CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar

Indirect Taxes Revision cum Amendment Notes

For CA Final May / Nov 2020 Exam – Part 2

Note
• These Notes are not a substitute for Regular Notes / ICAI Study Material and are useful only for the
purpose of revising the subject.
• RTP, Suggested Answers have to be studied thoroughly.
• We have taken all care while drafting these notes. If you find any error in these notes, please send us an
email to junnarkarkedar@gmail.com

Download our App in Google Playstore by searching ‘CA Kedar Junnarkar’

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 1

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar

Contents

No Chapter Name Page No.

12 GST Exemptions and Reverse Charge 4 - 22
13 Procedures under GST 23 - 41
14 Customs Law - Basics 42 - 47
15 Customs Tariff Act, 1975 48 - 51
16 Customs Valuation 52 - 55
17 Baggage 56 - 58
18 Customs Procedures 59 - 62
19 Refund and Duty Drawback 63 - 65
20 Foreign Trade Policy 66 - 72

Video Lectures by CA Kedar Junnarkar for May / Nov 2020 Exam

2 Views / 1 Year Validity

Pendrive Google Drive
Videos
Price in Rs. Price in Rs.
CA Final DT Regular - Paper 7 12,000 11,000
CA Final DT Regular - Paper 8 11,000 10,000
CA Final DT and IDT Regular Combo (Paper 7 and 8) 22,000 20,000
CA Final DT Fast Track - Paper 7 8,750 8,000
CA Final DT Fast Track - Paper 8 8,750 8,000
CA Final DT and IDT Fast Track Combo (Paper 7 and 8) 16,750 15,500

1.5 Views / 6 months Validity

Pendrive Google Drive
Videos
Price in Rs. Price in Rs.
CA Final DT Fast Track - Paper 7 5,500 5,000
CA Final DT Fast Track - Paper 8 5,500 5,000
CA Final DT and IDT Fast Track Combo (Paper 7 and 8) 10,500 9,500

Practice Book (covering Problems and Solutions from Past Exam Papers, RTP, Mock Papers)
Subject Rs.
CA Final DT 650
CA Final DT 650

You can order the Videos / Books from www.junnarkarkedar.com; In case of any purchase related query,
contact 9975612464

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 2

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Face to Face Class Details
CA Final IDT Fast Track Batch Tapasya Academy, Hyderabad from 19th Feb 2020 for 15 days 6 hours daily
(Phone no. 8885556611 / 8885556622)
CA Final IDT Revision Batch Chennai in March 2020
CA Final DT (Paper 7 and Paper 6C) Regular Navi Peth, Pune from 2nd April 2020 for 2 months
Batch for May / November 2021 Exam Timing: 6.30 am to 9.30 am (Ph. no. 9975612464)
CA Final IDT Batch for Nov 2020 onwards Hyderabad / Chennai in June / July 2020
exams (To be announced)

Contact Details
• Website – www.junnarkarkedar.com
• Email – junnarkarkedar@gmail.com
• Phone Number for Enquiry – 9975612464
• Phone Number for Query Solving - 8149108826 (Direct Number of CA Kedar Junnarkar – Only SMS and
Whatsapp - No Phone Calls)
• Youtube Channel – www.youtube.com/junnarkarkedar
• Facebook Page – www.facebook.com/junnarkarkedar
• Telegram Channel - t.me/junnarkarkedar
• Telegram Group for CA Final Students - t.me/junnarkarkedartax

About CA Kedar Junnarkar

• An Associate Member of ICAI. Also passed Company Secretary Examination
• Based in Pune and have teaching experience of more than 9 years in Direct and Indirect Taxes
• Diploma Holder in IFR ( Diploma in International Financial Reporting – ACCA UK) and DISA (Diploma in
Information Systems Audit – ICAI, New Delhi)
• A Rank Holder In All Five Examinations
 AIR 5 in CA Professional Exam I
 AIR 27 in CA Professional Exam II
 AIR 47 in CA Final
 AIR 13 in CS Executive
 Rank 7 in HSC (Pune Division)
• All India Subject topper in:
 Economics (91/100 in CA Professional Exam I)
 Audit (83/100 in CA Professional Exam II)
• Second Highest in State in HSC in:
 Accountancy (99/100)
 French (98/100)

Phenomenal Results for November 2019 Exams - Students who have done our DT / IDT Classes

ALL INDIA RANK 1 ALL INDIA RANK 46

Mr. Gurram Naga Sri Krishna Praneeth Mr. Prasad Vangala
(Vijaywada) (Vijaywada)
DT – 69 Marks and IDT – 74 Marks IDT – 66 Marks
More than 100 Students have scored exemption in DT / IDT.
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 3
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Change in Returns Chapter in Revision Notes 1 – Due date for furnishing Form GSTR-4 is 30th
April of succeeding year and not 13th.

Chapter 12 : GST Exemptions and Reverse Charge

Construction Service
Value of supply = total amount charged for such supply (-) one third of the total amount i.e. for value of
land or undivided share of land
Total amount means the sum total of consideration charged + amount charged for transfer of land or
undivided share of land

Real Estate Sector (Optional Rates)

a. 1% without ITC on construction of affordable houses (area 60 sqm in metros/ 90 sqm in non-metros
and value upto Rs. 45 lakh).
b. 5% without ITC shall be applicable on construction of:
i. all houses other than affordable houses, and
ii. commercial apartments such as shops, offices etc. in a residential real estate project (RREP) in
which the carpet area of commercial apartments is not more than 15% of total carpet area of all
apartments.

Conditions
Above tax rates shall be available subject to following conditions:
a. Input tax credit shall not be available.
b. 80% of inputs and input services [other than services by way of grant of development rights, long term
lease of land (against upfront payment in the form of premium, salami, development charges etc.) or FSI
(including additional FSI), electricity, high speed diesel, motor spirit, natural gas], used in supplying the
service shall be purchased from registered persons
However, if value of inputs and input services purchased from registered supplier is less than 80%, promoter
has to pay GST on reverse charge basis, under section 9(4) of the CGST Act, at the rate of 18% on all such
inward supplies (to the extent short of 80% of the inward supplies from registered supplier).
Further, where cement is received from an unregistered person, the promoter shall pay tax on supply of
such cement on reverse charge basis, under section 9(4) of the CGST Act, at the applicable rate which is 28%
(CGST 14% + SGST 14%) at present. Moreover, GST on capital goods shall be paid by the promoter on
reverse charge basis, under section 9(4) of the CGST Act at the applicable rates.

Exempt Service
Supply of TDR, FSI, long term lease (premium) of land by a landowner to a developer have been exempted
subject to the condition that the constructed flats are sold before issuance of completion certificate and tax
is paid on them.
Exemption shall be withdrawn in case of flats sold after issue of completion certificate, but such withdrawal
shall be limited to 1% of value in case of affordable houses and 5% of value in case of other than affordable
houses. This will achieve a fair degree of taxation parity between under construction and ready to move
property.
The liability to pay tax on TDR, FSI, long term lease (premium) has been shifted from land owner to builder
under the reverse charge mechanism (RCM)

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 4

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
GST Exemptions relating to Renting
1. Renting of residential dwelling for use as residence
2. Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or
lodging purposes, having value of supply of a unit of accommodation below or equal to Rs. 1,000 per
day or equivalent (Exemption will also apply to dharamshalas, ashram etc.) (w.e.f. 1.10.2019)

Transportation of Passengers Transportation of Goods

• Transportation by Air, embarking from or terminating • by an aircraft from a place
in an airport located in North East India or Bagdogra in outside India to the first
West Bengal: Exempt customs station of landing in
Airways • In other cases: Taxable India : Exempt
(Transportation by Air embarking from or terminating • by an aircraft from customs
in a Regional Connectivity Scheme Airport other than station of clearance in India
above Airports shall be taxable; Exemption will apply to a place outside India:
only for Viability Gap Funding for three years) Exempt upto 30.9.2020
• Ropeway, Cable Car, Aerial Tramway: Taxable • in other cases: Taxable
• Transport by Inland waterways (Tourism or Non • by inland waterways:
Waterways tourism purpose): Exempt Exempt
• Transport by public transport, other than • by vessel from customs
predominantly for tourism purpose, in a vessel station of clearance in India
between places located in India: Exempt (exempt even to a place outside India:
if few tourists ply if it is not predominantly for tourism) Exempt upto 30.9.2020
• Transport by public transport predominantly for • in other cases: Taxable
tourism purpose in a vessel between places located in (Transportation relating to
India: Taxable (Eg. Leisure or charter vessels or cruises certain goods – exempt)
• Metro, monorail or tramway: Exempt • Service of Transportation -
Railways • Railways in first class or AC coach: Taxable Taxable
• Railways in class other than first class or an air • Transportation relating to
conditioned coach: Exempt certain goods – Exempt
• Non AC Stage carriage: Exempt • Goods transportation
• AC Stage Carriage: Taxable agency: Taxable
• Metered cabs, auto rickshaws, e-rickshaws: Exempt (Transportation relating to
• Radio Taxi /AC Contract Carriage: Taxable certain goods – exempt)
• Non-air conditioned contract carriage for tourism, • Courier agency: Taxable
conducted tour, charter or hire: Taxable • Other ways like handcarts,
Roadways • Non-air conditioned contract carriage excluding for camels, horses, donkeys,
tourism, conducted tour, charter or hire: Exempt yaks: Exempt

Exemptions
Services provided by a goods transport agency, by way of transport Services by way of transportation
in a goods carriage of by rail or vessel from one place in
a) goods if consideration charged for transportation of goods on a India to another of the following
consignment transported in single carriage does not exceed goods
Rs.1,500 i. railway equipments or materials
b) goods, where consideration charged for transportation of all such
goods for a single consignee does not exceed Rs.750
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 5
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Common Exemptions
a) agricultural produce
b) milk, salt and food grain including flours, pulses and rice
c) newspaper or magazines registered with the Registrar of Newspapers
d) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap
e) defence or military equipments
f) organic manure

Exempt: GTA Service to an unregistered person/ unregistered casual taxable person is exempt OTHER THAN
to following recipients:
a) factory
b) Society
c) Co-operative Society
d) Body corporate
e) Partnership firm/AOP whether registered or not
f) Registered Casual taxable person

Exemption
Services provided by a goods transport agency, by way of transport of goods in a goods carriage to
a) a Department or Establishment of the Central Government or State Government or Union territory or
b) local authority or
c) Governmental agencies
which has taken registration under the CGST Act, 2017 only for the purpose of deducting tax under section
51 and not for making a taxable supply of goods or services.

Supply of services associated with transit cargo to Nepal and Bhutan (landlocked countries) shall be exempt
(means goods coming from other countries and to be transported to Nepal and Bhutan and transportation
is done in India)

Deemed Value
• Where value of taxable service provided by a person located in non-taxable territory to a person located
in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to
the customs station of clearance in India is not available with the person liable for paying integrated tax,
the same shall be deemed to be 10% of the CIF value (sum of cost, insurance and freight) of imported
goods.
• This provision will not apply if service recipient (person who appoints the transporter) is an Indian
importer.

Hiring/Leasing/Licensing
Exempt Services: Services by way of giving on hire
a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or
b) to a goods transport agency, a means of transportation of goods.
c) motor vehicle for transport of students, faculty and staff, to a person providing services of
transportation of students, faculty and staff to an educational institution providing services by way of
pre-school education and education upto higher secondary school or equivalent.
d) to a local authority, an Electrically operated vehicle meant to carry more than twelve passengers
(w.e.f. 1st August 2019)
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 6
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Tour Operator Services - Exemption from GST
1. Services by a specified organisation in respect of a religious pilgrimage facilitated by Government of
India, under bilateral arrangement
Specified organisation shall mean
a) Kumaon Mandal Vikas Nigam Limited, a Government of Uttarakhand Undertaking; or
b) Committee' or 'State Committee' as defined in section 2 of the Haj Committee Act, 2002
2. Services provided to a foreign tourist in relation to a tour conducted wholly outside India (Exempt from
IGST)
Import of Services
Imports by following persons shall be exempt from IGST
a) the Central Government, State Government, Union territory, a local authority, a governmental authority
or an individual in relation to any purpose other than commerce, industry or any other business or
profession;
b) an entity registered under section 12AA of the Income-tax Act, 1961 for the purposes of providing
charitable activities; or
c) Services received from provider of service located in a non-taxable territory by way of supply of online
educational journals or periodicals to an educational institution other than institution providing services
by way of
i. pre-school education and education up to higher secondary school or equivalent or
ii. education as a part of an approved vocational education course.
d) a person located in a non-taxable territory:

The exemption shall not apply to:

a) online information and database access or retrieval services received by persons specified in (a) or (b) or
b) services by way of transportation of goods by a vessel from a place outside India up to the customs
station of clearance in India received by persons specified in the entry

Exempt Services
1. Services supplied by an establishment of a person in India to any establishment of that person outside
India, which are treated as establishments of distinct persons provided the place of supply of the service
is outside India in accordance with section 13 of IGST Act, 2017.
2. Import of services by United Nations or a Specified International Organisation for official use of the
United Nations or the specified international organisation.
3. Services imported by a unit or a developer in the Special Economic Zone for authorised operations shall
be exempt from the whole of the integrated tax leviable thereon under section 5 of the Integrated
Goods and Service Tax Act, 2017. (Notification no. 18/2017)
4. Services by a Foreign Diplomatic Mission located in India shall be exempt.
5. Import of services by Foreign diplomatic mission or consular post in India, or diplomatic agents or career
consular officers posted therein shall be exempt
6. Services provided by an intermediary when location of both supplier and recipient of goods is
outside the taxable territory shall be exempt (w.e.f. 1.10.2019)

GST Exemption relating to services by Central / State Government / Union Territory / Local Authority
A. Services by the Department of Posts –
(a) speed post, express parcel post, life insurance, and agency services – Taxable (exempt if provided to
Central Government, State Government, Union territory)
(b) Other services of post – Exempt

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 7

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
B. services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport -
Taxable

C. Transport of goods or passengers – Taxable subject to other exemptions (eg. Non AC Stage Carriage
exempt)

D.
1. Other services provided to another Central Government, State Government, Union territory or local
authority – exempt

2. provided to other than business entity - exempt

3. provided to business entity – check (a) or (b)

(a) if consideration is upto Rs. 5000 p.a. – if yes, then exempt
(b) if consideration exceeds Rs. 5000 p.a. – check (i) or (ii)
(i) if the service is renting of immovable property
(1) to a person registered under CGST Act, 2017 - Taxable under Reverse Charge
(2) to unregistered person - Taxable under Forward Charge
(ii) if it is other service – check (1) or (2)
(1) aggregate turnover of business entity in the preceding financial year is of up to Registration
threshold limit in preceding financial year – Service is exempt (w.e.f. 1.10.2019)
(2) if it exceeds Registration threshold limit in preceding financial year – Taxable (w.e.f. 1.10.2019)

