01 January 0001

Tax Amicus: June 2018

by Brijesh Kothary Nikhil Agarwal

GST and amortization – An unceasing connection

CBIC has recently clarified certain issues involving job work including the issue relating to tax implications on free of cost (FOC) supplies of moulds and the need for reversal of input tax credit (ITC) in such cases. The circular seems to take two different positions on the liability to pay tax by the OEM based on his terms of contract with the component manufacturer. According to the authors, the artificial restriction of barring ITC under Scenario 2 (where mould is to be procured by component manufacturer, but supplied by OEM on FOC basis), is contrary to the general principles under which the GST operates. Deliberating on availability of such ITC to the component manufacturer, it is observed that insertion of second proviso to Rule 37(1) of the CGST Rules may allow the component manufacturer to take ITC even when the payment towards value of supply and tax thereon, on account of the amount being added in terms of Section 15(2)(b) of the CGST Act, i.e., the value of the mould, is not paid to the OEM within 180 days from the date of his invoice. OEM can also generate a tax invoice for supply of mould...


Goods & Services Tax (GST)

Notifications and Circulars

  • Refund of ITC in case of inverted tax structure and refund to UIN agencies – Amendments in CGST Rules made retrospective
  • Unique Common Enrolment Number for transporters – 6th amendment of CGST Rules
  • Time limit to furnish return in Form GSTR-6 by ISDs extended till 31-7-2018
  • SEZs – Nature of supply of services thereto - Section 7(5)(b) of IGST Act will prevail over Section 12(3)(c)
  • Refund on exports – Restrictions under Rule 96(10) clarified
  • Refund in case of exports – CBIC clarifies issue when supplies shown in column 3.1(a) instead of in column 3.1(b) of Form GSTR-3B
  • Refund of unutilised ITC available to job workers in textile sector as output supply is the supply of job work service and not of fabrics
  • Inspection of goods in movement – Proof of inspection and time period for conclusion of proceedings revised
  • Moulds and dies provided free to unrelated component manufacturer is not ‘supply’
  • PSLCs and RECs classifiable under Heading 4907 and taxable @ 12%
  • Future contracts when liable to GST
  • Farmers not liable to GST on leasing of their land

Ratio decidendi

  • Order for seizure of vehicle appealable and not covered under CGST Section 121 – Calcutta High Court
  • Valuation of goods supplied to branches – Option of both provisos of Rule 28 available – AAR West Bengal
  • Works contract – Effect when supply and service contracts have cross-fall breach clause – AAR West Bengal
  • Agreements from single tender notification not separate contracts – AAR Karnataka
  • Transfer of entire business of one unit is supply of service and covered by exemption – AAR Karnataka
  • Renting of space different from providing warehousing service – AAR Gujarat
  • Printing of content on customer’s request is supply of service – AAR West Bengal
  • GST leviable on ‘Abhivahan Shulk’ and exempted on ‘Marg Sudharan Shulk’ – AAR Uttarakhand
  • Implants for joint replacements taxable @ 5% - AAR Kerala
  • Roof ventilators powered by wind and used for ventilation attract 18% tax – AAR Telangana
  • UK VAT – Negotiation of discount is supply of service - UK Upper Tribunal (Tax and Chancery Chamber)
  • UK VAT – Right to deduct input tax in case of incorrect invoice - Absence of actual or constructive knowledge of fraud on taxpayer’s part is sufficient - UK First-Tier Tribunal Tax Chamber
  • EU VAT – Exemption to be opted at the time of commencement of activity – CJEU



Notifications and Circulars

  • India set to increase import duty on certain goods from USA
  • Customs Regulations for audit at premises of importer/exporter replaced
  • Postal export of goods through e-commerce – New procedure prescribed
  • E-sealing mandatory from 1-8-2018 for movement of goods to/from warehouses
  • EOU – DTA clearance of specified services covered as ‘goods’
  • SFIS/SEIS benefit available to actual service provider and not aggregators
  • Digital Signature not required for online/digital payment through e-MPS
  • MEIS application for project exports – DGFT notifies procedure
  • DFIA exports – Single application required for exports from any EDI port
  • IGST refund on exports – Correction facility and officer interface
  • Duty free import of certain inputs in specified sectors, restored
  • FTP Appendix 3A – Scope of word ‘Duty’ clarified

Ratio decidendi

  • FTP benefit available even if Customs department delays exemption notification – CESTAT Mumbai
  • Job work imports – Benefit not deniable to imports made not free of cost – CESTAT Chennai
  • Project imports – Registration by importer not direct party to contract and classification under water supply project – CESTAT Mumbai
  • Show cause notice by DRI – Tribunal to decide dispute and not remand matter for re-adjudication after decision by SC – Delhi High Court
  • SAD refund not deniable even if words in invoice differ from that prescribed in Notification – Karnataka High Court


Central Excise and Service Tax


  • ‘Place of removal’ in Central Excise Section 4 clarified
  • Monetary limit for departmental appeals before Commissioner (Appeals)

Ratio decidendi

  • Pre-deposit under Excise Section 35F for second appeal includes deposit made for first appeal – Delhi High Court
  • Cenvat credit available to insurance firm on sum paid for repair of insured vehicle – CESTAT Chennai
  • Supplementary invoice - Interest on delayed duty payment when not payable – CESTAT Delhi
  • Cenvat credit – Bar of limitation when not applicable – CESTAT Delhi
  • Cenvat Credit not deniable applying any thumb rule/formula – CESTAT Delhi
  • Activity before giving land ownership right is self-service – CESTAT Delhi
  • Cenvat credit on scrap re-purchased from first stage dealer – CESTAT Chennai
  • Exposure fee paid to foreign banks for availing ECBs is ‘interest’ – CESTAT Mumbai
  • Manufacture of moulds for use within factory not covered under Design service – CESTAT Kolkata
  • Classification of vehicle designed to carry both goods and passenger – CESTAT Hyderabad


Value Added Tax (VAT)

Ratio decidendi

  • Tamil Nadu VAT – ITC not to be reversed for non-payment of tax by seller – Madras High Court
  • ‘Samosa’ classifiable as cooked food and not as ‘Namkeen’ – Uttarakhand High Court
  • US Sales Tax – Out-of-State online retailers liable to sales tax on goods sold within State – US Supreme Court


June, 2018/Issue-84 June, 2018/Issue-84

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