LKS Indirect Tax Amicus, June 2024

Article

Taxability of Extra Neutral Alcohol settled or not?

Taxability of Extra Neutral Alcohol/rectified spirit, a denatured alcohol that is predominantly used as a raw material for manufacturing of liquor for human consumption has been a bone of dispute between the Centre and the States, while the former claiming its liability to GST, the States claiming that they are exclusively empowered to levy VAT and excise duty. The article in this issue of Indirect Tax Amicus traces the history of the dispute, analyses number of case law and GST Council Meetings, and observe that though the taxability of ENA would get settled from the perspective of GST based on the recommendations of the 53rd GST Council Meeting, the issue will continue from the perspective of levy of VAT and excise duty. The authors (Kundan Kumar and Surbhi Premi) note that while States are empowered to levy VAT and excise duty on alcoholic liquor for human consumption, ENA does not qualify to be alcoholic liquor for human consumption, therefore, its taxability from the perspective of excise duty and VAT is questionable.

Read the full article here .

Goods and Services Tax (GST)

Notifications and Circulars

• 53rd GST Council Meeting – Highlights of the recommendations
• 53rd GST Council Meeting – Highlights of Circulars issued by CBIC

Ratio decidendi

• Registration – Reasons to be assigned for cancellation of registration in case of non-furnishing of returns – Karnataka High Court
• Verification of business premises – Notice required to be issued to assessee requiring its/employee’s presence during verification – Jammu & Kashmir High Court
• Input Tax Credit – Kerala HC rejects challenge to constitutional validity of Sections 16(2)(c) and 16(4)
• Adjudication – Notification No. 9/2023-Central Tax extending time-limit with reference to FY 2017-18 is valid – Allahabad High Court
• Adjudication of cases involving fraud, suppression, etc., requires personal hearing to be given to assessee – Allahabad High Court
• Adjudication – Personal hearing required even if right to file written reply not availed – Allahabad High Court
• Cash/currency/money cannot be confiscated during course of search and seizure – Karnataka High Court
• Cash refund of amount recredited to Cenvat credit account post implementation of GST regime – Bombay High Court
• Refund claim of unutilized ITC after transfer from acquired business – Registration of acquiror during relevant period not required – Himachal Pradesh High Court
• Transition of VAT credit in GSTR-3B instead of through Form TRAN-01 is not fatal – Madras High Court
• Show cause notice in Form GST-REG-31 for cancellation of registration is wrong – Kerala High Court
• Show cause notices to proprietorship firm and its proprietor by different Commissionerates is valid – Punjab & Haryana High Court
• Reverse charge – Show cause notice not vitiated by mere mentioning Section 9(4) instead of Section 9(3) – Gujarat High Court
• Penalty – Non-mention of certain items in Delivery Challan when not violates Rule 55 – Karnataka High Court
• No GST on sale of goods warehoused in FTWZ on as-is-where-is basis to customer who clears same to bonded warehouse – Tamil Nadu AAR
• No GST on RCM basis on ‘export freight’ on exports on FOB basis – Tamil Nadu AAR

Customs

Notifications and Circulars

• Display assembly of a cellular mobile phone – Scope for BCD exemption clarified
• MOOWR – Procedure for transfer of goods from one Section 65 unit to another such unit
• QCOs notified by Department of Chemicals & Petro-chemicals exempted from mandatory compliance for imports by Advance Authorization holders, EOUs and SEZs
• Spices – Value addition norms relaxed
• Gold jewelry import restricted – Imports (except parts) under India-UAE CEPA TRQ however permitted without restrictions
• Review of Norms Committee decisions – Timelines relaxed

Ratio decidendi

• Refund claim of SAD – Limitation of one year as prescribed in notification is not applicable – Delhi HC decision in Sony India is applicable – CESTAT New Delhi
• No Customs duty can be demanded on goods destroyed in SEZ – CESTAT Ahmedabad
• Social Welfare Surcharge (SWS) cannot be debited from MEIS/SEIS scrips but is payable in cash – Madras High Court
• Monetary limit for Departmental appeal – Quantum of duty only relevant for determination of threshold when both duty and penalty/fine disputed – Delhi High Court
• Test report – No requirement for assessee to produce evidence contrary to the report in its favour – CESTAT Chennai
• Redemption fine imposable even when goods prohibited for import are re-exported – CESTAT Chennai
• Exemption benefit with respect to goods must be looked from the lens of ‘capability of use’ – CESTAT Hyderabad
• Lanterns with USB port specifically for solar charging are classifiable as solar lanterns – CESTAT Kolkata

Central Excise, Service Tax and VAT

Ratio decidendi

• Medicament or cosmetic – Telangana High Court upholds assessee’s view on classification of certain Ayurvedic products as medicaments
• Racetrack is not a ‘road’ meant for public access as a matter of right – Service tax exemption not available for construction of racetrack – CESTAT New Delhi

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