The Union Cabinet chaired by Prime Minister Narendra Modi has given its ex-post facto approval for the promulgation of the Central Goods and Services Tax (Extension to Jammu & Kashmir) Ordinance, 2017 and replacement of the Ordinance by the Central Goods and Services Tax (Amendment) Bill, 2017.
The Ordinance has extended the provisions of the Central Goods and Services Tax Act, 2017 referred to as (CGST Act) to the State of Jammu & Kashmir.
The Ordinance has been promulgated on 8th July 2017 and the (Amendment) Bill, 2017 will be tabled in the current session of the Parliament.
In International Tractors Ltd V. Commissioner of Central Excise & Service Tax, a division bench of the Delhi High Court held that an exporter cannot claim for rebate of duty under the Central Excise Rules when he already availed the benefit of Advance Authorizations under the Customs Act in respect of the same transaction.
The petitioners, manufacturers of models of tractors, approached the High Court seeking a direction to allow their claim for rebate of duty under Rule 18 of the Central Excise Rules. The department had, earlier rejected the claim and passed orders against the petitioners.
The bench comprising Justices S Muralidhar and Prathibha M Singh found that the petitioner has availed the benefits under the Advance Authorizations by importing input material and exporting the manufactured goods.
It was contended on behalf of the petitioners that availing of the benefit under Rule 18 of CER is not dependent or contingent upon any other notification or obligation. Overruling this submission, the bench said that Rule 18 is a rebate, which is subject to such conditions or limitations, as may be stipulated.
“In the present case, there is a categorical reference to Rule 18 in Notification No.93. It is a conscious and deliberate inclusion, inasmuch as, the policies envisaged in Rule 18 of the CER and Notification No. 93 is grant of rebate on payment of excise and exemption from payment of customs duty respectively. A party cannot be allowed to avail of both the exemptions when clearly, the intention seems to be to permit only one exemption,” it said.
Dismissing the petition, the bench held that “The reference to Rule 18 and 19 (2) in Notification No. 93 clearly reveals that non-payment/rebate of either excise duty or customs duty is being granted to encourage exports. Once an export transaction has been used for seeking discharge of Advance Authorizations issued under the CA, the same export transaction cannot be used for seeking rebate of duty under CER, as the rebate, in this case, is subject to the conditions and limitations, as specified in Notification No.93, which clearly requires that ‘the facility under Rule 18 or Sub-rule (2) of 19 of CER, 2002’ ought not to have been availed. The Petitioner’s right to seek rebate is clearly limited by this condition and hence it is not entitled to rebate under Rule 18 CER.”
Read the full text of the Order below.
In a petition moved by M/s Narela Food Processing Industries Welfare Association (Regd.), the Delhi High Court held that vehicles carrying pulses would not be subject to levy of Environment Compensation Cess (ECC) since pulses would clearly fall within the definition of foodstuffs as included in the notification dated 20.10.2015 issued by the Environment Department.
The Single bench, while allowing the petition, clarified that “food grains, is a larger group and would include both cereals and pulses.”
Earlier, the Supreme Court in M. C. Mehta v. Union of India & Ors, ruled that ECC ought to be imposed by the Government of NCT at the rates as indicated in the said order. However, the Court had also directed that ECC shall not be imposed on “(a) passenger vehicles and ambulances (b) on vehicles carrying essential commodities, that is, food stuffs and oil tankers”.
Following the above order, the Environment Department, GNCTD issued a notification dated 20.10.2015, levying ECC on light and heavy duty commercial vehicles.
Subsequently, the Environment Pollution (Prevention and Control) Authority exempted the vehicles carrying essential commodities, food stuffs and oil tankers from the levy of ECC. Later, the Government also vehicles carrying eggs and ice, from the levy of ECC by amending the earlier notification.
The petitioner approached the Court aggrieved by the action of the toll collecting agencies who also collected ECC from vehicles carrying pulses. They contended that such exemption be granted to pulses as both cereals and pulses fall within the category of ‘grains’.
Justice Vibhu Bhakru refused to accept the contention of the respondents that cereals are food grains, pulses are not. “In terms of logic, this is akin to a fallacy of “illicit major”: a formal fallacy in categorical syllogism that arises because a major term is undistributed in the major premise but distributed in the conclusion,” he said.
The bench further said that “It was made explicit that vehicles carrying raw vegetables, fruits, grains and milk would be exempt from ECC. Essential commodities other than those specified under the notification dated 30.10.2015, even though falling within the broad definition of the word „foodstuffs‟, stood excluded. However, there is no reason to limit the scope of the word “grains‟ to exclude any essential commodity falling within that classification. The word „grains‟ in the context of food stuffs would obviously imply „food grains‟ and the said term plainly includes pulses.”
