Newsletter

Customs

• Circular No. 42/2019 – Customs dated 29 November 2019
  • In line with the Government’s mission to reduce physical interface, a system called e-Sanchit had been developed for enabling the importers, exporters, customs and clearing agents to upload documents electronically in the prescribed portal;
  • The CBIC has mandated uploading every Bill of Entry, Invoice / Invoice cum packing list and Transport Contract i.e. Bill of Lading / Airway Bill etc. on e-Sanchit;
  • It has been further clarified that for every Invoice and Bill of Lading / Airway Bill declared on the Bill of Entry, w.e.f. 02 December 2019, the reference of IRN generated from e-Sanchit with the relevant document code shall be provided as it has been made mandatory in System.

• Circular No. 40/2019 – Customs dated 29 November 2019
  • CBIC observes that over the years, cross-border movement of express cargo has increased significantly which mandates simplification of procedure. It is also observed that sending a Courier Bill of Entry after X-ray screening to the Shed Superintendent / Appraiser, merely for giving out of charge order, adds an avoidable step in the automated clearance process. Accordingly, it was observed that ECCS should automatically give out of charge order to goods covered under facilitated CBE which has been 'cleared' on Customs X-ray screening;
  • Accordingly, CBIC directs Directorate of System & Data Management to take necessary steps to implement Auto Out of Charge (OOC) Order.

• Instruction No. 05/2019 – Customs dated 11 December 2019
  • In order to meet the international Anti-Money Laundering (AML) obligations and FATF recommendations the Union Government has bought several legislative changes to streamline the enforcement of Prevention of Money Laundering Act, 2002 (PMLA) and make it more effective;
  • In view of the above, Enforcement Directorate has devised new reporting formats for the all relevant officers to report cases warranting action under PMLA, viz. ML-I and ML-II;
  • CBIC directs the customs officers to report the cases in the new formats involving action under Section 135 of the Customs Act, 1962 where total value involved in Rs. 30 lakhs or more.

DGFT

• Public Notice No. 45/2015-2020 dated 26 November 2019
  • DGFT amends Chapter 6 of the Handbook of Procedure 2015-20 to mandate that STP units shall file every month, report of services exports under Service Exports Reporting Form (SERF);
  • Amendment to Appendix 6E of appendices and ANFs with immediate effect; 
  • The STP units have been directed to submit their SERF in the prescribed format.
• Public Notice No. 47/2015-2020 dated 07 December 2019
  • With a few exceptions as mentioned, DGFT provides additional 2% rate under MEIS for export of certain goods as mentioned in the previous notifications issued by the DGFT in this regard.

• Trade Notice No. 41/2015-20 dated 12 December 2019
  • In furtherance to Trade Notice No. 34/2015-20 dated 19 September 2019, DGFT issues the instant notice, mandating the application and lists down important points for application process for issuance of Preferential Certificate of Origin through online platform URL for exports to Nepal under South Asian Free Trade Area (SAFTA) and SAARC Preferential Trading Arrangement (SAPTA) w.e.f. 18 December 2019;
  • Provides medium for raising a complaint / suggestion.

• Notification No. 35/2015-20 dated 12 December 2019
  • DGFT amends para 2.25 of Foreign Trade Policy 2015-20 prohibiting import of goods, including those purchased from e-commerce portals, through post or courier where customs clearance is sought as gifts, except for life saving drugs / medicines and Rakhi (but not gifts relating to Rakhi);
  • Permits import of goods as gifts upon payment of full applicable duty.

In furtherance to the previous circulars on Sabka Vishwas Legacy Dispute Resolution Scheme, 2019, CBIC issues yet another clarification vide Circular No. 1074/7/2019 – CX dated 12 December 2019. Following are the highlights of the latest circular in this subject matter:

