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News Indirect Tax-Misc. - Indirect Tax

  • May 23, 2024
  • Major rejig of Customs duty, GST being planned

    The government has identified a clutch of products where inverted duty structure is distorting trade and impacting manufacturing competitiveness and has initiated the process to address the issue, a senior official said.

    Among the products that have been identified are washing machines, air purifiers, solar glass, paper, furniture, apparel and jewellery. Some of these products are on the list identified for special attention under Make in India initiative.
    Inverted duty structure is a situation where inputs and raw materials attract higher tax than the finished products. In cross border trade it makes imports of finished products cheaper than raw material and disincentivises local manufacturing.

  • Apr 04, 2024
  • FY24 indirect tax collection exceed estimates

    The indirect tax collection for FY24 has exceeded the revised estimates (RE) of Rs 14.84 lakh crore, helped by a record GST mop-up, a top government official said. The gross GST mop-up for FY24 also marks a milestone with the collection of Rs 20.18 lakh crore, comprising state GST, central GST, integrated GST and compensation cess, exceeding the previous year’s collection by 11.7 percent. In FY23 and FY22, indirect tax collections stood at Rs 13.94 lakh crore and Rs 12.94 lakh crore, respectively. When compared to FY23, the indirect tax collection for FY24 has exceeded by 6.45%.

    Sanjay Kumar Agarwal, chairman, CBIC, in a letter to field officials, said, “I am happy to inform that the indirect tax collections for FY 2024, including customs and union excise duty have exceeded the RE by a handsome margin.”

  • Aug 31, 2023
  • McDonald's, Domino's and 200 others now face a Rs 30,000 cr tax demand

    Around 200 firms, including McDonald's India, L'Oreal, Colgate Palmolive, Castrol, Saint-Gobain, Whirlpool, Mastek, and Domino's Pizza, have received notices from state authorities seeking tax under the pre-Goods and Services Tax (GST) regime, according to a report by The Economic Times (ET). The companies argue that they cannot be taxed on the same item as both "goods" and "services" and have subsequently moved various high courts and the Supreme Court.

    The tax authorities sent these notices in the past six months. They are seeking approximately Rs 30,000 crore in taxes for the financial years FY11 to FY15. The states have imposed value-added tax (VAT) on the transfer of intellectual property rights (IPRs) to franchisee services.

  • Mar 21, 2023
  • Indirect tax dept on revenue drive, urges field offices to ensure maximisation of collections

    Ahead of the end of the current fiscal year, the Central Board of Indirect Taxes and Customs (CBIC) has asked field offices to closely monitor tax collections.

    CBIC chairman Vivek Johri in a recent newsletter urged field offices to ensure maximisation of revenue collection through “every possible legitimate means”. He highlighted areas of focus including expeditious clearances in customs, recovery of arrears from “ripe cases”, disposal of seized and confiscated cargo and ensuring that all taxpayers that are required to file returns actually do so. “I would urge zonal chiefs to keep a close watch on revenue and to ensure that there are no slippages,” he said.

  • Feb 08, 2023
  • Sabka Vishwas: Tax board on drive to recover Rs 50 k cr

    The Central Board of Indirect Taxes and Customs (CBIC) has decided to go after tax evaders, who had made declarations under the Sabka Vishwas (Legacy Dispute Resolution) Scheme of 2019, but failed to pay the relevant tax subsequently. The drive aims to recover over Rs 50,000 crore lying with the taxpayers.

    Following a report by the Comptroller and Auditor General of India (CAG), the board has directed its field formations to “vigorously” pursue these cases so as to “protect the interest of revenue”.

  • Feb 24, 2022
  • Exception or exempting provision in taxing statute should be construed strictly: Supreme Court

    The Supreme Court Wednesday said an exception or exempting provision in a taxing statute should be construed strictly and it is not open to the court to ignore the conditions prescribed in the policy and notifications issued in that regard.

    The apex court said the exemption notification should be given meaning according to the legislative intendment and such statutory provisions have to be interpreted in light of the “words employed in them”.

    A bench of Justices M R Shah and B V Nagarathna dismissed a batch of appeals arising out of the judgement passed by the principal bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), New Delhi.

