Author: admin_gst

2019 (2) TMI 741 – GUJARAT HIGH COURT – TMI – Validity of provisional attachment – section 83 of the Central Goods and Services Tax Act, 2017 – various hardships were caused to the petitioner – Held that:- Section 83 of the CGST Act provides for provisional attachment to protect revenue in certain cases and inter-alia, provides that where during the pendency of any proceeding under section 67, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing, attach provisionally any property, including bank account belonging to the taxable person in such manner as may be prescribed. Thus, the object of the provision is to protect the interest of the Government revenue.
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In the facts of the present case, attachment of the bank accounts of the petitioner has resulted into various hardships to the petitioner which would adversely affect its business and which may result in loss of rev

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d to the controversy involved in the present petition, which lies in a very narrow compass, with the consent of the learned advocates for the respective parties, the same was taken up for hearing. 3. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the order of provisional attachment dated 15.5.2018 passed by the respondent No.2 in exercise of powers under section 83 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act) whereby the bank account of the petitioner bearing No.200020110000901 maintained with the Bank of India, Ahmedabad Main, Bhadra has been ordered to be attached. It is the case of the petitioner that pursuant to the said order, not only the above bank account has been attached but eight bank accounts maintained by the petitioner with different banks as enlisted at Annexure-C to the petition have been attached. 4. Mr. Zubin Bharda, learned advocate for the petitioner has submitted that the p

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ner has, therefore, requested the respondents to permit the petitioner to pay the central excise dues in installments; however, there is no response thereto. It was submitted that as the respondents have attached the bank accounts maintained by the petitioner, the petitioner is not able to deposit the employees' provident fund as required to be deposited with the office of Employees Provident Fund Organisation in respect of which a show cause notice has been issued to the petitioner. It is further pointed out that the Bank of India has also issued a notice dated 2.1.2019 calling upon the petitioner to make interest payment which is overdue, failing which its account shall by classified as Non Performing Asset. It was submitted that on account of the attachment over the bank accounts, the petitioner is unable to run its day-to-day affairs smoothly, which is adversely affecting its business. It was urged that the petitioner is not denying its liability to pay the central excise dues

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er had vide letter dated 29.5.2018 committed to pay ₹ 25,00,000/- every month towards the central excise liability; however despite giving assurance, the petitioner had failed to do so and, therefore, the attachment over the bank accounts of the petitioner could not be lifted. It was, accordingly, urged that the respondent having exercised powers under section 83 of the CGST Act in accordance with law, there is no warrant for intervention by this court. 6. Section 83 of the CGST Act provides for provisional attachment to protect revenue in certain cases and inter-alia, provides that where during the pendency of any proceeding under section 67, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing, attach provisionally any property, including bank account belonging to the taxable person in such manner as may be prescribed. Thus, the object of the provision is to protect th

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bove, the petition partly succeeds and is, accordingly, allowed to the following extent: The respondents are directed to forthwith release the attachment over the following bank accounts of the petitioner:- Sr. No. Bank Branch Account No. Type 1 Bank of India Main Branch, Bhadra, Ahmedabad 200030100170219 Cash Credit 2. Bank of India Main Branch, Bhadra, Ahmedabad 200020110000901 Current 3. Bank of Baroda Vatva I.E. 15960200000442 Current 4. HDFC Bank Ltd. Vatva i.e. 50200005903692 Current 5. ICICI Bank Ltd. Vatva i.e. 231205500050 Current 6. ICICI Bank Ltd. Vatva i.e. 231205500050 Current 6. AXIS Bank Ltd. Vastral BR. 914020036149120 Current 7. State Bank of India Ex. Highway Jn. Br. 34752992814 Current 8. Kotak Bank Ghantakarna Market 500011048318 Current The petitioner shall furnish a bank guarantee for a sum of ₹ 55,00,000/- to the second respondent within a period of one month from today. The petitioner shall also file an undertaking before this court within a period of one

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2019 (2) TMI 868 – CESTAT HYDERABAD – TMI – Levy of service tax – difference between the fund value and the surrender value in case of pre-mature surrender/discontinuance of ULIP – whether the exercise of the right of the insurer to receive money is merely a transaction in actionable claim, so as to be out of the purview of service tax?
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Held that:- The actionable claim as defined under Transfer of Property Act means a claim to any debt, secured by any beneficial interest in moveable property not in the possession, either actual or constructive, of the claimant. From the definition of actionable claim, the insurance policy or the surrender value thereof would become an actionable claim or otherwise was a matter of dispute in the Apex Court in the case of Union of India Vs. Sri Sarada Mills Ltd., [1972 (9) TMI 145 – SUPREME COURT] wherein, it has been explained that right to receive insurance money is an actionable claim.
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While, it is true that the expression of ‘Service’ u

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2013 till the date on which debit entry was made in CENVAT register, interest liability on the ₹ 91,92,096/-, needs to be worked out as per the provisions of Section 75 of the Finance Act, 1994 and paid by the appellant assessee – penalty need not be imposed – decided against assessee.
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Service tax demand of ₹ 8,17,779/ Held that:- The demand for the period needs to be upheld as appellant assessee is not able to show from the records that they had indicated the amount as other income in the service tax returns – demand with interest upheld – penalty set aside.
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Applicability of Rule 6 of the CENVAT Credit Rules – Held that:- Revenue has not challenged the findings of the Adjudicating Authority on merits qua the applicability of Rule 6, on this count itself, the appeal filed by the Revenue deserves to be dismissed.
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The mere fact that service tax was payable on the part of the value of the services subject to tax, that part of the value on which tax being levi

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Life Insurance Company (herein after referred to as appellant assessee) while appeal No. ST/30263/2016 is filed against Order-in-Original No. 004/COM/55-15-16 dated 18.12.2015 and Revenue has preferred an appeal against that portion of the impugned order dated 18.12.2015 in appeal No. ST/30327/2016. 3. Appellant assessee is engaged in the business of providing life insurance services since 2016, and are covered under the taxing head of Section 65(105) (zx) of the Finance Act, 1994; the appellant is duly licensed by the Insurance Regulatory Development Authority of India (IRDA for short); avails CENVAT credit on the inputs and input services. During the period in question i.e. 2011-2012 to 2014-2015, appellant was providing two types of life insurance policies i.e. the traditional plan though pure risk insurance policies, participating and non-participating policies (endowment policies) and unit linked insurance plans (ULIP for short). In respect of Traditional Plan/Policy, the appellan

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charges, on pre-mature termination of the policy in which case appellant assessee reduces a sum as surrendered/discontinuance charges which the Revenue is seeking to tax. The common issue in dispute in the appeals filed by the assessee appellant is whether for the period in question, they are liable to discharge service tax on the difference between the fund value and the surrender value in case of pre-mature surrender/discontinuance of ULIP. In appeal No. ST/30141/2017, two additional issues are also raised in the impugned orders viz., a) whether the assessee appellant was liable to discharge interest on service tax amount of ₹ 91,92,096/-, which was discharged by utilising the CENVAT balance on due date, however, the necessary entries were not carried out in CENVAT return due to an omission, and, b) whether service tax of ₹ 8,17,779/- in respect of other income such as Alteration Fee, Assignment Charges, Re-assignment charges etc. for the period 2010-2011 to 2014-2015 nee

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y and recover insurance money is an actionable claim has held by Apex Court in it is judgment in the case of Union of India Vs. Sri Sarada Mills Ltd., [1972 (2) SCC 877]; Sunrise Associates Vs. Government of NCT, Delhi [2006 (5) SCC 603] as also LIC of India Vs. Insure Policy Plus Services Pvt. Ltd., [2016 (2) SCC 507]. ii) Definition of Service under Section 65B(44) specifically excludes from it is purview in transaction in money or actionable claim, consequently, exercise of the right by policy holder to receive insurance money (surrender value) is transaction in an actionable claim and not a service to be taxed under Finance Act. iii) Without prejudice to the submissions, the Tribunal in the case of Reliance Life Insurance Company Ltd., [2018 -TIOL-1308-CESTATMumbai] held that the surrender/discontinuance charges represent penalty or liquidated damages are cannot be considered as a consideration for any services. iv) Reliance placed by the Adjudicating Authority on Notification date

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ority under the head of Life Insurance Services taxable under Section 65(105) (zx) whereas the show cause notice has proposed to recovery of service tax in respect of the same under the head of Management of ULIP as defined under Section 65(105) (zzzzf). It is contended that the Adjudicating Authority could have traverse beyond the show cause notice. vi) It is his submission that taxable service under the head of Life Insurance Services, tax was leviable only to any services provided to a policy holder by an insurer carrying on life insurance business. The act to terminating life insurance policy for which charges are collected, cannot be said to be rendition of life insurance services so as to taxed under Life Insurance Services. B) regarding interest on service tax of ₹ 91,92,096/-. It is the submission that there was no short payment, the appellant assessee had showed and discharged applicable tax in ST-3 return wherein, self assessment of tax liability and discharge thereof w

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recovered. D) regarding reversal of tax as required under Rule 6 as sought in the Revenue s appeal. It is his submission that the appellant was not recovered any taxable or exempted services and has availed credit attributable to the inputs and input services were correctly availed and provisions of Rule 6 cannot be invoked in the case in hand. It is also his further submission that for the demand under Rule 6, it is partially beyond 5 years which is the maximum period prescribed as raising a demand and even otherwise the primary input service credit availed by the appellant assessee was in respect of insurance auxiliary service to which the restrict of for which tax liability does not apply as has been held by the Hon ble Mumbai Tribunal in the case of Tata Aig Life Insurance Co. Ltd., [2015 (37) STR 570]. 7. He relies upon the decisions of the Supreme Court in the case of Union of India Vs. Sri Sarada Mills Ltd., [(1972) 2 SCC 877] and Sunrise Associates Vs. Government of NCT, Delhi

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iable to reverse CENVAT credit under proportionate basis for the period 01.07.2010 to 30.04.2011. 9. On careful consideration of submissions made by both sides, we find that it is not in dispute as to the amounts which are paid by the appellant assessee to an insured person under nomenclature of surrender charges, it represents the difference between the fund on the date of surrender vis-a-vis the amount agreed to be paid to the policy holder of his surrendering the policy before expiry of the locking period as provided in the policy. It is also seen that the policy document which is the contract between the insurer and the insured stipulates the manner in which surrender value of the policy would be computed in case a policy holder wishes to exercise his right to receive the insurance money by surrendering the policy. In another words, if the insured exercises right to receive insurance money prior to expiry of its lock-in period, the insurer is contractually obligated to pay him the

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r in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or (iii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force. Explanation 1 . – For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply to,- (A) the functions performed by the Members of Parliament, Members of State Legislative, Members of Panchayats, Members of Municipalities and Members of other local authorities who receive any consideration in performing the functions of that office as such member; or (B) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or (C) the duties performed by any person as a C

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ulation) Act, 1998;. (Finance Act 2016) (b) by a foreman of chit fund for conducting or organising a chit in any manner.; Explanation 3. – For the purposes of this Chapter,- (a) an unincorporated association or a body of persons, as the case may be, and a member thereof shall be treated as distinct persons; (b) an establishment of a person in the taxable territory and any of his other establishment in a non-taxable territory shall be treated as establishments of distinct persons. Explanation 4. – A person carrying on a business through a branch or agency or representational office in any territory shall be treated as having an establishment in that territory; It can be seen that the definition of Service in Section 65B(44) excludes from its purview an activity which is construed merely a transaction in actionable claim. The term actionable claim is defined in Section 65B(2) (1) have the meaning assigned to it in Section 3 of the Transfer of Property Act, 1882 we reproduce the said rele

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ceive insurance money is an actionable claim. The relevant portion of Apex Court observations are reproduced as below: 13. Section 130 of the Transfer of Property Act however speaks of transfer of actionable claim. Actionable claims under the Indian Law include claims recognised by the Court either as to unsecured debts or as to beneficial interests in moveable property not in possession. A debt is an obligation to pay a liquidated or certain sum of money. A beneficial interest in moveable property will include a right to recover insurance money or a partner s right to sue for an account of a dissolved partnership or a decretal debt or a right to recover the insurance money or the right to claim the benefit of a contract not coupled with any liability. The principle that beneficial interests in moveable property would include right to recover insurance money was reiterated by Apex Court in the case of Sunrise Associates (supra) the relevant observations of the Apex Court are in para No

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he security for such debts charged upon the property or the stocks or funds of the insurer. A policy of the insurance represents money due and owing to the assured at his death, and it forms part of his estate. A policy of life insurance can be said to be an actionable claim within the meaning of Section 3 of the Transfer of Property Act and is not a mere right to sue. In a policy of life insurance the sum insured is certain, the premium, or the consideration for its payment is certain and the time when its payment is to become due is certain to come. Even the present value of the policy which is called the surrender value can be calculated. A policy of insurance is a present contract in the hands of the assured of which he has a present right to the benefit although the fruits are to be enjoyed in future. A life assurance policy as such would be property. Coitton, L.J. in (Tucan)2, (1888) 40 Ch. D5 remarked It was contended that the policies did not come within the term property but i

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e definition of service. In our view, the amounts entered as surrender/discontinuance charges in the appellant assesse s books of accounts are not consideration for any service rendered by them, but it represents the amount that is retained by insurer on the insured, exercise his right to receive the insurance money. The entirety of the transaction being that in actionable claim is outside the purview of the service tax and does not get covered under provisions of Finance Act, 1994. 12. While, it is true that the expression of Service under Section 65B(44) only w.e.f. 01.07.2012, however, even for the period prior thereto the transaction in question is a actionable claim and not a service. It has to be also noted that for the period prior to 01.07.2012, for an activity to be tax it had to qualify as a taxable service in one of the specified services. Since we are of the view, the transaction in question is not a service at all but the transaction in a actionable claim hence could not h

