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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 whether DVDs containing case laws can be considered as “e-books” 42/2020-21

GST Update on whether DVDs containing case laws can be considered as “e-books” 42/2020-21

 

In this update we shall discuss a recent advance ruling pronounced by Tamil Nadu AAR in the case of VENBAKKAM COMMANDUR JANARDHAN, proprietor of M/s Law Weekly Journal on the issue whether the sale of DVD’s/CD’s containing the printed content in electronic form with a software to search and read in computers fall under the category of E-books so as to be eligible for the benefit of reduced GST rate of 5% in terms of serial no. 22 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 13/2018-C.T. (Rate) dated 26.07.2018.

The applicant supplies printed law journals and DVD’s of law journals. He seeks advance ruling with respect to the following four questions.

“1. Whether the assessee/dealer which publishes law journals in print and sells the same content that is in books in an electronic form in DVD’s/CD’s with a software to search and read it in computers and hand held devices come under the category of ‘E-book’, so that it can avail the benefit of notification dated 26.07.2018 in respect of E-book?

2. Whether the liability on the sale of DVD/pen drive which contains printed version of law citations can be adjusted against the available ITC?

3. Whether the liability on sale of e-book of printed version of law citation can be adjusted against the available ITC?

4. Whether the balance of ITC after adjustment accrued on the purchase of paper and other material can be reversed while filing GSTR 9?”

The AAR has answered the first question in negative stating that the supply of DVD containing content in electronic form does not fall under the category of E-books. This is for the reason that the DVD contains an executable file (setup) which is to be installed on the hard drive of the desktop/system. It was held that such DVD is not electronic version of the print journals as If it was an electronic version of the print journals, the DVD would have machine readable files in any format such as .doc, .txt, .pdf or any other readable files and not the executable file.

As DVD/CDs do not contain electronic versions of the journals but an executable software application and therefore do not fall under the meaning of ‘e-book’ given in the said entry. Moreover, it was concluded that this is case of composite supply wherein supply of DVD/CD/Dongal is loaded with software and license to use the software during the subscription period. Hence, DVD/CD/Dongal being ‘storage devices’ containing the software shall be considered as principal supply of goods. Consequently, the notification no. 11/2017-Central Tax (Rate) dated 28.06.2017 pertaining to services does not apply.

 

Moving on further to the next three question put forward before the Authority, it was ruled that since the AAR has authority only to discuss on the earmarked issues as stated in section 97(2) of the CGST Act, 2017, it is not possible to give ruling with respect to next 3 questions as it is out of their purview.

It is to be noted that the scope of advance ruling under section 97(2) of the CGST Act, 2017 is restrictive and many decisions have been reported wherein the advance rulings on issues concerning place of supply provisions, utilisation of input tax credit have been rejected merely by stating that the said issues are not withing their purview. However, the High Court has ordered against this view and held that the advance ruling can give verdict on place of supply provisions.  Therefore, government should think of increasing the ambit of advance rulings so that their very purpose of creation, being reduced litigation is achieved. Moreover, the GST law is at initial stage of implementation and interpretations may vary. As soon as the verdict of Apex Court, various High Courts and tribunals will come and law will settle down. But it will take time and till that time, consultants will have to work hard.

This is solely for educational purpose.

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