Staying Updated Indirect tax newsletter March 2018, Volume 20 Issue 04 In the issue Notifications and circulars Notifications issued by the Central Government 01 April, 2018 has been notified as the date on which the provisions pertaining to e-way bill comes into effect, except for generation of e-way bill by the transporter (where the consignor or the consignee has not generated e-way bill). Circulars issued by the Central Government Various issues pertaining to refund on exports have been clarified in a circular. Various issues pertaining to job work have been clarified in a circular. Case Laws Central Excise Reversal of CENVAT credit against shortage of inputs shown in monthly stock taking report upheld as the inputs were not at all used in the process of manufacture. Service Tax No service tax is leviable reimbursable expenditure or cost incurred by the service provider prior to 14 May, 2015 as the same goes beyond the mandate of section 67 of the Finance Act, 1994. No service tax is leviable on GTA services rendered in the state of Jammu and Kashmir (J&K) as services rendered within the state of J&K are beyond the scope of Chapter V of the Finance Act, 1994. / VAT Recovery of refunded input tax credit under section 10(5) read with section 69(1) of the Karnataka VAT Act upheld despite the repeal of said enactment w.e.f. July, 2017 on the basis of the repeals and savings provisions under section 173 read with section 174 of the K Act, 2017 as the repeal of the KVAT Act would not affect the proceedings initiated by revenue authorities under the said Act.
Notifications and circulars Notifications issued by the Central Government C Rules, 2017 are amended to prescribe time limit for filing of FORM TRAN-2 and amend the rules and forms relating to e-way bills. (Notification No.12/2018 Central Tax dated 07 Notification No. 6/2018-Central Tax prescribing late fee for delay in filing form R-5A has been rescinded. (Notification No. 13/2018 Central Tax dated 07 C Rules, 2017 are amended to clarify the procedure of movement of goods from one job worker to another and other minor amendments. (Notification No. 14/2018 Central Tax dated 23 The Government has notified 01 April, 2018 as the date on which the provisions pertaining to e-way bill will come into effect, except the provisions relating to generation of e-way bill by the transporter (where the consignor or the consignee had not generated e- way bill) (Notification No. 15/2018 Central Tax dated 23 Government has prescribed the due dates for submission of form R 3B for the months of April, 2018 to June, 2018 as under: The payment of tax, interest, penalty, fees or any other sum by debit to electronic cash ledger or electronic credit ledger should be made by the above due dates. (Notification No. 16 /2018 Central Tax dated 23 Due date for furnishing form R-1 for the quarter April to June 2018 for taxpayers with aggregate turnover of up to INR 15 million in preceding financial year or the current financial year has been prescribed as 31 July, 2018. (Notification No. 17/2018 Central Tax dated 28 Due date for furnishing of form R-1 for taxpayers with aggregate turnover of more than INR 15 million in the preceding financial year or the current financial year has been prescribed as follows: (Notification No.18 /2018 Central Tax dated 28 2 March 2018 - Volume 20 Issue 04
Due date for furnishing return by an Input Service Distributor in form R-6 for months of July 2017 to April 2018 has been prescribed as 31 May, 2018. (Notification No. 19/2018 Central Tax dated 28 Notified agencies can file application for refund of tax paid on inward supplies under section 55 of C Act, before expiry of 18 months from last date of quarter in which supply was received. (Notification No. 20/2018 Central Tax dated 28 Exemption from reverse charge liability on supplies received from unregistered persons has been extended up to 30 June 2018. (Notification No. 10/2018 Central Tax (Rate) dated 23 (Notification No. 11/2018 Integrated Tax (Rate) dated 23 Circulars issued by the Central Government The CBIC has issued a circular, giving the clarifications as under: Bus body building is a composite supply and classification as goods or service would depend on which supply is the principal supply, which may be determined on the basis of facts and circumstances of each case. Retreading of tyres is a supply of service. Priority Sector Lending Certificates are taxable as supply of goods @ 18% under residuary entry. Services of transmission and distribution of electricity by an electricity transmission or distribution utility is exempt from. Other related services provided by DISCOMs to consumer are taxable. Further, the service provided by Central Government/ State Government to any business entity including PSUs by way of guaranteeing the loans taken by them from financial institutions against consideration in any form including Guarantee Commission is taxable. (Circular no. 34/8/2018- dated 1 It is clarified that the clarification given vide Board Circular