GST Exemption relating to services BY Central / State Government / Union Territory / Local Authority
1. Issuance of passport, visa, driving licence, birth certificate or death certificate
2. Tolerating non-performance of a contract for which consideration in the form of fines or liquidated
damages
3. by way of registration required under any law for the time being in force
4. by way of testing, calibration, safety check or certification relating to protection or safety of workers,
consumers or public at large, required under any law
5. Assignment of right to use natural resources to an individual farmer for cultivation of plants and rearing
of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar
products.
6. Assignment of right to use any natural resource to persons other than individual farmer where such right
to use was assigned before the 1st April, 2016. The exemption shall apply only to tax payable on one
time charge payable.
7. Services provided by the Central Government, State Government, Union territory or local authority by
way of allowing a business entity to operate as a telecom service provider or use radio frequency
spectrum during the period prior to the 1st April, 2016, on payment of licence fee or spectrum user
charges
8. Services provided by way of deputing officers after office hours or on holidays for inspection or
container stuffing or such other duties in relation to import export cargo on payment of Merchant
Overtime charges.
9. Services by governmental authority by way of any activity in relation to any function entrusted to a
municipality under article 243W of the Constitution

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 8

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
10. Services by a governmental authority by way of any activity in relation to any function entrusted to a
Panchayat under article 243G of the Constitution
11. Services supplied by Central Government, State Government, Union territory to their undertakings or
Public Sector Undertakings (PSUs) by way of guaranteeing the loans taken by such undertakings or PSUs
from the banking companies and financial institutions. (banking companies added w.e.f. 1.1.2019)
12. Services by way of grant of license or lease to explore or mine petroleum crude or natural gas or both,
has been exempted from so much of tax as is leviable on the consideration paid to the Central
Government in the form of Central Government’s share of profit petroleum as defined in the contract
entered into by the Central Government in this behalf.
13. Services supplied by a State Government to Excess Royalty Collection Contractor (ERCC) by way of
assigning the right to collect royalty on behalf of the State Government on the mineral dispatched by
the mining lease holders.
At the end of the contract period, ERCC shall submit an account to the State Government and certify
that the amount of goods and services tax deposited by mining lease holders on royalty is more than
the goods and services tax exempted on the service provided by State Government to the ERCC of
assignment of right to collect royalty and where such amount of goods and services tax paid by mining
lease holders is less than the amount of goods and services tax exempted, the exemption shall be
restricted to such amount as is equal to the amount of goods and services tax paid by the mining lease
holders and the ERCC shall pay the difference between goods and services tax exempted on the service
provided by State Government to the ERCC of assignment of right to collect royalty and goods and
services tax paid by the mining lease holders on royalty.

Exempt Services to Central or State Government or Union territory or local authority or a

Governmental authority
1. Pure services (excluding works contract service or other composite supplies involving supply of any
goods) provided to the Central Government, State Government or Union territory or local authority or a
Governmental authority or a Government Entity by way of any activity in relation to any function
entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted
to a Municipality under article 243W of the Constitution.
2. Composite supply of goods and services in which the value of supply of goods constitutes not more
than 25% of the value of the said composite supply provided to the Central Government, State
Government or Union territory or local authority or a Governmental authority or a Government Entity by
way of any activity in relation to any function entrusted to a Panchayat under article 243G of the
Constitution or in relation to any function entrusted to a Municipality under article 243W of the
Constitution.
3. Services provided to the Central Government, State Government, Union territory administration under
any training programme for which total expenditure is borne by the Central Government, State
Government, Union territory administration.
4. Services provided to the Central Government, State Government, Union territory under any insurance
scheme for which total premium is paid by the Central Government, State Government, Union territory
Services by way of reinsurance of the insurance schemes specified above

GST Exemptions relating to Legal Services provided by

a) an arbitral tribunal to -
i. any person other than a business entity - exempt
ii. To the Central Government, State Government, Union territory, local authority, Governmental
Authority or Government Entity: Exempt

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 9

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
iii. a business entity with an aggregate turnover up to Registration threshold limit in preceding
financial year- Exempt (w.e.f. 1.10.2019)
iv. if turnover exceeds Registration threshold limit in preceding financial year–Taxable (w.e.f.
1.10.2019)

b) partnership firm of advocates or Junior advocate to

i. an advocate or partnership firm of advocates providing legal services - exempt
ii. any person other than a business entity- exempt
iii. To the Central Government, State Government, Union territory, local authority, Governmental
Authority or Government Entity: Exempt
iv. a business entity with an aggregate turnover up to Registration threshold limit in preceding
financial year- exempt
v. if turnover exceeds Registration threshold limit in preceding financial year – service taxable

c) senior advocate to-

i. any person other than a business entity- exempt
ii. To the Central Government, State Government, Union territory, local authority, Governmental
Authority or Government Entity: Exempt
iii. a business entity with an aggregate turnover up to Registration threshold limit in preceding
financial year- exempt
iv. if turnover exceeds Registration threshold limit in preceding financial year – service taxable

Person liable to pay tax in case of services provided by Senior Advocates

a) where legal services are provided by senior advocates to business entities, tax will be payable by the
recipient of service.
b) where representational services are provided by the senior advocates to any business entity, tax will be
payable by the recipient of service which is the business entity who is litigant, applicant, or petitioner.
c) where the contract for representational services provided by the senior advocates to any business entity
has been entered through another advocate or a firm of advocates, tax will be payable by the recipient
of service which is the business entity who is litigant, applicant, or petitioner.

Electricity Service
Exempt Service
1. Transmission or distribution of electricity by an electricity transmission or distribution utility
2. Services supplied by electricity distribution utilities by way of construction, erection, commissioning, or
installation of infrastructure for extending electricity distribution network upto the tube well of the
farmer or agriculturist for agricultural use

GST Exemptions relating to Health Care Service (diagnosis or treatment or care for illness, injury,
deformity, abnormality or pregnancy in any recognised system of medicines in India)
1.
(a) by a clinical establishment - exempt
(b) by authorised medical practitioner registered with medical council - exempt
(c) by paramedics (labs, nurses, diagnostic centres)- exempt
(d) transportation of a patient in an ambulance – exempt
(e) hair transplant or cosmetic or plastic surgery - Taxable

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 10

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
(f) hair transplant or cosmetic or plastic surgery undertaken to restore or to reconstruct anatomy or
functions of body affected due to congenital defects, developmental abnormalities, injury or trauma –
exempt

2. Services by a veterinary clinic in relation to health care of animals or birds

3. Services provided by the cord blood banks by way of preservation of stem cells or any other service in
relation to such preservation.

4. Services provided by operators of the common bio-medical waste treatment facility to a clinical
establishment by way of treatment or disposal of bio-medical waste or the processes incidental thereto

GST Exemptions relating to Education

Services by an Educational Institution to its students, faculty and staff shall be exempt.

Educational institution means an institution providing services by way of:

a) pre-school education and education up to higher secondary school or equivalent
b) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being
in force
c) education as a part of an approved vocational education course

Educational Institution providing education

Pre-school education education as a part of education as a part
Service and education up to a curriculum for of an approved
higher secondary obtaining qualification vocational
school or equivalent recognised by any law education course
Transportation of students, Exempt Taxable Taxable
faculty and staff
Catering, including any mid-day
meals scheme sponsored by the
the Central Government, State Exempt Taxable Taxable
Government or Union territory
Security or cleaning or house-
keeping services performed in Exempt Taxable Taxable
such educational institution
Services relating to admission
to, or conduct of examination Exempt Exempt Exempt
by, such institution
Supply of online educational
journals or periodicals Taxable Exempt Taxable
Hiring of Motor Vehicle for
transport of students, faculty Exempt Taxable Taxable
and staff to person providing
transportation service to

Services provided by an educational institution by way of conduct of entrance examination against

consideration in the form of entrance fee
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 11
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
The Central and State Educational Boards shall be treated as Educational Institution for the limited purpose
of providing services by way of conduct of examination to the students.

Circular No. 82/01/2019 GST

IIMs are “educational institutions” as they provide education as a part of a curriculum for obtaining a
qualification recognized by law for the time being in force. Therefore, such services would be exempt.
Services provided by IIMs to participants of short courses is not exempt from GST.

GST Exemption relating to Performance based Services

Services provided to a recognised sports body by
a) an individual as a player, referee, umpire, coach or team manager for participation in a sporting event
organised by a recognized sports body
b) another recognised sports body

Services by an artist by way of a performance in folk or classical art forms of

a) music, or
b) dance, or
c) theatre,
if the consideration charged for such performance is not more than Rs. 1.5 Lakhs. No exemption for
service provided by such artist as a brand ambassador

GST Exemptions relating to Arts, Culture and Sports

1. Admission to a museum, national park, wildlife sanctuary, tiger reserve or zoo (No limit on ticket price)

2. Services by way of right to admission to

a) circus, dance, or theatrical performance including drama or ballet
b) award function, concert, pageant, musical performance or any sporting event other than a
recognised sporting event
c) recognised sporting event
d) planetarium,
where the consideration for right to admission to the events or places as referred to in item (a), (b), (c) or
(d) above is not more than Rs. 500 per person.

3. Training or coaching services in recreational activities relating to

a) arts or culture
b) sports by charitable entities registered under section 12AA of the Income-tax Act.

3. Services by way of sponsorship of sporting events organised -

a) by a national sports federation, or its affiliated federations, where the participating teams or
individuals represent any district, State, zone or Country;
b) by Association of Indian Universities, Inter-University Sports Board, School Games Federation of
India, All India Sports Council for the Deaf, Paralympic Committee of India or Special Olympics
Bharat;
c) by the Central Civil Services Cultural and Sports Board;
d) as part of national games, by the Indian Olympic Association; or
e) under the Panchayat Yuva Kreeda Aur Khel Abhiyaan Scheme.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 12

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Exemption for Services relating to FIFA U-17 Women's World Cup 2020 (w.e.f. 1.10.2019)
a) Services by way of right to admission to the events organised under FIFA FIFA U-17 Women's World Cup
2020
b) Services provided by and to Fédération Internationale de Football Association (FIFA) and its subsidiaries
directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020 to be
hosted in India if Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are
directly or indirectly related to any of the events under FIFA U-17 FIFA U-17 Women's World Cup 2020

GST Exemptions relating to Agriculture

Exemption for Services relating to cultivation of plants and rearing of all life forms of animals, except rearing
of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce by way of
a) agricultural operations directly related to production of any agricultural produce including cultivation,
harvesting, threshing, plant protection or testing;
b) supply of farm labour
c) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying,
cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such
like operations which do not alter the essential characteristics of agricultural produce but make it only
marketable for the primary market;
d) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;
e) loading, unloading, packing, storage or warehousing of agricultural produce;
f) agricultural extension services;
g) services by any Agricultural Produce Marketing Committee or Board or services provided by a
commission agent for sale or purchase of agricultural produce.
h) services by way of fumigation in a warehouse of agricultural produce

Exemption for
• job work in relation to cultivation of plants and rearing of all life forms of animals, except the rearing of
horses, for food, fibre, fuel, raw material or other similar products or agricultural produce
• Services by way of pre-conditioning, pre- cooling, ripening, waxing, retail packing, labelling of fruits and
vegetables which do not change or alter the essential characteristics of the said fruits or vegetables
• Services by way of fumigation in a warehouse of agricultural produce
• Services by way of warehousing of minor forest produce
• Services by way of storage or warehousing of cereals, pulses, fruits, nuts and vegetables, spices,
copra, sugarcane, jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo,
unmanufactured tobacco, betel leaves, tendu leaves, coffee and tea (w.e.f. 1.10.2019)
• Loading, unloading, packing, storage or warehousing of rice
• Service provided by Fair Price Shops to Central Government by way of sale of wheat, rice and coarse
grains, kerosene, sugar, edible oil, etc under Public Distribution System (PDS) against consideration in
the form of commission or margin

GST Exemption relating to Banking Sector

1. Services by way of
a) interest or discount (interest involved in credit card services is taxable)
b) inter se sale or purchase of foreign currency amongst banks or authorised dealers of foreign exchange
or amongst banks and such dealers (Money changing service to public is taxable)

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 13

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
2. Services by an acquiring bank, to any person in relation to settlement of an amount upto two thousand
rupees in a single transaction transacted through credit card, debit card, charge card or other payment card
service.

3. Services by the following persons in respective capacities -

a) business facilitator or a business correspondent to a banking company with respect to accounts in its
rural area branch
b) any person as an intermediary to a business facilitator or a business correspondent with respect to
services mentioned in entry (a)
c) business facilitator or a business correspondent to an insurance company in a rural area

4. Services provided by a banking company to Basic Saving Bank Deposit (BSBD) account holders under
Pradhan Mantri Jan Dhan Yojana (PMJDY)

GST Exemption relating to RBI

1. Services by the Reserve Bank of India
2. Services received by the Reserve Bank of India, from outside India in relation to management of foreign
exchange reserves

Financial Service
Services by an intermediary of financial services located in a multi services SEZ with International Financial
Services Centre (IFSC) status to a customer located outside India for international financial services in
currencies other than Indian rupees (INR) shall be exempt

GST Exemptions relating to Charitable Trust

Services by an entity registered under section 12AA of the Income-tax Act, 1961 by way of charitable
activities shall be exempt. Also imports by such entity will be exempt.

Charitable activities means activities relating to

1. Public health by way of
A. care or counselling of
a) terminally ill persons or persons with severe physical or mental disability
b) persons afflicted with HIV or AIDS
c) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol

B . public awareness of preventive health, family planning or prevention of HIV infection

2. Advancement of educational programmes or skill development relating to

a) abandoned, orphaned or homeless children
b) physically or mentally abused and traumatized persons
c) prisoners or
d) persons over the age of 65 years residing in a rural area

3. Advancement of religion, spirituality or yoga

4. preservation of environment including watershed, forests and wildlife

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 14

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Services by an old age home run by Central Government, State Government or by an entity registered under
section 12AA of the Income-tax Act, 1961 to its residents (aged 60 years or more) against consideration
upto Rs. 25,000 per month per member shall be exempt provided that the consideration charged is inclusive
of charges for boarding, lodging and maintenance

Services provided by rehabilitation professionals recognised under the Rehabilitation Council of India
Act, 1992 by way of rehabilitation, therapy or counselling and such other activity as covered by the
said Act at medical establishments, educational institutions, rehabilitation centers established by
Central Government, State Government or Union territory or an entity registered under section 12AA
of the Income-tax Act, 1961 shall be exempt. (w.e.f. 1.1.2019)

Religious Services
Services exempt
a) conduct of any religious ceremony (Religious ceremonies are life cycle rituals including special religious
poojas conducted in terms of religious texts)

b) renting of precincts of a religious place meant for general public, owned or managed by an entity
registered as a charitable or religious trust under section 12AA of the Income-tax Act, 1961or a trust or
an institution registered under section 10(23C)(v) of the Income-tax Act or a body or an authority
covered under section 10(23BBA) of the said Income-tax Act:
This exemption shall not apply to
i. renting of rooms where charges are one thousand rupees or more per day
ii. renting of premises, community halls, kalyanmandapam or open area, and the like where charges are
ten thousand rupees or more per day
iii. renting of shops or other spaces for business or commerce where charges are ten thousand rupees
or more per month.

