Article

Locking horns over ‘free’ and ‘restricted’

By Nupur Maheshwari, Shambhavi Mishra and Varsha Goel

The concept of ‘restriction’ imposed on export of goods as indicated in the Indian Trade Classification (‘ITC (HS)’) has been the subject matter of judicial interpretation before various forums. The article in this 150th edition of LKS Tax Amicus analyses a recent Gujarat High Court decision in the case of Satyendra Packaging Limited v. Union of India, which has sparked some controversy towards the settled understanding of the issue. The Court has considered the export of restricted item as ‘free’ for determining the eligibility of RoDTEP scheme, once the permission to export the same was granted by the Directorate of Sugar. Deliberating on the legal background and various judicial pronouncements, the authors observe that obtaining an authorisation, does not make restricted goods ‘free’ but, the decision of Gujarat High Court holds to the contrary. According to them, the fulfilment of the conditions prescribed for export of sugar does not ensure automatic revision of the export policy from ‘restricted’ to ‘free’, and that it will be interesting to see if the Hon’ble Supreme Court endorses the view of the Gujarat High Court.

Goods and Services Tax (GST)

Notifications and Circulars

• Secondment of employees - Applicability of SC decision in Northern Operating Systems in GST regime clarified
• Form GSTR-3B - Last date for filing extended for taxpayers in specified districts of Tamil Nadu

Ratio decidendi

• Refund of ITC due to inverted tax structure is available even if tax rate on main input and output is same - Input and output being same, also immaterial - Delhi High Court
• Refund of ITC on exports when shipping bills signed by Customs officer who is not a proper officer - Calcutta High Court
• ITC deniable in absence of documentary evidence to support physical movement of goods - Allahabad High Court
• Investigation - Section 6(2)(b) does not preclude inspection by Central tax officers when an inspection is already done by State GST authorities - Delhi High Court
• Detention/seizure during transit - No automatic penalty under Section 129 without deciding on defences - Calcutta High Court
• Audit notice not complying with the time period specified in Section 65(3), and finalisation of findings without considering the reply, are wrong - Andhra Pradesh High Court
• Personal hearing mandatory before passing assessment order, irrespective of any request for same or even if no reply to SCN is filed - Madras High Court
• ‘Opportunity of hearing’ in Section 75 includes opportunity of personal hearing where adverse decision contemplated against assessee - Madhya Pradesh High Court
• Appeal to Appellate Authority - Provisions of Limitation Act, 1963 applicable - Appellate Authority can condone delay beyond 60 days - Calcutta High Court
• Search - Reasons for authorization to search to precede authorization for search - Allahabad High Court
• Demand of bank guarantee when Section 54(11) order directed for solvent security, is wrong - Rajasthan High Court
• ‘Delivery note’ and ‘Delivery challan’ are different - No substitute of prescribed Delivery challan - Jammu & Kashmir High Court
• Exemption to services in relation to ‘agricultural produce’ - Subsequent processes on the ‘agricultural produce’ are immaterial - Madras High Court
• Warehousing of tea exempt under Sl. No. 54 of Notification No. 12/2017-CT(R) - Blending and/or packing of tea does not change is basic character as ‘agriculture produce’ - Bombay High Court
• Correction in GSTR-1 return even after prescribed time period is permissible, when there is no loss of revenue - Bombay High Court
• No interest for delayed filing of returns due to wrong cancellation of assessee’s GSTIN - Kerala High Court
• Clubbing of ITC refund claim with output tax liability is not permissible - Calcutta High Court
• Non-appearance on the stipulated date is not absence of interest in hearing - Bombay High Court
• Amount deposited in Escrow account pending outcome of challenge against Arbitral Award is not liable to GST - Gujarat AAR
• Hostel services to students and working people is not eligible to exemption available to renting of residential dwelling - Tamil Nadu AAR and Karnataka AAR
• Lease of residential building for commercial purposes is not covered under RCM - Rajasthan AAR
• Amount paid for termination of lease constitute consideration for the supply of a facility - Karnataka AAR

Customs

Notifications and Circulars

• Amnesty Scheme - Clarification in relation to filing of application by 31 December 2023
• Yellow peas exempted from BCD and AIDC, while import policy also relaxed
• Lentil (Mosur) - Exemption from AIDC extended till 31 March 2025
• De-oiled rice bran - Export prohibition extended till 31 March 2024
• Onion exports prohibited till 31 March 2024
• Spices - Minimum value addition under Advance authorisation clarified

Ratio decidendi

• Advance authorisation - Condition X of Notification No. 21/2015-Cus not covers goods manufactured out of imported goods - CESTAT Ahmedabad
• EOU - Remission of duty when capital goods destroyed in fire were not insured to cover Customs duty - CESTAT Bengaluru
• Echo family devices, having ability to recognize voice commands and interact with AVS, are classifiable under Heading 8517 and not under Heading 8518 or 8528 - Exemption notification is not relevant for classification - Delhi High Court
• Front cover, middle cover and back cover of cellular phones are classifiable under TI 8517 70 90 - Classification cannot be decided by MeITY or Customs exemption notification - CESTAT New Delhi
• Exemption - Delay in issuance of Essentiality Certificate by another Ministry is not fatal - CESTAT Mumbai
• Compounding of offences - CESTAT has jurisdiction to entertain appeal against Chief Commissioner’s order - Telangana High Court
• Importer is not liable for delay in issuing EODC certificate under EPCG scheme by DGFT - CESTAT New Delhi
• Data Collection Device, a card reader working in conjunction with server, is classifiable under Heading 8543 - CESTAT Bengaluru
• Wireless Access Product using MIMO technology, and specifically covered under ITA, is not excluded from Notification dated 1 March 2005 - CESTAT New Delhi

Central Excise, Service Tax & VAT

Ratio decidendi

• Cenvat credit on GTA services for outward transportation of goods to buyer’s premises - CESTAT Larger Bench distinguishes SC decision in Ultratech Cement - CESTAT Larger Bench
• Reference to Larger Bench to be heard at instance of intervener even if appellant settles case under SV(LDR) Scheme - Intervener need not be an aggrieved party - CESTAT Larger Bench
• Refund order passed under CGST Section 142 is appealable before CESTAT - Such appeals not lie before GST Appellate Tribunal - CESTAT Larger Bench
• No service tax on sale of food items in cinema halls when there is no element of service - CESTAT New Delhi
• Packing of rechargeable batteries along with battery charger and labelling same is not ‘manufacture’ - CESTAT Kolkata
• Relinquishment charges paid for pre-mature termination of access from inter-State transmission system network by power generating companies, is not liable to service tax - CESTAT New Delhi
• Cenvat credit of duty paid on DTA clearance by EOU - Rate of BCD for formula under Cenvat Rule 3(7)(a) - CESTAT Ahmedabad
• Order passed after uploading notice on web portal, without physical service, is wrong - Madras High Court