“The term “food grains” as is commonly understood includes pulses. The Government of India also treats pulses as a part of food grains in the data published in this regard. On the website of the Government of India – data.gov.in, the statistics pertaining to the “Agricultural production of different food grains from year 2003 to 2014 at all India level” includes data pertaining to production of pulses.”
Read the full text of the Judgment below.
The Central Board of Direct Taxes (CBDT) today clarified that the Goods and Services Tax (GST) paid on services will continue to be excluded from the TDS provisions under the Income Tax Act when the GST component is separately shown in the invoice.
Earlier, the Board had excluded the service tax component from the amount paid or payable as per a contract between two persons.
After the rollout of GST from 1st July 2017, references received by the Board regarding the treatment of GST component on services. GST replaced all the earlier indirect taxes including service tax, excise duty, sales tax etc.
In order to bring clarity on the above issue, the Board said that “even under the new GST regime, the rationale of excluding the tax component from the purview of TDS remains valid, the Board hereby clarifies that wherever in terms of the agreement or contract between the payer and the payee, the component of ‘GST on services’ comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XV Il-B of the Income Tax Act on the amount paid or payable without including such ‘GST on services’ component. GST for these purposes shall include Integrated Goods and Services Tax, Central Goods and Services Tax, State Goods and Services Tax and Union Territory Goods and Services Tax”
Read the full text of the Circular below.
The Central Board of Direct Taxes (CBDT) recently amended its Circular No. 2112015 issued in 2015 prescribing monetary limit for appeals before various appellate authorities.
The recent letter prescribes methods for computing tax effect to determine maintainability of appeals where tax is assessed under the Minimum Alternative Tax (MAT) provisions.
The letter stated that “references are being received by the Board that in certain cases appellate authorities are dismissing appeals without going into the merits of the case by relying on the definition of ‘tax effect’ as defined in Circular No. 2112015, which prescribes the monetary limit for filing appeals before various appellate authorities. In certain situations where income is computed under the provisions of section 115JB or section II5lC of the Income Tax Act for the purposes of determination of ‘tax effect’, and the additions made under provisions other than sections 115JB or section 11SlC do not impact book profit, the appellate authorities are not considering the said additions for the purpose of ‘tax effect’ as defined in para 4 Circular No. 2112015.”
In view of the above, the Board inserted para 4.1 after the para 4 of the Circular No. 2112015 which reads as follows:
“4.1 Where income is computed under the provisions of section 115JB or section 115JC for the purposes of determination of ‘tax effect’, tax on the total income assessed shall be computed as per the following formula-
(A-B)+ (C-D)
where,
A = the total income assessed as per the provisions other than the provisions contained in section 115JB or section 115JC (herein called general provisions);
B = the total income that would have been chargeable had the total income assessed as per the general provisions been reduced by the amount of the disputed issues under general provisions;
C = the total income assessed as per the provisions contained in section 115JB or section 115JC;
D = the total income that would have been chargeable had the total income assessed as per the provisions contained in section 115JB or section ll5JC been reduced by the amount of disputed issues under the said provisions:
However, where the amount of disputed issues is considered both under the provisions contained in section llSJE or section I 15JC and under general provisions, such amount shall not be reduced from total income assessed while determining the amount under item D.”
Read the full text of the Letter below.
A division bench of the Delhi High Court today said that all the legal services provided by advocates including senior advocates and Law Firms are subject to GST under reverse charge mechanism till the pronouncement of the final order.
The division bench comprising of Justices S Muralidhar and Pratibha M Singh, while passing the order questioned the legal sanctity of the press release issued by the Ministry of Finance on 15th July 2017.
The bench was hearing the plea filed by Advocate JK Mittal asking among other things that whether all legal services provided by legal practitioners and firms would be governed by the reverse charge mechanism under the GST law implemented by the Government from 1st July 2017.
Earlier, the Court expressed an opinion that there is ambiguity in the existing CGST and SGST provisions and hence, directed the Government to not to take any coercive actions against advocates, law firms of advocates including Limited Liability Partnerships (LLPs) of advocates providing legal services for non-compliance with any legal requirement under the new GST Acts.
Advocate Sanjay Narula, who appeared for the Centre, produced a Finance Ministry Press Release dated July 15, 2017, clarifying that reverse charge mechanism is applicable to legal services provided by individual Advocates including Senior Advocates and law firms under the new indirect tax regime.