    The CESTAT had said that the appellants, ‘Krishi Upaj Mandi Samiti’ (Agricultural Produce Market Committees) located in different parts of Rajasthan, were liable to pay service tax under the category of “renting of immovable property service” for the period up to June 30, 2012.

    In its 18-page judgement, the apex court noted that as per the law laid down by the top court, in a taxing statute, it is the plain language of provision that has to be preferred, where the language is plain and is capable of determining a defined meaning.

    “An exception and/or an exempting provision in a taxing statute should be construed strictly and it is not open to the court to ignore the conditions prescribed in the relevant policy and the exemption notifications issued in that regard,” the bench said.

  • Jan 10, 2022
  • Can levy central excise duty, GST together: Karnataka HC

    Holding that the sources of power under Articles 246A (pertaining to levy of GST) and 246 are mutually exclusive and could be simultaneously exercised, the Karnataka high court has dismissed a batch of petitions filed by manufacturers of tobacco and tobacco products.

  • Dec 03, 2020
  • Govt makes it mandatory to mention 8-digit HSN Code in tax invoice for 49 chemical based products

    The government has made it mandatory to mention 8-digit HSN or tariff code for 49 chemical based products while issuing Goods and Services Tax (GST) invoice, a move experts feel is aimed at curbing tax evasion.

    While notifying the HSN Code for these products, the Central Board of Indirect Taxes and Customs (CBIC) said, “A registered person shall mention eight number of digits of HSN Codes in a tax invoice issued by him.”

    Currently, businesses mention up to 4-digit tariff code while issuing invoices.

    In trade parlance, every product is categorised under an HSN (Harmonised System of Nomenclature) Code. It helps in systematic classification of goods across the globe.

    AMRG & Associates Senior Partner Rajat Mohan said CBIC has notified every supplier of specified chemicals to mention 8 digits of HSN Code in every tax invoice issued by him for the said goods from December 1, 2020, irrespective of the scale of operations.

    “This is the first notification of its kind whereby a specific category of suppliers are pushed to use 8 digit HSN Code on every invoice irrespective of the aggregate turnover. Although there is no reason for cornering the supplier of specified chemicals, it seems that it is carried out to break the fake invoicing ring,” Mohan said.

  • Nov 11, 2020
  • Excise receipts seen up 25% in FY21, while other taxes falter

    Thanks primarily to the sharp hikes in excise duty rates on auto fuels three times since October last year, the Centre’s collections from excise duties grew a robust 34% on year in April-September this fiscal to Rs 1.28 lakh crore. The big rise in excise collections is an outlier as the Centre’s gross tax receipts declined by 22% during the period, due to the lockdown’s adverse effect on the economy, that had been on a downturn even earlier.

    Given that auto fuel sales have picked up substantially in recent months – Crisil sees annual sales down by just 11% –, the overall excise collections this year could be up Rs 60,000 crore over the FY20 mop-up of Rs 2.4 lakh crore, official sources reckon. That represents an annual increase of 25%. According to the Budget Estimate for FY21, the collections of excise duties – which includes basic excise, special additional excise on auto fuels, road/infra cess and cess on crude oil – in the year are to be Rs 2.67 lakh crore.

  • Oct 07, 2020
  • Government’s indirect tax litigation reduction scheme 'Sabka Vikas' challenged

    The government’s indirect tax litigation settlement scheme—Sabka Vikas (Legacy Dispute Resolution)—has landed in litigation, reports Sachin Dave.

    Introduced in 2019, the scheme, which was aimed at freeing “a large number of small taxpayers of their pending disputes with the tax administration”, has been challenged in the Madhya Pradesh High Court.

    The scheme offered tax payers settlement of pending central excise and sales tax issues by paying a portion of the tax demanded.

    The point of contention is whether the amount in arrears defined in the scheme would cover the disputed interest of the earlier regime.

    The petitioner has challenged the tax department claiming that the interest charged on the pending tax should be included in the scheme.

    As per the scheme, the name of the taxpayer has to be kept under the wraps. ET has refrained from naming the petitioner.

  • May 05, 2020
  • Delhi raises VAT on fuel, petrol up by Rs 1.67, diesel by Rs 7.10 per litre

    Petrol prices in Delhi jumped by Rs 1.67 to Rs 71.26 a litre on Tuesday while diesel prices went up by Rs 7.10 to touch Rs 69.39 a litre after the Delhi government raised value-added tax (VAT) on them.

