INDIRECT TAX UPDATES RSA Legal Solutions 11 th August 2017 About RSA Legal Solutions RSA Legal Solutions is an Indian Law firm specialized in the area of Indirect taxation i.e. Goods and Services Tax, Customs, Central Excise, Service Tax, Foreign Trade Policy (FTP), Special Economic Zone ( SEZ ), Value Added Tax (VAT)/ Central Sales Tax (CST), Foreign Exchange Management Act etc. With experience, constant training and updation of knowledge, the firm has developed unique expertise in the entire spectrum of indirect taxes. We provide litigation, advisory and compliance services to our clients. Tax Services Advisory Litigation Compliances Audit GST Handholding Taxmann s GST: Law & Practice A section wise commentary on GST Authored by: Ms. Shweta Jain, Partner RSA Legal Solutions General Updates The window for filing GSTR-3B has opened on August 5 GSTR-3B for the month of July shall be filed on or before 20 August 2017 GSTR 2 for the month of July shall be filed between 6 to 10 GSTR 1 for the month of July shall be filed between 1 to 5 GSTR 3 for the month of July shall be filed between 11 to 15 Deadline for GST composition scheme extended till August 16 GSTIN not necessary if exempt goods imported or exported Companies may face jail term for not reprinting revised MRP on Inventory GST Council authorises cess hike to 25% on luxury and large cars GST Council decides to reduce rates on works contracts
Key Notifications/Circulars/Public Notice The C.B.E& C. has clarified various operational issues on procurements made by Export Oriented Units without payment of customs duty viz. While Rule 5 of the Customs Rules, 2017 mention about submission of a continuity bond, since the EOUs have executed the B-17 bond, which is a general purpose running bond, the EOUs are not required to submit a separate continuity bond: EOUs have an option till 31 July, 2017 to import goods without payment of customs duty by issuing procurement certificates instead of following the procedure as prescribed under Rule 5 of the rules. The inter unit transfer from one EOU to another would be on an invoice, charging applicable GST, but no customs duty would be charged. The supplier unit would endorse on the invoice, the amount of custom duty availed as exemption. The inter unit transfer from one EOU to another would be on an invoice, charging applicable GST, but no customs duty would be charged. The supplier unit would endorse on the invoice, the amount of custom duty availed as exemption. CIRCULAR NO 29/2017- Customs, Dated: July 17, 2017 accruing in each such high sea sale shall form part of the value on which IGST is collected at the time of clearance. CIRCULAR NO. 33/2017- Custom, Dated: August 01, 2017 The C.B.E. & C. Board hereby extended the period for filing an intimation in FORM GST CMP-01 under sub-rule (1) of rule 3 of the Central Goods and Services Tax Rules, 2017 upto 16th August, 2017. ORDER NO. 01/2017- GST, Dated: 21 July, 2017 Clarification on IGST exemption on inter-state movement of various modes of conveyance, carrying goods or passengers or for repairs and maintenance, between distinct persons as specified in section 25(4) of the Central Goods and Services Tax Act, 2017, carrying goods or passengers or both; or for repairs and maintenance, [except in cases where such movement is for further supply of the same conveyance]. CIRCULAR NO. 1/1/2017 IGST, Dated: July 7, 2017 Services imported by a unit or a developer in the Special Economic Zone for authorised operations are exempted from the whole of the integrated tax leviable thereon under section 5 of the Integrated Goods and Service Tax Act, 2017. NOTIFICATION NO. 18/2017 - Integrated Tax (Rate), Dated: July 05, 2017 The GST council has decided that IGST on high sea sale (s) transactions of imported goods, whether one or multiple, shall be levied and collected only at the time of importation i.e. when the import declarations are filed before the Customs authorities for the customs clearance purposes for the first time. Further, value addition Exemption to intra-state supplies of second hand goods received by a registered person, dealing in buying and selling of second hand goods and who pays the goods and services tax compensation cess on the value of outward supply of such second hand goods, as determined under sub-rule (5) of rule 32 of the Central Goods and Services Tax Rules, 2017, from any supplier, who is not registered, from the whole of the goods and services tax compensation cess leviable thereon under section 8 of the Goods and Services Tax (Compensation to States) Act, read with subsection (4) of Section 9 of the Central Goods and Services Tax Act. NOTIFICATION NO. 4/2017-
