Article

GST on ocean freight – Smooth sailing ahead for assessees?

By S Rahul Jain and Meeth Desai

The article in this issue of Tax Amicus elaborately discusses the recent Gujarat High Court decision in the case of Mohit Minerals Pvt. Ltd. v. UOI, where the Court has struck down the levy of GST on ocean freight in case of imports. Tracing the history of the dispute, the authors analyse the impact of the decision and discuss what the assessees may have to do. The authors opine that so long as the matter is not stayed by the Supreme Court, the decision of the High Court would be binding, however, if credit of tax paid can be taken and utilized, the tax may continue to be paid. The article also discusses the questions as to whether the department would deny credit if the tax is paid now, and whether SCN can be issued for availment of credit of the past. The question as to whether an assessee can claim refund of GST paid, is also elaborately discussed in this article citing various decisions of the Supreme Court. According to the authors, considering that the High Court has struck down the levy on multiple and well-reasoned grounds, it is unlikely that the decision is overturned by the Apex Court. Nonetheless, each taxpayer would have to re-evaluate its strategy based on numerous factors and decide on his way forward

Goods & Services Tax (GST)

Budget 2020 - Finance Bill, 2020

• ITC – Delinking of date of debit note from date of issuance of underlying invoice
• Transitional credit – Time limit prescribed
• Penalty on person who retains benefit of specified transaction
• Prosecution – Person causing to commit and retaining the benefits arising out of specified transactions also to be liable
• Rate of GST on certain goods – Retrospective amendments

Ratio decidendi

• No provisional attachment based on summons issued for proceedings against another person – Bombay High Court
• Refund claim spread across different financial years – CBIC Circular restricting such refund is arbitrary – Delhi High Court
• Interest under CGST Section 50 is applicable only where output tax is paid in cash – Proviso to Section 50(1) is clarificatory – Madras High Court
• ITC available on demo motor vehicles – Maharashtra AAR
• Accommodation service to SEZ unit is inter-State supply and is zero-rated – Karnataka AAR
• No GST on premium collected from employees towards parental insurance premium – Uttar Pradesh AAR
• Transaction between foreign company and its project office in India when intra-company affair – Uttar Pradesh AAR
• Laying down enhanced infrastructure for transmission of electricity is not integral or ancillary to supply of service of transmission or distribution of electricity – Uttar Pradesh AAR
• No ITC on replacement of lifts by co-operative housing society – Maharashtra AAR
• Access cards classifiable as pamphlets, booklets, brochures, leaflets and similar printed matter – Karnataka AAAR
• UK VAT – Supply of lift service is not ancillary to principal supply of use of ski slope – United Kingdom’s Upper Tribunal (Tax and Chancery Chamber)

Customs

Budget 2020 - Finance Bill, 2020

• Trade agreements – Procedure for administration of Rules of Origin proposed
• Health Cess imposed on certain medical devices
• Import prohibition to prevent injury to the economy of the country
• Rates of Customs Duty revised for many articles

Notifications and Circulars

• Classification of goods - Review of products classified under ‘others’ category
• Export of garments and made-ups – RoSCTL scheme updated
• Valuation of second-hand machinery – Procedure specified for inspection or appraisement
• All Industry Rates of Duty Drawback revised
• Mobile phones – Ad-hoc incentive in addition to MEIS reward

Ratio decidendi

• EPCG Scheme – Exemption from additional customs duty (IGST) during 1-7-2017 till 12-10-2017 – Gujarat High Court
• Computation of Customs duty on goods auctioned after expiry of warehousing period – Supreme Court Larger Bench
• Valuation – Imported goods not bound to be sold at MRP adopted by another – CESTAT Delhi
• VKGUY benefit not available to merchant exporters procuring goods from EOU – Supreme Court
• Conversion of drawback shipping bill to DFIA – Time limit prescribed by Circular is not binding – CESTAT Ahmedabad
• Only excess goods liable to confiscation and not eligible for exemption – CESTAT Kolkata

Central Excise, Service Tax & VAT

Ratio decidendi

• Sabka Vishwas scheme – Benefit under voluntary disclosure category after denial under arrears category – Karnataka High Court
• Notice pay - Amount received from outgoing employee in lieu of notice period not liable to service tax – Madras High Court
• Sales tax leviable on sale of goods kept in Customs bonded warehouses to foreign going ship – Supreme Court
• Beneficiale liquid and DSN capsules – Common parlance test applicable for classification – CESTAT New Delhi
• Cenvat credit – No overlap between Rules 3(5) and 11(3) – CESTAT Mumbai
• Refund of Cenvat credit in case of export of services when unutilised credit carried forward in TRAN-1 – CESTAT Chennai
• Service tax liability even when no direct pecuniary benefit to service recipient – CESTAT New Delhi