Southern India Regional Council of
The Institute of Chartered Accountants Of India
(Setup by an Act of Parliament)

Professional Updates- September 2017

 

Andhra Pradesh VAT

CA Ambati Chinna Gangaiah agcpower@icai.org, 08801032969

Supreme Court

  • 1. Rayalaseema Alkalies and Batch - Appeal Civil 8036-8060/17 – directed the respondents in the judgment on entry tax to file petitions in the concerned High Courts by 15th August, 2017 – HC decides as per the guidelines of Nine Members Bench Judgment.
  • 2. Hindustan Petroleum Corporation Appeal Civil 9295/17 dt 3.8.2017 (IT Matters) this Court in Commissioner of Income Tax, Madras v. Vinbros and Company where bottling and blending of alcohol is held to be ‘manufacture or production’ for the purpose of Section 80-IB
  • 3. Privacy is held to be fundamental right by 9 Members Constitution Bench over ruling 1976 Judgment.
  • 4. Indian Hume Pipe Co. Civil Appeal 9879/17 dt 28.8.17 - the agreement was clearly in two parts, namely, (i) sale and supply of PSC pipes, jointing material specials, valves, anchor blocks, etc. and (ii) the remaining part being supply of labour and services. These findings are upheld not only by the appellate authority but also by the Single Judge of the High Court as well as the Division Bench of the High Court. It may also be mentioned at this stage that the assessee has, in fact, admitted that it had no grievance against the finding that supply of pipes was nothing but the sale of pipes involved in the execution of the contracts and, therefore, it was excisable to sales tax.

PMs Independence Day Speech - GST rollout improves business efficiency by 30%: PM Narendra Modi
The abolition of inter-state check posts after the implementation of GST has reduced time for movement of goods by 30 per cent and saved thousands of crores of rupees.

GOs issued
  • 1. GO MS No. 309 dt 24.7.17 - e-Waybill is required for the movement of goods which are not exempted under the Act for all purposes i.e., coming into the State or going out of the State or for the movement within the State, when the value of goods excluding tax exceeds Fifty Thousand Rupees. However, the issue of an e-Waybill shall not be necessary where a person, who is not a taxpayer, transports his household goods or other articles for his own use from one place to another.
  • 2.GO MS No. 375 dt 18.8.17 - amendment for rule 34, the following shall be substituted, namely:- “34. Rate of exchange of currency, other than Indian rupees, for determination of value.- (1) The rate of exchange for determination of value of taxable goods shall be the applicable rate of exchange as notified by the Board under section 14 of the Customs Act, 1962 for the date of time of supply of such goods in terms of section 12 of the Act. (2) The rate of exchange for determination of value of taxable services shall be the applicable rate of exchange determined as per the generally accepted accounting principles for the date of time of supply of such services in terms of section 13 of the Act.”;

    in rule 44, with effect from 1st July, 2017, for sub-rules (2) and (3), the following shall be substituted, namely:- “(2) The amount, as specified in sub-rule (1) shall be determined separately for input tax credit of central tax, State tax, Union territory tax and integrated tax. (3) Where the tax invoices related to the inputs held in stock are not available, the registered person shall estimate the amount under sub-rule (1) based on the prevailing market price of the goods on the effective date of the occurrence of any of the events specified in sub-section (4) of section 18 or, as the case may be, sub-section (5) of section 29.”; (iv) in rule 46, for the third proviso, the following proviso shall be substituted, namely:- “Provided also that in the case of the export of goods or services, the invoice shall carry an endorsement “SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS ON PAYMENT OF INTEGRATED TAX” or “SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF INTEGRATED TAX”, as the case may be, and shall, in lieu of the details specified in clause (e), contain the following details, namely,- (i) name and address of the recipient; (ii) address of delivery; and (iii) name of the country of destination:”;
  • 3. Amendments specified to items specified in G.O.Ms.No.259, Revenue (Commercial Taxes-II) Department, 29th June, 2017 by GO Ms No.382 to 386 dt 22.8.17