    Delhi government raised the VAT on petrol to 30 per cent from 27 per cent, previously. In case of diesel, VAT was almost doubled to 30 per cent from 16.75 per cent. Delhi government raised VAT to shore up its revenue which has suffered because of the national Covid-19 lockdown.

    The price of petrol on Monday was Rs 69.59 per litre whereas diesel was at Rs 62.29.
    Other than Delhi, the petrol and diesel prices remain unchanged in Mumbai and Kolkata, according to Indian Oil Corporation website.

    As the country entered its second lockdown extension by two more weeks to contain the spread of Covid-19, it has eased some restrictions to revive the economy slowly.

  • Apr 30, 2020
  • Nagaland impose Covid-19 cess on petrol and diesel sales

    Nagaland has imposed a Covid-19 cess on petrol and diesel sales, the first state to introduce such a levy. Experts say the move could coax other sates to impose a similar levy, which will be detrimental to the fragile economy.

    Nagaland, which does not have any novel coronavirus case, imposed a Covid-19 cess of Rs 5 per litre on diesel and Rs 6 per litre on petrol and other motor spirits through a notification issued on April 28.

    “In exercise of powers conferred by sub section 3 of section 3A of the Nagaland (Sales of Petroleum and Petroleum Products including Motor Spirit and Lubricants) Taxation Act, 1967 (as amended), the Governor of Nagaland is pleased to notify that in addition to existing rate of tax and cess, the Covid-19 cess shall be levied against Entry Serial Number 3 & 4 of Schedule II of the Act,” the notification said.

    States are facing revenue constraints with all economic activity coming to a halt following the nationwide lockdown since March 24. Petrol and diesel taxes have significant share in total revenues.

  • Apr 28, 2020
  • CBIC asks field offices to conduct virtual hearings in customs, excise, service tax appeals

    The Central Board of Indirect Taxes and Customs (CBIC) has asked field offices to conduct hearings in customs, excise and service tax appeal cases via video conference with the consent of the appellant or respondent to ensure social distancing amid the COVID-19 outbreak. The CBIC on Monday issued guidelines for conducting personal hearings in virtual mode under Customs Act and said that this would also apply to those cases under Central Excise Act 1944 and Chapter V of Finance Act 1994.

    While ensuring compliance with guidelines and instructions issued by the government and public health authorities, the board has decided that personal hearing for any proceeding under Customs Act, 1962, given by authorities such as Commissioner (Appeals), Original adjudicating authorities and Compounding authority, may be conducted through video conferencing, the CBIC said.

  • Apr 27, 2020
  • CBIC clears Rs 10,700 crore GST, customs duty refund in 16 days

    The Central Board of Indirect Taxes (CBIC) has cleared over Rs 10,700 crore worth refunds in GST and customs duty between April 8-23. In the ‘Special Refund and Drawback Disposal Drive’, the CBIC officers have cleared over 1.07 lakh Goods and Services Tax and IGST refund claims worth Rs 9,818.12 crore.

    Over 1.86 lakh customs and duty drawback refund was processed totalling Rs 915.56 crore, the CBIC said in a tweet.

    “CBIC is committed to help GST Taxpayers/Exim Trade during #COVID19. Expeditious sanction of refunds during Special Refund Drive provide relief to trade, especially MSMEs,” it said.

  • Jan 27, 2020
  • Sabka Vishwas tax scheme ends with flying colours; now do this to ensure people pay tax

    Phew! the deluge has finally abated! As we assess the impact of the Sabka Vishwas Legacy Dispute Resolution Scheme (SVLDRS- 2019) which finally ended at the stroke of the midnight hour on the 15th of January, 2020, there is only one unanimous verdict – it has turned out to be one gigantic winner. A total of 1,89,229 declarations filed, coupled with a handsome revenue of Rs 14821 crores (almost 2 billion dollars) for the cash-starved government exchequer. The figures speak for themselves!

