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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 ON INDUSTRY WANTS TO KNOW

Daily Dose of GST update on FAQ in seminar with Industries

Daily Dose of GST update on FAQ in seminar with Industries
INDUSTRY WANTS TO KNOW – PART IV

 

Here is the 3rd installment to the series where we try to find answers to the unanswered questions and queries coming from the trade and industry.
Question: What will be the tax rate for the Construction Service?
Answer: The exact tax rates have not been notified yet. Although as per the last meeting of GST Council where the slab system of rates was notified, we expect that it may fall under slabs of 12% or 18%. At present, the Construction Service is subject to both VAT and Service Tax. The effective tax rate comes to around 3.75% for Service Tax. Other than that, VAT is also leviable on the Construction contracts, generally paid by way of composition. 
Question:- This is very high rate for the construction industry. Whether the industry suffering from recession will be able to aborb such a high rate? 
Answer:-In our opinion, a representation maybe filed for considering the Construction Service in the lower tax rate slab of 5%.
Question: How will the Construction Industry be benefitted by the implementation of GST?
Answer: Construction Industry is largely to be benefitted after the advent of GST. Firstly, the assessees shall be liable to single indirect tax after GST comes into play. Secondly, there will be a smoother flow of credits thus reducing their costs. In the current regime, they are not able to avail credits of excise duty, CST, Entry Tax on various inputs which used to form a non-creditable tax cost. They are able to avail only the credit of input services only. But they will be able to take the credit of inputs also like cement, tor steel, tiles etc. In current regime, they have to pay the tax on 40 or 70% under service tax composition scheme. Similarly, industry has to pay VAT under composition scheme under works contract. If we add both the composition schemes, the industry is paying tax on more than 100% in most of the cases. But under current regime, both CGST and SGST will be charged on 100% only. Hence, the net tax payable by the industry will come down. Also, increased credit flow on inputs will also bring down the tax burden. If add all, the effective tax payable will come down from current regime.
Question: What are adverse effect of GST on reality industry?
Answer:-A higher tax rate can be a damper for the construction services. Not only that, the construction industry is known to be one amongst the most unorganized industries. With the GST in force, the entire Construction Industry will have to be organized and infact the builders and contractors will have to ensure proper payment of tax by their sub-contractors. This is big difficulty in current regime for the department. But this burden will be shifted from the department to builder or main contractors. Also, on the transitional front, GST can be a setback as credit of inputs is not availed in the current regime and will thus not be carried forward. Under the transitional provisions, the credit of input services will be carried forward as shown in their return. But the construction industry is not taking credit on inputs and there is no provision also for taking the credit of the same. This is provision for not taking credit due to exemption under current regime then the credit on stock will be available if the same is chargeable to GST under proposed regime. But there is no transitional provision of taking of credit on stock of inputs when the credit is not allowed in law itself due to abatement. The industry should demand transitional provision for the same.
Question: Will the department provide any help in filing of the said minimum 37 Returns annually?
Answer: The department shall not extend any help with regards to the filing of 37 returns. Instead it is expected that these returns will be highly software dependent particularly extracting data automatically. Although being highly software driven, it should also have features of editing required to make necessary amendment, monitoring of debit and credit notes and also human intervention about which credits to be availed or not, etc.
It is important to note that this may turn out to be a complex task for Small Scale Industries and Units both in terms of time and cost.

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