GST Exemptions to different types of persons / bodies

1. Services by way of licensing, registration and analysis or testing of food samples supplied by the Food
Safety and Standards Authority of India (FSSAI) to Food Business Operators

2. Services by Coal Mines Provident Fund Organisation to persons governed by the Coal Mines Provident
Fund and Miscellaneous Provisions Act, 1948

3. Services by National Pension System (NPS) Trust to its members against consideration in the form of
administrative fee

4. Services by way of providing information under the Right to Information Act, 2005

5. Services of life insurance business provided by way of annuity under the National Pension System
regulated by the Pension Fund Regulatory and Development Authority of India under the Pension Fund
Regulatory and Development Authority Act, 2013

6. Services of life insurance business provided or agreed to be provided by the Army, Naval and Air Force
Group Insurance Funds to members of the Army, Navy and Air Force, respectively, under the Group
Insurance Schemes of the Central Government

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 15

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
7. Services by the Employees' State Insurance Corporation to persons governed under the Employees'
State Insurance Act, 1948

8. Services provided by the Employees Provident Fund Organisation to the persons governed under the
Employees Provident Funds and the Miscellaneous Provisions Act, 1952

9. Services provided by the Insurance Regulatory and Development Authority of India to insurers under the
Insurance Regulatory and Development Authority of India Act, 1999

10. Services provided by the Securities and Exchange Board of India set up under the Securities and
Exchange Board of India Act, 1992 by way of protecting the interests of investors in securities and to
promote the development of, and to regulate, the securities market.

11. Services by way of collecting or providing news by an independent journalist, Press Trust of India or
United News of India

12. Services provided by the Goods and Services Tax Network to the Central Government or State
Governments or Union territories for implementation of Goods and Services Tax

13. Services provided by the National Centre for Cold Chain Development under the Ministry of Agriculture,
Cooperation and Farmer's Welfare by way of cold chain knowledge dissemination

14. Any services provided by

a) the National Skill Development Corporation set up by the Government of India;
b) a Sector Skill Council approved by the National Skill Development Corporation;
c) an assessment agency approved by the Sector Skill Council or the National Skill Development
Corporation;
d) a training partner approved by the National Skill Development Corporation or the Sector Skill
Council, in relation to-
i. the National Skill Development Programme implemented by the National Skill Development
Corporation; or
ii. a vocational skill development course under the National Skill Certification and Monetary Reward
Scheme; or
iii. any other Scheme implemented by the National Skill Development Corporation.

15. Services of assessing bodies empanelled centrally by the Directorate General of Training, Ministry of Skill
Development and Entrepreneurship by way of assessments under the Skill Development Initiative
Scheme

16. Services provided by training providers (Project implementation agencies) under Deen Dayal Upadhyaya
Grameen Kaushalya Yojana implemented by the Ministry of Rural Development, Government of India by
way of offering skill or vocational training courses certified by the National Council for Vocational
Training

Other GST Exemptions

1. Services by way of slaughtering of animals

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 16

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
2. Services by way of public conveniences such as provision of facilities of bathroom, washrooms,
lavatories, urinal or toilets

3. Services by an organiser to any person in respect of a business exhibition held outside India

4. Services of public libraries by way of lending of books, publications or any other knowledge-enhancing
content or material

5. Services provided by way of pure labour contracts of construction, erection, commissioning, installation,
completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other
original works pertaining to the beneficiary-led individual house construction or enhancement under the
Housing for All (Urban) Mission or Pradhan Mantri Awas Yojana.

6. Services by way of pure labour contracts of construction, erection, commissioning, or installation of

original works pertaining to a single residential unit otherwise than as a part of a residential complex.

Single residential unit means a self-contained residential unit which is designed for use, wholly or
principally, for residential purposes for one family.

5. Supply of service by a Government Entity to Central Government, State Government, Union territory,
local authority or any person specified by Central Government, State Government, Union territory or
local authority against consideration received from Central Government, State Government, Union
territory or local authority, in the form of grants.

6. Upfront amount (called as premium, salami, cost, price, development charges or by any other name)
payable in respect of service by way of granting of long term lease of thirty years, or more) of industrial
plots or plots for development of infrastructure for financial business, provided by the State Government
Industrial Development Corporations or Undertakings or by any other entity having 50% or more
ownership of Central Government, State Government, Union territory to the industrial units or the
developers in any industrial or financial business area

For the purpose of this exemption, the Central Government, State Government or Union territory shall
have 50 per cent or more ownership in the entity directly or through an entity which is wholly owned by
the Central Government, State Government or Union territory.

7. Services by way of public conveniences such as provision of facilities of bathroom, washrooms,

lavatories, urinal or toilets

8. Service by an unincorporated body or a non-profit entity registered under any law for the time being in
force, to its own members by way of reimbursement of charges or share of contribution -
a) as a trade union
b) for the provision of carrying out any activity which is exempt from the levy of Goods and Service Tax
c) up to an amount of Rs. 7,500 per month per member for sourcing of goods or services from a third
person for the common use of its members in a housing society or a residential complex

9. Services provided by an unincorporated body or a non-profit entity registered under any law for the
time being in force, engaged in

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 17

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
i. activities relating to the welfare of industrial or agricultural labour or farmers or
ii. promotion of trade, commerce, industry, agriculture, art, science, literature, culture, sports,
education, social welfare, charitable activities and protection of environment,
to its own members against consideration in the form of membership fee upto an amount of one
thousand rupees (Rs. 1000) per member per year.

10. Services by way of transfer of a going concern, as a whole or an independent part thereof

11. Service by way of access to a road or a bridge on payment of toll charges

12. Service by way of access to a road or a bridge on payment of annuity

13. Services of general insurance business provided under following schemes

a) Hut Insurance Scheme
b) Cattle Insurance under Swarnajayanti Gram Swarozgar Yojana (earlier known as Integrated Rural
Development Programme)
c) Scheme for Insurance of Tribals
d) Janata Personal Accident Policy and Gramin Accident Policy
e) Group Personal Accident Policy for Self-Employed Women
f) Agricultural Pumpset and Failed Well Insurance
g) Premia collected on export credit insurance
h) Restructured Weather Based Crop Insurance Scheme (RWCIS), approved by the Government of India
and implemented by the Ministry of Agriculture
i) Jan Arogya Bima Policy
j) Pradhan Mantri Fasal BimaYojana (PMFBY)
k) Pilot Scheme on Seed Crop Insurance
l) Central Sector Scheme on Cattle Insurance
m) Universal Health Insurance Scheme
n) Rashtriya Swasthya Bima Yojana
o) Coconut Palm Insurance Scheme
p) Pradhan Mantri Suraksha Bima Yojana
q) Niramaya Health Insurance Scheme implemented by the Trust constituted under the provisions of
the National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and
Multiple Disabilities Act, 1999
r) Bangla Shasya Bima (w.e.f. 1.10.2019)

Services by way of reinsurance of the insurance schemes specified above are exempt

14. Services of life insurance business provided under following schemes-

a) Janashree Bima Yojana
b) Aam Aadmi Bima Yojana
c) Life micro-insurance product as approved by the Insurance Regulatory and Development Authority,
having maximum amount of cover of Rs. 2,00,000
d) Varishtha Pension BimaYojana
e) Pradhan Mantri Jeevan Jyoti Bima Yojana
f) Pradhan Mantri Jan Dhan Yojana
g) Pradhan Mantri Vaya Vandan Yojana

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 18

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Services by way of reinsurance of the insurance schemes specified above are exempt

15. Services by way of collection of contribution under the Atal Pension Yojana

16. Services by way of collection of contribution under any pension scheme of the State Governments

17. Services of life insurance provided or agreed to be provided by the Naval Group Insurance Fund to the
personnel of Coast Guard under the Group Insurance Schemes of the Central Government

18. Services of leasing of assets (rolling stock assets including wagons, coaches, locos) by the Indian
Railways Finance Corporation to Indian Railways

19. Services provided by an incubatee up to a total turnover of fifty lakh rupees in a financial year subject to
the following conditions, namely:-
a) the total turnover had not exceeded fifty lakh rupees during the preceding financial year; and
b) a period of three years has not elapsed from the date of entering into an agreement as an incubatee.

20. Taxable services, provided or to be provided, by a Technology Business Incubator or a Science and
Technology Entrepreneurship Park recognised by the National Science and Technology Entrepreneurship
Development Board of the Department of Science and Technology, Government of India or bio-
incubators recognised by the Biotechnology Industry Research Assistance Council, under the
Department of Biotechnology, Government of India.

21. Services of public libraries by way of lending of books, publications or any other knowledge-enhancing
content or material

22. Services by way of slaughtering of animals

23. Services by way of artificial insemination of livestock (other than horses)

24. Services of life insurance provided or agreed to be provided by the Central Armed Police Forces
(under Ministry of Home Affairs) Group Insurance Funds to their members under the Group
Insurance Schemes of the concerned Central Armed Police Force (w.e.f. 1.10.2019)

Reverse Charge in case of Services

Category of Supply of Services - Reverse Charge Supplier of Recipient of Service who will
service pay tax
a) Any factory registered under
Supply of Services by a Goods Transport Agency or governed by the Factories
(GTA) who has not paid tax at the rate of 12% in Act, 1948 or
respect of transportation of goods by road to b) any society registered under
a) any factory registered under or governed by the Goods the Societies Registration Act,
Factories Act, 1948 or Transport 1860 or under any other law
b) any society registered under the Societies Agency (GTA) for the time being in force or
Registration Act, 1860 or under any other law for c) any co-operative society
the time being in force in any part of India or established by or under any
c) any co-operative society established by or under law
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 19
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
any law or d) any person registered under
d) any person registered under the Central Goods the CGST Act or the IGST Act
and Services Tax Act or the Integrated Goods and or SGST Act or UTGST Tax Act
Services Tax Act or the State Goods and Services e) anybody corporate
Tax Act or the Union Territory Goods and Services established, by or under any
Tax Act; or law
e) any body corporate established, by or under any f) any partnership firm whether
law or registered or not under any
f) any partnership firm whether registered or not law including association of
under any law including association of persons; or persons
g) any casual taxable person. g) any casual taxable person
located in the taxable territory.
Above provision shall not apply to services provided by a goods transport agency, by way of transport of
goods in a goods carriage by road, to
a. a Department or Establishment of the Central Government or State Government or Union territory; or
b. local authority; or
c. Governmental agencies,
which has taken registration under the CGST Act, 2017 only for the purpose of deducting tax under section
51 and not for making a taxable supply of goods or services
Individual
Services provided by an individual advocate including advocate or a Any business entity located in the
a senior advocate or firm of advocates by way of legal senior taxable territory
services, directly or indirectly (Firm includes LLP) advocate or
firm of
advocates
Services supplied by an arbitral tribunal to a business An arbitral Any business entity located in the
entity tribunal taxable territory.
Services provided by way of sponsorship to anybody Any person Anybody corporate or
corporate or partnership firm partnership firm located in the
taxable territory
Services supplied by the Central Government, State
Government, Union territory or local authority to a Central
business entity excluding Government, Any business entity located in the
a) renting of immovable property, and State taxable territory.
b) services specified below Government,
i. services by the Department of Posts by way of Union territory
speed post, express parcel post, life insurance, or local
and agency services provided to a person authority
other than Central Government, State
Government or Union territory or local
authority
ii. services in relation to an aircraft or a vessel,
inside or outside the precincts of a port or an
airport
iii. transport of goods or passengers
Central
Services supplied by the Central Government, State Government, Any person registered under the
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 20
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Government, Union territory or local authority by way State Central Goods and Services Tax
of renting of immovable property to a person Government, Act, 2017
registered under the Central Goods and Services Tax Union territory
Act, 2017 or local
authority
Services supplied by a director of a company or a A director The company or a body
body corporate to the said company or the body corporate located in the taxable
corporate. territory.
Services supplied by an Insurance Agent to any An insurance Any person carrying on insurance
person carrying on insurance business. agent business located in taxable
territory
Services supplied by a Recovery Agent to a banking A banking company or a financial
company or a financial institution or a non-banking A recovery institution or a non-banking
financial company agent financial company, located in the
taxable territory
Members of
Supply of services by the members of Overseeing Overseeing
Committee to Reserve Bank of India Committee Reserve Bank of India
constituted by
RBI
Individual
Services supplied by individual Direct Selling Agents Direct Selling A banking company or a non-
(DSAs) other than a body corporate, partnership or Agents (DSAs) banking financial company,
limited liability partnership firm to bank or non- other than located in the taxable territory
banking financial company (NBFCs) body
corporate,
partnership or
LLP
Services provided by business facilitator (BF) to a Business A banking company, located in
banking company facilitator (BF) the taxable territory
Services provided by an agent of business An agent of A business correspondent,
correspondent (BC) to business correspondent (BC) business located in the taxable territory
correspondent
Security services (services provided by way of supply Any person
of security personnel) provided to a registered person other than A registered person, located in
body corporate the taxable territory
Above provision relating to security services shall not apply to
(i)(a) a Department or Establishment of the Central Government or State Government or Union territory or
(b) local authority or
(c) Governmental agencies
which has taken registration under the CGST Act, 2017 only for the purpose of deducting tax under section
51 of the said Act and not for making a taxable supply of goods or services or
(ii) a registered person paying tax under section 10 of the said Act.
Services supplied by any person by way of transfer
of development rights or Floor Space Index (FSI) Any person Promoter
(including additional FSI) for construction of a
project by a promoter. (w.e.f. 1.4.2019)
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 21
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Long term lease of land (30 years or more) by any
person against consideration in the form of Any person Promoter
upfront amount (called as premium, salami, cost,
price, development charges or by any other name)
and/or periodic rent for construction of a project
by a promoter. (w.e.f. 1.4.2019)
Supply of services by an author, music composer,
photographer, artist or the like by way of transfer or Author or Publisher, music company,
permitting the use or enjoyment of a copyright music producer or the like, located in
covered under section 13(1)(a) of the Copyright Act, composer, the taxable territory.
1957 relating to original literary, dramatic, musical or photographer,
artistic works to a publisher, music company, producer artist, or the
or the like. like
Supply of services by an author by way of transfer
or permitting the use or enjoyment of a copyright Author Publisher located in the
covered under section 13(1)(a) of the Copyright taxable territory
Act, 1957 relating to original literary works to a
publisher.
Reverse Charge provisions will not apply in above case if
a. the author has taken registration under the CGST Act, 2017 and filed a declaration, in the form at
Annexure I, within the time limit prescribed therein, with the jurisdictional CGST or SGST
commissioner, that he exercises the option to pay tax on forward charge and to comply with all
the provisions of CGST Act, 2017 as they apply to a person liable for paying the tax in relation to
the supply of any goods or services or both and that he shall not withdraw the said option within
a period of 1 year from the date of exercising such option
b. the author makes a declaration on the invoice issued by him in Form GST Inv-I to the publisher
Services provided by way Any person other than a body Any body corporate located in
of renting of a motor corporate,paying central tax at the rate the taxable territory.
vehicle provided to a of 5% on renting of motor vehicles
body corporate (w.e.f. with input tax credit only of input
1.10.2019) service in the same line of business
Services of lending of Lender i.e. a person who deposits the Borrower i.e. a person who
securities under Securities securities registered in his name or in borrows the securities under
Lending Scheme, 1997 the name of any other person duly the Scheme through an
(“Scheme”) of SEBI (w.e.f. authorised on his behalf with an approved intermediary of SEBI
1.10.2019) approved intermediary for the purpose
of lending under the Scheme of SEBI

Reverse Charge only in case of IGST (in addition to above)

Category of Supply of Services Supplier of service Recipient of Service
Any service supplied by any person who is located in Any person located Any person located in the
a non-taxable territory to any person other than non- in a non-taxable taxable territory other than
taxable online recipient. territory non-taxable online recipient.
Services supplied by a person located in non- taxable A person located in Importer, as defined in
territory by way of transportation of goods by a non-taxable Customs Act, 1962 located in
vessel from a place outside India up to the customs territory the taxable territory
station of clearance in India.
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 22
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar

Chapter 13 : Procedures under GST

Assessment
Section 59 of CGST Act: Self-assessment
Every registered person shall self-assess the taxes payable and furnish a return for each tax period.

