26 三月 2024

Tax Amicus: January 2024


Tax relief on Grants: Not to be taken for grant-ed!
By Rohini Mukherjee, Divya Bhardwaj and Aishwarya Vardhan

The article in this 151st edition of LKS Tax Amicus covers the issue of taxability of grants. It notes that given the voluntary and unilateral nature of a grant, there exists ambiguity whether the provision of a grant qualifies to be a taxable supply under the scheme of GST law, as to qualify as a supply it is essential that a good or service is provided for a consideration. The authors note that it needs to be examined on case-to-case basis, whether the provision of the grant amount in a particular arrangement has its strings attached to the service provided and the consideration paid. They also in this regard explore various international precedents and observe that irrespective of whether the amount is received in the name of grant or donation or charity, it must be meticulously seen whether there is an element of quid pro quo in the particular arrangement. According to them, it is crucial to delve into the very essence of the transaction in order to navigate this complex maze of grants.

Goods and Services Tax (GST)

Notifications and Circulars

  • Pan masala, tobacco and tobacco products – New special procedure to be effective from 1 April 2024
  • LPG for non-automotive purposes classifiable under TI 2711 19 10 – GST rate reduced to 5%

Ratio decidendi

  • No interest when GST paid in Electronic Cash Ledger before due date though GSTR-3B filed belatedly – Madras High Court
  • Refund not to be rejected for non-supply of authenticated documents – Delhi High Court
  • Refund not deniable when delay is on account of technical glitches of portal – Delhi High Court
  • Interest on delayed refund – Date of receipt of complete refund application is relevant – Rajasthan High Court
  • Refund of IGST on zero rated exports does not affect refund due to inverted duty structure – Madras High Court
  • Registration when cannot be cancelled retrospectively – Delhi High Court
  • Uploading of notice on portal is wrong when assessee had cancelled registration earlier – Allahabad High Court
  • Appeal to Appellate Authority – Pre-deposit only of 10% of tax liability is required if liability disputed in entirety – Karnataka High Court
  • Demand – Issuance of bunched show cause notice for different AYs is wrong – Madras High Court
  • Delay in filing returns after best judgement assessment under Section 62 is condonable – Madras High Court
  • Hearing opportunity to be provided when adverse decision is contemplated, even if request for same is not made – Madhya Pradesh High Court
  • E-way bill generated subsequent to detention – Penalty not imposable when intention to evade absent – Allahabad High Court
  • No penalty for minor typographical error in vehicle number in e-way bill – Allahabad High Court
  • Gift Voucher/Card cannot be taxed at the time of issuance unless there is a clear identity of goods or services and its value is ascertained – Madras High Court
  • Sale and buyback – ITC available when payment settled by book adjustment – West Bengal AAR
  • Printing of textbooks, notebooks, calendar and report cards – Supply when of ‘goods’ or ‘services’ – West Bengal AAR
  • GST on canteen service to employees against recovery of nominal amount – Uttarakhand AAR
  • Change in rate of tax during ongoing service – Effect – Uttar Pradesh AAR


Notifications and Circulars

  • Exemption to certain classes of deposits from payments from the Electronic Cash/ Credit Duty Ledger is now effective till 1 March 2024
  • Import restrictions inapplicable to Desktop Computers, etc. falling under HS Code 8471
  • Molasses resulting from the extraction or refining of sugar – Export duty of 50% imposed
  • Soya-bean, sunflower and palm oils – BCD and AIDC reduction extended till 31 March 2025
  • Urad and Tur – Imports ‘Free’ till 31 March 2025
  • Used IT assets (laptops, desktops, monitors, and printers) from SEZ to DTA – Import Policy notified
  • Screws – Imports prohibited if CIF value is less than INR 129/kg
  • Silver imports – Policy Condition introduced to Chapter 71
  • Non-Preferential Certificate of Origin – Date for mandatory e-filing through common digital platform extended till 31 January 2024

Ratio decidendi

  • EPCG export obligation fulfilment in case of third-party exports – Amendment in HBP para 5.20(c) on 5 January 2017 read with Policy Circular dated 29 March 2019 is not applicable to Authorisations issued prior to 5 January 2017 – Gujarat High Court
  • SEZ imports – Exemption from GST compensation cess is not available – Andhra Pradesh High Court
  • Third-party invoicing under ASEAN-India FTA – ‘Third country’ includes any number of countries – Customs AAR
  • Penalty can be imposed on partnership firm – CESTAT New Delhi
  • EOU – Board of Approval cannot refuse to fix wastage norms – Delhi High Court
  • No recovery under Customs Section 28AAA until DGFT cancels duty credit scrip – Madras High Court
  • ‘Flanges’ when are classifiable under Heading 8503 and not under Heading 7307 – CESTAT Chennai
  • Data Projectors are classifiable under TI 8528 62 00 – Presence of additional ports such as HDMI, etc., is immaterial – Customs AAR
  • Super Nuggets 570 G IP-Soy Protein Nuggets are classifiable under Customs TI 3504 00 91 – Customs AAR

Central Excise, Service Tax & VAT

Ratio decidendi

  • Facilitating booking of hotel rooms through online portal is covered under Tour Operator service – 90% abatement available – CESTAT New Delhi
  • MRP based valuation not applicable when goods prohibited for retail sale and distributed by buyer after collecting some price – CESTAT New Delhi
  • EOU – Valuation in case of DTA clearance to related unit – Value at 110% of cost of production is correct – CESTAT Ahmedabad
  • Repacking and relabelling of spares of concrete mixers/pumps is not deemed manufacture – CESTAT Chennai
  • No service tax when consideration absent – Resort to Valuation Rules for determination of value, is incorrect – CESTAT Bengaluru
  • Cenvat credit – Not up to assessee to establish eligibility – Recovery must engage assessee with evidence – CESTAT Mumbai
  • Sabka Vishwas (LDR) Scheme – Deposits against demand for one period can be adjusted against demand for another period – Karnataka High Court
  • Clean Environment Cess not payable on stock of coal held on 30 June 2017 which was removed later after introduction of GST – CESTAT New Delhi

January 2024/Issue-151 January 2024/Issue-151

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