• Where deposits made by a taxpayer during enquiry, investigation or audit, could not be appropriated due to pendency of adjudication proceedings, in such cases, the deposits can be deducted / adjusted when issuing the statement indicating the amount payable by the declarant;
• Any deposit made by a taxpayer during enquiry, investigation or audit, under protest, shall be adjusted by the designated committee while determining the final amount payable by the declarant. However, in cases where the deposits made by an assessee exceeds the amount payable under the scheme, the differential amount will not be refunded;
• Since 30 June 2019 was a public holiday, being a Sunday, the relevant dated for the scheme shall be 01 July 2019;
• As per the Rule of the Scheme, a separate declaration shall be filed for each case. In this regard, it has been clarified that in case of audit, a ‘case’ means where the amount has been quantified on or before 30 June 2019. In cases of multiple paras in an audit report, the taxpayer has the option to file separate declarations for each para or to file a declaration for two or more paras together;
• For units which were closed long back before introduction of PAN based Central Excise registration and for overseas service providers not having PAN, the mandatory requirement for PAN while filing Form SLVDRS – 1 has been waived off;
• For cases where Show Cause Notice was issued on or after 01 July 2019 and are not covered under any of the categories such as enquiry or investigation or audit and tax dues have not been quantified on or before 30 June 2019, shall be eligible for the scheme under ‘arrears’ depending upon the fulfillment of other conditions;
• It has been clarified that a 'matter' for issuance of discharge certificate means a case for which the taxpayer intends to file a declaration under the Scheme. It has been further clarified that 'a return filed but duty not paid' is a separate matter and the Show Cause Notice issued for 'differential amount' is a separate matter.

In wake of the decisions of recent GST Council meeting, the CBIC has issued a removal of diffuculty order to provide clarifications regarding the method of calculating the timeline for filing Appeals before the GST Appellate Tribunal

• Any person aggreived  by an order passed by an adjudicating authority may appeal to the Appellate Tribunal within three months from the date on which the order sought to be appealed. In relation thereto, it has been clarified that the period of three months will begin from the later of the following dates:
  • Date of communication of order; or
  • Date on which the President or State President, as the case may be of the Appellate Tribunal after its constitution, enters office

• The Department, on the instructions of the Commissioner, shall file an Appeal before the GST Appellate Tribunal within six months from the date on which the order has been passed. In relation thereto, it has been clarified that the period of six months will begin from the later of following dates:
  • Date of communication of order; or
  • Date on which the President or State President, as the case may be of the Appellate Tribunal after its constitution, enters office

In view of the apprehensions raised via various representations and to ensure uniformity in the implementation of the provisions of the law across field formations, CBIC ab-initio withdraws Circular No. 107/26/2019-GST dated 18 July 2019. 

It should be noted that the said Circular was issued wherein certain clarifications were given in relation to various doubts related to supply of Information Technology enabled Services (ITeS services) under GST.

Appeal Case No. 10/WBAAAR/APPEAL/2019 dated 26 August 2019

• Earlier this year, the West Bengal AAR [09/WBAAR/2019-20 dated 25 June 2019] had ruled that work for filling in the compound, tank, low land, etc. with silver sand and earthwork in layers including spreading and compacting the same is ‘works contract’ in terms of Section 2(119) of GST Act;
• The AAR had pointed out that Applicants’ supply of filling the foundation or plinth by silver sand in layers and consolidating the same by saturation with water ramming is classifiable under SAC 99543 taxable @ 18% GST;
• Aggrieved by the order of the AAR, the Applicant preferred an Appeal before the WB AAAR against the said order;
• The AAAR referred to the definition of ‘Composite Supply’ u/s 2(30) of the GST Act and observed that it means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both or any combination thereof which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;
• It was further observed that in terms of work orders issued by Mackintosh Burn Limited to the Applicant, it is evident that the activities undertaken by the Appellant amounts to improvement and modification of land for future construction. Accordingly, it is not a composite supply where principal supply constitutes of sand, but a case of transfer of property in goods in course of site preparation for construction of the New Central Correctional Home;
• Basis the above observations, the WB AAAR upheld the ruling of the WB AAR that the activities provided by the Applicant are not classifiable as composite supply but as ‘Construction Services’ under SAC 99543 taxable @ 18% GST.

GOI releases the FAQs on the blocking and unblocking of E-Way Bill (‘EWB’) generation facility in EWB Portal which have been made effective from 01 December 2019. It has been explained that blocking of EWB generation facility means disabling a taxpayer from generating EWB, in case of non-filing of 2 or more consecutive GSTR 3B Return on GST Portal, by such taxpayer. The GSTINs of such blocked taxpayers cannot be used to generate the EWB either as Consignor or Consignee

The Taxpayer whose EWB generation facility has been blocked may get it unblocked by filing the returns for the default period and thereby reducing the default period to less than 2 consecutive tax periods

Highlights of the FAQs:

