Article

Customs in-bond manufacturing – Old scheme with new prospects

By Saurabh Malpani

With export promotion schemes like EOU, SEZ and EPCG being challenged at the international forums, alleged to be in violation of the WTO agreement, the thrust of the government has now shifted to age old scheme of duty deferment and manufacturing in customs bonded warehouse. The article in this issue of Tax Amicus makes a case for shifting to such scheme. Discussing various aspects of the Customs in-bond manufacturing scheme like easy conversion, less administrative burden, no export or NFE obligation, availability of job work – both by and for such unit, the author highlights that in-bond manufacturing will also solve the problem of credit accumulation currently being faced by many units currently under Foreign Trade Policy schemes. According to the author, the fear of customs control has been keeping many units away from bonded warehousing scheme, however, recent relaxations and clarity, would surely go a long way in creating alternatives to FTP/SEZ schemes...

Goods & Services Tax (GST)

Notifications and Circulars

• E-invoice threshold lowered to INR 100 crore from 1 January 2021
• Quarterly Return Monthly Payment Scheme introduced for specified taxpayers

Ratio decidendi

• Interest on delayed payment – Proviso to Section 50 of CGST Act is effective from 1 July 2017 – Madras High Court
• Error in GSTR-1 not to deprive ITC to recipient, in absence of matching mechanism – Madras High Court
• Detention of goods during transit – Nature of contravention and presence of intention to evade are important – Telangana High Court
• Provisional attachment of bank account during pendency of search proceedings under Section 67 – Supreme Court keeps in abeyance the Gujarat High Court decision
• Registration – Permanent registration when must relate back to date of provisional registration – Kerala High Court
• Restaurant service – GST liability on supply of beverages, cigarettes to customers and free food to employees – AAR Tamil Nadu
• Penal interest is exempt from GST – CBIC Circular No. 102/21/2019-GST is clarificatory – AAAR Maharashtra
• Solid waste management service provided by local authority is exempt – AAR Tamil Nadu
• Reimbursement of expenses by Indian subsidiary company to its foreign holding company when liable – AAR Tamil Nadu
• Supply of printed answer booklets classifiable under Heading 4802 – AAR Rajasthan
• Service by co-operative housing society is liable to GST – GST provisions different from service tax and income tax laws – AAAR Maharashtra
• Taxability of sale of developed land – AAR Uttarakhand refers question to AAAR
• EU VAT – Input VAT credit when third party also benefited by expenditure – Court of Justice of the European Union

Customs

Notifications and Circulars

• Manufacture and other operations in warehouse – Job work clarified
• Contactless delivery of international courier consignments
• Samples preferably to be tested in Central Revenue Control Laboratories
• Exemption to import of durable containers – Clarification
• Faceless assessment – CBIC introduces measures for timely assessment

Ratio decidendi

• Integrated tax and compensation cess are not included in phrase ‘duty of customs’ for purposes of customs notification – CESTAT New Delhi
• Amendment in Bills of Entry – Scope of words ‘in existence’ in proviso to Customs Section 149 – Madras High Court
• TED payment by mistake – No provision for refund – Government cannot unduly retain amount – Kerala High Court
• Demand – Benefit of Customs Section 28(2) available only to cases covered under Section 28(1) – Madras High Court
• Target Plus Scheme – Non-submission of BRC is not covered under ‘pending government dues’ – Bombay High Court
• Power to arrest a person by a Customs Officer is statutory in character – Gujarat High Court
• Penalty imposable even when wrong drawback code mentioned inadvertently – Madras High Court

Central Excise, Service Tax & VAT

Ratio decidendi

• Reversal of proportionate Cenvat credit – ‘Total Cenvat credit’ under Rule 6(3A) not covers credit of services used exclusively for taxable output – CESTAT New Delhi
• Sabka Vishwas (LDR) Scheme – Rectification of mistake in declaration by assessee – Delhi High Court
• Sabka Vishwas (LDR) Scheme – Declarant cannot be put in worse condition – Bombay High Court
• Renting out space for displaying names is Renting of Immovable Property service – CESTAT New Delhi
• Incineration is not liable to service tax under ‘cleaning activity’ – CESTAT New Delhi
• Cenvat credit on services availed to fulfil statutory obligation – CESTAT Mumbai refers matter to Larger Bench