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rendered and such charges are designed to recoup the expenses already incurred towards procurement administration of the policy and incidental thereto. The finding of the Adjudicating Authority are premised entirely are incorrect reading of the IRDA (treatment of discontinuance linked insurance policy) regulations, 2010 and overlooking the first principle and fundamental position that for an activity to be taxed as service under provisions of Finance Act, 1994, the activity has to first qualify as a service. In our view, a regulation framed by IRDA with the aim of protecting of the insured by providing for a yardstick for computation for the surrender and the consequent discontinuance charges cannot be read and applied out of services rendered a transaction in an actionable claim, as a service, liable to be taxed under the provisions of Finance Act, 1994. In any case, the said regulation will apply only to the policy issued after 01.07.2010 and does not apply to the policy prior there

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he ST-3 do not indicate any debit of the said amount. It is also on records, and undisputed that appellant assessee in April, 2013 corrected the utilisation of column of the CENVAT return by debit of the amount of ₹ 91,92,096/-. The entire arguments of the Learned Counsel is that this was a clerical error and during the relevant period in question i.e. June 2012 to April, 2013, the balance in the CENVAT registers was more than the amount which needs to be debited hence there was no reason to the appellant to make short payment for the month of June, 2012 hence interest liability be set aside. In our considered view, the appellant assessee, having not debited the CENVAT register for the period June, 2012, needs to pay the interest on the said amount till the liability of ₹ 91,92,096/- has been paid i.e. to say for the period from July, 2012 to April, 2013 till the date on which debit entry was made in CENVAT register, interest liability on the ₹ 91,92,096/-, needs to b

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y the Revenue is concerned, show cause notice issued to the appellant assessee has alleged that the policy administration charges, premium allocation charges, surrender charges which are recovered as a part of management of ULIP services did not paid tax during the period 16.10.2006 to 15.05.2008 & 01.07.2010 till 31.03.2011 and consequently were to be treated as exempt services, thereby the notification of CENVAT credit Rules, we find that the Adjudicating Authority has concluded that services rendered by the appellant assessee are only taxable services in as much, no taxable service rendered by them is exempt from whole of tax leviable on them nor was had rendering non taxable services, he has also held that merely because of service tax was payable on a part of a value on taxable service, it could not be contended by the Revenue that remaining part of the value on which tax was not being paid was an exempt service. We find that Revenue in it is appeal has not disputed any of the

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ed order covering all the issues and dealing with all the submissions that may be made by the assessee and have also been made before the Tribunal whether discussed in the order or not. For ease of reference, we reproduce the relevant paragraphs Nos. 12 to 15 dated 15.05.2014. 12. Coming to the issues relating to the CENVAT credit, learned counsel submitted that for the period from October, 2006 to March, 2008, there was a restriction of utilization of CENVAT credit to the extent of ₹ 20,000/-. It is settled law that it would be sufficient if the appellants paid the interest on such excess utilisation according to the learned counsel. We find that this submission has to be accepted since it would only be accepted. 13. Further as regards the demand relating to ₹ 3.98 crores @ 8% /6% on the exempted services, learned counsel fairly agrees that the appellants had in fact not maintained separate accounts. Nevertheless it is their claim that in respect of these services, because

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rse the proportionate credit attributable to such values. The learned counsel submits that according to their own calculation the amount of proportionate credit reversible would come to about ₹ 86 lakhs. 14. The observations hereinabove would show that prima facie, we have not found a case in favour of the appellant for approximately ₹ 92 lakhs going by the calculation of the appellants. In our opinion, this liability with a portion of interest should be deposited by the appellants and compliance should be reported before the Commissioner for fresh adjudication in the public interest. 15. In view of the above discussion, the impugned order is set aside and the matter is remanded to the original adjudicating authority with a request to adjudicate the matter afresh and pass a very reasoned detailed order covering all the issues and dealing with all the submissions that may be made by the appellants and have been made before us during the course of hearing whether discussed in

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is that undisputedly as per notice the charges towards policy administration, premium allocation and surrender charges are attributable to management of ULIP. Since management of ULIP services are taxable, merely because w.e.f. 01.07.2010 the taxable value qua services was a gross amount charged towards fund management charges, the same did not by any stretch of imagination result in any part of ULIP services being exempt from tax. The mere fact that service tax was payable on the part of the value of the services subject to tax, that part of the value on which tax being levied cannot be said to be an exempt service. Only to draw an analogy, abatement was granted from the levy of service tax in excess of 33% on construction services in terms of Notification No. 01/2006-ST, the grant of said abatement did not result in the construction service being an exempt service. Juxtaposing to the issue in hand, management of ULIP being a taxable service, merely because a part of the value of the

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2019 (2) TMI 869 – CESTAT NEW DELHI – TMI – Classification of services – Renting of immovable property services or not – ‘Advance Development Cost’ received from Developers towards development of common infrastructure facilities – extended period of limitation – Held that:- Development of Common Infrastructure facilities outside Asset Area cannot be construed as ‘Renting of Immovable Property’ or a service in relation to the renting of immovable property. The treatment of reimbursement of cost, of common facilities, as ‘Renting Service’ by the Adjudicating Authority is not legal because such common facilities were developed by taking advances as a pool of fund, for the infrastructure to be used by common beneficiaries and the account was to be settled as per Agreement by returning excess, if any, or charging deficit, etc. if any, if the cost of the works exceeded or was less than the amount collected as advance.
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For rent on immovable property service, the expression ‘in relatio

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elopment cost, because common facilities developed belong to none (held in trust) and the benefit is derived by all the 13 developers, as well as the public. Hence the same is not liable to Service Tax – Advance development cost is not consideration for any services rendered, therefore, Section 67 has been improperly invoked to take gross value as consideration for alleged services provided, even when whole of the deposit is liable to be spent and nothing retained as per the IDSA agreement.
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It is settled law that service tax, if any, is not applicable on the Advance Development Cost received prior to 01.07.2010. In the instant case taxable event happened even prior to the date when licensing of vacant land was included in the renting of immovable services w.e.f 01.07.2010. Therefore, taxable event having occurred earlier to the point of levy of service tax, the same cannot be levied.
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The ‘Infrastructure development cost’ as per IDSA is not covered under renting of immovabl

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rport Authority of India (AAI) for Delhi Airport on 04.04.2006 and under the Agreement the appellant had exclusive rights to undertake some of the functions like operating, maintaining, developing, designing, constructing, upgrading IGI Airport and to perform services relating to aeronautics and non aeronautics. It was their responsibility to adhere to Master Plan norms of the competent local authority and the land area utilized of non transfer assets not to exceed 5%, and to allow any development as per the Civil Aviation Security norms as per Para 2.2.4 of the said agreement which reads as under:- 2.2.4 It is expressly understood by the Parties that the JVC shall provide Non-Aeronautical Services at the Airport as above, provided however that the land area utilized for provision of Non-Transfer Assets shall not exceed five percent (or such different percentage as set forth) in the master plan norms of the competent local authority of Delhi, (as the same may change from time to time)

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tal 13 parties, as detailed below:- Assets area Area in acres BUA sft Successful bidders Developers Total infra deposits Date of DA Date of IDSA 1 5.48 650,000 Juniper Hotels Juniper Hotels 71.50 2.6.2009 2.6.2009 2 4.69 625,000 AAPC Caddie Hotels 68.75 15.6.2009 15.6.2009 3 5.03 730,000 Blue Coast Silver Resorts 60.23 26.2.2010 26.2.2010 4 4.55 578,000 Aria Hotels Aria Hotels 63.58 4.7.2009 4.7.2009 5A 1.58 240,000 Pride Hotels Pride Hotels 26.40 24.2.2010 24.2.2010 5B 1.58 240,000 Sweta Estates Central Park Infra Dev 26.40 27.2.2010 27.2.2010 6 1.95 232,000 Lemon Tree Hyacinth Hotels 25.52 25.5.2009 25.5.2009 7 2.22 300,000 Bhati Realty Oak Infra Dev 33.00 25.2.2010 25.2.2010 8 2.3 325,000 Bhati Realty Oak Infra Dev 35.75 25.2.2010 25.2.2010 9 1.71 190,000 InterGlobe Hotels nterGlobe Hotels 20.90 3.6.2009 3.6.2009 10 1.6 175,000 Bird Group Bird Group 19.25 28.5.2009 28.5.2009 11 3.1 450,000 Bhati Realty Aspen Buildtech 20.35 29.5.2009 29.5.2009 12 1.6 185,000 Wave Impex Wave Hospital

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Cost for any reason whatsoever. 1.1.2 The Advance Development Cost shall be payable by the Developer to DIAL, in three tranches within one year from the date hereof. The Developer shall pay 50% of the Advance Development Cost to DIAL, concurrently with the execution of this Agreement ( First Tranche ) in the manner specified herein. 1.1.3 25% of the Advance Development Cost, shall be payable within 6 months from the date hereof. The remaining 25% of the Advance Development Cost shall be payable by the Developer to DIAL, on or before the first anniversary of the date hereof. 1.1.4 Subject to Article 6.4 hereof, the Parties agree that any portion of Advance Development Cost paid by the Developer to DIAL, as has not been utilized by DIAL towards development of any infrastructure Facilities during the course of the Initial Term, as certified by the internal auditors of DIAL, shall be returned to the Developer upon the earlier of the expiry of the Initial Term or upon termination of Develo

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cture Development and Services Agreement (IDSA) with each developer. All the agreements i.e. DA and IDSA with 13 parties were entered prior 1.07.2010, i.e. the date on which notification No.31/2010 – ST dt.01.07.2010 came into existence by virtue of which vacant land became subject of renting of immoveable property service . By virtue of these agreements the vacant lands (in asset area 3) within Hospitality District were leased/ licensed to Developers under Development Agreement. Certain common areas outside the Asset Area 3, were to be developed and provided with infrastructure facilities and were to be maintained by the appellant under IDSA Agreement . In relation to these infrastructure development facilities, the IDSA agreement provided that DIAL shall be responsible to provide in Asset Area-3, following common infrastructure facilities, upon receipt of advance towards development cost, from the Developer, and payment of maintenance charges: (i) power supply at 11KW to Developer in

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advance development cost to DIAL with a condition to terminate agreement, in case of facilities not been provided and DIAL was required to compensate. All maintenance charges later on separately collected (post development) were however subjected to payment of tax, which was duly deposited and the same is not in dispute. 5. Appellant was claiming exemption under Notification No.31/2010-ST dated 22.06.2010. However, the Department was of the view that after amendment in Airport service w.e.f. 01.07.2010 the classification of the land development cost was under Renting of Immovable Property Services This, as per the department, was clarified to the appellant on 02/03.05.2012 vide C.No.IV(16)HQ/Tech/ST/179/2011, in response to clarification sought by M/s Aria Hotels & Consultancy Services Pvt. Ltd., which was one of the parties to such agreements with the appellant. Even though the letter itself mentioned that the issue is being referred to the Board for confirmation of views, but st

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Tax Implications; A. Whether grant of right to develop, operate and maintain non-transferable assets with grant of license in respect of Land can be treated as taxable service under service tax regulations? Under the proposed arrangement, DAPL, will give license of Land to the licensee with the right to use the said land for specific purpose of developing, operating and maintaining facilities over the Land. As a consideration for the license of land development right, licensee would pay an annual license fee to DAPL. As the transaction is in the nature of license of land acquisition of development right, there is exposure of service tax or VAT to such transaction as explained below:- Service Tax; As per service tax law there is no service tax on the right to use of land. Further, in the Budget 2007 a new taxable category of renting of immovable property has been inserted which excludes vacant land from its ambit. Therefore the activity of licensing of land by DAPL, to licensee would no

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nt transaction; 1. Renting of Immovable Property Services; As per the definition of immovable property service under the service tax law (refer annexure 2 for the definition), this category covers the services of renting, leasing, letting of an immovable property for the furtherance of business or commerce. Further, immovable property has been defined to cover buildings and land appurtenant to these buildings. In the instant case the common facilities being used are understood to be that of road, power, water etc which are not in the nature of building/ part of building. Accordingly, since the facilities being provided do not fall under the definition of immovable property, no service tax implication would arise under this category. Further, these services cover renting, leasing, letting out of immovable property. Renting, leasing, letting out of facilities is an arrangement wherein an exclusive right is granted for the immovable property, whereas in this case the various sub-licensees

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chargeable to service tax under the category of business support services. 3. Airport Services; Airport services as defined under the Finance Act, 1994 (refer annexure2 for definition) are any services provided by the airport authority or any other person authorized by it, in an airport or civil enclave. In the instant case DAPL has been given the right to manage the property which flows from the right given by AAI to DIAL and then by DIAL to DAPL. Further as per the definition these should be services provided in the airport. For this purpose it is required to be examined whether the common facilities are located inside the airport. The airport has not been directly defined under the service tax provisions. It is taken to have the sme meaning as is assigned to it by the Airport Authority Act, 1994, which while defining the term airport uses the terms aerodrome and aircraft as defined in Aircraft Act, 1934. Following are the relevant definitions:- Airport has the meaning assigned to it

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rture of aircraft and includes all buildings, sheds, vessels, piers and other structures thereon or appertaining thereto. As we have been made to understand that the area on which the common facilities would be constructed falls beyond the boundary of the airport area used for landing and taking off of aircraft, a view may be taken that such area would not be appertaining to the area intended to be used for landing or departure of aircraft covered under the definition of airport as discussed above. Accordingly, the applicability of the category of airport service to the instant transaction can be ruled out. Based on the above discussion, it may be seen that the advance received by DAPL from the licensees for development of common facilities by DAPL, does not sell under any of the taxable service category, therefore, there is no service tax exposure on the instant transaction. C. Whether refundable deposits received by DAPL from the licensees for overall development of infrastructure fa

