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

When will the Revenue Stop disputing

When will the Revenue stop disputing everything?

20th August, 2014

Honda Siel Power Products Ltd (HSPPL) were manufacturers of portable water pumps and portable gensets.  Portable water pumps were partially exempted (attracting 4% basic excise duty) by Notification No.10/2002 dated 1.3.2002 subject to the condition that no credit was availed on inputs.

Some of the inputs for both exempted and non-exempted goods were common. So they availed Cenvat credit on such common inputs for exempt and dutiable finished goods and reversed the credit on common inputs actually consumed in exempted goods subsequently. The Commissioner following Hon’ble  Supreme Court in Chandrapur Magnet Wires (P) Ltd.  dropped the notice. In that judgement the Hon’ble Supreme Court held that reversal of credit subsequently will also tantamount to not taking credit.

However, the Revenue in appeal before the Tribunal contended that since HSPPL availed credit initially they did not fulfil the condition of the exemption and therefore would not be eligible for the exemption. The Revenue argued therefore that duty amounting to  Rs.72,66,498/- being the differential amount was recoverable.

The Tribunal following the judgement of the Hon’ble Supreme Court held "if the credit taken is reversed the same would amount to a situation as if no credit was ever availed". The Tribunal also observed that the Department is not contesting the fact that the credit was reversed nor is there a dispute about the calculation for the reversal of credit. The only argument is that the reversal of credit happened later after the credit was first availed.

If one was to accept this argument, it would practically limit the exemption seriously. It would mean that no manufacturer who claims such an exemption (with condition that credit should not be availed) and  produces both exempted and dutiable goods will be able to claim the exemption. The only way the demand could have been confirmed is by asserting that the notification intends to distinguish between manufacturers who only produce exempted goods and other manufacturers who produce both exempted and non-exempted goods. Such an assertion would amount to an unreasonable distinction and a discrimination. Even from a point of equity, the Cenvat credit was already reversed. The Revenue did not dispute this and therefore there was no revenue implication whatsoever.

Finally, this was not an order passed by the Commissioner advancing his own rationale for the conclusion. He had relied upon a precedent set by the Hon’ble Supreme Court. So unless he choice judicial indiscipline, what was the choice did he have.

In any case, when the department filed an appeal before the CESTAT, New Delhi, did they expect the CESTAT to defy the Hon’ble Supreme Court? What were they thinking? What did they hope for?

It is rather surprising that an appeal was filed against a fairly reasonable order, following the principle set by a reasonable Supreme Court decision in a case where there is no legitimate revenue payable by the tax payer.

This case exemplifies several other avoidable tax disputes in India. Disputes which subject tax payers through litigation and tax uncertainties to get what is rightfully due to them. Legitimate taxes must be collected. No one can or should dispute this. But avoidable tax disputes? They are just impediments to business. Which keep the tax authorities and honest tax payers engaged and distracts the taxmen from paying attention to real tax offenders. 

The recent budget proposal to collect a mandatory pre-deposit in this demonstrably revenue biased and charged atmosphere seems flawed! It will punish honest tax payers who follow the rules without getting distracted. Companies should represent strongly against this and seek a more wholesome and durable solution which will compel officers to pass correct and fair orders.

Read the Tribunal decision


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