Compensation Cess (Rate), Dated: July 20, 2017 Clarification regarding applicability of section 16 of the IGST Act, 2017, relating to zero rated supply for the purpose of Compensation Cess on exports. CIRCULAR - Compensation cess, Dated: July 26, 2017 The C.B.E& C. specified the conditions and safeguards for the registered person who intends to supply goods or services for export without payment of integrated tax, for furnishing a Letter of Undertaking in place of a Bond. NOTIFICATION NO. 16/2017 Central Tax (Rule), Dated: JULY 7, 2017 Case Laws Central Excise Demand Additional Excise Duty - penalty was imposed upon the petitioner - Later, the Tribunal dismissed the petitioner's appeal on pecuniary grounds, based on what it perceived to be a paltry demand, although it set aside the penalty - The petitioner filed the present appeal, questioning whether the an appeal pertaining to determination of rate of duty could be dismissed on pecuniary grounds, without giving consideration to clause (i) of second proviso Section 35B(1). HELD - Considering all submissions, the question raised in present appeal merits consideration - Hence, Tribunal order set aside & Tribunal directed to pass fresh order upon de novo adjudication: High Court. Attikunna Tea Factory Vs. CCE [2017-TIOL- 1428-HC-MAD-CX] Automative India Pvt. Ltd. Vs Commissioner of Central Excise, Pune-II [2017-TIOL-2598- CESTAT-MUM] Demand - Imposed with interest & penalty on assessee - Later, the Tribunal dismissed the assessee's appeal - Issue at hand was whether the assessee could pay the National Calamity Contingency Duty & education cess & the secondary and higher education cess by utilising the Cenvat credit - Assessee seeks extension of stay on penalty. HELD- Considering that assessee already paid duty with interest, stay on penalty extended, to enable assessee to file appeal before the Uttarakhand High Court: High Court. Hero Motocorp Vs CC & CE [2017-TIOL- 1304-HC-DEL-CX] Rule 6 of Valuation Rules, 2000 - Modification charges recovered in respect of dies received free of cost is includible in AV as only the original cost of the unmodified dies have been amortised payment of service tax under the head Technical Support Service on such modification charges' is not relevant extended period is invokable as appellant has never disclosed that they are collecting die modification charges so also exercise is not revenue neutral as CENVAT credit cannot be availed of the differential duty payable as suppression is proved and demand is not hit by limitation Impugned order upheld and appeal is dismissed: CESTAT Gestamp CENVAT Credit - inputs purchased initially by the job-worker and utilized within the job-worker's premises for the product of the appellant and later sold to the appellant. HELD: The cenvat credit on the inputs even though not received by the appellants is admissible for the reason that the same was admittedly used by the job worker in the job work goods of the appellants only. Impugned order is, therefore, set aside and appeal is allowed with consequential relief: CESTAT. M/s Ballarpur Industries Ltd. Vs Commssioner od Excise and Customs, Nagpur [2017-TIOL-2802-CESTAT-MUM]
Refund Examination - Department had to examine whether the claim of the Petitioner that it had not passed on the incidence of CVD in respect of the B/Es for 27th March, 2015 to 31st March, 2015 to the customer was supported by proper documentation - Interestingly, the Petitioner had submitted the same CA certificate and documents (including sales invoices) for the aforementioned period as well as for the period June and July, 2015 - Respondent had accepted these very documents for the claim in respect of June and July, 2015 - By the same yardstick, there was no reason whatsoever for Respondent not to accept the very same documents in respect of the imports between 27th March, 2015 and 31st March, 2015 - The certificate of the CA is categorical that the incidence of CVD, even in respect of these imports, had not been passed on to the customers - Consequently, there was no valid justification for Respondent No. 4 to have denied the refund claim - Given the history of the case where the Petitioner has to approach the Court again for relief, the stand taken by the Respondents regarding the maintainability of the present petition is rejected - Respondent appears to be unwilling to accept the legal position and is persisting with rejection of the refund claims of the Petitioner on specious grounds - writ petition allowed: High Court. YU Televantures Pvt. Ltd. Vs UoI [2017-TIOL-1468-HC-DEL-CUS] Petitioner sought for clubbing of three Advanced Authorizations (AAs) issued - The Policy Relaxation Committee (PRC), a body constituted under the FTP 2009-14, did so but with certain conditions - Petitioner challenged the Public Notice which clubbed the AAs - Meanwhile, the PRC alleged non-compliance with the conditions and listed the petitioner as a defaulter on the websites of the authorities - Petitioner sought clearance of its name from defaulter list - Whether petitioner could have sought clubbing of AAs - Whether the PRC could impose conditions for Customs clubbing of AAs. HELD - It appeared that petitioner sought clubbing of the AAs by invoking a Public Notice No. 79 (RE-2010)/2009-14, issued in this regard, after such notice was amended superseded - Considering that the petitioner could not claim as a matter of right, a benefit from a relaxation policy which