No. 179/5/2014 ST dated 24 September, 2014 in the context of service tax on applicability of service tax on cash calls and services provided by unincorporated joint venture (UJV) to its members or by members to UJV is applicable for the purpose of levy of also. It is reiterated that the question whether cash calls are taxable or not will entirely depend on the facts and circumstances of each case. (Circular no. 35/9/2018- dated 5 The CBIC has issued a circular, giving procedure for processing of refund applications of specified international organisations etc. (Circular no. 36/10/2018- dated 13 March, 2018) The CBIC has issued a circular, clarifying various issues pertaining to refund on exports. (Circular no. 37/11/2018- dated 15 March, 2018) 3 March 2018 - Volume 20 Issue 04
The CBIC has issued a circular, clarifying various issues pertaining to job work. (Circular no. 38/12/2018- dated 26 March, 2018 Orders issued by the Central Government The CBIC has issued an order, extending the date for furnishing transition credit statement in form TRAN 2 to 30 June, 2018. (Order no. 1/2018-Central Tax dated 28 March, 2018) An order has been issued, mentioning that rate on supply of food and/ or drinks by the Indian Railways or Indian Railways Catering and Tourism Corporation Limited or their licensees, whether in train or at platforms, will be 5% without ITC. (F.No. 354/03/2018-TRU dated 31 U.P, 2018-TIOL-15-HC-ALL-, where the Petitioner s goods from outside the state were seized for lack of e-way bills and the petitioner contended that notification issued under Rule 138 of the UP Rules, 2017 making e-way bill mandatory would apply only in relation to goods in transit within the state of U.P, the Allahabad High Court had held the detention prima facie appears to be illegal, and consequently, granted interim relief to the Petitioner directing that goods be released along with vehicle as the goods were of perishable nature. Case Laws In Seth Prasad Agro Private Limited v. State of UP, 2018-TIOL-16-HC-ALL-, where the Petitioner s inter-state consignment was intercepted, detained and seized at Varanasi and the Petitioner argued that there could be no seizure under the UP Act since the transaction was an inter-state transaction, the Allahabad High Court rejected the argument of the Petitioner and held the seizure order to be valid as the provisions of the C Act, 2017 would apply in the matters of seizure under the provisions of I Act by virtue of section 20 of the I Act. In Proactive Plast Private Limited v. State of 4 March 2018 - Volume 20 Issue 04
Central Excise Case laws In Meena Krishna Agarwal v. Assistant Commissioner, TS-70-HC-2018 (GUJ)-EXC, Gujarat High Court held that personal properties of deceased assessee s legal heir could not be attached for recovery of unpaid dues by observing, inter alia, that personal properties of legal heir which have nothing to do with inheritance could not be attached for recovery of government dues. In Indian Additives Limited v. Commissioner of Central Excise, TS-77-HC-2018 (MAD)-EXC, Madras High Court upheld the reversal of CENVAT credit against shortage of inputs shown in monthly stock taking report by observing, inter alia, that CENVAT credit was not allowable when the inputs were not at all used in the process of manufacture. In Electronics Corporation of India v. Union of India, TS-85-HC-2018 (Tel & AP)-EXC, Andhra and Telangana High Court held that a writ was maintainable against order-in-original where statutory appeal was time-barred by observing, inter alia, that the power of judicial review under Article 226 could not be diluted or shut out by applying statutory prohibitions and restrictions. In Commissioner of Central Excise v. Hindustan Petroleum Corporation Limited, 2018-TIOL-411-HC-MUM-CX, where the assessee supplied naphtha against international competitive bidding for manufacture of fertilizers by claiming exemption under Notification no. 06/2002, the actual user of the goods used part of Naphtha for purpose other than manufacture of fertilizers and notices were issued to assessee raising duty demand, Bombay High Court held that since the assessee fulfilled all the preconditions for claiming exemption under the relevant exemption notification at the time of clearance and the actual use of the goods was post-clearance which was required to be fulfilled by the buyer or user, the assessee could not be expected to ensure the precise use of the goods by the other user and set aside the demand against the assessee. In Welcure drugs and Pharmaceuticals Limited v. Commissioner of Central Excise, Jaipur, TS- 66-HC-2018 (RAJ)-EXC, Rajasthan High Court had upheld the refund of accumulated CENVAT credit on account of closure of factory under Rule 5 of the CENVAT Credit Rules, 2004 by holding, inter alia, that since the Department had not preferred an SLP against an earlier CESTAT order granting refund, the principle of estoppel would apply in as much as an acceptance of view taken by CESTAT will debar the Revenue from challenging the same in the present case. In Swastik Packaging Private Limited v. Commissioner of Central Excise, Mumbai-II, TS-425-CESTAT-2017-EXC, Bombay Tribunal upheld the classification of packing box made of plain duplex board as other packing containers under CETH 4819.19 liable to duty at 8% and not under heading 4819.12 attracting NIL rate of duty. 5 March 2018 - Volume 20 Issue 04