While concluding, the bench observed that no coercive action would be taken against advocates, law firms of advocates including Limited Liability Partnerships (LLPs) of advocates providing legal services for non-compliance with any legal requirement under the CGST, DGST, or IGST Act.
It further held that the benefit of the interim order shall not be denied to any advocate, law firm of advocates, LLPs of advocates who are providers of legal services, who have registered under the CGST, DGST, or IGST Act from 1st July 2017.
Read the full text of the Order below.
A Public Interest Litigation has been filed in the Delhi High Court challenging the imposition of 12% Goods and Services Tax (GST) on Sanitary Napkins.
A bench comprising of Acting Chief Justice Gita Mittal and Justice C Hari Shankar issued notices to the Centre and Goods and Services Tax Council directing them to file their response.
The Petitioner, Zarmina Israr Khan, a Ph.D. scholar in African studies at the Jawahar Lal Nehru University(JNU), sought the direction or order quashing the imposition of 12% Goods and Services Tax on Sanitary Napkins, and declaring Sanitary Napkins to be liable to a ‘nil’ rate or a reduced rate.
The Petitioner contended that, the impugned levy violated the inviolable and fundamental right to life that is contained in Article 21 of the Constitution of India in as much as it makes it more onerous for women to be able to access an essential item relating to their reproductive, and overall, health.
The petitioner also stated that, “impugned levy in fact amounts to a levy on the reproductive rights of women, which include the right to gain access to reproductive health services, and which is ex-facie unsustainable and opposed to the Constitutional scheme”.
The petition alleged that 12% GST on Sanitary Napkins is discriminatory and violative of Article 15(1) of the Constitution of India in as much it burdens only women, who ultimately are the consumers of sanitary napkins. A menstrual cycle is not a matter of choice. Sanitary napkins are thus, not a luxury, nor are they a life-style product. On the contrary, they are, in fact, a basic necessity and an essential item for women.
“Impugned levy is diametrically opposed to the commitment towards securing just and humane conditions of work enshrined in Article 42 of the Directive Principles of State Policy. Further, considering the importance of sanitary napkins in ensuring women access to the workplace in particular, and public spaces in general, during the period of mensuration, the impugned levy also violates the right of women to an adequate means of livelihood and also compromises their health, thus falling afoul of the commitment contained in Articles 39 and 47 of the Directive Principles of State Policy. Though the same may not be enforceable in the strict sense, there can be no cavil that it is the duty of the State to adhere to the commitments contained in the Directive Principles while framing laws, and it cannot be permitted to act to the contrary as it has done in the present case”, the petition also added.
The Court posted the matter for hearing on November 15.
Read the full text of the petition below.
A division bench of the Delhi High Court in GECAS Services India Pvt. Ltd v. ITO & Ors, held that prior intimation need not be given to the Assssee by the Income Tax department before attaching the amount held in Bank Account when assesse has not responded to the demand notice sent under section 156 of the Income Tax Act.
Assessee, a wholly-owned subsidiary of the GE Group, is engaged in the business of providing marketing support, liaising and administrative services in connection with leasing of aircrafts in India to its parent company. The department completed assessment against the assesse under section 143(3) of the Act against which an appeal is pending before the first appellate authority.
During the pendency of the appeal, Assessee received a notice issued under Section 226 (3) (i) of the Act addressed to the HSBC bank attaching the Assessee’s bank account held there and any other amount held in recurring deposit/fixed account and current account held with the said bank towards the recovery of the demand. Later, assessee learned that the amount has already been recovered by the department from the Bank.
Aggrieved by the action of the department, assesse approached the Court seeking to quash the said notice and to refund the amount so attached.
On counter-affidavit, the department maintained that the Assessee had neither paid the demand nor filed a stay application before the first appellate authority to stay the recovery of demand.
The bench noted that a demand notice under Section 156 of the Act has already been sent by the AO demanding tax, interest, penalty, fine etc., and therefore, the petitioner-Assessee was fully aware that it would be deemed to be an Assessee in default u/s 221 (1) r/w s. 220 (4) of the Act. Further, the assesse has not explained the reason for not filing stay application before the first appellate authority.
“With the Assessee not having paid the amount within 30 days of the service of notice under Section 156 of the Act, the Department was justified in proceeding to treat it as an Assessee in default and in proceeding to take the necessary action to recover the demanded amount.”
Based on a plethora of judicial decisions, the bench dismissed the petition and held that “in the present case there was no illegality committed by the Department in not issuing to the Assessee a notice under Section 226 (3) (iii) of the Act simultaneously with or prior to the notice issued to its bank under Section 226 (3) (i) of the Act for recovery of the tax demand from its account. The Court accepts the submission of the Revenue that requirement under Section 226 (3) (iii) is only that a copy of the notice should be “forwarded to the assessee” and not that a copy should be served on the Assessee in advance or simultaneously.”
