HC : ‘Receivables’ from Associated Enterprise towards Business Consultancy Services non-taxable before May 2008

Amount ‘receivable’ from Associated Enterprise (AE) for rendering Management or Business Consultant’s Services not leviable to service tax prior to May 10, 2008 in view of amendment to Explanation (c) to Section 67 of Finance Act r/w Rule 6 of Service Tax Rules; HC states that although the aforesaid amendments were made to bring amounts to be received from AEs to tax, the intention was not to make it retrospective i.e. to tax transactions that have taken place prior to May 10, 2008; Notes that in present case, the amount shown as outstanding in the books of accounts of assessee pertained to transactions that had taken place prior to said date, thus, as per Rule 6 of the Service Tax Rules, date when the amount is credited/debited will be relevant and not the fact that the amount remained in the books; Remarks, any contrary interpretation would result in the provision being retrospective, which was not the intention; Accordingly, relying on SC decision in Martin Lottery Agencies Limited, HC upholds CESTAT order in favour of the assessee finding no substantial question of law for consideration  : Delhi HC


CBEC : No unutilised ITC refund against inverted duty structure arising in ‘construction services’

CBEC explains refund of unutilised Input Tax Credit (ITC) which may occur in two scenarios – (i) if such credit accumulation is on account of zero rated supplies, or (ii) on account of inverted duty structure, subject to certain exceptions; While refund claim may be filed at the end of any tax period, no refund of unutilised ITC is allowed where goods exported out of India are subjected to export duty or if the supplier of goods and / or services avails drawback in respect of central tax or claims refund of IGST paid on such supplies; Further, where the amount claimed as refund is less than Rs. 2 lakhs, it shall not be necessary for the applicant to furnish any documentary and other evidences but he may file declaration certifying that incidence of such tax and interest has not been passed on to any other person; CBEC also points out Notification No. 15/2017-Central Tax (Rate) which disallows ITC refund on account of inverted duty structure in respect of supply of construction services, as also Notification No. 5/2017-Central Tax (Rate) in relation to goods like woven fabrics of silk & cotton, rail locomotives and tramway passenger coaches; States that time lines have been set for processing of refund claims and claims not settled within 60 days will be paid with interest @ 6% : CBEC

Delhi HC reserves judgement on constitutional challenge to ICDS

Delhi HC reserves judgement on challenge to Constitutional validity  of Income Computation and Disclosure Standards (‘ICDS’);Chamber of Tax Consultants (‘petitioner’) had contended that Central Government / CBDT, in exercise of delegated legislation, cannot have such “uncontrolled, unfettered or absolute powers” while prescribing ICDS in terms of Sec. 145(2), so as to nullify the effect of various Supreme Court / High Court judgments; Petitioner had also assailed ICDS on the ground of it being violative of Article 19(1)(g) of the Constitution, arguing that it will increase compliance burden on taxpayers.

CBEC : Explains concept of IGST refund on zero-rated supplies, provisional refund within 7 days

CBEC explains refund of Integrated Tax on account of ‘zero rated supplies’ under GST, states that there is no burden of tax either on input or on output side in case of zero rating vis-à-vis exempted supplies where only output is exempt but tax is suffered on input side; States that in case of export of goods, once the shipping bill, export general manifest (EGM) and valid return are filed, the refund application shall be considered to have been filed and refund shall be processed by the Dept.; But in case of export of services, suppliers need to file claim in Form GST RFD – 01 alongwith a statement containing number and date of invoices and relevant Bank Realisation Certificates or Foreign Inward Remittance Certificates; In case of supplies to SEZs, proof of receipt of goods or services as evidenced by specified officer of the zone is a pre-requisite for filing of refund claim by DTA supplier, as also a declaration to the effect that SEZ unit / developer has not availed ITC of tax paid by such DTA supplier; Persons making zero rated supplies will be entitled to provisional refund of 90% of the claim within 7 days in terms of Section 54(6) of CGST Act r/w Rule 91 of CGST Rules : CBEC

CBEC : “E-Way Bill” to ensure compliance & check evasion; Non-adherence attracts penalty & detention / seizure

