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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 No 184 on whether determination of place of supply within scope of AAR?

GST update No 184 on whether determination of place of supply within scope of AAR?
The Advance Ruling under GST laws has been constituted for resolving disputes with respect to specific issues as enlisted in section 97(2) of the CGST Act, 2017. However, at times, certain questions involve examination of points which are indirectly covered under the issues as stated in section 97(2) of the CGST Act, 2017 but it is often observed that AAR refuse to give their ruling on such issues by contending that it is beyond their scope. One such issue was recently raised before hon’ble Karnataka AAR in the case of M/s IBI GROUP INDIA PVT. LTD. wherein AAR held that determination of place of supply is outside the purview of AAR. The outcome of this decision is the subject matter of discussion of our present update. IBI Group India Private Limited “IBI India”, in joint venture with IBI Group Professional Services (Canada) Inc (“IBI Canada”), has entered into a contract with Asian Development Bank, Manilla (“ADB”) for rendering consultancy services (IBI India and IBI Canada are jointly referred to as “IBI” herein. Hence, advance ruling has been sought in respect of the following questions:- a) Whether Consultancy Services rendered to ADB, Manilla would qualify as export of services under section 2(6) of the IGST Act, 2017? b) If the Consultancy Services rendered to ADB, Manilla do not qualify as “export of services”, whether ADB would be required to obtain refund of GST charged on the invoice issued for consultancy services in terms of section 55 of the CGST Act, 2017 or the services would be exempt as per the provisions of the Asian Development Act, 1966? The applicant submitted that they satisfy all the conditions for qualifying the transaction as “export of services” as follows:- • The supplier of service, IBI is located in India. • The recipient of service, ADB is located outside India. • The place of supply of service is outside India if the general provision as stated in section 13(2) of the IGST Act, 2017 is made applicable which states that place of supply shall be CA. PRADEEP JAIN ??www.capradeepjain.com??pradeep@capradeepjain.com??5 location of service recipient. It was contended that as the consultancy services are not directly related to immovable property, the provision contained in section 13(4) stating place of supply to be immovable property would not be applicable. It is worth mentioning that the consultancy services is with respect to transit-oriented development plan in respect of construction of new metro lines in Bangalore. • The payment of such service is received in convertible foreign exchange. • The supplier of service and the recipient of service are not merely establishment of distinct person. It was also pointed that even if it is contended that the place of supply of service is location of immovable property, i.e., India so the transaction cannot be considered as export of service, then too, the refund is available of GST paid on services provided by ADB in terms of section 55 of the CGST Act, 2017 read with notification no. 16/2017-Central Tax (Rate) dated 28.06.2017. Even otherwise, the services provided by ADB are exempted under Article 56 of ADB Act. The applicant also stated that determination of place of supply is essential to decide whether service qualifies as export of service or not which in turn would determine the liability of the applicant to pay taxes on services which is squarely covered within “determination of liability to pay tax on any goods or services or both” in terms of section 97(2)(e) of the CGST Act, 2017. The applicant has also placed reliance on the decision rendered by Hon’ble Kerala High Court in the case of SUTHERLAND MORTGAGE SERVICES INC VERSUS PRINCIPAL COMMISSIONER AND OTHERS [2020 (3) TMI 186] to support their submission. The AAR held that as per section 96 of the CGST Act, 2017, AAR constituted under the State Act shall be deemed to be the authority in respect of CGST Act, 2017 also. Thus, AAR is constituted under the respective State Act and not the Central Act. This means that the ruling given by the said Authority will be applicable only within the jurisdiction of the concerned State and so determination of place of supply cannot be raised before AAR. It was also stated that determination of place CA. PRADEEP JAIN ??www.capradeepjain.com??pradeep@capradeepjain.com??6 of supply is not covered under section 97(2) of the CGST Act, 2017 so cannot be answered by the AAR. Reliance was also placed on the decision given by Karnataka AAR in the case of M/s Eicher Volvo Commercial Vehicles Ltd., Bengaluru and M/s Toshniwal Brothers (SR) Pvt. Ltd., Bengaluru. Therefore, the application filed by the applicant was rejected as beyond the scope of AAR. The above decision depicts the contradictory views of AAR on the same issue and not following the decision rendered by Kerela High Court. It is settled principle of law that judicial discipline needs to be followed by the subordinate authorities but it is often observed that the decisions of High Courts are not applied by stating that the facts and circumstances are different. Such an approach leads to unwarranted litigation.
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