Tribunal
  • 1. Jami Santharao TA 99/11 dt 31-10-16 - Here bill of lading is filed showing the movement of goods in the course of export. Invoices have been filed proving the identity of the goods. The foreign buyer’s purchase orders numbers were quoted in the H form. Unless there is foreign buyer’s order, it may not be possible for the Indian Exporter to place order on the appellant for shipment of the goods. Apart from it the circular instructions issued by the Commissioner does not indicate that foreign buyer’s agreement has to be filed.
  • 2. Sai Industries TA 97/08 dt 28.8.17 - Since it is burden of the Revisional Authority to conclude that the commodity is not writing slates and cannot lay the burden on the dealer to show that the commodity is writing slates only and the impugned order does not reflect that it relied on any tenable evidence to come to its conclusion, the impugned order is not sustainable.

    in rule 44, with effect from 1st July, 2017, for sub-rules (2) and (3), the following shall be substituted, namely:- “(2) The amount, as specified in sub-rule (1) shall be determined separately for input tax credit of central tax, State tax, Union territory tax and integrated tax. (3) Where the tax invoices related to the inputs held in stock are not available, the registered person shall estimate the amount under sub-rule (1) based on the prevailing market price of the goods on the effective date of the occurrence of any of the events specified in sub-section (4) of section 18 or, as the case may be, sub-section (5) of section 29.”; (iv) in rule 46, for the third proviso, the following proviso shall be substituted, namely:- “Provided also that in the case of the export of goods or services, the invoice shall carry an endorsement “SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS ON PAYMENT OF INTEGRATED TAX” or “SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF INTEGRATED TAX”, as the case may be, and shall, in lieu of the details specified in clause (e), contain the following details, namely,- (i) name and address of the recipient; (ii) address of delivery; and (iii) name of the country of destination:”;

  • Professional Updates- August 2017

     

    Andhra Pradesh VAT

    CA Ambati Chinna Gangaiah agcpower@icai.org, 08801032969

    Tribunal

    1. 1. West Godavari Co-Operative Sugars TA 458/09 dt 25.1.17 The successful purchaser in the present case is from outside the State of A.P. who participated in the auction with an intention to transport molasses to outside the State of A.P. The supporting documents produced i.e., the bills, way bills and C forms clearly shows that the sale effected by the appellants are inter-state sales.
    2. 2. Hirawat Fashion TA 481/11 dt 25.1.17 - artificial jewellery sold by the appellants clearly falls under Entry 146 of First Schedule liable to be taxed @ 1% and the revisional authority has erroneously levied the tax @ 12% treating them as unclassified goods
    3. 3. Balaji Spun Pipes - TA 408/08 dt 17.2.17 Though there is a delay of more than three months in the service of revision order, we are not going into the issue because the impugned order is found to be bad in law for the other reasons hereinabove mentioned
    4. 4. K.A.R. Cotton Traders TA 200/07 dt 22.2.17 - Levy of tax by making a vague allegation that the appellant purchased cotton kappas without any material on record would be bad in law. There is no discharge of burden by the DC.
    5. 5. Costal Communications TA 85/08 17.7.17 - recharge coupons and sim cards only enable the users to access the service providers and as such they are only a means of accessing of service provided and not goods separately sold and hence leviable to turnover tax under Section-5A of the Act on the turnover relating to the second sale of the recharge coupons and sim cards. Therefore, we hold that levying of turnover tax is not leviable on the second sales of sim cards and recharge coupons.

    Gujarat HC

    Titan Industries O/TAXAP/46/2017 dt 3.2.17 (101 VST 1) - The word “Article or Jewellery” used in Entry No.13(ii) of Schedule II of the Act is required to be given the widest meaning and is not required to be read in a narrow or restricted sense and the fullest meaning is required to be given to the words used in the Entry in the texting statute. In the case of The Elel Hotel and Investments Ltd. and Anr (Supra) the Hon’ble Supreme Court has observed that the cardinal rule of interpretation is that the entries in the legislative lists are not to be read in a narrow or restricted sense and that each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it. It is further observed that the widest possible construction, according to the ordinary meaning of the words in the entry, must be put upon them

