GST GOODS & GOODS& SERVICES TAX - ICSI€¦ · advanced initiatives of the government under the...

July - 2018Volume -16Monthly Newsletter

GOODS &SERVICESTAX

GOODS &SERVICESTAX

GST

Disclaimer: Although due care and diligence have been taken in preparation of this Newsletter, the

Institute shall not be responsible for any loss or damage, resulting from any action taken on the basis of

the contents of this Newsletter. Any one wishing to act on the basis of the material contained herein

should do so after cross checking with the original source.

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President Message 03

GST Day Celebration 04

Recent Amendments in GST 05

Show Cause Notice part -I 08

Show Cause Notice-II 12

Important Ruling by AAR 16

GST in News 20

GST Quiz 27

ICSI-GST Newsletter 03

CS Makarand LelePresident, ICSI

n the contemporary times, India is poignant as a progressive economy with the Iindications of becoming one of the top three economic power of the world over the next 10-15 years, backed by its strong democracy and strategic partnerships

domestically and internationally. Owing to the reforming initiatives, where the GDP of India grew at the constant prices by 7.2% in the last quarters of 2017, at the same end the Corporate Earnings in India are also expected to grow by 15-20% in the financial year 2018-19.

All these milestones including the increase in the direct taxes by 19.5% and retention of India's position as the third largest start-ups base in the world, are supported by the advanced initiatives of the government under the mantra of Perform, Reform and Transform. Among others, the introduction of Goods and Services Tax also known as Good and Simple Tax constitutes an unprecedented reform of Indian Taxation.

Successfully registering its contribution to a transparent and emergent economy of the nation with inclusive growth, GST has completed its first year on July 01, 2018. In just one year, it has been evidently demonstrated that 'GST is a fitting tribute to spirit of cooperative federalism as all decisions in the 27 meetings of GST Council taken by consensus GST - 'One Nation, One Tax, One Market'- binds India into an Economic Union, promotes 'Make in India' and has improved 'Ease of Doing Business' Introduction of e-way bill ensures hassle free movement of goods throughout the country GST replaced multi-layered, complex indirect tax structure with a simple, transparent and technology–driven tax regime'

On this remarkable anniversary of GST, whereas dialogues of various dignitaries were organized pan India about the magnitude of this path breaking tax reform, the Institute in the deep alignment with the government towards this progressive reform, also shares its' worthwhile initiatives on GST in last one year. The Institute as a partner in nation building and in its commitment towards effective GST implementation in specific, has begun several initiatives including Guinness World Record in organizing largest Taxation Lesson, 268 Issues of GST Educational Series, 91 Sessions of GST Point, Introduction of GST Accounts Assistant Course, various programs on GST along with the publication of this GST Newsletter, which is our monthly publication dedicated to GST with 15 Editions so far.

Taking forward our allegiance in ensuring the efficacious implantation and further pursuits of success for GST, we are happy to release the next in the series, July, 2018 Edition of the GST Newsletter in advancing the capacity of our professionals for ensuing their utmost dedication and commitment for the sustainable and empowered governance in the service of the nation.

Looking forward for your treasured feedback for the GST Newsletter.

Message FromPresident


ICSI Celebrated GST DayThe First GST Anniversary


1. GSTR-4: Serial 4A of Table 4 is not required to be filed till June' 18

· In FORM GSTR-4, in the Instructions, for Sl. No. 10, the following shall be substituted, namely: “10. For the tax periods July, 2017 to September, 2017, October, 2017 to December, 2017, January, 2018 to March, 2018 and April, 2018 to June, 2018, serial 4A of Table 4 shall not be furnished.”

· Earlier this was waived till December, 2017

· Serial 4A of Table 4 requires the composition dealer to furnish details of inward supplies received from a registered supplier (other than supplies attracting reverse charge).

2. No e-way bill required for movement of empty cylinders for packing of LPG for reasons other than supply.

· Rule 138 (14) concerning e-way bills amended.

· One more situation where no e-way bill will be required for movement of goods prescribed. Following clause (o) inserted in rule 138(14):�“(o) where empty cylinders for packing of liquefied petroleum gas are being moved for reasons other than supply.”

3. Rule 133(3) regarding the powers of the anti-profiteering authority amended

Where the eligible person does not claim return of the amount or is not identifiable; The authority can now order:

· the deposit of the amount (equivalent to the amount not passed on by way of commensurate reduction in prices along with applicable interest at the rate of eighteen per cent)

· @ 50% each in the Consumer Welfare Fund of Centre (Section 57 of CGST Act) and Consumer Welfare Fund of the respective State (Section 57 of SGST Act).

4. Second proviso to Rule 83(3) regarding examination for GST Practitioners amended

· Time limit for GST Practitioners [only those covered by Section 83(1)(b) i.e. Sales Tax Practitioner or Tax Return Preparer enrolled in GST] to clear the stipulated exam increased to 18 months from one year which means that the Sales Tax Practitioner or Tax Return Preparer to remain enrolled as GST Practitioner are required to pass the exam conducted by NACIN within a period of 18 months from the appointed date (July 1, 2017).

· Time limit for other GST Practitioners in terms of first proviso to Rule 83(3) is yet to be fixed

5. Changes made in application for enrolment as GST Practitioner (GST PCT-01)

With effect from 01st July, 2017, in FORM GST PCT-01, in PART B,

(a) against Sl. No. 4, after entry (10), the following inserted-

“(11) Sales Tax practitioner under existing law for a period of not less than five years

RECENT AMENDMENTS MADE INTHE GST PROVISIONS/ RULES


(12) Tax return preparer under existing law for a period of not less than five years”;

(b) after the “Consent”, the following declaration inserted-

“(iv) I have not been convicted by a competent court.”

6. Changes made in Form GST RFD-01

In FORM GST RFD-01, in Annexure-1

(a) for Statement 1A, a new statement has been substituted. The new statement requires the GSTIN of the supplier to be mentioned. Statement 1A is to be

filed by persons claiming refund on account of inverted rate structure.

(b) for Statement 5B also, a new Statement has been substituted.

The new statement requires the GSTIN of the supplier to be mentioned. Statement 5B is required to be filed for a refund claim on account of deemed exports.

