Introduction:

The concept of warehouse manufacturing available under Customs Act, 1962 is an age-old duty deferment and export benefit scheme useful for both domestic suppliers and exporters. It is less popular among exporters when compared to EOU¹, EPCG² and Advance Authorization schemes under the FTP³. All these schemes allow exporters to import capital goods and inputs to procure domestically without payment of customs duties and IT⁴. Such duty saved amounts shall stand waived when the specified export obligations are fulfilled. On the contrary when such obligations are not fulfilled within the stipulated time, the duty saved amounts proportionate to unfulfilled export obligation shall be recovered along with interest which is payable from the date of actual import of goods under the above schemes. The option of warehouse manufacturing is also worthy for exporters to consider as it does not impose any condition of export obligation and there will be a remission of duty payable on imported goods if the final goods are exported. If the final goods are cleared for domestic consumption, then the duty payable on original imported goods that was not paid at the time of their import can be paid without interest at the time of such removal. In addition to the condition of export obligation, there are no stipulations about minimum investment, minimum area and is of less administrative burden.

Read more: Insights into In-bond Warehousing & Manufacturing Facility

Introduction: 

Whether the credit accumulated in the last returns filed under the previous regime can be taken to electronic credit ledger in terms of section 140 of the CT Act [1] by filing TRAN-01 even after the time limit prescribed under Rule 117 of the CT Rules [2] has been subjected to vexatious litigation and has caught the Nation’s attention with contrary decisions of various High Courts and the retrospective amendments to Section 140. The matter has finally landed before the Honourable Supreme Court [3]. Read our extensive analysis on the above matter at The Vires, Right & Retrospectivity - Transitional Credit

On the other hand, another issue related to credit of previous regime which is annoying the exporters is whether they are entitled to claim refund of the credit of the erstwhile regime that was carried forward into electronic credit ledger by filing TRAN-01 i.e. TRAN credit.

CBIC [4] vide their Circular No. 125/44/2019-GST dated 18.11.2019[5] clarified that the TRAN credit is not of the nature of accumulated credit under the GST laws and the same cannot be claimed as a refund against exports undertaken under LUT [6] without payment of IT [7].

In this backdrop an attempt is made in this article to examine the legal validity of the said clarification given by the circular and whether such clarification will also hold good even in case where refund claim was filed in cases where exports are undertaken with payment of tax.

Read more: An Incisive analysis on Refund of TRAN Credit

In this edition, the final part on aspect of dealing with taxation of partner/firm at the time of retirement, dissolution and contribution of asset to the firm. In this edition, we also bring the presentation on GST Audit to help the readers to understand the obligations therein. We also bring two articles on aspects which are effective from 01^st Oct 2020, namely on e-invoicing and tax collection at source on sale of goods.  

I hope that you will have good time reading this edition and please do share your feedback. I will also urge clients to mail us topics or issues on which you want us to deliberate in our future editions, so that we can contribute to the same.

August is an important month for SBS. We have completed 11 years on August 3^rd, this year. On this occasion, I thank everyone who helped us to be in the current stage. I wish everyone would support in the unconditional way as supported till date.

In this edition, the final part on the GST side which deals with the vires of Rule 117 which prescribes the time limit for availment of transitional credit. Apart from the above, we have covered another important aspect dealing with taxation of partner/firm at the time of retirement, dissolution and contribution of asset to the firm. This is a two part series and I recommend everyone to read both the parts to drive home the point.

Read more: SBS Wiki E Journal Aug 2020