Tax Updates January 2020 – 15.01.2020
1.Possibility of Banks, Telcos, Insurers to get an exemption from GST E-invoices:
(a). A possibility is that Banks, airlines, telcos and other entities that have direct customer interaction on a large scale may be exempted from filing their e-invoices under GST;
(b). Exemption from e-invoices is benefit to those entities which issue a number of invoices to customers directly.
(c). In order to curb tax evasion and fraudulent claims of GST, Government mandate Companies with aggregate revenue of Rs 100 crore or more to issue e-invoices from 1st October 2020.
2. The CBIC Vide notification No. 05/2020–Central Tax dated 13th January 2020 CBIC authorizes following as Revisional Authority under section 108 of Central Goods and Services Tax Act, 2017:
(a) the Principal Commissioner or Commissioner of Central Tax in respect of decisions or orders passed by the Additional or Joint Commissioner of Central Tax; and
(b) the Additional or Joint Commissioner of Central Tax in respect of decisions or orders passed by the Deputy Commissioner or Assistant Commissioner or Superintendent of Central Tax,
3. House of a GST Officer raided by the CBI officials:
(a) On 11th Jan 2020, a team of CBI officials raided the official residence of Deputy Commissioner of GST & Central Excise department Asiqui Jaman in Rourkela.
(b) The officer is placed under suspension following a CBI case during his posting in Mumbai.
(c) A simultaneous raid was also conducted at his residence at Ranchi in Jharkhand
4. With data analysis, the Department of Revenue has busted 932 cases of fraudulent GST. All such cases involve fake invoicing and fraudulent tax credits, which have been encashed through the facility of IGST refunds.
5. GST applicability on GAS:-
(a). In its first in-depth review of India’s energy policies, International Energy Agency (IEA) said that for the share of environment-friendly fuel to rise, the government needs to ensure gas is treated on a level playing field with other fuels for taxation and is included under the Goods and Services Tax (GST).
(b). The (IEA) has slammed India’s natural gas pricing policy, saying linking domestic production to very low global reference prices has reduced incentives for producers to raise supplies.
(c). IEA said, “The creation of a gas hub would allow transparent price discovery on the basis of buyers and sellers interacting in an open market, and has the potential to remove the multiple price regimes in India,”.
(d). IN 2017, the Goods and Services Tax (GST) was introduced with the aim of further rationalising taxation and reducing overlapping taxes between state and central governments. As we know that Excise duty and VAT were amalgamated in GST. But not all energy sectors are covered and not at the same rate. Crude oil, petrol, diesel, jet fuel (ATF) and natural gas do not fall under GST and they continue to incur central excise duty and state value-added tax (VAT). Other fuels such as coal, naphtha, furnace oil, and liquefied petroleum gas (LPG) have been brought under GST.
(e). For natural gas to compete in India, costs have to come down, including through rationalization of subsidies for coal and LPG and adjustment of the GST.
6. In a case where the assessee was engaged in the manufacture of Boilers, Heaters, etc. from duty paid inputs and it exported boilers on payment of applicable excise duty and subsequently filed a rebate claim, Competent Authority was directed to refund the amount of duty in cash to the assessee.
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7. CAIT urges Finance Minister to probe alleged avoidance of GST by Amazon, Flipkart:
(a). At the occasion of, visit of founder of Amazon Jeff Bezos to India on 15th January 2020 Traders body Confederation of All India Traders (CAIT) said that the visit will be greeted with a strong protest from traders across the country;
(b). The statement came on 14th January 2020 when CAIT said that they are going to urge the Finance Minister Nirmala Sitharaman for an investigation into alleged avoidance of GST and income tax liability by both Amazon and Flipkart;
(c). In a statement by CAIT, they said “Amazon and Flipkart have caused huge GST and income tax revenue loss to the government and CAIT will soon meet the finance minister and urged her to institute an investigation into avoidance of GST and income tax liability on both Amazon and Flipkart,”
(d). Competition Commission of India, CCI fair trade regulator also ordered a probe against Flipkart and Amazon for alleged malpractices, including deep discounting and tie-ups with preferred sellers.
8. Kerala High court clear confusion over an issue pertaining to “Composite supply” under GST
(a). In case of Abbott Healthcare Private Limited Vs Commissioner of State Tax Kerala, Kerala High court on the matter of “Composite supply” held that Authority for Advance Rulings does not have jurisdiction to go beyond issues referred;
(b). In this case, the petitioner places its diagnostic instruments at the premises of unrelated hospitals, laboratories, etc. for their use for a specified period without any consideration;
(c). The Petitioner also enters into Reagent Supply and Instrument Use Agreements with hospitals, laboratories, etc. The arrangement between the parties is for the supply of medical instruments to the laboratory / hospital , for their use, without any consideration for a specified period and for the supply of specified quantities of reagents, calibrators, disposables, etc. at the prices specified in the agreement, through its distributors on payment of applicable GST;
(d). The question here was how much GST rate would be applicable to the goods supplied? Under GST, medical equipment draw 18 percent rate, while products such as medicines and drugs attract five percent rate;
(e). The matter went into Kerala-based Authority of Advance Ruling(AAR) which ruled that the supply of both — equipment and products– is composite. It said equipment is the principal supply and products are just incidental and hence higher rate of 18 percent would apply;
(d). The appellate authority in the state upheld the ruling. The petitioner went to the Kerala high court against the judgment. The high court wondered as to how AAR came to the conclusion that it was a composite supply.
(e). The court held that a distinction has to be drawn between the nature of a supply and the valuation thereof – While clubbing of two independent suppliers may be for the purposes of valuation of each of those supplies.
(f). For a supply to be seen as a composite supply, it must answer to the definition of the term “composite supply” at the time of its supply.
(g). The high court raised questions over how AAR can put that one supply is incidental to the other. It said one has to look at the historical pattern of the company, how it is doing the transaction and then only one can come to the conclusion in that one transaction is incidental to the other.
Also See, “Tax updates January 2020 – 13-01-2020
Also See, “Reminder Statutory Due Dates Chart for January 2020
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