was non-existent on the date of its invokation by the petitioner, the authorities were correct in denying the request for clubbing of AAs - In such circumstances, the petitioner approached the PRC seeking its favorable discretion - Now, considering the powers of the PRC given in Para 2.5 of the FTP 2009-14, the PRC had the discretion to impose conditions as it deemed fit - Moreover, the review order of the PRC shows that the conditions were imposed after considerable deliberation - Besides, there is noting to show that the said conditions were grossly unreasonable or unfair - The exercise of discretion to grant exemption is a delicate balance between balancing the hardship of the petitioner and the adverse impact on trade - Hence, the PRC imposed conditions which were neither illegal nor arbitrary: High Court. NOCIL LTD Vs The Policy Relaxation Committee & Ors. [2017-TIOL-1376-HC-DEL-CUS] Appeal Dismissed- Rectification of Mistakes- Application Dismissed- Petitioner imported 8 consignments of capital goods, on which the adjudicating authority imposed duty demand with penalty, after some rounds of litigation - Petitioner's appeal before Tribunal was dismissed, and whose order was received very late by the petitioner - Subsequent application for Rectification of Mistakes was dismissed for exceeding prescribed limitation period. HELD - Considering Sec. 129B of the Customs Act, 1962, an applicant may file application for rectification of mistake, which necessitated the receipt & verification of such order - Thereby, in present circumstances, where application was filed within 6 months of the order, the rejection of such
application was unacceptable - Although any delay in filing such application was not condonable, considering that the order was received late by the petitioner, strict interpretation of this rule was unnecessary - Any such Rent agreement has been entered between the three persons and the lessee - all the persons were paid different amounts of rent after deduction of TDS - amount received by others cannot be clubbed with rent received by appellants - since rent received is much below the threshold limit of 8 lakhs, no service tax is payable - demand not sustainable - impugned order set aside and appeal allowed: CESTAT. Sambhaji Pandurang Hulawale Vs CCE [2017-TIOL-2748- CESTAT-MUM] Services- Marketing of goods of foreign seller and receives the commission in convertible foreign exchange would qualify for the benefit of export of service Board Circular dated 24-2-2009 simply prescribed that the said service qualifies as exports if recipient is located outside India, therefore, bonafide belief of the appellant cannot be dislodged extended period of limitation cannot be invoked Appeal allowed: CESTAT. Yamazaki Mazak India Pvt. Ltd. Vs CCE [2017- TIOL-2674-CESTAT-MUM] Demand Confirmed along with penalty -In appeal, Tribunal reduced the penalty to 25% - Revenue contended that reduced penalty of 25% was available only if the duty determined u/s 73(2) with interest u/s 75 and penalty @ 25% of the duty determined was paid within thirty days - Tax Appeal before High Court challenging such reduction of penalty. Held - Adjudicating authority had imposed full penalty of 100% and had not given any option of availing reduced penalty on depositing amount with interest within thirty days - When the assessee approached the Service Tax ********************************************** application before the Tribunal could be filed within six months from the receipt of the copy of the order Allied Fibres Ltd. Vs CC [2017-TIOL- 1322-HC-MUM-CUS] Commissioner (A), he granted such option of paying reduced penalty, if deposited within thirty days - Such option was granted by the Commr.(A), and later upheld by Tribunal, Tribunal order warrants no interference - If the assessee has not availed of the option made available by the Commissioner (Appeals), it will always be open for the department to recover full penalty instead of the reduced penalty as provided in the said order - Tax appeal dismissed: : High Court. CCGST & CE Vs Metro Security Services [2017-TIOL-1312-HC-AHM-ST] Agreement Amount collected by virtue of an agreement between the two parties shows that they are not in the nature of tax, but are in the nature of income other than tax - If the amount collected for the activities undertaken in these agreements were tax then no such agreement would have been needed - Permitting the use of its land or other immovable property for fixing poles/structures for putting up billboards for advertisement or fixation of kiosks for advertisement on street light poles - amounts collected chargeable to service tax under the category of Sale of space or time for advertisement service' - Revenue generated by collecting license fee from private property for permitting advertisement on the private properties, demand of service tax is not sustainable - Penalties imposed u/ss 76, 77 and 78 set aside invoking Section 80 of the FA, 1994 Appeal partly allowed: CESTAT. Nagpur Municipal Corporation Vs CCE [2017-TIOL- 2769-CESTAT-MUM]