01. GOODS AND SERVICES TAX
NOTIFICATIONS AND CIRCULARS
Facility of filing GSTR-3B and GSTR-1 using EVC has been provided for companies
Returns under section 39 of CGST Act in Form GSTR-3B and details of outward supplies under section 37 of the Act in Form GSTR-1 can be furnished using electronic verification code (EVC). Rule 26(1) of the CGST Rules has been suitably amended.
[Notification No. 07/2021-CT dated 27 April 2021]
Lower rate of interest and waiver of late fee for the months of March 2021 and April 2021
Government has provided partial relief on interest on delayed payment of tax and late filing fee for the months of March 2021 and April 2021 in the following manner:
|Aggregate turnover of taxpayer in preceding financial year||Rate of interest||Waiver of late filing fee|
|Up to INR 5 Crores||NIL for the first 15 days, 9% for next 15 days and 18% thereafter||Waived for 30 days from the due date of filing return|
|More than INR 5 Crores||9% for the first 15 days and 18% thereafter||Waived for 15 days from the due date of filing return|
[Notification No. 08/2021-CT dated 1 May 2021 Notification No. 09/2021-CT dated 1 May 2021]
Extension in due dates for compliances / proceedings under GST
Time limit has been extended for the following GST related compliances:
- Due date for furnishing of FORM ITC-04 for the period January 2021 - March 2021 extended till 31 May 2021.
- Due date of furnishing FORM GSTR-1 for April 2021 extended to 26 May 2021
- Due date for completion of any proceeding or passing of any order or issuance of any notice, intimation, notification, refund, sanction or approval or such other action, by whatever name called, by any authority, commission or tribunal under GST laws falling between 15 April 2021 and 30 May 2021 has been extended to 31 May 2021.
- Due date for filing of any appeal, reply or application or furnishing of any report, document, return, statement or such other record by any person under GST laws falling between 15 April 2021 and 30 May 2021 has been extended to 31 May 2021.
[Notification No. 11/2021-CT, No. 12/2021-CT and No. 14/2021-CT all dated 27 April 2021]
Cumulative application of availment of 5% of mismatch ITC
The condition of availing 5% of the mis-match credit has been cumulatively made applicable to the month of April 2021 and May 2021.
[Notification No. 13/2021-CT dated 27 April 2021]
CASE LAWS | SUPREME COURT & HIGH COURTS
Supreme Court sets aside the order of provisional attachment; lays down guidelines
The Apex Court observing that powers of provisional attachment under Section 83 of the CGST Act are draconian in nature held that the prescribed conditions must be 'strictly' fulfilled. The Supreme Court further held that prior to exercising powers of provisional attachment, the Commissioner is bound to form an opinion on the basis of tangible material that the assessee is likely to defeat the demand. It was also observed that Section 83 implicates the doctrine of proportionality; therefore, balance must be maintained between the nature and extent of the attachment and the purpose which is sought to be served.
GST Policy wing of CBIC also issued detailed guidelines in respect of provisional attachment of property under Section 83 of the CGST Act vide instructions dated 23 February 2021.
[Radha Krishan Industries v/s State of H.P. (CA.1155 of 2021)]
Supreme Court extends period of limitation
The Supreme Court vide order dated 27 April 2021 took suo moto cognisance of the challenges arising on account of the COVID-19 pandemic and has extended all periods of limitation under general and special laws. The Apex Court restored its orders dated 23 March 2020 by virtue of which the prescribed periods of limitation under general or special laws for any judicial and quasi-judicial proceedings stand extended from 15 March 2020 till further orders in this regard.
This order is applicable to any appeals to be filed under the Customs Act, GST Laws including legacy laws such as Central Excise Act, Service Tax Act and State VAT laws.
[Misc. Application No. 665 of 2021 in SMW (C) No. 3/2020]
Madras High Court allows transition of VAT TDS Credit
The Madras High Court analysed the nature of VAT TDS and observed that any deduction made towards anticipated tax liability viz. VAT TDS, would assume the character of tax. Since Section 140 of the Tamil Nadu Goods and Services Tax Act 2017 (TNGST Act) contemplates the carrying forward of credit of VAT under the existing law and TDS has also been captured in the VAT Returns, such amounts would stand included for the purposes of transition.