7. Second proviso added to Rule 37(1) of CGST Rules

· Rule 37(1) requires reversal of ITC where value of supply is not paid within the stipulated period (i.e. within a period of 180 days from the date of issue of invoice by the Supplier)

· First proviso deems value to be paid where supplies are made without consideration in terms of Schedule I

· Second proviso now added also deems value to be paid in cases covered by Section 15(2)(b) i.e. any amount which the supplier is liable to pay in relation to supply which has been incurred by the recipient.

8. Formula for refund on account of inverted duty structure under Rule 89(5) earlier substituted w.e.f. 18.4.2018 is now made effective retrospectively w.e.f. 01.07.2017

· Maximum Refund Amount = {(Turnover of inverted rated supply of goods and services) x Net ITC ÷ Adjusted Total Turnover} - tax payable on such inverted rated supply of goods and services.

9. Refund in certain cases (UINs etc; Section 55 of CGST Act)

· Rule 95(3): The refund of tax paid by the applicant shall be available if-

(a) the inward supplies of goods or services or both were received from a registered person against a tax invoice [ and the price of the supply covered under a single tax invoice exceeds five thousand rupees, excluding tax paid, if any]

· Rule 95(3) (a) was amended earlier wherein above crossed portion was omitted vide Notification No. 75/2017-Central Tax dated 29.12.2017. The amendment has now been made effective retrospectively with effect from 01.07.2017


10. Refund of Compensation Cess

· Second Proviso to Rule 97(1) inserted by virtue of which 50% of the Compensation Cess amount, determined under Section 54(5) shall be deposited in the Consumer Welfare Fund; the rest 50% shall go the Consumer Welfare Fund of State.

11. Common Unique Enrolment number for transporters with registration in more than one state

Rule 1(A) inserted after Rule 58(1)

· A transporter who is registered in more than one State having the same PAN, may apply for a unique common enrolment number by submitting the details in FORM GST ENR-02 using any one of his GSTIN, and

· upon validation of the details furnished, a unique common enrolment number shall be generated and communicated to the said transporter

· Once a transporter has obtained a unique common enrolment number, he shall not be eligible to use any of the GSTIN for the purposes of E-Way Bill (Chapter XVI)

12. Time limit to file final report by proper officer inspecting the vehicle increased.

· Following proviso inserted after Rule 138C (1)

Provided that where the circumstances so warrant, the Commissioner, or any other officer authorised by him, may, on sufficient cause being shown, extend the time for recording of the final report in Part B of FORM EWB-03, for a further period not exceeding three days.

13. Now summary of order passed under Section 129 (Detention/seizure of goods & conveyances in transit) or Section 130 (Confiscation of goods or conveyances and levy of penalty) has to be uploaded in Form GST DRC-07

· Rule 142(5) amended which now reads as under:

A summary of the order issued under sub-section (9) of section 73 or sub-section (9) of section 74 or sub-section (3) of section 76 or section 129 or section 130 shall be uploaded electronically in FORM GST DRC-07, specifying therein the amount of tax, interest and penalty payable by the person chargeable with tax.

The bold portion added by the present amendment.


*PART-I

In the GST regime, of late, the Show Cause Notice (hereinafter called SCN) has started pouring in.

In last about ten months, there had been audits and investigation in respect of transitional credits

or otherwise – which led to issuance of Show Cause Notice (hereinafter called SCN). The SCN

were issued under the regime of (a) Central Excise, (b) Service Tax etc. primarily under Section

11A of the Central Excise Act, 1944 within a period of two years from the relevant date (time limit th

of one year upto 14 May, 2016). However, where the Department was alleging fraud, collusion,

willful mis-statement and suppression of facts, with an intent to evade payment of duty, demand

can be raised within a period of five years. In other words, the department can issue SCN within a

period of five years by invoking the extended period of limitation.

However, no SCN can be issued seeking to demand tax/duty for a period more than five years as

has been held in the case of CCE Vs. Pashupati Spinning & Weaving Mills Ltd

MANU/CE/0140/2012 (Tri) and also Endurance Technologies (P) Ltd Vs. CCE

MANU/CE/0381/2012 (Tri). However, where there is continuous and recurring obligation on

the part of assessee, then the period of five years shall not be apply as has been held by the Five

Member Bench of Tribunal in the case of Bombay Hospital Trust Vs. CCE 2005(188) ELT 374 –

where medical equipments were imported without payment of custom duty with a condition that

the certain percentage of patients shall be treated free and such condition has not been fulfilled –

no time limit shall apply. Under GST regime, Section 73 of CGST Act, lays down the time limit

(normal period) within which, the SCN is required to be issued to the assessee. Section 74 of CGST

Act, lays down time limit laying extended period of limitation.

___________________________________________________________________________________________

* Contributed by Mr. P. K. Mittal, B.Com, LL.B & FCS, and member of ICSI-GST Core Advisory Group

SHOW CAUSE NOTICE ITS INGREDIENT,

EXAMINATION AND CROSS EXAMINATION

OF WITNESSES WHOSE STATEMENT

RELIED UPON BY DEPTT AND BY PARTY


SERIVICE OF SCN IS MANDATORY

No demand can be raised without issuance of SCN – CCE Vs. Akay Cosmetics 2005(182) ELT 294

SC. Here issuance means actual service of notice and not merely issuance of a notice by the

Department without its actual service upon the party . In the case of Union of India and Ors. v.

Madhumilan Syntex Pvt. Ltd. MANU/SC/0550/1988 : 1988 (35) ELT 349 (SC), this Court held

that the demand raised without notice was invalid. Section 11A clearly proceeded to say that prior

show-cause notice must be issued to the person against whom any demand on grounds of short-

levy or non-levy was proposed and, therefore, post-facto show-cause notice cannot be regarded

as adequate in law.

SCN IS MUST EVEN IF PARTY ADMITTED LIABILITY

Even if the party has agreed to pay the duty during investigation stage, yet the adjudication of SCN (i.e. service of SCN, receiving reply to SCN, grant of reasonable opportunity of personal hearing and passing of adjudication order is must)-Balaji Vegetables Vs. CCE 1999 (108) ELT 802; Saphai Saw Mills Vs. CCE 1999 (109) ELT 197. Despite the fact that the duty has been deposited (either with protest or without protest), SCN is a must as has been held in AR Plastic Vs. CCE 2004( 171 ELT 413 and also Veera Spinning Mills Vs. CCE 2001(131).

