01 January 0001

Tax Amicus: June 2017


GST - Old order changeth yielding place to new:

India is on the verge of ushering in a tax revolution with GST marking its entry in the Indian economic and political horizon. . GST being a great leveller, everyone in the chain pays the same GST, takes credit of such GST paid, uses such credit to offset his tax liability, files same set of returns, etc. Tracing the journey of credit available to manufacturers, service providers and dealers – from the Modvat era to the GST regime, the article points out that a few excise concepts are being carried over to GST, raising doubt as to whether the flow of credit would be seamless. Further, since GST commences with multiple rates – both for goods and services, one may witness re-enactment of few chapters of drama on classification issues. The new Valuation Rules are also tilted in favour of the exchequer. On the positive side, since the new regime is system-driven, it is expected to be less painful in terms of compliances, atleast once the systems and processes settle down. The author bids good bye to Central Excise, Service Tax and VAT and welcomes GST with the hope that the landmark tax reform creates history by conferring more benefits to the industry, lower price to consumers and more revenue to the exchequer.


Goods and Services Tax (GST)

  • GST is set for launch on 1st of July with certain provisions already coming into force from 22nd of June. While exemption has been granted from registration to suppliers where tax is fully payable by the recipient, last dates for filing of Returns have been relaxed for first two months. Further, threshold limit under Composition Levy has been enhanced for certain special category States. More updates, GST Acts, Rules and other documents related to GST, are available at www.gst.lakshmisri.com


Central Excise

Ratio decidendi

  • Availability of exemption notification – Appeal not maintainable before High Court – Uttarakhand High Court
  • Valuation – Non-inclusion of part of advertisement cost incurred by dealer – CESTAT Chennai
  • Refund of excess duty by payment to bank towards discharge of loan, and not in Cenvat account, if assessee a sick company - Andhra Pradesh and Telangana High Court
  • Area based exemption not deniable when only portion of boundary wall of factory extended to unspecified Khasra – CESTAT Delhi
  • Remission of duty not available if procedure prescribed under CBEC Manual on Supplementary Instructions not followed – Gujarat High Court
  • Milk treat containing cocoa butter and not cocoa classifiable under TI 1905 32 19 – CESTAT Delhi
  • Exemption to products made up of cotton available to full tent including value of non-cotton parts – CESTAT Allahabad
  • No interest payable in the absence of duty liability even when duty paid on being convinced by Department – CESTAT Mumbai
  • Payment of duty on net quantity, after deducting value of goods received back during month, correct – CESTAT Mumbai
  • Pre-deposit for preferring second appeal to Tribunal required over and above pre-deposit made for first appeal – CESTAT Larger Bench
  • Recovery of dues on the basis of lease agreement for one of the properties of arrears holder, not sustainable – CESTAT Delhi


Service Tax

Ratio decidendi

  • Purchase of foreign exchange on own account for ultimate transfer to customers not covered under foreign exchange broking – CESTAT Delhi
  • Putting up and managing gas storage facility in industrial unit when not covered under infrastructural support service – CESTAT Delhi
  • Leasing of equipment and facilities covered under BSS – CESTAT Delhi
  • Exemption to health care services by clinical establishments – Scope – Andhra Pradesh High Court
  • Training by project implementing authority on behalf of government covered under BAS and eligible for exemption – CESTAT Mumbai
  • Construction of independent houses as part of larger number of houses sharing common facilities, not covered under Construction of Residential Complex service – CESTAT Delhi
  • Consideration received for sale of air tickets purchased from another travel agent not covered under BAS – CESTAT Delhi
  • Threshold exemption – Computation of aggregate value – Only net value to be considered – CESTAT Allahabad



Circulars and Trade Notices

  • PAN of entity to be used for IEC
  • Drawback – Exemption from drawal of samples extended to Tier- I AEO
  • Manual filing of Bill of Entry – Procedure streamlined

Ratio decidendi

  • Exemption – Production of Certificate of Origin after filing of B/E, not fatal – CESTAT Chandigarh
  • Refund – Proof of absence of unjust enrichment in case of exports – CESTAT Bangalore
  • Valuation – Mere reference to NIDB data not enough for enhancement of value – CESTAT Delhi
  • Opinion of examiner not enough to establish mis-declaration – CESTAT Mumbai
  • No penalty under Customs Section 114 on CHA for lapses in verification of exporter – CESTAT Delhi
  • Scrap - Exemption under Notification No. 20/99-Cus. – Conditions – CESTAT Bangalore
  • Barges not having capacity to navigate not classifiable under Heading 8901 – CESTAT Bangalore
  • Wires of Nickel Alloy covered under phrase “nickel and articles of nickel” – CESTAT Mumbai


Value Added Tax (VAT)

Act, Ordinance and Notification

  • Madhya Pradesh - Ordinance for settlement of old arrears under Madhya Pradesh General Sales Tax Act, 1958, Madhya Pradesh Vanijyik Kar Adhiniyam, 1994, Madhya Pradesh Vat Act, 2002, and Central Sales Tax Act, 1956, issued
  • Haryana Alternative Tax Compliance Scheme for Contractors, 2016 amended
  • West Bengal Tax on Entry of Goods into Local Areas Act, 2012 – Amendments made in West Bengal Sales Tax (Settlement of Dispute Act, 1999) for settlement of disputes

Ratio decidendi

  • Appy Fizz classifiable as fruit juice based drink and not as aerated soft drink – Supreme Court


June, 2017/Issue-72 June, 2017/Issue-72

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