[DMR Constructions v/s A.C., Commercial Tax [WP.No.9991 of 2020]
AAR & AAAR
Time of supply of vouchers
The Tamil Nadu AAAR held that 'gift vouchers' are neither goods nor services. Rather, they are a means for advance payment of consideration for future supply of goods or services. Since the vouchers in question could identify the goods receivable on redemption, the supply was held to have taken place at the time of issuance of the voucher as per Section 12(4)(a) of the CGST Act, 2017. The AAAR further clarified that the subsequent transfer of the underlying goods would not be taxable on redemption of vouchers.
[Kalyan Jewelers India Ltd. [2021 (4) TMI 885-AAAR, TN]
02. LEGACY TAXES (CENTRAL EXCISE / SERVICE TAX / VAT / CST)
CASE LAWS | SUPREME COURT & HIGH COURTS
HC holds that recording of voluntary statements in pursuance of summons issued cannot be considered to be pre-show cause notice consultation in terms of Circular No. 1053 / 02 / 2017 – CX dated 10 March 2017
The Petitioner in this case filed the writ petition before the Hon'ble Delhi High Court challenging the fact that the Respondent Department did not hold any pre-show cause notice consultation with them before issuing the show cause notice.
Circular No. 1053 / 02 / 2017 – CX dated 10th March 2017 (Circular No. 1053 / 2017) requires that the Department should hold pre-show cause notice consultation with the assesses before issuing them show-cause notices.
The Respondent Department contended that officials of the Petitioner had recorded voluntary statements before the Senior Intelligence Officer in terms of Section 14 of the Central Excise Act, 1944 as made applicable to Finance Act, 1994. The crux of the Department's contention was that since the officials of the Petitioner had recorded voluntary statements pursuant to summon proceedings, the same was a sufficient compliance of the mandate of Circular No. 1053 / 2017.
The Hon'ble Delhi High Court disagreed with the argument of the Respondent Department. It was categorically held that voluntary statements recorded in summon proceedings before Senior Intelligence Officer cannot be stated to be pre-show cause notice consultation. Pre-show cause notice consultation entails constructive deliberations and discussions and there is a regular back and forth and exchange of information between the assessee and the Department. On the other hand, voluntary statements are mere one-sided statements which are recorded by the Department.
Basis the aforesaid rationale, the Hon'ble High Court held that, as such statements given in summon proceedings cannot be said to be compliance with the mandate of Circular No. 1053 / 2017.
[Omaxe Ltd & Anr v Union of India & Ors. 2021 – VIL – 277 – DEL - ST]
CASE LAWS | CESTAT
Group Insurance Policy qualifies as an input service and credit thereof is admissible
The Appellant had taken a Group Insurance Policy for its employees as was required under the statute. The Department sought to deny CENVAT credit of the same by alleging that Group Insurance Policy does not qualify as an input service since it is used in relation to the output service provided by Appellant. The Department further alleged that the same falls under the exclusionary clause of the definition of 'input service' under Rule 2(l) of CENVAT Credit Rules, 2004.
CESTAT relied on the judgment of the Hon'ble Madras High Court in the case of M/s Ganeshan Builders Ltd v Commissioner of Service Tax wherein a similar issue was involved. CESTAT holds while analyzing the admissibility of Group Insurance Policy as an input service, three things assume significance; a) Nature of the Group Insurance Policy availed by the assessee; b) beneficiary of the policy; c) the statute under which the policy is required to be availed.
The Appellant in this case availed the policy in its name and the same was intended for its workers and staffs. The taking of a Group Insurance Policy was mandated under Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996. CESTAT held that the requirements to qualify as an 'input service' are aptly met in as much as the availing the same is a statutory requirement and is used in relation to the aspect of the output service. Accordingly, CENVAT credit on the same was allowed.