Central Excise Case laws In Commissioner of Central Excise, Thane v. Deluxe Recycling (India) Private Limited, TS- 428-CESTAT-2017-EXC, Bombay Tribunal upheld CENVAT credit reversal on capital goods cleared under Rule 4(5)(A) of the CENVAT Credit Rules, 2004 to sister unit and not returned within stipulated period of 180 days of clearance and rejected the assessee s case that since the machine was destroyed in fire accident along with certain other inputs, it could not be returned at all. 6 March 2018 - Volume 20 Issue 04
Service Tax In Union of India v. Intercontinental Consultants and Technocrats Private Limited, TS-72-SC-2018-ST, the Supreme Court had held that no service tax was leviable on reimbursable expenditure or cost incurred by the service provider prior to 14 May, 2015 as the same goes beyond the mandate of section 67 of the Finance Act, 1994. In All Kerala Association of Chit Funds v. Union of India, TS-98-HC-2018 (KER)-ST, Kerala High Court held that chit fund transactions were non-taxable before 2015 as i) the issue was no longer res integra in view of the SC decision in Margadarshi Chit Funds (P) Ltd. & Ors., ii) chit transactions became liable to service tax only when section 65B(44) of the Finance Act was amended and iii) the said amendment could not be clarificatory to be given retrospective operation from 2012. In Transmedia Software Limited v. Union of India, TS-83-HC-2018 (Bom)-ST, the Bombay High Court upheld the rejection of an application under Voluntary Compliance Encouragement Scheme as the discharge of service tax dues was beyond the stipulated deadline under the scheme by observing that the same was not an open-ended scheme and benefits thereunder could not be derived de hors after its life or duration had come to end. In Bharat Petroleum Corporation Limited v. Commissioner of Service Tax, Noida, TS-93- CESTAT-2018-ST, where the assessee with a centralised registration had received GTA services at its unit located in J & K and the Revenue raised the plea that service tax was payable under reverse charge mechanism by the assessee, the Allahabad Tribunal held that no service tax was leviable on GTA services rendered in the state of J&K as services rendered within the state of J&K are beyond the scope of Chapter V of the Finance Act, 1994. In SITQ India Private Limited v. C.S.T Delhi, TS- 99-CESTAT-2018-ST, Delhi Tribunal held that advising foreign clients on investments in Indian real-estate companies constitutes export of service and allowed refund claims of unutilised credit of input services and rejected the Revenue s stand that such services qualify as real estate advisory services which were consumed within India and do not qualify as export of services. In Punj Lloyd Limited v. CST Delhi, TS-84- CESTAT-2018-ST, Delhi Tribunal held that construction of parking facility for Delhi Municipal Corporation for Commonwealth Games 2010 was not a works contract service as the said category covered only civil structures for commerce and industry and such sports events involving participation of large number of countries and structures created therefore could not be considered as commercial or industrial ventures. 7 March 2018 - Volume 20 Issue 04
In Sri Gopal Automotive Limited v. Commissioner of Central Excise, C & ST, (2018- TIOL-756-CESTAT-HYD), Hyderabad Tribunal held that the assessee was eligible for the benefit of 75% abatement to GTA services under Notification No. 32/2004 as the benefit of such abatement will be available without requirement of any specific endorsement on every consignment note, but merely on general declaration from GTA, and the assessee obtained such undertaking letters from concerned transporters. In Canon India Private Limited v. Commissioner of Central Excise & ST, Delhi, TS- 424-CESTAT-2017-ST, Chandigarh Tribunal set aside the demand of service tax under Banking and Other Financial Service in respect of operating lease of equipment and machines as leasing of equipment under Fixed Period Rental Agreement was not financial leasing and the definition of BoFS had been interpreted to include only financial lease and not operating lease. In ION Exchange India Limited v. Commissioner of Central Excise, C & ST, 2018- TIOL-752-CESTAT-AHM, Ahmedabad Tribunal held that the assessee was eligible for credit of service tax paid on construction services relating to modernisation/ renovation as the same continued to be within the meaning of input service even after the amendment to the definition of input service w.e.f. 01 April,2011 and the assessee carried out modernisation/ renovation work to meet USA FDA guidelines for manufacture of