Indirect Tax News

IDT Developments and Associated Procedures

1. Finance Bill 2021 receives Presidential AssenT:

The Finance Bill, 2021 introduced by the Finance Minister during the Union Budget presented on 1 February 2021 received the assent of the Hon’ble President, on 28 March 2021. While the changes which were introduced under the GST laws are now a part of the respective legislations, the same would be made effective from a date to be notified later.

2. Important decisions to be taken in upcoming 44th GST council meeting:

The 15th Finance Commission in its report has recommended merging of two GST rates of 12 per cent and 18 per cent. This may be discussed in forthcoming meeting of GST Council. Along with the merging of tax slabs, issues such as correcting inverted duty structure on textiles, fertilizers etc. may also be taken up.

3. Supreme court on the powers of DRI officers to issue SCNs: 

The apex court has recently decided in the matter of Canon India Pvt. Ltd. [TS-75-SC-2021-CUST] that DRI officers have no power to issue SCNs under the Customs Act, 1962 as officers of DRI are not proper officers to issue SCNs. This landmark decision of the Supreme Court is expected to have a huge ramification on the pending and upcoming litigations involving SCNs issued by DRI officials and it is most likely that the Government would come up with a series of retrospective amendments to counter the judgment of Apex Court.

Further, following such decision of Hon’ble Supreme Court, CBIC has issued Instruction No. 4/2021-Cus dated 17 March 2021 wherein it is clarified that until further notice, for all the cases where DRI has investigated, the show cause notice shall be issued by the jurisdictional Commission rates from where imports have taken place.

As the ratio of this decision was bound to raise questions vis-a-vis the SCNs issued under the GST regime by DGGSTI, the Hon’ble Karnataka High Court has also decided the matter on similar ground on the powers of DGGSTI officers to raise SCN.

Important Notifications issued during the quarter

1. Amendments in CGST Rules:

Vide Notification No. 01/2021-Central Tax dated 1 January 2021, the Government has amended the CGST Rules, 2017. The gist of these amendments is, as follows:

a. Registered persons filing monthly GST returns: A registered person shall not be allowed to file monthly GSTR-01 if he has not furnished GSTR-3B for preceding two months.

b. Registered persons filing quarterly GST returns: A registered person shall not be allowed to file periodical GSTR-01 if he has not furnished GSTR-3B for preceding tax period.

 

c. Registered person restricted to use balance in Electronic Credit Ledger under Rule 86B: A registered person shall not be allowed to file GSTR-01 or use invoice furnishing facility if he has not furnished GSTR-3B for the preceding tax period.

2. Exemption from Aadhar Authentication to Certain class of taxpayers

Vide Notification No. 03/2021-Central Tax dated 23 February 2021, a class of person namely a person who is not citizen of India, Department of Central or State Government, local authority, Public Sector Undertaking, etc. are exempted from undertaking Aadhar authentication.

3. Notifications related to E-Invoicing  

Vide Notification 05/2021- Central Tax dated 8 March 2021, the liability to mandatorily generate E-Invoice (‘IRN’) and QR Code would be applicable also to taxpayers having aggregate turnover above INR 500 Million in any financial year post implementation of GST.

Customs and Foreign trade policy related developments

1. Introduction of Customs Authority for Advance Ruling Regulation, 2021 :

Vide Notification 01/2021- Customs (N.T.) dated 4 January 2021, the Government has introduced Customs Authority for Advance Ruling Regulation, 2021 .

As per the regulation, the applicant would be required to make an application in Form CAAR-1 before the jurisdictional Authority (i.e. Customs Authority for Advance Rulings, Delhi or Customs Authority for Advance Rulings, Mumbai).

The powers of the Authority, the procedure for filing application, etc. have been given in detailed manner in Notification 01/2021-Customs (N.T.)

Further, vide Notification 02/2021-Customs (N.T.), the CBIC has rescinded Customs (Advance rulings) Rules, 2002 introduced vide Notification 55/2002-Customs (N.T.).