[Solvay Specialities India Pvt Ltd v CCE & ST, Vadodara-II, 2021 – VIL – 159 – CESTAT – AHM – ST]
Proceedings cannot be initiated solely on the basis of evidence recovered from a third party
The Appellant was in the business of manufacturing M.S. Ingots. The Department had conducted a raid on the premises of a company by the name of M/s Shree Sharma Steel Rolling Mills Pvt. Ltd (SSSRM). During the raid, certain loose documents and handwritten ledger books were recovered which contained the name of the Appellant.
The Department alleged that the Appellant was involved in clandestine removal of goods and accordingly the demand was raised. The contention of the Appellant before CESTAT was that there was no positive corroborative evidence linking the Appellant to such clandestine removal. The Department has solely based its demand on the recovery of loose documents and handwritten ledger books which cannot be the basis of raising a demand on the Appellant.
CESTAT by relying on the judgment of the Hon'ble Allahabad High Court in the case of Continental Cement Company v Union of India, 2014 (309) ELT 411 (All) held that in allegations pertaining to clandestine removal of goods, some evidence must be there to link the Appellant in question with such removal. Mere documents seized from third party cannot be solely used as evidence to raise a demand on the Appellant.
[Rajasthan Industrial Gases Ltd v Commissioner, Central Goods and Service Tax, Jaipur, 2021 – VIL – 146 – CESTAT – DEL - CE]
CESTAT sets aside orders which upheld adjustment of payment of interest against rebate claims filed by the Appellant; holds that procedure stipulated under Section 11A of the Central Excise Act, 1944 not followed
The Appellant had filed two rebate claims. The same was initially rejected before being allowed by the Commissioner (Appeals). The Department filed a revision application which was rejected. However, instead of refunding the amount to the Appellant, the Department adjusted the same with the GST liability of the Appellant and further demanded interest for late payment under Section 11A of the Central Excise Act, 1944 and Section 79 of the Central Goods and Services Tax Act, 2017.
CESTAT holds that where interest is to be recovered, issuance of a show cause notice is must as per Section 11A of the Central Excise Act, 1944 which admittedly has not been done. Further, under the Central Goods and Services Tax Act, 2017 relying on the judgment of the Hon'ble Bombay High Court in the case of M/s New India Civil Erectors Pvt Ltd v Union of India, 2020 (10) TMI 59, CESTAT that where the assessee disputes the payment of interest, issuance of a show cause notice is mandatory. Observing that the procedural requirements have not been met, orders adjusting the rebate claims were set aside.
[CMI Limited v CCE & ST, Faridabad, 2021 – VIL – 138 – CESTAT – CHD - CE]
Retraction of statement during cross-examination
CESTAT held that when a witness during cross-examination states that their statements as were recorded during investigation were under threat of arrest and retracts his statement, those statements can no longer be called as admission under Section 58 of Evidence Act. Burden would be on the Department to prove the allegations with some cogent and corroborative evidence.
[Sanjay Goel vs Commissioner of CGST]
NOTIFICATIONS & CIRCULARS
Customs duty exemption on import of Remdesivir and related items
As a part of covid relief measures, the Government has exempted import of Remdesivir Active Pharmaceutical Ingredients, Beta Cyclodextrin (SBEBCD) used in the manufacture of Remdesivir and the Remdesivir Injection from customs duty till 31 October 2021.
[Notification No. 27/2021 – Customs dated 20 April, 2021]
Exemption of Customs duty and health cess on medical oxygen and various other related equipment
In light of the severe shortage of oxygen being faced all across the country, the Government has extended its covid related exemptions to medical oxygen and related equipment (used for production, storage etc.) vide Notification No. 28/2021 – Cus dated 24 April, 2021. These include inter-alia oxygen filling systems, storage tanks, generators, cryogenic road transport tanks. The exemption shall apply till 31 July 2021.
[Notification No. 28/2021 – Customs dated 24 April, 2021]
Oxygen concentrator imported for personal use subject to reduced IGST rate of 12%
The Government, has reduced the rate of applicable duty on import of oxygen concentrators for personal use to IGST from 28% to @ 12%.