Read the full text of the Judgment below.
While allowing a petition filed by M/s Purnima Advertising Agency Pvt Ltd, a division bench of the Gujarat High Court directed the Income Tax department to allow the petitioner to correct PAN of the deductee in the statement of tax deducted at source filed by them.
In the instant case, the petitioner had challenged the action of the Deputy Commissioner, Income Tax, who do not permitted the assessee to correct the error in mentioning the Permanent Account Number (PAN) of one of the agencies to whom the petitioner had made multiple payments during the relevant financial period for which deduction of tax at source was necessary.
The department pointed out that all the forms are to be generated online and corrections can also be therefore, made only online. It also pointed out that looking to the large number of such statements and entries in such statements, it would be impossible to process individual claims of corrections, whether they are based on bona fide mistakes or otherwise.
Analyzing the relevant provisions under the Act, the bench noted that neither the statute nor the department completely rules out the possibility of genuine and bona fide typographical or even mechanical errors. Section 200A refers to a statement of tax deducted at source or a correction statement. However, this provision does not refer to any mechanism for correction of such a statement, subsection (1) of section 200A specifically refers to a statement of tax deduction at source or a correction statement thus, clearly leaving the possibility of correcting a declaration once made by the assessee.
It noted that para 4 of the Notification dated 15.1.2013 issued by the department provides for the correction statement of tax deducted at source. Para. 11 of the scheme authorises the Director General to specify the procedures and processes for effective functioning of the Cell where such declarations would be processed which includes receipt of correction statement of tax deducted at source.
Justice Akil Kureshi and Justice Biren Vaishnav, pointed out that “in our view, once the department recognises the possibility of errors and also makes provisions for making corrections, it would be wholly illogical to limit such corrections on arithmatical working out of only two alphabets or two numerics being found incorrect requiring change. Error in feeding an entry or a number may have multiple origins from typographical error of Data Entry Operation to mechanical failures or through pure oversight referring to one column of PAN instead of another while filling up and uploading the statement. It is not necessary nor possible for us to envisage different situations under which such errors could crop up and it need not necessarily be confined to limited figures on the letters of the PAN being incorrect.”
“We are not unsympathetic to the department’s view that late corrections can derail assessments of the deductees. If the legislature therefore, had laid down that no corrections would be permitted or the department had provided that no correction would be permitted beyond a particular period, we could have examined the issue in different light. However, that is not the present situation. In the present case, as noted, section 200A itself refers to correction statement of tax deducted at source. The intimation sent to the petitioner of shortfall in deduction of tax also referred to the possibility of correction but limited it to certain characters. In the affidavit in reply also same stand has been taken.”
It therefore, said that the decision of department in not permitting the petitioner to correct PAN of the deductee in the statement of tax deducted at source was impermissible. “In the present case, department shall verify the petitioner’s claim of actual deduction of tax at the prescribed rate in case of M/s. Star (India) Pvt. Ltd., verify that the PAN sought to be corrected by the petitioner belongs to the said agency and that the tax was actually deposited in case of such deductor. If these questions are answered in favour of the assessee, the department shall not insist on raising higher demand from the petitioner of failing to deduct tax at source in terms of subsection(1) of section 206AA of the Act,” it added.
Read the full text of the Judgment below.
The Government of Assam notified the list of documents which shall be carried by a person in charge of the conveyance at the time of consignment of goods till the implementation of E-way Bill system by the Central Government.
He present notification stated that “in order to prevent evasion of tax and to facilitate, regulate and monitor the inter-State movement of taxable goods, into Assam or outside Assam, it is considered necessary to notify certain documents for furnishing of relevant information online till e-way bill system is fully developed by the Goods and Services Tax Network.”
The Notification mandated furnishing of electronically generated ‘GST Inward Permit’ by the person in charge of the goods while importing/ transporting goods into the State.
In case of inter-State supply of taxable goods from the State to other States, the person making such outward supply is bound to furnish electronically generated “GST Outward Permit”.
For movement of taxable goods passing through the State, a dealer should carry Transit pass. It further clarified that the earlier system of issuance of Online Transit Pass and endorsement in respect of taxable goods coming from other States and meant for other States but passing through the State shall continue.
Read the full text of the Notification below.
Shri Santosh Kumar Gangwar, Minister of State for Finance in written reply to a question in Rajya Sabha today said that Goods and Services Tax (GST) is much simpler to earlier tax regime.
