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Hotels, travel aggregators start refunding GST

Hotels, travel aggregators start refunding GST

Sridhar (name changed) got a pleasant surprise on Monday morning when he got a message from an online travel aggregator regarding a booking for Varanasi hotel made in September for stay in November.

“This is an important update regarding your upcoming hotel stay at XXX Hotel. The amount of tax applicable on this hotel booking has now been reduced in keeping with the new GST (Goods & Services Tax) reduction mandated by the GST department. We have therefore initiated a refund of ₹XXXX.X which will reflect in your account in 7-12 working days. Wallet and UPI refunds will take only 1-2 days,” the message read. Sridhar’s friend Arnab too got a similar message for a hotel booking in Shimla.

There could be many Sridhars and Arnabs who are pleasantly surprised by this move as a refund has been initiated, probably for the first time, after GST rate lowered for hotel sector.

In its 37th meeting, held in Goa on September 20, the GST Council rejiged the slabs from four to three and reduced the highest tax from 28 per cent to 18 per cent. To make this effective, the Central Board of Indirect Taxes and Custom (CBIC) and States’ Tax authorities notified the new rates by September 30.

“With the increasing awareness of the need to charge only the applicable GST and refund any excess charged to the end consumer accompanied by the evolution of stable IT processes enabling such refunds, consumers can look forward to fairer business practices from B2C businesses,” said MS.Mani, Partner with Deloitte India.

Normally, many hotels and travel aggregators announce special packages for vacations and long weekends and offer special rates if booking is made in advance. Since, old rates were applicable till September 30, nyone booking by that date for stay in October onwards had to pay higher tax. Technically speaking, if rates have been lowered, then goods/service providers need to pass on the benefit, otherwise the matter could go to the Anti-profiteering Authority.

There have been such instances with goods providers, when many companies were asked to reduce the prices, return the profiteered amount along with interest at the rate of 18 per cent or deposit profiteered amount along with penalty.

Same rules apply to the services also. Now, to avoid action by National Anti-profiteering Authority (NAA), companies can suo motu initiate the process of lowering the price or refund the difference in case of advance booking.

Rajat Mohan, Senior Partner with AMRG said that taxes in the hospitality sector have been rationalised from October 1 resulting in savings of 6-10 per cent in consumers’ budget for hotel accommodation services prospectively.

“In case of advance bookings made in a pre-change tax period, higher taxes were collected by the sector including online aggregators which now needs to be returned. There are reports that some multi-national chain of hotels and some leading online aggregators have suo motu started refunding the excess collection of taxes, as retention of any amount by businesses would make them guilty under anti-profiteering provisions,” he said.

Now, if someone has not received any refund intimation for the hotel booking in India made prior September 30 for stay in October onwards, he/she should ask the hotel or aggregator to do so.

Source: The-Hindu-Business-Line.

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Stern action if GST returns are not filed, warns Chief Commissioner

Stern action if GST returns are not filed, warns Chief Commissioner

Taxpayers should file their GST returns for 2017-18 by August 31 and failure to do so will attract very severe consequences, including hefty penalty, Chief Commissioner of Customs and CGST Visakhapatnam Zone, Naresh Penumaka, has said.

Though only 15 days of time was left, 80% of traders have not filed it so far. It involved a consolidated filing of the monthly returns filed by them and the date had been extended several times and would not be extended further, he said at a press conference here. They should approach the nearest Central Excise officials for hand-holding and filing the returns, he suggested.

Besides, not passing on the benefit of GST to customers or indulging in any fraud in input tax credit or any attempt to use it as working capital or not remitting GST collected from consumers might lead to imprisonment, he warned traders. Traders should also issue a bill collecting GST as per the reduction effected by the GST Council from time to time, he said. The Directorate General of Analytics and Risk Management was analysing bulk data to check GST fraud. The National Anti-Profiteering Authority would also investigate it.

He denied that cumbersome process was the reason for the delay in filing returns citing 90 % compliance at the national-level and some States reporting as high as 70%. “Some are deliberately delaying payment,” he said.

