Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
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.  

Comments

Print   |    |  Comment

GST UPDATE ON TREATMENT OF STEEL DIE INVOICED TO FOREIGN BUYER BUT SCRAPPED IN INDIA 64/2020-21

GST UPDATE ON TREATMENT OF STEEL DIE INVOICED TO FOREIGN BUYER BUT SCRAPPED IN INDIA 64/2020-21
The Karnataka Authority for Advance Ruling has recently pronounced an interesting decision in the case of M/s Dolphine Die Cast (P) Ltd  wherein it has discussed in detail the treatment to be done in case where the steel dies used in manufacture of aluminium and zinc die castings were invoiced to the foreign buyer which were subsequently either exported to the foreign buyer or scrapped at the applicant’s end as per the instructions of the foreign buyer.
The applicant is a manufacturer and exporter of Aluminium and Zinc die Castings to the overseas customer. The applicant first manufactures the die mould as per the requirements and specification given by the customer. This die is retained by the applicant and is used for the manufacture and supply of Aluminium and Zinc die Castings. The applicant raises the tax invoice for this steel die in the name of overseas customer in foreign currency for receipt of payment though the die is rarely exported as per instructions of the customer. After the completion of the export order or completion of the die life, applicant either exports the dies to the overseas customer or scraps the die at applicant’s end as per the instruction of the customer.
Similarly, the applicant is an importer of the Aluminium casting and pressure die casting component of Aluminium from Thailand. The Thailand supplier first manufactures die as per the requirement and specifications given by the applicant and uses the same for the manufacture of the Aluminium casting and pressure die casting component of Aluminium for the applicant. The Thailand supplier raises the tax invoice in the name of the applicant though the die is not physically imported. After completion of the order or completion of the die life, the applicant either imports the dies and returns to the domestic customer or as per the instruction of the domestic customer the applicant inform the Thailand supplier to scrap the die at their end.
The applicant seeks advance ruling on taxability of the above transactions and admissibility of input tax credit.
The AAR ruled that in the case of manufacture of die by the applicant and invoiced to the overseas recipient, without moving the goods, the applicant has to raise the tax invoice addressed to the foreign buyer. The place of supply of goods, other than supply of goods imported into, or exported from India, shall be the location of such goods at the time of the delivery to the recipient as per section 10(1)(c) of the IGST Act 2017. Therefore, the place of supply of die in this case is the location of the applicant.
In view of the above, the location of the supplier of die and place of supply of die are one and the same i.e., location of the applicant and such being the case said transaction shall be treated as intra-state transaction. Since it is an intra-state supply, applicant has to collect CGST and SGST and discharge the liability. The applicant is not eligible to claim said payment as input tax credit on the invoice raised by him as he is not the recipient. Further if the said steel die is scrapped at applicant’s end as per the instruction of the overseas customer, while supplying the die scrap to the third party, the applicant has to issue intra/interstate tax invoice depending upon the nature of the transaction and collect and pay the applicable tax as per the provisions of the GST Act.
In the case of manufacture of die by the Thailand supplier, if applicant physically imports the die to a place in India then applicant has to pay the IGST under reverse charge mechanism and claim the IGST tax paid as input tax credit, subject to conditions applicable. Further if the steel die belonging to the applicant is scrapped at the location of the overseas supplier without die coming to India, then such transaction is occurring outside the taxable territory, i.e. India and hence not under the purview of GST Act.
This advance ruling raises various questions in the minds of the assessee as regards the transaction of supplying aluminium castings to the overseas buyer is concerned. One such question is whether raising of invoice for die without physically sending die abroad attracts the provisions of section 10(1)(c) of IGST Act, 2017? The reasoning adopted by the AAR is that since export of goods means taking out of India to a place outside India, and as this criteria is not fulfilled for the steel dies, the place of supply will be determined by invoking provisions of section 10 of the IGST Act, 2017 which prescribes place of supply of goods other than supply of goods imported into or exported from India. By application of this provision, the applicant is required to consider the transaction of selling of steel die to the overseas customer without physical delivery of said settle die as intra-state transaction attracting CGST and SGST of Karnataka. We all have basic perception in our minds that sale involves movement of goods but the provisions contained in section 10(1)(c) of the IGST Act, 2017 seeks to levy GST even if there is sale of goods without movement of such goods. The common example framed in our minds for this section 10(1)(c) was that of showroom sales but this advance ruling has changed our perception as regards application of the provision of section 10(1)(c) of the IGST Act, 2017.
Now further another question arises is as to whether the title of goods is transferred to foreign buyer when the goods does not move from the premises and also the scrap is also to be sold by Indian supplier in India only. Hence, it is clear when the title of goods is transferred then only supply will take place. If it is not a supply of goods, can it be termed as export of service of “ manufacturing of die steel” and will qualify for export of service. There are number of questions are raised in this advance ruling and each one is to be decided on facts of each case.

This is solely for educational purpose.
You can reach us at www.capradeepjain.com, at our facebook page on https://www.facebook.com/GSTTODAYBYPRADEEPJAIN/as well as follow us on twitter at https://www.twitter.com/@capradeepjain21.
Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com