Article

‘Intermediary’ – Mediating required for intermediary

By Rinku Panbude & Shankar Rochlani

The first article in this issue of Tax Amicus discusses at length the issue as to whether an intermediary suppling service to a foreign customer should discharge CGST+SGST or IGST. It notes that Section 8(2) of the Integrated Goods and Services Tax Act, 2017 dealing with ‘intra-State supply’ begins with the term ‘subject to…’ thereby giving a meaning that Section 8 is inextricably conditional upon Section 12 and does not have its own identity unless the later section is invoked. The authors are of the view that hence in such case, the transaction would be covered under Section 13(8)(c) and be deemed as inter-State supply as per Section 7(5)(c). They also state that the Gujarat High Court’s observation in the case of Material Recycling Association of India, that CGST+SGST would be liable in such case, is a mere obiter dicta. The article concludes by observing that while the legacy issue of sales agent vs. intermediary is still continuing on one hand, it is high time for CBIC to clarify the nature of applicable tax...

Contractual payment = Consideration?

By Mansi Goel

The second article in this issue of the newsletter elaborately discusses the thin line which a payment needs to cross in order to become a consideration. Discussing the definitions of ‘consideration’ under GST law and Indian Contract Act, 1872, the article states that payment should have a direct and sufficient nexus with the supply and be at the desire of the promisor. Providing illustrations, the author comments that merely because some payment is made by one party to another, it does not necessarily imply that there would be some supply for which the payment is a consideration. Regarding the second attribute of the payment being at the desire of the promisor, the author, relying upon recent CESTAT Larger Bench decision in the case of Repco Home Finance Ltd., also points out various instances where the payment cannot be a consideration. According to the author, it should be determined for each payment whether there is any corresponding activity and whether the payment has the attributes of consideration...

Goods & Services Tax (GST)

Notifications and Circulars

• Interest on delayed payment of GST to be paid on net tax liability – Amendment in CGST Section 50 comes into force from 01-09-2020
• E-invoice – Increase in threshold limit and exclusion of SEZ units
• E-invoice – Increase in threshold limit and exclusion of SEZ units

Ratio decidendi

• Refund due to inverted duty structure available of credit accumulated on input services – Gujarat High Court
• Place of supply in case of intermediary – Section 13(8)(b) of IGST Act is intra vires Constitution of India – Gujarat High Court
• No detention when e-way bill did not mention tax amount – Kerala High Court
• No detention when invoices not bearing continuous serial number – Kerala High Court
• Best judgement assessment can be done immediately after failure to file return despite notice – Kerala High Court
• Anti-profiteering – No penalty imposable for violations before 01-01-2020 – National Anti-Profiteering Authority
• Recipient of service – Foreign manufacturer is recipient of repair service provided by Indian distributor in India during warranty period – Appellate AAR Karnataka
• No ITC available on paver blocks laid in parking area – AAR Maharashtra
• Setting up of data centre is not works contract but composite supply – AAR Maharashtra
• Supply of food to hospitals on outsource basis is liable to GST – Exemption available only to clinical establishments – AAR Telangana
• ITC on tax paid on lease premium, annual lease rentals and maintenance charges paid for land lease when not available – AAR Telangana
• Assignment of leasehold rights and transfer fee are taxable under Other Miscellaneous services @ 18% – AAR Telangana
• UK VAT – Supplier of service vs. agent – Liability towards customer – UK’s Upper Tribunal (Tax and Chancery Chamber)

Customs

Notifications and Circulars

• Faceless assessment – 2nd phase launched with inclusion of Delhi and Mumbai
• FTAs – Administration of Rules of Origin under Trade Agreements – Guidelines
• Gold, silver, other precious and semi-precious metals and articles – Regulations notified for manufacture in special warehouse
• Authorised Public Undertakings extended benefit of deferred payment of Customs duty
• Import of pets or live animals – Procedure revised
• Colour television sets – Import Policy revised

Ratio decidendi

• Child parts used in manufacture of parts of motor vehicle seats are classifiable under Heading 9401 – CESTAT Ahmedabad
• Water signal/sensors, pressure sensors, heart film air mass meters/air mass sensors and temperature sensors are classifiable under Heading 9026 and not Heading 9032 – CESTAT Bengaluru
• Digital cameras for capturing still images and videos classifiable under Tariff Item 8525 80 20 – CESTAT Mumbai
• Valuation – Advertisement and sales promotion expenses incurred by importer on own account, not includible – CESTAT Delhi
• Surgical tape rolls not eligible for exemption as ‘skin barrier micropore surgical tapes’ – CESTAT Bengaluru

Central Excise, Service Tax & VAT

Ratio decidendi

• Foreign bank’s charges for transfer of money to settle export payments, not liable to service tax in the hands of the bank of Indian exporter – CESTAT Delhi
• Cenvat credit when portion of output service not liable to service tax – CESTAT Bengaluru
• Sabka Vishwas (Legacy Dispute Resolution) Scheme – Oral admission of demand – Delhi High Court
• Nestle Milky Bar and Eclair are not white chocolate – Exemption available – CESTAT Bengaluru
• Valuation of goods prior to and after 01-07-2000 – Supreme Court lists principles