Also the Central Excise and Service Tax dues pending for the past two years also should be paid in two weeks, Mr. Naresh said warning of imprisonment of it was not complied with.

With the modifications in GST returns from October and January 2020 new returns should be filed and GSTR 3B would be done away with, Nr. Naresh revealed.

Target
The current year’s target for Andhra Pradesh was ₹58,222 crore against which so far only ₹16,037 crore was collected, Mr. Naresh said adding the previous year’s collection was ₹50,000 crore. Traders should file returns and pay the tax to improve collection, he said.

Mr. Naresh also urged importers and exporters to make use of the trade facilitation measures in Customs as only 51% of importers were using the Direct Port Entry and 6 % of the exporters Direct Port Entry schemes.

Principal Commissioner, Customs, Visakhapatnam Zone, D.K. Srinivas, said there was an exponential growth and for the first time the zone crossed ₹10,000 crore mark in customs duty collection in the previous year. It kept pace with the 20% increase in the target during the current year with ₹4,700 crore collected in the first four months. Besides IGST returns and ‘drawbacks’ of ₹400 crore was paid.

Principal Commissioner, GST of Visakhapatnam Zone, Faheem Ahmed, announced the schedule for awareness programmes in the city and divisions.

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Source: The-Hindu
Firms may get to raise prices after transferring GST cuts

Firms may get to raise prices after transferring GST cuts

Companies are free to raise prices of products and services as per their business cycle without fear of getting caught in the anti-profiteering provision in the Goods and Services Tax (GST) law once they have passed on the benefit of tax rate cuts to consumers, said a government official.

The clarification from the official, who has knowledge of how the National Anti-profiteering Authority (NAA) and its investigative arm work, comes at a time when ambiguity in the law and the recent extension of the profiteering watchdog’s tenure as well as an increase in penalty for violation have led to concerns that the pricing liberty of businesses stands curtailed.

Analysts said that due to lack of guidelines on how to implement anti-profiteering provisions in the Central GST Act, companies are not sure how long they are expected to maintain a price after they reduce price to pass on the benefit of a tax cut to consumers. This is also worrisome for companies that have faced charges of profiteering for specific periods in the past. The law is silent on how long companies have to maintain the reduced price after a tax rate cut. This open ended provision, in effect, results in price administration, they said. Under GST law, not passing on the benefits of tax rate reduction or availability of input tax credits to consumers by businesses and merchants amounts to profiteering.

The liberty to increase price as per the business cycle will come as a relief to companies, especially large fast-moving consumer goods (FMCG) manufacturers that have faced ‘profiteering’ charges under GST law.

“Whenever there is a reduction in GST rate, businesses have to pass on the benefit to consumers immediately. Thereafter, companies are free to follow their cycle of price adjustments as they deem fit in line with market forces. There is no lock-in period for maintaining reduced prices,” said the first official cited above, who spoke on condition of anonymity. If a company has increased prices of products in a particular month in the past, that is a valid explanation for a price increase subsequent to reducing prices in line with a tax rate cut. Businesses, however, should be in a position to defend themselves in case of a complaint, said the person.

Experts said it may not be a very easy task for businesses to defend price increases considering the complexities in the overall business environment and pricing. They said past price trends may show movement both ways and may not be sufficient to justify a price increase in case of a profiteering investigation.

“Businesses may at times want to increase margins on a better selling product to offset losses in other products. There is still an ambiguity on whether that increase in margin for some products would be acceptable by the authorities as a justification for a price increase. Separately, industry has also been looking forward to detailed guidelines on calculating the amount of benefit to be passed on and in specific, the duration for which the reduced price is to be continued,” said EY tax partner Abhishek Jain.

