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September 2019

Tax Amicus: July 2019


Better late than never – A sigh of relief for real estate developers
by Narendra Kumar Singhvi


The first article in this issue of Tax Amicus highlights the impact of recent decision of the Gujarat High Court in the case of Principal Commissioner v. Alembic Limited, which has affirmed the decision of the CESTAT relating to Cenvat credit on portion of the input services used in development of the real estate project, to the extent of unsold units till receipt of the completion certificate. The Tribunal had held that the entitlement to Cenvat credit is to be determined at the time of receipt of input services and merely because the output services became exempt later on, the credit on input services received earlier is not deniable. The High Court judgement has come as a sigh of relief for the real estate developers, although, with the introduction of GST, the window to avail Cenvat credit under earlier regime has been closed. According to the author, though specific provisions have been enacted under the GST regime for calculation of ITC required to be reversed, the doubts over interpretation of statutory provisions therein still loom large…


Coverage of redemption fine under Sabka Vishwas (Legacy Dispute Resolution) Scheme
by Atul Gupta


The Central Government has proposed a scheme termed as Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 to reduce/wipe out the litigation pending at various stages. At present, amount of fine in lieu of confiscation of goods has not been included either in tax dues and amount in arrears or the amount in respect of which grant of relief has been proposed under the scheme. The department may adopt an interpretation that such matters, in which even though an insignificant amount in respect of redemption fine is involved, will be outside the scope of the proposed scheme. The author expects that the Central Government may take care of such issue and will make appropriate changes in clause 128(1)(a) to include the amount of redemption fine also in the relief granted, so that the scheme may achieve its intended purpose…

Goods & Services Tax (GST)
Budget 2019 – Amendments proposed in CGST Act

  • Penalty for profiteering under GST proposed
  • Interest on delayed payment to be paid only on tax paid by debiting cash ledger
  • New 3-member National Appellate Authority for Advance Rulings proposed
  • Refund of SGST by Central Government
  • Registration under GST – Authentication using Aadhaar number being made mandatory
  • Transfer an amount from one head to another in the electronic cash ledger

Notifications and Circulars

  • GST returns and declaration – Due dates notified
  • Supply of Information Technology enabled Services clarified
  • GST on taking goods out of India for exhibition, clarified
  • Treatment of additional or post-sales discounts clarified
  • Refund processing by authorities to whom taxpayer not assigned
  • Place of supply of services at port and on goods temporarily imported
  • GST on additional/penal interest for delay in payment of EMI clarified
  • IGST refund to exporters – ITC verification only of few risky exporters
  • Australia introduces penalty on Director for company’s GST liabilities

Ratio decidendi

  • Return in Form GSTR-3B is temporary and not in lieu of return in Form GSTR-3 – Gujarat High Court
  • IGST refund can be withheld only as per CGST Rule 96 – Gujarat High Court
  • Property to be attached only after notice and assessment – Gujarat High Court
  • Dream 11’s fantasy sports is not gambling – GST liability clarified – Bombay High Court
  • Transition of credit of Education Cesses – Gujarat High Court issues notice to UoI
  • Anti-profiteering – No profiteering when ITC reversal more than excess realization – National Anti-profiteering Authority
  • Anti-profiteering – Profit or loss has no relevance in proceeding under Section 171 - National Anti-profiteering Authority
  • Subvention received to reduce interest rate for customers chargeable to GST – AAR Tamil Nadu
  • ITC available on vehicles used for demo by car distributors – AAR Goa
  • Gaming zone in a mall is not an ’amusement park’ – AAR Maharashtra
  • ITC is not available on goods supplied free under promotion scheme – AAR Maharashtra
  • Taxability of extra goods supplied without additional consideration – AAR Maharashtra
  • Valuation when goods moved between distinct entities – AAR Maharashtra
  • Compulsory registration if GTA services received though goods supplied exempt – AAR Maharashtra
  • Importer without godown can import goods in Odisha with Maharashtra GSTIN – AAR Maharashtra
  • UK VAT – Test for single or two different services - UK’ s Upper Tribunal (Tax and Chancery Chamber)
  • UK VAT on deals offering free items – Apportionment of payment received – UK’s Upper Tribunal (Tax and Chancery Chamber)

Customs
Budget 2019 – Amendments proposed in Customs law

  • Penalty for obtaining and utilizing FTP instruments by fraud
  • Provisional attachment of bank account
  • Arrest of Customs offenders outside India
  • Countervailing duty to be imposed in cases of circumvention of Countervailing duty

Notifications and Circulars

  • Jurisdictional authority for filing SEIS application clarified
  • Customs duty on reimport of jewellery exported under bond for exhibition
  • Redemption of authorisations - DGFT stresses issuing of one consolidated deficiency letter
  • Procedure relaxed for Transport and Marketing Assistance for specified agriculture products

Ratio decidendi

  • Goods cleared for home consumption do not retain identity of imported goods –Gujarat High Court
  • Valuation – No indication for how market survey conducted, is wrong – CESTAT Delhi
  • Mere enhancement of value not carries stigma of mis-declaration for penalty –CESTAT Mumbai
  • Penalty on CHA under Customs Section 114 is incorrect – CESTAT Mumbai
  • Submission of EO Discharge Certificate is only a procedural condition – CESTAT Bangalore
  • Computer with integrated CPU, VDU and virtual keyboard is portable PC –CESTAT Mumbai
  • Safeguard duty on solar cells –High Court vacates interim relief against levy –Gujarat High Court
  • Part of machine – Conditions for classification as ’part’ - Court of Justice of the European Union

Central Excise and Service Tax

Budget 2019

  • Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019

Ratio decidendi

  • Refund of credit of Swachh Bharat Cess on export of services, available –CESTAT Mumbai
  • Discount from car dealer to bank disbursing loan is not for any service – CESTAT Chennai
  • Cenvat credit of tax paid on demurrage charges is available – CESTAT Mumbai
  • Cenvat credit of service tax paid for insuring deposits – Issue referred to Larger Bench –CESTAT Chandigarh
  • Export of service - Channel carriage fees to be considered as ’intermediary’ –CESTAT Mumbai
  • Refund - Benefit of Supreme Court decision cannot be taken after levy attains finality – Kerala High Court
  • No refund of Cenvat credit on closure of factory –Larger Bench of Bombay High Court
  • Cereal bar not containing sugar or jaggery can be classified as sweet meat –CESTAT Hyderabad
  • Valuation – Related person – Mutuality of interest important – CESTAT Ahmedabad

Value Added Tax (VAT)

Ratio decidendi

  • Sales Tax exemption or deferment – Availability to units after re-organization of States – Larger Bench of Supreme Court
  • No provision of deregistration in CST, dealer can also register in GST – Gujarat High Court
  • Input Tax Credit (ITC) not a matter of right but concession – Bombay High Court
  • Property tax payable for use of municipal land for laying cables - Chhattisgarh High Court

July, 2019/Issue-97 July, 2019/Issue-97

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