[Notification No. 30/2021 – Customs dated 1 May, 2021]
IGST exemption on covid related items for free distribution
Vide an Ad hoc Exemption Order, Government granted IGST exemption to various goods (namely Remdesivir injections, Remdesivir Active Pharmaceutical Ingredients, oxygen, oxygen related equipment and COVID-19 vaccines), from payment of IGST till 30 June 2021. This is subject to the following conditions:
- Goods imported free of cost for purpose of covid relief by state government or any entity authorised thereof.
- The goods are received for the purpose of free distribution.
- Obtainment of certificate from nodal authority appointed by state government to the effect that the goods are meant for free distribution.
- The importing entity produces a statement containing details of goods imported within six months of import.
[Ad hoc Exemption Order No. 4/2021 – Customs dated 3 May 2021]
Trade facilitation measures during lockdown
Government has decided to restore the facility of accepting an undertaking in lieu of bond by the Customs formations up till 30 June 2021. It is further clarified that such an undertaking (furnished in lieu of bond) must be replaced with a proper bond by 15 July 2021.
[Circular No. 9/2021 – Customs dated 8 May 2021]
CASE LAWS | SUPREME COURT & HIGH COURTS
Statutory tax liabilities under IBC resolution
Supreme Court held that once a resolution plan is approved by the Adjudicating Authority under Section 31(1) of the of Insolvency and Bankruptcy Code, 2016, all claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan. Thus, no action can be brought against the corporate debtor whether or not claim is part of the resolution plan.
[Ghanashyam Mishra and Sons Private Ltd v. Edelweiss Asset Reconstruction Company]
Service of Show cause notice
CESTAT has held that in case of ex-parte order, the adjudicating authority must record his satisfaction of service of show cause notice. Substituted service by way of affixation on the notice board of the Department under Section 153 of the Customs Act is the last resort and cannot substitute service of notice to the noticee by other means.
[Baldeep Singh vs Commissioner of Customs]
Condonation of delay in filing of appeal
CESTAT relying on the judgment of Supreme Court in Singh Enterprises vs CCE [2008 (221) E.L.T. 163 (S.C.)] reiterated that Appellate Commissioner or Courts have no power to extend the period of limitation for filing of an appeal before the Appellate commissioner and Section 5 of the Limitation Act, 1963 will not override the limitation imposed under Section 128 of the Customs Act.
[Shambhu Synthetics Pvt Ltd vs Commissioner, Customs]
Right to Information
Central Information Commission has held that name and designation of the customs officer who served summons to a person cannot be withheld under Sections 8(1)(g) & 8(1)(h) of the RTI Act on fear that disclosing the name & designation of the officials may jeopardize their lives and hamper the process of investigation/prosecution.
[Suraj Mishra vs Chief Commissioner of Customs]
04. TRADE PROTECTION MEASURES
NOTIFICATIONS FOR LEVY OR EXTENTION OF EXISTING LEVY
Anti-dumping / Countervailing duty
|Products||Country of origin / Country of export||Notification|
|Flexible Slabstock Polyol of molecular weight 3000-4000 (HS 3907 20)||Saudi Arabia and UAE||
For 5 years
Notification No. 20/2021 -Customs (ADD) dated 5 April 2021
|Normal Butanol or N-Butyl Alcohol (HS 2905 13
||European Union, Malaysia, Singapore, South Africa and United States of America||
For 5 years
Notification No. 21/2021 -Customs (ADD) dated 12 April 2021
|Barium Carbonate (HS 2836 60 00)||China||
Extended up to 20 October 2021
Notification No. 22/2021 -Customs (ADD) dated 15 April 2021
|Polytetrafluoroethylene (PTFE) (HS 3904 61 00)||Russia||
ADD enhanced to $ 874.56 / MT from $ 739.77 / MT
Notification No. 24/2021 -Customs (ADD) dated 26 April 2021
|Polytetrafluorethylene (PTFE) Products
(HS 3904, 39073910, 3916, 3917, 3918, 3919, 3920, 3921, 3922, 3923, 3924, 3925, 3926)
Up to July 2022
Notification No. 21/2021 -Customs (ADD) dated 12 April 2021
BY INDIA – INITIATION, PROVISIONAL, FINAL INCLUDING REVIEW
Anti-dumping investigation on imports of certain rubber chemicals originating or exported from China, Russia and the European Union has been initiated.
