01 January 0001

Tax Amicus: May 2017


GST liability on transfer/disposal of assets in lieu of tax liability:

European Union’s Court of Justice has recently held that transfer of tangible property to the State Treasury in settlement of arrears of taxes is a transaction not subject to VAT. Observing that obligation of the taxpayer (debtor) to make payment to the tax authorities (creditor), is unilateral in nature, it was held that such transaction cannot be considered to be ‘supply for a consideration’. The GST law in India, as would come into effect from 1st of July, is not clear on such liability. It is doubtful if provisions of Schedules I and II relating to transfer/disposal of business assets, or phrase ‘actionable claim’ in Schedule III could be relied by the Revenue department or the assessee in future and divergent views may be taken.


Goods and Services Tax (GST)

  • GST rates for both goods and services and the revised draft of 7 procedural GST Rules placed in public domain by CBEC


Central Excise

Ratio decidendi

  • Valuation - Freight from principal manufacturer to job-worker’s premises not to be added in invoice value when same not shown separately – CESTAT Mumbai
  • Valuation - Freight charges not necessarily to be reflected in excise invoice – CESTAT Allahabad
  • Valuation - Payment of 10% under Cenvat Rule 6(3)(b) not to be deducted from price of exempted goods – CESTAT Larger Bench
  • Cenvat credit on returned goods – No requirement for providing reasons for return and evidence of further used for being remade – CESTAT Allahabad
  • Cenvat credit available on rock bolts used in captive mines as capital goods – CESTAT Delhi
  • Manufacture – Cutting of old tyres to produce two or more pieces of cut-tyres is not manufacture – Delhi High Court Larger Bench
  • Manufacture - Gear teeth cutting of machined blanks amounts to manufacture – CESTAT Mumbai
  • EOU - No requirement to reverse credit on input services received prior to de-bonding – CESTAT Delhi
  • Heena powder in retail pack for use on hand is classifiable under Heading 1401 – CESTAT Allahabad




  • EO discharge certificate – Customs to keep matter in abeyance till DGFT decision

Ratio decidendi

  • Valuation – Value cannot be rejected for reasons that importer used name of another firm to avoid sales tax, imports were made from trader and not from manufacturer, and the value declared was even less than the value of steel scrap – CESTAT Delhi
  • Conversion of shipping bill – Limitation prescribed is not correct – CESTAT Mumbai
  • Accounting of goods imported under Customs (IGCRDMEG) Rules – Principles of Rule 7A applicable retrospectively – CESTAT Allahabad
  • Confiscation – Customs Section 123 does not require explanation of source of source – CESTAT Allahabad
  • EOU – Imported inputs used in production of non-excisable goods cleared in DTA liable to duty – CESTAT Hyderabad
  • Jurisdiction in respect of rigs operated in Exclusive Economic Zone (EEZ) – CESTAT Mumbai
  • Auction of goods by Customs during pendency of appeal, without notice to importer is not valid – Delhi High Court
  • Due diligence by CHA – Inquiry into genuineness of IE Code, not covered – Delhi High Court


Service Tax

Ratio decidendi

  • Exemption – Benefit of exemption notification available even to service recipient – CESTAT Delhi
  • Cenvat credit on telephones installed at schools maintained in close vicinity of factory, available – CESTAT Allahabad
  • Penalty - Longer duration of tax liability does not bar closure of case under Section 73(3) of Finance Act, 1994 – CESTAT Delhi
  • Refund of Cenvat credit available even when premises of service provider not registered – Madras High Court
  • Reimbursable expenses – Evidence for non-inclusion in value of service provided – CESTAT Delhi
  • Input credit distribution – Apportionment of inadmissible credit based on turnover of unit, not correct for period prior to introduction of Cenvat Rule 7(d) – CESTAT Allahabad
  • Rebate on exports available for Rent-a-cab service used for transporting employees for conference – CESTAT Allahabad
  • Export of BAS – Determination of destination of service – CESTAT Delhi
  • STGU service – No liability on rental of containers transporting gas, utilized further in manufacture – CESTAT Mumbai


Value Added Tax (VAT)


  • Amnesty Schemes under Rajasthan VAT and Rajasthan Entry Tax extended

Ratio decidendi

  • Sales tax not payable on service tax component even when composition scheme opted – Tribunal
  • ITC on goods used in construction of silos is available – Allahabad High Court


May, 2017/Issue-71 May, 2017/Issue-71

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