Article

Dry lease of aircrafts under GST: A classification conundrum

By Priyanka Kalwani, Devanshi Sharma and Aanchal Kesari

The article in this issue of Tax Amicus discusses elaborately the problems of classification and rate of GST in case of dry leasing of an aircraft. In respect of classification, the authors note that there is no specific mention of aircrafts under the Explanatory Notes to sub-heading 997311 or under the residuary entry 997319, though the Service Code 7311 of the UNCPC provides for transport equipment and specifically includes aircrafts. For rate of tax, the authors note that though it can be argued that aircrafts are covered under Sl. No. 17(viia) of Notification No.11/2017-Central Tax (Rate) and the rate of tax on leasing or renting would be 5%, the Revenue department may contend that Heading 9973 does not cover transport vehicles and therefore, such services are classifiable under the residuary entry, attracting GST at the rate of 18%. The authors conclude by stating that a clarification from the government is much needed on the correct classification and rate of GST applicable on the dry leasing of transport vehicles including aircrafts.

Goods and Services Tax (GST)

Notifications and Circulars

• GST Rate notifications amended to bring into effect recommendations of 49th GST Council Meeting

Ratio decidendi

• Directing summoning party to stop payment to the assessee is beyond the scope of CGST Section 70(1) – Andhra Pradesh High Court
• Show cause notice just to extend blocking of credit ledger is not acceptable – Delhi High Court
• Intimation in Form GST DRC-01A and show cause notice under Section 73(1) – Simultaneous uploading is wrong – Uttarakhand High Court
• Penalty not sustainable under Section 129 on goods seized from godown – Calcutta High Court
• GST Tribunal – Bombay High Court suggests measures to reduce writ petitions due to non-constitution of GST Tribunal – Bombay High Court
• E-way bill not cancelled though vehicle made available only after 10 days – Misuse of statutory provisions – Allahabad High Court
• Refund of IGST when exporter’s supplier received fake invoices – Delhi High Court
• Development of land before sale of land is not supply of service – Karnataka Appellate AAR
• ITC is to be reversed on sale of alcoholic liquor for human consumption by a restaurant, as same falls under ‘non-taxable supply’ – West Bengal AAR
• No ITC if preceding seller (not the current seller) has not discharged liability – Punjab AAR
• Renting of residential dwelling to a registered person would attract RCM irrespective of nature of use – Odisha AAR
• Supply of ice cream at outlet is covered under restaurant service only when supplied along with food – Gujarat AAR
• Job work – Retaining certain amount from inputs before manufacture is not normal loss/wastage – West Bengal AAR
• GST on trading of tobacco leaves without processing or after coating – Gujarat AAR

Customs

Notifications and Circulars

• India-Australia FTA – Origin procedures clarified
• Milk, fish and pork, and their products – Requirement of health certificate for import deferred
• Crude soya-bean oil and crude sunflower seed oil – Tariff Rate Quota exemption now limited only till 31 March 2023
• Tur whole exempted from BCD
• Vessels and other floating structures for breaking up – BCD exempted till 31 March 2025

Ratio decidendi

• Search – Mere recording satisfaction without supportive materials is insufficient to trigger a lawful search – Supreme Court
• Demand – Invocation of extended period – Jurisdictional question – Supreme Court
• Refund consequent to finality of amendments in Bills of Entry when not deniable – CESTAT New Delhi
• Notification effective only after digitally signed and uploaded for publication – CESTAT Bengaluru
• Customs Brokers Licensing – Show cause notice under Regulation 20 to be ‘issued’ and not ‘served’ within specified time – Delhi High Court
• Absence of snuffing would not make leather ‘unfinished’ – CESTAT Chennai
• GoPro digital camera for use while surfing, skydiving, etc. is classifiable under TI 8525 80 20 – CESTAT Mumbai
• Stepper motor classifiable under Tariff Item 8501 10 12 – Customs AAR

Central Excise, Service Tax & VAT

Ratio decidendi

• Karnataka VAT – Mere production of invoices or payment by cheque is not enough to discharge burden for availing Input Tax Credit – Supreme Court
• No excise duty on plastic scrap separated from lead scrap before use of latter – CESTAT New Delhi
• Right to use IT software – Point of taxation is date of commissioning and not date of download – CESTAT Chennai
• Cenvat credit available on services of Commission Agent engaged in collection of debts – CESTAT Kolkata
• Activity of soil conservation and land reclamation covered under ‘conservancy’ – CESTAT Ahmedabad
• Pre-deposit obligations cannot be set off against refund claims – Delhi High Court
• Tractors fitted with certain attachments after clearance from factory, still classifiable under Heading 8701 – CESTAT Mumbai