No demand can be confirmed either upon Director or on partners unless SCN has been served upon them by the Department – Prabhat Forging Vs. CCE 2002(139) ELT 720. Similarly no tax and penalty can be confirmed on employee unless he had been served with SCN setting out his role in the commission of offence or evasion of duty– Pfizer Ltd GVs. CCE 2001(131) ELT 251 (Tri).

In case of partnership firm, SCN must be served upon the firm and the service of notice only upon the partner is not a good service and shall not be deemed to be service upon partnership firm. Nityanand Nirmal Vs. CCE 1999(109) ELT 522 followed in CCE Vs. Sompura Ceramics 2001(130) ELT 195 (Tri).

MERE A LETTER DEMANDING DUTY/TAX IS NOT SCN

A communication sent by the Department either in the form of directions or suggestion or advice shall not be construed as SCN as SCN requires clear, specific unambiguous charge, alleged violation of law or rules, clear and specific demand of duty/tax/penalty and grounds for levy of penalty and above all, if the extended period is invoked, then the reasons/grounds for invocation of extended period. Metal Forgings Vs. UOI 2003( 146) ELT 241 SC. However, every communication cannot be equated with SCN unless the communication contains all the necessary ingredients, as stated above in this para , of SCN are contained as has been held in the case of J K Synthetics Vs. UOI 2009(234) ELT 417 (Delhi HC) and CCE Vs. Merchant Impex 2012( 276)ELT 458 Karnataka DB.

A letter issued by Supdt/AC asking the party to pay Tax/Duty is not a valid notice and is in violation of principal of natural justice Steel Ingots Vs. UJOI 1988 (360 ELT 529(MP): Ennore Steel Vs. UOI 1990(47) ELT 363 Madras. cannot be treated as SCN.


THERE IS NO PRESUMPTION EVERYONE KNOWS THE ENTIRE LAW

It is generally said that ignorance of law is no excuse as has been held in Bharat Electronics Ltd Vs. CCE 2005(142) STC and also in State of UP vs. Twin Jewellers Association 2006(147) STC 354. However, there are some old judgments of Hon'ble Supreme Court wherein it has been held that there is no presumption that everyone known all laws. Motilal Padampat Sugar Mills Co Ltd Vs. State of UP AIR 1979 SC 621 and also in D Cawasji & Co Vs. State of Mysore 1978(2) ELT J154 SC.

WHO CAN ISSUE SCN ? – ITS EFFECTS

The Section 73 and 74 of CGST Act authorize “proper officer” to issue SCN and the proper officer has been defined in Section 2(91) to mean “Commissioner” or the officer of the Central Tax who is assigned that function by the Commissioner in the Board. What is the affect if the SCN has been issued by a person who is not a “proper officer”?

In Godrej Soap Vs. CCE 2004(174) ELT 35 (Three Member Bench) of the Tribunal has held that SCN issued by a person who is not authorized to do so, SCN is void in totality and good part of the SCN, cannot be severed from the bad part. In Pahwa Chemicals (P) Ltd Vs. CCE AIR 2005 SC 1532 = 2006(181) ELT 339 has held that if the law authorized proper officer to issue and adjudicate the SCN, the Board Instructions/Circular can neither curtail nor enlarge the power of adjudication.

CONTENTS OF SCN

The CBEC has issued a Master Circular No.1053/02/2017-CX dated 10.3.2017 which lays down guidelines for drafting of SCN. It, inter-alia, says that the SCN should include (a) introduction of the assessee (b) introduction of the case (c) legal framework (d) factual statement and appreciation of evidence (e) discussions, facts and legal frame work (f) allegation on limitation (g) calculation of duty and other amounts due (h) statement of charges/allegations/apprehensions (i) Authority who will adjudicate. Any demand without issuance of SCN is void as has been held in Gokak Patel Vs Volkart Ltd 1987 (53) SC.

The Supreme Court CCE Vs. Brindavan Beverages 2007 (213) ELT 487 SC observed “SCN is foundation on which Department has to build its case. If allegations in SCN are not specific and on the contrary vague, lack details and/or unintelligible, it is sufficient to hold that the notice is not given proper opportunity to meet allegations of SCN.

The SCN must specify what is the offence alleged otherwise the proceedings are invalid as has been held in CCE Vs. HMM Ltd 1995(76) ELT 497 SC and Kaur & Singh 1997(94) ELT 289 SC. The SCN which has demanded incorrect amount of duty would not be invalid on this count i.e. Section 11A of Central Excise Act. Jagdish Sales Corpn Vs. CCE 2002(144) ELT 73 (Tri).


SUPPLY OF DOCUMENTS RELIED UPON BY THE DEPARTMENT IN THE SCN AS WELL AS SUPPLY OF NON-RELIED UPON DOCUMENTS

The Bombay High Court in the case of Silicon Graphics System (India) Pvt. Ltd. Vs. Union of India MANU/MH/0963/2006 : 2006 (204) ELT 247 (Bombay) has held that un-relied upon documents may not be relevant for department but the same may be relevant for effected party to file their reply to the show cause notice and such request cannot be held to be frivolous request. The Board vide its circular No. 171/05/96-CX : MANU/EXCR/0010/1996 dated 2/2/1996 have also observed that the documents which have not been relied upon in the show cause notice may be returned to the party.

The Tribunal in the case of Hindustan Dyeing & Printing Works vs. Commissioner of C. Ex. (03.07.2013 - CESTAT - Delhi) : MANU/CE/0444/2013, has observed as under:-

Fairness of the adjudication requires the department to return back all the relied upon/non-relied upon documents. No reason on the part of the Revenue can justify such non-return of the documents. I really sometimes fail to understand as to what can be the objection of the Revenue for return of such seized documents, which they no longer require and which admittedly belong to assessee.

The non-supply of relied upon documents amounts to violation of principal of natural justice (a) Sanghi Textiles Processors v. UOI 1993 (65) ELT 357; (b) Methodex Systems v. UOI MANU/MP/0486/2000;(c) Balakrishna Dass and Sons v. CC, New Delhi MANU/CE/4102/2001; and (d) PGO Processors Pvt. Ltd. v. CCE 2000 (122) ELT 25.