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rs to have been made by M/s CAS Associates on 13/12/2011. Another representation was made by the appellant on 17.01.2012 on the same issue, however the Assistant Commissioner in response, vide letter dated 08.02.2012 opined that License Fee is taxable as Airport Service. Another Clarification was received from Dy. Commissioner, Service Tax on 02.05.2012 stating that on re-examination of issue the Department is of the view that the license fee is chargeable to service tax as renting of immovable property services. However, the matter has been referred to Board Office for confirmation. But, no confirmation from Board was received by the Appellants. It is claimed by the appellant that the Development Agreement was duly enclosed by M/s Aria Hotels, while seeking clarification from Chairman CBEC, vide letter dated 11.07.2011. Similarly, letter dated 17.07.2012 to Commissioner, Service Tax clearly indicates that Development Agreement dated 04.07.2009 was duly enclosed. Even the notes to clau

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ether the element of Advance Development Cost received from Developers towards development of common infrastructure facilities, is classifiable as renting of immovable property services. Department is of the view that only one agreement should have suffice and the advance receipt for specific purposes of developing common facilities under IDSA, should also be included as License Fee. As such services provided or to be provided are in relation to vacant land. After completion of investigations based on facts narrated in preceding paras, Show Cause Notice dated 10.10.2014 was issued by the Additional Director General, DGCEI (Hqrs), New Delhi under F. No 574/CE/41/20/Inv./ Pt.II/11327 dated 10.10.2014. The said Show Cause Notice was adjudicated by the adjudicating authority on contest vide the impugned order wherein demand of ₹ 54,31,68,584/-(Fifty Four Crores Thirty One Lakh Sixty Eight Thousand Five Hundred Eighty Four) was confirmed, interest demanded under Section 75 and penalti

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s or commerce. Explanation 1.- For the purposes of this sub-clause, "immovable property" includes – (i) building and part of a building, and the land appurtenant thereto; (ii) land incidental to the use of such building or part of a building; (iii) the common or shared areas and facilities relating thereto; and (iv) in case of a building located in a complex or an industrial estate, all common areas and facilities relating thereto, within such complex or estate, but does not include – (a) vacant land solely used for agriculture, aquaculture, farming, forestry, animal husbandry, mining purposes; (b) vacant land, whether or not having facilities clearly incidental to the use of such vacant land; (c) land used for educational, sports, circus, entertainment and parking purposes; and (d) building used solely for residential purposes and buildings used for the purposes of accommodation, including hotels, hostels, boarding houses, holiday accommodation, tents, camping facilities. Ex

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rights but obligation on DIAL to develop common facilities for the various developers, as well as the common public, on payment of apportioned shares of such approx developments cost, outside Asset Area-3, on all Developers. It is seen that there were financial obligations imposed on DIAL in case it failed to provide the facilities, even in future. The Infra Agreement had two components (i) Development of Common facilities (ii) Maintenance of various services, -both are in relation to real estate which were not part of Asset Area-3 and are related to Common and Public Area with no exclusive right being conferred. Under the OMD Agreement entered between the appellant and AAI, appellants had responsibilities to adhere to various construction norms, civil aviation security norms and norms of master plan of Delhi Government and of other agencies. Therefore, even while allowing development rights to developers in allocated development area, as per norms and approved plans, for common areas

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ls etc. Further, as per the terms of IDSA no profit was to be made or surplus retained by the appellant, and any excess deposit of the Advance Development Cost was liable to be returned to the 13 parties/ developers after completion of the work. Therefore, no consideration for any purported service has been retained by the appellant. The provision of gross value invoked by the Department under Section 67 of the Finance Act, 1994, for the activities performed prior to amendment of Section 67 w.e.f. May 14, 2015, can not include the value of goods and services, cost of which is only defrayed or reimbursed to the appellant even in advance, in terms of IDSA, The Department has failed to show, if any portion was retained by the Appellant as its remuneration for alleged services provided. Reliance in this regard is placed on 2018 (10) G. S. T. L. 401 (S. C.), in the matter of Union of India Vs. Intercontinental Consultants and Technocrats Pvt. Ltd. (Para 16, 22, 24, 25 and Para 29). The rele

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ovided or to be provided. On that basis, submission was that for the period in question, that is covered by these appeals, there could not be any service tax levy on reimbursed expenses, as Section 67 of the Act did not provide for such an inclusion. Mr. Mittal also referred to Para 2.4 of Circular/Instructions F. No. B-43/5/97-TRU, dated June 6, 1997 wherein it is clarified that …various other reimbursable expenses incurred are not to be included for computing the service tax . 22.Section 66 of the Act is the charging Section which reads as under: there shall be levy of tax (hereinafter referred to as the service tax) @ 12% of the value of taxable services referred to in sub-clauses of Section 65 and collected in such manner as may be prescribed. . 24.In this hue, the expression such occurring in Section 67 of the Act assumes importance. In other words, valuation of taxable services for charging service tax, the authorities are to find what is the gross amount charged for providing

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ed on May 1, 2006. Sub-section (4) of Section 67 empowers the rule making authority to lay down the manner in which value of taxable service is to be determined. However, Section 67(4) is expressly made subject to the provisions of sub-section (1). Mandate of sub-section (1) of Section 67 is manifest, as noted above, viz., the service tax is to be paid only on the services actually provided by the service provider. 29. In the present case, the aforesaid view gets strengthened from the manner in which the Legislature itself acted. Realising that Section 67, dealing with valuation of taxable services, does not include reimbursable expenses for providing such service, the Legislature amended vide Finance Act, 2015, with effect from May 14, 2015, whereby Clause (a) which deals with consideration is suitably amended to include reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service. Thus, only with ef

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A legislation is not just a series of statements, such as one finds in a work of fiction/non-fiction or even in a judgment of a court of law. There is a technique required to draft a legislation as well as to understand a legislation. Former technique is known as legislative drafting and latter one is to be found in the various principles of interpretation of statutes . Vis-a-vis ordinary prose, a legislation differs in its provenance, layout and features as also in the implication as to its meaning that arise by presumptions as to the intent of the maker thereof. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in

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egislation or to explain a former legislation. We need not note the cornucopia of case law available on the subject because aforesaid legal position clearly emerges from the various decisions and this legal position was conceded by the counsel for the parties. In any case, we shall refer to few judgments containing this dicta, a little later. 12. Reliance in this regard is also placed on the decision of this Bench (same composition) in the matter of Premium Real Estate Developers, Rajat Yadav Vs. C. S. T. Service Tax, Delhi, Final Order No.53322-53323/2018 dated 30.09.2013, where the issue before the bench was relating to Advance receipt by the Appellants for purchase of land, Development of Land and Registration of land. The Settlement of the Accounts was still to take place and the exact component of consideration of alleged service received was still to be ascertained. The Department was of the view that advance received by the appellant itself was taxable in its hand as per Section

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ew of the discussion in the preceding paras. Para 32. Further we find that the issue relates to interpretation, and there is no malafide on the part of the appellant. The transaction is duly recorded in the books of accounts maintained by the appellant. Further, there is no suppression of information from the revenue. Accordingly, we hold that the extended period of limitation is not applicable. 13. Reliance in this regard is also placed on the decision of this Tribunal Bench- Chennai, in the case of Commr. Of C.Ex. & S.T, Madurai Vs Sashwath Construction Pvt Ltd-2018 (10) GSTL 273 (Tri-Chennai) wherein it was held- Construction of Residential Complex Service,-Amount received by builder from allottees under category easement rights for using certain common area-Taxability of-Order of authorities below holding amount being relatable to construction and land value, hence not taxable, sustainable especially when Revenue not challenged such finding on merit but only contested that the

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ich appellants were duly discharging tax liability alongwith that on the lease rent of the land of Asset Area-3. In fact, such common area facilities were outside the vacant land in Asset Area-3. For rent on immovable property service, the expression in relation to has to be read in conjunction with the expression rental . The term rental even in enlarged form of Lease, Rent, Licence, etc., cannot encompass anything done for development of the common facility/ property. There is difference between anything done in relation to renting of immovable property service and anything done in relation to immovable property per-se, which is in common domain. The latter cannot fall within the ambit of the former, 15. From the definition of Renting of Immovable Property Services as contained in Section 65(105)(zzzz), (reproduced above), it is evident that in order to be covered under renting of immovable property services, the nature of the activity should be that of renting or letting or leasing

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r of Property Act reads; 105. Lease Defined-A lease of immovable property is a transfer of right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or anything of value, to be rendered periodically or on specified occasions to the transferor by the transferee who accepts the transfer on such terms. Section 52 of the Indian Easement Act, 1882 reads; License Defined-Where one person grants to another, or to a definite number of other persons a right to do, in or upon the immovable property of the grantor, something which would, in the absence of which, be unlawful and such right does not amount to an easement or an interest in the property, the right is called license Section 105 of Transfer of Property Act,1882 defines a lease of immovable property as a transfer of a right to enjoy such property made for a certain time in consideration for a price paid or promised. Un

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ourt in the case of C.M. Beena Vs P.N. Ramachandra Rao-(2004) 3 SCC 595 wherein it has been held that lease refers to conferring of a right to possess exclusively coupled with transfer of a right to enjoy the property. It is evident that the transaction of renting an immovable property includes within its scope the granting of the right to use the immovable property by way of tenancy, lease, license etc. It also includes any other arrangement of similar nature. In order to understand the scope of any other arrangement of similar nature the rule of ejusdem generis is to be applied. A lucid illustration from Salmond on Jurisprudence Twelfth Edition, page 135, is extracted with advantage; This (i.e the rule of ejusdem generis) however, is only the application of a common sense rule of language. If a man tells his wife to go out and buy butter, milk, eggs and anything else she needs, he will not normally be understood to include in the term anything else she needs a new hat or an item of f

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the general word, which follow them, By applying the principle of ejusdem generis the general term of other similar arrangement has to be interpreted in the light of the specific terms used in the definition, namely, renting, letting, leasing and licensing. 16. As discussed above the term rent means letting out or use by another person usually for fixed periodical return. It cannot encompass Development and Maintenance of common facilities, which was to be defrayed on the basis of actual expense incurred. Again lease involves transfer of rights by transferor to the transferee. In this case, there is no right vested in immovable property to be transferred to Developer, again for License a right is required to be conferred to do or continue to do something upon the immovable property of the granter. In this case however, the common area is meant for public use and such immovable property is neither the property of DIAL nor the developer. The road network, metro facilities, etc. are for t

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ble property for business or commerce, and as such, the activities in relation to the construction of building on the vacant land allotted on lease basis i.e. the charges of map approval, validation, map revision, malba charges etc. would not attract service tax. As per case of M/s Greater NOIDA Industrial Development Authority, (supra) the charges collected to undertake various municipal functions like Fire Services, Public amenities, public conveniences including street lightings, parking light, were in the nature of services to be provided by the municipalities and were liable to tax under Management Maintenance and Repair Services in respect of charges collected from allottees., even when within specified industrial area and not outside, it was regarded not as Renting of Immovable Property Service, but as Management Maintenance and Repair Services . Therefore, by no sense of imagination, the Common Area Services outside Asset Area can be regarded as Renting of Immovable Property Se

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eturned. Since there is only development of common infrastructure facilities involved (as trustee), there is no service flowing from any party to other. The common facilities developed are also outside the asset area which is in the nature of infra development and the same is neither renting of immovable property, nor in relation to renting of immoveable property. Development of common infra outside asset area cannot be said to be in relation to renting of immoveable property, as no interest in common area is transferred under IDSA to developer. In fact the services which can be in relation to renting of immoveable property are in the nature of broker services etc., and not infrastructure facilities which become part of immoveable property in common areas. In fact Section 65(105)(zzzz) explanation 1 sub clause 4 includes within the ambit of immoveable property, only such common areas and facilities which are within complex of such estates. The area outside and common facilities outside

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able services w.e.f 01.07.2010. Therefore, taxable event having occurred earlier to the point of levy of service tax, the same cannot be levied. Reliance is placed on: – (2000) 119 SCC 182 (SC), 20th Century Finance Corporation Ltd. and Anothers vs. State of Maharashtra. – 2009 (13) STR 159 (Tri. Bom): Bajaj Allianz General Insurance Co. Ltd. vs. CCE, Pune. 19. In any case the development of land or common facilities for commercial exploitation and usage by public cannot be termed as Renting of Immovable Property as it is the case of Land Development. Reliance in this regard is placed on 2015 (37) STR 859 (Tri. Del.) as confirmed in 2015 (040) STR J132 (S. C.) in the matter of Alokik Township Corporation Vs. Commissioner of Central Excise and Service Tax, Jaipur-I. (Para 7 and 7.1) :- In which matter construction of sewerage line, laying of underground water supply pipe line or of overhead water tank, construction of dividers and footpath along with plantation were clearly held as acti

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d on discussion in the preceding paras, we are of the view that the Infrastructure development cost as per IDSA is not covered under renting of immovable property and is not chargeable to service tax. a. Second issue on which the appellant has asserted is that extended period of limitation cannot be invoked in the present case and the demand, if any, is time barred. We find that there is nothing brought out on record that the appellant had any intent to evade payment of Service Tax on the consideration paid by the Developers for renting, as alleged. In fact the Appellant had paid Service Tax on the consideration being Licence Fees. There appears no suppression as everything was revealed and was available on Balance Sheet submitted to the Department during Audit conducted from July, 2012 to 2013 and also the same were reflected in ST-3 Returns. It is clear that the appellant nurtured a bonafide belief and it involves interpretation The Department was also not clear on the matter, as is

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he suppression of fact has to be with intent to evade . b. We note from the facts of the case that it was the appellant who had sought clarification from the Department regarding taxability or otherwise for various services provided by them. On 16.05.2011, Office of Commissioner gave interim reply, stating opinion was not final. On 18.11.2011 an Assistant Commissioner after visiting the site gave the opinion that tax was dischargeable as renting of immovable property. Again on 08.02.2012 an Assistant Commissioner opined that Licence Fee is taxable as Airport Service . Lastly on 02.05.2012 Deputy Commissioner of Service Tax on re-examination gave opinion that the alleged service is taxable as renting of immovable property but at the same time the matter has been referred to the Board Office. Till date no clarification from the Board has been received. It is thus clear that the matter involved both physical verification as well as examination of legal issue on which even within the Depar

