01 January 0001

Tax Amicus: November 2019


CGST Rule 36(4) - 20% of which credit are you eligible for?
by Vatsal Bhansali, Nivedita Agarwal and Chaitanya Bhatt

The CBIC has on 9th October 2019 notified yet another round of amendments to the CGST Rules which may have far reaching implications for the trade and industry both from the point of view of increased burden of compliances and financial hit that the companies may now be forced to take on account of blocked mis-matched input tax credits. By insertion of Rule 36(4) in CGST Rules, the government has reinforced its intention to disallow the input tax credit on account of mis-match, however, one of the lingering question before the assessees for implementing the above provision is “What is eligible credit” for determination of 20%. The authors in the article in this 101st issue of Tax Amicus raise various other issues like what will happen in case where the suppliers are registered and yet making supplies which are taxable on reverse charge basis, and whether the phrase ‘20% of the eligible credit available’ restricts the available eligible credit as referred in the rule only to the amount visible in GSTR 2A for the month. According to the authors, the practical implementation of this rule looks very challenging and the trade and industry should brace themselves to ensure proper compliance with the rule to avoid uncertainties and litigation to the extent possible...

Pre-import condition and Rule 96(10) - Misplaced comforts and GST implications for Advance Authorization holders
by Astha Sinha and Nirav S. Karia

The second article in this 101st issue of Tax Amicus discusses at length the ‘pre-import condition’ in respect of advance authorisations. The authors discuss the history of said condition, history of Rule 96(10) of the CGST Rules, 2017, and the missing connection for Advance Authorization holders and CGST Rule 96(10). They note that while the amendment in January 2019, removing this condition, was viewed as a relief to the assessees (importers), the overall impact of that same actually came out to be a big surprise for Advance Authorisation holders as Rule 96(10), which bars the exporters from claiming refund in case of export of goods on payment of IGST if the said exporters have availed the benefits of Notification No. 79/2017-Cus., was not amended. The authors believe that various assessees as on date are unaware about the fact that they are hit by provisions of Rule 96(10) of the CGST Rules, 2017 by merely being holders of Advance Authorisation...

Goods & Services Tax (GST)

Notifications and Circulars

  • ITC restrictions when details of invoices not uploaded, clarified
  • GST annual returns for 2017-18 to be filed by 31-12-2019
  • Electronic refund process through Form GST RFD-01 - Procedure for electronic submission and processing of refund applications
  • Optional filing of GST annual return clarified
  • Job work – Rate of tax clarified
  • Job work in relation to bus body building – ‘Bus body building’ to include building of body on any vehicle
  • CBIC implements digital DIN for correspondence with taxpayers

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

  • GST transitional credit – Non-filing of TRAN-1 by 27-12-2017 not fatal – Punjab & Haryana High Court
  • GST transitional credit permissible of accumulated credit of Education Cesses and Krishi Kalyan Cess – Madras High Court
  • Good seized due to expiry of e-way bill cannot be released on indemnity bond – Uttarakhand High Court
  • Error in TRAN-1 – Filing of revised declaration after lapse of time – Gujarat High Court
  • Best judgement assessment – Prescription of 30 days for challenge to be strictly construed – Kerala High Court
  • Presence of lawyers cannot be allowed during examination by GST officers – Delhi High Court
  • No ITC on detachable sliding glass partitions fixed to immovable property – AAR Karnataka
  • Mere providing place to consume food not prepared there is not restaurant services – AAR Kerala
  • GST on expenses incurred by employees on behalf of employees and on remuneration to Directors – AAR Karnataka
  • No GST on volume and sales discount received by way of financial credit notes – AAR Karnataka
  • GST liability on transfer of assets fastened to a building – AAR Karnataka
  • GST liable under RCM on payment towards District Mineral Foundation and National Mining Exploration Trust – AAR Karnataka
  • No ITC on electrical works, pumping systems & tanks, lighting system, physical security system and fire system fitted in warehousing space meant for letting – AAR Karnataka
  • Services of coal beneficiation and transportation are two different supplies and not covered under composite supply – AAR Madhya Pradesh
  • No composite supply even if number of works entrusted by way of single document – AAR Madhya Pradesh


Notifications and Circulars

  • Deemed export drawback can be claimed on All Industry Rate
  • Companies whose cases are referred to NCLT are required to inform outstanding export obligations
  • Import of PET flakes prohibited
  • Export policy for onions revised

Ratio decidendi

  • Valuation – Proviso to Rule 9(2) of Customs Valuation Rules can be invoked only when freight not ascertainable – CESTAT Ahmedabad
  • Valuation - Evidentiary value of export declarations, public ledger, commodity trade statistics data – CESTAT Chennai
  • Cutting and slitting of imported running length tapes to produce Velcro is ‘manufacture’ – No anti-dumping duty if Velcro cleared into DTA – CESTAT Allahabad
  • Classification of goods - Reference to chemical structure when not correct – CESTAT Mumbai
  • Interest on delayed refund - Wrong/excessive collection of duty is not ‘deposit’ – Madras High Court
  • Drawback - Customs cannot re-assess already assessed shipping bill – Punjab & Haryana High Court
  • Mis-declaration by SEZ – Permission based on project report to be relied – CESTAT Ahmedabad
  • Customs Broker License - Mere reference to additional foreign degree is no ground for disqualification for writing examination – Madras High Court
  • Conversion of shipping bill – Request to be made within reasonable period – Delhi High Court
  • Refund claim without challenging assessment of bill of entry is premature, however, time given to assessee to challenge – Madras High Court

Central Excise and Service Tax

Ratio decidendi

  • No demand under Cenvat Rule 6(3)(i) on electricity generated from bagasse – Delhi High Court
  • Agreement to purchase property with intention to sell – Liability under Real Estate Agent service – Chhattisgarh High Court
  • Cenvat credit on outdoor catering activity and rent-a-cab services – CESTAT Mumbai
  • Sale from SHA at departure terminal of international airport is ‘export’ – CESTAT Mumbai
  • Service tax exemption to units in SEZ – Exemption to depend only on terms and conditions prescribed in SEZ provisions – Telangana and Andhra Pradesh High Court
  • Bees wax – Washing, melting and packing not amount to ‘manufacture’ – CESTAT Mumbai
  • Cenvat credit on motor vehicles – No need for exclusive use in listed services – CESTAT Hyderabad
  • Ground of limitation can never be impliedly rejected – Chhattisgarh High Court

September, 2019/Issue-101 November, 2019/Issue-101

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