GST Rate to be reviewed by GST Council

The GST Council is scheduled to meet on 18th December to review GST rates.

This is necessitated by the consistent fall in both the GST and Compensation Cess collections.

Also the States, particularly opposition ruled States have been applying pressure on the Centre to release GST payments immediately as Rs 50,000 cr cess lies unutilised.

This GST review more specifically covers exempted items, items with inverted rates, compensation cess rate. This may lead to GST rates on certain items being raised. 

 

Central Excise & Service tax Amnesty Scheme

  1. 1. Chapter V of the FA 2019 (full text of SVLDR Scheme)
  2. 2. SVLDR Rules
  3. 3. SVLDR Notification No 4/2019
  4. 4. CBIC Circulars dated 28.08.2019 and 25.09.2019
  5. 5. FAQs on SVLDR
  6. 6. SVLDR Departmental presentation
GST Optimisation Part 2

This is the 2nd Part of the set of videos on “GST Optimisation”. It explains how indirect tax cascading still continues in India even after implementing GST. The video covers specific situations in which tax cascading happens. This video is meant for the general public and not exactly the tax experts. So the language is simpler devoid of sections, rules, technical expressions and tax jargon.

https://www.youtube.com/watch?v=pohxDYOjLNU&t=226s

GST Optimisation Part 1

This is the first part of a three part video set on Tax Optimisation, more specifically GST Optimisation. Its created for those who are not too familiar with taxation and yet keen to understand and benefit by optimising on taxes. This can be useful for people handling indirect taxation too as the aim of these videos is to conceptually clarify the subject.

https://youtu.be/tWWb9ClOOZg

"The Indian GST Story" by Anthony Fernandes - Founder of Tax Quotient


1st June 2019

 

 
   

 

Recent Court / Tribunal Judgements

 CESTAT Decisions

 

18th October, 2018 : CESTAT Mum : UPS Jetair Express Private Limited   Vs Commissioner of CGST, Mumbai East 

Revenue denied CENVAT credit only on the ground invoices didn't mention the registration number of the service provider. No other allegations were made regarding receipt of input services, eligibility etc.

Held : This is merely a procedural lapse. It is settled that CENVAT credit can't be denied on mere technicalities or procedural lapses.

CENVAT credit allowed, extended period of limitation not applicable.

Ed's comment : Isnt it surprising that a Senior Officer like Prin. ADG, DGPM, WRU, still needs to catch up with decades old case law regarding Modvat and Cenvat? It's repeatedly held procedural lapses aren't reason enough to deny credit. How will the dept reduce litigation? Should Tribunal for fairness?

18th October, 2018 : CESTAT Ahd : M/s Auto Care Lubricant Vs C.C.E. & S.T.-Vapi
The Tribunal relying on an earlier decision in Castrol India Ltd, held :
“The authorities under the Standards of Weights and Measures Act are the best judge to decide as to whether a product is required to be affixed with a MRP under the said Act or not. If said authority has clarified that 210 ltr. barrel are not required to be affixed with MRP, it was obligatory on the part of the Excise authority to accept such decision of Controller of Legal Metrology authority….., it was not open to the Excise authority to doubt the decision of the authority under Standards of Weights and Measures Act and to proceed independently ….”

18th October 2018 : CESTAT Ahd : M/s Javiya Finance Services, Javiya Marketing Vs C.C.E.& S.T.- Surat-I
The appellant were providing service of identifying customers for car loans and receiving commission from ICICI Bank. This was to be taxed under Business Auxiliary Services (BAS).  

The appellants admitted taxability but argued they were under bonafide belief the services are not taxable and so extended period of limitation should not be invoked.
Held : "The definition of Business  Auxiliary  Services  is  very  clear  and  there  is  no  scope  of interpretation. The definition specifically includes the service of promotion or marketing of any service of the client within its ambit." Appeals dismissed.

 

 12th Oct : CESTAT Mum : Tahnee Heights CHS Ltd. Vs Commissioner of CGST, Mumbai South : Held : "The appellant also do not provide any service to its members, who pay the amount towards their share of contribution, for occupation of the units ....the explanation furnished under clause 3(a) in Section 65B of the Act will not designate the appellant as an entity, separate from its members....the case of the appellant is not confirming to the requirement of 'service', as per the definition contained in Section 65B(44) of the Act."