The Hon'ble Tribunal in the case of Anagha Surface Transport Pvt. Ltd. vs. The Commissioner of Customs and Central Excise (19.06.2008 - CESTAT - Bangalore) : MANU/CB/0431/2008

We are of the considered opinion that the department is bound to supply all the relied upon documents in the show cause notice. The assessee is also entitled to take copies from the seized documents, even if the same had not been relied in the show cause notice for the purpose of raising effective defense.

The Division Bench of Hon'ble Allahabad High Court in Novamet Industries & Ors. v. Union of Inda & Anr. MANU/UP/0912/2007 after referring to circular issued by the Department of Revenue concerning seizure of books and records held that non-relied seized goods and documents should be released to the assessee, in cases where show cause notice is not issued, within six months from the date of the seizure. Once the show cause notice is issued to the party, the document/records which have not been relied upon may be returned to the party under proper receipt.

The Hon'ble Delhi High Court in Vikas Gumber v. Commissioner of Customs MANU/DE/4998/2009 observed that the Departmental Authorities are under obligation to release such documents as are not relied upon by them within a reasonable time.


PART-IIIn the process of adjudication of Show Cause Notice (hereinafter called SCN), examination and cross examination of respective witnesses, (whose testimony is relied upon both the department and assessee), is the most important tools both in the hands of Department and Assessee in order to strengthen their respective case before the Appellate Authorities. It is very common that the Department, during the stage of investigation, apply all methods (both fair and foul) in order extracts of the statements of their choice (generally secure admission /confirmation /acknowledgements from the witnesses in order to buttress their case) so that their job, during the investigation, is thoroughly simplified and there is no need to carry out all-round investigation which the Department is duty bound to prove clandestine removal of goods. Normal rule is that if the witness is not cross-examined, then the examination-in-chief/statement of that witness cannot be termed as evidence and, therefore, cannot be read in evidence and cannot be relied upon by the Department in support of their case.

In accordance with the provisions of Section 9D of Central Excise Act, (equal to Section 136 of CGST Act) when any statement given by any person is relied upon by the Adjudicating Authority, they should first intimate the admission of said statements. Thereafter, if the notice seek cross examination, cross should be provided and an opportunity should have been provided for the assessee to contest the contents of the statement which will necessary during cross examination. Before cross-examination of witness, it is absolutely necessary that there shall have to be examination of the witness(s) as has been held in the following cases.

1) Jindal Drug vs. Union of India [MANU/PH/1117/2016 : 2016 (340) ELT 67 (P & H)];

2) G Tech Industries vs. Union of India [MANU/PH/1118/2016 : 2016 (339) ELT 209 (P & H)];

3) CCE, Meerut I vs. Parmarth Iron Pvt. Ltd. [MANU/UP/2113/2010 : 2010 (260) ELT 514 (All)];

4) Goyal Tobacco Co. Pvt. Ltd. vs. CCE Jaipur I] MANU/CE/0031/2017 : 2017 (348) ELT 720 (Tri-Del)];

5) R D Plast vs. CCE, Delhi I [MANU/CE/0490/2016 : 2017 (357) ELT 881 (Tri-Del)]

Bhartiya Loha Udyog Pvt. Ltd. and Ors. vs. Commissioner of CGST, Customs, Central Excise and Alwar (28.02.2018 CESTAT - Delhi) : MANU/CE/0127/2018

In view of the catena of judgments as cited above, so long as there was no any examination of the witnesses (who may be employees of the assessee, raw materials suppliers, transporters, buyers of finished goods, supplier of plant and machinery, experts or any person whose statement is heavily relied upon by the Department), by virtue of Section 136 of CGST Act, their statements cannot be relied upon by the Department in support of their case against the assessee/party/appellant.


Section 106 of the Indian Evidence Act in terms does not apply to a proceeding under the Excise, Customs Acts etc. However, the Supreme Court has pronounced that the principle underlying Section 106 is of universal application and therefore, shall apply to proceedings under Indirect Tax Laws now GST. Under that section, when any fact is especially within the knowledge of any person, the burden of proving that fact is upon him has been held by the Supreme Court in the case of Amba Lal Vs. Union of India MANU/SC/0090/1960 The Supreme Court once again in the case of Shambu Nath Mehra v. The State of Ajmer MANU/SC/0023/1956: 1956CriLJ794 after considering the earlier Privy Council decisions on the interpretation of section 106 of the Evidence Act, observed as under:-

"The section cannot be used to undermine the well established rule of law, that, save in a very exceptional class of case, the burden is on the prosecution and never shifts."

The Supreme Court in the case of Collector of Customs Vs. D Bhoormal MANU/SC/0237/1974 has held that provisions of Section 106 Indian Evidence Act shall apply to proceedings under Customs & Excise Act.

The necessity of allowing cross-examination of the witnesses during departmental adjudication proceedings is well-settled and accepted, as is clear from the following decisions of the Hon'ble Supreme Court and High Courts:

(i) Laxman Exports Ltd. v. Collector of Central Excise MANU/SC/0548/2002: (2005) 10 SCC 634

(ii) Swadeshi Politex Ltd. v. Commnr. Of Central Excise 2000 (122) ELT 641 (SC)

(iii) Arya Abhushan Bhandar v. Union of India MANU/SC/0552/2002 : 2002 (143) ELT 25 (SC)

(iv) Gyanchand Sant Lal Jain v. Union of India 2001 (136) ELT 9 (Bombay High Court)

(v) Kellogg India Pvt. Ltd. & Madhukar Patil v. UOI MANU/MH/0802/2005: 2006 (193) ELT 385 (Bombay High Court)

(vi) Ripen Kumar v. Deptt. of Customs 2003 (160) ELT 60 (Delhi High Court)

(vii) New Decent Footwear Industries v. UOI MANU/DE/0821/2002: 2002 (150) ELT 71 (Delhi High Court)

(viii) M/s India Sales Corporation and Shri Tayeb Haroon v. Commissioner of Customs MANU/TN/0625/2013

(ix) The Division Bench of Hon'ble Delhi High Court in Basudev Garg v. Commissioner of Customs MANU/DE/1876/2013.

It has been repeatedly held that at the stage of adjudication, it is the right of an assessee to seek cross-examination of the witnesses, whose statements are sought to be relied upon by the Revenue and that the cross-examination is necessary so that it could be established as to whether the statements of witnesses so recorded had been given voluntarily or whether the same are based on personal knowledge or legal records or on hearsay or the statements were extracted.