Section 60 of CGST Act: Provisional assessment

• Where the taxable person is unable to determine the value or determine the rate of tax, he may
request the proper officer for payment of tax on a provisional basis and the proper officer shall pass an
order allowing such payment within 90 days from the date of receipt of such request.
• Bond with such surety or security of the difference between the amount of tax as may be finally assessed
and the amount of tax provisionally assessed.
• The proper officer shall, within 6 months from the date of the communication of the order issued, pass
the final assessment order.
• This period may be extended by Joint or Additional Commissioner for a further period not exceeding
six months and by the Commissioner for such further period not exceeding four years.
• The registered person shall be liable to pay interest on any tax payable at 18% p.a. from the first day
after the due date till the date of actual payment.
• Where the registered person is entitled to a refund consequent to the order of final assessment, interest
shall be paid on such refund 6% p.a. from the date immediately after the expiry of 60 days from the date
of receipt of application till the date of refund of such tax.

Section 61 of CGST Act: Scrutiny of returns

• The proper officer may scrutinize the return to verify the correctness of the return and inform him of the
discrepancies noticed and seek his explanation thereto.
• In case the explanation is found acceptable, the registered person shall be informed accordingly and no
further action shall be taken.
• In case no satisfactory explanation is furnished within 30 days of being informed by the proper officer or
such further period as may be permitted by him or where the registered person, after accepting the
discrepancies, fails to take the corrective measure in his return for the month in which the discrepancy is
accepted, the proper officer may initiate appropriate action including those under section 65 or section
66 or section 67, or proceed to determine the tax and other dues under section 73 or section 74.

Section 62 of CGST Act: Assessment of non-filers of returns

• Where a registered person fails to furnish the return under section 39 or section 45, even after the
service of a notice under section 46, the proper officer may proceed to assess the tax liability of the said
person to the best of his judgment and issue an assessment order within 5 years from due date of the
annual return.
• Where the registered person furnishes a valid return within 30 days of the service of the assessment
order, the said assessment order shall be deemed to have been withdrawn but the liability for payment
of interest under section 50 or for payment of late fee under section 47 shall continue.

Section 63 of CGST Act: Assessment of unregistered persons

Where a taxable person fails to obtain registration even though liable to do so or whose registration has
been cancelled but who was liable to pay tax, the proper officer may proceed to assess the tax liability of
such taxable person to the best of his judgment for the relevant tax periods and issue an assessment order
within 5 years from due date of the annual return.
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 23
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Section 64 of CGST Act: Summary assessment in certain special cases
• The proper officer may, on any evidence showing a tax liability of a person coming to his notice, with the
previous permission of Additional or Joint Commissioner, proceed to assess the tax liability of such
person to protect the interest of revenue and issue an assessment order, if he has sufficient grounds to
believe that any delay in doing so may adversely affect the interest of revenue.
• Where the taxable person to whom the liability pertains is not ascertainable and such liability pertains to
supply of goods, the person in charge of such goods shall be deemed to be the taxable person liable to
be assessed and liable to pay tax and any other amount due under this section.
• On an application made by the taxable person within 30 days from the date of receipt of order passed
or on his own motion, if the Additional or Joint Commissioner considers that such order is erroneous, he
may withdraw such order and follow the procedure laid down in section 73 or section 74.

Types of Audits under GST

Mandatory Audit by CA / CMA Audit by Tax Authorities Special Audit

Section 65 of CGST Act: Audit by tax authorities

• The Commissioner or any officer authorised by him may undertake audit of any registered person.
• The officers may conduct audit at the place of business of the registered person or in their office.
• The registered person shall be informed by way of a notice not less than 15 working days prior to the
conduct of audit.
• The audit shall be completed within 3 months from the date of commencement of the audit.
• Commissioner may extend the period by a further period not exceeding 6 months.
• On conclusion of audit, the proper officer shall, within 30 days, inform the registered person, whose
records are audited, about the findings, his rights and obligations and the reasons for such findings.
• Where the audit conducted results in detection of tax not paid or short paid or erroneously refunded, or
input tax credit wrongly availed or utilised, the proper officer may initiate action under section 73 or 74.

Section 66 of CGST Act: Special Audit

• If at any stage of scrutiny, inquiry, investigation or any other proceedings before him, any officer not
below the rank of Assistant Commissioner, having regard to the nature and complexity of the case and
the interest of revenue, is of the opinion that the value has not been correctly declared or the credit
availed is not within the normal limits, he may, with the prior approval of the Commissioner, direct such
registered person to get his records including books of account examined and audited by a chartered
accountant or a cost accountant as may be nominated by the Commissioner.
• The Chartered Accountant or Cost Accountant so nominated shall, within 90 days, submit a report of
such audit duly signed and certified by him to the said Assistant Commissioner.
• The Assistant Commissioner may extend the said period by a further 90 days.
• The expenses of the examination and audit of records, including the remuneration of such chartered
accountant or cost accountant, shall be determined and paid by the Commissioner and such
determination shall be final.
• Where the special audit conducted results in detection of tax not paid or short paid or erroneously
refunded, or input tax credit wrongly availed or utilised, the proper officer may initiate action under
section 73 or 74.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 24

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Demand

Section 73 of CGST Act: Determination of tax not paid or short paid or erroneously refunded or input
tax credit wrongly availed or utilised for any reason other than fraud or any wilful misstatement or
suppression of facts
Tax not paid voluntarily Tax paid voluntarily
The Officer shall, within 2 • Person chargeable with tax may, before service of notice pay on basis
years 9 months from the of
due date for furnishing a) his own ascertainment of such duty or
of annual return, serve b) duty ascertained by the Officer, the amount of duty
notice on such person along with interest payable thereon.
requiring him to show • He shall inform the Officer of such payment in writing, who, on
cause why he should not receipt of such information, shall not serve any notice.
pay the amount specified • If the Officer is of the opinion that the amount paid falls short of
in the notice. that actually payable, then, he shall issue the notice for such shortfall

Section 74 of CGST Act: Determination of tax not paid or short paid or erroneously refunded or input
tax credit wrongly availed or utilized due to fraud or wilful-misstatement or suppression of facts
The Officer shall, within 4 years 6 months from the due date for furnishing of annual return, person
requiring him to show cause why he should not pay the amount serve notice on such as per notice along
with interest payable and a penalty = 100% of tax as per notice.
Time Limit to complete proceeding
No intention to evade payment of duty Intention to evade payment of duty
within 3 years from the due date for furnishing within 5 years from the due date for furnishing of
of annual return annual return

Action by Taxpayer Amount of penalty payable

Non Fraud Cases Fraud Cases
Tax along with Interest is paid before issuance No Penalty and no Penalty = 15% of Tax and no SCN
of Show Cause Notice (SCN) Show Cause Notice shall be issued
Tax along with Interest is paid within 30 days No Penalty; All Penalty = 25% of Tax
of issuance of Show Cause Notice proceedings deemed All proceedings deemed to be
to be concluded concluded
Tax amount along with Interest, paid within Penalty = 50% of Tax
30 days of communication of adjudication Penalty = Higher of All proceedings deemed to be
order  10% of Tax concluded
Tax amount along with Interest, paid after 30 amount
days of communication of adjudication order  Rs. 10,000 100% of Tax

Recovery Procedure

Section 78 of CGST Act: Initiation of recovery proceedings

 Any amount payable by a taxable person in pursuance of an order passed under this Act shall be paid by
such person within a period of three months from the date of service of such order failing which
recovery proceedings shall be initiated:

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 25

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
 Where the proper officer considers it expedient in the interest of revenue, he may, for reasons to be
recorded in writing, require the said taxable person to make such payment within such period less than a
period of three months as may be specified by him.

Section 79 of CGST Act: Recovery of tax

 Where any amount payable by a person to the Government under any of the provisions of this Act or
the rules made thereunder is not paid, the proper officer shall proceed to recover the amount by one or
more of the following modes:
a) the proper officer may deduct or may require any other specified officer to deduct the amount so
payable from any money owing to such person which may be under the control of the proper officer
or such other specified officer
b) the proper officer may recover or may require any other specified officer to recover the amount so
payable by detaining and selling any goods belonging to such person which are under the control of
the proper officer or such other specified officer
c)
(i) the proper officer may, by a notice in writing, require any other person from whom money is due
or may become due to such person or who holds or may subsequently hold money for or on
account of such person, to pay to the Government either forthwith upon the money becoming
due or being held, or within the time specified in the notice not being before the money
becomes due or is held, so much of the money as is sufficient to pay the amount due from such
person or the whole of the money when it is equal to or less than that amount;
(ii) every person to whom the notice is issued shall be bound to comply with such notice, and in
particular, where any such notice is issued to a post office, banking company or an insurer, it
shall not be necessary to produce any pass book, deposit receipt, policy or any other document
for the purpose of any entry, endorsement or the like being made before payment is made,
notwithstanding any rule, practice or requirement to the contrary;
(iii) in case the person to whom a notice has been issued, fails to make the payment in pursuance
thereof to the Government, he shall be deemed to be a defaulter in respect of the amount
specified in the notice and all the consequences of this Act or the rules made thereunder shall
follow;
(iv) the officer issuing a notice may, at any time, amend or revoke such notice or extend the time for
making any payment in pursuance of the notice;
(v) any person making any payment in compliance with a notice issued shall be deemed to have
made the payment under the authority of the person in default and such payment being credited
to the Government shall be deemed to constitute a good and sufficient discharge of the liability
of such person to the person in default to the extent of the amount specified in the receipt;
(vi) any person discharging any liability to the person in default after service on him of the notice
issued shall be personally liable to the Government to the extent of the liability discharged or to
the extent of the liability of the person in default for tax, interest and penalty, whichever is less;
(vii) where a person on whom a notice is served proves to the satisfaction of the officer issuing the
notice that the money demanded or any part thereof was not due to the person in default or that
he did not hold any money for or on account of the person in default, at the time the notice was
served on him, nor is the money demanded or any part thereof, likely to become due to the said
person or be held for or on account of such person, nothing contained in this section shall be
deemed to require the person on whom the notice has been served to pay to the Government
any such money or part thereof;

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 26

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
d) the proper officer may, in accordance with the rules to be made in this behalf, distrain any movable
or immovable property belonging to or under the control of such person, and detain the same until
the amount payable is paid; and in case, any part of the said amount payable or of the cost of the
distress or keeping of the property, remains unpaid for a period of thirty days next after any such
distress, may cause the said property to be sold and with the proceeds of such sale, may satisfy the
amount payable and the costs including cost of sale remaining unpaid and shall render the surplus
amount, if any, to such person;
e) the proper officer may prepare a certificate signed by him specifying the amount due from such
person and send it to the Collector of the district in which such person owns any property or resides
or carries on his business or to any officer authorised by the Government and the said Collector or
the said officer, on receipt of such certificate, shall proceed to recover from such person the amount
specified thereunder as if it were an arrear of land revenue;

Section 80 of CGST Act: Payment of tax and other amount in instalments

 On an application filed by a taxable person, the Commissioner may, for reasons to be recorded in
writing, extend the time for payment or allow payment of any amount due under this Act, other than the
amount due as per the liability self-assessed in any return, by such person in monthly instalments not
exceeding twenty four, subject to payment of interest under section 50 and subject to such conditions
and limitations as may be prescribed.
 where there is default in payment of any one instalment on its due date, the whole outstanding balance
payable on such date shall become due and payable forthwith and shall, without any further notice
being served on the person, be liable for recovery.
 The facility of payment in instalments shall not be allowed where -
(a) the taxable person has already defaulted on the payment of any amount under the CGST Act or IGST
Act or UTGST Act or any of the SGST Act, for which the recovery process is on;
(b) the taxable person has not been allowed to make payment in instalments in the preceding financial
year under the Act or the IGST Act or UTGST Act or any of the SGST Act;
(c) the amount for which instalment facility is sought is less than Rs. 25,000.

Section 81 of CGST Act: Transfer of property to be void in certain cases.

Where a person, after any amount has become due from him, creates a charge on or parts with the property
belonging to him or in his possession by way of sale, mortgage, exchange, or any other mode of transfer
whatsoever of any of his properties in favour of any other person with the intention of defrauding the
Government revenue, such charge or transfer shall be void as against any claim in respect of any tax or any
other sum payable by the said person:
Provided that, such charge or transfer shall not be void if it is made for adequate consideration, in good
faith and without notice of the pendency of such proceedings under this Act or without notice of such tax or
other sum payable by the said person, or with the previous permission of the proper officer.

Section 82 of CGST Act: Tax to be first charge on property

Notwithstanding anything to the contrary contained in any law for the time being in force, save as otherwise
provided in the Insolvency and Bankruptcy Code, 2016, any amount payable by a taxable person or any
other person on account of tax, interest or penalty which he is liable to pay to the Government shall be a
first charge on the property of such taxable person or such person.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 27

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Section 83 of CGST Act: Provisional attachment to protect revenue in certain cases.
 Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section
67 or section 73 or section 74, the Commissioner is of the opinion that for the purpose of protecting the
interest of the Government revenue, it is necessary so to do, he may, by order in writing attach
provisionally any property, including bank account, belonging to the taxable person in such manner as
may be prescribed.
 Every such provisional attachment shall cease to have effect after the expiry of a period of one year from
the date of the order made.

