Article

Export of services: Settled, yet unsettled

By Shrishti Agarwal, Disha Bhandari and Narendra Singhvi

The article in this issue of Tax Amicus discusses a recent decision of the Larger Bench of the CESTAT which settles, in favour of assessee, the issue as to whether Business Auxiliary Services (BAS) provided by Indian agents to foreign entities qualify as export of services under the service tax regime. The article in this regard also analyses whether this decision of the Larger Bench will have any impact in the GST regime. While it notes that the Revenue department has consistently challenged this settled position, and that the issue is also pending before the Hon'ble Supreme Court for final resolution, the authors are of the view that the decision will bring a sigh of relief for the assessees whose service tax litigations are pending at various forums. Recommending the industry to wait and watch the outcome at the Supreme Court, the authors state that Businesses must closely monitor and analyze the developments, as it will have significant implications for their operations and tax obligations in relation to cross-border service transactions.

Goods and Services Tax (GST)

Notifications and Circulars

• GSTR-1, 3B and 7 by entities in Manipur – Last date of filing postponed till 30 June 2023
• Registration – Guidelines issued for processing of applications

Ratio decidendi

• Attachment of bank account – Only Commissioner having territorial jurisdiction can attach – Delhi High Court
• Attachment of property – Commissioner to form opinion based on relevant facts and not merely on suspicion – Delhi High Court
• SEZ units can be investigated, searched, and inspected by GST officers – Gujarat High Court
• Assessment cannot be based only on the E-way Bill – Patna High Court
• Export of service v. Intermediary service – Scope of IGST Section 13(3)(b) and 13(5) – Delhi High Court
• Budgetary support scheme – Goods manufactured during GST regime should be under same 8-digit HSN code as manufactured pre-GST, and also cleared by availing earlier area-based exemption – Jammu & Kashmir High Court
• Interest not payable for delay in disbursement of Budgetary support benefit – Jammu & Kashmir High Court
• Bank account of person owning debt to taxable person, whose assets are liable to be attached, cannot be subje/ct to provisional attachment – Delhi High Court
• Personal hearing not to be rejected even if reply to SCN, containing request therefor, is rejected for delay – Karnataka High Court
• Input Tax Credit is not deniable only because supplier’s registration was cancelled retrospectively – Calcutta High Court
• Mixing various perfumes in unmanufactured tobacco changes its character to manufactured tobacco – Uttar Pradesh High Court
• Transfer of goods when not mere movement of goods not amounting to supply – Maharashtra Appellate AAR
• Treatment of Substance Use Disorder (addiction) not covered under health care services – Rajasthan AAR

Customs

Notifications and Circulars

• Pre-import condition under Advance Authorisation – Procedure notified for payment of IGST and Compensation Cess for the period 13 October 2017 till 9 January 2019
• Import/export declarations – Additional qualifiers introduced with effect from 1 July 2023 for certain products
• E-commerce export of jewellery – Procedure simplified when exporter does not wish to re-import
• Electronic Repairs Services Outsourcing – Pilot initiative launched

Ratio decidendi

• Valuation – Freight charge from third country which the vessel called en route to India, when not includible – CESTAT Mumbai
• Valuation – No enhancement if speaking order not passed under Customs Section 17(5), in case when duty paid under protest – CESTAT Kolkata
• Confiscation – Jurisdiction of customs in case of alleged breach of Food Safety and Standards Act – CESTAT Mumbai
• Appeal to Commissioner (A) – Limitation – Mere sending of adjudication order by registered post is not ‘communication’ – CESTAT Mumbai
• Transfer from FTWZ/SEZ to DTA is not re-imports for benefit of Notification No. 45/2017-Cus. – Customs AAR
• LED Socket Plug Assembly is classifiable under Customs Heading 8512 – Customs AAR

Central Excise, Service Tax & VAT

Ratio decidendi

• Earth-moving equipment are not ‘automobiles’ – Repacking of parts of earth-moving equipment was not ‘deemed manufacture’ prior to 29 April 2010 – CESTAT Larger Bench
• Commission Agent service provided to a foreign entity, for booking orders in India, is export of service – CESTAT Larger Bench
• Cenvat credit available on cement and steel used in provision of Commercial and Industrial Construction Services – CESTAT Ahmedabad
• Sale of RMC along with pumping to required floor is not covered under Commercial or Industrial Construction Service – CESTAT Chandigarh
• Cenvat credit of BSS provided by group company – Difference between expense distribution and credit distribution – CESTAT Kolkata
• No service tax on re-instatement interest collected on delayed payment of premium to reinstate lapsed policy – CESTAT New Delhi
• Cenvat credit available on commission paid to collection agents for collection of dues of post-paid plans from subscribers of telecommunication services – CESTAT New Delhi
• ‘Exclusion’ from a certain service does not make it ‘exempted service’ – CESTAT Chennai
• Black tea is covered as ‘agricultural produce’ under Notification No. 13/2003-S.T. – CESTAT Chennai