“The tax rates on goods and services have been fixed taking into consideration, inter alia, the total indirect tax incidence in pre- GST regime, including cascading of taxes. The GST rates so notified are lower than the pre-GST tax incidence on most of the items of mass consumption, such as cereals, pulses, milk, tea, vegetable edible oils, sugar, toothpaste, hair oil, soap, footwear, Childrens’ picture, drawing or coloring books, etc. In addition, the objective of GST was to migrate from a complicated and multi tax system to a simpler tax system. The GST thus, is a much simpler tax regime as compared to tax regime it has replaced”, he said.
The new indirect tax law, GST had been implemented by the Government on 1st July 2017. Under the new law, all the indirect taxes such as excise duty, sales tax, VAT, service tax except customs duty were subsumed.
However, still there are certain confusions and ambiguities on the new law among the traders and consumers. The Government is taking all possible efforts to reduce the difficulties.
“In fact, GST has replaced several taxes which were being levied and collected by the Centre, including 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); and Service Tax. In addition, a number of State taxes have also been subsumed in GST, including State VAT; Central Sales Tax; Purchase Tax; Luxury Tax; Entry Tax (All forms); Entertainment Tax (except those levied by the local bodies); Taxes on advertisements; Taxes on lotteries, betting and gambling. Besides, a number of cesses have also been abolished vide the Taxation Laws Amendment Act, 2017. GST has only five rational rates (0%, 5%, 12%, 18%, and 28%) as against multiple excise duty rates, rate of cesses and surcharges and multiple rates of VAT (varying across the states in many cases). Therefore, overall the GST is much simpler to earlier tax regime it has replaced”, he added.
In reply to a Starred Question in Rajya Sabha today, the Union Minister for Finance, Defence and Corporate Affairs, Shri Arun Jaitley said that the organized traders and unorganized sellers in Textile Sector have not been affected by the Goods and Services Tax (GST).
According to him, the GST rate structure for the textile sector was discussed in detail in the GST Council Meeting held on 3rd June, 2017, wherein the Council recommended the detailed rate structure for the textile sector which enables ease of classification and determination of rate.
Mr. Jaitley, in a written reply to a Starred Question in Rajya Sabha today said that the main demand of the textile traders is not to put any tax on fabrics. However, said that the same cannot be accepted because of the following reasons:
Firstly, Nil GST on fabrics will break the input tax credit chain and then the garments / made ups manufacturers will not be able to get the credit of tax on previous stages
Secondly, Nil GST on fabrics will result in zero rating of imported fabrics, while domestic fabrics will continue to bear the burden of input taxes.
Lastly, the GST rates are equal or lower than the pre-GST tax incidence. And therefore, the price of fabrics is not likely to go up.
“It is not correct to say that textiles sector was never taxed in independent India. In fact, during 2003-04, the entire textiles sector was subjected to central excise duty. Necessary steps have been taken to facilitate taxpayers to take GST registration. GST Sewa Kendras have been set-up in various centres to handhold the taxpayers and to provide all necessary guidance regarding GST compliance,” he said.
The statement published by the Press Information Bureau in its official website.
The Government today clarified that accommodation in any hotel, including 5-star hotels, having a declared tariff of a unit of accommodation of less than INR 7500 per unit per day, will attract GST @ 18%; Star rating of hotels is, therefore, irrelevant for determining the applicable rate of GST.
Reports have been received expressing doubts whether 5-star Hotels are liable to pay GST @ 28% irrespective of the declared tariff of a unit of accommodation.
In this context, it is hereby clarified that accommodation in any hotel, including 5-star hotels, having a declared tariff of a unit of accommodation of less than INR 7500 per unit per day, will attract GST @ 18%. Star rating of hotels is, therefore, irrelevant for determining the applicable rate of GST.
Justice Vineet Kothari of Karnataka High Court had directed State Government to consider amendments in Karnataka Value Added Tax Act (KVAT) to stop unnecessary litigation in High Court.
While disposing the petition, the Court observed that, It is unfortunate that in view of the limited power given to the Tribunal and not empowering it to extend its own stay order by the said legislative mandate, while the Tribunal finds itself unable to decide all the pending appeals within the stipulated time frame of one year and on account of this legislative lacunae despite there being good intention for the reasons beyond the control of Tribunal this Court is flooded with these kind of petitions unnecessarily.
The Court also said that, the State should immediately consider appropriate amendments to the said provisions of Section 63(7)(b) of the KVAT Act, 2003 for making powers of the concerned Appellate Tribunal effective while dealing with the pending appeals before them so that no such unnecessary litigation is brought before this Court. State cannot deliberately generate a litigation for the Constitutional Courts.
