Article
Classification disputes on networking equipment forcing a policy change ByDhruv Matta and Shobhit Jain
The article in this issue of Indirect Tax Amicus focuses on a recent decision regarding classification of small form-factor pluggable (‘SFPs’). It notes that judicial forums including the Supreme Court have recently ruled in favour of the telecom companies, classifying SFP as part of networking telecom equipment under Tariff Item 8517 70 90 of the Customs Tariff Act, 1975. The article hence notes that the said goods will be eligible for Basic Customs Duty (BCD) exemption. However, citing a recent press report indicating that the Finance Ministry is considering a 10% BCD on telecom network equipment components, the article ponders over various approaches the Government may take to restrict the exemption. Further, the authors also delve into the question as to whether such products will continue to enjoy exemptions under India’s different Free Trade Agreements (FTAs). According to them, the only certain outcome is that yet again the tax landscape is liable to change, and it will require impacted players to re-align their strategies.
Goods and Services Tax (GST)
Notifications and Circulars
- Registration – Grievance Redressal Mechanism for processing of applications introduced
- Sharing information/records with C&AG Audit Team – CBIC instructs field formations to get documents, if required, from taxpayers
Ratio decidendi
- Input Tax Credit is available on construction of ‘plant’ for letting out – Supreme Court dismisses review petition
- Refund under inverted duty structure – Restrictions by Notification No. 9/2022-CT are applicable only for ITC arising after 18 July 2022 – Supreme Court
- Electronic Credit Ledger cannot be blocked for an amount exceeding the credit available – Supreme Court
- Pre-deposit can be made by using Electronic Credit Ledger – Supreme Court
- Flavoured milk is classifiable as milk under Heading 0402 and not as beverage containing milk under Heading 2202 – Supreme Court
- Supplies to merchant exporters qualify as ‘export of goods’ – GST Council strongly urged to consider exempting compensation cess on such supplies – Gujarat High Court
- Seizure – Not issuing notice under Section 129(3) and proceeding directly to Section 130 is wrong – Andhra Pradesh High Court
- Shortage of goods – Confiscation of goods that are not physically available – Redemption Fine – Orissa High Court
- Notice under Section 61 (scrutiny of returns) alleging undervaluation is wrong – Jharkhand High Court
- Adjudication – Fixing personal hearing date before the date for submission of reply is akin to putting the cart before the horse – Uttarakhand High Court
- Recovery from Directors under Section 88(3) only possible for tax, penalty or interest determined under the CGST Act – Andhra Pradesh High Court
- Recovery – Section 75(12) is not invokable if self-assessed tax under Section 37 (GSTR-1) is included in return under Section 39 (GSTR-3B) – Calcutta High Court
- Recovery – Authority must wait for 3 months after service of order, before initiating recovery proceeding – Patna High Court
- GST liability on Development Agreements registered prior to GST, when project completed later – Patna High Court
Customs
Notifications and Circulars
- RoDTEP benefit restored for Advance Authorisation holders, EOUs and units in SEZs
- Works of art and antiques – Exemption when imported for public exhibition
- Bangalore Rose Onions – Exports relaxed
- Port restrictions imposed on certain imports from Bangladesh
- Prohibition on imports from Pakistan
Ratio decidendi
- Unjust enrichment doctrine is not applicable for refund of amount recovered by encashing bank guarantee, as same is not customs duty – Supreme Court
- Valuation – Product support services provided by Indian agent of the foreign exporter – Supreme Court
- Drawback – Customs component of AIR drawback when input stage rebate taken by exporter – CBIC Circular No. 35/2010-Cus. is applicable retrospectively – Supreme Court
- Crude degummed soyabean oil is not an agricultural product – Benefit of DFCE scheme is available – Supreme Court
- ‘Mechanical Electrical Assembly Front’ is covered under ‘Display Assembly’ of a cellular mobile for exemption under Notification No. 57/2017-Cus. – Department’s reliance on MEITY Report and two CBIC Circulars rejected – CESTAT New Delhi
- ‘Lemoneez’, a blend of lemon juice concentrate with water, is classifiable under TI 2009 31 00 and not under TI 2016 90 19 – CESTAT Kolkata
- Special warehousing license cannot be denied solely on grounds of imposition of penalty under Customs Section 112 in the past – ‘Contravention’ is not ‘offence’ – CESTAT Chennai and Gujarat High Court
- Refund of customs duty available when perishable goods got damaged due to certain delays by shipping company and customs – Customs Section 26A(3) is not applicable – Punjab & Haryana High Court
- CESTAT has power to grant compensatory interest for delayed adjudication of provisional assessment, but the rate of interest is to be as per the notification – Orissa High Court
- Order rejecting warehousing license is appealable before CESTAT – CESTAT Chennai
Central Excise, Service Tax & VAT
Ratio decidendi
- Supply on trial basis for 2 years with an option to purchase at the end when constitutes ‘sale’ under P&H VAT – Punjab & Haryana High Court
- Rebate – Output duty rebate on exports is available even if drawback also claimed – No double benefit – Bombay High Court
- Renting of immovable property service – ‘Plant’ not covered under Section 65(90a) and Section 65(105)(zzzz) of Finance Act, 1994 – ‘Includes’ in Explanation to Section 65(105)(zzzz) to be read as ‘means’ – CESTAT Mumbai
- Cement sold to institutional/industrial buyers in packaged form with RSP is eligible to Sl. No. 1A of Notification No. 4/2007-C.E. – CESTAT New Delhi
- Service to foreign universities/foreign group entities for enrolment of students in foreign universities is not covered under ‘intermediary services’ – CESTAT New Delhi
- DTA clearance by EOU by utilizing SFIS scrips held by the buyer is permissible – CESTAT Mumbai