Section 142A of the Customs Act: Liability under Act to be first charge
• Notwithstanding anything to the contrary contained in any Central Act or State Act,
• any amount of duty, penalty, interest, or any other sum payable by an assessee or any other person
under this Act or the rules made thereunder shall be the first charge on the property of the assessee or
the person,
• save as otherwise provided in
a) section 529A of the Companies Act, 1956
b) the Recovery of Debts Due to Banks and the Financial Institutions Act, 1993 and
c) the Securitisation and Reconstruction of Financial Assets and the Enforcement of Security Interest
Act, 2002

Section 28BA of the Customs Act: Provisional Attachment of Property

• Where, during the pendency of any proceedings, the Officer is of the opinion that for protecting the
interests of revenue, it is necessary so to do, he may, with the previous approval of the Principal
Commissioner or Commissioner, attach provisionally any property belonging to the person on whom
notice is served.
• Every such provisional attachment shall cease to have effect after six months from the date of the
order.
• The Principal Chief Commissioner or Chief Commissioner may extend by such further period or periods
as he thinks fit, so, however, that the total period of extension shall not in any case exceed two years.
• Where an application for settlement of case is made to the Settlement Commission, the period
commencing from the date on which such application is made and ending with the date on which an
order is made shall be excluded from the period specified above.
• Where a property has been provisionally attached, the said person or his representative shall not
mortgage, lease, transfer, deliver or deal with the attached property in any manner except with the
previous approval of the Commissioner.

Powers of GST Officers

Section 67 of CGST Act: Power of inspection, search and seizure

 Where the proper officer, not below the rank of Joint Commissioner, has reasons to believe that
a) a taxable person has suppressed any transaction relating to supply of goods or services or both or
the stock of goods in hand, or
b) a taxable person has has claimed input tax credit in excess of his entitlement under this Act or
c) a taxable person has has indulged in contravention of any of the provisions of this Act or the rules
made thereunder to evade tax under this Act or

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 28

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
d) any person engaged in the business of transporting goods or an owner or operator of a warehouse
or a godown or any other place is keeping goods which have escaped payment of tax or has kept his
accounts or goods in such a manner as is likely to cause evasion of tax payable under this Act,
he may authorise in writing any other officer of central tax to inspect any places of business of the
taxable person or the persons engaged in the business of transporting goods or the owner or the
operator of warehouse or godown or any other place.
 Where the proper officer, not below the rank of Joint Commissioner, either pursuant to an inspection
carried out or otherwise, has reasons to believe that any goods liable to confiscation or any documents
or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act,
are secreted in any place, he may authorise in writing any other officer of central tax to search and seize
or may himself search and seize such goods, documents or books or things:
 Where it is not practicable to seize any such goods, the proper officer, or any officer authorized by him,
may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or
otherwise deal with the goods except with the previous permission of such officer:
 The documents or books or things so seized shall be retained by such officer only for so long as may be
necessary for their examination and for any inquiry or proceedings under this Act.
 The documents, books or things or any other documents, books or things produced by a taxable person
or any other person, which have not been relied upon for the issue of notice under this Act or the rules
made thereunder, shall be returned to such person within a period not exceeding thirty days of the issue
of the said notice.
 The officer authorised shall have the power to seal or break open the door of any premises or to break
open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or
documents of the person are suspected to be concealed, where access to such premises, almirah,
electronic devices, box or receptacle is denied.
 The person from whose custody any documents are seized shall be entitled to make copies thereof or
take extracts therefrom in the presence of an authorised officer at such place and time as such officer
may indicate in this behalf except where making such copies or taking such extracts may, in the opinion
of the proper officer, prejudicially affect the investigation.
 The goods so seized shall be released, on a provisional basis, upon execution of a bond and furnishing
of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of
applicable tax, interest and penalty payable.
 Where any goods are seized and no notice in respect thereof is given within six months of the seizure of
the goods, the goods shall be returned to the person from whose possession they were seized.
 The period of six months may, on sufficient cause being shown, be extended by the proper officer for a
further period not exceeding six months.
 The Government may, having regard to the perishable or hazardous nature of any goods, depreciation in
the value of the goods with the passage of time, constraints of storage space for the goods or any other
relevant considerations, by notification, specify the goods or class of goods which shall, as soon as may
be after its seizure, be disposed of by the proper officer in such manner as may be prescribed.
 Where any goods have been seized by a proper officer, or any officer authorised by him, he shall
prepare an inventory of such goods in such manner as may be prescribed.
 The provisions of the Code of Criminal Procedure, 1973, relating to search and seizure, shall, so far as
may be, apply to search and seizure under this section. Commissioner shall have the powers of
Magistrate.
 Where the proper officer has reasons to believe that any person has evaded or is attempting to evade
the payment of any tax, he may, for reasons to be recorded in writing, seize the accounts, registers or
documents of such person produced before him and shall grant a receipt for the same, and shall retain

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 29

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
the same for so long as may be necessary in connection with any proceedings under this Act or the rules
made thereunder for prosecution.
 The Commissioner or an officer authorised by him may cause purchase of any goods or services or both
by any person authorised by him from the business premises of any taxable person, to check the issue of
tax invoices or bills of supply by such taxable person, and on return of goods so purchased by such
officer, such taxable person or any person in charge of the business premises shall refund the amount so
paid towards the goods after cancelling any tax invoice or bill of supply issued earlier.

Section 69 of CGST Act: Power to arrest

 Where the Commissioner has reasons to believe that a person has committed any offence specified in
section 132(1)(a)/(b)/(c)/(d) which is punishable under clause (i) or (ii) of sub-section (1), or sub-section
(2) of the said section, he may, by order, authorise any officer of central tax to arrest such person.
 Where a person is arrested for an offence specified under section 132(5), the officer authorised to arrest
the person shall inform such person of the grounds of arrest and produce him before a Magistrate
within twenty four hours.
 Subject to the provisions of the Code of Criminal Procedure, 1973
a) where a person is arrested for any offence specified under section 132(4), he shall be admitted to
bail or in default of bail, forwarded to the custody of the Magistrate
b) in the case of a non-cognizable and bailable offence, the Deputy Commissioner or the Assistant
Commissioner shall, for the purpose of releasing an arrested person on bail or otherwise, have the
same powers and be subject to the same provisions as an officer-in-charge of a police station.

Section 70 of CGST Act: Power to summon person to give evidence and produce documents.
 The proper officer under this Act shall have power to summon any person whose attendance he
considers necessary either to give evidence or to produce a document or any other thing in any inquiry
in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil
Procedure, 1908
 Every such inquiry shall be deemed to be a "judicial proceedings" within the meaning of section 193 and
section 228 of the Indian Penal Code.

Section 70 of CGST Act: Power to summon person to give evidence and produce documents.
 The proper officer under this Act shall have power to summon any person whose attendance he
considers necessary either to give evidence or to produce a document or any other thing in any inquiry
in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil
Procedure, 1908.
 Every such inquiry shall be deemed to be a "judicial proceedings" within the meaning of section 193 and
section 228 of the Indian Penal Code.

Section 71 of CGST Act: Access to business premises.

 Any officer under this Act, authorised by the proper officer not below the rank of Joint Commissioner,
shall have access to any place of business of a registered person to inspect books of account,
documents, computers, computer programs, computer software whether installed in a computer or
otherwise and such other things as he may require and which may be available at such place, for the
purposes of carrying out any audit, scrutiny, verification and checks as may be necessary to safeguard
the interest of revenue.
 Every person in charge of place shall, on demand, make available to the officer authorised or the audit
party deputed by the proper officer / cost accountant /chartered accountant nominated u/s 66

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 30

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
a) such records as prepared or maintained by the registered person and declared to the proper officer
in such manner as may be prescribed
b) trial balance or its equivalent
c) statements of annual financial accounts, duly audited, wherever required
d) cost audit report, if any, under section 148 of the Companies Act, 2013
e) the income-tax audit report, if any, under section 44AB of the Income-tax Act, 1961 and
f) any other relevant record, for the scrutiny by the officer or audit party or the Chartered Accountant
or Cost Accountant within a period not exceeding fifteen working days from the day when such
demand is made, or such further period as may be allowed by the said officer or the audit party or
the chartered accountant or cost accountant.

Section 72 of CGST Act: Officers to assist proper officers

 All officers of Police, Railways, Customs, and those officers engaged in the collection of land revenue,
including village officers, officers of State tax and officers of Union territory tax shall assist the proper
officers in the implementation of this Act.
 The Government may, by notification, empower and require any other class of officers to assist the
proper officers in the implementation of this Act when called upon to do so by the Commissioner.

Penalties under GST

Offences  Aids or abets offences
related to Tax not paid,  acquires possession / concerns in Fails to
Invoices, short paid or dealing with goods which he knows Fails to furnish
Transportation, erroneously or has reasons to believe are liable furnish Statistics
payment of tax, refunded or to confiscation Information without
ITC, Refund of ITC has been  Fails to appear when summons Return within reasonable
tax, TDS, TCS, wrongly issued to give evidence or produce time cause /
furnishing of availed or a document specified in willfully
false records, utilised  Fails to issue Invoice or Account in the notice furnishes false
information accordance with provision information
Higher of Fraud Cases:
a) Rs. 10,000 Higher of Rs. Rs. 25,000 Rs. 100 per Rs. 10,000
b) Tax evaded 10,000 or day for which
/ not 100% of Tax failure Continuing
deducted / continues offence Rs.
not Non Fraud subject to 100 per day
collected / Cases: maximum Rs. Maximum Rs.
not paid to Higher of Rs. 5,000 25,000
Government 10,000 or 10%
/ ITC of Tax
availed,
passed or
distributed
irregularly/
claimed
Refund

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 31

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Section 128 of CGST Act: Power to waive penalty or fee or both.
The Government may, by notification, waive in part or full, any penalty referred to in section 122 or section
123 or section 125 or any late fee referred to in section 47 for such class of taxpayers and under such
mitigating circumstances as may be specified therein on the recommendations of the Council.

Section 129 of CGST Act: Detention, seizure and release of goods and conveyances in transit
 Notwithstanding anything contained in this Act, where any person transports any goods or stores any
goods while they are in transit in contravention of the provisions of this Act or the rules made
thereunder, all such goods and conveyance used as a means of transport for carrying the said goods
and documents relating to such goods and conveyance shall be liable to detention or seizure and after
detention or seizure, shall be released
a) on payment of the applicable tax and penalty equal to one hundred per cent of the tax payable on
such goods and, in case of exempted goods, on payment of an amount equal to two per cent of the
value of goods or twenty five thousand rupees, whichever is less, where the owner of the goods
comes forward for payment of such tax and penalty;
b) on payment of the applicable tax and penalty equal to the fifty per cent of the value of the goods
reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount
equal to five per cent of the value of goods or twenty five thousand rupees, whichever is less, where
the owner of the goods does not come forward for payment of such tax and penalty;
c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b)in such
form and manner as may be prescribed:
 Provided that no such goods or conveyance shall be detained or seized without serving an order of
detention or seizure on the person transporting the goods.
 The provisions of section 67 shall, mutatis mutandis, apply for detention and seizure of goods and
conveyances.
 The proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and
penalty payable and thereafter, pass an order for payment of tax and penalty.
 No tax, interest or penalty shall be determined without giving the person concerned an opportunity of
being heard.
 On payment of amount referred above, all proceedings in respect of the notice shall be deemed to be
concluded.
 Where the person transporting any goods or the owner of the goods fails to pay the amount of tax and
penalty within seven days of such detention or seizure, further proceedings shall be initiated in
accordance with the provisions of section 130.
 Where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in
value with passage of time, the said period of seven days may be reduced by the proper officer.

Section 130 of CGST Act: Confiscation of goods or conveyances and levy of penalty
 Notwithstanding anything contained in this Act, if any person
i. supplies or receives any goods in contravention of any of the provisions of this Act or the rules made
thereunder with intent to evade payment of tax or
ii. does not account for any goods on which he is liable to pay tax under this Act or
iii. supplies any goods liable to tax under this Act without having applied for registration or
iv. contravenes any of the provisions of this Act or the rules made thereunder with intent to evade
payment of tax or
v. uses any conveyance as a means of transport for carriage of goods in contravention of the provisions
of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 32

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
used without the knowledge or connivance of the owner himself, his agent, if any, and the person in
charge of the conveyance, then, all such goods or conveyances shall be liable to confiscation and the
person shall be liable to penalty under section 122.
 Whenever confiscation of any goods or conveyance is authorised by this Act, the officer adjudging it
shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer
thinks fit:
 Such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable
thereon:
 The aggregate of such fine and penalty leviable shall not be less than the amount of penalty leviable
under section 129:
 Wwhere any such conveyance is used for the carriage of the goods or passengers for hire, the owner of
the conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine equal
to the tax payable on the goods being transported thereon.
 Where any fine in lieu of confiscation of goods or conveyance is imposed, the owner of such goods or
conveyance or the person, shall, in addition, be liable to any tax, penalty and charges payable in respect
of such goods or conveyance.
 No order for confiscation of goods or conveyance or for imposition of penalty shall be issued without
giving the person an opportunity of being heard.
 Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance
shall thereupon vest in the Government.
 The proper officer adjudging confiscation shall take and hold possession of the things confiscated and
every officer of Police, on the requisition of such proper officer, shall assist him in taking and holding
such possession.
 The proper officer may, after satisfying himself that the confiscated goods or conveyance are not
required in any other proceedings under this Act and after giving reasonable time not exceeding three
months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the sale
proceeds thereof with the Government.

Section 131 of CGST Act: Confiscation or penalty not to interfere with other punishments.
Without prejudice to the provisions contained in the Code of Criminal Procedure, 1973, no confiscation
made or penalty imposed under the provisions of this Act or the rules made thereunder shall prevent the
infliction of any other punishment to which the person affected thereby is liable under the provisions of this
Act or under any other law for the time being in force.

Offences and Prosecution

Section 132 of CGST Act: Punishment for certain offences

Whoever commits any of the following offences:
a) supplies any goods or services or both without issue of any invoice, in violation of the provisions of this
Act or the rules made thereunder, with the intention to evade tax
b) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this
Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or
refund of tax
c) avails input tax credit using such invoice or bill
d) collects any amount as tax but fails to pay the same to the Government beyond a period of three
months from the date on which such payment becomes due

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 33

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
e) evades tax, fraudulently avails input tax credit or fraudulently obtains refund and where such offence is
not covered under clauses (a) to (d)
f) falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false
information with an intention to evade payment of tax due under this Act
g) obstructs or prevents any officer in the discharge of his duties under this Act
h) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping,
concealing, supplying, or purchasing or in any other manner deals with, any goods which he knows or
has reasons to believe are liable to confiscation under this Act or the rules made thereunder
i) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of
services which he knows or has reasons to believe are in contravention of any provisions of this Act or
the rules made thereunder
j) tampers with or destroys any material evidence or documents
k) fails to supply any information which he is required to supply under this Act or the rules made
thereunder or (unless with a reasonable belief, the burden of proving which shall be upon him, that the
information supplied by him is true) supplies false information
l) attempts to commit, or abets the commission of any of the offences mentioned in clauses (a)to (k)of this
section,
shall be punishable
Tax evaded / ITC wrongly availed or Punishment / Cognizable / Non
utilised or the amount of refund Imprisonment Bailable?
wrongly
Cognizable / Non Bailable
i. exceeds Rs. 500 Lakhs Upto 5 years and with fine – (a)/(b)/(c)/(d); Others -
Non Congizable / Bailable
ii. exceeds Rs. 200 Lkhs but does not Upto 3 years and with fine Non Congizable / Bailable
exceed Rs. 500 Lakhs
iii. exceeds Rs. 100 Lkhs but does not Upto 1 year and with fine Non Congizable / Bailable
exceed Rs. 200 Lakhs
iv. he commits or abets the commission of Upto 6 months and with Non Congizable / Bailable
an offence specified in clause (f) or (g) fine
or (j)

Note
a) Where any person convicted of an offence is again convicted of an offence, then, he shall be punishable
for the second and for every subsequent offence with imprisonment for a term which may extend to
five years and with fine. It cannot be for a term less than six months.
b) The imprisonment referred to in clauses (i), (ii) and (iii) shall, in the absence of special and adequate
reasons to the contrary to be recorded in the judgment of the Court, be for a term not less than six
months.