Read the full text of the Order below.
A division bench of the Bombay High Court in M/s Allied Fibers Ltd v. Commissioner of Customs & Anr, observed that there is no provision for condonation of delay in filing rectification application under the Customs Act.
\However, the bench of Justices Anoop V Mohta and Anuja Prabhu Dessai interpreted the provisions of s. 129B of the Customs Act in favour of the assesse in the absence of a provision for condonation of delay and directed the Appellate Tribunal to consider the application within six months.
Appellant, in the instant case, filed a rectification application before the CESTAT under section 129B of the Customs Act after five months from the receipt of the order. However, the Tribunal dismissed the application on ground that the same was filed beyond the time limit prescribed under the law.
The bench noted that as per section 129B(2) of the Customs Act, the Tribunal suo moto need to rectify the mistake, if any, within six months from the date of the order. In the absence of such an action, the appellants themselves proceeded with the application. “The Tribunal, therefore, was required to consider and decide the merits of the matter within six months from the date of receipt of such Application. This is for simple reason that the Appellant and/or the party would not be in a position to apply for rectification unless and until the actual order is seen and/or verified.”
Analyzing the relevant provisions of the Act, the bench noted that there is no power and/or remedy available and/or no provision for condonation of delay in filing such Application for rectification. “In the absence of any such provision, we are of the view that the second part of the Section need to be read in the interest of the Appellant. The Application so filed after receipt of the order serve the purpose and object of the Application for rectification. The Tribunal, suo motu, even as per proviso to Section may correct the mistake within six months. But, if other party to appeal required correction, then second part of the Section is available to the Appellant/party. In such case, the strict interpretation of appeal within six month from the date of order referring to first part of the Section is unacceptable. Any application for correction filed by the appellant, other party, before the Tribunal, is required to be filed within six months from the receipt of the copy of the order, such application may not be dismissed, as not filed, within six months from the date of order.”
Remitting the matter back to the files of the Tribunal, the bench observed that the provisions of Limitation Act must be read with the provisions of the Act as both are relating to procedural aspects of filing such an appeal/application. “As there is no specific provision to deal with the Limitation aspect from the receipt of the order, we are of the view that a case is made out by the Appellant even to condone the delay, if any. The period of limitation may be different under two different circumstances. Therefore, the Application so filed under the same provision from the receipt of order is within limitation. Such application cannot be liable to be dismissed as sought to be contended by the Department.”
Read the full text of the Judgment below.
The Goods and Services Tax (GST) Council on Monday raised the GST compensation cess on cigarattes over the higher rate of 28 per cent. The effect on their prices was lower under the new taxation regime than earlier. The increase will give the government around Rs 5,000 crore more in revenue which would be used for compensating states.
The new rate would be applicable from today midnight.
After the meeting, Finance Minister Arun Jaitley clarified that the peak GST rate of 28 per cent and ad valorem cess of 5 per cent would remain. However, specific cess on the basis of the length of cigarettes would be raised from midnight Monday.
“It was noted in the first 15 days of the GST implementation that when the rate on cigarettes was translated, the cascading effect of taxes was not factored in. We noted that cigarette companies were getting windfall profit from reduction in cigarette prices, Jaitley said.
| Compensation Cess Rates | ||||
| Tariff Item | Present rate | Proposed Increase | New rates | |
| Non- filter | ||||
| 2402 20 10 | Not exceeding 65 mm | 5% + Rs.1591 per thousand | Rs.485 per thousand | 5% + Rs.2076per thousand |
| 2402 20 20 | Exceeding 65 mm but not 70 mm | 5% + Rs.2876 per thousand | Rs.792 per thousand | 5% + Rs.3668per thousand |
| Filter | ||||
| 2402 20 30 | Not exceeding 65 mm | 5% + Rs.1591 per thousand | Rs.485 per thousand | 5% + Rs.2076per thousand |
| 2402 20 40 | Exceeding 65 mm but not 70 mm | 5% + Rs.2126 per thousand | Rs.621 per thousand | 5% + Rs.2747per thousand |
| 2402 20 50 | Exceeding 70 mm but not 75 mm | 5% + Rs.2876 per thousand | Rs.792 per thousand | 5% + Rs.3668per thousand |
| 2402 20 90 | Others | 5% + Rs.4170 per thousand | 31% | 36% + Rs.4170 per thousand |
The Central Government recently issued a corrigendum to the Notification No.1/2017-Central Tax (Rate), dated the 28th June, 2017 stating that citrus fruits, clementines, wilkings, grape fruits including lemons and limes are taxable at 12% under the Goods and Services Tax (GST) law.