    It would be a grave injustice to the scheme, if it’s success were to be measured solely on the basis of figures reported. A more rational evaluation would be to judge it vis-a-vis the expectations with which it was launched on the 1st of September, 2019. As per records, the number of potential declarations was estimated to be about 1,82,000 & with the actual number topping the expectations by a wide margin, the results have come as a pleasant surprise. On the revenue side, the figure of Rs 14821 crores may look piffling, but with the scheme granting a mammoth and truly unprecedented waiver of as much as 70% of tax dues, any expectations of windfall revenues were anyway fanciful.

  • Jan 10, 2020
  • Sabka Vishwas Tax Amnesty Scheme: Big taxpayers stick to legal fight

    Taxpayers with deep pockets seem to have weighed the two options of resolving their indirect tax disputes with the government under the Sabka Vishwas scheme and getting legal remedy, only to mostly choose the latter route. Why else even after nearly 90% of the eligible taxpayers opted for Sabka Vishwas, cases related to only a fifth of the total disputed amount of Rs 3.6 lakh crore have been resolved yet? As reported by FE earlier, the scheme’s original deadline was December 31 but it was later extended to January 15. Over 87% of 1.8 lakh eligible taxpayers applied for the leniency scheme by Monday, according to officials. The government had earlier said 1.6 lakh taxpayers committed to pay Rs 35,094 crore of Rs 79,968 crore claimed by the taxman and settled the disputes. It remains to be seen how much of the committed payments will be made in the current fiscal. Government sources say that large taxpayers are steering clear of the scheme because in many cases the tax consultants and lawyers employed by the firms might have found that immediate settlements would not be in the best interests of these intermediaries.

  • Nov 25, 2019
  • Govt plans to scrap e-comm ‘gifts’ to curb China imports

    The government is considering amending its rules to completely remove the provision under which citizens can receive duty-free ‘gifts and samples’ valued at under Rs 5,000 from overseas, after finding its rampant misuse by Chinese ecommerce vendors, senior officials ET spoke to said. The Central Board of Indirect Taxes and Customs (CBITC), which formulates policy concerning levy and collection of customs, was considering a cap on the number of gifts an individual can receive, but has decided against it given the complexity in its implementation. “There were multiple legal options we were looking at, one being limiting the number (of gifts) to four per individual. But to implement this practically would be difficult, so we’re looking at a policy that prohibits the clearance of gifts altogether,” said a senior government official, who spoke on the condition of anonymity.

  • Nov 13, 2019
  • Sabka Vishwas Scheme gaining traction; over Rs 5,000 cr dues declared so far

    More than Rs 5,000 crore worth dues have been declared so far under the government's 'Sabka Vishwas Scheme', which is for settling pending disputes of service tax and central excise. The Central Board of Indirect Taxes and Customs (CBIC) has asked its principal chief commissioners to be more proactive in persuading eligible taxpayers to take benefit of 'Sabka Vishwas Scheme'. Finance Minister Nirmala Sitharaman had unveiled the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 with the objective of settling pending disputes of Service Tax and Central Excise in the budget. A mid-term review reveals that a total amount of Rs 5,472 crore inclusive of pre-deposit amount of Rs 4,225 crore has already been declared under the scheme, sources said. Efforts are being made to maximise declarations by December 31, 2019 when the scheme ends.

  • Nov 12, 2019
  • Lukewarm response to indirect tax legacy dispute resolution scheme

    The legacy dispute resolution scheme for indirect tax taxpayers has seen a tepid response at the half-way point with only a fraction of amount locked in litigation coming forward. Sources said the lack of takers in the first two months (September and October) could be due to preoccupation of businesses with GST and income tax audits. The sources said that Rs. 5,472 crore (inclusive of pre-deposit amount of Rs. 4,225 crore) had been declared under the scheme, so far. This contrasts with nearly Rs. 3.6 lakh crore stuck in legal battles pertaining to various quasi-judicial, appellate and judicial forums under service tax and central excise put together. This has prompted the Central Board of Indirect Taxes and Customs (CBIC) to ask its zonal heads to proactively reach out to 1.8 lakh taxpayers.

  • Nov 08, 2019
  • CBIC to communicate with taxpayers using document identification number

    The indirect tax department (CBIC) will quote a computer-generated document identification number (DIN) for its communications with taxpayers starting Friday. The system, which is expected to bring transparency and shield taxpayers from harassment, has already been implemented by the direct tax department.