The other factor that has got businesses worried is the perpetual nature of the anti-profiteering provision in the CGST Act although the tenure of the NAA is defined. The provision which mandates immediate price reduction of goods and services commensurate with the tax cut, does not specify a sunset clause. A second government official, who also spoke on the condition of anonymity, said that the anti-profiteering provision may be administered by any designated government official or agency in a less elaborate way after NAA’s term ends as the tax system would have stabilised by then. The GST Council extended the term of NAA by two years in June, which enables it to continue to work till end of 2021. The Council had also in June decided to let NAA impose a penalty equivalent to 10% of the profiteered amount on those who pocket the tax benefit meant for consumers.

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Source: LiveMint
Consumer panel fines retail store for charging GST on discounted price

Consumer panel fines retail store for charging GST on discounted price

Clarifying that charging GST on a discounted price of a product is an unfair practice, District Consumer Disputes Redressal Forum has imposed a fine of Rs 4000 on a city based retail store, that had overcharged Rs.3.68 from a customer.
In its detailed order the Forum asked Lifestyle International Private Limited, MBD Neopolis, Ferozepur Road, Rajguru Nagar to pay Rs.2000 as compensation for mental harassment and agony and an equal amount as litigation expenses to the customer Rahul of Modern Housing complex in Manimajra of Chandigarh.

In his complaint to Forum on February 1, 2019, Rahul a resident of Chandigarh said he had purchased a product from the store on July 23, 2017 by paying an amount of Rs.78. The maximum retail price (MRP) of the product inclusive of all taxes was Rs.245. After giving discount of 70% , the discounted price payable was Rs.73.50 but on this price GST at the rate 5% of Rs.3.68 charged. Claiming that charging GST on discounted price was an unfair trade practice, he sought refund of excessively charged GST amount of Rs.3.68 along with compensation of Rs.25,000 on account of mental and physical harassment along with the litigation expenses of Rs 15,000.

The respondent in its reply however pleaded that it was entitled to charge and collect GST after deducting discount from the printed MRP, which was considered as the sales price. “On the advertisement of discount offer, it was clearly mentioned “Tax Extra” and the complainant might have missed to notice this fact, the reply claimed. It added that in case the complainant had objections he could have got cancelled the invoice. But the complainant did not raise any concern in this regard and later filed a complaint with a ‘malafide intention and for unjust enrichment’.

The Forum after going through the arguments and evidence however observed that the practice of charging tax on the discounted price having MRP inclusive of all taxes in this csae certainly was an unfair practice. This practice has been deprecated by National Consumer Disputes Redressal Commission, the Forum comprising President G K Dhir and member Jyotsna held.

The forum in its detailed order directed the retail store to refund the excess received amount of Rs.3.68 with an interest rate of 6% annum from July 23, 2017 till payment. Besides it also issued directions for compensation for mental harassment and litigation expenses to the buyer.

Source: Times of India

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Delhi HC gives relief for companies in anti-profiteering probe

Delhi HC gives relief for companies in anti-profiteering probe

A company is required to give information to the Director-General of Anti-profiteering (DGAP) only about the ‘complained product’ and not about every product it produces, the Delhi High Court has said.

A complained product refers to a product against which complaint of not passing reduction in GST rate or benefit of Input Tax Credit (ITC) is alleged. The complaint can be made by any consumer or even a tax officer can suo motu files a complaint.

“It is directed that, till the next date, it will not be required to furnish information to the DGAP pursuant to the impugned notice other than information pertaining to the Complained Product,” a division Bench of the Delhi High Court ordered in a matter related with profiteering complaint made against Dettol HW Liquid Original 900 ml, produced by Reckitt Benckiser India (petitioner).

The National Anti-profiteering Authority (NAA) ordered an enquiry of profiteering against the said product. However, the company moved to Delhi High Court after the DGAP issued a notice seeking information on all its products (nearly 3,500 in number).

It argued that that as per the provisions under the GST Rules, without a report of the DGAP on the Complained Product followed by an order of NAA, the DGAP cannot suo motu issue a notice requiring the Petitioner to submit information on all its products.