The Hon'ble Delhi High Court in the case of New Decent Footwear Industries v. Union of India - MANU/DE/0821/2002 : 2002 (150) E.L.T. 71 (Del.) and of Hon'ble Punjab & Haryana High Court in the case of C.C.E. v. Hindustan Polyester Lines - 2009 (236) E.L.T. 44 (P & H), wherein Hon'ble High Courts have held that denial of cross-examination of the witnesses on whose evidence the allegation against the assessee is based, would amount to violation of principles of natural justice hence any order passed is null and void.

The Delhi High Court in the case of Directorate of Revenue Intelligence Vs. Vinod Kumar MANU/DE/1005/2004 has observed as under:-

The only right available to an accused is to rebut or demolish the said report by way of cross examination of expert or in the alternative, produce another expert to counter the opinion given in the report or rely upon the authoritative text books to challenge the opinion given by the expert.

Now, there are some of the following landmark judgments on the cross-examination of expert

(i) (Collector v. Kiran Overseas 1996 (88) E.L.T. A187 (SC) Expert report/opinion if disputed - Cross examination essential otherwise report to be ignored.

(ii) MANU/GJ/0063/1985 Arunodaya Mills Ltd. And Anr. Cross examination of experts not allowed-assessment order quashed. Assistant Collector directed to decide the question afresh; according to law, after giving an opportunity to the petitioner to cross-examine the two experts as well as evidence on record.

(iii) MANU/CE/0387/1983 Walker Anjaria and Sons Pvt. Ltd. Evidence-Cross Examination- Natural Justice violated if cross examination of experts so to their status and to rebut their opinion has been denied - Matter remanded for re-adjudication without either party being restricted to evidence already on record-Section 35C(1) of the Central Excises and Salt Act, 1944.

(iv) MANU/CM/2330/2001 Carrara Marble and Granite Industries Expert's opinion-Cross-examination-Reputation and age of institution to which expert belong not enough to justify refusal of cross-examination of those who tested samples.

(v) MANU/CC/0032/1993 Vijayalakshmi Industries: Adjudication-Natural justice-Cross-examination-Expert opinion relied on by

department but expert not made available for cross-examinational though requested-Principles of natural justice violated.


The Supreme Court in the case of Shalimar Rubber Industries v. CCE - MANU/SC/1023/2002: 2002 (246) E.L.T. 248 (S.C.), held that no reliance can be placed on the oral statement of the raw material suppliers as he is not subjected to any examination and cross examination during adjudication.

As per provisions of Sec. 9D of the Central Excise Act 1944 (equal to Section 136 CGST Act), such statements recorded loose its relevance and evidentiary value if cross examination is not allowed. He relied upon the following case laws in support of his arguments:

(a) 2010 (261) ELT. 803 Shree Industries Ltd. Vs. CCE

(b) MANU/UP/1995/2014: 2014 (309) ELT. 411 (All) Continental Cement Co. Vs. UOI

(c) MANU/GJ/0467/2014: 2014 (308) ELT. 655 (Guj) CCE Vs. Saakeen Alloys Pvt. Ltd.

CROSS-EXAMINATION OF CHEMICAL EXAMINER

The Hon'ble Supreme Court in the case of Commissioner of Customs v. Punjab Stainless Steel Industries MANU/SC/0402/2001: 2001 (132) ELT10 (SC) has held that the cross-examination of the Chemical Examiner, whose report has been relied upon the Department, is permissible. Needless to say, if the cross is not allowed, his Report cannot be relied upon by the Department.

CROSS-EXAMINATION OF CO-NOTICEE

The Tribunal in the cases of Anil Pannalal Sarogi v. CC 2009 (241) E.L.T. 219, Sai Kripa Exim (P) Ltd. v. CC, reported in MANU/CB/0048/2003 : 2003 (156) E.L.T. 225 (Tri.) has held that cross-examination of co-noticee, if requested, cannot be denied.


“Advance Ruling” means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in Section 97(2) or Section 100(1), in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.Any advance tax ruling is a written interpretation of tax laws. It is issued by tax authorities to corporations and individuals who request for clarification of certain tax matters. An advance ruling is often requested when the taxpayer is confused and uncertain about certain provisions.

Objectives of Advance Ruling under GST· Provides clarity: By providing certainty for tax liability in advance in relation to a future

activity to be undertaken by the applicant, it provides clarity. · Attract Foreign Direct Investment (FDI): By clarifying taxation and showing a clear

picture of the future tax liability to Non-Residents, it helps in attracting FDI. · Reduction in chaos: By reduction in litigations & costly legal disputes, it helps in reduction

in chaos. · Saving of Time & cost: By giving decisions in a timely, transparent and inexpensive

manner, it helps in saving both time and cost.

Now let's discuss some important Advance Rulings by Authorities for Advance Ruling (AAR):

IMPORTANT RULINGSBY ADVANCE AUTHORITY

I. Case Name: In re M/s Bahl Paper Mills Ltd.

Name of the Entity

Name of AAR

Appeal Number

Date of Judgement/Order

Brief Issue

M/s Bahl Paper Mills Ltd.

Uttarakhand AAR

Advance Ruling No. 03/2018-19

04th May, 2018

1) Whether IGST payable by importer on ocean freight in case of CIF basis contract?

2) Supporting document required by Importer under RCM to take the credit of IGST paid on ocean freight under CIF basis contract.

3) Whether credit will be available in GST of office fixtures & furniture, A.C. plant & sanitary fittings on newly constructed building on its own account for furtherance of business and accounting entry is capitalized in books of account?


Category as per Section 97(2)

Brief of Order passed

97(2)(b), (d) and (e)

1) An importer is required to pay IGST on the ocean

freight in case of CIF basis contract.

2) Credit of IGST paid can be taken on the basis of

invoice/challan issued.

3) On sanitary fittings- No ITC will be available. On

fixtures & furnitures and A.C. plant- ITC will be

available provided that the registered person has not

claimed depreciation on the tax component of the cost

of the capital goods and plant and machinery under

the provisions of the Income-Tax Act 1961.

1) Whether IGST payable by importer on ocean freight in case of CIF basis contract?