It inserted the words “Citrus fruit, such as Oranges, Mandarins (including tangerines and satsumas); clementines, wilkings and similar citrus hybrids, Grapefruit, including pomelos, Lemons (Citrus limon, Citrus limonum) and limes (Citrus aurantifolia, Citrus latifolia), dried” at page 259, after line 9.
It further added Entry 103A to the said Notification wherein 12% GST is applicable on Bran, sharps and other residues, whether or not in the form of pellets, derived from the sifting, milling or other working of cereals or of leguminous plants [other than aquatic feed including shrimp feed and prawn feed, poultry feed and cattle feed, including grass, hay and straw, supplement and husk of pulses, concentrates and additives, wheat bran and de-oiled cake.
Read the full text of the Notification below.
Parliament is likely to consider the bill raising exemption limit of gratuity under the Income Tax Act in its monsoon session started today.
The Bill aims at doubling the ceiling for tax exempt gratuities from the current Rs 10 lakh to Rs 20 lakh. Earlier in February, the central trade unions had agreed on the proposal in a tripartite consultation with the labour ministry. However, the unions had demanded the removal of conditions asking to have at least 10 employees in an establishment and minimum five years of service for payment of gratuity.
Earlier, Labour Minister Bandaru Dattatreya had made a statement confirming this.
Besides, the bill to amend the Payment of Gratuity Act also seeks to enable the central government to change the ceiling for tax-free gratuity after factoring in rise in income levels by an executive order bypassing Parliament route to amend the law.
Though the decision in this regard was taken by the Union Cabinet in March, it has not been scrutinised and approved the draft bill yet.
At present, as per the Payment of Gratuity Act, an employee is required to do minimum service of five years to become eligible for gratuity amount. Moreover, the Act applies to those establishments where the number of employees is not less than 10.
Trade unions had demanded that the amended provision regarding maximum amount should be made effective from January 1, 2016, as done in the case of central government employees.
Besides, that rate of 15 days wages for each completed year of service be raised to 30 days wages, the unions had said during the tripartite meeting.
The proposed amendment to the Payment of Gratuity Act as circulated by the government only deals with enhancing the ceiling of maximum amount under Section 4(3) of the Act from Rs 10 lakh to Rs 20 lakh.
While dismissing an appeal filed by the Commissioner of Central Excise & Service Tax, Kolhapur, a division bench of the Bombay High Court observed that in view of Section 35G of the Central Excise Act, 1944, the High Court has no jurisdiction to entertain appeals wherein the “rate of duty” or “value of goods” is the subject matter.
During the course of hearing, the respondent-assessees had raised a preliminary objection on the maintainability of this appeal under Section 35G (CF Act) against the impugned Order. They submitted that a Special Leave Petition has already filed by them before the Supreme Court against the same order/issues and the same is admitted. The “Rate of Duty” and “Value of Goods”, the basic issues, are pending in the Supreme Court.
Analyzing the provisions of section 35G of the Central Excise Act, the bench comprising Justices Anuja Prabhudessai and Anoop V. Mohtait said that “it is clear from the provisions itself that no appeal lies to the High Court from the Order passed by the Appellate Tribunal being the order relating among other things, to the determination of any question having a relation to the rate of duty of excise and/or to the value of goods for the purposes of amendment.”
Accordingly, the appeal was dismissed with liberty to the department to approach the available appellate forum against the impugned order/issue.
Read the full text of Judgment below.
A division bench of the Delhi High Court in the case Canyon Financial Services Ltd v. ITO held that the documents furnished by the assessee found in possession of someone else cannot be treated as “belongs to the assessee” for purpose of Assessment under Section 153C of the Income Tax Act.
Assessing officer, during the course of search in the Dalmia Group of Companies, found letters sent by M/s Canyon Financial Services Ltd in connection with share purchase. Consequently, department initiated assessment proceedings against the assessee u/s 153A r/w 153C.
As per s. 153C(1) amended in the year 2015, when the AO of the searched person has satisfied that the documents seized ‘belongs or belong to a person other than the person referred to in Section 153A’, the AO of the searched person can hand over such documents to the AO “having jurisdiction over such other person”.
Challenging the proceedings, assessee contended that it was not shown in either of the satisfaction notes as to how the documents seized as referred to therein “belongs to” the Assessee in terms of Section 153C. It further submitted that in terms of Section 153C (1) of the Act as it stood prior to the amendment with effect from 1st June 2015, it was incumbent on the Department to show the documents seized and referred to in the satisfaction notes of both the AO of the searched person and of the AO of the Assessee in fact ‘belong to’ the Assessee.