The Bench found force in the submissions of the petitioner. Accordingly it allowed interim relief to the company. The matter has been listed for hearing on August 22.

It is important to note that in the case of Abbott Healthcare Private Ltd it was held that DGAP cannot proceed to investigate into products other than those covered in the notice and stay was granted until further order.

To overcome this, the rule was amended with effect from June 28 providing power to the NAA to direct the DGAP to investigate into goods or services other than those covered in the report submitted by DGAP. Further the investigation of other products shall be deemed to be a fresh proceeding. It is further provided that in order to initiate proceeding for other products, the NAA must have reasons which are to be recorded in writing.

Harpreet Singh, Partner with KPMG, said this ruling would give some belief to the dealers that authorities cannot arbitrarily question the pricing/policies of products “unless they have tangible evidence to substantiate their claim and are working within the framework of GST regulations.

Echoing the same sentiment Anita Rastogi, Partner with PwC, said that investigation of the complained product is right, but “expanding the scope of investigation to other products without following the due process looks unreasonable.”

MS Mani, Partner at Deloitte India, said that the mandate of the anti-profiteering provisions to investigate specific allegations of profiteering should be respected. “Broad level enquiries covering all products/SKUs would entail significant change compliance efforts for businesses and hence should be avoided unless there are compelling grounds for such an enquiry,” he said.

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Source: The-Hindu-Business-Line
Anti-profiteering in GST: Caught in litigation, extension in tenure may not be enough

Anti-profiteering in GST: Caught in litigation, extension in tenure may not be enough

Anti-profiteering provisions have been in force for nearly two years and at the recent GST Council meeting the tenure of the National Anti-Profiteering Authority (NAA) has been extended for two more years, till November 2021. Although the key reason given for this extension was the large pendency of complaints (around 350) which still needs to be investigated, it is fair to say that the presumption is that GST benefits are still not being passed on to consumers. But is the extension of tenure all that is required to ensure compliance with these provisions?

There are also reports that the GST Council, along with the extension of the tenure of the NAA, has approved a new mechanism to check profiteering. Tax officers have been empowered to conduct anti-profiteering checks in their jurisdictions. This clearly signals that complaints and investigations on profiteering will increase and the NAA will be around for much longer than the recent two-year extension. A new penalty may also may be imposed if the profiteered amount is not surrendered within a prescribed time limit.

Given that anti-profiteering related investigations will increase and impose heavier fiscal penalties there is an urgent need to address three key issues:

Introduce an appellate mechanism, within the GST law, for appealing the orders of the NAA;
Broaden the membership of the NAA to include a judicial member; and
Define methodologies/frameworks for compliance.

This will ensure that the core objective of ensuring that benefit of GST is passed on to consumers, is achieved in an efficient and timely manner.

It is worth noting that when NAA was originally constituted in November 2017 for a period of two years, it was set up primarily as a deterrent to big businesses and hence envisioned that its actions would be restricted. This is far from reality and the actions of the NAA have been far more widespread and have impacted almost all sectors and all sizes of businesses.

Considering that there is no appellate mechanism prescribed under the GST laws against an order of the NAA, can it be assumed that the government had not expected challenges on such orders? Whatever may have been the thinking on this aspect, the legal view adopted is that the law does not provide a statutory mandate to appeal orders of the NAA before the Tribunal, High Court or the Supreme Court. Hence, the only recourse for taxpayers is to file a writ petition in the High Court.

Almost all orders of the NAA where profiteering has been alleged, are being challenged in various High Courts. In most cases the courts have stayed the orders and the litigation is in progress. With most NAA orders being embroiled in litigation, the key purpose of the existence of the NAA, which is to ensure that the GST benefit is passed on to the consumer, is yet to be achieved. An alternative form of recourse is required which should assist in the faster resolution of cases.

Some of the writ petitions have challenged the constitutional validity of anti-profiteering provisions. While this challenge is being deliberated by the courts, the government may be able to address some of the other concerns/issues that have been raised.

