Newsletter

CBIC vide Notification No. 05/2021 - Central Tax dated 08 March 2021 has mandated e-invoicing w.e.f. 01 April 2021 for taxpayers having aggregate turnover of more than Rs. 50 crores in a Financial Year. Earlier, e-invoicing had been made applicable w.e.f. 01 January 2021 for taxpayers having aggregate turnover of more than Rs. 100 crores.

The Petitioner, situated in a Special Economic Zone in Mumbai, had been exporting electronic motors to notified markets and claiming benefit under the MEIS in the prescribed manner. In certain cases, where exports had been made from non-EDI portals, physical SBs were filed and physical MEIS applications had been filed. Such applications made by the Petitioner, were rejected on the ground that the declaration of intent on the SB had not been mentioned.

Aggrieved, the Petitioner had preferred a Writ before the Bombay HC. The HC observed that in the case of non-EDI cases, under the provisions of section 149 of the Customs Act, only manual corrections can be made by a party. It was further observed that the only lapse on the part of the Petitioner was that it had inadvertently mentioned ‘N’ in the reward column of the SB instead of ‘Y’.

It was observed by the HC that such an error is a procedural defect and is curable considering the fundamental objective of the scheme under Chapter 3 of the FTP 2015-20. The basic objective of the Exports from India Schemes is to provide reward to the exporters and to promote manufacture and export of notified goods to notified markets. Once this is done, the assessees are entitled to claim its reward.

The HC further observed that in the case of Pasha International vs. Commissioner of Customs [2019 (365) E.L.T. 669], among others, it has been held by the Madras HC that an assessee can be allowed to manually carry out corrections in the SBs in the case of Non-EDI bills and the Revenue can issue the necessary No-Objection Certificate to such party if such assessee has inadvertently committed a mistake while filing and uploading the SB and not claimed MEIS benefit.

Basis the above observations, the Bombay HC quashed the MEIS rejection letters and directed the Revenue to issue the required No Objection Certificate, basis which the Petitioner would be enabled to claim the benefit of MEIS.

Portescap India Private Limited vs. Union of India and Ors. [W.P. No. 2532 of 2019]

The Ministry of Finance vide Press Release dated 28 February 2021 has decided to extend the due date for filing Annual Return in Form GSTR-9 and Reconciliation Statement in Form GSTR-9C for the F.Y. 2019-20 till 31 March 2021 with the approval of Election Commission of India

The CBIC vide Notification No. 14/2020 – CT dated 21 March 2020 had notified that Dynamic QR Code would be required on B2C invoice issued by taxpayers having aggregate turnover of more than Rs. 500 crore, w.e.f. 01 December 2020. Further, the penalty had been waived for non-compliance of the provisions of the said notification till 31 March 2021, subject to certain conditions.

In respect of the said notification, the CBIC vide Circular No. 146/02/2021-GST dated 23 February 2021 has issued further clarifications:

The Ministry of Finance vide Press Release dated 22 February 2021 has clarified that the time limit for sanction of pending IGST refunds stands extended till 31 March 2021, in such cases where records have not been transmitted to ICEGATE due to GSTR1 and GSTR3B mismatch. The Ministry of Finance further provided that such facilitation overcomes the problem of refund blockage by allowing refunds subject to post refund audit scrutiny and undertakings of CA certificates by the exporters.

It has been further provided that the CBIC has also extended the facility for resolving invoice mismatch errors through customs officer interface on permanent basis. Earlier this facility was provided for a limited period i.e. in respect of shipping bills filed up to 31.12.2019. The exporter may now avail the facility of correction of Invoice mis-match errors in respect of all past shipping bills, irrespective of its date of filing subject to payment of prescribed fees.

The DGFT vide Trade Notice No. 42/2020-21 dated 19.02.2021 has proposed to issue online Certificate of Origin (Non-Preferential) tentatively w.e.f. 01 April 2021. The online applications for CoO would be processed in terms of the provisions of Rules of Origin as prescribed under the Handbook of Procedures, based on the declaration of exporter to the issuing agency without any scrutiny of documents.

However, the documents such as invoices, etc. would be available for scrutiny, where cross verification would be required. Further, the online CoO has been proposed to be issued at a uniform fee of Rs. 100/-. It has been further provided that the applicants will be able to avail CoO (non-preferential) in either online or manual till 30 March 2021. Thereafter, w.e.f. 01 April 2021, the applications would be accepted only in online mode.

