Tax Vista Your weekly tax recap Edn. 151 - 8th May 2023 By Dr. G. Gokul Kishore

 

 

E-way bill extension - 8 hours to be reckoned to count delay

GST law is enforced in full particularly in context of e-way bills. Contravention of statute, how so ever understandable or without malafide, cannot escape penalty as per the revenue officers. However, the High Court of Calcutta held that imposition of 200% penalty was not warranted in the case of the petitioner since his conduct did show that there was no intention to evade taxes. The consignee had changed the destination from Panagarh to Durgapur and then changed the same again. The vehicle was intercepted at 9.35 am and the e-way bill had expired at 11.59 pm. The assessee also showed the email exchanged to prove his bonafide. The High Court held that if the 8 hours provided by the statute for renewal of bill is considered the delay was about 1.5 hours only and taking into consideration the bonafide of the assessee, imposition of penalty was not warranted [2023-VIL-270-CAL]

 

Refund - Physical signature cannot be insisted in addition to digital signature

In an era of digitisation and funds transfer using OTP, the revenue department contended that refund granted based on electronic application with all documents being uploaded was contrary to law since the assessee/petitioner had not signed the declarations physically prior to uploading the same. The High Court had to come to the rescue of the assessee since Tribunal has not been established and proceeded to rule that the requirement of physical signature is not found either in Rule 89 (on refund) or Rule 26 (on method of authentication) of CGST Rules and GST authorities cannot insist on the same on strength of administrative instructions, i.e. Circular dated 18-11-2019. The original authority had held in favour of the taxpayer but the appellate authority had found fault with such documents. The High Court restored the adjudication order with consequential benefit [2023-VIL-275-RAJ].

 

RoDTEP claim through shipping bills - Gujarat High Court intervenes

It would appear that foreign/export markets are easier to navigate than the tax environment in India. An exporter of sugar was before Gujarat High Court being aggrieved that the customs authorities prohibited claim of RoDTEP benefit through shipping bills in respect of export of refined white sugar and insisted on filing separate claim. Also, they threatened recovery action in respect of benefit earned already by the petitioner. The petitioner apprehended that filing of shipping bill without claim would be a ground to later deny the same treating the same as waiver of claim. The High Court directed that the petitioner be allowed to claim benefit even if it is not mentioned in the shipping bill, such non-mention would not be treated as waiver and that an opportunity of hearing should be provided to the petitioner. It is not known why proper proceedings cannot be initiated if the benefit is viewed as inadmissible like exceeding of quota or other issues with the documents and why methods not having sanction of law are adopted by the customs authorities [2023-VIL-252-GUJ-CU].

 

Amount received in relation to supply not consideration for separate service

Ruling on an application with surprising ingredients, the AAR held that a lump sum paid by the service recipient to be paid as bonus to employees of the service provider would be taxable at the same rate of 5% as the supply of canteen service by him. As per facts in the order, the service provider issued invoice for the canteen services charging 5% GST and it appears that the service recipient paid a sum separately as bonus for the employees. The applicant was of the view that he is acting as intermediary between the employees and the service recipient and hence GST was chargeable at 18% but his service recipient wanted to be charged 5% on such amount as well. The AAR held that the additional sum paid by the service provider would form part of value of canteen services being sum liable to be paid by the supplier but "incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both". Since no other service was provided it would form part of canteen services only and accordingly attract 5% GST.

 

The Central Member also concurred with this ruling but opined that in case the applicant/service recipient retains any sum as commission for the receipt and subsequent payment of bonus, that portion would be exigible to GST at 18%. According to him the lump sum was also consideration being inducement for the employees to provide quality services [2023-VIL-84-AAR].

 

It appears that the considering the stature of service recipient, the service provider had opted for advance ruling in this case. The ruling by Central Member on applicability of intermediary service to commission portion, if any and for the other amounts as part of consideration of canteen service is a value add for the applicant.

 

Structure using pre-fabricated materials may be movable but is rooted in bar on ITC

The applicant contended that ITC of goods and services used for construction of shed using pre-fabricated technology which was movable as compared to conventional building would be admissible since it was not immovable property. Though there was an RCC flooring, rest of the structure was not embedded in earth. The AAR held that the test to be applied is whether the structure enable permanent enjoyment of the land beneath and since factually it was not possible to move the shed without damage to the floor, it was not movable in that sense. It was also held that intention of the parties in building the structure - whether for permanent enjoyment /relative durability or for sale as a separate good was to be considered. Holding that ITC is not admissible, the judgements under excise law were distinguished factually since the criteria of sale in the market was not satisfied [2023-VIL-82-AAR]. 

 

The Central Member's observations though appear to be legally grounded sometimes goes off tangent as the ruling states that if an article cannot be used without fastening to earth and is not removed under ordinary circumstances, it should be considered as permanently attached to earth. It goes further to hold that if the article attached to earth is not agreed to be severed before supply, it ceases to be goods. It is not known who will have an agreement to sever warehouse or whether warehouse at the bare minimum can be erected without nuts and bolts.

 

 

(The author is an Advocate, Gokul & Subha Advocates, Chennai. The views expressed are personal. The author has published books on cross-border taxation and investigations & appeals under GST. He edits R.K. Jain's GST Law Manual. E-mail - gokulkishore@gmail.com)