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Tax Amicus: August 2018

by Koushal Sonthalia

Refund of GST under Inverted Duty Structure

Due to multi-rate structure in India, taxpayers face a peculiar problem when the final product attracts lower GST while the inputs/input services are liable to tax at much higher rate. Scope of ‘Net ITC’ as per the rules has seen many changes including a retrospective change effective from 1-7-2017, however it is perceived that restricting refund under inverted duty structure to inputs only is unreasonable. Relying on two Supreme Court judgements interpreting the phrase “unless the context otherwise requires”, it can be said that the context of refund under inverted duty structure requires interpretation of the expression “inputs” as all procurements including input services used in making outward supplies. According to the author, not refunding GST attributable to input services is resulting in accumulation of ITC, which goes against the intention of free flow of ITC under GST and is adding to the cost of making such supplies...


Goods & Services Tax (GST)

Notifications and Circulars

  • Bills to amend GST Acts passed by Lok Sabha
  • Reverse charge liability on supplies from non-registered supplier deferred till 30-9-2019
  • GST Returns – Due dates for months of July 2018 till March 2019 notified
  • Due dates for filing GSTR-3B and GSTR-1 (in specified cases), extended
  • GST return by Input Service Distributor – Date extended again
  • Fertilizers supplied for manufacturing complex fertilizer attract GST @ 5%
  • GST on vocational training provided by private ITIs – Exemption clarified
  • Rate of tax on various products and services clarified by CBIC
  • Special procedure for completing GST migration
  • UK proposes to amend law to address ‘looping’ of financial services

For GST Acts, GST Rules and Notifications (Central and States), Circulars, Press Releases and Notes, please use Knowledge tab in www.gst.lakshmisri.com.

Ratio decidendi

  • Services by employees of corporate office, to other units in other States, is ‘supply’ – AAR Karnataka
  • E-Commerce Operator liable to GST on amount charged by cab operators for transportation – AAR Karnataka
  • Generic terms indicating quality when to be construed ‘brand name’ – Appellate AAR Maharashtra
  • Conversion of EVR (diamond in vault) to securities and vice-versa attract GST – AAR Karnataka
  • Supply of beverages by coffee vending machines to SEZ units is not covered under ‘zero rated supply’ – AAR Karnataka
  • Supply of diesel engines and repair services to units located in SEZs are zero rated – AAR West Bengal
  • ‘Truck Mounted Crane’ when classifiable under Heading 8705 as SPVs – AAR Haryana
  • GST on sourcing services provided to associate company abroad – AAR Haryana
  • Fitting of bus-bodies (principal supply) on chassis is composite supply – AAR Haryana
  • Exam support services are composite supplies attracting GST @ 18% – AAR Haryana



Notifications and Circulars

  • Petroleum coke import policy revised – Import for fuel prohibited
  • Solar cell imports to be provisionally assessed – Safeguard duty stayed
  • Textile products - Customs duties increased on various textile products
  • Indian retaliatory measures against USA to cover trade loss, postponed
  • MEIS benefit extended to specified goods - List in Appendix 3A deleted
  • Courier and postal exports – Value limit for MEIS benefit enhanced
  • TED refund on supplies to projects funded by JICA till 31-3-2015
  • Refund to exporters – CBIC extends facility of officer interface
  • No fees for amendment in Export Manifest for specified period - Levy of Fees (Customs Documents) Regulations amended
  • SCOMET - Amendments in Appendix 3, procedural relaxations and export authorisations

Ratio decidendi

  • Tax exemption notifications to be interpreted strictly favouring Revenue – 5 Judges Bench of Supreme Court
  • Redemption of goods on payment of fine – Additional condition of re-export not correct – CESTAT Hyderabad
  • SEZ Act does not override FT (D&R) Act if it remains consistent with former – Delhi High Court
  • Amendment of Bill of Entry on change in importer, after Customs duty rates increased – Gujarat High Court


Central Excise and Service Tax

Ratio decidendi

  • Vocational training - Exemption to commercial training services in aviation, hospitality, etc. – Supreme Court upholds Tribunal order
  • No Cenvat credit on service attributable to trading even prior to 2011 – Delhi High Court
  • Agreement for supply of water on agreed tariff not covered under BSS – Supreme Court
  • Cenvat credit available on courier service used for sending free samples – CESTAT Chennai
  • Reimbursements towards senior counsel fee not liable to service tax – Delhi High Court
  • Cenvat Credit on CVD not deniable even if document for other inputs not sufficient– Delhi High Court
  • Construction of residential complex for personal use, via sub-contractor – Karnataka High Court
  • Credit card services – Bank issuing credit card when not liable – CESTAT Delhi
  • Supply of food to airlines without involvement of serving to passengers on board is not outdoor catering service – CESTAT Delhi
  • Steel doors cleared to research institute not eligible for exemption under Notification No. 10/97-CE – CESTAT Hyderabad
  • Manufacture – Cutting and embossing of jumbo paper rolls when amount to manufacture – CESTAT Delhi
  • Cenvat credit on rail and rail sleeper for transporting material – CESTAT Kolkata


August, 2018/Issue-86 August, 2018/Issue-86

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