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Summary of major Indirect Tax Case Laws

Summary of major Indirect Tax Case Laws


A. GST: Refund claim on the export of goods from 01.07.2017 to 30.09.2017 allowed even though drawback availed.

The revenue rejected refund of IGST paid on the export of goods on the ground of simultaneous availment of duty drawback of the custom portion. The HC noted that during the transitional period, the petitioners have inadvertently claimed benefit of duty drawback since there was a lack of clarity with respect to the refund of IGST. The HC also observed that

  •  Taxpayers have faced difficulties in understanding the complexity of GST procedures.
  • Inefficient implementation of the law has had adverse fallout on the taxpayer. 
  • The government needs to embrace initiatives that would help the taxpayers in the transformation to the new regime which would require understanding the difficulties faced by the industry.
  • Petitioners have been the victim of technical glitches on account of confusion during the transitional phase.
  • The taxpayers like the Petitioners should not be denied the substantive benefit of the IGST paid by them on exports.

[M/s TMA International Ltd, 2020-VIL-02- DEL]

B. GST: Credit available when consideration is paid by book adjustment.

The question before AAAR was whether the credit is available for GST paid on inter-state movement of cranes from HO to branches. The AAAR reversed the decision of AAR and ruled that the HO has adopted a value agreed under the ‘Pricing’ clause of the MOU and paid the tax on the value declared in the Invoice and there is no reason to restrict the ITC of the tax paid by the HO, as it has been substantially brought out that the ‘consideration’ stands paid to the HO either by the customer of the Appellant or by setting off against the payables of the appellant to HO, in respect of lease/hire of Cranes, etc which is as per the established accounting principles. The appellant is eligible to avail full ITC subject to other conditions.

[M/s Sanghvi Movers Ltd., 2020-VIL-88-AAAR]

C. GST: Proviso to Rule 28 can opt-in case of supply to a distinct person.

The AAAR held that when the supply is to the distinct person of the appellant and the recipient is eligible for full ITC, the second proviso provides the value declared in the invoice to be the ‘open market value for such transaction. Also, the second proviso does not restrict its application as in the first proviso, which is to be applied for cases of ‘as such supply’ only. Therefore, the appellants may adopt the value for supply to distinct persons as provided under Proviso 2 to Rule 28 of the CGST Rules, 2017. The AAAR set aside the ruling of AAR.

[M/s Specsmakers Opticians Pvt. Ltd., 2020-VIL87-AAAR]

D. GST: Paper-based gift vouchers taxable at 12% and Gift cards taxable at 18%.

The AAR held that Own closed Pre-paid Instruments (PPIs) issued by the Applicant are ‘vouchers’ and are a supply of goods under the CGST Act. The time of supply of such gift vouchers/gift cards shall be the date of the issue of vouchers if the vouchers are specific to any particular goods specified against the voucher. If the gift vouchers/gift cards are redeemable against any goods bought, the time of supply is the date of redemption of voucher. In the case of paper-based gift vouchers classifiable under CTH 4911, the applicable rate is 12% as per Sl. No. 132 of Schedule II of the Notification No. 1/2017- C.T.(Rate). In the case of gift cards classifiable under CTH 8523, the applicable rate is 9% CGST as per Sl. No. 382 of Schedule III of the said Notification.

[M/s Kalyan Jewellers India Ltd, 2019-VIL-480- AAR]

E. GST: ITC is not available for the construction of the marriage hall.

The AAR held that the input tax paid on the goods/services received for construction of immovable property ‘on one’s own account’ is unavailable. Reading section 16(1) of the CGST Act shows a Legislative intent that ITC may not always be allowed partially or fully. No ITC is available against any goods or services received by the applicant for construction of the Marriage Hall on his own account even if used in the course or furtherance of his business of renting the place.

[M/s Sree Varalakshmi Mahaal LLP, 2019-VIL481-AAR]

F. GST: ITC for motor vehicles used for demonstration purposes is eligible.

The AAR held that demo cars used for demonstration purposes fulfill the definition of capital goods as they are received under a Tax Invoice and are used or intended to be used in the course or furtherance of business i.e. sale of motor vehicles. Since the applicant will be making further supplies of the Demo vehicles, and there is no time limit prescribed in the GST Act for making such further supplies, the applicant is eligible to avail ITC on capital goods. The applicant shall pay an amount equal to the Input Tax Credit taken on the said Demo Vehicles reduced by such percentage points as may be prescribed or the tax on the transaction value of such Demo Vehicles, whichever is higher.

[M/s Chowgule Industries Private Limited, 2020- VIL-06-AAR]

G. GST: Handling activity of imported agriculture produce is not exempted.

The AAAR held that imported raw whole yellow peas are agricultural produce, however, the consignment of raw whole yellow peas was harvested in a foreign land and the concerned primary market is located in that foreign land. From a combined reading of entry no. 54(e) of 12/2017-CTR and definition 2(d) of the exemption notification, all services and processes are excluded beyond the primary market. The spirit of the legislature was intended to boost the agricultural sector of the home country and not that of a foreign land. Accordingly, the exemption is not applicable.

[M/s T.P. Roy Chowdhury & Company Pvt Ltd., 2020-VIL- 01-AAAR]

H. GST: Advertisement carrying specific messages where the content is the exclusive property of the recipient, the supplier can be said to be providing the supply of printing services.

The Appellant was engaged in the business of printing of trade advertisement material using printing ink and base material and the content of which is provided by the recipient. The AAAR observed that the PVC sheet does not have any other usage other than displaying the advertisement content and the advertisement materials carry specific messages meant for customers and the contents are very specific to the product for which the advertisements are made. For example, advertisement meant for Hyundai cannot be used by Hero or any other company, therefore, the content is exclusively the property of the client who entrusts the job to the appellant and the usage right of the content remains with the client of the appellant. It held that the supply is a composite supply, the supply of service being predominant.

[M/s Macro Media Digital Imaging Pvt Ltd, 2020-VIL-02-AAAR]

I. GST: The benefit of a reduced rate of 12% is available to contractor constructing units having carpet area up to 60 sq. mtrs.

The Maharashtra AAR held that the benefit of a reduced rate of 12% would be available to the contractor for supply against the construction of the units having carpet area up to 60 sq. mtrs. in the “Affordable housing project” and tax for units above the carpet area 60 sq. mtrs. would be payable at the normal rate of 18%. Further, the benefit of a reduced rate would be available for common areas and amenities on a pro-rata basis. Also, building completion and finishing services forming part of the construction services would also be eligible for the reduced rate.

[M/s Shapoorji Pallonji and Company Private Limited GST – Maharashtra AAR]

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Summary of major Indirect Tax Case Laws.

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