Article

Margin Scheme – Few unanswered issues

By Kundan Kumar and Surbhi Premi

Under margin scheme, a registered person may at his option, discharge tax on sale of used or second-hand goods on the margin amount which is the difference between selling price and purchase price of the goods. Analysing the statutory provisions, the article states that margin scheme is only a special valuation provision to arrive at the value of supply of second-hand goods for the purpose of payment of tax. The authors then go on to discuss various issues like whether margin scheme is optional, whether margin amount must be considered qua each transaction, whether margin amount can be inclusive of GST, and whether input tax credit can be availed. According to the authors, open issues need to be addressed by the CBIC to bring certainty and uniformity in the industry...

Goods & Services Tax (GST)

Top Notifications and Circulars

• Exemption and lower rate of tax withdrawn in respect of services provided to a Governmental authority or a Government Entity
• Textiles and textile articles – GST rate set to be enhanced with effect from 1 January 2022
• Dynamic QR Code not required when recipient of service located outside India, subject to conditions
• Refund – CBIC clarifies on various issues

Ratio decidendi

• Right of refund of amount paid during investigation when is independent of process of investigation – Karnataka High Court
• Refund under Section 77 allowed even where taxpayer himself subsequently finds out the transaction as inter-state or intra-state – Punjab & Haryana High Court
• Refund permissible of TCS related credit remaining unutilized in electronic cash ledger – Telangana High Court
• Refund should not be withheld on account of technical glitches – Kerala High Court
• Refund during pendency of investigation – Department directed to process claim – Bombay High Court
• Form GST-DRC-01 under CGST Rule 142(1) is not a mere formality – Madras High Court
• Cancellation of registration on hyper technical ground not sustainable – Calcutta High Court
• ITC to the extent of capitalisation of repair services not available to housing society – AAR Maharashtra
• Valuation – Salaries, EPF/ESI reimbursed by client not excludible from assessable value – AAR Telangana
• ITC not available even on indirect expenses when benefit of margin scheme claimed – AAR Maharashtra
• ITC not available on inputs/input services used for promotional scheme for distributors, etc. – AAR Tamil Nadu
• Premium coating on goods belonging to customers qualifies as job work – AAR Maharashtra
• Eggs covered as agricultural produce – No GST on rail transportation – AAR Karnataka

Customs

Notifications and Circulars

• SCOMET items – Supply to SEZ/EOU and outside India
• Courier imports – Registration of authorised couriers to be valid for lifetime
• Tariff rate quota quantity lowered for goods of Heading 1604 and 2208 from Mauritius
• Customs duty lowered on imports from Sierra Leone

Ratio decidendi

• Education cess paid using MEIS scrips – Benefit of Circular No. 2/2020-Cus. not deniable – Madras High Court
• Certificate of Country of Origin cannot be unilaterally rejected – CESTAT Kolkata
• Refund in absence of re-assessment – Amendment of Bill of Entry – Dictum of Dimension Data must be followed – CESTAT Bengaluru
• Seizure – Time limit to issue show cause notice applicable when provisional release not availed – Bombay High Court
• Penalty – No mis-declaration by recipient of foreign courier – CESTAT Delhi
• Demand – Limitation period for clearances before 8 April 2011 – CESTAT Bengaluru
• Sweet corn is not ‘cereal’ for exclusion from Chapter 12 of Customs Tariff – CESTAT Mumbai

Central Excise, Service Tax & VAT

Notifications and Circulars

• • Exclusion from pre-show cause notice consultation is case-specific and not formation specific

Ratio decidendi

• Export of service – Service provided to related person registered abroad is not provision to ‘any other establishment’ – CESTAT Ahmedabad
• ‘Manufactured sand’ covered under ‘sand’ – Common parlance is the best way to classify goods – Karnataka High Court
• Cenvat credit – Nothing in Rule 6(3) which required approval of formula by any competent authority – CESTAT Delhi
• Refund of credit which could not be carried forward in Tran-1 – CESTAT Chennai
• Lubricants are not excisable goods for exclusion from Sabka Vishwas (LDR) Scheme – Madras High Court
• Manufacture – Assembly simpliciter, including fitting and minor adjustments, does not constitute ‘manufacture’ – Madras High Court
• Compensation received for cancellation of allotment of mines is not for tolerating an act, not liable to service tax – CESTAT Kolkata