Section 133 of CGST Act: Liability of officers and certain other persons.
 Where any person engaged in connection with the collection of statistics under section 151 or
compilation or computerisation thereof or if any officer of central tax having access to information
specified under section 150, or if any person engaged in connection with the provision of service on the
common portal or the agent of common portal, wilfully discloses any information or the contents of any
return furnished under this Act or rules made thereunder otherwise than in execution of his duties under
the said sections or for the purposes of prosecution for an offence under this Act or under any other Act
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 34
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
for the time being in force, he shall be punishable with imprisonment for a term which may extend to six
months or with fine which may extend to twenty-five thousand rupees, or with both.
 Any person
a) who is a Government servant shall not be prosecuted for any offence under this section except with
the previous sanction of the Government;
b) who is not a Government servant shall not be prosecuted for any offence under this section except
with the previous sanction of the Commissioner.

Section 138 of CGST Act: Compounding of offences

 Any offence under this Act may, either before or after the institution of prosecution, be compounded by
the Commissioner on payment, by the person accused of the offence, to the Central Government or the
State Government, as the case be, of such compounding amount in such manner as may be prescribed.
 Nothing contained in this section shall apply to
a) a person who has been allowed to compound once in respect of any of the offences specified in
clauses (a) to (f) of sub-section (1) of section 132 and the offences specified in clause (l) which are
relatable to offences specified in clauses (a) to (f) of the said sub-section
b) a person who has been allowed to compound once in respect of any offence, other than those in
clause (a), under this Act or under the provisions of any State Goods and Services Tax Act or the
Union Territory Goods and Services Tax Act or the Integrated Goods and Services Tax Act in respect
of supplies of value exceeding one crore rupees
c) a person who has been accused of committing an offence under this Act which is also an offence
under any other law for the time being in force
d) a person who has been convicted for an offence under this Act by a court
e) a person who has been accused of committing an offence specified in clause (g) or clause (j)or clause
(k)of sub-section (1) of section 132
f) any other class of persons or offences as may be prescribed:
 Any compounding allowed under the provisions of this section shall not affect the proceedings, if any,
instituted under any other law.
 Compounding shall be allowed only after making payment of tax, interest and penalty involved in such
offences.
 The amount for compounding of offences under this section shall be such as may be prescribed, subject
to the minimum amount not being less than ten thousand rupees or fifty per cent of the tax involved,
whichever is higher, and the maximum amount not being less than thirty thousand rupees or one
hundred and fifty per cent of the tax, whichever is higher.
 On payment of such compounding amount as may be determined by the Commissioner, no further
proceedings shall be initiated under this Act against the accused person in respect of the same offence
and any criminal proceedings, if already initiated in respect of the said offence, shall stand abated.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 35

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Appeals and Revision under GST

Appellate Authority (Sec 107) GST Appellate Tribunal High Court Supreme Court
(Sec 112) (Sec 117)) (Sec 118)
Taxpayer can file appeal against Taxpayer can
order of Taxpayer can file appeal file appeal Taxpayer can file
a) Additional / Joint against order of against the appeal against the
Commissioner to a) Appellate Authority order passed by order passed by
Commissioner (Appeals) b) Revisional Authority State and Area a) National or
b) AC/DC/Superintendent to Within 3 months from receipt Bench of Regional Bench
Joint Commissioner (A) or of order of such authority. Appellate of Appellate
lower authority Tribunal Tribunal
Within 3 months from receipt Within 180 b) High Court
of order of adjudicating days from
authority. receipt of order
Taxpayer has to be tax, interest, Taxpayer has to be tax, interest,
penalty, fine, fee admitted and penalty, fine, fee admitted and Entire amount Entire amount due
10% of tax in dispute subject 20% of tax in dispute subject due has to be has to be paid
to Rs. 25 crores (For IGST – Rs. to Rs. 50 crores (For IGST – Rs. paid before the before the appeal is
50 crores) 100 crores) – in addition to appeal is filed. filed.
disputed amount paid u/s 107
Department can also file appeal Department can also file Department can
Within 6 months from receipt appeal also file appeal Department can
of order of such authority. Within 6 months from receipt within 180 also file appeal.
of order of such authority. days.
Other party may within 45
Not applicable days of receipt of notice, file a Not applicable Not applicable
memorandum of cross-
objections
The time limit of 3 / 6 months The time limit of 3 / 6 months / Time limit can --
can be extended by 1 month. 45 days can be extended. be extended.
Appeal possible against Question of
Appeal is possible against Appeal is possible against Law. No Appeal against Question of
Question of Law as well as fact. Question of Law as well as fact. fact; Writ petition to High Court can
be filed. If it is dismissed, then Special
Leave petition to Supreme Court.
Appellate Authority, where it is Appellate Tribunal, where it is
possible, shall decide such possible, shall decide such No time limit No time limit
appeal within 1 year from the appeal within 1 year from the specified. specified.
date on which such appeal is date on which such appeal is
filed. filed.

Appeal against order of Appellate or Revisional Authority

One of the issue relates to place of supply Other than issues to place of supply
Appeal to National / Regional Bench of Appellate Appeal to State / Area Bench of Appellate
Tribunal Tribunal

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 36

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Appellate Authority (Sec 107) GST Appellate Tribunal High Court Supreme Court
(Sec 112) (Sec 117)) (Sec 118)
If the tax or ITC involved or the Appeal shall be
This appeal is heard and difference in tax or ITC or fine, heard by a Nothing specified
decided by single person. fee or penalty does not exceed bench of not in CGST Act.
Rs. 5 Lakhs and which does less than two
not involve any question of Judges of the
law may be heard by a bench High Court.
consisting of a single member.
Appellate Authority does not It can send back the case to It may refer the case back to the
have the power to send back Appellate or Revisional Appellate Tribunal for the making
the case to AO for Authority or Adjudicationg additions or alterations as it may
reconsideration. Authority for reconsideration. direct.
Adjournment possible for Adjournment possible for Nothing Nothing specified
maximum 3 times. maximum 3 times. specified
Rectification of Mistake (Sec
161) shall be made With a view to rectifying any Nothing Nothing specified
a) On own motion or error mistake apparent from the specified
brought to notice by officer record, it may amend any order
of tax payer - Within 3 passed by it, at any time within
months from date of order 3 months from the date of
b) Other cases - Within 6 order.
months from date of order
(This time limit will not
apply for clerical or
arithmetical error, arising
from any accidental slip or
omission)
It may, in its discretion, refuse
Appeal application cannot be to admit appeal if the tax or Nothing Nothing specified
rejected on the basis of tax ITC involved or the difference specified
involved. in tax or ITC or fine, fee or
penalty does not exceed Rs.
50,000.

Section 108: Powers of Revisional Authority

Revisional Authority may call for and examine the record of any proceedings and revise the order if he
considers that any decision or order passed is
erroneous in so far as it is illegal or has not taken into account certain material facts, whether
is prejudicial to the improper available at the time of issuance of the said order or not or in
interest of revenue consequence of an observation by CAG

Time Limit to pass order – Later of

on any point which has not been raised and decided in an appeal before the expiry of 3 years after the
before the expiry of 1 year from the date of the order in such passing of the decision or order
appeal sought to be revised

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 37

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Advance Ruling under GST

Section 97 of CGST Act: Application for Advance Ruling

An applicant desirous of obtaining an advance ruling may make an application to Advance Ruling Authority
stating the question on which the advance ruling is sought. The question on which the advance ruling is
sought under this Act, shall be in respect of
a. classification of any goods or services or both
b. applicability of a notification issued under the provisions of this Act
c. determination of time and value of supply of goods or services or both
d. admissibility of input tax credit of tax paid or deemed to have been paid
e. determination of the liability to pay tax on any goods or services or both
f. whether applicant is required to be registered
g. whether any particular thing done by the applicant with respect to any goods or services or both
amounts to or results in a supply of goods or services or both, within the meaning of that term

Section 98 of CGST Act: Procedure on receipt of application

• Authority shall cause a copy thereof to be forwarded to the concerned officer and, if necessary, call upon
him to furnish the relevant records.
• The Authority shall not admit the application where the question raised in the application is already
pending or decided in any proceedings in the case of an applicant under any of the provisions of this
Act:
• Where an application is admitted, the Authority shall pronounce its advance ruling on the question
specified in the application within ninety days from the date of receipt of application.

Section 100 of CGST Act: Appeal to Appellate Authority (AAAR)

• The concerned officer, the jurisdictional officer or an applicant aggrieved by any advance ruling
pronounced, may appeal to the Appellate Authority.
• Every appeal under this section shall be filed within thirty days from the date on which the ruling sought
to be appealed against is communicated to the concerned officer, the jurisdictional officer and the
applicant
• The Appellate Authority may allow it to be presented within a further period not exceeding thirty days.

Section 101 of CGST Act: Orders of Appellate Authority

The order shall be passed within a period of 90 days from the date of filing of the appeal under section 100
or a reference under section 98.

Section 102 of CGST Act: Rectification of advance ruling

The Authority (AAR) or the Appellate Authority (AAAR) may amend any order passed within a period of six
months from the date of the order.

Section 103 of CGST Act: Applicability of advance ruling

The advance ruling pronounced by the Authority or the Appellate Authority shall be binding only
a) on the applicant who had sought it in respect of any matter referred to in section 97 for advance ruling
b) on the concerned officer or the jurisdictional officer in respect of the applicant.
The advance ruling shall be binding unless the law, facts or circumstances supporting the original advance
ruling have changed.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 38

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Section 104 of CGST Act: Advance ruling to be void in certain circumstances
Where the Authority or the Appellate Authority finds that advance ruling pronounced by it has been
obtained by the applicant or the appellant by fraud or suppression of material facts or misrepresentation of
facts, it may, by order, declare such ruling to be void ab initio.

Refunds

Situations leading to refund claims under GST

1. Goods or services or both are exported or, goods or services or both supplied to an SEZ developer/unit,
on payment of IGST and refund of such IGST paid on goods or services or both supplied is claimed

2. A registered person may claim refund of any unutilised input tax credit (ITC) at the end of any tax period
in the following cases:
a) Zero rated supplies: Supply of goods/services/both to an SEZ developer/unit or export of goods or
services or both, and
b) Accumulated ITC on account of inverted duty structure: Where the credit has accumulated on
account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil
rated or fully exempt supplies), except supplies of goods or services or both as may be notified by
the Government on the recommendations of the Council.
However, refund of unutilized ITC shall NOT be allowed if:
a) the goods exported out of India are subjected to export duty;
b) the supplier of goods or services or both avails of drawback in respect of CGST or claims refund of
the IGST paid on such supplies.

3. Tax paid on the supply of goods regarded as deemed exports may be claimed by recipient.

4. Refund of any balance in the electronic cash ledger after payment of tax, interest, penalty, fee or any
other amount payable under this Act or the rules made there under may be claimed

5. Refund on account of issuance of refund vouchers for taxes paid on advances against which goods or
services have not been supplied, may be claimed

6. Refund of tax wrongly collected and paid to the Government [i.e. CGST & SGST paid by treating the
supply as intra-State supply which is subsequently held as inter-State supply and vice versa

7. The IGST paid by tourist leaving India on any supply of goods taken out of India by him

8. Tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate
Authority, Appellate Tribunal or any court.

9. On finalization of provisional assessment, if any tax becomes refundable to assessee (on account of
assessed tax on final assessment being less than the tax deposited by the assessee)

10. Refund of taxes on purchase made by UN bodies or embassies etc.

11. Refund of taxes to retail outlets (discussed in Chapter 3)

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 39

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Section 54 of CGST Act: Refund of Tax
• Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by
him, may make an application before the expiry of two years from the relevant date.
• The proper officer shall issue the order within 60 days from the date of receipt of application complete
• No refund shall be paid to an applicant, if the amount is less than Rs.1,000.
• If refund is less than Rs. 2,00,000, then it shall not be necessary for the applicant to furnish documentary
and other evidences proving that the incidence of such tax and interest had not been passed on to any
other person. In other cases, he may file a declaration, based on the documentary or other evidences
available with him,
• A specialised agency of the United Nations Organisation or any Multilateral Financial Institution and
Organisation notified under the United Nations (Privileges and Immunities) Act, 1947 Consulate or
Embassy of foreign countries or any other person or class of persons, as notified under section 55,
entitled to a refund of tax paid by it on inward supplies of goods or services or both, may make an
application for such refund before the expiry of 18 months from the last day of the quarter in which
such supply was received.

Grant of provisional refund

• The proper officer may, in the case of any claim for refund on account of zero-rated supply of goods or
services or both made by registered persons, other than such category of registered persons as may be
notified by the Government on the recommendations of the Council,
• refund on a provisional basis, 90% of the total amount so claimed, excluding the amount of ITC
provisionally accepted
• thereafter make an order under section 56(5) for final settlement of the refund claim after due
verification of documents furnished by the applicant.
• It shall be granted within period not exceeding 7 days from the date of the acknowledgement
• If the amount of tax evaded exceeds Rs. 2.5 crores, the provisional refund shall be granted subject to the
condition that the person claiming refund has, during any period of 5 years immediately preceding the
tax period to which the claim for refund relates, not been prosecuted for any offence under the Act or
under an existing law.

Withholding of refund claim

Where an order giving rise to a refund is the subject matter of an appeal or further proceedings or where
any other proceedings under this Act is pending and the Commissioner is of the opinion that grant of such
refund is likely to adversely affect the revenue in the said appeal or other proceedings on account of
malfeasance or fraud committed, he may, after giving the taxable person an opportunity of being heard,
withhold the refund till such time as he may determine.
However, it has been adequately safeguarded by provision for payment of interest @ 6% p,a, if, as a result
of appeal, or further proceedings, the applicant becomes eligible for refund.