CBEC explains concept of “E-Way Bill” under GST, stating that it has been devised to ensure that goods being transported comply with GST law and it is an “effective tool to track movement of goods and check tax evasion”; According to CBEC, E-way Bill is to be issued irrespective of whether movement of goods is caused by reasons of supply or otherwise i.e. in view of export/import, job-work, SKD or CKD, recipient not known, line sales, sales returns, exhibition or fairs, for own use, sale on approval basis etc.; While explaining the procedure for generating & cancelling E-Way Bill as also the validity & exceptions thereof, CBEC clarifies that “Where multiple consignments of varying values (per consignment) are carried in a single vehicle, e-way bill needs to be mandatorily generated only for those consignments whose value exceeds Rs.50,000/-” ; Person in charge of a conveyance has to carry invoice / bill of supply / delivery challan, and a copy of E-Way Bill / E-Way Bill number, either physically or mapped to a Radio Frequency Identification Device embedded onto the conveyance; Non-compliance with provisions of Rule 138 would attract penalty of Rs. 10,000/- or tax sought to be evaded (wherever applicable), whichever is higher as well as detention or seizure u/s 129 of CGST Act, whereas Commissioner / officer empowered by him may authorise proper officer to intercept any conveyance to verify E-Way Bill / E-Way Bill Number in physical form for all inter-State and intra-State movement of goods : CBEC

Govt. notifies GST Council recommendations deferring ‘RCM’, tweaking ‘composition’ provisions, & reducing ‘rates’

Govt. notifies exemption from payment of tax on reverse charge basis in respect of supplies from unregistered suppliers u/s 9(4) of CGST Act, 5(4) of IGST Act and 7(4) of UTGST Act till March 31, 2017; Amends CGST Rules to – (i) allow registered / migrated taxpayers to opt for composition levy upto March 31, 2018 but they cannot furnish declaration in Form GST TRAN-1 after statement in Form GST ITC-03 has been furnished, (ii) prescribe the returns a composition taxpayer must furnish when the option is availed mid-quarter, (iii) insert Rule 46A to provide for issuance of a single “invoice-cum-bill of supply” in case of supply of both taxable & exempt goods and / or services; Notifies increased turnover limits for composition scheme while clarifying that value of exempt services including services by way of extending deposits, loans or advances where consideration is represented by way of interest or discount, shall not be considered in computing aggregate turnover of restaurateur; Further prescribes payment of tax on issuance of invoice for registered persons whose aggregate turnover is less than Rs. 1.5 Cr, and exempts persons making inter-State taxable supplies from obtaining registration where aggregate turnover on all India basis is less than Rs. 20 lakhs (Rs. 10 lakhs in case of special category States except for J&K); Also notifies reduction in GST rates as well as extension of exemption to various goods & services, including concessional rate on leasing of motor vehicles : CBEC Notifications

After Madras HC, Karnataka HC admits Steamer agents’ challenge to service tax on import freight

Karnataka HC admits writ petition of Steamer Agents’ Association challenging Notification Nos. 1, 2 & 3 of 2017-ST dated January 12, 2017 and Circular No. 206/4/2017-ST dated April 13, 2017 imposing liability to pay service tax on agents in respect of transportation of goods by vessel from a place outside India upto Customs clearance station in India, during the period January 12 to April 13, 2017; According to the petitioner, such liability could be affixed only on service provider or receiver, and the amendments to impugned Notifications shifting the liability on ‘importers’ should be applied retrospectively from January 12; HC finds that petition prima facie gives rise to certain questions of law for interpretation particularly, whether the agents alone or Principal would be liable to pay service tax during the interim period and whether newly substituted Explanation-V w.e.f. April 13, 2017 could be given retrospective effect : Karnataka HC


OECD releases Action 5 progress report on preferential regimes; Indian IP regime not harmful

OECD releases progress report on Preferential Regimes, as part of the BEPS Action Plan 5 peer review and monitoring process, report provides outcome of peer reviews undertaken of 164 preferential tax regimes across 100 jurisdictions participating in OECD Inclusive Framework on BEPS; Report also contains guidance on preferential tax regimes, including timelines for amending regimes, how certain features of preferential regimes will be monitored, and guidance on the requirement that jurisdictions offering non-IP preferential regimes must require substantial activities to be undertaken in the regime; Report reveals that of the 164 regimes reviewed in the last 12 months, 99 require action (however, most of them have already been completed or initiated the required action), 56 regimes do not pose a BEPS risk and 9 regimes are still under review due to extenuating circumstances; After review of preferential regimes reviewed as at October 4, 2017 ,report highlights  that India’s new IP regime, UK’s patent box regime, Switzerland’s License box regime are not harmful, whereas Turkey’s Technology development zones regime is held as potentially harmful and France’s IP rights licensing taxation is held as harmful; Director of the OECD Centre for Tax Policy and Administration Pascal Saint-Amans  remarks that “These outcomes demonstrate that the political commitments of members of the Inclusive Framework are rapidly resulting in measureable, tangible progress”