What GST brought to Malaysia
30 06 2015
Tuesday
MALAYSIA introduced GST with a 5% rate in April 2015. A survey conducted by JobStreet.com revealed certain interesting facets.
- An alarming 90% of the respondents don't think they can cope with their daily expenses since the implementation of Goods and Service Tax (GST).
- The weight of GST has prompted significant changes in the daily routine of the survey respondents. More than half of them at 56%, said they have minimized having lunch with their colleagues, while 47% of them started packing food from home. Some have also resorted to other frugal activities, such as utilizing the pantries more frequently and carpooling to control their expenses.
- A number of respondents are exploring new ways of generating a better income in order to cope with the upsurge in prices. Some 35% of them are considering changing their jobs, while 33% of them are looking into other alternatives, such as part-time and freelance jobs.
- 41% of companies have encountered increasing demands in employee wages since the execution of GST; however, only 19% of the total number of employers has offered salary increments.
In Canada, which has a Federal system, there is a GST, which applies to the whole of Canada. There is an HST in some provinces, which applies to the same goods and services as the GST, but at a different rate. And some provinces have a provincial sales tax or a retail sales tax in addition to GST. We are perhaps into the fourth dimension with a Central GST and a State GST - with total chaos assured.
Refund is Repugnant to Revenue
SOMETIME back I asked a senior Customs/Central Excise Officer, why the Revenue officers are allergic to granting refunds. He said "at the end of the day, we are revenue officers; our job is to collect tax, not to refund it." When I asked him as to why Income Tax Department is more liberal in granting refunds than the CBEC officers, he said, "perhaps their refund orders are not reviewed by senior officers."
It is easier for a camel to go through the eye of a needle than for an assessee to get a refund from the Customs, Excise and Service Tax Department. Somehow the officers here use all their intelligence to find some reason to deny refunds. They forget that their job is to collect the correct revenue - not a rupee less; not a rupee more. If they have collected a rupee more, they should be as eager to return/refund it as they were at the time of collecting it. The ingenuity of the departmental officers knows no bounds when it comes to rejecting refunds.
It is not as if these rejecters of refunds are champions of revenue or they are serving the cause of revenue. These officers are ultimately responsible for the government ending up with payment of interest for a long period, because some Assistant Commissioner wanted to show that he was more loyal than the king and the refund is granted only after the assessee successfully completes a tortuous voyage through the treacherous and uncertain waters of taxation and sometimes the process has to be repeated as the following case will show.
It is unfortunate that law enforcing/implementing agency chooses to ignore law; somehow deny refund, without even considering legal options
THE assessee is a 100% EOU. They filed 4 refund claims for the period from October 2005 to September 2007 totally amounting to Rs. 6,42,052/-. The refund claims have been filed under Notification No. 05/2006-CE (NT) dated 14.03.2006 under Rule 5 of Cenvat Credit Rules 2004. The refund claims were rejected by the original authority by orders dated 28.03.2008. On appeal, the Commissioner (Appeals) allowed the refunds. No appeal was filed by the Revenue against this order.
The Original Adjudicating authority did not follow the orders of the Commissioner (Appeals) and issued another notice to the assessee to produce certain records. This time also the refund was rejected. On appeal, now the Commissioner (Appeals) upheld the lower authority's order and rejected the refund claim. The assessee claimed that the first order passed by the Commissioner (Appeals) had attained finality, but this aspect was not dealt with by both the authorities in the second round.
And the appeal reached the CESTAT. The Tribunal observed,
- While issuing show-cause notice, only ground taken by the Revenue in the first round of litigation was that appellant was not at all eligible for the credit of service tax paid on GTA service as a receiver of service. No other ground was taken. Normal presumption in such cases, is that, when a claim is received, the claim is examined, verified and if the rejection is to be made all the grounds which are required to be considered before rejection should be considered and all the grounds which can cause rejection of refund claim should be enumerated in the show-cause notice.
- Unfortunately in this case even at the beginning itself, by failing to issue a detailed show-cause notice covering other grounds, the opportunity to refuse portion of refund was lost. The show-cause notice was limited to only one ground and this was covered by the original authority and the Commissioner (Appeals) order dated 13.05.2009. Commissioner has considered the issue properly by getting the documents submitted before him verified and getting the verification report by the original authority and after satisfying himself based on the verification report, he allowed the appeals.
- The Revenue had an opportunity to rectify the mistakes at least at this stage since litigation is a mixed question of law and facts and probably this could have been considered by the Tribunal if appeal was to be filed.
- Whether this could have been done or not is not relevant since another opportunity was lost by not filing the appeal against the order of Commissioner (Appeals).
- Thereafter the officers committed another mistake by issuing another show-cause notice after 9 months in March 2010. This show-cause notice could not have been issued at all. Only option available was to file appeal rather than issuing a show-cause notice. Taking note of the fact that before the Tribunal, there is no limit for condonation of delay, there was time available to rectify the defects and file appeal even at this stage which was also lost.
- The legal process adopted in this case shows that opportunities to proceed properly on the part of the Revenue in this case were missed/lost.