• In case the GSTIN of a taxpayer has been blocked, even the transporter will not be able to generate EWB for such GSTINs as supplier or recipient;
• On filing of GSTR-3B return resulting in reduction of return filing default period to less than two tax periods, the same will be updated on the EWB portal and the GSTIN will be unblocked next day. Unblocking can also be done by the Jurisdictional officer upon application through offline / manual request;
• In case the taxpayer needs to immediately file an EWB subsequent to filing latest GSTR 3B returns thereby reducing the default to less than 2 tax periods then, they can login to the EWB portal and select the option to manually search their block status by entering the GSTIN. If the GSTIN is still shown as blocked, then they can use update option to get the latest filing status from the GST Common Portal. If their return filing default period is less than two, their return filing status will be communicated by GST System to E Way Bill Portal, and such blocked taxpayers GSTIN will be unblocked and their EWB generation facility will be restored on EWB Portal;
• Such blocking of EWB will have no effect on the already generated EWBs. These EWBs are valid and can be used to move goods to the destination;
• Transporters enrolled in EWB Portal and who are not registered on GST portal will not be impacted by this system. However, if the GSTIN of registered transporters is blocked, then that GSTIN cannot be used as Consignor, Consignee or transporter while generating e-way bill and updating transporter details;
• If a registered transporter’s GSTIN is blocked in EWB generation facility, then, such EWB generation facility will block the updating of Transporter ID

Andhra Pradesh AAR holds that benefit of concessional GST rate on works contract services provided to Government Companies shall not be available to an Assessee if the Government Company provides its services for commercial / business purposes. Notes that the Applicant's works are in of industrial nature as those are to be done to industrial feeders and said works are to a business entity

CBIC vide Circular No. 126/45/2019 – GST dated 22 November 2019 clarifies scope of entry at item (id) and (iv) under Heading 9988 of Notification No. 11/2017 – Central Tax (Rate) dated 28 June 2017 inserted w.e.f. 01 October 2019 prescribing 12% for job-work services while the rate of 18% was retained for manufacturing services.

Since both the above services were in relation to goods owned by others, it had led to confusion as to the applicability of GST rate on job-work transactions. In this regard, it has been clarified that the said entry no. (id) pertaining to job work services would only cover those services which involve treatment or processing undertaken on goods belonging to another registered person. Whereas, the entry no. (iv) pertaining to manufacturing services covers such services which are carried out on physical inputs (goods) which are owned by unregistered persons.

CBDT releases the much-awaited Taxation Laws (Amendment) Ordinance, 2019. This comes as a great relief to a number of Assessees and hopes to encourage domestic businesses. The proposal made under this ordinance shall attain finality upon the discretion of the Parliament and the President

Highlights:

• Domestic Companies shall have the option to pay the income tax at the rate of 22% (plus applicable surcharge and cess) for any previous year relevant to the assessment year beginning on 01 April 2019, in terms of the newly inserted Section 115BAA in the Income Tax Act, subject to the fulfillment of the prescribed conditions
  • Provided that where a domestic Company fails to satisfy the conditions of this Section, the option shall become invalid in respect of that year and subsequent years and other provisions of the Act shall apply as if the option was never exercised;
  • Further provided that the total income of the Company shall be computed without any set-off or allowance of unabsorbed depreciation deemed, if such loss or depreciation is attributable to any incentive, deduction or exemption which are not allowed once a domestic company exercises such option under this section
• Domestic Manufacturing Companies other than those falling under Section 115BA and 115BAA shall have the option to pay the income tax at the rate of 15% (plus applicable surcharge and cess)
  • Provided that where the Assessees fail to satisfy the conditions of this Section, the option shall become invalid in respect of that year and subsequent years and other provisions of the Act shall apply as if the option was never exercised.
• A new sub-section is proposed to be inserted to provide that in case of a unit in the IFSC, the domestic company shall be entitled to deduction under newly inserted Sec. 80LA in respect of such unit subject to fulfilment of conditions in the said section
• It has been clarified that the following businesses shall not be included in the business of manufacture or production of any article or a thing:
  • development of computer software in any form or in any media;
  • mining;
  • conversion of marble blocks or similar items into slabs;
  • bottling of gas into cylinder; 
  • printing of books or production of cinematograph film;
• It has also been clarified that surcharge of 10% would apply to all income of the Companies eligible for reduction rate of tax u/s. 115BAA and 115BAB of the IT Act;
• It has been proposed to provide that the income-tax payable in respect of income being short term capital gains derived from transfer of a capital asset on which no depreciation is allowable, shall be computed at the rate of 22% plus surcharge of 10% and cess of 4%

Karnataka AAR: The activities undertaken by an Assessee involving construction of residential property on land under Joint Development Agreement, amounts to supply of service which is a taxable supply