In the absence of a statutory appellate process, the decision of the High Courts on anti-profiteering matters, will very likely be sent back to the NAA for implementation. This may create a conflict, as the authority that has passed the original order will have to review the orders based on directions of the High Court and then pass a revised order. This is likely to give rise to further litigation. One option to address could be to induct a judicial member on the NAA to ensure that a legal view is also taken into consideration while deliberating on High Court orders. Another option may be to create a body within the NAA to review and implement the orders of the High Court. There may be other options as well and the government should explore all possible alternatives to address this issue. In all such cases, the focus of the NAA should be to resolve the matter, pass on the benefit to the consumer and not litigate further.

As it is likely that anti-profiteering related investigations will increase going forward, there is also an urgent need to introduce an appellate mechanism, within the GST law, for challenging the orders of the NAA. This will ensure that going forward, writ jurisdiction is not the only option for challenging orders of the NAA and may also result in faster resolution of cases.

One key and outstanding demand of tax payers is for a specific mechanism/methodology to calculate profiteering. This may minimise the subjectivity in the investigation process and therefore litigation. The NAA’s position has been, and remains, that a standard methodology cannot be prescribed for all sectors and hence none is being prescribed. This position needs to be revisited urgently, more so as the NAA now has the benefit of experience from over a hundred investigations. The contradictory positions being adopted in some orders has also added to the complexity of complying with the provisions. One option could be to reconstitute sector-specific committees, set up during GST implementation, which were headed by senior tax officers. These committees can provide guidance on prescribing methodology for compliance with the anti-profiteering provisions.

With the focus once again on initiatives for improving Ease of Doing Business in India, anti-profiteering related concerns of taxpayers do need to be addressed on a priority. The trust deficit between the business and tax administration on this subject needs to be reduced to ensure that the key purpose of the consumer benefiting by GST implementation, is served.

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Source: Economic-Times.
Advance Ruling Authority under GST: Does it really solve the taxpayer’s issues?

Advance Ruling Authority under GST: Does it really solve the taxpayer’s issues?

Since the advent of GST Laws, trade and industry have faced multifarious issues relating to uploading of returns, availing legacy Cenvat credit under TRAN-1 form, various confusions regarding the generation of e-way bills and many other such small issues.

When the Government introduced the Advance Ruling Authority under GST, it sought to provide a much wider coverage as compared to the earlier Excise and Service Tax Regime, in order to provide an early resolution of the potential tax dispute coming from the trade and industry. For the first time in any Tax Legislation, an appeal mechanism was provided against the orders passed by the Advance Ruling Authority which was absent under the earlier laws and also under the existing Income Tax Act.

This welcome step by the Govt was met with overwhelming support from the trade and industry and as a result, thousands of applications were filed before the Advance Ruling Authority seeking clarification on a variety of tax issues. Surprisingly, the Advance Ruling Authorities of various states had not only come up with contradictory rulings on the same subject but also most of the rulings were decided in favour of the revenue only. Further, the applicants rarely got any relief before the Appellate Authority of Advance Ruling as well.

Probably, the constitution of this forum, which consists only of revenue officers and not having an independent judicial member is one of the biggest reasons for this outcome. Hence, instead of getting relief, the trade and industry started facing this unique challenge.

This situation was further worsened by the recent order passed by the Bombay High Court in the case of JSW Energy Limited wherein it has been held that no appeal can be filed against an order of the Appellate Authority of Advance Rulings on “merits” since no appeal has been provided under the GST Act. Without going into the merit of this judgment, which seems to have ignored the well-settled proposition of law that a writ petition is indeed maintainable before the High Court, the order of the High Court has certainly created chaos in the Industry.

Seeing this trend, strong perception in the Trade and Industry is getting build as to why one should even approach the Advance Ruling Authority who is likely to decide the matter against the assessee and when practically there is no appeal mechanism against the said order. Whereas if the assessee opts the route of the adjudication, the doors of the tribunal as well as the courts would always be open to seek relief. Given this, it appears that the whole objective of creating this forum to provide speedy resolution of issues, instead of going through the long-drawn litigation route, is getting defeated.