- Now the question arises because of these missed opportunities, whether the second round of litigation initiated by the Revenue by issue of a fresh show-cause notice in 2010 culminating in the impugned order should be held as sustainable? The answer has to be ‘no'. Once the order-in-appeal passed on 13.05.2009 attained finality, the only option available to any appellate forum is to say so and any other option, if exercised, would be illegal.
- It is unfortunate that law enforcing/implementing agency chooses to ignore the law and just because assessee became entitled to refund, proceeded to somehow deny refund, without even considering legal options.
- The second round of litigation initiated itself was unwarranted and probably has to be held void. In any case allowing the appeal with consequential relief and holding the proceedings ab initio void have the same consequences. Therefore appeal is allowed with consequential relief to the appellants.
At this stage even though strictly speaking it is not required, as a measure of caution, the Tribunal mentioned that appellant would be eligible for interest after 3 months from the date of filing the claim in this case so that another round of litigation is not initiated by not granting the interest by the original authority.
Let us hope the refund is given at least now.
Please see 2015-TIOL-1283-CESTAT-BANG
Question of eligibility of CENVAT Credit while claiming Rebate?
HERE is another interesting case:
The appellants are engaged in providing information technology software services (ITSS). The entire service is provided to customers located outside India and it is the claim of the appellants that all the services are exported. On this basis, the appellants filed claim for rebate of the CENVAT credit availed by them on various input services under Notification No.11/2005-ST. A portion of the rebate claim has been rejected on the ground that the appellant cannot avail CENVAT credit on hotel bills, air travel, employees' insurance, repair of vehicles, hospitality service. Further some of the amounts have also been rejected on the ground that the documents on the basis of which credit has been taken are not in compliance with the provisions of Rule 9 of CENVAT Credit Rules.
The Assessee submitted that Notification No. 11/2005-ST under which rebate claim was made has no condition requiring the verification of correctness of CENVAT credit availed. It was also submitted that in this case, the Assistant Commissioner had exceeded his power in issuing show-cause notice since total amount of CENVAT credit denied was more than Rs.5 lakhs which is the monetary limit imposed as far as the adjudication by the Assistant Commissioner / Deputy Commissioner is concerned. Therefore it was not proper to deny the CENVAT credit to the appellants.
The Tribunal agreed with the submissions of the assessee and observed,
The proper course to adopt was to hold up the rebate claim, issue a show-cause notice proposing to deny the CENVAT credit and that has to be a separate proceedings since the total amount proposed to be denied was in excess of the adjudication powers of the concerned authority. If it was within the power of concerned authority, one could take a view that the Assistant Commissioner did not exceed his powers in compiling the show-cause notice denying the CENVAT credit while considering the rebate claim. Therefore the action by the Assistant Commissioner cannot be sustained.
Nevertheless, the Tribunal also found that it cannot be said that these services have no nexus. It was submitted that the hotel bills related to the training of the employees which is definitely an input service covered in the definition. As regards air travel, there are several decisions taking a stand that service tax credit in respect of air travel of the employees for the business purpose is admissible as credit. As regards employees insurance, High Court of Karnataka in the case of CCE Vs. Stanzen Toyotetsu Ltd. - 2011-TIOL-866-HC-KAR-ST has held that credit is admissible. Further repair of vehicles also cannot be said to be unrelated to the output service.
Therefore on merit also, Tribunal found that CENVAT credit cannot be said to be inadmissible and therefore the benefit has to be given to the appellants.
The Tribunal further observed,
What is required to be verified while sanctioning rebate claim under Notification No.11/2005 is whether service has been exported or not and whether consideration has been received for the exported service and whether the tax has been paid on the service exported or not. Other than this, no other verification is required. Therefore on this ground also, the impugned order cannot be sustained.
The appeals were allowed with consequential relief.
The appellants have won the case, but will they get refund?
Please see 2015-TIOL-1282-CESTAT-BANG
DGFT Launches Mobile Application
DGFT has developed a mobile app for the android platform, which has the following features.
- • Minister's Speech
- • Foreign Trade Policy
- • Foreign Trade Procedures
- • Foreign Trade Policy Statement
- • Appendices and ANF of FTP
- • Know ITC(HS) code for a product
- • Know MEIS rate for a product
- • Application status
- • Check latest tweets
- • Download forms, appendices etc
Android users can download it free from Google Play Store by searching the key word "DGFT" or at this link:
https://play.google.com/store/apps/details?id=in.cdac.dgft_new
DGFT Trade Notice No. 06/2015-2020, Dated: June 29, 2015
E-invoicing and E- payment for CFS charges - mandatory soon in Mumbai
REPRESENTATIONS have been received from trade to implement e-billing and e-payment of CFS charges levied by CFSs for various services as it would expedite the customs clearance of goods.
As a measure of trade facilitation and ease of doing business and in view of Regulation 5 of Handling Of Cargo In Customs Areas Regulation 2009, the Jawaharlal Nehru Customs House announced yesterday that from 01.10.2015 it would be mandatory for all CFSs under the jurisdiction of JNCH to implement e-invoicing and e-payment.
JN Custom House Facility Notice No. 50/2015., Dated June 29, 2015
WCO Photo Competition 2015 - Cuban Entry
Until Tomorrow with more DDT
Have a nice day.
Mail your comments to vijaywrite@tiol.in
