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August 2019

Tax Amicus: June 2019


GST 3.0 – The way forward!
by Brijesh Kothary

GST is entering third year and priority of the government is now shifting from implementation to securing revenue. However, what has taken authorities by surprise is the increase in cases of tax evasion and decline in filing of returns by entities. The first article in this issue of Tax Amicus hence deliberates on some of the tools at the hands of the government which are in the pipeline, to make the entire process simpler as well as accountable. The government is in the process of bringing in tools like ‘Electronic invoicing system’ to combat tax evasion, and RFID tag readers to reduce manual intervention for verification of goods. Tools like geo tagging have been introduced making it compulsory to furnish latitude and longitude coordinates of registered office of company. Generation of e-way bills is also being restricted if returns are not filed. Use of data analytics to find patterns indicative of tax evasion is also on the cards. According to the author, it will be a tough challenge for the GST Council to strike a balance between demand for rationalisation of taxes and government’s agenda to boost growth and revenue…


Recourse against order passed by Appellate AAR under GST
by Nagesh Jadhav


An applicant is entitled, under the provisions of GST law, to seek advance ruling on specific points. If the applicant or the jurisdictional authority is not satisfied with the ruling, appeal may be filed with Appellate Authority for Advance Rulings. . The same is binding and there is no further mechanism in the GST law in case of grievances regarding AAAR ruling. The second article discusses the recent Bombay High Court judgement in the case of JSW Energy Limited where the High Court has refused to interfere with the AAAR’s order and specifically noted that merely because the statute has not provided any further remedy for appeal, it does not become a fit case for further appeal before the High Court. In exercise of powers of judicial review, the Court held that it is mainly concerned with issues like whether decision-making authority exceeded its jurisdictional limits, committed errors of law, acted in breach of principles of natural justice or arrived at a decision which is unreasonable or vitiated by perversity. According to the author, considering that there is no statutory appellate remedy, implications should be carefully examined before taking a decision on filing of such applications…

Goods & Services Tax (GST)
Notifications and Circulars

  • 35th Meeting of GST Council – Decisions on rate changes and time extension for various forms
  • Blocking of e-way bills on non-filing of returns – Implementation of Rule 138E postponed till 21st August
  • Annual Return – Clarifications on filing
  • New GST Returns – Ministry of Finance unveils transition plan
  • Kerala Flood Cess will be imposed from 1st of July 2019

Ratio decidendi

  • IGST not payable on supplies from Duty Free Shops at International Airport - Allahabad High Court
  • ITC available of inputs and services used in construction of mall rented out - Orissa High Court
  • Principal Bench of GST Tribunal at Lucknow and not in Prayagraj - Allahabad High Court
  • Registration – Deemed registration within 3 days when not applicable – Kerala High Court
  • GST Form TRAN-1 – High Court directs department to provide certain facilities - Delhi High Court
  • GST fraud - Provisions of UP GST Act not override Indian Penal Code - Allahabad High Court
  • No profiteering if sales in pre-GST era absent – NAA
  • No profiteering when tax rate increased post-GST, cost of non-creditable tax not passed on and comparable price absent – NAA
  • Exemption to construction of Inland Waterways Terminal for IWAI - West Bengal AAAR
  • ITC of tax paid on lease rent during preoperative period when not available - West Bengal Appellate AAR
  • Diagnostic service provider not liable to take registration under GST - AAR Kerala
  • Delayed payment charges in respect of electricity charges, not liable to GST - AAR Rajasthan
  • No ITC on motor vehicles used for providing renting of motor vehicle service - West Bengal AAR
  • TDS not deductible in respect of specified supplies to Municipal Corporation - AAR West Bengal
  • EU VAT – Time of supply – Acceptance of supply also important – Court of Justice of the European Union

Customs
Notifications and Circulars

  • India implements tariff retaliatory measures against USA
  • Customs (Supplementary Notice) Regulations, 2019 notified
  • Manufacture and Other Operations in Warehouse Regulations, 2019 notified
  • IGST refund on exports – CBIC prescribes mechanism to verify ITC
  • Smuggling of foreign currency – Guidelines for launch of prosecution revised
  • Export benefits – RCMC required only from one Export Promotion Council
  • FTP– No requirement of destruction certificate from excise/customs authorities
  • Flash sale price acceptable for Customs valuation purposes – WCO adopts Advisory Opinion 23.1
  • Import policy for Bio-fuels relaxed

Ratio decidendi

  • Valuation – Doubt to justify enquiry to be based on certain reasons - Supreme Court
  • Customs duty can be demanded only from importer if owner not redeeming goods - Bombay High Court
  • Cosmetic imports – No exemption under Rule 132 of Drugs and Cosmetic Rules - Bombay High Court
  • No ADD on saccharin salts – Notification to be strictly interpreted - CESTAT Mumbai
  • Classification of hearing aid connectors – CJEU interprets Chapter Note 2(a) of Chapter 90 – Court of Justice of the European Union
  • Classification of vehicles – Intended use when to be considered - US Court of Appeals for Federal Circuit

Central Excise and Service Tax

Circular

  • Declared service concept not applicable on service covered in Negative List

Ratio decidendi

  • Demand of Service tax - Pre-notice consultation mandatory - Delhi High Court
  • Service tax not liable on transfer of copyright in perpetuity - Madras High Court
  • No period of limitation for filing stay applications - Bombay High Court
  • Cenvat credit – Limitation – Amendment to Rule 4(1) not retrospective - Delhi High Court
  • Hospitals not liable to pay service tax under business support services - CESTAT Mumbai
  • No liability on goods destroyed before clearance – Not material if remission sought or not - CESTAT Hyderabad
  • No liability under Section 73A of Finance Act on service tax paid under RCM and collected from agent - CESTAT Mumbai
  • Reversal of Cenvat credit merely because value of goods diminished, not required - CESTAT Delhi
  • No bar on interest on delayed interest even in absence of provisions - CESTAT, Delhi
  • Cenvat credit of tax paid, though not payable, not deniable - CESTAT Mumbai
  • No service tax on TDR if land acquired without transfer of ownership - CESTAT, Chandigarh
  • Sub-contractor liable to pay service tax even if main contractor had paid tax on gross amount - Larger Bench of CESTAT
  • Multi-storey parking by development authority – No service tax on construction thereof - CESTAT Allahabad

Value Added Tax (VAT)

Ratio decidendi

  • Tamil Nadu General Sales Act – First sale of imported item - Madras High Court
  • Skimmed milk powder is not same as milk food - Madras High Court

June, 2019/Issue-96 June, 2019/Issue-96

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