SIGN IN SUBSCRIBE

News Update

Cus - Export of non-basmati rice - Notification 20/2023 insofar as it denies the benefit of the transitional arrangement as contained in para-1.05 of the FTP 2023, is bad in law: HCCus - Refund of SAD - 102/2007-Cus - Areca Nut and Supari are one and the same - Objections with regard to name, nature and status of importer or buyers or the end use of goods purchased by them etc. are extraneous: HCCX - Interest on Refund - Since wrong order annexed by petitioner in paper book, Bench is unable to proceed further - Petition is dismissed with liberty to file a fresh one: HCGST - No E-way bill - When petitioner imports machinery and after Customs clearance, transports same to his own factory, it cannot be said that such a transportation would fall within the definition of term 'supply' - Penalty imposable under second limb of s.129(1)(a): HCGST - Fix responsibility on officers who allowed BG to lapse - Petitioner not justified in not renewing BG - Cost of Rs.15 lacs imposed, to be paid to PM Cares Fund: HCGST - Since the parties agree that petition can be disposed of on the basis of records available before Appellate Authority, petitioner is directed to enclose all documents filed before Appellate Authority in a compilation, in form of a paper book: HCWrong RoadST - Whether any service is used for personal consumption or not is certainly question of fact and being question of fact, no substantial question of law arises: HCGovt proposes to amend Geographical Indication of Goods Rules; Draft issued for feedbackST - If what has been paid as tax is without authority of law, Revenue should refund the same - Denial of credit would result in the whole exercise being tax neutral: HCWarehousing Authority notifies several agri goods to be stored in only registered warehousesST - Even if the petitioner may have a case on merits, it is best left to be decided by the Appellate Authority under the hierarchy prescribed under the FA, 1994: HCUS FDA okays Eli Lilly Alzheimer’s drugGST - Petitioner challenges jurisdiction of assessing officer - Petitioner is entitled to file an appeal u/s 107 by availing an alternate efficacious remedy: HCFive from Telangana killed in car accident on Pune-Solapur HighwayGST - Existence of an alternative remedy is a material consideration but not a bar to the exercise of jurisdiction: HCHush money case against Donald Trump - Sentencing deferred to Sept 18GST - It is open to a trader to take goods by whichever route he opts, unless the law otherwise requires, destination point being intact: HCDeadly hurricane Beryl smashes properties in JamaicaGST - Conclusion that taxable person is providing a service to supplier while taking the benefit of a discount by facilitating an increase in the volume of sales of such supplier is ex facie erroneous and contrary to the fundamental tenets of GST law: HCIsrael claims 900 militants killed in Rafah since May monthGST - Order expressly records that personal hearing notice was returned with endorsement 'no such person at address' - Since petitioner has shifted to a new premises, it is just and necessary to provide an opportunity to contest demand: HC116 die in stampede at UP ’Satsang’I-T- Application for revision of order dismissed in limine on grounds of delay; case remanded for re-consideration: HCWe are deepening economic ties with India, says US officialI-T- As per Section 119(2)(b), power to condone applications relate to claims for amount exceeding Rs 50 lakhs are to be considered by CBDT; however it is impermissible for CBDT to pass order on merits: HC8 Dutch engineers build world’s longest bicycle - 180 feet, 11 inchesI-T- Additions framed u/s 68 for unexplained income & u/s 69 for unexplained expenditure not tenable where complete transactional details are furnished & not doubted: HCRailways earns Rs 14798 Crore from Freight loading in June monthI-T- Delay in filing ITR is per se insufficient reason to estimate assessee's profit @15% on turnover, more so where audited financial report is filed in timely manner: ITATMoD inks MoU to set up testing facilities in Unmanned Aerial System in TN Defence Industrial CorridorI-T- For invoking section 69A, assessee should be found to be owner of any money, bullion, jewellery or other valuable article & which is not recorded in the books of account: ITATGovt proposes Guidelines for ethical approach to Coal MiningI-T- TDS credit can be allowed based on AIS, where details pertaining to TDS, advance tax & other payments are reflected in Form 26AS: ITATVaishnaw to inaugurate Global IndiaAI Summit 2024I-T- Lending money with the primary intention of earning interest can be considered a business activity, but nature and manner of lending, as well as the frequency, should be taken into account: ITAT
 
