Article

Leasing of capital goods between two GSTINs

By Brijesh Kothary, Padmasri Manyam and Ananya Raghavendra

The article in this issue of Tax Amicus seeks to analyse the GST implications on leasing of capital goods between ‘distinct persons’, in the light of a recent ruling of the Maharashtra Appellate Authority of Advance Ruling. After providing the crisp summary of the Ruling, the article examines the implication of the Ruling in respect of issues regarding valuation, mere movement of goods not amounting to supply, and documentation. Observing that the AAAR ruling brings out the proposition that mere possession of goods by the other GSTIN does not automatically result in the ‘supply of goods’ but rather, is a supply of services, the authors point out that to substantiate the same without any dispute, taxpayers need to ensure that appropriate documentation is maintained both in respect of the supply between the two GSTINs, and also, for the actual movement of such goods. They also emphasize that the value of transactions of this nature are to be ascertained based on the provisions under GST laws along with the recently issued CBIC Circular.

Goods and Services Tax (GST)

Notifications and Circulars

• 50th GST Council Meeting – Highlights and clarifications

Ratio decidendi

• Demand – Notice under CGST Section 74 can be issued without recourse to scrutiny under Section 61 – Andhra Pradesh High Court
• Provisional attachment of bank account can be made of ‘any person’ – Territorial jurisdiction of concerned Commissioner is immaterial – Bombay High Court
• Provisional attachment – Communication to Bank for extension, with copy to assessee, is not fresh order to continue provisional attachment – Bombay High Court
• ITC reversal cannot be compelled without mentioning basis of cancellation of selling dealer registration – Calcutta High Court
• Non-renewal of e-way bill when not calls for 200% penalty – Calcutta High Court
• Interest on delayed refund – Provisions of Section 56 are mandatory – Gujarat High Court
• Refund in case of exports – Consideration of application as filed under Section 16(3)(a) when refund granted under Section 16(3)(b) repatriated – Karnataka High Court
• Refund in case of exports – Manual filing of supplementary claims when to be permitted – Gujarat High Court
• Input Tax Credit pertaining to period prior to the date of approval of resolution plan (under insolvency law) is not available to the new management – Jharkhand High Court
• Appeal can be filed manually when electronic portal does not have provision for e-filing – Bombay High Court
• PG/hostel rent paid by inhabitants does not qualify for GST exemption – Karnataka AAR
• Charging of Electric Vehicles – Supply of electrical energy and service charges, together to be considered as supply of service – Karnataka AAR
• No ‘supply’ in case of settlement of dues for goods/services received by one GSTIN by another GSTIN – Kerala AAR
• UK VAT – Input tax incurred on sale of shares has a direct and immediate link to taxable activities – UK Upper Tribunal (Tax and Chancery Chamber)
• EU VAT – Accommodation services sold without ancillary services qualify to be taxed under ‘special VAT scheme’ applicable to travel agents – Court of Justice of the European Union

Customs

Notifications and Circulars

• EPCG scheme – Condonation of delay in submission of installation certificate
• Liquified Propane and Liquified Butane – AIDC rate increased
• Rice – Export of non-basmati white rice prohibited
• Gold imports made ‘restricted’ – Imports by SEZ still ‘free’

Ratio decidendi

• Penalty under Customs Section 112(a) for abetting an offence is not imposable in absence of knowledge of wrong – Delhi High Court
• Valuation – License fee is not includible when it is not a condition of sale – CESTAT Chennai
• Breach of condition of import through canalized agencies – Goods when not ‘prohibited’ but only ‘restricted’ – CESTAT Bengaluru
• SHIS and EPCG issuance in same year – Interpretation of term ‘year of issuance’ in Notification No. 102/2009-Cus. – CESTAT Chennai
• MEIS benefit not deniable for merely marking ‘No’ in shipping bill – Error a technical lapse – Gujarat High Court
• Earphones are not part of mobile phones – Exemption under Notification No. 57/2017-Cus. is available – CESTAT New Delhi
• All-Terrain vehicles – Classification under Headings 8704 and 8709 and not under Heading 8703 – CESTAT New Delhi
• Tomato dry flavour is classifiable under TI 3302 10 10 and not under TI 2106 90 60 – CESTAT Chennai
• Optomo creative Touch 3-series Interactive Flat Panel is classifiable under Heading 8471 – Word ‘interactive’ is important – Customs AAR

Central Excise, Service Tax & VAT

Ratio decidendi

• Refund of service tax when service rendered and consumed outside India – Receipt of payment in foreign currency is not material – CESTAT Ahmedabad
• Refund of service tax when service rendered and consumed outside India – Receipt of payment in foreign currency is not material – CESTAT Kolkata
• Error in filing ST-3 Return is not fatal for claiming otherwise eligible refund – CESTAT Chennai
• No Business Support Service in case of concession agreement for development of port – CESTAT Chennai
• Demand – Limitation – No suppression when requirement to disclose is absent – Supreme Court
• Appeal to Supreme Court – Resurrection of point made at original stage when not permissible – Supreme Court