Where any refund is due in case of zero rated supplies or accumulated ITC on account of inverted duty
structure, to a registered person who has defaulted in furnishing any return or who is required to pay any
tax, interest or penalty, which has not been stayed by any Court, Tribunal or Appellate Authority by the
specified date, the proper officer may:
a) withhold payment of refund due until the said person has furnished the return or paid the tax, interest or
penalty, as the case may be;
b) deduct from the refund due, any tax, interest, penalty, fee or any other amount which the taxable person
is liable to pay but which remains unpaid under this Act or under the existing law.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 40

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Amount to be claimed as refund in case of zero rated supply of goods or services
Maximum Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of
services) / Adjusted Total Turnover * Net ITC
where
"Net ITC" means ITC availed on inputs and input services during the relevant period
"Turnover of zero-rated supply of goods" means the value of zero rated supply of goods made during the
relevant period without payment of tax under bond/LUT
"Turnover of zero-rated supply of services" means the value of zero rated supply of services made without
payment of tax under bond or LUT, calculated in the following manner, namely:-
Zero-rated supply of services is the aggregate of the payments received during the relevant period for zero-
rated supply of services and zero rated supply of services where supply has been completed for which
payment had been received in advance in any period prior to the relevant period reduced by advances
received for zero-rated supply of services for which the supply of services has not been completed during
the relevant period.
"Adjusted Total turnover" means the turnover in a State or a Union territory, as defined under section
2(112), excluding the value of exempt supplies other than zero-rated supplies, during the relevant period;

Refund on account of inverted duty structure, refund of input tax credit

Maximum Refund Amount = {(Turnover of inverted rated supply of goods and services) × Net ITC ÷
Adjusted Total Turnover} – tax payable on such inverted rated supply of goods and services.
Net ITC shall mean input tax credit availed on inputs during the relevant period other than the input tax
credit availed for which refund is claimed under sub-rule (4A) or (4B) or both.
"Adjusted Total turnover" and "relevant period" shall have the same meaning as above.

Section 56 of CGST Act: Interest on Delayed Refunds

A. Interest on amount refundable consequent to order passed by Proper Officer under section 54(5)
Where any tax ordered to be refunded under section 54(5) to any applicant is not refunded within 60
days from the date of receipt of application under section 54(1), interest shall be payable @ 6% p.a. from
61st day to the date of refund.
B. Interest on amount refundable consequent to order passed in an appeal or further proceedings
Where any claim of refund arises from an order passed by an Adjudicating Authority or Appellate
Authority or Appellate Tribunal or Court which has attained finality and the same is not refunded within
60 days from the date of receipt of application filed consequent to such order, interest @ 9% p.a. shall
be payable on such refund. from 61st day to the date of refund.

Section 11(1) of CGST Act / Section 6 of IGST Act

• If the Government is satisfied that it is necessary in the public interest so to do, it may, on the
recommendations of the Council, by notification, exempt generally, either absolutely or subject to
such conditions, goods or services or both.
• Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the
recommendations of the Council, by special order, under circumstances of an exceptional nature to
be stated in such order, exempt from payment of tax any goods or services or both.
• The Government may, for clarifying the scope or applicability of any notification issued or order issued,
insert an explanation at any time within one year of issue of the notification or order and every such
explanation shall have effect as if it had always been the part of the first such notification or order.
• Where an exemption has been granted absolutely, the registered person shall not collect the tax, in
excess of the effective rate, on such supply of goods or services or both.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 41

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar

Chapter 14 : Customs Law - Basics

Importance of different zones

1. Indian territorial waters: Indian territorial waters extend up to 12 nautical miles from the baseline of
India. Import starts when goods cross this area.
2. Continental Shelf of India and Exclusive Economic Zone of India: It is 200 nautical miles from the
nearest point of the baseline. It is important for economic activities like fishing, mining, excavation of
minerals, extraction of mineral oil and natural gas etc. It is important for security, sanitation and other
purposes. The Customs officer has the power to curb smuggling and such other activities in this area.
3. High Seas: It is area beyond 200 Nautical Miles

Provisions of Customs Act, 1962 and Customs Tariff Act, 1985 shall apply to
a) Entire Continental Shelf of India and Exclusive Economic Zone of India for the purpose of exploration of
mineral oil, natural gas, petroleum etc.
b) Designated areas in Continental Shelf of India and Exclusive Economic Zone of India for other goods

Section 12: Charging Section

• Duties of customs shall be levied on goods.
• The goods shall be such as are imported or exported to or from India
• The duty shall be at such rates as may be specified under the Customs Tariff Act, 1975.
• Government goods shall be treated on par with non-governmental goods for the purposes of levy of
customs duty. Hence, there is no general exemption to goods imported by Government.

Taxable event
Import Export
Starts When goods cross the territorial waters When exporter files shipping bill or
bill of export
Ends A. Goods cleared for home consumption: when they when the goods cross the territorial
become part of the mass of goods within the country waters of India (If ship sinks within
i.e. when bill of entry for home consumption is filed. the territorial waters, export is not
B. Goods warehoused and then cleared: when Ex complete so export benefits will not
bond bill of entry is filed be available)

Section 15: Date for determining the rate of duty and tariff valuation of imported goods (other than
baggage and goods imported by post)
Goods entered for home consumption Goods cleared from a warehouse Other Goods
Date of filing the a bill of entry or date of Date of filing bill of entry for home Date of payment
entry inward / arrival whichever is later consumption i.e. Ex-bond Bill of Entry of duty

Rate of Exchange (CBIC Rate)

Goods entered for home consumption Goods cleared from a warehouse
Exchange rate as on date of filing bill of entry for home Exchange rate as on date of Into Bill of
consumption. Entry.

Note: Social Welfare Surcharge should be calculated on Import Duty. However, it should not be calculated
on Export duty.
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 42
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Section 16: Date for determining the rate of duty and tariff valuation for export goods
Goods entered for export (irrespective of the Date of the let export order permitting export and
mode of transport) loading of cargo on board
any other goods Date of payment of duty
Note: Exchange rate will be CBIC Exchange rate as on the date of filing Shipping Bill / Bill of Export.

Section 20: Re-importation of goods produced or manufactured in India

• If goods are imported into India after exportation therefrom, such goods shall be liable to duty and be
subject to all the conditions and restrictions, if any, to which goods of the like kind and value are liable
or subject, on the importation thereof.
• However, the following notifications have provided certain concessions in this regard:
Condition Time limit for Import duty payable
reimport
Exported goods re-imported within 3 years of Duty payable = Nil if
a) for Repairs or export (in case of a) time limit for re-export is 6 months
Reconditioning other than Nepal and Bhutan (extendable to one year by Commissioner)
goods specified in within 10 years) and
Notification no. 60/2018 b) AC of Customs is satisfied as regards
b) for Reprocessing or refining within 1 year of identity of the goods.
or remaking: export
c) Specified Goods Duty payable = Nil if
manufactured in India and within 7 years of a) time limit for re-export is 1 months
reimported into India for export (in case of (extendable to one year by Commissioner)
repairs or for reconditioning Nepal and Bhutan and
within 10 years) b) AC of Customs is satisfied as regards
identity of the goods.
Goods exported and re-imported without being re-manufactured or re-processed
a) Goods exported under
claim for drawback of any Drawback of customs or excise duties allowed
customs or excise duties within 3 years from at the time of export
levied by the Union date of export
b) under claim for drawback (can be extended Excise duty leviable by State at the time and
ofany excise duty levied by by 2 years) place of importation of the goods. allowed at
a State the time of export
c) under claim for refund of For Bhutan, 7 years Refund of integrated tax, availed at the time of
integrated tax paid on (3 years extension) export
export goods
d) under bond without Integrated tax not paid
payment of integrated tax
e) under duty exemption
scheme (DEEC/ Advance within 1 year from Integrated tax and compensation cess leviable
Authorisation/ DFIA) or date of export (can at the time and place of importation of goods
Export Promotion Capital be extended by 1
Goods Scheme (EPCG) year)
Value for levy of duty = Fair Cost of repairs
Goods exported for repairs and within 3 years (can done abroad including cost of materials used
re-imported without any be extended to 5 in repairs (whether such costs are actually
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 43
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
remanufacturing or years) incurred or not) + Insurance cost + Freight
reprocessing Charges both ways
Parts, components of aircraft
replaced or removed during the Nil
course of maintenance, repair
or overhaul of the aircraft in a
Special Economic Zone and
brought to any other place in
India.

Section 21: Goods derelict, wreck etc

• All goods, derelict, jetsam, flotsam and wreck brought or coming into India, shall be dealt with as if
they were imported into India, unless it be shown to the satisfaction of the proper officer that they are
entitled to be admitted duty-free under this Act.
• This implies that apart from goods which are normally imported in the course of international trade,
such goods brought into India out of compulsion are also treated on par with trade goods.

Section 13: Pilferage

If any imported goods are pilfered after the unloading thereof and before the proper officer has made an
order for clearance for home consumption or deposit in a warehouse, the importer shall not be liable to
pay the duty leviable on such goods except where such goods are restored to the importer after pilferage.

Section 23: Remission of duty on goods lost, destroyed or abandoned

Remission of duty Relinquishment of title
• If any imported goods have been • The owner may, at any time before an order for clearance
lost (otherwise than as a result of of goods for home consumption(Sec 47) or an order for
pilferage) or destroyed permitting warehousing (Sec 60) has been made,
• at any time before clearance for relinquish his title to the goods
home consumption, • He shall not be liable to pay the duty thereon.
• AC/DC shall remit the duty on such • He shall not be allowed to relinquish his title to goods for
goods. which an offence appears to have been committed.

Section 22: Abatement of duty on damaged or deteriorated goods

• Where it is shown to the satisfaction of the Assistant or Deputy Commissioner of Customs that
Any imported Any imported goods, other than Any warehoused goods
goods warehoused goods
had been had been damaged at any time after the had been damaged at any time
damaged or had unloading thereof in India but before before clearance for home
deteriorated at any their examination under section 17, on consumption on account of any
time before or account of any accident not due to any accident not due to any wilful act,
during the wilful act, negligence or default of the negligence or default of the owner,
unloading of the importer, his employee or agent his employee or agent
goods in India

Duty abated = Duty on the goods before * Value of the damaged or deteriorated goods
the damage or deterioration Value of the goods before the damage or deterioration

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 44

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017

Rule 2: Application
These rules shall apply to an importer, who intends to avail the benefit of an exemption notification issued
under section 25(1) of the Customs Act, 1962 and where the benefit of such exemption is dependent upon
the use of imported goods for the manufacture of any commodity or provision of output service.

Rule 4: Information about intent to avail benefit of exemption notification

An importer who intends to avail the benefit of an exemption notification shall provide the information to
the AC / DC having jurisdiction over the premises where the imported goods shall be put to use.

Rule 5: Procedure to be followed

• The importer who intends to avail the benefit of an exemption notification shall provide information -
a) in duplicate, to AC / DC, the estimated quantity and value of the goods to be imported,
particulars of the exemption notification applicable on such import and the port of import in
respect of a particular consignment for a period not exceeding one year
b) in one set, to AC / DC at the Custom Station of importation.
• Importer shall submit a continuity bond with such surety or security as deemed appropriate by AC / DC.
• It will be an undertaking to pay the amount equal to the difference between the duty leviable and that
already paid, if any, at the time of importation, along with interest, at 15% p.a.

Rule 6: Importer who intends to avail the benefit of an exemption notification to give information
regarding receipt of imported goods and maintain records
• Such importer shall provide the information of the receipt of the imported goods in his premises where
goods shall be put to use for manufacture, within two days (excluding holidays, if any) of such receipt to
the jurisdictional Customs Officer.
• He shall maintain an account indicating the quantity and value of goods imported, the quantity of
imported goods consumed in accordance with provisions of the exemption notification, the quantity of
goods re-exported, and the quantity remaining in stock, bill of entry wise and shall produce it when
required by AC/DC.
• The importer shall submit a quarterly return, AC / DC by the tenth day of the following quarter.

Rule 7: Re-export or clearance of unutilised or defective goods

Re-export
• The importer who has availed benefit of an exemption notification may reexport the unutilised or
defective imported goods, within six months from the date of import, with the permission of the AC /
DC having jurisdiction over the premises where the imported goods shall be put to use for manufacture
of goods or for rendering output service:
• The value of such goods for re-export shall not be less than the value of the said goods at the time of
import.

Clearance
The importer may also clear the unutilised or defective imported goods, with the permission of AC / DC
within six months from the date of import on payment of differential import duty along with interest, at
15% p.a. from the date of importation to date of actual payment.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 45

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Rule 8: Recovery of duty in certain case
• The importer shall use the goods imported as per the conditions mentioned in the concerned exemption
notification or take action by re-export or clearance of unutilised or defective goods under rule 7.
• In the event of any failure, AC / DC shall take action by invoking the Bond to initiate the recovery
proceedings of the amount equal to the differential duty along with interest, at 15% p.a..

Section 25 of the Customs Act, 1962

• General Exemption by Notification by Central Government
• Exemption by Special Order by Central Government
• Clarification by Central Government within one year of issue of the notification and every such
explanation shall have effect as if it had always been the part of the first such notification or order.
• Form of exemption: It can be at a rate expressed in a form or method different from the form or method
in which the statutory duty is leviable. Duty chargeable on such goods shall in no case exceed the
statutory duty.
• No duty shall be collected if the amount of duty leviable is equal to, or less than, Rs.100.

Section 17: Self Assessment

1. Duty to be self- assessed by the importer/ exporter

2. Verification by proper officer

The proper officer may verify the entries made under section 46 (Bill of Entry) or section 50 (Shipping Bill
/ Bill of Export) and the self-assessment of such goods and examine or test any imported goods or
export goods. He may require the importer, exporter or any other person to produce any contract,
broker’s note, insurance policy, catalogue or other document, whereby the duty leviable can be
ascertained, and to furnish any information required to such ascertainment.
The selection of cases for verification shall primarily be on the basis of risk evaluation through
appropriate selection criteria.

3. Calling for Information: For verification of the entries made under section 46 or section 50 and self-
assessment, the proper officer may ask to produce any document or information, whereby the duty
leviable on the imported goods or export goodscan be ascertained.

4. If self-assessment not done correctly

Where any re-assessment done is contrary to the self-assessment done by the importer or exporter and
in cases other than those where he confirms his acceptance of the said re-assessment in writing, the
proper officer shall pass a speaking order on re-assessment, within 15 days from the date of re-
assessment of the bill of entry or the shipping bill.

Section 18: Provisional assessment of duty

• Provisional assessment can be resorted to where
a) the importer or exporter is unable to make self-assessment under section 17 and makes a request in
writing to the proper officer for assessment
b) the proper officer deems it necessary to subject any imported goods or export goods to any
chemical or other test
c) where the importer or exporter has produced all the necessary documents and furnished full
information but the proper officer deems it necessary to make further enquiry

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 46

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
d) where necessary documents have not been produced or information has not been furnished and the
proper officer deems it necessary to make further enquiry
• The proper officer may direct that the duty leviable on such goods be assessed provisionally if the
importer/exporter execute a bonds of an amount equal to the difference between the duty that may be
finally assessed and the provisional duty
• Where, pursuant to the provisional assessment, if any document or information is required by the proper
officer for final assessment, the importer or exporter, as the case may be, shall submit such document or
information within such time, and the proper officer shall finalise the provisional assessment within such
time and in such manner, as may be prescribed.
• When the duty leviable on such goods is assessed finally or re-assessed by the proper officer
Goods cleared for home consumption or Warehoused goods
export
Amount paid shall be adjusted against the final The Proper Officer may, where the final duty is in
duty. If the amount so paid is short or in excess excess of the duty provisionally assessed, require the
of final duty, he shall pay the deficiency or be importer to execute a bond, binding himself in a sum
entitled to a refund. equal to twice the amount of the excess duty.
• Interest
Amount is payable on finalization Amount is refundable on finalization
Interest at the rate of 15% p.a. from the Interest on Refund at 6% p.a. from 3 months from the
first day of the month in which the duty is date of assessment till the date of refund. Refund shall be
provisionally assessed till the date of subject to doctrine of unjust enrichment
payment.

