Article

Interest on delayed payment of tax – The saga continues!

By Sahana Rajkumar and Balaji Sai Krishnan

The article in this issue of Tax Amicus analyses provisions of Section 50 of the Central Goods and Services Tax Act, 2017 in the light of recent Madras High Court decision in the case of Srinivasa Stampings. Raising a doubt as to whether interest would be liable on the gross tax liability in a case where there is a delay in payment of tax due to inadvertence or an interpretation issue, though return is filed on the due date, the authors state that the proviso to Section 50(1) itself is couched in such language. The authors in this regard trace the history behind introduction of the proviso with specific focus on the jurisprudence that has developed over time and the GST Council decisions. According to them, though intention of the law makers was not to levy interest on tax liabilities discharged through Input Tax Credit, the manner in which the provision reads as on date is bound to create difficulties in implementing the law in cases where there is a delayed payment of GST without delay in filing returns...

Goods & Services Tax (GST)

Notifications and Circulars

• GSTR-3B and GST PMT-06 – Due dates extended

Ratio decidendi

• IGST not leviable on ocean freight on RCM basis in CIF contracts – Levy violates principle of ‘composite supply’ – Supreme Court
• Construction services – Deduction of 1/3rd value towards land is not mandatory – Gujarat High Court
• Refund of unutilised ITC, which was distributed to an SEZ unit, available – Madras High Court
• Cenvat credit of service tax paid after the appointed date when permissible – Meghalaya High Court
• Levy of advertisement tax/fee by Municipal Corporation, after introduction of GST, permissible – Karnataka High Court
• Internal agreement to merge two GST registrations is not transfer of business as ‘going concern’ – Maharashtra AAR
• Supply of software licence when supply of goods and not services – Karnataka AAR
• Incentives/discounts received from third party are not trade discounts – Maharashtra AAR
• Activity of developing and operating mine including excavating and delivery to allottee is supply of service – Royalty, etc., charges not includible in value as same paid by allottee directly to Government – Maharashtra AAR
• Merchant exports – Benefit of Notification No. 41/2017-IT (R) not available in case of bill-to-ship-to supplies – Karnataka Appellate AAR
• EU VAT – Fixed establishment clarified – Court of Justice of the European Union

Customs

Notifications and Circulars

• India-UAE CEPA – First tranche comes into force from 1 May 2022
• Iron ore and specified iron and steel products – Export duties increased/imposed
• Wheat exports prohibited with effect from 13 May 2022
• Waste and scrap of precious metals – Imports placed under restricted category
• Pre-shipment inspection for metal scrap – New online module for application for Pre-Shipment Inspection Agency and issuance and electronic verification of Pre-Shipment Inspection Certificates
• Non-Preferential Certificate of Origin – Transition period for mandatory filing of applications through Common Digital Portal further extended

Ratio decidendi

• Valuation – Transaction value cannot be rejected by extrapolations – CESTAT Hyderabad
• Valuation – Royalty paid under technical aid agreement when not includible – CESTAT Delhi
• RoSCTL benefit when ‘No’ mentioned in shipping bill – RoSCTL also an export promotion scheme – Madras High Court
• No penalty imposable on importer for mistake of exporter/shipper in mis-match of goods – CESTAT Delhi
• Valuation – Transaction value can be rejected only if evidence available to show that it does not reflect actual transaction price in course of international trade – CESTAT Mumbai
• Customs debt extinguishes when goods confiscated even after being unlawfully introduced – Liability to excise duty and import VAT however not extinguishes – Court of Justice of the European Union

Central Excise, Service Tax & VAT

Ratio decidendi

• Manpower recruitment or supply agency service – Secondment of employees from foreign group company – Extended period of demand not invokable – Supreme Court
• Refund of amount deposited under different registration number – CESTAT Delhi
• Compounded levy scheme – Abatement of duty for temporary closure available under Notification No. 17/2007-C.E. – CESTAT Ahmedabad
• No service tax on services by a milk federation to district milk cooperative societies and milk unions – CESTAT Delhi