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July 2019

Tax Amicus: May 2019


ITC reversal on sale of used capital goods
by Tushar Mittal


GST law is moving towards its second anniversary yet most taxpayers are facing challenges in implementation. In the article in this issue of Tax Amicus, the author discusses two separate provisions in law for registered persons who are selling capital goods after use, on which ITC has been taken. First method is prescribed under Rule 40(2) which states that ITC in case of supply of capital goods and plant and machinery shall be calculated by reducing five percentage points for every quarter or part thereof from date of issue of invoice. The other Rule 44(6) read with Rule 44(1)(b) of the CGST Rules also prescribes a method of determining an amount for the purpose of Section 18(6), by stating that ITC involved in remaining useful life in months shall be computed on pro rata basis, taking useful life as five years. These two provisions tend to produce different results when quantum of ITC reversal is computed. But department may adopt provision which is more beneficial to it. If such interpretation is adopted, taxpayers (sellers) will have to take the hit of incremental liability on him. It is desirable that appropriate clarification is issued by the CBIC…

Goods & Services Tax (GST)
Notifications and Circulars

  • Time provided to apply for revocation of cancellation of registration
  • Order of utilisation of ITC of IGST clarified
  • Non-filers of returns for two consecutive periods cannot generate E-Way Bill from 21st June
  • Composition suppliers to file quarterly statement and annual return
  • FAQ on real estate sector – Ongoing project and liability on cancellation of bookings clarified
  • Exemption on upfront amount for long term lease clarified

For GST Acts, GST Rules and Notifications (Central and States), Circulars, Press Releases and Notes, please use Knowledge tab in www.gst.lakshmisri.com.

Ratio decidendi

  • Interest payable on total tax liability including portion of ITC available for set off - Telangana High Court
  • Detention of conveyance - Carrying LR issued by transporter is not mandatory - Gujarat High Court
  • Seizure of goods from premises of job-worker, when not valid - Kerala High Court
  • No writ of mandamus lies against GST Council - Kerala High Court
  • Imprisonment – Power invokable only post determination of demand - Madras High Court
  • Anti-profiteering – Comparison with pre-GST rate – Delhi High Court stays NAA order
  • Anti-profiteering – ITC benefit to be passed on periodically - NAA
  • Anti-profiteering - Not reducing price since same not changed post GST, fatal - NAA
  • Construction service - Service of preferential location naturally bundled - AAR West Bengal
  • Valuation - Cost of diesel provided by service recipient includible for charging GST - AAR Chhattisgarh
  • ITC available even if consideration is paid through book adjustment - AAR West Bengal DFIA – Supply of DFIA scrip covered under exemption – AAAR Maharashtra
  • Sale of ice cream in retail pack and in scoop is supply of goods - AAR Maharashtra
  • Transfer of business as going concern on slump sale basis - Exemption available – AAR Uttarakhand
  • Work Books which test child’s knowledge classifiable as ‘Printed books’ - Delhi High Court
  • Installation and maintenance of LED/fixtures is not works contract - AAR Maharashtra
  • GST Appellate Tribunal – Delhi High Court asks govt. not to appoint persons without prior intimation to Court

Customs
Notifications and Circulars

  • Exports – New Shipping Bill Regulations introduced
  • SEZ - Management and Business Consultant services is authorized service
  • Exports – 250 shipping bills can now be filed online in single ANF 3D
  • FTP - No requirement to submit physical copy of RCMC for incentives
  • Milk and milk products from China – Import prohibition extended

Ratio decidendi

  • Customs valuation - Rules 3 to 5 to be exhausted before going to Rule 7 & 9 - Supreme Court
  • Belated payment of redemption fine - Govt. not to return excess amount from auction - Delhi High Court Larger Bench
  • FTP – Clubbing of Advance authorisations when not possible - Delhi High Court
  • IGST refund not deniable even if shipping bill is shut in computer system - Madras High Court
  • SAD exemption available to goods cleared from SEZ to DTA on stock transfer - CESTAT Mumbai
  • Absolute confiscation of prohibited good when not necessary - CESTAT Mumbai
  • No confiscation under Customs Section 113(d) when attempt to export absent - CESTAT Mumbai
  • DFIA – Classification under particular tariff heading not relevant - CESTAT Hyderabad
  • Santa Clause suit comprising 9 pieces sold as set classifiable separately under respective headings - US Court of Appeals for Federal Circuit
  • Casings made of textile with plastic coating – Classification - US Court of Appeals of Federal Circuit

Central Excise and Service Tax

Ratio decidendi

  • Interest payable on differential duty payable due to retrospective price escalation - Supreme Court Larger Bench
  • Bagasse not a manufactured product – Allahabad High Court quashes CBIC Circular
  • Cenvat credit on towers for providing telecommunication services - Karnataka High Court
  • Valuation of goods self-used but not in production – Excise Valuation Rule 8 not applicable - CESTAT Chennai
  • Cenvat credit on input/capital goods not confined to registered site - CESTAT New Delhi
  • Cenvat credit available on photography, repair of MD car and debris removal - CESTAT Bangalore
  • Excise - No appeal before High Court if matter involves valuation also - Bombay High Court
  • Valuation, related person – Directors being member of HUF and sharing infra - CESTAT Ahmedabad
  • Medicaments cleared to hospitals – DPCO para 14 & 15 not applicable - CESTAT Ahmedabad

Value Added Tax (VAT)

Ratio decidendi

  • No power with State gov./Municipal Corp. to legislate on advertisement tax - Allahabad High Court
  • Delivery of possession, not custody of goods, sine qua non for VAT - Allahabad High Court
  • Questions allowed to be challenged cannot be barred on plea of res judicata - Supreme Court

May, 2019/Issue-95 May, 2019/Issue-95

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