TIOL-DDT 2868
15 06 2016
Wednesday

"VIRTUALLY all states have supported the idea of GST today barring Tamil Nadu which has expressed some reservations. Tamil Nadu has offered a few suggestions which have been noted by the committee.", said the Finance Minister yesterday after a meeting of the empowered committee of State Finance Ministers. He said that there was no deadline as such but hoped to get the laws in place by the end of this year. The Finance Ministry released the Model GST Law for public scrutiny. And every line will be dissected in the coming days. I am personally very pessimistic about GST being a reality in the near future and am really scared about the monster that is going to be unleashed, but a few observations on the Draft Act may be not out of place.

The Mysterious Competent Authority: In Government, there is a latent mysterious "Competent Authority" who seems to be all powerful but rarely visible. In most of the cases, we do not know who this 'competent authority' is. The GST Act also has this 'competent authority' propping up many times. The 'competent authority' can

1. Authorize distrain and detention of property for recovery of tax;

2. Extend the period for return of seized goods;

3. Authorize an officer to summon any person;

4. Compound offences;

5. Decide on persons authorized to represent;

6. Transfer proceedings from one officer to another;

7. Decide on publication of names of offenders;

8. Issue written instructions;

9. Delegate powers;

10. Extend the period for return of goods cleared for job work.

But who is this omnipotent 'competent authority'?

There is however one place where the 'competent authority' is defined. For issue of completion certificate for construction of a complex. In the days to come let's hope to find this authority, who is going to be the unseen hand that is going to run the GST regime.

Capital Goods under some schedule: The model Act defines Capital Goods as;

"capital goods" means: -

(A) the following goods, namely:-

(i) all goods falling within Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading6805, grinding wheels and the and the like, and parts thereof falling under heading 6804 of the Schedule to this Act;

The schedule to this Act has no Chapters and headings; what is meant is obviously the schedule to the Central Excise Tariff Act.

Retrospective Notifications: The Act seeks to confer certain 'retro' powers on the officers. Section 132 provides for - The Central Government (or the State Government) may, on the recommendation of the Council, make rules, including rules conferring the power to issue notifications with retrospective effect under those rules, to carry into effect the purposes of this Act. As per Section 21, the registration can be cancelled with retrospective effect.

What is input tax credit? Section 2(58) defines "input tax credit" as credit of 'input tax' as defined in section 2(56) - and section 2(56) defines "Input Service Distributor"!

GST compliance rating:

(1) Every taxable person shall be assigned a GST compliance rating score based on his record of compliance with the provisions of this Act.

(2) The GST compliance rating score shall be determined on the basis of parameters to be prescribed in this behalf.

(3) The GST compliance rating score shall be updated at periodic intervals and intimated to the taxable person and also placed in the public domain in the manner prescribed.

Lawyer friendly: The Law seems to be as lawyer-friendly as possible.

Customs - Single Window Project - Simplification of procedure in SWIFT for clearance of consignments related to drugs & cosmetics

THE Single Window Interface for Trade (SWIFT) provides the importers/exporters a single point interface for clearance of import and export goods thereby reducing dwell time and cost of doing business.

Since its implementation, reports have been received highlighting problems faced by trade in relation to the import of drugs, cosmetics and medical equipment. The Board has examined these issues and in consultation with the Drug Controller General of India certain decisions have been taken to simplify the procedure for clearance of such goods:

Items that are Chemicals and Not drugs: Several items falling under different Customs Tariff Heads which have been mapped in SWIFT as requiring clearance from Assistant Drug Controller's (ADC) office are chemicals and not drugs. These are being routed for ADC's clearance by virtue of the Customs Tariff Heads under which they are declared, and the ADC's office routinely declares them as "out of scope". In this regard, a list of such items have been prepared and published on the ICEGATE website as part of PGA Exemption Category (PEC).The Board has already established a Working Group to examine all such items. The PEC will be duly updated after holding consultations in the Working Group and with the approval of the concerned PGAs (DCGI - in case of drugs and cosmetics items).

Dual Use Items & Excipients: Several items falling under different Customs Tariff Heads which have been mapped in SWIFT as requiring clearance from Assistant Drug Controllers' (ADC) office have dual use (use for medicinal and non-medicinal purposes) and excipients (an inactive substance that can serve as the vehicle or medium for a drug or other active substance). A large number of importers are importing them for purposes other than drugs or medicinal use.

In respect of the category of dual-use items or excipients, in the Integrated Declaration, the items will normally not be referred to the ADC clearance.

Any problems faced by field formations may be reported to Single Window Project team, CBEC.

CBEC Circular No. 28/2016-Cus., Dated: June 14, 2016

Excise Duty on readymade garments having a retail sale price of Rs. 1000 or more - CBEC Clarifies

REPRESENTATIONS have been received from the trade regarding the scope of the levy of excise duty on readymade garments and made articles of textiles bearing a brand name or sold under a brand name and having a retail sale price of Rs. 1000 or more in this year's Budget.

The issue is: whether excise duty would be chargeable on readymade garments or made up articles of textiles which are sold by a retail store which merely affixes the retail sale price on the readymade garments or made up articles of textiles which are purchased by such retail store from the open market.

Board clarifies:

1. The present levy is not on all readymade garments and made ups, and is restricted only to readymade garments and made up articles of textiles bearing a brand name or sold under a brand name and having retail sale price (RSP) of Rs. 1000 or above.

2. To avoid disputes and minimize duty evasion, it has also been provided that affixing a brand name on the product, labeling or relabeling of its containers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to manufacture.

3. However, such retailer shall not be liable to pay excise duty if:

a) the retail sale price of such readymade garments or made up articles of textiles is less than Rs. 1000, or

b) the aggregate value of clearances for home consumption by such person is less than Rs. 1.5 crore in a year [provided aggregate value of clearances during previous financial year was less than Rs. 4 crore].

4. Merely because the outlets [shop] of a retailer, from where readymade garments or made ups are sold, has a name, say, M/s XYZ and Sons, the readymade garments or made ups sold from such outlet [shop] cannot be held as branded readymade garments or made ups and become liable to excise duty. Deemed manufacture and liability to excise duty will arise only if such retailer affixes a brand name on the readymade garments and affixes a label bearing the RSP on the packages containing the readymade garments of Rs. 1000 or above.

Board has directed that field formations shall not visit individual retail outlets or retail chains, except based on specific inputs regarding duty evasion and with the approval of the jurisdictional Commissioner or Additional Director General or above. Who is this or above?

CBEC Circular No. 1031/19/2016-CX., Dated: June 14, 2016

Increase in Tariff Values of Gold

GOVERNMENT  has increased the tariff value of Gold. There is no change in the rates of other commodities:

Notification No. 85/2016-CUSTOMS (N.T.)., Dated: June 14, 2016

Until Tomorrow with more DDT

Have a nice day.

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