India: Indirect Tax Updates: Notification Of Customs Audit Regulations, 2018, Amendments In The Foreign Trade Policy, Exemption From Payment Of A Late Fee Under Profession Tax

Last Updated: 6 June 2018
Article by SKP  

Important rulings by Authority for Advance Ruling (AAR)

  • Whether the sale of imported goods outside India, without such goods entering into India at any stage, taxable under GST?

    AAR, Kerala has held that a transaction wherein a person registered under GST in India places an order for goods in China, and the Chinese supplier, on the directions of such person, ships the goods directly to a customer in the USA, GST will not be applicable in India since the goods cannot be said to have been imported in India in accordance with the provisions of the IGST Act, 2017. Furthermore, the position will not change even in a scenario wherein such goods are directly shipped by the Chinese supplier to such person's warehouse in the Netherlands, and thereafter sold to customers in and around the Netherlands.

    (2018-VIL-02-AAR - Synthite Industries Ltd)

  • Whether reinstatement and access charges paid by businesses to a municipality towards digging and restoration of roads in the course of their business, be taxable under GST?

    AAR, Maharashtra has held that recovering restoration charges by a municipality from business entities that have dug up a road cannot be equated to performing a sovereign function as envisaged under Article 243W of the Constitution. Thus, any reinstatement charges and any connected access charges paid to municipal authorities would be liable to GST under reverse charge mechanism.

    (2018-VIL-22-AAR - Reliance Infrastructure Ltd)

  • Whether services of running a restaurant or a canteen for an entity, to provide meals to employees of such an entity, would be classifiable as 'outdoor catering' services (taxable under GST at the rate of 18%) or as 'restaurant' or 'canteen' service (taxable under GST at the rate of 5% without input tax credit)?

    AAR, Gujarat, relying on the observations of the Allahabad High Court in the case of Indian Coffee Worker's Co-Op Society Ltd vs CCE & ST, Allahabad [2014 (34) S.T.R. 546 (All.)]), under the erstwhile service tax law, has ruled that services of running a canteen provided to an entity, within the premises of such entity, would not alter the nature of such services just because it is for providing meals to the employees of such entity, and would still be classified as 'outdoor catering' services and not as a restaurant or a canteen service. Consequently, such services would fall under the specific entry of 'outdoor catering services' and thereby be taxable at 18%.

    (2018 (5) TMI 1181 - Rashmi Hospitality Services Pvt Ltd)

  • Applicability of IGST on the supply of Customs warehoused goods

    The government vide circular no. 3/1/2018-IGST dated 25 May 2018 has clarified that IGST will be levied and collected on goods supplied while being deposited in Customs bonded warehouse only when such goods are cleared for home consumption from such a warehouse. The IGST would be charged either at the transaction value or the valuation done at the time of filing an into-bond bill of entry, whichever is higher.

    It has been further clarified that GST should not be charged on any intermediate sale of such goods while they are deposited in the Customs bonded warehouse.

Notification of Customs Audit Regulations, 2018

Audit was introduced under the Customs law by inserting Section 99A in the Customs Act, 1962 vide the Finance Act, 2018. In furtherance of this, the government vide Notification No. 45/2018-Customs (N.T.) dated 24 May 2018 has introduced Customs Audit Regulations, 2018, guiding such audit under the Customs law.

Amendments in the Foreign Trade Policy

The Directorate General of Foreign Trade (DGFT) has made the following amendments to the Foreign Trade Policy 2015-20 vide public notices:

Public Notice reference

Effect of the notice

7/2015-2020 dated 11 May 2018

The government, after the mid-term review of Foreign Trade Policy 2015-20 vide various public notices, had increased the rate of rewards for certain items under Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS) till 30 June 2018.

Now, vide this public notice, such enhanced benefits would be continued beyond 30 June 2018.

9/2015-2020 dated 14 May 2018

Regional authorities can issue advance authorization for the annual requirement on the basis of self-declaration by the applicant (where the exporter intends to use additional inputs), even where ad-hoc norms already exist for the resultant product.

10/2015-2020 dated 22 May 2018

Exporters can offset excess exports done towards the average Export Obligation (EO) fulfillment of an EPCG authorization against any shortfall in the average EO done in other years. However, it should be ensured that the average EO is maintained on an overall basis, within the block period or the EO period as applicable.

As per para 3.08 (b) of Foreign Trade Policy 2015-2020, to qualify for SEIS, the service provider should have minimum net foreign earnings of USD 15,000 (USD 10,000 for individual service providers and sole proprietorship). Now, DGFT vide Notification No. 8/2015-2020 dated 24 May 2018 has amended the said para to clarify that such minimum threshold limit is to be considered for the year for which the duty credit scrip is being obtained and not the financial year preceding the year of providing the eligible services.

Exemption from payment of a late fee under profession tax

The Maharashtra government vide Trade Circular No. 15T of 2018 dated 21 May 2018 has exempted registered employers from payment of a late fee in respect of monthly or annual returns pertaining to the period April 2016 to June 2018 if the following conditions are fulfilled:

  • Any amount payable as per the return should have been paid before the due date.
  • The monthly/annual returns for the said period are submitted before 31 July 2018.
  • There will be no refund or set off against the liability for late fee already paid.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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