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ces Agreement . Therefore, it is not correct that the appellants had not informed or misled the Department about the existence of IDSA. It is on record that all the clarification by M/s Aria and the Appellants were in relation to License Fee of vacant land and that the Legal Opinion of PWC dated 09.07.2007 had clearly indicated that the advances received towards Development of basic common infrastructure facilities were not liable to service tax either as Renting of Immovable Property Services as they do not vest any exclusive right in any immovable property in creation of common facilities or Business Support Services or Airport Services . Even when Renting of Immovable Property w.e.f. 01.07.2010, included vacant land, the opinion has remained relevant because no exclusive right stood vested in creation of common facility. d. Again as far as non- taxability of Advance Development Cost is concerned, appellant had acted on legal opinion given by PWC which had clearly opined in 2007 that

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GST – States – 08/2019 – State Tax – Dated:- 8-2-2019 – GOVERNMENT OF WEST BENGAL DIRECTORATE OF COMMERCIAL TAXES 14, BELIAGHATA ROAD, KOLKATA -700015 NOTIFICATION BY THE COMMISSIONER OF STATE TAX Notification No. 02/2019-C.T./GST Dated: 08/02/2019 No. 08/2019 – State Tax In exercise of the powers conferred by sub-section (6) of section 39 read with section 168 of the West Bengal Goods and Services Tax Act, 2017 (West Ben. Act XXVIII of 2017) (hereinafter referred to as the said Act), the Commi

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2019 (3) TMI 305 – CESTAT KOLKATA – TMI – Appealable Order or not? – communication dated 17.07.2018 – Section 86(1) of the erstwhile Finance Act, 1994 – Held that:- Circular dated 28.02.2015 of Central Board of Excise & Customs clarified that the Recovery Officer do have power to add, to amend, to vary or review any Garnishee Notice issued. However, the interest of Revenue has to be suitably safeguarded. It is stated in the said Circular that the facility to pay the arrears in installments shall generally be granted to a reasonable case of payment of arrears in installments as the company being under temporary financial distress. The Ld. Commissioner may cancel the permission in case of default in the payment of installments or when the company is becoming financial unviable and there is livelihood of winding up of business.
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The appellant by letters dated 17.01.2017 and 04.01.2018 requested the Ld. Commissioner for payment of arrears in installments, which is backed by the Board

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ellant (s) Shri A. K. Biswas, Suptd. (AR) for the Respondent(s) ORDER Per Shri P. K. Choudhary: The appellant filed an application for condonation of delay of 65 days in filing the appeal. The matter was heard at length on 18.01.2019. 2. After hearing both the sides on the application for condonation of delay in filing appeal, I find that the delay has occurred owing to sickness of the Counsel. After considering the submission of both sides, I find that there is sufficient reason for condoning the delay, and I do so. 3. With the consent of both sides, the appeal itself is taken up for hearing. 4. The facts of the case in brief are that the appellant has filed this appeal against the communication dated 17.07.2018 of the Deputy Commissioner (Tech) whereby it was communicated that the Commissioner has withdrawn the facility for allowing payment of outstanding Service Tax by installments, as allowed by the earlier order dated 10.04.2018 issued by the Assistant Commissioner (Tech) with the

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f outstanding demand by installments. He relied upon the following decisions:- (a) Commissioner of Central Excise Vs Girish B Mishra Order dated 13.02.2013 in Tax Appeal No. 951 of 2012 of the Hon ble Gujarat High Court. (b) C. C. E. B. Maharashtra State Bureau (2013) 35 Taxmann Com. 8 (CESTAT). The Learned A. R. for the Revenue strongly opposed submission of the Leaned Counsel. It is submitted that the Board Circular is an executive order. 6. On perusal of the impugned communication dated 17th July, 2018 of the Learned Commissioner, I find that by earlier order dated 10.04.2018, the Ld. Commissioner allowed payment of the outstanding Service Tax dues in installments. It is observed in the impugned communication dated 17.07.2018 before the Bench that since the appellant had defaulted in the monthly payment of installments as stipulated vide letter dated 10th April, 2018, the facility for allowing of payment of outstanding Service Tax dues in installments as allowed, has been withdrawn

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from April 2018 to November 2018 and the balance amount of ₹ 3,25,505/- would be paid by December 2019. It is submitted that there was delay in payment of dues for the month of June 2018 and on 13.07.2018 payment was made for ₹ 7,00,000/- for the months of June 2018 and July 2018. There was no default of payment of installments while passing the impugned Order dated 17th July, 2018. 8. The Ld. Authorized Representative for the Revenue submits that the Board Circular dated 28th February, 2015 clearly stated that in case of default in payment of installments, the permission shall be withdrawn. It is submitted that the appellant failed to pay the installments for the month of June 2018 and therefore, the Ld. Commissioner withdrew the earlier permission. 9. After hearing both sides and on perusal of the record, I find that Circular dated 28.02.2015 of Central Board of Excise & Customs clarified that the Recovery Officer do have power to add, to amend, to vary or review any

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ted in the monthly payments, the Ld. Commissioner has withdrawn the facility for payment of outstanding dues in installments, against which the appellant filed this appeal. 10. In the present case, I find that the appellant failed to pay only one installment for the month of June 2018 within the stipulated period. In fact, the installment for the month of June was paid in the next month on 13.07.2018 alongwith the installment of July 2018. Therefore, the impugned Order dated 17.07.2018 was issued. It seems that the payment of installments of June and July 2018 as communicated by the appellant by letter dated 13.07.2018 may not be noticed while passing the order dated 17.08.2018. The order aspect of this case is that the appellant by letter dated 20.08.2018 informed the department that they have paid ₹ 49,00,000/- vide two challans for the balance amount. It shows that the interest of Revenue has been suitably safeguarded. In this situation, the impugned order dated 17.07.2018 for

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GST – Started By: – Kaustubh Karandikar – Dated:- 7-2-2019 Last Replied Date:- 11-2-2019 – XYZ(India) paying consideration to PQR, Germany (Parent company) for providing technical knowledge, designing of product and after sale service in relation to products manufactured by XYZ in India. The amount payable to PQR would depend on sales value of goods sold by XYZ. Is XYZ liable to pay GST on the amount paid to PQR? – Reply By Ganeshan Kalyani – The Reply = This amounts to import of service which

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GST – Started By: – Kaustubh Karandikar – Dated:- 7-2-2019 Last Replied Date:- 8-2-2019 – XYZ(India) providing engineering service (Design, drawing etc) to PQR, Germany (Parent company). Services are provided online from India. Invoice would be raised by XYZ on hourly basis and rate. Is XYZ liable to pay GST on the amount received from PQR? – Reply By DR.MARIAPPAN GOVINDARAJAN – The Reply = Please ascertain the service provided by you fulfills the conditions in section 2(16) of IGST Act. If it

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GST – GOODS AND SERVICE TAX CONCEPT & STATUS – AS ON 1st FEBRUARY, 2019 – TMI Updates – Highlights

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GST – Started By: – Kumar Kedia – Dated:- 7-2-2019 Last Replied Date:- 9-2-2019 – Can two notices be issued simultaneously under section 70 of GST Act( Power to summon), one of which is issued under CGST act by Central Jurisdiction officer and the other one under SGST act by state jurisdictional officer? – Reply By KASTURI SETHI – The Reply = Both Centre and State authorities have separate jurisdictions. If unit falls in the jurisdiction of State GST Authority. and Central GST Office has already started investigation, Central GST Office will complete the investigation and forward draft SCN to the State GST Authority for issuance and vice versa. In other words, there is no legal hurdle if State GST Officer detects evasion of GST by the unit

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Goods and Services Tax – GST – Dated:- 7-2-2019 – GOODS AND SERVICE TAX (GST) CONCEPT & STATUS CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS (CBIC) DEPARTMENT OF REVENUE MINISTRY OF FINANCE GOVERNMENT OF INDIA AS ON 1st FEBRUARY, 2019 The uniform system of taxation, which, with a few exceptions of no great consequence, takes place in all the different parts of the United Kingdom of Great Britain, leaves the interior commerce of the country, the inland and coasting trade, almost entirely free. The inland trade is almost perfectly free, and the greater part of goods may be carried from one end of the kingdom to the other, without requiring any permit or let-pass, without being subject to question, visit, or examination from the revenue officers. ……This freedom of interior commerce, the effect of uniformity of the system of taxation, is perhaps one of the principal causes of the prosperity of Great Britain; every great country being necessarily the best and most extensive

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Article 265 of the Constitution of India provides that no tax shall be levied or collected except by authority of law. As per Article 246 of the Constitution, Parliament has exclusive powers to make laws in respect of matters given in Union List (List I of the Seventh Schedule) and State Government has the exclusive jurisdiction to legislate on the matters containing in State List (List II of the Seventh Schedule). In respect of the matters contained in Concurrent List (List III of the Seventh Schedule), both the Central Government and State Governments have concurrent powers to legislate. 2.2 Before advent of GST, the most important sources of indirect tax revenue for the Union were customs duty (entry 83 of Union List), central excise duty (entry 84 of Union List), and service tax (entry 97 of Union List). Although entry 92C was inserted in the Union List of the Seventh Schedule of the Constitution by the Constitution (Eighty-eighth Amendment) Act, 2003 for levy of taxes on services,

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ON IN POSTINDEPENDENCE INDIA TILL GST: 3.1 In post-Independence period, central excise duty was levied on a few commodities which were in the nature of raw materials and intermediate inputs, and consumer goods were outside the net by and large. The first set of reform was suggested by the Taxation Enquiry Commission (1953-54) under the chairmanship of Dr. John Matthai. The Commission recommended that sales tax should be used specifically by the States as a source of revenue with Union governments' intervention allowed generally only in case of inter-State sales. It also recommended levy of a tax on inter-State sales subject to a ceiling of 1%, which the States would administer and also retain the revenue. 3.2 The power to levy tax on sale and purchase of goods in the course of interState trade and commerce was assigned to the Union by the Constitution (Sixth Amendment) Act, 1956. By mid-1970s, central excise duty was extended to most manufactured goods. Central excise duty was levi

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with the New Economic Policy of 1991. The Tax Reforms Committee under the chairmanship of Prof. Raja J Chelliah was appointed in 1991. This Committee recommended broadening of the tax base by taxing services and pruning exemptions, consolidation and lowering of rates, extension of MODVAT on all inputs including capital goods. It suggested that reform of tax structure must have to be accompanied by a reform of tax administration, if complete benefits were to be derived from the tax reforms. Many of the recommendations of the Chelliah Committee were implemented. In 1999-2000, tax rates were merged in three rates, with additional rates on a few luxury goods. In 2000-01, three rates were merged into one rate called Central Value Added Tax (CENVAT). A few commodities were subjected to special excise duty. 3.5 Taxation of services by the Union was introduced in 1994 bringing in its ambit only three services, namely general insurance, telecommunication and stock broking. Gradually, more and m

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n ten in some States and these varied for the same commodity in different States. Inter-state sales were subjected to levy of Central Sales Tax. As this tax was appropriated by the exporting State credit was not allowed by the dealer in the importing State. This resulted into exportation of tax from richer to poorer states and also cascading of taxes. Interestingly, States had power of taxation over services from the very beginning. States levied tax on advertisements, luxuries, entertainments, amusements, betting and gambling. 3.7 A report, titled Reform of Domestic Trade Taxes in India , on reforming indirect taxes, especially State sales tax, by National Institute of Public Finance and Policy under the leadership of Dr. Amaresh Bagchi, was prepared in 1994. This Report prepared the ground for implementation of VAT in States. Some of the key recommendations were; replacing sales tax by VAT by moving over to a multistage system of taxation; allowing input tax credits for all inputs, i

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implement VAT, in 2003. In 2005, VAT was implemented in most of the states. Uttar Pradesh was the last State to implement VAT, from 1st January, 2008. 4. INTERNATIONAL PERSPECTIVES ON GST / VAT: 4.1 VAT and GST are used inter-changeably as the latter denotes comprehensiveness of VAT by coverage of goods and services. France was the first country to implement VAT, in 1954. Presently, more than 160 countries have implemented GST / VAT in some form or the other. The most popular form of VAT is where taxes paid on inputs are allowed to be adjusted in the liability at the output. The VAT or GST regime in practice varies from one country to another in terms of its technical aspects like definition of supply , extent of coverage of goods and services , treatment of exemptions and zero rating etc. However, at a broader level, it has one common principle, it is a destination based consumption tax. From economic point of view, VAT is considered to be a superior system over sales tax of taxing c

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eparately are called non- participating provinces , whereas provinces which have teamed up with the Federal Government for tax administration are called participating provinces . 4.3 The rate of GST varies across countries. While Malaysia has a lower rate of 6% (Malaysia though scrapped GST in 2018 due to popular uproar against it), Hungary has one of the highest rate of 27%. Australia levies GST at the rate of 10% whereas Canada has multiple rate slabs. The average rate of VAT across the EU is around 19.5%. 5. NEED FOR GST IN INDIA: 5.1 The introduction of CENVAT removed to a great extent cascading burden by expanding the coverage of credit for all inputs, including capital goods. CENVAT scheme later also allowed credit of services and the basket of inputs, capital goods and input services could be used for payment of both central excise duty and service tax. Similarly, the introduction of VAT in the States has removed the cascading effect by giving set-off for tax paid on inputs as w

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akes place. Despite remarkable harmonization in VAT regimes under the auspices of the EC, the national market was fragmented with too many obstacles in free movement of goods necessitated by procedural requirement under VAT and CST. 5.4 In the constitutional scheme, taxation powers on goods was with Central Government but it was limited upto the stage of manufacture and production while States have powers to tax sale and purchase of goods. Centre had powers to tax services and States also had powers to tax certain services specified in clause (29A) of Article 366 of the Constitution. This sort of division of taxing powers created a grey zone which led to legal disputes. Determination of what constitutes a goods or service is difficult because in modern complex system of production, a product is normally a mixture of goods and services. 5.5 As can be seen from the previous paragraphs, India moved towards value added taxation both at Central and State level, and this process was complete