The CBIC vide Notification No. 17/2021 – Customs (N.T.) dated 17 February 2021, has prescribed a fee of Rs. 1,000/- for amendment in Customs Automated System for handling a mis-match between Shipping Bill and GST Returns

The Applicant, situated in Pathderi, Haryana, had been supplying un-assembled sub-assembles of railway components, to its additional place of business located in Chennai. The sub-assemblies were then being assembled completely and finally supplied to the Integral Coach Factory, Chennai (‘ICF Chennai’). Accordingly, the Chennai unit of the Applicant, would bill to its parent unit in Pathderi and ship the assemblies directly to ICF Chennai.

In view of the afore-stated background, the Applicant sought an Advance Ruling before the Haryana AAR to ascertain the tariff classification of sub-assemblies supplied from Pathredi unit to Chennai unit as well as the IGST rate applicable.

Upon perusal of the invoice, the AAR observed by the AAR that the items supplied by Pathredi unit to the Chennai unit were in fact parts and sub-parts of sub-assemblies. It was further observed that fabrication of sub-parts was to be done at the Chennai unit. The AAR remarked that fabrication is generally defined as the process of making something from semi-finished or raw materials rather than from ready-made components, hence, the process done at Chennai unit amounted to work process or manufacturing.

The AAR further referred to the Explanatory Notes and the General Rules of interpretation, which provides that incomplete or unfinished articles presented unassembled or disassembled are to be treated as finished goods. However, it had been observed that in the instant case, parts which will are to be assembled in Chennai, are being assembled by adding some other components procured from other suppliers.

It was further observed that the Applicant would be undertaking the process involving in-house inspection, fabrication, welding, painting, leakage testing and final inspection. Accordingly, it can be said that assembly operation as well as addition of components was being undertaken to prepare the parent assembly in Chennai unit.

The AAR further referred to Para 4 of Circular No. 30/4/2018-GST dated 25 January 2018, wherein it has been clarified that only the goods classified under chapter 86 supplied to the railways would attract GST at 5% with no refund of unutilized ITC and other goods would attract the general rates even if supplied to railways.

Basis the above observations, the AAR held that the goods supplied from Pathredi unit of the Applicant to Chennai unit cannot be classified under chapter 86 and would therefore attract the general rate applicable as per the classification of each item in their respective chapters.

JSL India Private Limited [Advance Ruling No. HAR/HAAR/R/2018-19/51]

GLS Comments:

Even after more than 45 years of the introduction of Tariff in India, the classification of parts of railway goods is still a major subject of dispute. Although the Haryana AAR has not touched upon the Section Notes to the Tariff, it would be pertinent to note that the instant dispute is majorly on account of two rather contradictory Notes. While Note 2 to Section XVII of the Tariff Act (which covers railway goods) provides that parts of general use, even if being used in railways, shall be classified in respective chapters other than 86, Note 3 provides that parts, being used solely and principally with Railways shall be remain classifiable under Chapter 86.

It would be pertinent to note that the matter relating to classification of goods, where assembly occurs at the site of supply, has been majorly litigated in the excise regime as well. In the case of Bharat Heavy Electricals Limited [2018 (14) G.S.T.L. J74], it had been held that boiler parts cleared in unassembled form as incomplete boiler and assembled at site, are classifiable under sub-heading 8402 as boiler and not the sub-heading as parts. Taking note of the SC judgement, it seems that the instant AAR seems to have taken a different approach in this case.

The CBIC has recently released FAQs on services by way of transport and logistics to clarify various issues under GST. Following are the key highlights of the FAQs:

GTA Services

Airline Services

While all eyes were on the Budget 2021-22 announced by the Finance Minister on 01 February 2021, there have also been substantial developments in the tax front in the month of January 2021 as well. Notably, the CBDT has already notified the Faceless Penalty Scheme, 2021 and the CBIC has notified the Custom Authority for Advance Ruling Regulations, 2021.

Bringing you all the relevant judicial, legislative and regulatory developments in Direct and Indirect Tax, we are glad to present you the 6th Edition of our ‘Vision 360’ Newsletter in association with TIOL.

We hope that reading of the newsletter would bring an enriching experience to you! Your valuable feedback is always welcome at consult@gstlegal.co.in or updates@gstlegal.co.in.