GST - Agenda for the second year - Part - I - Advance rulings, anti-profiteering, cross-charge

 

SEPTEMBER 05, 2018

By Dr G Gokul Kishore

GST is the tax of the day. One year of GST has been discussed in too many articles and equally too many fora. Let us, therefore, set the agenda for the second year. The issues discussed in this article are merely indicative and the agenda will be further expanded and discussed in subsequent articles.

Trade jolted by advance rulings

There was much disappointment when there was considerable delay in constituting Authority for Advance Rulings. The industry was waiting for an institutional mechanism to provide statutorily binding ruling on a variety of issues and AAR was seen as the body to dispel the confusion surrounding host of issues. The wait was over when State-level AARs were constituted towards the end of last year. With over 200 reported rulings now and a good majority not concurring with the view of the trade, the euphoria and interest in seeking such remedy have started dissipating. The situation appears to be no better for the industry with Appellate Authority for Advance Rulings also as most of the rulings appealed against so far have been affirmed by AAAR. Considering the fact that in a few cases, conflicting stand has been taken by different AARs, as per reports, moves are afoot to constitute such authority at the central level. This may require substantial amendments to the CGST Act and SGST Acts. If contra views are expressed by AARs in more number of cases, voices demanding such change will get louder and may eventually get implemented in the second year of GST.

Price control through anti-profiteering

Not a day passes without a media report on particular companies being asked to prove their compliance with Section 171 of CGST Act relating to anti-profiteering. While post 14th November, 2017 GST rate reduction, such inquiries were confined to informal discussions with identified companies by National Anti-Profiteering Authority (NAPA), the present rate reduction of 27th July, 2018 has resulted in field formations of both CGST and SGST administrations taking up investigations ostensibly under the directions of NAPA. Press reports indicate that NAPA is not accepting most of the measures that the trade has adopted to ensure the benefit of rate reduction is passed on to recipients. Such measures like increase in quantity (commonly grammage), special schemes, additional discounts, reimbursements to next in the supply chain, etc., are reportedly being rejected by NAPA on the ground that GST law does not accommodate them.

Absence of any guidelines, statutory or otherwise, as to how benefits should be computed has resulted in adoption of divergent approaches to compute benefits and also methodology to pass on the benefit to the recipients. Considering the sweeping powers of NAPA which includes precipitative action like cancellation of registration, second year of GST should see framing of guidelines to achieve the twin objectives of ease of doing business and GST benefiting the common man. One only hopes that the beneficial legislation of anti-profiteering is not converted into a code conferring police powers to the tax administration.

Refund of ITC - More amendments than refunds

One of the provisions that has witnessed maximum number of amendments in the first year itself pertains to refund of accumulated input tax credit arising out of inverted tax structure. By use of ambiguous terms (not defined in law) like 'inputs' in Section 54(3) of CGST Act, service providers in many cases have been discriminated against as specified job work services are under 5% GST rate while most procurements attract default rate of 18%. Notwithstanding the recent relaxation to manufacturers of woven fabrics [as refund restriction under Notification No. 5/2017-Central Tax (Rate) has been removed for them from 1st August, 2018], the formula after multiple amendments today effectively excludes input services from computation of refund affecting adversely those who have inverted tax structure. It will be against one of the basic canons of GST i.e. business decisions should be tax-neutral if it is advocated that additional line of business not involving inverted tax structure should be explored by such affected parties. Tax policy is sub-set of economic policy and, therefore, when the thrust is on seamless credit and wherever there is accumulation, refund of the same is to be provided.