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request, would work with the Central Government to prepare a road map for introduction of GST in India. After this announcement, EC decided to set up a Joint Working Group in May 10, 2007, with the then Adviser to the Union Finance Minister and Member-Secretary of the Empowered Committee as its Co-conveners and four Joint Secretaries of the Department of Revenue of Union Finance Ministry and all Finance Secretaries of the States as its members. This Joint Working Group got itself divided into three Sub-Groups and had several rounds of internal discussions as well as interaction with experts and representatives of Chambers of Commerce & Industry. On the basis of these discussions and interaction, the Sub-Groups submitted their reports which were then integrated and consolidated into the report of Joint Working Group (November 19, 2007). 6.3 This report was discussed in detail in the meeting of the EC on November 28, 2007, and the States were also requested to communicate their obse

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e EC released its First Discussion Paper (FDP) on GST in November, 2009. This spelled out the features of proposed GST and has formed the basis for discussion between the Centre and the States. 7. CHALLENGES IN DESIGNING GST: 7.1 In the discussion that preceded amendment in the Constitution for GST, there were a number of thorny issues that required resolution and agreement between Central Government and State Governments. Implementing a tax reform as vast as GST in a diverse country like India required the reconciliation of interests of various States with that of the Centre. Some of the challenging issues, addressed in the run up to GST, were the following: 7.2 Origin-based versus Destination-based taxation: GST is a destination based consumption tax. Under destination based taxation, tax accrues to the destination place where consumption of the goods or services takes place. The existing VAT regime was based on origin principle where Central Sales Tax was assigned to the State of or

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ands the sales tax base of the producing states and thereby contributes to their revenues. In fact, to the extent that consumer expenditures are dependent on the level of income of the residents of a State, it is the producing States that stand to gain the most in additional sales tax revenues (even under the destination basis of consumption taxes) from increased export output. 7.3 Rate Structure and Compensation: There was uncertainty about gains in revenue after implementation of GST. Though attempts were made to estimate a revenue neutral rate, nonetheless it remains an estimate only. It was difficult to estimate accurately as to how much the States will gain from tax on services and how much they will lose on account of removal of cascading effect and phasing out of CST. In view of this, States asked for compensation during the first five years of implementation of GST. 7.3.1 A Committee headed by the Chief Economic Adviser Dr. Arvind Subramanian on possible tax rates under GST sug

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akeholders stick to the decisions taken by the supreme body, which was later constituted as the Goods and Services Tax Council (the Council). However, the possibility of departure from the recommendations of such body cannot be completely ruled out. Any departure would definitely affect other stakeholders and in such circumstances there must be a statutory body to which affected parties may approach for dispute resolution. The nature of such dispute resolution body was a bone of contention. Under the Constitution (One Hundred Fifteenth Amendment) Bill, 2011, a Goods and Services Tax Dispute Settlement Authority was to be constituted for this purpose. This body was judicial in nature. The proposed constitution of this Authority was challenged because it s powers would override the supremacy of the Parliament and the State Legislatures. The Constitution (One Hundred Twenty Second Amendment) Bill, 2014 departed from the previous GST amendment bill and proposed that the Goods and Services

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lso under GST. Thus, to ensure smooth transition and provide fiscal buffer to States, it was agreed to keep alcohol completely out of the ambit of GST. 8. CONSTITUTIONAL AMENDMENT: 8.1 As explained above, unification of Central VAT and State VAT was possible in form of a dual levy under the constitutional scheme. Power of taxation is assigned to either Union or States subject-wise under Schedule VII of the Constitution. While the Centre is empowered to tax goods upto the production or manufacturing stage, the States have the power to tax goods at distribution stage. The Union can tax services using residuary powers but States could not. Under a unified Goods and Services Tax scheme, both should have power to tax the complete supply chain from production to distribution, and both goods and services. The scheme of the Constitution did not provide for any concurrent taxing powers to the Union as well as the States and for the purpose of introducing goods and services tax amendment of the

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in the Rajya Sabha and thereafter by Lok Sabha in August, 2016. Further the bill was ratified by required number of States and received assent of the President on 8th September, 2016 and has since been enacted as Constitution (101st Amendment) Act, 2016 w.e.f. 16th September, 2016. 8.4 The important changes introduced in the Constitution by the 101st Amendment Act are the following: a) Insertion of new article 246A which makes enabling provisions for the Union and States with respect to the GST legislation. It further specifies that Parliament has exclusive power to make laws with respect to GST on interState supplies. b) Article 268A of the Constitution has been omitted. The said article empowered the Government of India to levy taxes on services. As tax on services has been brought under GST, such a provision was no longer required. c) Article 269A has been inserted which provides for goods and services tax on supplies in the course of inter-State trade or commerce which shall be lev

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services have been defined. h) Article 368 has been amended to provide for a special procedure which requires the ratification of the Bill by the legislatures of not less than one half of the States in addition to the method of voting provided for amendment of the Constitution. Thus, any modification in GST Council shall also require the ratification by the legislatures of one half of the States. i) Entries in List I and List II have been either substituted or omitted to restrict power to tax goods or services specified in these Lists or to take away powers to tax goods and services which have been subsumed in GST. j) Parliament shall, by law, on the recommendation of the Goods and Services Tax Council, provide for compensation to the States for loss of revenue arising on account of implementation of the goods and services tax for five years. k) In case of petroleum and petroleum products, it has been provided that these goods shall not be subject to the levy of Goods and Services Tax

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GST; f) any special rate or rates for a specified period to raise additional resources during any natural calamity or disaster; g) special provision with respect to the North- East States, J&K, Himachal Pradesh and Uttarakhand; and h) any other matter relating to the GST, as the Council may decide. 9.2 The Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel. While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonized structure of goods and services tax and for the development of a harmonized national market for goods and services. 9.3 One half of the total number of Members of the Goods and Services Tax Council shall constitute the quorum at its meetings. The Goods and Services Tax Council shall determine the procedure in the performance of its functions. Every

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1.5 Cr after necessary amendments in the Act. Composition scheme shall not be available to interState suppliers, service providers (except restaurant service) and specified category of manufacturers. For special category States (except J&K and Uttarakhand) enumerated in article 279A of the Constitution, threshold exemption limit has been fixed at ₹ 75 lakh. c) Existing tax incentive schemes of Central or State governments may be continued by respective government by way of reimbursement through budgetary route. The schemes, in the present form, would not continue in GST. Further, 50% exemption of the CGST portion will be provided to CSD (Defense Canteens). d) Recommending GST laws, namely CGST Law, UTGST Law, IGST Law, SGST Law and GST Compensation Law paving the way for implementation of GST. e) In order to ensure single interface, all administrative control over 90% of taxpayers having turnover below ₹ 1.5 crore would vest with State tax administration and over 10% wi

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ving turnover upto ₹ 20 lakh, making inter State supplies; b. Suppliers of services, having turnover upto ₹ 20 lakh, making supplies through e-commerce platforms. k) The reverse charge mechanism under sub-section (4) of section 9 of the CGST Act, 2017 and under sub-section (4) of section 5 of the IGST Act, 2017 has been suspended till 30.09.2019. l) There shall be no requirement on payment of tax on advance received for supply of goods by all taxpayers. m) Supply from GTA to unregistered persons has been exempted from tax. n) There would be a single cash ledger for each tax head. The modalities for implementation would be finalized in consultation with GSTN and the Accounting authorities. o) A scheme of single authority for disbursement of the refund amount sanctioned by either the Centre or the State tax authorities would be implemented on pilot basis. The modalities for the same shall be finalized shortly. p) The new return filing system shall be introduced on a trial bas

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ed till 07.02.2019. u) The due date for submitting FORM GST ITC-04 for the period July 2017 to December 2018 shall be extended till 31.03.2019. v) E-Wallet Scheme shall be introduced for exporters from 01.04.2019 and till then relief for exporters shall be given in form of broadly existing practice. w) All taxpayers are required to file return FORM GSTR-3B & pay tax on monthly basis. x) Taxpayers with turnover upto ₹ 1.5 Cr are required to file information in FORM GSTR-1 on a quarterly basis. Other taxpayers would have to file FORM GSTR-1 on a monthly basis. y) One more window for completion of migration process is being allowed. The due date for the taxpayers who did not file the complete FORM GST REG-26 but received only a Provisional ID (PID) till 31.12.2017 for furnishing the requisite details to the jurisdictional nodal officer shall be extended till 31.01.2019. Also, the due date for furnishing FORM GSTR3B and FORM GSTR-1 for the period July, 2017 to February, 2019 / qu

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ng types of refunds shall also be made available through FORM GST RFD-01A: (a) Refund on account of assessment / Provisional Assessment / Appeal / Any Other Order; (b) Tax paid on an intra-State supply which is subsequently held to be inter-State supply and vice-versa; (c) Excess payment of Tax; and (d) Any other refund. dd) Supply of services to Nepal and Bhutan shall be exempted from GST even if payment has not been received in foreign convertible currency – such suppliers shall be eligible for input tax credit. ee) Centralized UIN shall be issued to every Foreign Diplomatic Mission / UN Organization by the Central Government. ff) Rate of interest on delayed payments and delayed refund has been recommended. gg) A Group of Ministers has been constituted to look into the issues being faced by MSMEs and to provide solutions for the same. hh) A Group of Ministers has been constituted to study the revenue trend, including analyzing the reasons for structural patterns affecting the revenue

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or boosting real estate sector under the GST regime. kk) A Group of Ministers has been constituted to address issues related to taxation on lottery under the GST regime. ll) State of Kerala has been allowed to levy cess at the rate of 1% for not more than two years in order to overcome losses due to natural calamity. 9.5 In its 28th meeting held in New Delhi on 21.07.2018, the GST Council recommended certain amendments in the CGST Act, IGST Act, UTGST Act and the GST (Compensation to States) Act. These amendments have been passed by Parliament and have been enacted wef 01.02.2019, as the Central Goods and Services Tax (Amendment) Act, 2018, the Integrated Goods and Services Tax (Amendment) Act, 2018, the Union Territory Goods and Services Tax (Amendment) Act, 2018 and the Goods and Services Tax (Compensation to States) Amendment Act, 2018, respectively. The major amendments brought about by these Acts are as below: a) Upper limit of turnover for opting for composition scheme raised fro

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o are required to collect tax at source. g) Registration to remain temporarily suspended while cancellation of registration is under process, so that the taxpayer is relieved of continued compliance under the law. h) The following transactions to be treated as no supply (no tax payable) under Schedule III: a. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India b. Supply of warehoused goods to any person before clearance for home consumption c. Supply of goods in case of high sea sales. i) Scope of input tax credit has been widened, and it would now be made available in respect of the following: a. Most of the activities or transactions specified in Schedule III b. Motor vehicles for transportation of persons having seating capacity of more than thirteen (including driver), vessels and aircraft c. Services of general insurance, repair and maintenance in respect of motor vehicles, vessels and aircr

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ferent State/Union territories. p) The order of cross-utilisation of input tax credit has been rationalized. q) The amount of IGST not apportioned to the Centre or the States/UTs may, for the time being, on the recommendations of the Council, be apportioned at the rate of fifty per cent. to the Central Government and fifty per cent. to the State Governments or the Union territories, as the case may be, on adhoc basis and this amount shall be adjusted against the amount finally apportioned. r) Fifty per cent of such amount, as may be recommended by the Council, which remains unutilised in the Compensation Fund, at any point of time in any financial year during the transition period shall be transferred to the Consolidated Fund of India as the share of Centre, and the balance fifty per cent. shall be distributed amongst the States in the ratio of their base year revenue. s) In case of shortfall in the amount collected in the Fund against the requirement of compensation to be released for

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invoices uploaded by the buyer and the supplier. Simply put, the process would be UPLOAD – LOCK – PAY for most tax payers. d) Taxpayers would have facility to create his profile based on nature of supplies made and received. The fields of information which a taxpayer would be shown and would be required to fill in the return would depend on his profile. e) NIL return filers (no purchase and no sale) shall be given facility to file return by sending SMS. f) There shall be quarterly filing of return for the small taxpayers having turnover below ₹ 5 Cr as an optional facility. Quarterly return shall be similar to main return with monthly payment facility but for two kinds of registered persons – small traders making only B2C supply or making B2B + B2C supply. For such taxpayers, simplified returns have been designed called Sahaj and Sugam. In these returns details of information required to be filled is lesser than that in the regular return. g) The new return design provides facili

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ut tax credit, i.e. interest would be leviable only on the amount payable through the electronic cash ledger. 9.8 The GST Council in its 32nd Meeting held on 10.01.2019 took the following major decisions to give relief to MSME (including Small Traders) among others: a) Increase in Turnover Limit for the existing Composition Scheme: The limit of Annual Turnover in the preceding Financial Year for availing Composition Scheme for Goods shall be increased to ₹ 1.5 crore. Special category States would decide about the Composition Limit in their respective States. The compliance under Composition Scheme shall be simplified as now they would need to file one Annual Return but Payment of Taxes would remain Quarterly (along with a simple declaration). This would be made effective from 01.04.2019 b) Higher Exemption Threshold Limit for Supplier of Goods: There would be two threshold limits for exemption from registration for suppliers of Goods i.e. ₹ 40 lakhs and ₹ 20 lakhs. St

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t of the Real Estate Sector. b) to examine the GST Rate Structure on Lotteries. 9.10 GST Council in its 32nd Meeting held on 10.01.2019 also approved levy of Cess on Intra-State Supply of Goods and Services within the State of Kerala at a rate not exceeding 1% for a period not exceeding 2 years. Kerala Government has, accordingly, decided to levy one per cent. Kerala Flood Cess on value of intrastate supply of all goods by registered dealers, at the last supply point, coming within the GST tax bracket of 12%, 18% and 28%. 0.25% flood cess will be levied on all goods coming under the fifth schedule including gold, silver and platinum ornaments on the value of supply. All services will attract one per cent. cess. The Kerala government has also decided to allow local bodies to collect entertainment tax on movie tickets up to 10 per cent. 10. THE DESIGN OF INDIAN GST: 10.1 Concurrent dual model of GST: India has adopted dual GST model because of its unique federal nature. Under this model,

