18 May 2024

Tax Amicus: March 2024


The ever-evolving advertising industry: Is GST ready for the same?
By Nupoor Agrawal, Nivedita Agarwal and Vanshika Gupta

Last few years have seen a huge surge in sports marketing, where companies sponsor leagues, display billboards during sports matches or display their logo on the players’ jersey. The article in this issue of Tax Amicus highlights that one needs to examine whether sports marketing is in the nature of ‘advertisement/sale of advertising space and time service’ or ‘sponsorship service’. According to the authors, considering the overlapping nature of advertisement and sponsorship services, taxing advertisement under forward charge and allowing full ITC of the expenses, while taxing sponsorship under reverse charge and disallowing credit of GST, is creating an artificial discrimination. They suggest that the government should clarify the scope of both kinds of services and additionally should also consider shifting liability under sponsorship services from mandatory reverse charge mechanism to an optional scheme, where supplier of service can opt to pay tax under forward charge.

Game-changing Customs and FTP changes: What you need to know after the 2024 Interim Budget
By Ratan Jain and Shobhit Jain

The second article in this issue of the newsletter discusses few recent changes which one needs to know under Customs and Foreign Trade Policy. The Ministry of Commerce has extended the RoDTEP benefit to Advance Authorisation holders, Export Oriented Units and units in Special Economic Zone, and has relaxed the mandatory Quality Control Order compliance for import of inputs under Advance Authorisation and by EOU, for use in exports. Highlighting the key observations from the changes, the authors raise few pertinent questions which need immediate attention of the exporters/importers, in respect of both the changes.

Goods and Services Tax (GST)

Ratio decidendi

  • Non-claim of ITC in GSTR-3B return is not fatal – Madras High Court
  • Interest on delayed refund is mandatory and is payable automatically – Claim by assessee is not required – Delhi High Court
  • Refund under Section 54 can be granted even in case where levy is held unconstitutional – Gujarat High Court
  • Refund of ITC on exports – Withholding of claims despite precedents and in absence of any change in circumstances, is wrong – Allahabad High Court
  • Refund due to inverted duty structure – Limitation, when amount set off against demands which subsequently set aside – Character of amount changed to tax recovered – Patna High Court
  • Cancellation of registration – Not mandatory for authorities to issue order within 30 days of reply to SCN – Delhi High Court
  • Provisional attachment order should disclose reasons/circumstances and grounds for issuance of such order – Telangana High Court
  • Demand – Section 74 is not applicable if tax paid under Section 73(5) before SCN – Telangana High Court
  • E-way bill – Furnishing of documents subsequent to interception does not prove absence of intention to evade – Allahabad High Court
  • No penalty for a typographical error in e-way bill if intention to evade absent – Mistake of more than 2 digits is also condonable – Allahabad High Court
  • Deposits made at 3 AM during search operation that lasted till 5 AM, is not voluntary – Amount to be refunded with interest – Delhi High Court
  • Demand – Assessee to be mandatorily provided opportunity under Section 73(5)/(8), providing for non-imposition of penalty when tax along with interest is paid within 30 days of notice – Kerala High Court
  • Appeal to Appellate Authority – Non furnishing of physical copies or deficiencies in documents uploaded is not material – Bombay High Court
  • Input Tax Credit is not available for construction of godowns meant for renting out – AAR Tamil Nadu
  • E-commerce – Receipt of commission as percentage of value of sales through one’s online platform would not qualify it as ‘agent’ – AAR Karnataka
  • ITC is not available of differential IGST paid after on-site audit by Customs authorities post clearance of imported goods – AAR Tamil Nadu


Notifications and Circulars

  • RoDTEP benefit extended to exports by Advance Authorisation holders and by EOU and SEZ units
  • Imports under Advance Authorisations, and by EOUs and SEZ units – Compliance with certain QCOs relaxed
  • Electric vehicles of minimum CIF value USD 35000 – 15% BCD and nil SWS if imported under Scheme to promote manufacturing of electric passenger cars in India
  • Free Trade Agreements – Fourth tranche of India-Mauritius CECPA and third tranche of India-UAE CEPA to be effective from 1 April 2024
  • Onions – Export prohibition extended beyond 31 March 2024

Ratio decidendi

  • Classification of goods imported in SKD condition – No authority to separate different parts and components – Supreme Court
  • Warehousing – Unloading of imported goods outside bonded warehouse but within factory premises – Customs duty when not payable – Supreme Court
  • Appeal to Appellate Tribunal – Limitation for review by Committee of Commissioners – Supreme Court
  • Adjudication of SCN – Period of limitation under Customs Section 28(9)(a)/(b) is mandatory and imperative – Jharkhand High Court
  • Power to issue supplementary show cause notice implicit in Section 124 even before insertion of second proviso – Calcutta High Court
  • Pumps for lotion dispenser are classifiable under TI 8424 89 90 and not under Headings 8413 and 9616 – CESTAT New Delhi

Central Excise, Service Tax & VAT

Ratio decidendi

  • Valuation – Additional consideration – Notional cost of specification drawings received free of cost by the manufacturer from the buyer, before issuance of letter of intent identifying former as the supplier, is not includible – CESTAT New Delhi
  • Manufacture – Strapping together of tyres, tubes and flaps for catering to replacement market, is not covered under Central Excise Section 2(f)(iii) – CESTAT Mumbai
  • Manufacture – Affixing revised MRP tags at showrooms on goods cleared initially from area-based exemption units, is not ‘deemed manufacture’ – CESTAT Chennai
  • Sabka Vishwas (LDR) Scheme – Filing of rectification application is not at par with filing of appeal – Case not to be considered under ‘pending appeal’ – Madras High Court
  • Lease of wagons by private companies to Railways under various schemes is not covered under Supply of Tangible Goods service – CESTAT Larger Bench
  • Cenvat credit is not available on inland haulage charges from ICD to the seaport if LEO issued at ICD in case of FOB exports – CESTAT New Delhi

March 2024/Issue-153 March 2024/Issue-153

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