Article

Essentiality Certificates under Customs and GST laws: Need for synchronization

By Anshul Mathur, Abhishek Ranjan and Sadhvi Gupta

The article in this issue of Tax Amicus discusses certain exemptions and concessions available under Customs and GST laws in respect of goods involved in petroleum operations. It also underlines amendments introduced in one law and shadowing the other. The authors note that essentiality certificate from the Directorate-General of Hydrocarbons was required in respect of concessional rate of duty – both under Customs and GST laws till February 2022 when, for availing exemption from customs duty on import of specified goods, this requirement has been done away with. Now, in order to avail benefit of concessional rate under GST, the requirement of obtaining an Essentiality Certificate continues while in Customs law, it can be obtained on certificate issued by specified persons-Licensee/Lessee/Contractor. The authors also raise the question of applicability of Circular No. 163/19/2021-GST, after the abovementioned changes in customs notification. According to them, the inconsistency between the two laws for availing the tax benefits, though seemingly unintended, spikes confusion and complexity in implementation of transactions for licensees, lessees, contractors and their sub-contractors…

Goods and Services Tax (GST)

Notifications and Circulars

• Certain changes by Finance Act, 2022 in the CGST Act, 2017 come into effect from 1 October 2022
• Launching of prosecution under CGST Act – CBIC issues guidelines

Ratio decidendi

• Limitation for refund under CGST Section 54 – Date of online filing and not physical submission of documents, relevant – Gujarat High Court
• Credit available in Electronic Credit Ledger can be utilised for payment of 10% pre-deposit amount under CGST Section 107 – Bombay High Court
• Orders – Provision of digital signature by issuing authority is mandatory – Bombay High Court
• Provisional attachment – Section 83 provides more stringent requirement than mere expediency – Allahabad High Court
• Renting of residential dwelling – Government clarifies before Court – Delhi High Court
• Consideration for supply – Money granted by Government for activities beneficial to public is ‘subsidy’ – Maharashtra Appellate AAR
• Frozen Paratha is not classifiable as roti/chapatti – Covered under Heading 2106 – Gujarat Appellate AAR
• No GST on employees’ portion of canteen and transportation charges collected and paid to service provider – Gujarat AAR

Customs

Notifications and Circulars

• Solar power plants or solar power projects – Project Imports Regulations amended
• Platinum, Palladium, Rhodium, etc. – Import duty increased
• SCOMET items – Procedure for general authorisation for export after repair in India notified
• Wheat Flour (Atta) exports allowed under Advance Authorisation and by EOU/SEZ, subject to conditions
• Rice – Export quota for broken rice notified

Ratio decidendi

• Interest and penalty cannot be levied with demand of Customs Additional duty, SAD and surcharge – Bombay High Court
• Amendment under Section 149 – Documentary evidence as available at time of import only to be considered – Bombay High Court
• Pre-show cause notice consultation is mandatory – Delhi High Court
• Provisional release of seized goods to only be in favour of owner – Issue of SCN under Section 124 to importer is immaterial – Bombay High Court
• Alloy steel forging rings requiring further operation to be used as rings for bearing are classifiable under Heading 7326 – CESTAT Ahmedabad
• Valuation – Plea of lower end version when not available – CESTAT New Delhi

Central Excise, Service Tax & VAT

Notifications and Circulars

• Sabka Vishwas (LDR) Scheme available for waiver of interest

Ratio decidendi

• No bar of Cenvat credit on supplementary invoices in case of transfer from conversion agent – CESTAT Kolkata
• Cenvat credit of hotel accommodation services when available – CESTAT Delhi
• No service tax on foreclosure charges for insurance contracts – Tribunal holds such charges as not different from surrender charges – CESTAT Mumbai
• Premium charged on interest restructuring of loan is not liable to service tax – CESTAT New Delhi