Article

Topsy-turvy state of taxation on distribution of electricity

By Gagan Gugnani

The article in this issue of Tax Amicus attempts to discuss the dispute on the scope of distribution of electricity services by DISCOMs. The issue was ignited when CBIC issued a circular in 2018 stating that specified services provided by DISCOMs shall attract GST liability. Recently, the Rajasthan High Court relying upon a Gujarat High Court decision has quashed the circular and held that such services are exempted from GST. The article analyses the precise issue and the reasoning given by the High Courts while quashing the circular. It is noted that the activity of distribution of electricity, which is exempted, is not a single activity but is rather a bundle of activities (including hiring of meter, connection fees, etc.) which collectively constitute distribution of electricity. The author also highlights that the exemption entry for supply of electrical energy was not brought before the Court and that it can be contended that such services are incidental to supply of electrical energy, i.e. supply of goods by DISCOMs. Observing that tax complexity itself is a kind of tax, the author hopes that the issue and various other issues faced by this sector in respect of the exemption entries are resolved quickly...

Goods & Services Tax (GST)

Notifications and Circulars

• E-invoicing mandatory for taxpayers having aggregate turnover exceeding INR 50 crore
• GSTR-9/9C for FY 2019-20 – Due dates extended
• Refund on exports/deemed exports clarified

Ratio decidendi

• Refund cannot be withheld without assigning reasons as prescribed in Section 54(11) and Rule 92 – Allahabad High Court
• Input tax credit not deniable on account of mismatch in GSTIN when forms yet to be notified – Madras High Court
• Rectification of GSTR-3B when wrong data inadvertently uploaded – Unnecessary litigation on account of technicalities – Gujarat High Court
• Transition of accumulated credit of Tax Deducted at Source under VAT – Madras High Court
• Prosecution – Default bail – Condition for deposit of 50% amount cannot be imposed – Gujarat High Court
• Hearing opportunity while determining tax liability – Specific request by assessee not mandatory – Madras High Court
• Order passed on date of notice, without granting hearing, is incorrect – Tripura High Court
• Development of land for further sale as plot is taxable – Uttarakhand Appellate AAR
• Supply of operation and maintenance of sewage treatment plant to undertaking of State Government when taxable – Uttarakhand AAR
• Liaison Office when not liable to GST – Karnataka AAR
• Printing of content supplied by customer on material owned by assessee, is composite supply of services – Tamil Nadu Appellate AAR

Customs

Notifications and Circulars

• DRI investigated cases – Jurisdictional Commissionerates to issue SCNs under Section 28
• Import authorisations for restricted goods – Applications to be filed online
• Online module introduced for adjudication, appeal and review proceedings under Foreign Trade (D&R) Act and Rules
• Rebate of State Levies (RoSL) – Last date notified for applications for shipping bill before 1 October 2017

Ratio decidendi

• DRI officer not ‘the’ proper officer to issue show cause notice under Customs Section 28(4) – Supreme Court
• Suspension of customs clearance of alleged IPR infringing goods when not permissible beyond 14 days – Bombay High Court
• Conversion of shipping bills – CBIC Circular No. 36/2010-Cus., is ultra vires Customs Section 149 – Gujarat High Court
• SEIS – DGFT Policy Circulars restricting benefit only to net foreign exchange are ultra vires FTP 2015-20 – Bombay High Court

Central Excise, Service Tax & VAT

Ratio decidendi

• Incentives received by travel agents from airlines and CRS companies not liable under Business Auxiliary Services – CESTAT Larger Bench
• Relays used only for railway signalling equipment classifiable under Heading 8608 – Supreme Court relies on ‘sole or principal user test’ – Supreme Court
• Sabka Vishwas (LDR) Scheme – Initiation of enquiry after 30 June 2019 not fatal for filing declaration under voluntary disclosure category – Bombay High Court and Punjab & Haryana High Court
• Sabka Vishwas (LDR) Scheme – Remand by Tribunal brings assessee to stage of SCN again – Declaration can be filed in litigation category – Bombay High Court
• Sabka Vishwas (LDR) Scheme – ‘Quantification’ means determination of duty liability by department – Delhi High Court