01 January 0001

Tax Amicus: October 2017

by S. Rahul Jain R. Sahana Nitum Jain


Ocean Freight under GST – A Sea Change?

GST law whether clearly indicates the person who is obliged to pay tax in a transaction involving services provided by a shipping line located outside India to an exporter located outside India for the purpose of transporting goods to an importer located in India? First article in this issue of Tax Amicus discusses elaborately the liability under erstwhile Service Tax law and the present GST law to understand the evolution of the levy on such transportation of goods. It is noted that under the Service tax provisions the liability to pay tax under Section 68(2) vested on any person that the Government notifies, however, under GST law the liability to pay tax under reverse charge mechanism is only on the recipient of the service. Liability in case of such transportation under CIF transactions is hence doubtful inasmuch as recipient here would be the exporter of goods.

Ratio decidendi

  • Detention of goods for not carrying documents for inter-State movement of goods not valid – Kerala High Court
  • Finance lease with an option to purchase – Normal course of events – VAT liability in EU – CJEU


Supply by an SEZ Unit - Controversy in levy and collection

Supplies made to and by a Special Economic Zone unit are to be treated as an inter-state supply under the GST regime and the levy of IGST is attracted at the applicable rate. Under the pre-GST regime, sale of goods by the SEZ unit attracted Sales tax in the hands of the SEZ unit and Customs duties, i.e. Basic Customs duty and CVD (SAD being exempt where goods suffered VAT), in the hands of the importer. Second article in this issue raises the question as to whether IGST is payable once by the recipient on filing the Bill of Entry for clearance of goods to the DTA and thereafter also by the SEZ unit on its outward inter-state supply? It notes that GST statutes and the rules made thereunder offer no clarity on whether IGST is to be paid by the SEZ unit or by the recipient on clearance.


Goods & Services Tax (GST)

Notifications, Circulars and Council decisions

  • GST Returns – Due date for filing specified returns extended and late fees for delayed filing of GSTR-3B waived – Due date for filing and revising TRAN-1 extended to 30 November
  • Nominal rate of GST prescribed for supplies to merchant exporters
  • Area based exemption for units in States of J&K, Uttarakhand, Himachal Pradesh and North Eastern States including Sikkim – Budgetary Support Scheme introduced
  • Deemed exports - Specified supply of goods notified for benefit of deemed exports
  • Registration exemption for inter-State supplies of services
  • RCM liability on procurement from unregistered dealers, deferred
  • RCM liability – Scope of reverse charge mechanism under CGST Section 9(3) has been widened by inclusion of more entries
  • Rate of GST on specified goods, as approved by GST Council, revised
  • GTA service provided to unregistered person, exempted
  • Job work services – GST rates for certain services revised
  • Exemption to supply of services having place of supply in Nepal or Bhutan, against payment in Indian Rupees
  • Motor vehicles – GST rate on lease or sale of vehicles purchased before 1-7-2017
  • Works Contract services – GST rates revised for certain specified services
  • Relaxation from tax on advance received by SMEs
  • Proper officer for sanction of refund under Section 54/55 of CGST Act and the Rules, notified
  • Printing contracts – CBEC clarifies taxability
  • Supply on approval basis – Tax liability clarified
  • Fabric cut and sold in unstitched state remains as fabric
  • Registration application may be filed till 31-12-2017
  • Composition Levy – Aggregate turnover limit and last date for option revised
  • Relief to small taxpayers in compliance of GST law

Ratio decidendi

  • Detention of goods for not carrying documents for inter-State movement of goods not valid – Kerala High Court
  • Finance lease with an option to purchase – Normal course of events – VAT liability in EU – CJEU
  • Transport costs connected to importation of goods which are exempt from VAT – CJEU



Notifications & Public Notices

  • Advance authorisation, EPCG and EOU schemes revised to allow exemption of IGST on imports
  • Duty credit scrips – Validity period increased
  • EPCG Scheme – Re-export for repairs allowed
  • EPCG scheme – Extension of EO period and acceptance of installation certificate
  • Advance authorisation – Clubbing of authorisations and extension of Export Obligation period
  • Gifts imported by post or air, exempted from BCD and IGST

Ratio decidendi

  • SAD refund – Sawing of imported logs before local sale, immaterial – Andhra Pradesh High Court
  • Project Import benefit to single or composite machine – CESTAT Chennai
  • DTA clearance by SEZ – No duty can be demanded from SEZ unit – CESTAT Ahmedabad
  • FTA concession – Classification of one input and final product in same heading, not material – CESTAT Delhi
  • Exemption – Non-following of procedure under IGCRDMEG Rules at time of clearance when not fatal – CESTAT Chennai
  • Containers of durable nature – No condition of capability of reuse when goods exported – CESTAT Hyderabad
  • Valuation – Reliance on DoV data when not correct – CESTAT Chandigarh


Central Excise & Service Tax

Ratio decidendi

  • No fresh sale of product under maintenance agreement as amount realized thereunder is comprehensive – Allahabad High Court
  • Valuation – Non-inclusion of Passenger Service Fee and Airport tax in value for Transportation of passengers by air service – CESTAT Chandigarh
  • Printed advertising material classifiable as articles of printing industry – CESTAT Delhi
  • Remission of duty - Evidence including FIR, report of City and District Magistrate and grant of insurance claim, enough to prove ‘accidental’ cause of fire – Allahabad High Court
  • Interest when duty paid under wrong accounting head – Gujarat High Court
  • Personal penalty when duty, interest and 25% penalty deposited by company – CESTAT Mumbai
  • Proprietary concern not liable as recipient of service of GTA – Effect of admission of proprietor – CESTAT Chennai
  • Employee Provident Fund Organisation is a public authority performing statutory functions – CESTAT Delhi.


Value Added Tax

Ratio decidendi

  • Aloe vera juice covered under expression “processed or preserved vegetable” – Allahabad High Court
  • Price less than the minimum price fixed by government when valid – Patna High Court


October, 2017/Issue-76 October, 2017/Issue-76

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