Article

Aircraft lease transaction – Not a lease of life

By Anupama Ravindran

The Indian commercial airline industry mostly takes aircrafts on lease from foreign vendors, where the lease agreement usually also covers engine, landing gear, auxiliary power unit and maintenance / replacement / refurbishment clauses. Recognising that the transaction is service and not for goods, Sl. No. 547A of Notification No. 50/2017-Cus. provides for exemption of the IGST levied under Section 3(7) of the Customs Tariff Act, 1975 on aircrafts, aircraft engines and other aircraft parts imported into India, subject to conditions. However, basic customs duty is not exempted vide the same serial number. The author notes that for exemption of BCD, the transaction is treated as import of goods and the lessee must seek exemption under different Sl. Nos. According to the author, the same transaction is painted with a different brush – once to colour it as goods, and another time to colour it as a service. The article in this issue of Tax Amicus also raises the issue of duty demand on import of the replaced parts, since the specific identification numbers for these components would be different after replacement. Doubting whether the legislative intent was to collect duty on the replaced parts, the author believes that a minor correction in line with the legislative intent will go a long way in easing stress on the airlines businesses...

Goods & Services Tax (GST)

Notifications and Circulars

• 39th Meeting of the GST Council – Highlights
• Apportionment of ITC in case of business reorganisation
• Special procedure prescribed for corporate debtors undergoing CIRP under IBC where management is being undertaken by IRP/RP
• Foreign airlines exempted from furnishing Form GSTR-9C
• Appeal to Appellate Tribunal – Limitation

Ratio decidendi

• Anti-profiteering – Computation of profiteered amount – Delhi High Court stays NAA Orders
• TRAN-1 – Non-filing of Form Tran-1 by 27-12-2017 not fatal – Supreme Court maintains Punjab & Haryana High Court Order
• TRAN-1 – CGST Rule 117 is procedural in nature – Gujarat High Court
• No detention on allegation of mis-classification of goods – Kerala High Court
• No detention of vehicle for alleged ‘wrong destination’ – Telangana High Court
• Area based exemption – No compulsion to grant GST exemption for residual period – Delhi High Court
• Advance Ruling – Issue relating to determination of place of supply, covered – Kerala High Court
• Cancellation of registration – Continuous default of 6 months in filing of returns mandatory at time of passing order – Kerala High Court
• Provisional attachment – CGST Rule 159(5) providing for filing of objections within 7 days is directory – Delhi High Court
• No GST on chilling and packing of raw milk – TRU Letter dated 9-8-2018 not in consonance with provisions of notification – Gujarat High Court
• No GST on mobilisation advance received prior to implementation of GST towards supply of Works Contract Service – AAR Tamil Nadu
• GST applicable on transfer of title of title in moulds used for manufacturing goods supplied – AAR Tamil Nadu
• ITC available on buses and not cars hired for transportation of employees – AAAR Haryana
• Lapse of accumulated ITC due to inverted duty structure – AAR Uttarakhand
• Association of apartment owners liable to GST on contributions received from members – AAAR Karnataka
• Printing under agreement with foreign entity when material delivered to Indian entity, is not exports – AAR West Bengal
• Selling of space/time for advertisement in print media – GST liability – AAR Uttarakhand

Customs

Notifications and Circulars

• Mandatory RFID Sealing for goods transported for deposit or removal from warehouse, postponed
• All-India implementation of automated clearance of Bills of Entry
• Transportation of Goods (Through Foreign Territory), Regulations, 2020 notified
• Relief in Average Export Obligation under the EPCG Scheme to exporters of specified sectors
• Export restrictions for specified Active Pharmaceutical Ingredients and formulations made from these APIs
• COVID-19 effect – List of certain personal protection equipment and certain medical equipment freely exportable/prohibited revised
• SCOMET items – Proforma of undertaking in form of legal agreement and of application and end-use certificate for implementation of GAICT, notified
• Metallic waste and scrap – Specified imports through Katapulli port allowed
• Remission of Duties and Taxes on Exported Products (RoDTEP) – Union Cabinet approves scheme

Ratio decidendi

• Valuation – Sponsorship and endorsement expenses borne by importer when not includible – CESTAT Delhi
• Valuation – Buying commission and notional high sea sales charges – CESTAT Ahmedabad
• Refund of SAD when duty originally paid using scrips – CESTAT Delhi
• Interest on delayed refund of auction proceeds – Madras High Court
• Reference to High Court – Calling for statement from Tribunal not mandatory – Supreme Court Larger Bench
• Valuation – Invoice value when cannot be negated – CESTAT Delhi
• Drawback and DEPB benefit on goods job-worked in EOU and exported from there – Madras High Court
• Valuation – Department to prove undervaluation by evidence/information on comparable imports – CESTAT Chennai

Central Excise, Service Tax & VAT

Ratio decidendi

• Delayed payment of service tax – Cenvat credit not deniable invoking Cenvat Rule 9(1)(bb) – CESTAT Bangalore
• Refund – Limitation under Central Excise Section 11B not applicable for restoration of Cenvat credit – Madras High Court
• Tamil Nadu VAT – ITC available even when final goods cleared to SEZ outside the State – Madras High Court
• Refund of unutilised Cenvat credit on exports – Reversal of credit in GSTR-3B sufficient compliance – CESTAT Madras
• No penalty under Section 78 when tax paid prior to SCN though on audit objection – Madras High Court
• Taxability of service is required to be examined at the time when same is provided – CESTAT Allahabad
• Job work – Notification No. 8/2005-S.T. pari materia to Notification No. 214/86-C.E. – CESTAT Ahmedabad
• No unjust enrichment in refund of MOT charges – CESTAT Ahmedabad