2. Common Customs Electronic Portal:

Vide Notification 33/2021- Customs (N.T.), the Central Board of Indirect Taxes and Customs has notified URL: https://www.icegate.gov.in as the Common Customs Electronic Portal for facilitating registration, filing of bills of entry, shipping bills, other documents and forms prescribed under the said Act or under any other law for the time being in force or the rules or regulations made thereunder, payment of duty, functions specified to be carried out through common portal.

3. Filing Advance Bill of Entry for imports

Vide Notification No. 35/2021-Cus (N.T.) dated 29 March 2021 read with Circular No. 8/2021-Cus dated 29 March 2021, w.e.f. 29 March 2021 for all imports from countries other than Bangladesh, Maldives, Myanmar, Pakistan and Sri Lanka coming at sea ports, the Bill of Entry is required to be filed at least one day prior to arrival of vessel.

Similarly for all the imports from Inland Container Depot, the Bill of Entry is required to be filed at least one day prior to arrival of vessel/vehicle/aircraft.

For imports from Airports or Land Customs Stations, the Bill of Entry is expected to be filed latest by end of the day of arrival of aircraft/ vehicle.

Further, vide the aforesaid Circular dated 29 March 2021, the requirement of Master Bill of Lading or Master Airway Bill is done away with.

4. Extension of Foreign Trade Policy 2015-20 upto 30 September 2021:

Vide Notification 60/2015-2020, dated 31 March 2021, the existing FTP 2015-20 has been extended up to 30 September 2021.

5. Extension of exemption benefit on IGST and Compensation cess on goods imported by EOUs, AA and EPCG holders:

Vide Notification No 19/2021- Customs, dated 30 March 2021 and Notification No. 23/2021-Cus dated 31 March 2021, CBIC has extended the benefit of exemption from payment of IGST and Compensation Cess to EOU and Advance Authorization as well as Export Promotion Capital Goods (‘EPCG’) Scheme Authorization holders respectively until 31 March 2022.

6. Amendment in the Import Policy of Copper and Aluminium:

Vide Notification 61/2015-2020, the import policy condition of certain items of Copper and Aluminium classified under Chapter 74 and 76 of ITC (HS), 2017 has been revised from ‘Free’ to ‘Free subject to compulsory registration under Non-Ferrous Metal Import Monitoring System (NFMIMS).

The NFMIMS shall require importers to submit advance information in an online system for import of items and obtain automatic registration number. The importer can apply for registration not earlier than 60th day and not later than 5th day before the expected date of arrival of the import consignment.

The NFMIMS will be effective from 12 April 2021 i.e. Bill of Entry filed on or after 12 April 2021 for items listed in Annexure –I and Annexure –II to the notification.

7. IEC application and mandatory updation:

Vide Notification No. 58/2015-2020 dated 12 February 2021 the Ministry of Commerce & Industry has made it mandatory for all the IEC holders to ensure that details in its IEC are updated electronically every year during the April-June period. In cases where there are no changes in IEC, the same is also required to be confirmed online by the IEC holder. IEC shall be de-activated if it is not updated within the above prescribed time and can be reactivated only on its successful updation.

Process of updation of IEC within the above time period is completely online and can be done without payment of any charges.

8. Clarifications issued by CBIC

• Vide Circular No. 5/2021-Cus dated 17 February 2021 it is clarified that if there is mismatch which is resulting in holding up of IGST refunds in respect of all past shipping bills, irrespective of its date of filling, subject to payment of Rs. 1,000/- as fee towards such rendering of service by Customs Officers for correlation and verification of the claim.
• Vide Circular No. 7/2021-Cus dated 22 February 2021, the issues relating to payment of Agriculture Infrastructure & Development Cess (‘AIDC’) by EOU unit are clarified. CBIC has clarified that EOU unit would be entitled to claim the upfront exemption from payment of AIDC. However if the inputs are used for clearance in DTA, then EOU unit would be required to surrender the AIDC exemption along with BCD exemption. Similarly, it is clarified that the benefit of depreciation on capital goods which is allowed for the purpose of calculating the customs duty while removing the capital goods from EOU unit would also be allowed for the purpose of calculating the liability of AIDC as well.