Next GST Council meeting scheduled on 21st July :      The outgoing CEA Arvind Subramanian says - India can't have single rate GST, however a 3-slab structure is possible :      GST Council is expected to consider rate cut on items with low revenue impact in the meeting on July 21 :      Government proposes major changes to GST and this may bring down litigation :      Outgoing CEA, Mr Arvind Subramanian says, the first step to simplify GST is to do away with 28 per cent tax slab :      TDS, TCS and RCM provisions in GST have been deferred by 3 months :      GST may decide to include natural gas and ATF in GST as a first step to extend GST to petroleum products

To simply GST first step is "remove 28% tax slab", says outgoing CEA Arvind Subramanian

28th June, 2018

Outgoing CEA says first step to simplify GST is to do away with 28 per cent tax slab. 

Mr Arvind Subramanian said “I am saying that in an ideal system the 28 per cent rate has to go. The cesses may have to be there because we are going to have higher rates for some products but there shouldn’t be multiple rates even here. In my report, we had called for one 18 per cent rate and then 40 per cent rate. Cesses are a different way of implementing the 40 per cent rate.”

Currently, there are seven slabs in GST 0, 0.25%, 3%, 5%, 12%, 18% and 28%. In addition there is compensation cess applicable to "sin" or "luxury" goods. All this makes the GST structure both complex and high.

 

HSBC report says GST has not increased formalisation of Indian Economy

24th June, 2018


 

A British brokerage firm HSBC seems to contradict what Mr Arun Jaitley recently said a few days ago. He said that GST and Noteban are reforms that are leading to the gradual increase in formalisation of the Indian economy.

The HSBC report on the contrary, says, the demand for cash in India has gone up - "Cash in circulation is rising above trend, but not because rural India is faring better, rather it is due to a revival in the 'informal' sectors, thanks to the continued remonetisation".

The report however concedes that in the long run it will lead to formalisation.

GST - A Good & Simple Tax?

18th June, 2018


A review of the most significant indirect tax reform one year after its introduction on 1st July, 2017.

Were all the expectations of the stakeholders met? What are the pain points?

  • First - there are multiple Rates, seven different rates topped with a cess on sin and luxury goods
  • High Tax Rates, probably one of the highest in the world, together with petroleum products operating in a parallel tax system with no cross credit.
  • The complexities in the  laws seem to have flowed from the old legacy laws into the new GST laws. Complexity remains.
  • What next? Govt and GST Council contemplating action to resolve the issues.
 Read the full article


The Union Minister of Petroleum & NG, Mr Dharmendra Pradhan says as petrol and diesel exclusion from GST costs state owned oil industry Rs 200 billion.

7th June 2018

The Union Minister of Petroleum & NG, Mr Dharmendra Pradhan is reported to have said that as petrol and diesel is kept out of the purview of GST, the state owned oil industry is losing Rs 200 billion annually in terms of input credit.

Well, this is true not just for the state owned oil industry but all manufacturers, service providers and traders (entire economy) lose input credit since the petro-products are out of the scope of GST.

Secondly, the credit loss to the industry and trade reflects as tax collected and retained by the Central and State Govt. So any which way the Govt really doesn't lose.

Thirdly, instead of speaking about a long term plan of GST introduction the immediate solution to reduce petrol and diesel prices will be to cut central excise. This will have a snowball effect as it will automatically reduce State VAT as value drops.

Question is, whether the Govt is confident of its finances to reduce central excise.

 

Isn’t creating jobs a good thing? Should it be taxed?

7th June 2018

Isn’t creating jobs a good thing? Should it be taxed?

When countries are straining to create new jobs to meet the growing unemployment, one wouldn’t think that authorities will impose taxes on jobs.

But this is exactly what the Seattle City Council voted to do. Unanimously by a 9-0 vote.  The new kind of tax called “head tax” will be levied at $275 per employee, per year on “for-profit” companies which gross at least $20 million per year in the city. This tax will become effective from next year i.e. 2019 and will apply to large employers like Amazon, Microsoft, Starbucks etc. that will be covered by the parameters set for the tax. This tax is watered down as the initial proposal was $500 per employee.

The underlying reason for the new tax is to create a fund to help the homeless population in Seattle find affordable housing. Another likely reason is that the city has added a large number to its population in recent years. This makes home prices in Seattle one of the fastest growing pushing it out of reach of the poor. Those who support the tax believe that the revenue is needed to build shelters and the head tax is progressive as it falls on those who benefit the most from the growth.

Read the article
 
 Click for News Archives  

 

Recent Court / Tribunal Judgements

 CESTAT Decisions

17th July, 2018 : CESTAT Delhi : Sir Ganga Ram Hospital Vs C.S.T. Delhi-I :  During audit it was observed the appellants outsourced 4 diagnostic services to 3 diagnostic centres. The Tribunal held "the arrangement vis a vis appellant and diagnostic centre is clearly an arrangement of Business Support System." The Tribunal set aisde the demands under Management Maintenance & Repair Services. Appeal was partly allowed.

13th July, 2018 : CESTAT Mumbai : Mahindra Engg. Vs CCE, Pune-I : The appellant refund claim was allowed but amount credited to Consumer Welfare Fund. The appellant had intimated on enquiry that the said amount was treated as expenditure in their P&L account accordingly the amount was credited to the Consumer Welfare Fund. The Tribunal held “The only possible way to pass the bar of Unjust Enrichment is that the disputed tax /duty is not expensed off in the accounts, but booked as ‘Receivables’.” Appeal dismissed.

