this issue of Tax Amicus while deliberating on the provisions contained in Model IGST Law, considers various scenarios of supply involving movement of goods. Further, pondering over the question as to whether ex-factory or ex-works supplies can be treated as intra-State supply, the author is of the view that interpretation of the present provisions may result in various complications and contradictions, including that involving availability of input tax credit. It is stated that Model IGST Act in its current form, though clearly had intended to and seeks to address the problem, has only ended up creating more peculiar ones.

Challenges in availment of Input Tax Credit under GST With the introduction of GST whole concept of availment of input tax credit (ITC) is set to change from present system of availment of credit as part of self-assessment scheme to electronic matching of credit with supplier wise and invoice wise matching of details. Second article in this issue of Tax Amicus considers various circumstances like availability of credit on advance payments, availability only on receipt of last lot of goods, payment to supplier, utilization of capital goods partly for exempted supplies, and GST paid in different State as per the provisions contained in Revised Model GST Law. According to the author since input tax credit chain could be stuck in certain cases, diluting the ultimate objective of GST, it is hoped that the government will come out with appropriate changes in the final law and rules.

Goods & Services Tax (GST)

  • CBEC commences enrolment for Central Excise & Service Tax assessees


Central Excise


  • Central Excise Tariff amended with effect from 1-1-2017 to reflect changes made in HSN

Ratio decidendi

  • Valuation - Non-mention of turnover and cash discounts in invoice not to lead to their disallowance – CESTAT Delhi
  • Manufacture - Process of production of ‘isolated soya protein’ from de-oiled cake amounts to manufacture – CESTAT Delhi
  • Valuation - Transportation charges not includible when goods supplied to self at site –CESTAT Mumbai
  • Refund - No unjust enrichment when excess duty paid on clearances from factory to depot than on actual sale value charged from depot – CESTAT Mumbai
  • Cenvat credit on steel items used for fabrication of items embedded to earth and laying foundation and for supporting structures, available – CESTAT Delhi
  • Cenvat credit available in case of change in name of a consignee in invoice – P&H High Court
  • Cenvat credit when captive power plant transferred to another entity – No amount payable under erstwhile Rule 3(4) – CESTAT Delhi
  • Exemption under Notification No. 67/95-C.E. and obligation under Cenvat Rule 6 – CESTAT Mumbai
  • Food processor basic unit along with accessories to be assessed together and chargeable to duty on MRP basis – CESTAT Delhi
  • 'Fly ash' formed during production of electricity not ‘manufactured’ – Madras High Court



Notifications and Circulars

  • Customs Tariff amended with effect from 1-1-2017 to incorporate changes made in HSN
  • FTA and Comprehensive Economic Partnership/Cooperation Agreements – Exemptions revised in respect of imports from ASEAN, Korea, Malaysia and Japan

Ratio decidendi

  • Valuation – Royalty in respect of goods manufactured in India, not includible – CESTAT Delhi
  • Valuation - Section 14 not applicable in respect of goods already exported – CESTAT Allahabad
  • Refund available when appeal against assessment absent in a case involving non-claim of exemption – CESTAT Delhi
  • Valuation - NIDB data is not substitute for evidence – CESTAT Chennai
  • Refund of SAD available even when actual user condition for goods imported not complied with – CESTAT Delhi
  • Drawback not deniable based on notification contrary to provisions in Customs Act and Drawback Rules – CESTAT Delhi
  • SCN required before prohibiting Customs Broker to work in specified jurisdictions – CESTAT Delhi
  • Classification of goods - No mis-declaration when classification wrongly declared – CESTAT Delhi
  • Litigation policy for appeal to Tribunal – Individual bills of entry to be considered – CESTAT Delhi


Service Tax

Ratio decidendi

  • Cenvat credit on input service distributed by head office, attributed to product manufactured in another factory, admissible – CESTAT Mumbai
  • Cenvat credit for construction of drain in and around factory, admissible – CESTAT Delhi
  • Refund claim – Limitation in case of issuance of credit notes – CESTAT Delhi
  • Suo motu credit in Cenvat account when not fatal – CESTAT Chandigarh
  • Refund of Cenvat credit when claims not filed on quarterly/monthly basis – CESTAT Bangalore
  • Import of services – Receipt of service for use in relation to business or commerce – CESTAT Mumbai
  • Freight margin recovered from customers by logistic service provider, when not taxable – Authority for Advance Rulings
  • Real Estate Agent service – Taxability of ‘administrative charges’, ‘restoration charges’ and ‘transfer charges’ – CESTAT Delhi
  • BAS – Brand promotion in advertisement – CESTAT by majority order allows assessee’s appeal


Value Added Tax


  • Rajasthan - Voluntary Amnesty Scheme for Entry Tax notified
  • Odisha – Rate of tax under Composition Scheme reduced

Ratio decidendi

  • Entry tax on goods brought to Uttar Pradesh from outside through e-commerce – Allahabad High Court grants interim stay
  • Sale from Customs bonded warehouse is not sale in course of import – VAT payable – Authority for Advance Rulings
  • SIM replacement and Lease Line Charges not liable to VAT – Madhya Pradesh High Court


January, 2017/Issue-67 January, 2017/Issue-67

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