Hence, it was a genuine wish and demand of the industry that the Government should bring some reform in the structure and give life to this forum. Appreciating the need of the industry, the newly elected government in this Budget tried to address this issue by introducing the National Appellate Tribunal for Advance Ruling (NATAR) under Section 101A of the CGST Act, 2017. The proposed NATAR will be presided upon by a retired Judge of the Supreme Court or any High Court and would be accompanied by two technical members representing both the central and the state government.

The composition of the NATAR appears to solve the issue of departmental bias, by introducing a judicial member and also introducing an option of appeal against orders of the Appellate Authority which was previously absent under the GST Laws. However, the wording of proposed Section 101B of CGST Act suggests that an appeal before NATAR would lie only in cases where the views taken either by the members of Appellate Authority of Advance Ruling constituted in the same state or in different states are contradictory.

Though this new proposal by the Government seems to provide relief in some aspects i.e. when there are contradictory views from either of the members of the same Bench or amongst the co-ordinate Benches of different states. However, there is no relief provided against the order of the AAAR if the ruling goes against the assessee. Therefore, the NATAR would have a limited utility and this brings the taxpayer back to square one.

As per the trend of the Advance Authority Rulings thus far, it has been seen that two co-ordinate benches of the Appellate Authority rarely differ in their views when it comes to a single issue. Similarly, a situation wherein the members of the same bench of the Appellate Authority (who are both departmental officers) differ in their opinions, is also rare. Therefore, the NATAR will be limited to addressing rare situations wherein conflicting views have been taken by two or more Appellate Authorities (of different states) or two members of the same Appellate Authority Bench. Thus, despite the introduction of NATAR, effectively there is still no appellate forum available to the assessee having an adverse order of the AAAR.

This issue will only be solved if the NATAR is given wider powers to adjudicate on “any” order passed by the Appellate Authority. Hence while passing the Bill, the Government should make suitable changes in the Bill to provide the much-anticipated relief to the Industry.

In summation, the introduction of the NATAR by the government only solves the issue of the assessee on the surface. However, the real issue of having an efficacious appellate remedy against the orders of the AAR still eludes the taxpayers.


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Source: Business-Today.
Nirmala Sitharaman Explains How GST Filing Will Be Simplified

Nirmala Sitharaman Explains How GST Filing Will Be Simplified

Finance Minister Nirmala Sitharaman on Friday said that the Goods and Services Tax (GST) processes were being further simplified while adding that businesses with less than Rs. 5 crore annual turnover will need to file quarterly GST return.
She also announced to increase special additional excise duty and road and infrastructure cess on petrol and diesel by one rupee each, hike in customs duty on gold and precious metals to 12.5 per cent and imposing nominal basic excise duty on tobacco products and crude.

The Union Budget 2019-20 also provides for exempting import of certain defence equipment from basic customs duty, reducing customs duty on certain raw materials and capital goods, and rationalisation of export duty on raw and semi-finished leather.

“The threshold exemption limit for a supplier of goods is proposed to be enhanced from Rs. 20 lakh to an amount exceeding Rs. 40 lakh. Taxpayers having an annual turnover of less than Rs. 5 crore shall file the quarterly return,” she said.

She said that a fully automated GST refund module shall be implemented. “Multiple tax ledgers for a taxpayer shall be replaced by one,” she said. The Budget proposes to move to an electronic invoice system wherein invoice details will be captured in a central system at the time of issuance.

“This will eventually be used to prefill the taxpayers’ returns. There will be no need for a separate e-way bill. To be rolled out from January 2020, the electronic invoice system will significantly reduce the compliance burden,” said Ms Sitharaman.

The Finance Minister said that the landscape of indirect tax has changed significantly with the implementation of GST.

Terming it as a “monumental reform”, Ms Sitharaman said the GST regime has brought together the centre and the states with the result 17 taxes and 13 cesses became one and a multitude of rates instantly became four.