    Central Board of Direct Taxes

    Circular 23/17 dt 19.7.17- Modification of Circular No.1 of 2014 in view of substitution of Service Tax by Goods and Services Tax - 4. In the light of the fact that even under the new GST regime, the rationale of excluding the tax component from the purview of TDS remains valid, the Board hereby clarifies that wherever in terms of the agreement or contract between the payer and the payee, the component of'GST on services' comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVIJ-B of the Act on the amount paid or payable without including such (GST on services' component. GST for these purposes shall include Integrated Goods and Services Tax, Central Goods and Services Tax, State Goods and Services Tax and Union Territory Goods and Services Tax


    Professional Updates- July 2017

    VAT Update in AP

    CA Ambati Chinna Gangaiah agcpower@icai.org, 08801032969

    Supreme Court
    Kathyayini Hotels 135 STC 77 - Even a best judgment assessment must be reasonably made and not on surmises

    Advance Ruling
    Shuchi Beverages-A.R.Com/376/2016 dt 24.5.17 (AO124/16)–Movement of goods outside AP– price ex factory – specified as sales liable for VAT – Appeal filed before APVAT AT VSKP – Arguable case exists

    Orissa HC
    D. K. Construction - STREV Nos.101 /11 and batch dt 1.3.17 - 100 VST 24 - Contract for supply of ballast and grit at both sides of Railway track – Labour charges to be deducted

    Bombay HC
    Axis Bank – WP 1796 OF 2015 dt 7.3.17 100 VST 48 - Recovery of tax-Priority of debts- Company in liquidation –Bank bringing property mortgaged to it to sale- Bank’s dues have priority over statutory dues - Maharashtra Value Added Tax , 2002 (9 of 2005), ss. 33(1), 37, 38 – Securitization and Reconstruction of Financial Assets and Enforcement of security Interest Act (54 of 2002), ss. 13, 26E, 35-Companies Act (1 of 1956), ss. 529, 529A, 530

    Chhattisgarh HC
    Kasturchand Bafna 100 VST 251 Breakup of landed cost per tone including freight by road on pre-paid door delivery basis – Freight charges included in “sale price” by express agreement between parties –Includible in taxable turnover –Reassessment –Question whether freight charges includible in turnover not considered in original assessment – Reopening of assessment valid

    Allahabad HC
    Silawar Brick Field 100 VST 394 Settlement scheme fixing trade tax payable on composition basis – Once agreement entered into, binding on both dealer and Department – Dealer not entitled to seek waiver of payment on any ground


    Professional Updates- June 2017

    VAT Update in AP

    CA Ambati Chinna Gangaiah agcpower@icai.org, 08801032969

    Supreme Court

    • 1. Aryaverth Chawl Udyuog, Appeal Civil No. 6714/09 dt. 27.11.14 (91 VST 1)- assessment cannot be reassessed by placing reliance on the change in law specified in circular and action is taken on the basis of directions issued by Commissioner.
    • 2. CTO Vs A Infrastructure Ltd Appeal Civil 2806/15 dt 24.11.15 - There is no doubt that a distinction has to be drawn between exempted goods, which means complete exemption for the specified goods, and when the goods are taxable goods, but a transaction or a person is granted exemption. When the goods are exempt, there would be no taxable transactions or exemption to a taxable person. In other cases, goods might be taxable, but exemption could be given in respect of a taxable event, i.e., 8 (1976) 4 SCC 27 24 Page 25 exemption to specified transactions from liability of tax or exemption to a taxable person, though the goods are taxable. (Argument of profession - ITC can be claimed in respect of sale of taxable goods even if not taxed under specified circumstances)

    High Court
    Bhimas Hotels – WP 217/17 dt 23.3.17 - supply of food to its workers at a subsidized rate is understood to be part of their industrial obligation, it is unthinkable that the same can be construed as service falling within the definition of the expression ‘service’ under Section 65B(44) of the Finance Act. The 2nd respondent has completely overlooked this aspect and assumed a jurisdiction not vested in him in law. As a matter of fact, the petitioner has paid the value added tax on the value of the food supplied to its workers. In respect of some assessment years, they have even been imposed with a penalty under the Andhra Pradesh Value Added Tax Act, 2005. Therefore, once the State Authorities have treated the supply of food to the workers of the petitioner as sale, it is not open to the respondents to treat the same as service and impose a liability.