In this regard it is observed that vide notification no. 8/2017- Integrated Tax (Rate) dated 28.6.2017 and notification no. 10/2017- Integrated Tax (Rate) dated 28.6.2017 an importer is required to pay IGST on the ocean freight. Therefore as on date, even if the importer has already paid IGST on CIF value imported goods, he is still required to pay IGST on ocean fright. Authority also observe that the applicant has also submitted, a copy of Special Civil Application No. 726 of 2018 filed by Mohit Minerals (P) Ltd. before Hon'ble High Court of Gujarat in this regard. Authority observes that mere filing of an application before the Hon'ble High Court does not render a notification issued by the Central Government ultra vires until or unless the same is turned down by the competent court.

2) Supporting document required by Importer under RCM to take the credit of IGST paid on ocean freight under CIF basis contract.

� Credit of IGST paid can be taken on the basis of invoice/challan issued.

3) Whether credit will be available in GST of office fixtures & furniture, A.C. plant & sanitary fittings on newly constructed building on its own account for furtherance of business and accounting entry is capitalized in books of account?

� “As per explanation to the Section 17 of CGST Act, 2017 credit is not available in respect of land, building or any other civil structure ……………………”. Therefore, in view of the aforesaid


provisions of law, Cenvat Credit of GST paid in relation with building or any other civil structure is not available and since sanitary fittings are integral part of building or any other civil structure, cenvat credit of GST paid on such sanitary fittings is not available. However, credit of GST is available on office fixtures & furniture, A.C. plant. To further strengthen the view, the authority rely on the CBIC Board Circular No. 943/04/2011-CX dated 29th April 2011 wherein it was clarified that the goods such as furniture and stationery used in an office within the factory are goods used in the factory and are used in relation to the manufacturing business and hence the credit of the same is allowed. Further the Hon'ble CESTAT, Principal Bench, New Delhi in the case of M/s Balkrishna Industries Ltd Vs CCE, Jaipur-I vide its Final Order No. A/53217-53218/2015 dated 09.10.2015 reported in 2016 (335) ELT 559 (Tri-Del) has held that the credit on duty paid on air-conditioners installed in the office of factory is admissible. Therefore the credit of input tax charged on the supply of fixtures & furniture and A.C. plant is admissible under CGST/SGST Act. 2017, provided that the registered person has not claimed depreciation on the tax component of the cost of the capital goods and plant and machinery under the provisions of the Income-Tax Act 1961.

II. Case Name: In Re. IT Development Agency (ITDA), Govt. of Uttrakhand, Dehradun

Name of the Entity

Name of AAR

Appeal Number

Date of Judgement/Order

Brief Issue

Section/ Rules of the Act/ Rules involved on which ruling issued

Category as per Section 97(2)

Brief of Order passed

M/s. IT Development Agency (ITDA), Govt. of Uttrakhand, Dehradun

Uttarakhand AAR

Advance Ruling No. 03/2018-19

th29 May, 2018

Leviability of GST, if any, on the services or material procured by Govt. Agency from Govt./ Govt. Authority

Section 2(53) & 2(69)(C) of Uttarakhand Goods & Services Tax Act, 2017

97(2)(e)

Government/Government Authority providing services to other Government/Government Authority is exempted from GST whereas supply of goods by one Government/Government Authority to other Government/Government Authority is not exempted from GST


· An application under section 97(1) is filed by project co-ordinator (Finance & Admin.), Information Technology Development Agency (ITDA), Govt. of Uttarakhand, Dehardun registered under GST seeking an advance ruling on the question whether the services or material procured by ITDA, a local authority (within the meaning of Section 2(53) & 2(69)(C) of Uttarakhand Goods & Services Tax Act, 2017) under the control of Uttarakhand Government, from the Indian Institute of Technology (IITs) which is also a Government/Government Authority (in terms of Section 2(53) of the Central Goods and Services Tax Act, 2017 wherein ” Government” mean the Central Government), is exempt from GST.

· Serial No. B of Part 3 of GST Tariff - Services (Chapter 99) provides the list of nil rated/fully exempted services. On going through the said list, one finds that Government/Authority providing services to other Government/Authority is exempted from GST.

· Thus, in view of above, the services received by the applicant from IIT, Mumbai is exempt from GST. As regard to the supply of goods by one Government/Government authority to other Government/Government authority is concerned, there is no exemption from GST in this regard.


1. Maharashtra Tops In E-way Bill Generation followed by Gujarat, Karnataka, Haryana & U.P. respectively.

• M aharashtra has emerged as the leading state in generating e-way bills during April- June 2018.

th • T otal e-way bill generated till 30 June are 11,19,92,869.

2. GST collection rises to Rs 95,610 crore in June.

• GST collections in June rises to Rs 95,610 crore from over Rs 94,016 crore in May.

• O ut of which CGST collection is Rs 15,968 crore, SGST Rs 22,021 crore, IGST Rs 49,499 crore and Cess Rs 8,122 crore.

• T he June collections figures indicate that revenues are now stabilising and inching close to Rs. 1 trillion mark.

3. No GST on free banking services, clarifies Government.

• T he ambiguity arose after notices were sent to lenders for non-payment of service tax under the pre-GST regime.

• I n 32 pages of 'Frequently Asked Questions' (FAQs) for the financial services sector, the Central Board of Indirect Taxes and Customs (CBIC) clarified there would be no levy on services provided without consideration (free) to other than related/distinct persons (Link to FAQs: http://www.cbic.gov.in/resources//htdocs-cbec/gst/FAQs_on_Financial_ Services_Sector.pdf).

• F ree banking services like cheque book issuance and ATM withdrawals will not attract GST late payment charges.

• O utstanding credit card bills and purchase of insurance policies by NRIs will attract the levy.

• I n other important clarifications, CBIC has noted that ATM machines do not trigger a GST registration liability —they are not a place of business. Beside, derivatives, forward and futures contracts are not subject to GST, it said. Only service charges or brokerage would be.

in


4. GST boon for flexi staffing industry

• T he input tax credit benefit under GST prompted companies to increase their hiring of temp employees such as sales and support staff, resulting in an up to 60% annual growth for staffing firms such as Team Lease Services, Ikya Human Capital Solutions (a division of Quess Corp.), Randstad, Kelly Services, Adecco and Spectrum Talent Management.