“Almost all commodities saw rate reduction. Tens of returns were replaced by one. Taxpayers’ interface with tax departments got reduced. Border checks got eliminated. Goods started moving freely across states, which saved time and energy. The dream of ‘One Nation, One Tax, One Market’ was realised,” she said.

The Finance Minister said that GST rates have been reduced significantly where relief of about Rs. 92,000 crore per year has been given. “There is a need to unload the baggage and allow the business to move on, as more than Rs. 3.75 lakh crore is blocked in litigations in service tax and excise,” she said.

The budget proposes a dispute resolution-cum-amnesty scheme — Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 — will allow quick closure of these litigations. The relief under the scheme varies from 40 per cent to 70 per cent of the tax dues for cases other than voluntary disclosure cases, depending on the amount of tax dues involved.

Describing ‘Make in India’ as a cherished goal, the Finance Minister proposed an increase in basic customs duty on certain items so as to provide domestic industry a level playing field. These items include PVC, cashew kernels, vinyl flooring, tiles, metal fittings, mountings for furniture, auto parts, certain kinds of synthetic rubbers, marble slabs, optical fibre cable, CCTV camera, IP camera, digital and network video recorders.

She also proposed to withdraw exemption from customs duty on certain electronic items which are now being manufactured in India.

To encourage domestic publishing and printing industry, 5 per cent customs duty will be imposed on imported books. To further promote domestic manufacturing, the budget proposes customs duty reductions on certain raw materials and capital goods.

These include certain inputs of CRGO sheets, amorphous alloy ribbon, ethylene dichloride, propylene oxide, cobalt matte, and naphtha, wool fibres, and input for manufacture of artificial kidney and disposable sterilised dialyzer, and fuels for nuclear power plants.

The Union Budget proposes to increase special additional excise duty and road and Infrastructure cess each by one rupee a litre on petrol and diesel.

“Crude prices have softened from their highs. This gives me a room to review excise duty and cess on petrol,” she said.

Nirmala Sitharaman also announced an increase in customs duty on gold and other precious metals from 10 per cent to 12.5 per cent. The Budget also proposes rationalisation of export duty on raw and semi-finished leather to provide relief to the sector.

Ms Sitharaman said that tobacco products and crude attract National Calamity and Contingent duty which in certain cases is being contested on the ground that there is no basic excise duty on these items. To address this issue, the Budget proposes to impose a nominal basic excise duty on tobacco products and crude.

The Finance Minister proposed a few amendments to the >Customs Act. She said: “Recent trends reveal that certain bogus entities are resorting to unfair practices to avail undue concessions and export incentives.”

She announced that misuse of duty-free scrip and drawback facility involving more than Rs. 50 lakh rupees will be a cognizable and non-bailable offence.

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Source: NDTV.
Why the GST Council should issue proper guidelines on anti-profiteering

Why the GST Council should issue proper guidelines on anti-profiteering

Fears that the goods and services tax (GST) would aggravate India’s litigation problem seem to be coming true as far as anti-profiteering goes. The GST Council extended the term of the National Anti-profiteering Authority (NAA) by two years recently.

Considering the number of pending cases and increasing tussle between NAA and numerous companies, this move was largely anticipated. A slew of firms have been accused of failing to pass on the rate-reduction benefits commensurately to end consumers. These include blue-chips such as Hindustan Unilever Ltd, and Procter and Gamble India.

But as experienced in the past with GST, while the intent is good, implementation of related rules has been messy. Tax experts point out that only an extension of NAA’s term, without proper guidelines, doesn’t serve much purpose. What we need is a proper framework to estimate the profiteering amount so that litigation can be avoided.

“Businesses have been looking forward to explicit clarifications on the methodology of computing the profiteering benefits to be passed on, and also on the duration of the anti-profiteering clause, including the sunset of this clause,” said Abhishek Jain, tax partner at EY India.