9th July, 2018 : CESTAT Bangalore : Bhagwan Mahaveer Jain College Vs CC, Bangalore: It was alleged 200 PCs imported under Not. 51/96-Cus for reasearch in the field of agriculture, computers etc. were only used for their courses in microbiology, botany, biochemistry. The Tribunal held "Essentiality Certificate has been issued and Bangalore University is registered with the DSIR. Therefore, the importer is eligible ..as the conditions of the Notification have been satisfied..".  Appeal is allowed.

3rd July, 2018 : CESTAT Delhi : Udaipur Treasure  Vs C.C.E. & S.T.-Indore  : Appellant availed Cenvat Credit but provided no output service or paid service tax. The Tribunal rejected the appeal held "Credit... allowed to be taken contingent upon ...rendering output service which is chargeable to Service Tax..."

3rd July, 2018 : Elinjikal Foods & Beverages  & Ors  Vs CCE (Adj) etc.  : The appeal involves valuation where the buyer, Concept Sales was alleged to sell the goods at twice the purchase price. Investigation revealed interconnectedness, interdependence & inexplicable financial transactions. The Tribunal held "..under these circumstances, it has to be held that leave about mutuality of interest, all the companies were one and the same managed by Shri George Varghese; corporate entities are created as a façade."

2nd July, 2018 :  CESTAT Allahabad : Piem Hotels Ltd. Vs CCEST, Lucknow : The main dispute was over credit availed on invoices of Indian Hotels as "Management Consultancy". The dept disputed this saying it was "Franchisee Service" and hence truncated credit only to the extent of 20% should have been availed, not  100%. The issue since then is settled at Indian Hotels end in their favour. Accordingly, the appellant is entitled to full 100% credit.

2nd July, 2018 : CESTAT Allahabad : Alert Protection And Security Vs CCEST, Meerut-i : Details as per the bank statements and bills received from the customers did not match with the service tax returns. The appellant argued the balance sheet figures were lower. The Tribunal accepted the revenue’s argument and held that the balance sheet does not carry any weight.  Appeal is rejected.

2nd July, 2018 : CESTAT Ahmedabad : Radha Trading  & Ors Vs CC-Kandla : DRI seized the goods on charges of under valuation alleging the goods were routed through SEZ units to actual importers. They relied on evidences and statements of persons indicating that the DTA buyers/ importers were negotiating directly with overseas suppliers etc. The appeal was against the harsh conditions of provisional release. Appeals were partly allowed. 

2nd July, 2018 : CESTAT Delhi : Pee Cee Cosma Sope Ltd. Vs CE, C & CGST – CCE & ST, Jodhpur :  Cenvat Credit on outward freight inadmissible. On time bar appeal rejected on grounds of suppression.

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.

22nd June, 2018 : MP High Court : Star Automobile Vs Commr : Appellant was issued a notice for Rs. 26.61 lakhs and later confirmed in adjudication and both appeal stages. The appellant raised the time-bar issue before the Tribunal. The Hon'ble Court dismissed the appeal u/s 35G as "the appeal does not involve any substantial questions of law for adjudication by this Court and the proposed questions ....are purely factual.." 21st June, 2018 : Bombay High Court : Lloyds Steel Industries Vs CESTAT & Ors : The issue involved eligibility of cenvat credit on appliances/instruments used for maintenance. Tools or instruments must be demonstrated to be used during manufacturing process. The Court held the items do not qualify as capital goods and upheld CESTAT order denying credit.
21st June, 2018 : Calcutta High Court : ARCL Organics Ltd Vs CCE, Kol V : The substantial question of law was: “Whether an appeal can be dismissed for non-compliance of pre-deposit without considering merits? Though clandestine removal was raised, Tribunal did not go into the merits but dismissed merely on the ground that pre-deposit was not made.  If appellant makes the pre-deposit of 10% of the duty within 30 days, appeals will stand restored. 20th June, 2018 : Karnataka High Court : Principal Commr CE Vs  AZKO NOBEL : The Dept appeal was filed seeking an answer to a question of law already answered by the Tribunal in favour of the assessee that the Amendment of Rule 6(6)(i) of Cenvat Credit Rules, 2004, was clarificatory and hence restrospective in nature. The Court uphold the decision of the cognate bench & dismissed appeal.
18th June, 2018 : Chattisgarh HC : Shrikishan & Co Vs Addl Commr Commrcl Tax : Whether bitumen emulsion should be assed under under residual category at % or 4% as per Entry-23 of Schedule-II of Part II of the Chhattisgarh VAT Act. Based on a detailed analysis, Hon'ble High Court sets aside revisional authority order and rules bitumen emulsion is covered by Entry-23 of Part II of Schedule-II of the VAT Act and rate of VAT would be 4% or applicable. 18th June, 2018 : Himachal Pradesh HC : The State of HP Vs Tritronics India :  The Court rejects Revenue plea to condone delay in Revision saying HP VAT Act, 2005 "is a complete code in itself....and as there is no provision contained in the Act, making the provisions of Limitation Act applicable.....this Court has no inherent power to condone the delay in entertaining a Revision Petition which stands filed beyond the period of limitation prescribed in the Act."

Click for earlier Judgements in 2018

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