Article
IGST on FTWZ transactions: Retrospective amendment to put dichotomy to rest
The article in this issue of Indirect Tax Amicus discusses a recent recommendation of the GST Council in respect of transactions by Free Trading and Warehousing Zones (‘FTWZs’) within their premises, i.e. without exporting or clearing the goods in the Domestic Tariff Area. The article notes that there are conflicting rulings of different States’ Authority for Advance Rulings. The authors (Ratan Jain and A. Rangarajan) elaborately discuss the conflict in the light of different AAR Rulings, including the use of different methods of interpretation (strict and purposive) for this purpose. According to them, the proposed retrospective amendment to Schedule-III of the CGST Act by the GST Council to insert paragraph 8(aa) therein and thus to clarify expressly that transactions occurring within FTWZs prior to clearance to the DTA shall be exempt supplies, is a welcome move. They believe that the change will bring clarity and boost ease of doing business.
Goods and Services Tax (GST)
Notifications and Circulars
- 55th GST Council Meeting – Highlights
Ratio decidendi
- Telecommunication towers are not immovable property – ITC is not deniable under Section 17(5)(d) – Delhi High Court
- Refund application filed after the SC decision holding IGST on ocean freight as unconstitutional is not time-barred – Gujarat High Court
- Cash whether can be seized during search – Supreme Court issues notice in SLP filed against Delhi HC decision – Supreme Court
- Blocking of ITC under Rule 86A – Negative blocking – Actual availability of ITC in credit ledger is not material – Andhra Pradesh High Court and Madras High Court
- State Authorities are empowered to issue Form GST ASMT-10 subsequent to search by Central Authorities – Madras High Court
- ITC is not available on goods purchased for sales promotion – Madras High Court
- No excess utilization of credit when credit of IGST amount not shown in Form GSTR-3B but split towards CGST and SGST – Kerala High Court
- Annual returns GSTR-9/9C, belated filing – Amnesty under Notification No. 7/2023-CT is available even if returns filed before such notification – Himachal Pradesh High Court
- Refund in case of inverted duty structure – Amendment in Rule 89(5) on 5 July 2022 is curative, thus applicable retrospectively – CBIC Circular No. 181/2022 clarifying to the contrary quashed – Gujarat High Court
- Order under Section 129 communicated on 8th day from date of service of notice is wrong – Orissa High Court
- Demand notice under Section 74 cannot be issued on ‘borrowed satisfaction’ – Karnataka High Court
- Budgetary Support Scheme – Change in ownership and name of manufacturing unit is immaterial – Sikkim High Court
- Audit proceeding initiated after closure of demand under Section 73, is not wrong – Punjab & Haryana High Court
- Attachment to the summary of show cause notice, mentioning the determination of tax, is not a show cause notice – Gauhati High Court
- Authentication under Rule 26(3) is also required for issuing notice, statement and orders for demand and recovery – Gauhati High Court
- Territorial jurisdiction – Rajasthan HC has no jurisdiction to entertain writ for exports made through Nhava Sheva port – Rajasthan High Court
- Demand proceedings against a company merging with another are void – Delhi High Court
- Jurisdiction of State Tax Officer to issue SCN when assessee allocated to Central Tax Authority and notification under CGST Section 6(1) is absent – Issue referred to Division Bench – Kerala High Court
- Charitable institutions’ activities are prima facie not liable to GST – Delhi High Court
- Flavoured milk is classifiable under Heading 0402 and not under Heading 2202 – Andhra Pradesh High Court
Customs
Notifications and Circulars
- Electronic collection of voluntary/self-initiated payments enabled
- Electronic integrated circuits – Compulsory registration under Chip Imports Monitoring System discontinued
- EPCG Scheme – Amendment to Para 5.10(c) of Handbook of Procedures 2015-20 (Mid-Term Review) is prospective in nature
- Revamped Preferential Certificate of Origin (eCoO) 2.0 System to be relaunched on 17 January 2025
- Yellow peas – Exemption from BCD and AIDC extended for B/L issued till 28 February 2025
- Solar power generation projects which supply electricity not eligible for benefit of MOOWR Scheme
- Petroleum and Aviation Turbine Fuel – Notification exempting additional customs duty equal to Special Additional Excise Duty rescinded
Ratio decidendi
- Valuation – No enhancement solely on basis of NIDB data – Authorities need to provide cogent reasons – Delhi High Court
- Valuation – Importer can question enhancement even if right to seek SCN or speaking order under Customs Section 17 given up – Delhi High Court
- Letter rejecting issuance of MEIS scrip is appealable under FTDR Section 15 – Bombay High Court
- Subsequent purchaser is not the ‘importer’ for demand of customs duty – No redemption fine when subsequent purchaser not the registered ‘owner’ of car imported – Supreme Court
- Interest under Customs Section 28AA is not imposable on denial of any scheme under FTP 2015-20 – FTP by itself cannot authorize interest under said section – Kerala High Court
- Customs cannot doubt validity of instrument (MEIS) issued under FTDR Act, absent any adjudication by DGFT – Delhi High Court
- LCD monitors for use with medical equipment such as ultrasound machines, X-Ray machines and CT scan, etc., are liable to IGST @ 18% – CESTAT Mumbai
- Valuation – Benefit of restricting air freight charges to 20% – CPT price becoming de facto FOB price – CESTAT New Delhi
- Refund – Unjust enrichment is not applicable to cases of goods not unloaded/short landed – CESTAT Mumbai
- Manufacture in bonded warehouse – Subsequent extension of license to cover full factory when applicable retrospectively – CESTAT Ahmedabad
- SEZ – No confiscation for bringing goods in SEZ in alleged violation of FTP and other laws – Customs authorities have no jurisdiction till goods remain in notified area – CESTAT Mumbai
Central Excise, Service Tax & VAT
Ratio decidendi
- Zinc sulphate (agriculture grade) is a fertilizer – Sulphuric acid for manufacture of said item is eligible for exemption – CESTAT Larger Bench
- Advertisement activity by franchisee for outlets in India is not extra consideration flowing to foreign franchisor – No service tax liability – CESTAT New Delhi
- Promoting and publicizing business of foreign universities in India is ‘Export of service’ – CESTAT New Delhi
- Cenvat credit on renting of immovable property service for warehouse located outside factory premises is admissible even after 1 March 2011 – CESTAT Ahmedabad
- Non-completion of adjudication within the time limit prescribed under Excise Section 11A(11) is fatal – CESTAT New Delhi
- Activities relating to consultancy on acquisition of mines abroad is not liable to service tax under Scientific or Technical Consultancy – CESTAT Kolkata
- Paint is part and parcel or essential/integral feature of any component – CESTAT Mumbai
- Coconut oil, packaged and sold in small quantities (from 5 ml to 2 liter), when is classifiable as ‘edible oil’ under Heading 1513 – Supreme Court
