Article

Discharge of indirect tax liabilities and procedural compliance during intervening period in case of amalgamation/ merger / demerger

By Payal Nahar

The article in this issue of Tax Amicus discusses at length the significance of ‘appointed date’, ‘effective date’ and various clauses of the scheme of amalgamation/ merger/ demerger in the light of indirect tax laws. Elaborating upon the concepts, the author deliberates on a dispute in respect of those transactions which are undertaken between the appointed date and the effective date/till the fresh registration under indirect tax is obtained by the successor in its own name. The article elaborates upon a recent Gujarat High Court decision in the case of L&T Hydrocarbon Engineering Ltd. v. Union of India holding that the successor entity would not be again liable to central excise duty on the clearances made from the appointed date till the effective date of de-merger. According to the author, the issue is of general nature and non-compliance of procedural requirement under various laws, including GST, by the transferee between the appointed date and effective date would always arise, and hence companies must consider the terms of the amalgamation/merger/ demerger from taxation point of view and impact of this case...

Goods & Services Tax (GST)

Notifications and Circulars

• No detention on sole reason of undervaluation as compared to MRP – Kerala authorities issue circular to comply with the High Court decision
• Special composition scheme for brick kilns

Ratio decidendi

• Refund due to inverted duty structure available even when input and output goods are same – Calcutta High Court
• Blocking of ITC – Post decisional or remedial hearing to be granted – Reasons to be recorded in every case – Gujarat High Court
• Jurisdiction of State Officer when assessee allotted to Central Officer – Contributory error of jurisdiction – Allahabad High Court
• Rule 96(10) restrictions – Recredit of ITC on voluntary repayment of IGST refund with interest – Gujarat High Court
• Demand – Department not to threaten recovery in intimation under Section 74(5) – Gujarat High Court
• Expiry of e-way bill during transit – Vehicle when should be allowed to continue – Tripura High Court
• Refund of ITC on exports when duty drawback claimed – Madras High Court
• Discrepancy in the date on the invoice when insignificant – Kerala High Court
• Conducting of examination covered under ‘education’ for GST exemption – Gujarat High Court
• C&F services along with transportation of cargo, empty containers and obtaining customs permissions and certificates, covered as mixed supply – Gujarat Appellate AAR
• Diagnostic imaging services to further provisioning of diagnostic services is not covered under healthcare services – Haryana Appellate AAR
• Valuation – Fair Trade Premium includible in value of goods supplied – Kerala AAR
• Liquidated damages/penalties recovered for breach of contract are liable to GST – Telangana AAR
• Transportation facility provided to employees under separate contract is liable to GST – Haryana Appellate AAR
• No additional registration required in State where goods imported even if same sent directly therefrom to customers; ITC also available – Telangana AAR
• Tunnelling not covered under S. No. 3A of Notification No. 12/2017-CT (R) – Maharashtra AAR
• No ITC on inputs/capital goods used for construction of warehouse for self – Haryana Appellate AAR

Customs

Notifications and Circulars

• EPCG authorisation – Amendments made in Handbook of Procedures to reduce compliance burden and enhance ease of doing business
• Online scrip transfer recording module re-operationalised with additional features
• Exemption from IGST and Compensation Cess for imports under advance authorisations or EPCG or by an EOU extended till 30 June 2022
• Cotton, not carded or combed – Basic Customs Duty and Agriculture Infrastructure and Development Cess exempted

Ratio decidendi

• EPCG authorisation – Electricity ‘transmission’ and ‘distribution’ are two different things – DGFT Circular dated 4 January 2019 not legal – Gujarat High Court
• Conversion of shipping bill – Failure on part of department in conducting physical examination not to be attributed as lapse on part of assessee – CESTAT Bengaluru
• Conversion of shipping bill – Absence of provisions for limitation and requirement of physical examination – CESTAT Chennai
• Interest payable for delay in determining brand rate of drawback – Madras High Court

Central Excise, Service Tax & VAT

Ratio decidendi

• Not allowing assessee to operate his bank account when dispute pending in second appeal, not correct – Gujarat High Court
• Area based exemption – New industrial unit when majority shares held by proprietor of earlier manufacturer – Supreme Court
• Refund of amount paid under SVLDR Scheme when monetary limit of departmental appeal raised earlier – Bombay High Court
• DGCEI officers have no power to assess central excise duty or scrutinize self-assessment – CESTAT New Delhi
• Refund of service tax on exports when shipping bill shows different exporter – CESTAT Kolkata
• Refund of pre-deposit when appeals disposed of as demands beyond a certain sum turned down by NCLAT in insolvency proceedings – Rajasthan High Court