There are several factors that determine movement in prices including the cost of raw materials and the level of competition. Companies may find it difficult to cut prices on the basis of GST rate cut alone, without accounting for the impact of other factors. Also, one cannot ignore the amount of time and money companies may have to employ to deal with cases of price investigations, which are complex especially for service providers. So, some tax experts are of the view that companies cannot be expected to operate in an environment of controlled pricing forever and that there should be a specific duration for this clause.

But expecting the clause to be done away with completely may be too much. “The duration of the anti-profiteering authority was originally envisaged for two years. However, considering that there have been multiple rate changes after July 2017, it was but obvious that the period would be extended. In a scenario where more rate reductions are expected in future, the possibility of a sunset of this clause may not be feasible,” says Anita Rastogi, indirect tax partner at PwC India.

“So far since the GST has been implemented in July 2017, more than 65 orders have been issued by the NAA. Considering that so many rulings have already been passed, it would be ideal if key takeaways arising from such orders are published in a manner which will facilitate the businesses in future,” she adds.

In short, there is long a way to go as far as fine-tuning of anti-profiteering rules are concerned. But at a time when GST revenues continue to fall short of expectations, user-friendly laws would not only lower litigation but also boost compliance and aid revenue collections.

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Source: Live-Mint.
GST Council may give 1-year extension to anti-profiteering authority

GST Council may give 1-year extension to anti-profiteering authority

The GST Council is likely to extend till November 30, 2020 the tenure of the National Anti-profiteering Authority (NAA), which deals with customer complaints regarding not receiving tax cut benefits, at its next meeting on June 21, an official said.

The Council at its 35th meeting, the first under new Finance Minister Nirmala Sitharaman, is also likely to consider a proposal to set up one appellate tribunal for north-eastern states, and another one for all Union Territories.

Besides, the Council would discuss a proposal to levy Goods and Services Tax (GST) on extra-neutral alcohol (ENA), which is used for manufacturing alcoholic liquor for human consumption, the official added.

The Finance Ministry is of the view that NAA should be given an extension of one year till November 30, 2020 as the authority continues to receive complaints of profiteering by companies, the official told PTI.

The NAA is keen for a two-year extension, the official said, adding that the final call will be taken by the GST Council in its meeting on June 21 which had earlier been scheduled for June 20.

Soon after the GST was rolled out from July 1, 2017, the government had approved setting up of the NAA for two years to deal with complaints by consumers against companies for not passing on GST rate cut benefits.

The NAA came into existence on November 30, 2017, after its Chairman B N Sharma assumed charge. So far, the NAA has passed 67 orders in various cases.

The GST law provides for setting up of benches of appellate tribunal in all states. Although 18 states have got the approval to set up appellate benches, none of these states have operationalised them.

The GST Council in its June 21 meeting is likely to approve the proposals of Delhi, Odisha and Telangana to set up appellate tribunal benches.

The Council will also take a call on setting up a combined bench for all north-eastern states as well as one bench to deal with appeal cases in six Union Territories — Chandigarh, Puducherry, Lakshadweep, Daman and Diu, Dadra and Nagar Haveli, and Andaman and Nicobar Islands, the official said.

With regard to bringing ENA under GST, states have divergent views on levying GST. Larger states like West Bengal, Rajasthan, Haryana, Tamil Nadu, Karnataka, Andhra Pradesh and Maharashtra have been of the view that ENA should be out of GST.

States levy Value Added Tax (VAT) and Central Sales Tax (CST) on ENA. They will have to forgo the right to tax the product if it is brought under GST.

The GST Council had earlier sought the opinion of the Attorney General on legality of imposing GST on ENA. The AG had then opined that since ENA is not consumed directly by people, GST can be imposed on it.

Currently, potable alcohol is out of the ambit of GST and states are free to levy taxes on them.

Among other things, the GST Council will also consider issuance of e-invoice by entities with turnover of over Rs 50 crore for business-to-business (B2B) sales in a bid to curb GST evasion.

Source: The-Hindu.

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