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ITC Transition not to be denied in case of Input Service Distributor (ISD)

editor — Sat, 23 Mar 2024 06:22:00 +0000

In the case of Siemens India Ltd. v. Union of India [Writ Petition No. 986 of 2019 dated February 09, 2024], the Hon’ble Bombay High Court, drawing upon sub-section (7) of Section 140 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”), postponed the proceedings for further examination. The court upheld the temporary halt granted to the Assessee, who is an Input Service Distributor (“ISD”), emphasizing that Input Tax Credit (ITC) legitimately available to the Assessee before the Appointed Day should not be forfeited due to the absence of an effective procedural mechanism for transferring ITC to the Electronic Credit Ledger for utilization. This situation could lead to the permanent loss of such ITC.

Facts of the case:

Siemens India Ltd. (“the Petitioner”), registered as an Input Service Distributor (ISD), initiated a writ petition regarding the transition of Input Tax Credit (ITC) available to them on July 1, 2017 (“the Appointed Day”). The petition contested the Revenue Department’s (“the Respondent”) refusal to allow transition or utilization of ITC in the Electronic Credit Ledger, citing a defective electronic mechanism.

These proceedings stemmed from a Supreme Court order dated March 24, 2023, in Union of India and Ors. v. Siemens Ltd. and Ors [SLP (Civil) Diary No. 7213 of 2023], directing a fresh consideration of the case, taking into account relevant contentions and legal provisions.

Issue:

Is an Input Service Distributor (ISD) entitled to transition ITC available on the Appointed Day?

Held:

The Bombay High Court, in Writ Petition 986 of 2019, made the following determinations:

The primary concern revolves around the legal ramifications of sub-section (1) and sub-section (7) of Section 140 of the CGST Act, outlining transitional arrangements for the carry-forward and utilization of ITC by ISDs.
Citing sub-section (7) of Section 140 of the CGST Act, the Court emphasized that legitimately available ITC with the Petitioner before the Appointed Day cannot be forfeited due to the absence of an effective procedural mechanism for transferring ITC to the Electronic Credit Ledger for utilization, thus preventing permanent loss of such ITC.
The Court suggested that a thorough examination of these issues by the GST Council would aid in the adjudication process.
It was decided that interim relief granted to the Petitioner would remain in force.
The case was adjourned until August 9, 2024.

India’s E-Vehicle Policy Aims to Boost EV Manufacturing and Technology Adoption

editor — Sat, 16 Mar 2024 05:34:06 +0000

The Indian government has given its nod to a strategic initiative aimed at positioning India as a premier manufacturing hub for electric vehicles (EVs), leveraging cutting-edge technology within the nation’s borders. This policy seeks to attract investments from leading global EV manufacturers, fostering the production of state-of-the-art e-vehicles domestically.

The primary objective of this policy is to facilitate widespread access to the latest EV technology for Indian consumers while concurrently advancing the Make in India campaign. By stimulating the EV ecosystem, the policy aims to encourage healthy competition among EV manufacturers, resulting in increased production volumes, economies of scale, and reduced production costs. Moreover, it envisions a reduction in crude oil imports, trade deficits, and air pollution, particularly in urban areas, thereby benefiting public health and the environment.

Key features of the policy include:

Minimum Investment Requirement: An investment of at least Rs 4150 crore (approximately USD 500 million) is mandated.
No Maximum Investment Limit: There is no upper limit on the amount of investment.
Manufacturing Timeline: Manufacturers are required to set up production facilities in India within three years, commence commercial production of e-vehicles, and achieve a minimum domestic value addition (DVA) of 50% within five years.
Domestic Value Addition (DVA) Targets: Localization levels of 25% by the third year and 50% by the fifth year must be attained during manufacturing.
Customs Duty Incentives: A customs duty of 15% (as applicable to Completely Knocked Down units) would be levied on vehicles with a minimum CIF value of USD 35,000 and above for a maximum period of five years, provided that manufacturers establish manufacturing facilities in India within three years.
Import Limits: The total number of EV imports allowed would be capped, with the duty foregone limited to the investment made or Rs 6484 crore (equivalent to incentives under the PLI scheme), whichever is lower. Import quotas would be set at a maximum of 40,000 EVs, with an annual limit not exceeding 8,000 vehicles if the investment exceeds USD 800 million. Unused annual import limits may be carried over.
Bank Guarantee Requirement: Companies must provide a bank guarantee to support their investment commitments, with the guarantee being invoked in case of failure to meet DVA and minimum investment criteria.

This forward-thinking policy is poised to propel India’s EV sector into a new era of growth, innovation, and sustainability. Access to state-of-the-art EV technology, coupled with robust manufacturing infrastructure and supportive government policies, is expected to revolutionize the automotive industry landscape in India.

Access the full press release at: https://www.pib.gov.in/PressReleasePage.aspx?PRID=2014858

CBIC Modifies BCD Rates on Selected Smart Wearable Devices

editor — Sat, 16 Mar 2024 05:15:08 +0000

The Central Board of Indirect Taxes and Customs (CBIC) has issued Notification No. 17/2024-Customs on March 14, 2024, which revises its earlier Notification No. 57/2017-Customs dated June 30, 2017. This revision pertains to the Basic Customs Duty (BCD) rates applicable to specific smart wearable devices.

In the aforementioned notification, a modification has been made in the Table, as follows:

S. No.	Chapter or Heading or Sub-heading or tariff item	Description of goods	Standard rate	Condition No.
20	8517 62 90 or 8517 69 90	All goods other than the following goods, namely: – (a) Wrist wearable devices (commonly known as smart watches) and other smart wearable devices including smart rings, shoulder bands, neck bands or ankle bands; (b) Optical transport equipment; (c) Combination of one or more of Packet Optical Transport Product or Switch (POTP or POTS); (d) Optical Transport Network (OTN) products; (e) IP Radios; (f) Soft switches and Voice over Internet Protocol (VoIP) equipment, namely, VoIP phones, media gateways, gateway controllers and session border controllers; (g) Carrier Ethernet Switch, Packet Transport Node (PTN) products, Multiprotocol Label Switching Transport Profile (MPLS-TP) products; (h) Multiple Input/Multiple Output (MIMO) products; (i) Long Term Evolution (LTE) products	10%	-

The revised table details the changes in BCD rates for various goods, excluding wrist wearable devices and other specified items. The Notification aims to address the evolving landscape of smart wearable technology and ensure appropriate customs duties are applied.

The complete Notification can be accessed here

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ITC Transition not to be denied in case of Input Service Distributor (ISD)

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India’s E-Vehicle Policy Aims to Boost EV Manufacturing and Technology Adoption

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CBIC Modifies BCD Rates on Selected Smart Wearable Devices

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