[Case No AD-(OI)-04/2021]
Recommendation by Designated Authority
The Designated Authority has recommended imposition of anti-dumping duty on Flat rolled products of copper and copper alloy originating or exported from China, South Korea, Malaysia, Nepal, Sri Lanka and Thailand for a period of five years.
[Case No AD-OI-06/2020]
The Designated Authority has recommended imposition of anti-dumping duty on Plain Medium Density Fibre Board having thickness less than 6mm originating or exported from Vietnam, Malaysia, Thailand and Indonesia for a period of five years.
[Case No AD-OI-11/2020]
Sunset review investigation of levy of anti-dumping duty on Hot rolled flat products of alloy or non-alloy steel originating or exported from China, Japan, South Korea, Russia, Brazil and Indonesia, has been initiated.
[Case No ADD (SSR) - 05/2021]
Sunset review investigation of levy of anti-dumping duty on Cold rolled / cold reduced flat steel products of iron or non-alloy steel, or other alloy steel of all width and thickness, not clad, plated or coated originating or exported from China, South Korea, Japan and Ukraine, has been initiated.
[Case No ADD (SSR) - 06/2021]
05. FOREIGN TRADE POLICY AND SPECIAL ECONOMIC ZONES
NOTIFICATIONS / CIRCULARS / PUBLIC NOTICES PERTAINING TO FTP
Amendment in export policy of Injection Remdesivir
Export policy of Injection Remdesivir and Remdesivir Active Pharmaceutical Ingredients (API) falling under the ITCHS Codes Ex 293499 & Ex 300490 amended from free to prohibited, with immediate effect.
[Notification No. 01/2015-2020 dated 11 April 2021]
Relaxation in the late cut provisions for Shipping bills
Relaxation in the late cut provisions for Shipping bill (s) of the period 01.04.2019 to 31.03.2020 provided, so that if such shipping bills are submitted on or before 30 September 2021, for an MEIS claim, no late cut would be applicable.
[Public Notice No. 53/2015-2020 dated 9 April 2021]
Expansion in electronic platform for Preferential Certificate of Origin (CoO)
Electronic platform for Preferential Certificate of Origin (CoO) expanded further to facilitate electronic application of Preferential Certificates of Origin under the India Mauritius Comprehensive Economic Cooperation and Partnership Agreement (IMCECPA). This Preferential Certificate of Origin for exports to Mauritius shall be applied and issued from the CoO e-platform with effect from 01st April 2021.
[Trade Notice No. 01/2021-22 dated 01 April 2021]
DGFT Covid-19 Helpdesk
'COVID-19 Helpdesk' operationalized by DGFT to support and seek suitable resolutions to issues arising in respect of International Trade, Import and Export Licensing Issues, Customs clearance delays and complexities arising thereon, Import/Export documentation issues, Banking matters etc. It is available on the DGFT Website (https://dgft.gov.in) → Services → DGFT Helpdesk Service
[Trade Notice No. 02/2021-22 dated 26 April 2021]
CASES | CESTAT, HIGH COURT AND SUPREME COURT
FTP is for the duration specified thereunder and not for the fiscal year
Imports under the FTP is for the duration of the FTP and not for the fiscal year 2017-2018. By trade notice No.13/2015-2020 dated 11 August 2017 it was made mandatory for importers having an Irrevocable Letter of Credit opened prior to 5 August 2017 to register with the jurisdictional Regional Authority as per the provisions of paragraph 1.05 of the FTP. Considering that the petitioner had imported the items before 31 March 2021, petitioner's Registration certificate, Bombay High Court rules that the same was binding on the respondents until the completion of the import quota mentioned therein and considering that the petitioner has imported the import item before 31 March 2021, petitioner's import was required to be declared as valid import under the FTP in view of notification dated 5 August 2017.