    Advance Ruling
    Foods Fats & Fertilisers-A.R.Com/08/2015 dt 28.4.17(A.O. 122/16)(majority decision) - Margarine is commercially a different product from vegetable oils mentioned in Entry 66 or 67 of schedule –IV and therefore, it falls under Schedule-V liable to tax @14.5%

    Commissioner’s Circulars
    CCT’s Ref.No.CCW /CS (1)/128/2015, dt.09.05.17- filing of Annexure III ( List of inventory )and Annexure IV ( Details of all bank accounts transacted during the tax period ) along with form VAT 200 for the quarter endings June, September, December and March

    Gujarat HC
    Shyam Industries Special Civil Application No 5204/16 dt 17.6.16 (100 VST 343) - Tribunal and High Court directing refund – Department seeking special leave to appeal to Supreme Court and Supreme Court issuing notice on petition and application for condonation of delay – Commercial Tax Officer cannot suo motu refuse to refund on ground Department in process of appealing to Supreme Court – However, refund to abide order of Supreme Court.


    Professional Updates- May 2017

    VAT Update in AP

    CA Ambati Chinna Gangaiah agcpower@icai.org, 08801032969

    High Court

    • 1. Transocean Offshore – WP 44908/16 dt 6.4.17 “………..47. As pointed out by the Supreme Court in State of A.P. v. Rashtriya Ispat Nigam Ltd.1, hire charges are taxable only when full possession and control is given to the hirer. If the owner retains effective control over the equipment, it is not transfer of the right to use………”
    • 2. Tirupati Fuels wp 11082/17 dt 6.4.17 – “………..All that was required of the petitioner was to produce proof to show eligibility for input tax credit. If this proof had been produced there would have been no difficulty, in arriving at the final figure without disturbing the figures already recorded. Therefore, we are of the considered view that the petitioner deserves one opportunity only for the purpose of producing evidence……………”
    Commissioner’s Circulars
    • 1. CCT’s Ref.No.CCW /CS(1)/128/2015, dt.27.03.17 - instructions in modification of procedure for Post registration advisory visits
    • 2. CCT’s Ref.No.CCW /CS (1)/128/2015, dt.10.04.2017 - instructions issued and communicated for discontinued of using physical waybills-
    • 3. CCT's Ref No.BII(1)/141/2017 DT: 11.04.2017Audits and Assessments - Rule 59 of APVAT Rules 2005 –Procedures to be followed

    Allahabad
    G.D. Goenka WRIT TAX No.- 146 of 2013 dt 9.12.16 99 VST 188 - grant of non-exclusive licence to Franchisee for use of Brand name of petitioner under the agreement for consideration is exigible to tax under VAT Act, 2008 and judgments in Bharat Sanchar Nigam Ltd. and another (supra) and State of A.P. Vs. Rashtriya Ispat Nigam Ltd. (supra) are neither applicable to the facts of present case nor lay down a different law.

    Punjab and Haryana
    Indo Arya Central Transport 98 VST 21 - Vehicle running upon fixed rails –Excluded from definition of “goods vehicle”-Goods transported in such vehicle –Cannot be detained


    Professional Updates- April 2017

    AP VAT

    Supreme Court

      • Ayyasamy vs. A. Paramasivam AC 8245-8246/16 dt 4.10.16 (2016) 10 SCC 386 – 10. 'Fraud' is a knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his detriment. Fraud can be of different forms and hues. Its ingredients are an intention to deceive, use of unfair means, deliberate concealment of material facts, or abuse of position of confidence. ………. (Ramesh Kumar & Anr. v. Furu Ram & Anr., (2011) 8 SCC 613.)
      • Syscon Consultants AC 2910/13 dt 19.9.16 (2016) 10 SCC 353-Once, it is found that justice of the case on facts does not require interference, this Court, even at the appellate stage, is well within its discretion to stay its hands off, as held in Taherakhatoon (D) by Lrs. v. Salambin Mohammad (1999) 2 SCC 635
      • Imax Corporation AC 34009/13 dt 10.3.17 – (Cause of action in India and Arbitration in London) – High Court committed an error in observing that the seat of arbitration itself is not a decisive factor to exclude Part-I of the Arbitration Act.

