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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 14.01.2016

‘CONSIDERATION’ IN DRAFT GST ACT, 2016

GST DAILY DOSE OF UPDATION:-
 
‘CONSIDERATION’ IN DRAFT GST ACT, 2016:-
 
Section 2(20) defines consideration in relation to the supply of goods and/or services to any person, includes-
(a)            Any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods and/or services, whether by the person or any other person;
(b)            The monetary value of any act or forbearance, whether or not voluntary, in respect of, in response to, or for the inducement of, the supply of goods and/or services, whether by the person or any other person:

Provided that a deposit, whether refundable or not, given in respect of the supply of goods and/or services shall not be considered as payment made for the supply unless the supplier applies the deposit as consideration for the supply.

It is worth observing that presently, the term consideration is not defined in the Central Excise Laws but is defined in section 67 of the Finance Act, 1994. As per Service Tax Laws, consideration includes any amount that is payable for the taxable services provided or to be provided and includes any reimbursable expenditure or cost incurred by the service provider and charged in the course of providing or agreeing to provide taxable service. It is also pertinent to note that there has been a long litigation as regards inclusion of the value of reimbursable expenditure in the value of taxable services. The Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 stipulating that reimbursement expenditure is to be treated as consideration for taxable service was recently quashed by the Hon’ble Delhi High Court in the case of INTERCONTINENTAL CONSULTANTS & TECHNOCRAFTS PVT. LTD. VERSUS UNION OF INDIA [2013 (29) S.T.R. 9 (DEL)] as ultra vires the provisions of section 67 of the Finance Act, 1994. However, in order to nullify the decision of Delhi High Court, the government came up with amendment in the meaning of consideration given under section 67 with effect from 14.05.2015 so as to specifically include reimbursable expenditure within its ambit. It is submitted that inspite of the fact that consideration includes ‘any amount’ payable for taxable services, the reimbursable expenditure was specifically mentioned in the meaning of consideration. If we pursue the defination of consideration proposed in the Draft GST Act, 2016, it is found that any type of payment is covered in it. Accordingly, whether reimburseable expenditure incurred will also form part of consideration will be again a matter of dispute.
 
Furthermore, the amount received in respect to forbearance is specifically included in the defination of consideration thereby meaning that GST will be levied even on the act of tolerance or forbearance as is specifically declared service on which service tax is payable currently.
 
Moreover, the proviso to the defination specifically excludes all kinds of deposits, whether refundable or not, from the ambit of consideration unless the deposit is utilised against consideration for the supply. This is appreciable from trade and industry as in the past there has been lot of litigation as regards inclusion of notional value of interest on deposits given by the buyers/service recipients to the manufacturers/service providers. For example- in case of renting of immovable property, acceptance of security deposits are common feature to secure against possible damages to the property by the tenant. In Excise Laws also, deposits are received from the buyers to indemnify manufacturers against any possible losses on account of non-delivery of goods by the buyers. It was contended by the revenue authorities that notional interest on the deposits is included in the transaction value/taxable value of services. However, the issue was finally settled by the Supreme Court decision in the case of COMMISSIONER OF CENTRAL EXCISE, MUMBAI-III VERSUS I.S.P.L. INDUSTRIES LTD. [2003 (154) E.L.T. 3 (S.C.)] wherein it was concluded that the notional interest is not to be included in assessable value of goods unless and until it is brought notice that the deposit has influenced the price of goods. In simple words, if it is evidenced that there is different price if deposit is given and higher price if no deposit is given by the buyer, it is only in that situation that the notional interest would be includible in the assessable value of goods. However, in the draft GST Act, 2016 deposit is excluded from the ambit of consideration but nothing is specified about the notional interest.

 
 
 

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