10th Oct : CESTAT Ahd :  L & T Ltd. etc Vs C.C.E. Ahd Appellants argued the law and IS specifications had changed for their product "concrete mix" made at site. It was eligible for the exemption making the earlier Supreme Court judgement in their own case irrelevant.

Tribunal ruled that there is no change in the  C.Ex Tariff Heading description as far as ready mix concrete is concerned. There is no mention of any IS Specification anywhere in the SC judgement. So changes in IS Specifications cannot be used to distinguish the decision of Hon’ble Apex Court. Demand beyond the period of limitation set aside. Personal penalty quashed as this is a case of interretation.

11th Oct : CESTAT Chennai : M/s. Pepsico India HPL Vs Commr of GST & CE, Chennai Outer : The appellants had paid excess central excise duty for which they utilised the CENVAT credit. On realizing this they suo moto took re-credit of the excess amount debited from the Cenvat account.

Held:  Following the said decisions of the High Courts, The impugned order and demand was set aside.

High Court Judgements

 

2nd July, 2018  : Allahabad High Court : Hamdard (Wakf) Labs Vs Commr Of Commercial Taxes : The High Court upholds the Tribunal order and holds that "Sharbat "Rooh Afza" is not unclassifiable under Schedule-V of the Act and liable to tax @ 12.5%. It is neither fruit juice nor fruit drink nor processed fruit.

 2nd July, 2018 :  Delhi High Court : JOYCE KAROUNG Vs NARCOTICS CONTROL BUREAU : Relying on the SC judgment in Babua v. State of Orissa, (2001) 2 SCC 566 the High Court concluded the petitioner is not prima facie not guilty. Also, liberty of a citizen must be balanced with the interest of the society especially where narcotic drugs and psychotropic substances are involved. It is alleged that this is not the first offence.
   
   

Click for earlier Judgements in 2018

Mumbai CESTAT rules that amount debited in Cenvat erroneously is not covered by time limitation under section 11B

Facts :

The GTL infrastructure Ltd. (appellant) is a provider of “Business Auxiliary Services” a taxable service. The appellant and Chennai Network Infrastructure Ltd. (CNIL) filed petitions in Bombay High Court and Madras High Court seeking a merger. The merger was sanctioned by the Hon’ble Bombay High Court on 22.07.2011 however the petition before the Hon’ble Madras High Court is still pending.

Based on the merger sanctioned by the Bombay High Court, and a presumption that the appellant was required to discharge CNIL’s liabilities, they filed a consolidated service tax returns. They included CNIL's liability in their return and CNIL however, did not file any returns.  The appellant also paid the CNIL's liabilities towards service tax amounting to Rs.79,92,56, 619/- by debit entry in the appellants CENVAT account for the period October 2010 to March 2012. A part of the amount was paid by utilizing CENVAT credit in CNIL's account. 

However, since approval from the Hon’ble Madras High Court, was still pending, the appellant CNIL's turnover and liabilities were not required to be included.

CNIL later filed  a declaration under Voluntary Compliance Encouragement Scheme (VCES) disclosing their liability of Rs.79,92,56,919/- and discharged it on 22.11.2013.  The designated VCES authority issued a Discharge certificate to CNIL.  CNIL informed the appellant that all service tax liability has been paid by them and they have no objection in the appellant taking credit of service tax paid on behalf of CNIL. 

As a measure of abundant caution, the appellant approached the Hon’ble Bombay High Court in a Writ Petition seeking prior approval from Court for the re-credit of the service tax paid on behalf of CNIL. The Hon’ble Court by order dated 27.01.2014 directed the Commissioner to decide the matter treating the Writ Petition as a representation. 

The Commissioner by his order dated 7.3.2014 directed the appellant to approach the proper officer to pursuing a remedy.  The appellant has challenged this order dated 7.3.2014 before the Tribunal which dismissed the appeal as not maintainable. 