their products. In Ashoka Auto Sales Limited v. Commissioner of Central Excise, 2018-TIOL-793-CESTAT-ALL, Allahabad Tribunal held that no service tax was payable on commission from financial institutions/ banks for arranging loans for customers as i) the relationship between assessee and the banks and/ or financial institutions was on principal to principal basis, ii) both were promoting their business as the assesse was interested in the sale of vehicle whereas financial institutions or banks were interested in giving loans for interest and therefore no particular activity done by the assessee was identifiable for promoting the business of banks and financial institutions. In Pepsico I Holdings Private Limited v. Commissioner of Central Excise, 2018-TIOL-786- CESTAT-MAD, a single member bench of Madras Tribunal held that when an assessee manufactures taxable goods as well as undertakes trading (which was exempt service), then for the purpose of reversal of common input services, entire amount of credit claimed on input services need to be considered and not only the amount of credit claimed on common services used for manufacture of taxable goods as well as for trading. In Rane TRW Steering System Limited v. Commissioner of Central Excise, 2018-TIOL-414- HC-MAD-CX, the Madras High Court held that garden maintenance services would be considered as input services and credit of service tax paid on such services would be allowed as the garden maintenance services could be considered as inextricably connected and having nexus with manufacture. 8 March 2018 - Volume 20 Issue 04
VAT/Sales Tax/Entry Tax In the issue Case Laws In Abhay Solvents Private Limited v. the Assistant Commissioner of Commercial Taxes, TS-87-HC-2018 (KAR)-VAT, the Karnataka High Court had upheld the recovery of refunded input tax credit under section 10(5) read with section 69(1) of the Karnataka VAT Act despite the repeal of said enactment w.e.f. July, 2017 on the basis of the repeal and savings provisions under section 173 read with section 174 of the K Act, 2017 as the repeal of the KVAT Act would not affect the proceedings initiated by revenue authorities under the said Act. In Reliance Industries Limited v. State of Maharashtra, TS-91-HC-2018 (BOM)-VAT, the Bombay High Court had held that return of Kerosene after extraction of N-Paraffin required for manufacturing LAB by Reliance Industries Limited to Bharat Petroleum Corporation Limited constitutes purchase by BPCL and not a sales return under section 2(36) & 2 (35) of the Bombay Sales Tax Act, 1959 by observing, inter alia, that if the goods that were sought to be returned were different from the ones that were originally supplied, the same could never be termed as a sales return. 9 March 2018 - Volume 20 Issue 04
Delhi Pratik Jain/ Gautam Khattar/ Rahul Shukla Ph: +91 (124) 3306000 Mumbai Dharmesh Panchal Ph: +91 (22) 6689 1000 Kolkata Pratik Jain/ Gopal Agarwal Ph: +91 (33) 4404 3098/4404 6000 Bangalore Pramod Banthia/ Kunal Wadhwa Ph: +91 (80) 4079 6000 Hyderabad Ananthanarayanan S Ph: +91 (40) 4424 6363 Chennai N Madhan Ph: +91 (44) 4228 5000 Pune Nitin Vijaivergia Ph: +91 (20) 4100 4444 Ahmedabad Jatin Arora Ph: +91 (22) 6689 1000 About PwC At PwC, our purpose is to build trust in society and solve important problems. We re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com. In India, PwC has offices in these cities: Ahmedabad, Bangalore, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai and Pune. For more information about PwC India's service offerings, visit www.pwc.com/in PwC refers to the PwC International network and/or one or more of its member firms, each of which is a separate, independent and distinct legal entity in separate lines of service. Please see www.pwc.com/structure for further details. For private circulation only This publication does not constitute professional advice. The information in this publication has been obtained or derived from sources believed by PricewaterhouseCoopers Private Limited (PwCPL) to be reliable but PwCPL does not represent that this information is accurate or complete. Any opinions or estimates contained in this publication represent the judgment of PwCPL at this time and are subject to change without notice. Readers of this publication are advised to seek their own professional advice before taking any course of action or decision, for which they are entirely responsible, based on the contents of this publication. PwCPL neither accepts or assumes any responsibility or liability to any reader of this publication in respect of the information contained within it or for any decisions readers may take or decide not to or fail to take. 2018 PricewaterhouseCoopers Private Limited. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers Private Limited (a limited liability company in India having Corporate Identity Number or CIN : U74140WB1983PTC036093), which is a member firm of PricewaterhouseCoopers International Limited (PwCIL), each member firm of which is a separate legal entity.