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l transfer to the Centre the credit of SGST used in payment of IGST. The person based in the destination State will claim credit of IGST while discharging his output tax liability in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST. The relevant information will also be submitted to the Central Agency which will act as a clearing house mechanism, verify the claims and inform the respective governments to transfer the funds. The major advantages of IGST Model are: a) Maintenance of uninterrupted ITC chain on inter-State transactions. b) No upfront payment of tax or substantial blockage of funds for the interState supplier or recipient. c) No refund claim in exporting State, as ITC is used up while paying the tax. d) Self-monitoring model. e) Model takes Business to Business as well as Business to Consumer transactions into account. 10.3 Tax Rates: Owing to unique Indian socio-economic milieu, four rates namely 5%, 12%, 18% and 28%

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tion amount in any financial year, year 2015-16 will be assumed to be the base year, for calculating the revenue to be protected. The growth rate of revenue for a State during the five-year period is assumed be 14% per annum. The base year tax revenue consists of the states tax revenues from: (i) State Value Added Tax (VAT), (ii) central sales tax, (iii) entry tax, octroi, local body tax, (iv) taxes on luxuries, (v) taxes on advertisements, etc. However, any revenue among these taxes arising related to supply of alcohol for human consumption, and five specified petroleum products, will not be accounted as part of the base year revenue. A GST Compensation Cess is levied on the supply of certain goods and services, as recommended by the GST Council to finance the compensation cess. 10.5 E-Way Bill System: The introduction of e-way (electronic way) bill is a monumental shift from the earlier Departmental Policing Model to a SelfDeclaration Model . It envisages one e-way bill for movement

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6.1 National Anti-profiteering Authority (NAPA) has been constituted under GST by the Central Government to examine the complaints of non-passing the benefit of reduced tax incidence. The Authority shall cease to exist after the expiry of two years from the date on which the Chairman enters upon his office unless the Council recommends otherwise. 10.6.2 The Authority may determine whether any reduction in the rate of tax or the benefit of input tax credit has been passed on to the recipient by way of commensurate reduction in prices. It can order reduction in prices, imposition of penalty, cancellation of registration and any other decision as may deem fit, after inquiry into the case. 10.7 Concept of Supply: GST would be applicable on supply of goods or services as against the present concept of tax on manufacture of goods or on sale of goods or on provision of services. It includes all sorts of activities like manufacture, sale, barter, exchange, transfer etc. It also includes suppli

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creased to ₹ 1.5 crore. 10.10 Zero rated Supplies: Export of goods and services are zero rated. Supplies to SEZs developers and SEZ units are also zero-rated. The benefit of zero rating can be taken either with payment of integrated tax, or without payment of integrated tax under bond or Letter of Undertaking. 10.11 Cross-utilization of ITC: IGST credit can be used for payment of all taxes. CGST credit can be used only for paying CGST or IGST. SGST credit can be used only for paying SGST or IGST. The credit would be permitted to be utilized in the following manner: a) ITC of CGST allowed for payment of CGST & IGST in that order; b) ITC of SGST allowed for payment of SGST & IGST in that order; c) ITC of UTGST allowed for payment of UTGST & IGST in that order; d) ITC of IGST allowed for payment of IGST, CGST & SGST/UTGST in that order. ITC of CGST cannot be used for payment of SGST/UTGST and vice versa. It has been further provided that IGST balances shall be exhaus

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ment agencies, who are recipients of supply, to deduct tax at the rate of 1% from the payment made or credited to the supplier where total value of supply, under a contract, exceeds two lakh and fifty thousand rupees. The provision for TDS has been operationalized wef 01st October, 2018. Exemption from the provisions of TDS has been given to certain authorities under the Ministry of Defence. 10.15 Refunds: Refund of tax to be sought by taxpayer or by any other person who has borne the incidence of tax within two years from the relevant date. Refund of unutilized ITC also available in zero rated supplies and inverted tax structure. 10.16 Tax Collection at Source: Obligation on electronic commerce operators to collect tax at source , at such rate not exceeding two per cent of net value of taxable supplies, out of payments to suppliers supplying goods or services through their portals. The provision for TCS has been operationalized wef 01st October, 2018. 10.17 Self-assessment: Self-asses

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gainst the orders passed by the Appellate Authority or the Revisional Authority. States would adopt the provisions relating to Tribunal in respective SGST Act.10.20 Advance Ruling Authority: Advance Ruling Authority would be constituted by States in order to enable the taxpayer to seek a binding clarity on taxation matters from the department. Centre would adopt such authority under CGST Act. 10.20 Transitional Provisions: Elaborate transitional provisions have been provided for smooth transition of existing taxpayers to GST regime. 10.21 Subsuming of taxes, duties etc.: Among the taxes and duties levied and collected by the Union, Central Excise duty, Duties of Excise (Medicinal and Toilet Preparations), Additional Duties of Excise (Goods of Special Importance), Additional Duties of Excise (Textiles and Textile Products), Additional Duties of Customs (commonly known as CVD), Special Additional Duty of Customs (SAD), Service Tax and cesses and surcharges insofar as they related to supp

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CGST Act, IGST Act, UTGST Act and the GST (Compensation to States) Act. These amendments have been passed by Parliament and have been enacted wef 01.02.2019, as the Central Goods and Services Tax (Amendment) Act, 2018, the Integrated Goods and Services Tax (Amendment) Act, 2018, the Union Territory Goods and Services Tax (Amendment) Act, 2018 and the Goods and Services Tax (Compensation to States) Amendment Act, 2018, respectively. 11.3. On 22nd June, 2017, the first notification was issued for GST and notified certain sections under CGST. Since then, 161 notifications under CGST Act have been issued notifying sections, notifying rules, amendment to rules and for waiver of penalty, etc. 16, 32 and 1 notifications have also been issued under IGST Act, UTGST Act and GST (Compensation to States) Act respectively. Further 78, 82, 78 and 9 rate related notifications each have been issued under the CGST Act, IGST Act, UTGST Act and GST (Compensation to States) Act respectively. Similar noti

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a total project value of ₹ 2,256 Cr. 12.2 Augmentation of human resources would be necessary to handle large taxpayers base in GST scattered across the length and breadth of the country. Capacity building, particularly in the field of Accountancy and Information Technology for the departmental officers has to be taken up in a big way. A massive four-tier training programme has been conducted under the leadership of NACIN. This training project is aimed at imparting training on GST law and procedures to more than 60,000 officers of CBIC and Commercial Tax officers of State Governments. 12.3 CBIC would be responsible for administration of the CGST and IGST law. In addition, excise duty regime would continue to be administered by the CBIC for levy and collection of central excise duty on five specified petroleum products as well as on tobacco products. CBIC would also continue to handle the work relating to levy and collection of customs duties. 12.4 Director General of Anti-profit

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ies and 1 Commissioner of Commercial Taxes (CCT, Karnataka), to be called GST Suvidha Providers (GSPs). GSPs would develop applications to be used by taxpayers for interacting with the GSTN. The diagram below shows the work distribution under GST. 13.2 Central Government holds 24.5 percent stake in GSTN while the state government holds 24.5 percent. The remaining 51 percent are held by non-Government financial institutions, HDFC and HDFC Bank hold 20%, ICICI Bank holds 10%, NSE Strategic Investment holds 10% and LIC Housing Finance holds 10%. The GST Council in its 27th meeting held on 04th May, 2018 has approved the change in shareholding pattern of GSTN. Considering the nature of state function performed by GSTN, the GST Council felt that GSTN be converted into a fully owned Government company. Accordingly, the Council approved acquisition of entire 51 per cent of equity held by non-Governmental institutions in GSTN amounting to ₹ 5.1 Cr, equally by the Centre and the State Gov

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o a long way in reducing the compliance cost. 14.3 Benefits to small traders and entrepreneurs: GST has increased the threshold for GST registration for small businesses. Those units having aggregate annual turnover more than ₹ 20 lakhs (10 lakh in case of North Eastern States) have be registered under GST. Unlike multiple registrations under different tax regimes earlier, a single registration is needed under GST in one State. An additional benefit under Composition scheme has also been provided for businesses with aggregate annual turnover upto ₹ 1.5 Cr. With the creation of a seamless national market across the country, small enterprises will have an opportunity to expand their national footprint with minimal investment. 14.4 Benefits to agriculture and Industry: GST will give more relief to industry, trade and agriculture through a more comprehensive and wider coverage of input tax set-off and service tax set-off, subsuming of several Central and State taxes in the GST

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thus boosting aggregate demand. It will result in harmonization of laws, procedures and rates of tax. It will boost export and manufacturing activity, generate more employment and thus increase GDP with gainful employment leading to substantive economic growth. Ultimately it will help in poverty eradication by generating more employment and more financial resources. More efficient neutralization of taxes especially for exports thereby making our products more competitive in the international market and give boost to Indian Exports. It will also improve the overall investment climate in the country which will naturally benefit the development in the states. Uniform CGST & SGST and IGST rates will reduce the incentive for evasion by eliminating rate arbitrage between neighboring States and that between intra and inter-State supplies. Average tax burden on companies is likely to come down which is expected to reduce prices and lower prices mean more consumption, which in turn means m

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uniform formats of tax return, common tax base, common system of classification of goods and services will lend greater certainty to taxation system. 15. EXPERIENCE OF REGISTRATION, RETURN FILING & REVNUE: 15.1 Registration & Returns Snapshot: S. No. Details As on 1st February, 2019 1. No. of transited (migrated) taxpayers 66,25,077 2. Total No. of new applications received for registration 72,47,326 3. No. of applications approved 61,89,300 4. No. of applications rejected 10,10,121 5. Total No. of taxpayers; new + migrated (1 + 3) 1,28,14,377 6. No. of taxpayers who have opted for composition scheme 17,74,379 7. No. of 3 (B) returns filed for July, 2017 65,26,282 8. No. of 3(B) returns filed for August, 2017 70,81,816 9. No. of 3(B) returns filed for September, 2017 74,07,507 10. No. of 3(B) returns filed for October, 2017 71,44,420 11. No. of 3(B) returns filed for November, 2017 71,78,519 12. No. of 3(B) returns filed for December, 2017 72,36,629 13. No. of 3(B) returns file

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r, 2017 67,00,075 31. No. of GSTR 1 returns filed for January, 2018 25,58,477 32. No. of GSTR 1 returns filed for February, 2018 25,54,257 33. No. of GSTR 1 returns filed for March, 2018 67,52,855 34. No. of GSTR 1 returns filed for April, 2018 26,93,815 35. No. of GSTR 1 returns filed for May, 2018 27,10,608 36. No. of GSTR 1 returns filed for June, 2018 69,30,688 37. No. of GSTR 1 returns filed for July, 2018 27,00,050 38. No. of GSTR 1 returns filed for August, 2018 26,66,940 39. No. of GSTR 1 returns filed for September, 2018 68,01,925 40. No. of GSTR 1 returns filed for October, 2018 25,45,880 41. No. of GSTR 1 returns filed for November, 2018 24,32,892 42. No. of GSTR 1 returns filed for December, 2018 55,58,053 43. No. of GSTR 2 returns filed for July, 2017 25,72,552 44. No. of GSTR 4 returns filed for quarter July-September, 2017 9,69,966 45. No. of GSTR 4 returns filed for quarter October- December, 2017 14,49,970 46. No. of GSTR 4 returns filed for quarter January-March, 2018

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ut also for business community, tax administration and even common citizens of the country. Some of these challenges relate to the unfamiliarity with the new regime and IT systems, legal challenges, return filing and reconciliations, passing on transition credit. Lack of robust IT infrastructure and system delays makes compliance difficult for the taxpayers. Many of the processes in the GST are new for small and medium enterprises in particular, who were not used to regular and online filing of returns and other formalities. 16.2 Based on the feedback received from businesses, consumers and taxpayers from across the country, attempt has been made to incorporate suggestions and reduce problems through short-term as well as long-term solutions. After rectifying system glitches, E-way bill for inter-State movement of goods has been successfully implemented from 1st April 2018. As regards intra-State supplies, option was given to States to choose any date on or before 3rd June, 2018. All S

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2019 (2) TMI 425 – GUJARAT HIGH COURT – TMI – Provisional attachment of property – invocation of provisions of section 83 of the CGST Act against the directors of the petitioner-company – Held that:- The reliance placed upon section 89 of the Act is thoroughly misconceived inasmuch the same relates to recovery of any tax, interest or penalty due from a private company in respect of supply of goods or services. Moreover, even if such amount cannot be recovered from the private company, the directors of the company do not ipso facto become liable to pay such amount and it is only if the director fails to prove that non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of

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HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. By the impugned orders of provisional attachment of the property under section 83 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act ), the respondent has, inter alia, attached the bank accounts of the directors of the petitioner-company. A perusal of the provisions of section 83 of the CGST Act shows that the same empowers the Commissioner, if the circumstances therein are satisfied, to attach provisionally any property, including bank account, belonging to the taxable person, in such manner as may be prescribed. The term taxable person has been defined under sub-section (107) of section 2 of the CGST Act to mean a person who is registered or liable to be regist

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ed upon section 89 of the Act is thoroughly misconceived inasmuch the same relates to recovery of any tax, interest or penalty due from a private company in respect of supply of goods or services. Moreover, even if such amount cannot be recovered from the private company, the directors of the company do not ipso facto become liable to pay such amount and it is only if the director fails to prove that nonrecovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company, that the same can be invoked. However, in any case, at this stage, section 83 of the Act does not apply to the directors of the private company. Under the circumstances, the impugned orders of attachment, t

