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Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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GST Update-07.12.2016

CHANGES IN SCHEDULE IV AND SCHEDULE V OF REVISED GST DRAFT LAW

CHANGES IN SCHEDULE IV AND SCHEDULE V OF REVISED GST DRAFT LAW
                                                        
We have till now discussed the definition of supply along with provisions described in schedule I, schedule II and schedule III, and in this update, we will discuss the changes and consequences in schedule IV and V.

Schedule IV:- In the previous GST Law, Schedule IV specified the activities or transactions in respect of which the Central Government, a State Government or any Local Authority shall not be regarded as a taxable person. However, in the revised GST Law, Schedule IV specified activities or transactions undertaken by the Central Government, State Government or any local authority which shall be treated neither as supply of goods nor supply of services. Although, the heading of the Schedule has been changed but it does not has significant impact with the only difference that earlier government was not considered as taxable person for certain activities while now the transactions will not be considered as supply of goods/services. It appears that the earlier language indicated that for certain transactions, government will not be taxable person but since there is concept of reverse charge mechanism, there was possibility of confusion. The new law removes the probability of any confusion as regards statutory functions performed by the government.
In the earlier GST draft Law, in case of ‘assignment of right to use any natural resource’ when such right was assigned by the Government or Local authority, onetime charges paid were made exempt but an explanation was provided wherein it was mentioned that the periodic payments made every year for the assignment of right to use any natural resource shall be liable to tax. This explanation has been removed from the revised law. Deletion of this explanation does not bring any change in taxability of the periodic payments as it is very much clear from the proviso itself that only one time charges shall be exempt. The explanation was merely for clarification purpose and removing the same does not bring any sort of change.

No other change has been made in the revised draft in context of this schedule and it has been kept identical to earlier law. Also it is worthwhile to mention that the provisions mentioned in these schedules are exactly parallel to current Service Tax Laws.

SCHEDULE V:- In the previous GST draft law, the persons to be registered were specified in schedule III but in revised GST law, these have been transferred to schedule V. Changes made therein are discussed hereunder:-

1.     In the revised GST Draft Law, there is substantial relaxation in the threshold limit for getting registered under GST Law. In earlier GST draft law, the limit for registration was nine lakh rupees which has been increased to twenty lakh rupees. It is an appreciable step from Government’s side. As already told by us in our earlier GST updates, this limit has been enhanced by GST council which is reflected in this revised GST update also.
 
2.     In revised GST draft law a new proviso has been inserted which reads as under:-
 
“PROVIDED that where such person makes taxable supplies of goods and/or services from any of the States specified in sub-clause (g) of clause (4) of Article 279A of the Constitution, he shall be liable to be registered if his aggregate turnover in a financial year exceeds ten lakh rupees.”
 
The insertion of this proviso reduces the threshold of registration if the taxable supplies are made from states of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand. The threshold of registration would be ten lakh rupees only instead of twenty lakh rupees.
 
3.     In new GST draft law the need of registration has been divided into two categories which is special category states and non special category states. For non special category the registration limit is as mentioned in above points and for the special category states the limit is ten lakh rupees. The government in earlier GST draft had explicitly specified that for the NE states including Sikkim the registration limit shall be four lakh rupees, but in new GST draft law though the limit for special category states has been increased but it is nowhere mentioned that special category states shall be North Eastern states including Sikkim. Hence, in future there is a possibility that government may specify a new list of states for this threshold limit.
  
4.     In the list of persons who are required to get registered irrespective of the threshold limit following entries have been added:-
 
a.     Persons who are required to pay tax under sub-section (4) of section 8, irrespective of the threshold specified under paragraph 1;
b.     Persons who are required to collect tax under 56, whether or not separately registered under the Act;
c.      Every person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered taxable person.
 
Hence these people have to get registered even if they are not crossing the threshold limit. Looking into each entry separately:-
a.     The persons covered under section 8(4) are the electronic commerce operators supplying specified services.
b.     Every electronic commerce operator who is not an agent is required to collect tax at source and deposit it to government. Such operator is required to be registered under the GST Law without any threshold limit.
c.        A foreigner providing services of online information and database access services to a person in India shall also be required to register under this act. It is pertinent to mention that recently a similar provision was bought into current Service Tax laws. Therefore by bringing the parallel change in GST law government removes scope of any ambiguity.
 
5.     Lastly the entry relating to aggregator providing services under his brand name or his trade name has been removed from the list of person requiring registration irrespective of the threshold limit. Hence he shall not be required to get registered if threshold limit does not exceed the specified turnover.
 

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