• A ccording to TN Hari, head of human resources at online grocer Big Basket, the introduction of GST has totally changed the game on staffing services. Prior to GST, service tax was a deterrent, so cost-conscious companies tried to in source staff even though hiving it to a third party made strategic sense. “After GST, one can set off the entire amount paid on outsourced staffing cost against the GST payable on the goods sold,” said Hari.

5. Proposal to include Natural Gas & Aviation Turbine Fuel (ATF) under GST gets mixed reaction

• A t an event in New Delhi, a GST Council official revealed that a proposal to include natural gas (on an experimental basis) and ATF could also be brought in before including petrol and diesel.

• S ome states have strongly opposed inclusion of petrol and diesel under GST even as global oil prices have skyrocketed adding to the burden on consumers.

• T he remaining are in favour of including natural gas and ATF under GST compared to passenger fuel due to lower revenue loss burden.

• A ndhra Pradesh finance minister Yanamala Ramakrishundu reacted strongly to the statement and opposed inclusion of natural gas under GST in a letter to the chairman of the GST Council.

• “ Andhra Pradesh got revenue of Rs 5.23 billion on sale of natural gas during the year 2017-18. Being a producer of natural gas, our state will lose substantial revenue if it is included under GST as our ultimate consumption is less than our production,” Ramakrishundu said.

• S ome states do not find any harm in including natural gas and ATF under GST but have reservations so far as petrol and diesel are concerned. But Maharashtra is in favour of including petrol and diesel under GST.

• A ssam too is in favour of inclusion of petrol and diesel, only after GST stabilises.


6. Government mulls GST refund mechanism for foreign tourists at airports.

• A provision for GST refund to tourists has been made in the GST law, but it is yet to be operational.

• F oreign tourists may soon get to claim GST refunds at airports at the time of exit as the revenue department is working on a mechanism to refund taxes paid by them on local purchases.

• I nitially, only purchases made by tourists from big retailers would be eligible for Goods and Services Tax(GST) refunds at the airports when the tourist is leaving the country, an official said.

7. Finance Ministry likely to launch Annual GST Return Forms in next Council meet

• T his comes after finance ministry complained of not enough information being shared by taxpayers in the monthly GSTR Forms.

• T he Annual GST Return will help the government with invoice matching thus aiding in cross-checking returns to avoid tax evasion. The form will also be useful in checking any wrong claims of credit and refunds.

8. Conversion of GSTN to State-owned entity still a few months away

• C onversion of the GSTN into a state-owned entity is still a few months away with approvals from central and state governments yet to come through.

• G STN Chairman Ajay Bhushan Pandey told that the procedural formalities of making GST's information technology backbone into a 100 percent government-owned entity are currently underway. “I hope that within the next few months, this process will be over,” he said.

• T hat's after the GST Council recently approved a proposal allowing the Government to acquire the 51 percent stake held by private entities in GSTN. Subsequently, the Central Government will acquire a 50 percent stake in GSTN while State Governments will collectively hold the remaining 50 percent. The Central and State Governments currently hold 24.5 percent stake each in GSTN while the remaining 51 percent is held by HDFC Ltd., HDFC Bank Ltd., ICICI Bank Ltd., NSE Strategic Investment Co and LIC Housing Finance Ltd., according to data on GSTN's website.

• T axation is a State function and should be undertaken by a Government-Run Body, Pandey said. “In the beginning, the whole programme had to take off and therefore, considering the exigencies of the requirement, this formulation of GSTN as a private entity was worked out,” he added.


9. International Passengers need not pay GST at Indian Airports' Duty-Free Shops.

• I nternational passengers buying goods at airport 'duty-free' shops will not be subject to Goods and Services Tax, and the revenue department will soon clarify on this exemption, an official said.

• F ollowing an order passed in March by the New Delhi bench of the Authority for Advance Ruling stating that GST would be leviable on sale of goods from 'duty-free' shops at airports, the revenue department had received many representations seeking clarification on the issue.

• “ The position of the revenue department has always been that we cannot export our taxes. We will issue a clarification stating that duty-free shops would not levy GST,” the official said.

10. GST to be levied on goods stored in customs warehouse only on final clearance: CBIC.

• I n a circular to principal chief commissioners and chief commissioners, the GST policy wing of the CBIC said “transfer/sale of goods while being deposited in a customs-bonded warehouse” is a common trade practice whereby an importer files an 'into-bond' bill for entry and stores the goods in a customs-bonded warehouse.

• The importer then supplies such goods to another person, who then files an 'ex-bond' bill of entry for clearing the said goods from the customs-bonded warehouse for home consumption.

• T he circular said integrated tax shall be levied and collected at the time of final clearance of the warehoused goods for home consumption, which means at the time of filing the 'ex-bond' bill of entry.

• H owever, the value addition accruing at each stage of supply would be accounted for, on which GST would be payable at the time of clearance of the warehoused goods.

11. GST payers can approach jurisdictional tax officer to change email and mobile number

• T he revenue department had received complaints from Taxpayers that the intermediaries who were authorized by them to apply for registration on their behalf had used their own e-mail and mobile number during the process.

• T hese intermediaries are not sharing the user details with the Taxpayers.

• W ith a view to address this difficulty of the Taxpayer, a functionality to update e-mail and mobile number of the Authorized Signatory is available in the GST system.


• " The e-mail and mobile number can be updated by the concerned jurisdictional tax authority of the Taxpayer".

12. Government extends sale of pre-GST goods with stickers of revised price till July 31, 2018.

• A fter implementing GST from July 1' 2017, the government had allowed use of stickers with revised rates, alongside the printed MRP for pre-packaged items to reflect changes in selling price for three months till September 30, 2017. The deadline has been extended several times and the latest was April 30, 2018.

• T he deadline has now been further extended till July 31, 2018 on request made by manufacturers, packers and importers.

13. Second Special Drive Refund Fortnight held from 31.5.2018 to 16.6.2018

• T he Government has launched the second “Special Drive Refund Fortnight” from 31.5.2018 to 14.6.2018. In view of overwhelming response from exporters and pending claims, the period of Refund fortnight extended by two more days i.e. upto 16th June, 2018.