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2019 (2) TMI 495 – CESTAT CHENNAI – TMI – Demand of service tax from the erstwhile partner of the firm – allegation that appellants/partner have collected amount from a purchaser of the flat – allegation is that the firm received ₹ 1.50 lakhs as service tax on 25.7.2011 in regard to the amount of ₹ 6.60 lakhs which was the balance to be paid by Shri Gangadharan who purchased the flat – Held that:- Merely because the appellant D. Prabhu had written a letter dated 13.7.2010 requesting the purchase to pay up the balance amount, the demand has been raised against the appellants herein – there is no logic of the department to issue such a notice against the appellants herein merely basing upon the letter written by the appellant when they were partners of the firm. The records show that the balance amount was paid by the purchaser of the flat by way of demand draft in favour of Shri Thiyagarajan, who continued to be the partner of the firm. The same evidences the payment made b

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of the flat to pay an amount of ₹ 6 lakhs along with service tax due of ₹ 1.50 lakhs. Thereafter, the appellants exited from the partnership firm on 25.7.2010. The said Shri Gangadharan paid up the amount in regard to the flat purchased by him. Show cause notice was issued to the appellants herein alleging that they have collected the amount and are liable to pay the service tax along with interest. After due process of law, the original authority confirmed the demand of ₹ 1.50 lakhs along with interest however he dropped the proposal for imposing penalty. In appeal, Commissioner (Appeals) upheld the same. Hence these appeals. 3. On behalf of the appellants, Shri S. Ramachandran, Consultant submitted that merely because the appellant Shri D. Prabhu has written a letter to the purchaser of the flat Shri Gangadharan, the present demand is raised against the appellants. In fact, the said purchaser had not paid the amount to the appellants and instead had paid the amount

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ased the flat. Merely because the appellat D. Prabhu had written a letter dated 13.7.2010 requesting the purchase to pay up the balance amount, the demand has been raised against the appellants herein. I do not find the logic of the department to issue such a notice against the appellants herein merely basing upon the letter written by the appellant when they were partners of the firm. The records show that the balance amount was paid by the purchaser of the flat by way of demand draft in favour of Shri Thiyagarajan, who continued to be the partner of the firm. The same evidences the payment made by the purchaser to the firm / Thiyagarajan. Therefore, the demand of service tax made against the appellant is without any factual or legal basis. The demand therefore cannot sustain and requires to be set side, which I hereby do. 7. For the reasons discussed, the impugned order is set aside and the appeals are allowed with consequential relief, if any. (Dictated and pronounced in open court)

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2019 (2) TMI 566 – CESTAT NEW DELHI – TMI – CENVAT Credit – removal of inputs as such – shale stone – Revenue was of the view that the shale stone which are not actually used by the appellant, are required to be considered as clearance of the inputs and are required to reverse Cenvat credit – Rule 3(5) of Cenvat Credit Rules – Held that:- Admittedly, Rule 3(5) of Cenvat Credit Rules requires reversal of credit when inputs in respect of which Cenvat credit has been taken, are removed “as such” from the factory. Admittedly, the Cenvat credit was availed on the coal and the coal was never removed from the factory. In such a scenario, the provisions of Rule 3(5) would not get attracted.
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Otherwise, also when the coal is issued for washing and screening and further preparation, it can be safely concluded that the inputs stand issued for utilisation in the manufacture of the final product. After the issuance of the inputs, if waste is generated during further processes, no reversal is

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of sponge iron. Coal is one of the inputs in the manufacture of the said final product. Coal became dutiable with effect from 1.3.2011 and prior to that there was no duty paid on the coal received by the assessee. However, with effect from 1.3.2011, the coal procured by the appellant was duty paid and the appellant was availing the benefit of Cenvat credit of duty paid on the same. 2. Before the use of the coal in the manufacturing activity, the same is required to be washed and screened, during which processes shale stone emerged. Thereafter, the cleaned coal is used. 3. The shale stones separated during the processing of coal are subsequently sold by the appellant as a waste product. Inasmuch as the appellant had taken the credit of the entire duty paid by the coal supplier, Revenue was of the view that the shale stone which are not actually used by the appellant, are required to be considered as clearance of the inputs and are required to reverse Cenvat credit to that extent in term

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e factory. In such a scenario, the provisions of Rule 3(5) would not get attracted. Otherwise, also when the coal is issued for washing and screeing and further preparation, it can be safely concluded that the inputs stand issued for utilisation in the manufacture of the final product. After the issuance of the inputs, if waste is generated during further processes, no reversal is required to be done in terms of Rule 3(5). The shale stones have emerged during the course of manufacture of the appellant s final product which stands initiated with the issuance of the coal. This legal issue stands clarified by the Board vide Circular No. 1029/17/2016-CX. dated 10.5.2016. Though, the same is in the context of segregation of impurities from honey grade brass scrap but the clarification equally applies to the facts of the present case. For better appreciation, para 3 and 4 of the said circular is reproduced below : 3. The issue has been examined. Segregation from honey grade brass scrap in or

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e feeding in the furnace cannot be treated as removal of inputs as such as envisaged under Rule 3(5) of CENVAT Credit Rules, 2004. The segregated foreign material in such situation, as has been explained above, shall be cleared on payment of Central Excise duty on transaction value as per its appropriate classification and rate of duty determined on merits. The issue also stands decided by the Tribunal in the case of Indo Rama Synthetics (I) Ltd. Vs. CCE, Nagpur – 2016 (336) ELT 541 (Tri.-Mumbai), wherein it was held that removal of the sludge settled at bottom of the tank during storage of oil cannot be held to be removal of the inputs as such so as to attract the provisions of Rule 3 of Cenvat Credit Rules, which require reversal only in case of removal of inputs as such . 6. In view of the above, I find no merits in the impugned order. The same are accordingly set aside. The appeal is allowed with consequential relief to the appellant. (Dictated & pronounced in open Court) – C

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2019 (2) TMI 567 – CESTAT NEW DELHI – TMI – Clandestine removal – MS Bars – demand based upon the recovery of kutcha slips, private ledger and the data available in the computer CPU and pen drive – Held that:- The entire case of the Revenue is based upon recovery of the so called incriminating evidence from the residential premises of one of the Directors. They have not adduced any evidence to connect these documents with the activities of the manufacturing unit. No further investigations stand made by them from the persons concerned with the production of the goods in the assessee’s factory and their clearances. Further, there is no identification of the transporters or the recipient of the goods, thus establishing that the appellant had actually cleared the goods in a clandestine manner.
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Though, Revenue is not expected to prove its case of clandestine activities to the hilt but the evidences produced by the Revenue should be, at least, to an extent so as to inspire confidence

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acture of MS bars. Their factory was visited by the Central Excise officers on 3.8.2010, who conducted various checks and verifications. Nothing incriminating was found. 2. However, the residential premises of one of the Directors Shri Rajesh Natani was also put to search on the same day and certain loose documents, kacchi parchi, private ledgers as well as computer laptop, pen drives and broken data card etc. were recovered. The same were seized under a Panchnama dated 3.8.2010 and a statement of Shri Rajesh Natani was recorded wherein he admitted the clandestine removal of the finished goods without payment of duty and also deposited an amount of ₹ 5 lakhs towards duty liability. The said statement was subsequently retracted by Shri Rajesh Natani on the next day itself. 3. The matter was further investigated and based upon the recovery of kutcha slips, private ledger and the data available in the computer CPU and pen drive, Revenue came to a conclusion that the appellant had in

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ty and has nothing to do with the manufacturing activities of the appellant. They also produced the ledger account of M/s Sanjog Steels to impress upon their stand that the entries in the ledger recovered from the residential premises were of M/s Sanjog Steels. It was further contended that in the appellant s premises, no stock taking of the final product or the raw materials was conducted so as to corroborate the charge of clandestine removal. Further, they submitted that the Revenue has not produced any evidence to show that the appellant had manufactured excess final product and has cleared the same in a clandestine manner. By referring to various judicial decisions, it was submitted that the clandestine removal allegations are required to be based upon production of positive and tangible evidence and cannot be upheld on the basis of assumptions and presumptions. 6. I find that the Commissioner (Appeals), though recorded all the above submissions of the assessee, observed that the o

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o identification of the transporters or the recipient of the goods, thus establishing that the appellant had actually cleared the goods in a clandestine manner. Though, Revenue is not expected to prove its case of clandestine activities to the hilt but the evidences produced by the Revenue should be, at least, to an extent so as to inspire confidence in the prosecution s case. In the present case, I note that no further investigations except the recovery of certain incriminating documents from the residential premises of the assessee s director read with his retracted statement, stand made. The findings of the clandestine activities cannot be upheld on the said documents, which were not even recovered from the premises of the manufacturing unit and as such has to be treated in the nature of third party documents. The same required corroboration, which the Revenue has failed to. 8. In view of the foregoing, I find no justification in upholding the impugned order. Accordingly, the same i

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2019 (2) TMI 595 – CESTAT CHENNAI – TMI – Refund of service tax paid – accommodation services – air travel agency service – denial on the ground of nexus – Rule 5 of CENVAT Credit Rules, 2004 – Held that:- In fact, there has been no show cause notice issued by the department alleging that the appellants are not eligible for credit of these services. When the department has not raised any allegation by issuing show cause notice that the appellant is not eligible for credit, they cannot go into the admissibility of the credit during the process of refund claim – Further, as per amended provisions of Rule 5, it is not necessary to establish the nexus with the output service – The Board circular also clarifies the same.
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The rejection of refund claim is without any basis and unjustified – Appeal allowed – decided in favor of appellant. – Appeal Nos. ST/42370 & 42371/2018 – Final Order Nos. 40249-40250/2019 – Dated:- 7-2-2019 – Ms. Sulekha Beevi C.S., Member (Judicial) Shri Harish Bi

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Input services involved Short term accommodation and hotel room charges 4,33,451/- 3. He referred to Rule 5 of CENVAT Credit Rules, 2004 as amended and submitted that the said Rule nowhere uses the term nexus . In fact, after the amendment brought forth in Rule 5 with effect from 1.4.2012, any input services are eligible for credit for the person who is providing the output service. The word used has been omitted by such amendment. The authorities below have rejected the refund claim stating that the appellant has not established any nexus between the input services and the output services. It is also opined by the authorities below that the services do not contribute or add value to the output services provided by the appellant. He relied upon the decision of the Tribunal in K Line Ship Management (India) Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai – 2017-TIOL-2406-CESTAT-MUM to argue that the department cannot reject the refund claim by stating that the credit is not eligible.

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he impugned order. 5. Heard both sides. 6. The issue is with regard to the rejection of refund claim in respect of short-term accommodation service and air travel agency service. The appellant has pleaded that these services were used for accommodation of the employees when they were undertaking business travel and therefore is eligible for refund. The Commissioner (Appeals) has rejected the refund claim holding that the appellant has not proved the nexus of the input service with the output service and that there is no value addition of these services for the output services. In fact, there has been no show cause notice issued by the department alleging that the appellants are not eligible for credit of these services. When the department has not raised any allegation by issuing show cause notice that the appellant is not eligible for credit, they cannot go into the admissibility of the credit during the process of refund claim. Further, as per amended provisions of Rule 5, it is not

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that the lower authorities has not deal with this issue. Lower authorities have gone into the admissibility of the Cenvat Credit already availed. In these circumstances, it is not possible to uphold the impugned order. If the lower authorities wanted to challenge the admissibility of credit, the same cannot be done while examining the refund claim of the appellant, without following the due process prescribed. 5. Notification No. 5/2006 has been issued under the said Rule. It is seen that Rule 5 and the Notification issued there under prescribed refund of Cenvat availed on (i) inputs and input and input services used in providing out put services payment of service tax, subject to conditions and limitations set out in Notification no.5/2006. In these circumstances, the only test of admissibility of refund can be the Rule 5 and notification issued there under. I find that the impugned order instead of dealing with this rule and notification issued there under, deals with the admissibil

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2019 (2) TMI 1218 – CALCUTTA HIGH COURT – TMI – Rectification/revision of Form GST TRAN 2 electronically or manually – the present scheme of CGST Act does not allow rectification or revision of the Tran 2 form – Whether an assessee can rectify/revise GST TRAN 2 form subsequent to its uploading? – Held that:- Since the Rules of 2017 do not contemplate revision of Form GST TRAN 2, the common portal available under the Act and Rules of 2017, does not provide for revision of Form GST TRAN 2 in the electronic manner. The petitioners are therefore unable to file a revised declaration under Form GST TRAN 2 electronically. There is no mechanism under the Act or Rules of 2017 to file any document manually.
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Taxing statutes are to be strictly construed. However, such interpretation should not lead to a reckless or a mindless mechanical application of the statute.
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In the present case, the petitioners contend that, there are mistakes in Form GST TRAN 2 requiring revision. The Form GST

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2 will be taken into consideration for the purpose of assessment. In the assessment proceedings, the person filing the Form GST TRAN 2 would be at liberty to establish by cogent evidence that, the figures filed therein are incorrect or untrue. The Assessing Officer will be obliged to take into consideration such a stand while pronouncing upon the assessment – There is no ground as to why, a person filing Form GST TRAN 2 should not be allowed to revise Form GST TRAN 2 after its initial filing.
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The authorities are directed to allow the first petitioner to file a revised Form GST TRAN 2, either electronically or manually, in accordance with law, within four weeks from the date of communication of this order – petition allowed. – W.P. No. 18879 (W) of 2018 Dated:- 7-2-2019 – Debangsu Basak, J. For the Petitioners : Mr. S. Bagaria, Advocate, Mr. I. Banerjee, Advocate And Mr. P. Sharma, Advocate For the Respondent No.5 : Mr. Amitabrata Roy, Advocate, Ms. Sanjukta Gupta, Advocate And