The bench noted that the amendment has no retrospective effect and therefore, it is not sufficient to the department to show that the seized documents in fact belong to (and not merely pertain to) the Assessee.
Diving deeply into the facts of the case, the bench said that the first document seized was a document filled up by the Assessee and submitted to DEPL. In the opinion of the bench, the document can certainly be said to be ‘pertaining to’ to the Assessee. “However, once it was submitted by the Assessee to DEPL, and was found in possession of DEPL, it cannot be said to ‘belong’ to the Assessee. If it had been recovered from the premises of the Assessee then the position may have been different. Based on the presumption under Section 132 (4A) read with Section 292 C of the Act it may have been possible to proceed against the Assessee under Section 153 A of the Act subject of course to the document constituting incriminating material. However, in the present case that is not the position.”
“The second document is the certificate issued by the Assessee confirming the issuance in its favour of the equity shares of DEPL. The said document is titled ‘To whomsoever it may concern’. It is, clearly, not addressed to a particular person but to anyone who may receive it. This document after it has been despatched by the Assessee and found in possession of someone else cannot said to ‘belong’ to the Assessee. While it may ‘pertain’ to the Assessee, it cannot be presumed to ‘belong to’ it when it is not recovered from the Assessee but from the searched person.”
The other documents found were the copies of the return of income of the Assessee, copy of its director’s report, copy of certificate of incorporation and memorandum of association. These were documents furnished by the Assessee to DEPL and found in the possession of DEPL. “Here, again, it cannot be presumed that such documents having being found in the possession of the DEPL did not belong to DEPL but to the Assessee. Here again, while the documents may ‘pertain to’ the Assessee, but in the context explained above, they cannot be presumed to be documents that ‘belonged to’ the searched person. Consequently, even with regard to these documents, the jurisdictional requirement under Section 153 C (1) of the Act, of the AO of the searched person having to be satisfied that the said documents do not belong to searched person but to the Assessee, has not been fulfilled.”
In view of the above finding, the bench held that the satisfaction note prepared by the AO of the searched person does not fulfill the legal requirement spelled out in Section 153C (1) of the Act. Accordingly, the proceedings were quashed.
Read the full text of the Judgment below.
The Senior Superintendent of Police (Co-ordination) South 24 Parganas District has moved Calcutta High Court challenging the constitutional validity of Imposition of Service Tax on Police activities by Police Authorities.
Justice Debangsu Basak has issued notice and said that, a strong prima facie case has been made out by the petitioners. The Court also directed not to proceed with the show-cause notice any further till disposal of the writ petition.
Additional Advocate General appearing on for the petitioners submitted that, the authorities did not have jurisdiction to impose service tax on police activities undertaken by police authorities. He relied upon an order of the CESTAT reported at 2017 (48) S.T.R. 275 (Deputy Commissioner of Police, Jodhpur vs. Commissioner of Central Excise & Sales Tax, Jaipur-II).
He also relied upon Section 13 of the Police Act, 1961 and submits that, the police is discharging statutory functions in providing police assistance to persons requisitioning the same on chargeable basis. He refers to Regulation 669 of the Police Regulation, Bengal and submitted that, reading the same along with Section 13 of the Act, 1961, it cannot be said that, the police authorities are rendering a service, which is taxable.
The petitioners also stated that, respondent authorities completely misdirected themselves both in facts and in law as the State Government in the Home Department cannot be classified as a person engaged in the business of rendering service relating to the security of any property, whether movable or immovable of any person in any manner including the services of providing security personnel.
The police authorities of the home department, Government of West Bengal are not engaged in any business of rendering services of the nature specified above. The police authorities are sometimes required to provide additional security personnel in against actual cost for maintenance of law and order. The act of providing security personnel on actual cost basis is intrinsically linked with maintenance of law and order. Hence the impugned show-cause notice suffers from want of jurisdiction, the petitioners also stated.
The petitioners also submitted that, For that once it appears from a conjoint reading of Part IX-A and Twelfth Schedule of the Constitution that the charges levied by the petitioner are clearly regulatory in character, then in that event any attempt to levy service tax under Finance Act 1994 on such regulatory charges would be ultra vires the Constitution.
Advocate Abhratosh Majumder, Advocate Soumitra Mukherjee and Advocate Debasish Ghosh also appeared for the petitioners.
The matter posted after seven weeks for hearing.
Read the full text of the Petition below.
