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March 2019

Tax Amicus: January 2019


Inverted duty structure in exports – Perplexity in refund
by Chaitanya R. Bhatt & Saurabh Malpani


The provisions of CGST provide appropriate relief via refund that can be applied under section 54(3) for the accumulated credit in case of inverted duty structure, but there are also provisions to safeguard revenue against double benefit that could be claimed by the exporters. One of these provisions does not allow refund of accumulated credit when exporter claims refund of IGST paid on exported goods [third proviso to Section 54(3)]. A literal reading of the above proviso would make the exporter ineligible for refund of his credits lying unutilized where the exporter has paid IGST on goods exported and then has claimed refund thereof. The Government has always encouraged exports therefore it can be argued that the aforesaid safeguard should ideally be restricted only to such an amount as has been utilized for payment of IGST on outward supply and claimed as refund and the remaining balance of credit should be granted as refund. It can be contended that the third proviso to Section 54(3) should be read in context and not literally…


Treatment of value of moulds and tools in GST regime
by Astha Sinha, Nivedita Agarwal & Nirav Karia


The second article in this issue of Tax Amicus aims to analyse confusion relating to the inclusion of amortised value of tools and moulds in the supplies made by the contract manufacturers. The amortized value of moulds, dies and jigs provided free of cost by the OEM to the contract manufacturers (CM) was deemed to be an “additional consideration” for the supply made by the CM in the excise regime whereas in the GST regime, GST is payable on the value of supply as determined under CGST Section 15. According to CBIC Circular No. 47/21/2018–GST, value of the moulds and dies are to be included in the value of supplies by CM if the contract between CM and OEM specifies that CM is liable to supply moulds but the same have been supplied by the OEM. Hence, contractual arrangements may have to be examined to determine the inclusion of the value of moulds in the supplies of CM. Highlighting contrary rulings of Authority for Advance Rulings, the author believes that it is imperative for the contract manufacturing industry to revisit their agreements with the OEMs…

Goods & Services Tax (GST)
Notifications and Circulars

  • GST registration threshold for supply of goods proposed to be doubled with effect from 1-4-2019
  • GST Composition Scheme set to be broadened
  • Cenvat credit of Service Tax available as transitional credit under GST
  • Exemption to services provided by ADB and IFC clarified
  • Exemption to IIMs clarified
  • Liability on services by business facilitator or business correspondent to a banking company clarified
  • Printing of pictures falls under Service Code 998386 and liable to GST @18%
  • No GST on supply of food and beverages by educational institution itself
  • E-invoices issued as per Information Technology Act – Signature not required
  • Late fee for delayed filing of GSTR-1, 3B and 4 for specified period waived
  • Effective date for denial of Composition scheme clarified
  • Time for completion of migration process extended
  • No GST on inter-State movement of goods on own account
  • Export of service when part of service provided by another foreign supplier
  • GST valuation – Inclusion of TCS collected under Income Tax
  • No penalty under Section 73(11) for delayed filing of GSR-3B return
  • Refund procedure simplified
  • Extension of time limit for availing ITC for supplies in FY 2017-18
  • Annual return – Due date for filing extended till 30-6-2019
  • GSTR-8 for specified months – Due date for filing extended

Ratio decidendi

  • Detention of goods not permissible over minor detectable errors – Kerala High Court
  • Detention – Section 129 applicable to transporter also – Kerala High Court
  • Sale to international passenger from shop at domestic airport attracts GST- Bombay High Court
  • Supplies to duty-free shop at airport liable to GST, as not ‘export’- Madhya Pradesh High Court
  • Seizure due to expiry of e-way bill, when wrong – Allahabad High Court
  • Purchase in different State, and subsequent transportation – Kerala High Court
  • Anti-profiteering – Operational difficulty no ground for disobedience – NAA
  • Place of supply of imports made through different State – AAR Maharashtra
  • Sale of business as going concern – Direction to seller to transfer business to affiliates is ‘supply’ – AAR Maharashtra
  • Construction service – Occupancy certificate is ‘completion certificate’ – AAR Karnataka
  • Service to other units by employees at corporate office constitutes ‘supply’ – AAAR Karnataka
  • Bill-to-ship-to mode not limited to only three parties – AAR Rajasthan
  • Service not ‘pure service’ when goods used significantly – AAR Odisha
  • Transport service accompanying supply of food to attract 18% GST – AAR Telangana
  • ITC of IGST paid in Bill-to-ship-to model, available – AAR Rajasthan
  • Transfer of development rights to a developer constitutes ‘supply’ – AAR Karnataka
  • UK VAT – Whether apportionment of single supply be allowed for exemption – Matter referred to CJEU
  • EU VAT – CJEU clarifies chargeable event in case of payment in instalment

Customs
Notifications and Circulars

  • Documents for online IEC applications, clarified
  • IGST refund on exports – Resolution of some EGM related errors
  • EPCG Scheme – List of products importable revised
  • Advance authorisation available to other exporters based on ratified norms
  • Re-export/return of imported SCOMET items – Procedure prescribed
  • Customs duty reduced on specified imports from Malaysia, ASEAN, South Korea and Japan
  • Import duty hike – Retaliatory measures against USA once again postponed
  • Capital goods for distribution of power not importable under EPCG
  • Peas import restrictions extended till 31st of March 2019

Ratio decidendi

  • Valuation – Assessing officer to give reasons for rejecting value – Supreme Court
  • Exemption – Use in any other project but for specified work, does not bar exemption – CESTAT Mumbai

Central Excise and Service Tax

Ratio decidendi

  • Cenvat credit on inputs used in excess of what prescribed when available – CESTAT Kolkata
  • Excise duty based on different MRPs affixed on different packages, correct – CESTAT Kolkata
  • Distribution of Cenvat credit to other units optional till 2016 – Bombay High Court
  • Refund – Limitation – Time taken by Ministry to be excluded – Bombay High Court
  • Exemption to sulphuric acid used for zinc sulphate – Matter referred to Larger Bench – CESTAT Chandigarh
  • Exemption to services used by SEZ and authorised by UAC – CESTAT Chennai
  • Refund when price reduced subsequent to clearance – CESTAT Mumbai

Value Added Tax

Ratio decidendi

  • Classification – Words ‘in all its forms’ cover goods made of basic material – Supreme court

January, 2019/Issue-91 January, 2019/Issue-91

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