    High Court

      • Venkateswara Electrical and General Stores WP.24957/16 dt.18-08-16 - the petitioner admitted non-disclosure of the turnover, and accepted their liability to pay tax thereon….. there is no justification in denying them the benefit of input tax credit for the corresponding purchases made by them.
      • Sri Asta Lakshmi Rice Mill WP 38708/15 dt 30.11.15 – (purchase tax on paddy proportionate to production of husk) purchase tax levied, under Section 4(4), on paddy should be deducted from the tax levied on the sale of rice, as both paddy and rice are declared goods U/s 14 of the CST Act.

    STAT

    Sri Raghavendra Enterprises – TA 255-56/11 dt 22.2.17 It is settled law that burden in revision lies on the revisional authority.

    Commissioner’s Circulars

    Ref.No.CCW/CS(1)/128/2015, dt.17.03.17–instructions issued Registrations in all acts.

    Allahabad

    Kalpataru Agro Forest Enterprises - Trade tax Revision No. 52 of 2016, dt 4-7-16 - 2016 NTN (Vol 61) 143 (All) - Purchase of the bamboo and wood and subjecting it to process of debarking, cutting and removing roots does not bring new commercial commodity as after the process it remains bamboo and wood as such it does not amount to manufacture


    Professional Updates- March 2017

    Supreme Court
    • PATEL BROTHERS AC 49-50/2017 dt 4.1.17 -What, therefore, follows is that the court cannot interpret the law in such a manner so as to read into the Act an inherent power of condoning the delay by invoking Section 5 of the Limitation Act, 1963 so as to supplement the provisions of the VAT Act which excludes the operation of Section 5 by necessary implications
    • Advance Gases & Consultants AC 1337/10, dt 16-3-16 (2016) 54 PHT 177 (SC) - The process of cleaning and testing of cylinder cannot be seen as independent of the sale transaction. Therefore, service charges collected for cleaning and testing cylinders shall form part of sale price and turnover for sale of oxygen for levy of tax.
    High Court
    Digital Factor – WP 15984/16 dt 24.6.16 (63APSTJ1) - presumption contained in Section 47 of the AP VAT Act, 2005 is rebuttable presumption and the assesse can rebut the presumption that the goods has crossed the border check post of the state and not intended for sale in the State by producing evidence

    STAT
    Fresco Juices – TA No.60/2016 dt 25.10.16 - In the present case the vehicle which was checked at the check-post is the same number mentioned in the e-way bill. Hence the authorities are not right in imposing penalty (Section 10A of CST Act was brought to the notice of Tribunal)

    Commissioner’s Clarifications
    CCT’s Ref No.Enft /E3/6/2017 dt 31-01-17 – clarification on the procedure of eTranshipment Goods coming from outside the state through Railways- transhipped in Trucks to other states

    DC orders
    AP Paper Mills - R. F. No.6/2015-16 dt 3.2.17 (DC 726) – scrap of sales forest wood brought to tax – (forest wood scrap fit to be firewood and exempted – not put in reply show cause notice)

    Patna High Court
    Mappra Laboratories WP 18626/14 dt 4th May, 2015, (2016) 24 KTR 358 (Patna)] - State Legislature not being competent to provide for levy of tax on the first point of sale on the basis of MRP or any other notional value, there could be no question of the legislature providing for the same even by way of exercise of option by the dealer concerned. The matter goes to the root of the competence of the State Legislature under the Constitution to frame any such enactment and if it is not competent to enact such a measure then it is equally not competent to do the same by way of providing option for levy of tax upon the dealer in such matter.

    Jharkhand HC
    Express Infratech WP 2852 / 2014 dt 3.5.2016 (2016) 55 STJ 501 (Jhar) - There is no loss of revenue to the State of Jharkhand even if this amendment is carried out with retrospective effect. The goods, which are purchased from 8 different States like West Bengal & Maharshtra etc. and which has been given validated date as 04.02.2011 by this registered dealer having certificate of registration, which includes the aforesaid capital goods. In that eventuality this petitioner will have to pay Central Sales Tax @ 2%