[Rika Global Impex Limited vs. Union of India & Ors.]
Service Providers in Telecom Sector in FTP includes only the Telecom Service Providers of services mentioned therein
Delhi High Court holds that "Service Providers in Telecom Sector" meant and included only the Telecom Service Providers of services mentioned therein. The ambit and scope of such exclusion was not of Service Providers who render services to such Telecom Service Providers. Clearly, what was made ineligible for availing benefit of SEIS in terms of paragraph 3.09(2)(i) are the Telecom Service Providers and not the Service Providers who provide services to such Telecom Sector. The Hon'ble High Court also held that the impugned Instructions/Circular dated 22 May 2019 has been issued under the instructions of the DGFT itself, the remedy of appeal under Section 15 of the Act would clearly be otiose and redundant. As far as the remedy under Section 16 of the Act is concerned, once it is held that the Impugned Orders have been passed on basis of Instructions which are otherwise ultra vires the Act, the petitioner cannot be denied the benefit of an original adjudication on merits and the decision on an appeal under Section 15 of the Act in accordance with law and be relegated only to a remedy of review. The respondents are directed to consider the claims of the petitioner(s) under the SEIS afresh and in accordance with FTP 2015-20 - Petition allowed.
[Ericsson India Global Services Pvt. Ltd. and Huawei Telecommunications (India) Company Pvt. Ltd. vs Union of India & Ors.]
Entity's name cannot be put in Denied Entity List without providing a period
The Petitioner was put in Denied Entry List (DEL) and no period was mentioned, as to for how long the Petitioner was put on the DEL. Further, material on the basis of which the show-cause notice and the impugned order were issued, were not supplied and no reply was received to the repeated communications of the Petitioner. Delhi High Court disposing the petition held that documents relied upon by the Respondent should be supplied to the Petitioner within a period of four weeks as directions are liable to be issued so that the matter reaches a conclusion.
[M/S. CL International Vs DGFT]
06. OTHER REGULATORY LAWS
FOOD SAFETY AND STANDARDS
FSSAI issue directions for facilitating food businesses during the prevailing COVID-19 conditions
To facilitate the continuity of food business operations during the prevailing COVID-19 outbreak, the FSSAI has taken immediate steps to ensure uninterrupted food services / supply during the current scenario. FSSAI has clarified that Import clearances of food items and testing services by FSSAI's notified laboratories (including both public and private laboratories) are Essential Services.
FSSAI has also issued following additional directions:
- Allow FBOs, other than manufacturers, to temporarily operate their businesses on the basis of a valid receipt of FSSAI license/ registration application having 17- digit Application Reference Number (ARN) generated upon online application and fee payment on FoSCoS. This will enable quick expansion of logistic supply chains, warehouses, retail outlets, catering, food service establishments etc wherever required. New businesses can start operating once they successfully file a complete application on FOSCOS. This is an interim relief measure, the licence/ registration will need to be secured before the expiry of the relaxation.
- Manufacturers are allowed to increase/ enhance their capacity, on the basis of a valid receipt of FSSAI license/ registration application having 17- digit Application Reference Number (ARN) generated upon online application and fee payment on FoSCoS. This will enable immediate upscaling of production facilities without waiting for regulatory approvals.
- No routine inspections are required to be done except in case of high risk food product viz. Milk and milk products, slaughter houses, meat and meat products etc. However, food safety authorities can conduct inspections in case of select cases on basis of risk profiling or in case of any food emergency/ incidents and complaints. Where feasible, inspections can be done by e-inspection.
- The deadline for returns for 2020-21 has been extended till 30 June 2021. All returns are required to be filed online on FOSCOS.
- No penalty shall be payable for late filing of application for renewal of licenses.
The above measures would be valid up to 30 June 2021 irrespective of the status of lockdown/ curfew/ containment at any location.
[Food Safety and Standards Authority of India Press Release dated 20 April 2021, Order in F No. 15 (6)2020/FLRS/RCD/FSSAI dated 20 April 2021 and Order in F No. 15 (6)2020/FLRS/RCD/FSSAI dated 20 April 2021]
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