In the coming year, one more amendment to the provisions should be effected to ensure the objectives of GST are implemented through provisions. In fact, Notification No. 5/2017-Central Tax (Rate) should be rescinded as it is a piece of subordinate legislation running contrary to the legislative intention of GST law.

Supplies between distinct persons - State revenue v. business friendly regime

One of the major issues having significant implications for businesses with presence or operations in multiple States is the issue of taxing of services provided or deemed as provided by the head office or corporate office in one State to places of business in other States. While the rationale or statutory basis lies in Schedule I to CGST Act whereby transactions sans consideration between distinct persons are deemed as supplies and therefore, liable to GST, the recent ruling of AAR [Columbia Asia Hospitals - Karnataka AAR, Ruling dated 27-7-2018] [2018-TIOL-113-AAR-GST] seeking inclusion of employee cost (read salary cost) in such cross-charging has unnerved the industry.

The concept is new and the trade is yet to reconcile to such taxing of intra-company services. Cross-charge is defended on the ground of yielding revenue to States and providing ITC to the industry. Availability of ITC is not an attractive argument to win the hearts of members of the industry as initial pay-out and compliances are seen as dampeners. Even though valuation provisions cater specifically to supplies between distinct persons, absence of clarity on the entire gamut of issues on cross-charge is bound to lay a fertile foundation for litigation. This is one of the natural issues arising out of dual GST structure we have opted for, involving concurrent taxation by both federal and regional governments. The issue is too complex to be left to a few taxpayers and advance rulings and it will not be unreasonable to expect a detailed circular from a pro-active tax bureaucracy which has issued numerous circulars in the first year of GST.

...to be continued

(The author is a Joint Partner, Lakshmikumaran & Sridharan, New Delhi. The views expressed are personal.)

GST - Agenda for the second year - III

GST - Agenda for the second year-II

(DISCLAIMER : The views expressed are strictly of the author and Taxindiaonline.com doesn't necessarily subscribe to the same. Taxindiaonline.com Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the site)

 RECENT DISCUSSION(S) POST YOUR COMMENTS
   
 
Sub: Anti-profiteering is gobbledygook

Dear Gokul,
The provisions of anti-profiteering incorporated in section 171 of CGST Act is a new concept to Indirect tax regime. In the legacy tax regime, we never had anything of that sort which parallels this provision. Unfortunately, the tax administration, it appears hasn’t given much thought to the consequences of incorporating this provision in the statute except aping the global tax regimes like Australia and Malaysia (where they rolled back to Sales Tax regime). This provision in fact, goes against the fundamentals of a laissez faire economy. Whether there is reduction in tax rate or availability of input tax credit owing to imposition of IGST in place of CST, the price of goods or services are determined by the market forces. What if businesses are unable to reduce their prices due to impact of additional input tax costs owing to setting up of new offices/businesses where section 17(5)(c) and (d) of CGST Act restrains the business from availing ITC on construction/works contract services used for immovable property? Further, section 15 of the CGST Act provides for levy of GST on transaction value. Transaction value is the price actually paid or payable for supply of goods or services. The buyer and seller enter into a contract for purchase of goods or services at a price convenient to both and if there is more supply than demand, the seller will be under compulsion to cut prices to stay relevant in the business. So in my view section 171 is vires of section 15 of CGST Act. Will the Government compensate the losses when prices go below than what it intends to be owing to reduction in tax rates or availability of input tax credits? So, this whole idea of anti-profiteering is gobbledygook and has no place in a 21st century tax regime. It is good for tax consultants who can push their clients to do this analysis and make a fast buck. But
Best regards,
Santosh Hatwar


Posted by santosh hatwar
 

TIOL Tube Latest

TIOL Tube
India's Path to Becoming a Superpower: An Interview with Pratap Singh

TOP NEWS


AR not Afar by SK Rahman

VISION 360



Shri Ram Nath Kovind, Hon'ble 14th President of India, addressing the gathering at TIOL Special Awards event.

TII LATEST

TIOLCORPLAWS LATEST