14. Government clears Rs 38,062 Crores refund claims of Exporters till June 16

• T he government has cleared pending Goods and Services Tax refunds to the tune of Rs 38,062 crores to exporters so far. “In all, Rs 21,142 crores (Integrated GST refunds), Rs 9,923 crores (RFD-01A refund by CBIC) and Rs 6,997 crores (RFD-01A refund by states), all totaling Rs 38,062 crores has been sanctioned till June 16, 2018,” the Central Board of Indirect taxes and Customs said in a statement.

15. No pure GST on petrol, diesel; 28% tax plus VAT a possibility.

• A peak tax rate of 28 percent plus states levying some amount of local sales tax or value added tax on petrol and diesel is likely to be the tax structure when the two auto fuels are covered under the Goods and Services Tax regime, a top government official said.

• T he peak GST rate plus VAT will be equal to the present tax incidence, which is made up of excise duty, levied by the central government, and VAT charged by the states.

• B ut before the two fuels are put under the GST, the Centre has to decide if it is willing to let go of the nearly Rs 20,000 crores of input tax credit it currently pockets by keeping petrol, diesel, natural gas, jet fuel and crude oil out of the GST regime that came into force from July 1, 2017, the official said.

• “ There is no pure GST on petrol and diesel anywhere in the world and so in India too it will have to be a combination of GST and VAT,” said the official, who is closely involved with the GST implementation.


• T he timing of including petrol products in the GST will be a political call which the Centre and states have to take collectively, he said.

16. India sees 20% rise in dollar millionaires despite GST impact: Report

• D espite adverse impact on GST implementation, India saw a 20 percent increase in both the number of dollar millionaires and their wealth in 2017 to emerge as the fastest growing market for high net population.

17. Prime Minister credits States for GST implementation.

• D escribing the GST as a fine example of cooperative federalism, Prime Minister Narendra Modi said the new system is a "festival of honesty" which has ended 'inspector raj' in the country.

• A s the new tax regime completes one year, the Prime Minister said if he has to credit anyone for the successful implementation of 'one nation one tax system, it is the States of our Nation.

• " GST is a great example of cooperative federalism, where all the states decided to take a unanimous decision in the interest of the nation, and then such a huge tax reform could be implemented in the country," he said.

18. GST Council to look at option of Centralized Appellate Authority.

• U nder the Goods and Services Tax law, each state is required to set up an Authority for Advance Rulings comprising one member from the Central Tax Department, and the other from the respective State.

• I n view of the confusion being created by contradictory rulings given by different authorities on the same or similar issues, the Finance Ministry is planning to set up a Centralized Appellate Authority which could reconcile the contradictory verdicts of different AARs.

19. Abolish IGST to make Tax System effective: Manish Sisodia.

• M anish Sisodia at an ASSOCHAM event in New Delhi said, he feels that IGST is a bad idea. In the last GST Council meeting, we got the figure of Rs 1, 81,418 Crore IGST which we have collected and is lying idle in an escrow account. This is neither in the account of State Government nor the Central Government.

• I t's not helping Central or State Governments or Traders as it is just lying idle. It's a loss to the economy.

20. GST evasion of Rs 2,000 Crores detected in two (2) months.

• T he Goods and Services Tax investigation wing has detected tax evasion of over Rs 2,000 crore in two months, and data analysis reveals that only one percent of over 1.11 crore registered businesses pay 80 percent of the taxes, a senior official said.


• T he CBIC member John Joseph said that like small businesses that are making mistakes while filing the GST returns, multinationals and big corporates, too, have slip-ups.

21. Government notices to firms for 'wrongly' claiming transitional credit under GST.

• T he Government has sent notices to companies for “wrongly” claiming transitional credit under GST, a move contested by these entities. Under the pre- GST regime, companies had personal ledger accounts(PLAs) to pay their excise duties. Under GST, they do not require PLAs. They have, instead, transferred their credits in PLAs to TRANS-1, a form for staking claims for taxes paid on pre- GST stock or what is termed transitional credit.

• T aking objection to that, indirect tax officials have sent notices to companies such as BR Agro, Chenab Textiles, Star Industries, Ritz Polymers, Gravita Metalsand Bharat Udyog.

22. GSTN to go in for third-party audit of its software: CEO Prakash Kumar

• G STN has decided to go in for third-party audit of its software developed by Infosys to ensure that all changes in law are adequately captured and its performance is not lagging on any count, a senior official said.

• G STN operates the IT backbone for collection of Goods and Services Tax (GST) data of over 1.11 crore registered business entities. A third-party audit will ensure that data filed with GSTN is adequately secured and there are no glitches.

23. GST provisions on TDS, TCS, Reverse Charge Mechanism deferred till September.

• A senior official said that the revenue department has decided to keep in abeyance GST provisions relating to Reverse Charge Mechanism, Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) for another three months till September end.

24. GST in smooth phase, simple return-filing key agenda for 2nd year: Adhia

• A dhia on one year of GST, listed out the benefits of the new tax regime saying it has reduced plethora of taxes, removed cascading effect of taxation and state check post, increased taxpayer base with much less possibility of evasion and brought about end-to-end electronic filing.

• He said, the glitches in the new system are over and we are in a smooth phase of implementation.

• H e further said that the Tax Officers are working on a single page return form which will be modular in nature and "user friendly". This year's main agenda would be to implement the new and simple system of filing of retur n s .


An

s: Q

1 –

D, Q

2 –

A, Q

3 –

A, Q

4 –

B, Q

5 -

D

QuizGST 1 E-way bill is not required to be generated for_________

A transporter, who is registered in more than one State having the same PAN, may apply for a unique common enrolment number by submitting the details in ___________using any one of his GSTIN.

E-Way Bill Number consists of___________

Consolidated e-way bill is generated in ___________

In case of Over Dimensional Cargo, e-way bill is valid for one day upto the distance of____________

a. Movement of empty cylinders for packing of LPG for reasons other than supply

b. Jewellary

c. Used household effects

d. All of the above

a. FORM GST ENR-02

b. FORM GST ENR-03

c. FORM GST EWB-02

d. FORM GST EWB-03

a. 12 digits

b. 15 digits

c. 11 digits

d. 18 digits

a. FORM GST ENR-02

b. FORM GST EWB-02

c. FORM GST EWB-01

d. FORM GST EWB-03

a. 100 Km.

b. 120 Km.

c. 50 Km.

d. 20 Km.

2

3

4

5

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