Though it cannot be stated with certainty, the Commissioner apparently resorted to this approach to compel the appellant to seek “remedy” by following the refund procedure. The refund procedure would have introduced the issue of limitation as section 11B requires any refund claim to be filed within one year.  Apparently in this case, it was beyond one year. It seems this was the reason as later, the authorities did raise this objection before the Tribunal!

The appellant apparently understanding the situation, did follow the Commissioner’s advice but challenged the same before the Tribunal. As the Tribunal dismissed the appeal against the Commissioner’s order as not maintainable, the appellant approached the Hon’ble Bombay High Court. The Hon’ble Court disagreed with the Tribunal and held that the Hon’ble Tribunal is competent to decide the appeal and should do so in accordance with law. 

The Appellant’s Counsel among other issues submitted the following points:

  • the Commissioner was competent to decide the issue as per Section 12E of the Central Excise Acts, 1944 read with Section 83 of the Finance Act, 1994
  • He was duty bound by the directions of the Honble High Court in its order dated 27.01.2014. 
  • The amount in dispute has already been paid by CNIL admitting it to be its service tax liability. 
  • The payment was confirmed by the competent authority under VCES scheme and a discharge certificate was issued.
  • The appellant is entitled to take CENVAT credit of the amount of service tax paid on behalf of CNIL by the appellant  as CNIL
  • The appellant had filed returns including CNIL turnover service tax payment has been accepted by the Revenue. 
  • As the said amount is not to be paid by the appellant and CNIL has paid the same the appellant is entitled to re-credit. 
  • Disallowance of the credit would amount to recovering the tax amount twice. 

 

The main argument from the revenue was that the appellant representation was beyond the one year time limit prescribed under Section 11B. Hence their claim is not maintainable.  In support various case laws i.e. Vighnahar SSK Ltd., BDH Industries Ltd. and Automotive Metal Stampings Pvt. Ltd.

 

The Hon'ble Tribunal allowed the appeal stating :

“it is an admitted fact that the amount paid by the appellant is not required to be paid by the appellant as service tax and they have discharged the service tax liability of CNIL during the impugned period.  We further note that the appellant has informed vide their letters dated 05.01.2012 and 09.04.2013 about the fact of paying service tax on behalf of CNIL and are filing service tax returns including the turn over of CNIL in their turn over and paying service tax.  Therefore, the amount paid by the appellant in excess of their service tax liability ceased to be in nature of service tax paid by them and is merely an excess deposit paid by the appellant.  Therefore, such excess deposit paid by the appellant is refundable to the appellant and the provisions of Section 11B of the Central Excise Act, 1944 are not applicable to the facts of this case as held by the Honble Delhi High Court in the case of Hind Agro Industries Ltd. (supra) wherein the Honble High Court held that

“16. There can be no manner of doubt that the custom authorities in the instant case were bound to refund the cess erroneously paid by the Appellants for the period from 15th January, 2001 till 19th February, 2002 under a mistake of law. They had paid the cess when in fact no such cess was payable. There is no question of processing a claim of refund of such amount in terms of the Customs Act at all because the payment made mistakenly was not under that Act. In the circumstances, the period of limitation under Section 27 of the Act would not apply, as explained in Salonah Tea Company Limited. The applications for refund having been made well within the period of three years after discovery of mistake by the Appellants, are not barred by limitation. Question (a) in para 7 above is accordingly answered in favour of the Appellants. Consequently, the need to answer question (b) does not arise.”

……The applications for refund having been made well within the period of three years after discovery of mistake by the Appellants, are not barred by limitation. Question (a) in para 7 above is accordingly answered in favour of the Appellants. Consequently, the need to answer question (b) does not arise.”

5th February, 2015 : CESTAT Mumbai M/s GTL Infrastructure Ltd. Vs Commissioner of Service Tax, Mumbai II Respondent

 


Tax Risk Management Part 1

An Introduction

 

Risk comes from not knowing what you’re doing. 
- Warren Buffet

Read the Article

 

Tax Risk Management Part 2

Tax Risks as Black Swan Events!

If you were asked "What 'tax risks' you perceive in your business?" What would be your answer?

Read the Article

 

 

Indirect Tax Risk Management

Indirect Risk Tax Management
 

 

 

 

Economic Survey of India 2017-18