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en Tran 1 forms are allowed to be revised or rectified. The authorities must have similar provisions as akin to Rule 120 A of the Central Goods and Services Tax and Rules, 2017 for rectification/revision of Tran 2 forms. In support of his contentions, learned Advocate for the petitioners has relied upon various provisions of the Act and the Rules of 2017. He has also relied upon 2018 (10) GSTL 228 (Ker.) (Alwaye Sugar Agency v. Asst. Commr. (Assmnt.), Commercial Taxes Special Circle, Aluva) and 2018 (18) G.S.T.L. 28 (Ker.) (G.C. & Infra Innovations v. Union of India). Learned Additional Advocate General has represented the State. Learned Additional Solicitor General has represented the Union. Learned Additional Advocate General has relied upon Section 140 of the Act of 2017 and submitted that, the transitional provisions are one time benefits given to persons who were entitled to avail of such benefits. A concessional provision is required to be strictly construed. The prescription

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itional credit. It filed TRAN 1 form within time. It is required to file TRAN 2 which it did, again within time. It discovered certain mistakes in the TRAN 2 form and sought to rectify the same within the time prescribed for the filing of the TRAN 2 form. The authorities allow filing of the TRAN 1 and TRAN 2 forms electronically. There is no provision for filing the forms with hard copies. Although the Rules of 2017 were subsequently amended to provide for revision/rectification of TRAN 1 form by insertion of Rule 120 A, similar provisions have not been incorporated in the Rules of 2017 for rectification/revision of TRAN 2. An assessee is not entitled to either rectify or revise its TRAN 2 form as the present dispensation with regard to filing of the same in the electronic form stands. Central Goods and Services Tax Act, 2017 was enacted to make provision for levy and collection of tax on intra-state supply of goods or services or both by the Central Government and for matters connecte

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d under any existing law or on goods held in stock on the appointed day. Essentially, it allows filing of Form GST TRAN 1 and Form GST TRAN 2 on the common portal. The Act and Rules of 2017 contemplate filing of returns in the electronic form. Rule 120 of the Rules of 2017 requires every person to submit details of goods sent on approval in Form GST TRAN 1. Rule 120 A of the Rules of 2017 was introduced subsequently to allow a person to revise a declaration submitted under Form GST TRAN 1. Similar provision however is not available with regard to Form GST TRAN 2. According to the petitioners, the first petitioner is entitled to revise Form GST TRAN 2. Since the Rules of 2017 do not contemplate revision of Form GST TRAN 2, the common portal available under the Act and Rules of 2017, does not provide for revision of Form GST TRAN 2 in the electronic manner. The petitioners are therefore unable to file a revised declaration under Form GST TRAN 2 electronically. There is no mechanism under

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the opportunity to explain the same. A person making an admission, is entitled to prove that, the admission was made by mistake or was untrue. If, a person making the admission, is able to substantiate with cogent evidence that, the admission was a mistake or was untrue, then, such facts have to be taken into consideration for the purpose of deciding the evidentiary value of the admission and the relevancy thereof. In other words, the law permits a person making an admission, the liberty of explaining the same, if he so chooses. The Form GST TRAN 2, at best can be an admission allowing the authorities to inform the state of affairs of the first petitioner in relation to the subject matter governed by such form. However, neither the Act of 2017 nor the Rules of 2017 can be read to mean that, the same excludes the right of a person making an admission, to forfeit the opportunity to explain it. Neither the Act of 2017 nor the Rules of 2017 forfeits the right of a person making an admissi

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ling a revised From GST TRAN 2 as to why such revision was required and whether such revisions are justified or not. Such an enquiry can be held in the assessment proceedings. There is no ground as to why, a person filing Form GST TRAN 2 should not be allowed to revise Form GST TRAN 2 after its initial filing. In view of the discussions above, the issue is answered in the affirmative and in favour of the petitioners. In the facts of the present case, the authorities are directed to allow the first petitioner to file a revised Form GST TRAN 2, either electronically or manually, in accordance with law, within four weeks from the date of communication of this order. W.P. No. 18879(W) of 2018 is disposed of. No order as to costs. Urgent certified website copies of this judgment and order, if applied for, be made available to the parties upon compliance of the requisite formalities. – Case laws – Decisions – Judgements – Orders – Tax Management India – taxmanagementindia – taxmanagement –

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GST – Started By: – Madhavan iyengar – Dated:- 6-2-2019 Last Replied Date:- 11-2-2019 – Where goods are purchased and sold on highseas basis ( which is treated as no supply post 01/02/2019) is the GST credit of clearing agent charges, eligible to be taken – Reply By KASTURI SETHI – The Reply = In my view, ITC is eligible . Clear Agent 's Service is independent of 'No Supply' activity. – Reply By Mahadev R – The Reply = I concur with Kasturi Sir. After the amendment now, for the purp

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Goods Transport services in relation to export of goods to Nepal & Bhutan Impact of Recent Amendments – Goods and Services Tax – GST – By: – Rakesh Garg – Dated:- 6-2-2019 – A. LEGISLATIVE BACKGROUND 1. Meaning of Export of Service – Sec 2(6) of the IGST Act Export of services means the supply of any service when,- (i) the supplier of service is located in India; (ii) the recipient of service is located outside India; (iii) the place of supply of service is outside India; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India [Words in italic inserted vide IGST Amendment Act, 2018 w.e.f. 01.02.2019]; and (v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8. 2. Meaning of Recipient of Service – Sec 2(93) of the CGST Act Recipient of supply of goods or services or bo

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han a registered person, shall be the location at which such goods are handed over for their transportation. Provided that where the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods. [Proviso inserted vide IGST Amendment Act, 2018, w.e.f. 01.02.2019] 4. Place of supply in relation to GTA service where location of supplier or location of recipient is outside India – Sec 13(9) of the IGST Act The place of supply of services of transportation of goods, other than by way of mail or courier, shall be the place of destination of such goods. 5. Exemption vide Notification No. 9/2017- IGST (Rate), dated 28.06.2017 Entry No. 10D – Supply of services having place of supply in Nepal or Bhutan, against payment in Indian Rupees . Inserted vide Notification No. 42/2017- IGST (Rate), dated 27.10.2017; and Omitted vide Notification No. 02/2019- IGST (Rate), dated 04.02.2019 6. Explanation (a) to Rule 43(2) of the GST Rules For the

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ocation of Recipient – M/s B, Nepal Place of Supply – Sec 13(9) – Nepal; Mode of remittance – Indian Rupees The transaction shall not be treated as export since consideration is received in Indian Rupees. Therefore, Exemption Entry no. 10D of Notification No. 9/2017- IGST (Rate) effective from 27 Oct. 2017 gave the relief, which exempted such transactions. Further, an explanation was also added in Rule 43(2), whereby these services were excluded from exempted services; hence, there was no requirement to reverse input tax credit. After Amendment in Feb. 2019: Location of Supplier – XYZ, India; Location of Recipient – M/s B, Nepal Place of Supply – Sec 13(9) – Nepal; Mode of remittance – Indian Rupees (Permitted by RBI) Now, the definition of export of service also includes those cases where consideration is received in Indian Rupee. After, the amendment, it will be considered as export of service; and hence, zero rated. Further, explanation (a) in Rule 43(2) has also been omitted. Since

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b. 2019: Location of Supplier – XYZ, India; Location of Recipient – M/s A, India Place of Supply – Sec 12(8) – Nepal; Mode of remittance – Indian Rupees (Permitted by RBI) Now, the definition of export of service also includes those cases where consideration is received in Indian Rupee. Even after the amendment, the transaction will not be considered as export of service since location of recipient is in India, even though place of supply is Nepal. Entry 10D of Notification No. 9/2017- IGST (Rate) has also been omitted w.e.f. 04.02.2019; otherwise, the transaction would have been exempt since place of supply is at Nepal. Hence, the transaction would be taxable. Net Impact: Earlier transaction was treated as taxable supply; and after the amendment, the situation remains unchanged: Remains taxable. If that is so, the need to insert proviso in section 12(8) of the IGST Act, stipulating the place of supply, in case of services of transportation of goods to a place outside India, at the des

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Customs – IGST Export Refunds–resolution of errors – TMI Updates – Highlights

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GST – Constitutionality of section 174 of KGST Act and 101st Constitutional Amendment – power to enact section 174 of KGST Act – Indeed concurrency yields to the Doctrine of repugnancy, but simultaneo

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GST – Profiteering – restaurant services – food stuff – the quantum of denial of such benefit or the profiteered amount illegally earned by the Respondent is determined as ₹ 41,42,97,635/- as pe

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GST – Started By: – Ankit Jaiswal – Dated:- 6-2-2019 Last Replied Date:- 6-2-2019 – Suppose I register in delhi and receiving an architect services for the property situated in haryana from a person registered in delhi and he is charging IGST as per law.But my doubt is whether ITC is available to a person registered in delhi. – Reply By Spudarjunan S – The Reply = Dear Sir, Prima-facie the eligibility is yes subject to section 16 & 17 of CGST Act, 2017. However, in order to give a proper re

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Goods and Services Tax – GST – By: – Mr. M. GOVINDARAJAN – Dated:- 6-2-2019 Last Replied Date:- 6-2-2019 – Changes in CGST The following are the changes that are brought in by the Central Government through various notifications- Amendment to Notification No. 48/2017-Central Tax The Central Government, vide Notification No.01/2019-Central Tax, dated 15.01.2019 amended the Notification No. 48/2017-Central Tax, dated 18.10.2017 to amend the meaning of Advance Authorization . According to the amendment the supply of goods by a registered person against Advance Authorization is a deemed export provided- that goods so supplied, when exports have already been made after availing input tax credit on inputs used in manufacture of such exports, shall be used in manufacture and supply of taxable goods (other than nil rated or fully exempted goods) and a certificate to this effect from a chartered accountant is submitted to the jurisdictional commissioner of GST or any other officer authorized b

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planation 2 to section 140 of CGST Act. Amendment to CGST Rules, 2017 The Central Government, vide Notification No. 3/2019-Central tax, dated 29.01.2019 brings amendment to the Central Goods and Services Tax Rules, 2017. Rule 7 and 8 are amended; Rule 11 is substituted for a new provision which provides for separate registration for multiple places of businesses within a State or a Union Territory; A new Rule 21A is inserted which provides for suspension of registration; A new Rule 41A is inserted which provides for transfer of credit on obtaining separate registration for multiple places of business within a State or Union territory; Rule 42 and 43 are amended; Rule 53 is amended and a new sub rule (1A) is inserted which provides the details to be furnished in the debit/credit note; Rule 80 is amended; Rule 83 is amended sub rule (8) is substituted for a new rule which provides the activites that can be undertaken by a GST practitioner; Rule 85, 86, 89, 91, 92, 96A are amended; A new

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the preceding financial year did not exceed one crore rupees , may opt to pay, in lieu of the central tax payable by him, an amount of tax calculated at the rate specified in rule 7 of the Central Goods and Services Tax Rules, 2017. Sl. No. Category of registered persons Rate of tax (1) (2) (3) 1. Manufacturers, other than manufacturers of such goods as may be notified by the Government half per cent. of the turnover in the State or Union territory 2. Suppliers making supplies referred to in clause (b) of paragraph 6 of Schedule II two and a half per cent. of the turnover in the State or Union territory 3. Any other supplier eligible for composition levy under section 10 and the provisions of this Chapter half per cent. of the turnover of taxable supplies of goods and services in the State or Union territory Amendment of Notification No. 65/2017 The Central Government, vide Notification No.06/2019-Central Tax, dated 29.01.2019 seeks to amend Notification No. 65/2017-Central Tax, dated

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ing inter-State supply of services to a registered person as the category of persons exempted from obtaining registration under the said Act. nothing contained in this notification shall apply to a job-worker – who is liable to be registered under or who opts to take registration voluntarily under of the said or who is involved in making supply of services in relation to the goods mentioned against serial number 5 in the of the This notification came in to effect from 01.02.2019. Amendment to Notification No.10/2017-IGST, The Central Government, vide Notification No.03/2019-IGST, dated 29.01.2019 amended the Notification No.10/2017-IGST, dated 13.10.2017. After amendment this Notification specifies the persons making inter-State supplies of taxable services and having an aggregate turnover, to be computed on all India basis, not exceeding an amount of twenty lakh rupees in a financial year as the category of persons exempted from obtaining registration under the said Act. The aggregate

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2019 (2) TMI 540 – GUJARAT HIGH COURT – TMI – Validity of search proceedings – power of proper officer to carry on search proceedings – Held that:- It appears that the proper officer could not have any reason to believe as contemplated under sub-section (2) of section 67 of the Act, and hence, the entire search proceedings are without authority of law – Issue Notice returnable on 21st February, 2019. – R/SPECIAL CIVIL APPLICATION NO. 2091 of 2019 Dated:- 6-2-2019 – MS HARSHA DEVANI AND DR A. P. THAKER, JJ. For The Petitioner (s) : MR JK MITTAL,MR HARDIK P MODH, MR AMIT LADDHA (5344) For The Respondent (s) : MR NIRZAR S DESAI (2117) ORAL ORDER (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. Mr. J. K. Mittal, learned advocate with Mr. Hardik

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2019 (2) TMI 541 – GUJARAT HIGH COURT – TMI – Search or seizure – seizure of goods, documents or books or things – subsection (2) of section 67 of the Central Goods and Services Tax Act, 2017 – Held that:- The basic requirement is that the goods, documents, books or things should have been secreted in any place. It was submitted that in the facts of the present case, the goods in respect of which the impugned order of prohibition under rule 139(4) of the rules has been issued, are the goods which are accounted for in the books of account and are not secreted anywhere, and hence, the order of prohibition is contrary to the provisions of sub-section (2) of section 67 of the Act – Issue Notice returnable on 21st February, 2019. – R/SPECIAL CI

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izure can be carried out, and such goods, documents or books or things can be seized. Therefore, the basic requirement is that the goods, documents, books or things should have been secreted in any place. It was submitted that in the facts of the present case, the goods in respect of which the impugned order of prohibition under rule 139(4) of the rules has been issued, are the goods which are accounted for in the books of account and are not secreted anywhere, and hence, the order of prohibition is contrary to the provisions of sub-section (2) of section 67 of the Act. 2. Having regard to the submissions advanced by the learned advocate for the petitioner, Issue Notice returnable on 21st February, 2019. Direct Service is permitted qua resp

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