Section 99A of Customs Act, 1962: Audit

• The proper officer may carry out the audit of assessment of imported goods or export goods or of an
auditee under this Act either in his office or in the premises of the auditee in such manner as may be
prescribed.
• Auditee means a person who is subject to an audit under this section and includes an importer or
exporter or custodian approved under section 45 or licensee of a warehouse and any other person
concerned directly or indirectly in clearing, forwarding, stocking, carrying, selling or purchasing of
imported goods or export goods or dutiable goods.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 47

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar

Chapter 15 : The Customs Tariff Act, 1975

The First Schedule The Second Schedule

The goods liable to Import Duty The goods liable to Export Duties

A Assessable Value as per Customs XXX

B Basic Customs Duty (% of A) XXX
C Social Welfare Surcharge (% of B) XXX
D Safeguard Duty / Anti-Dumping Duty / CVD on Subsidized Articles XXX
E Value for the purpose of calculating Integrated Tax / GST Compensation Cess (A+B+C+D) XXX
F Integrated Tax (% of E) XXX
G GST Compensation Cess (% of E) XXX
H Landed Cost (E + F + G) XXX

Protective Duty
• The protection through protective duties is given considering the following factors.
 The protective duties should not be very stiff so as to discourage imports.
 It should be sufficiently attractive to encourage imports to bridge the gap between demand and
supply of those articles in the market.
• The protective duties are levied by the Central Government upon recommendation of the Tariff
Commission
• Duty imposed shall be deemed to have been specified in the First Schedule as duty on goods.
• Protective Duty shall be effective only upto and inclusive of the date specified in the First Schedule.

Section 8B: Safeguard Duty

• If the Central Government is satisfied that any article is imported into India in such increased
quantities so as to cause or threatening to cause serious injury to domestic industry, then, it may,
by notification in the Official Gazette, impose a safeguard duty on that article.
• Serious injury means an injury causing significant overall impairment in the position of a domestic
industry.
• Threat of serious injury means a clear and imminent danger of serious injury.
Exemptions from safeguard duty
a) Articles originating from developing country if share of imports of article from that country does not
exceed 3% of total imports of that article
b) Articles originating from more than one developing country if total imports from developing
countries each with less than 3% import share and together upto 9%
c) Articles imported by a 100% EOU or units in FTZ/SEZ unless specifically made applicable

Time Limits
 Provisional duty shall be in force for maximum 200 days from the date of its imposition
 First Time levy - 4 years from the date of its imposition
 Extension - Central Government may extend the period of such imposition subject to a maximum of 10
years from the date of first imposition.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 48

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Section 9: Countervailing Duty on Subsidized Articles
a) Any country or territory, directly or indirectly, pays or bestows subsidy upon the manufacture or
production or exportation of any article. Such subsidy includes subsidy on transportation of such article.
b) The subsidy relates to export performance
c) The subsidy relates to the use of domestic goods over imported goods in the export article or
d) The subsidy has been conferred on a limited number of persons engaged in manufacturing producing or
exporting the article
Quantum = Countervailing duty shall not exceed the amount of subsidy paid or bestowed

Section 9A: Anti-Dumping Duty

• Where any article is exported by an exporter or producer from any country or territory to India at less
than its normal value, then, upon the importation of such article into India, the Central Government
may, by notification in the Official Gazette, impose an anti-dumping duty
• The anti-dumping duty shall not be leviable on articles imported by a 100% EOU or a unit in a Free
Trade Zone or Special Economic zone, unless specified. However, duty is leviable if articles are cleared in
DTA.

Quantum
Anti-Dumping Duty shall not exceed the margin of dumping in relation to such article.
Margin of dumping = Export Price - Normal Value in the country of export

Time Limits for Countervailing Duty on Subsidized Articles / Anti-Dumping

 Original Levy - 5 years from the date of such imposition
 Extension - If Central Government, in a review is of opinion such cessation is likely to lead to
continuation or recurrence of such subsidization and injury, it may extend it for 5 years.
 Review is not completed before the expiry of the period of imposition - Duty may continue to remain in
force pending the outcome of such review for a further period not exceeding 1 year
 Prior imposition of duty - Retrospective date from which the duty is payable shall not be beyond 90
days from the date of notification
 Provisional duty can be levied

Section 9C: Appeal

• An appeal against the order of determination or review thereof shall lie to the Customs, Excise
and Service Tax Appellate Tribunal constituted under section 129 of the Customs Act, 1962, in
respect of the existence, degree and effect of
i. any subsidy or dumping in relation to import of any article or
ii. import of any article into India in such increased quantities and under such condition so as to
cause or threatening to cause serious injury to domestic industry requiring imposition of
safeguard duty in relation to import of that article. (added by Finance Act 2019)
• Appeal shall be filed within 90 days of date of order under appeal. Delay can be condoned if sufficient
cause.
Project imports
• Project Imports are the imports of machinery, instruments, and apparatus etc., falling under different
classifications, required for initial set up of a unit or for substantial expansion of an existing unit. Several
different items are required, each of which is importable at different rates of customs duties.
• Hence, it becomes very complicated to make assessment for such project imports.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 49

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
• Therefore, one consolidated rate of customs duty has been made applicable for all items imported under
a project irrespective of the nature of the goods and their customs classification.
• The items eligible for project import are specified in Heading 9801 of the Customs Tariff Act, 1975
• This scheme has been made applicable to Industrial Plants, Irrigation Projects, Power Projects, Mining
Projects, Projects for Oil or Mineral Exploration etc.

8 Digit System
• The excisable goods are classified by using 8-digit system.
• The first two digits refer to the Chapter Number of the Tariff
• The next two digits refer to heading of the goods in that Chapter,
• The next two digits indicate Chapter sub-heading and the last two digits refer to the Chapter sub-sub-
heading.
• Description with eight digits is termed as tariff item.

Dash System
• If the description of the articles is preceded by a single dash, it means that it is a sub-classification of the
immediately preceding heading.
• If there is double dash or triple dash before a description, it means that it is a sub-classification of the
immediately preceding item which has either a single dash or double dash.

Five Column Headings

a) Tariff Item (8 digit code of the goods)
b) Description of goods covered
c) Standard unit of Measurement
d) Rate of duty
e) Preferential rate of duty

Rules for the Interpretation

Rule 1
Titles of Sections, Chapters and Sub-Chapters are provided for ease of reference only for legal purposes,
classification shall be determined according to the terms of the headings and any relative Section or
Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following
provisions.

Rule 2(a)
Any reference in a heading to an article shall be taken to include a reference to that article incomplete or
unfinished, provided that, as presented the incomplete or unfinished article has the essential character of
the complete or finished article.
It shall also be taken to include a reference to that article complete or finished (or falling to be classified as
complete or finished by virtue of this rule), presented unassembled or disassembled.

Rule 2(b)
Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or
combinations of that material or substance with other materials or substances.
The classification of goods consisting of more than one material or substance shall be taken to include a
reference to goods consisting wholly or partly of such material or substance.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 50

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Rule 3
When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or
more headings, classification shall be effected as follows:
a) the heading which provides the most specific description shall be preferred to headings providing a
more general description. However, when two or more headings each refer to part only of the materials
or substances contained in mixed or composite goods or to part only of the items in a set put up for
retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one
of them gives a more complete or precise description of the goods.
b) mixtures, composite goods consisting of different materials or made up of different components, and
goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if
they consisted of the material or component which gives them their essential character, insofar as this
criterion is applicable.
c) when goods cannot be classified by reference to (a) or (b), they shall be classified under the heading
which occurs last in numerical order among those which equally merit consideration.

Rule 4
Goods which cannot be classified in accordance with the above rules shall be classified under the heading
appropriate to the goods to which they are most akin.

Rule 5(a)
camera cases, musical instrument cases, gun cases, drawing instrument Containers which give
cases, necklace cases and similar containers, specially shaped or fitted to the whole its essential
contain a specific article or set of articles, suitable for long-term use and character
presented with the articles for which they are intended
Classified with such articles when of a kind normally sold therewith. Classified
independently

Rule 5(b)
Packing materials or containers are clearly suitable Packing materials or containers are clearly suitable
for repetitive use for single use
classified independently classified with the goods if they are of a kind
normally used for packing such goods

Rule 6
Only subheadings at the same level are comparable

Classification of Parts and Accessories

Parts Accessories
Special Purpose Parts General Purpose Parts
These parts are made for a Their use is not restricted They cannot be said to be component
particular machine and cannot be to any specific machine. or integral part of any machine. They
used for any other machine. can be fitment for any type of goods.
They should be classified under They should be classified They should be classified independently.
same heading as that of machine. independently.

The onus of proving dutiability is on the department while in the case of exemption, the burden is on
the tax payer claiming the exemption.
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 51
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar

Chapter 16 : Customs Valuation

Section 14(2): Tariff Value

• If the Board is satisfied that it is necessary or expedient so to do, it may, by notification in the Official
Gazette, fix tariff values for any class of imported goods or export goods.
• Provisions of Tariff Value have an overriding effect on the provisions of Transaction Value.

Section 14(1): Transaction Value

In case of export goods In case of imported goods
• the price actually paid or payable for the • the price actually paid or payable for the goods
goods when sold for export to India
• when sold for export from India • for delivery at the time and place of importation
• for delivery at the time and place of • where the buyer and seller of the goods are not
exportation related and
• where the buyer and seller of the goods are • Price is the sole consideration for the sale.
not related and
• Price is the sole consideration for the sale.

Customs Valuation (Determination of Price of Imported Goods) Rules, 2007

Rule 10(1): Additions to Transaction Value

 Commissions and brokerage except buying commission
 Cost of containers
 Cost of packing
 The value of any part of the proceeds of any subsequent resale, disposal or use of the imported goods
that accrues, directly or indirectly, to the seller
 The value, apportioned of the following where supplied directly or indirectly by the buyer free of charge
or at reduced cost
a) materials, components, parts and similar items incorporated in the imported goods
b) tools, dies, moulds and similar items used in the production of the Imported goods
c) materials consumed in the production of the imported goods
d) Engineering, development, art work, design work, and plans and sketches undertaken elsewhere than
in India and necessary for the production of the imported goods.
 Royalties and licence fees related to the imported goods that the buyer is required to pay, directly or
indirectly, as a condition of sale of the goods. It may include payments in respect to patents, trademarks
and copyrights. (Charges for the right to reproduce the imported goods in the country of importation
shall not be added)
 All other payments actually made or to be made as a condition of sale of the imported goods, by the
buyer to the seller or by the buyer to a third party to satisfy an obligation of the seller

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 52

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Additions Transport by Air + Transport by Sea/Land + Insurance Charges
under Rule Loading, unloading, Loading, unloading, handling
10(2) handling charges charges
Ascertainable Actual cost subject to Actual Cost Actual Cost
20% of Customs FOB
Value
Cost Not 20% of Customs FOB 20% of Customs FOB Value 1.125% of Customs FOB
Ascertainable Value Value
FOB not 20% of (Customs FOB 20% of (Customs FOB Value + 1.125% of (Customs FOB
ascertainable Value + Cost of Cost of Insurance) Value + Cost of Freight)
Insurance)

Note
 The cost of transport includes ship demurrage charges on charted vessels, lighterage or barge charges.
 In the case of goods imported by sea or air and transshipped to another customs station in India, the
cost of insurance, transport, loading, unloading, handling charges associated with such transshipment
shall be excluded.
 Customs FOB = FOB Value + Additions under Rule 10(1)

Valuation Methods
Rule 2(1)(d): Identical goods Rule 2(1)(f): Similar goods
means imported goods means imported goods
 which are same in all respects, • which although not alike in all respects,
 including physical characteristics, quality • have like characteristics and like component
and reputation as the goods being valued materials
 except for minor differences in • which enable them to perform same functions and
appearance that do not affect the value • to be commercially interchangeable with the goods
of the goods being valued having regard to the quality, reputation
and the existence of trade mark
• produced in the country in which the goods being valued were produced and
• produced by the same person who produced the goods, or where no such goods are available, goods
produced by a different person
• shall not include imported goods where engineering, development work, art work, design work, plan or
sketch undertaken in India were completed directly or indirectly by the buyer on these imported goods
free of charge or at a reduced cost for use in connection with the production and sale for export of these
imported goods.

Rule 4: Transaction value of identical goods / Rule 5: Transaction value of similar goods
 Value of imported goods shall be the transaction value of identical goods sold for export to India and
imported at or about the same time as the goods being valued.
 Transaction value of identical goods in a sale at the same commercial level and in substantially the
same quantity as the goods being valued shall be used to determine the value of imported goods.
(Adjustments shall be made if not at the same commercial level and in substantially the same
quantity)
 Also, adjustments shall be made as per Rule 10(2)

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 53

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Rule 6: Determination of value where value cannot be determined under rules 3, 4 and 5
If the value of imported goods cannot be determined under the provisions of rules 3, 4 and 5, the value shall
be determined under the provisions of rule 7 or, when the value cannot be determined under that rule,
under rule 8. At the request of the importer, and with the approval of the proper officer, the order of
application of rules 7 and 8 shall be reversed.

Rule 7: Deductive value

If the goods being valued or identical or similar imported goods are sold in India, in the condition as
imported or after processing, the value shall be based on the unit price at which the imported goods or
identical or similar imported goods are sold in the greatest aggregate quantity to persons who are not
related to the sellers in India as reduced by
 commission usually paid
 Additions for profits and general expenses
 Usual costs of transport and insurance
 Customs duties and other taxes payable in India
 Value added by processing, if any
Value can be taken if the goods are resold before the expiry of 90 days after such importation

Rule 8: Computed value

The value of imported goods shall be based on a computed value, which shall consist of the sum of:-
 Cost or value of materials / fabrication or other processing employed in producing the imported goods
 Amount for profit and general expenses
 cost or value of all other expenses under rule 10(2).

Rule 9: Residual method - the value shall be determined using reasonable means consistent with the
principles and general provisions of these rules and on the basis of data available in India

Section 19 of the Customs Act: Classification of Sets of Articles

Articles liable to duty with reference to quantity Duty as per quantity
Articles liable to duty with reference to value
a) if they are liable to duty at the same rate duty at that rate
b) if they are liable to duty at different rates duty at highest of such rates
Articles not liable to duty duty at the rate at which articles liable to duty with
as above
If the importer produces evidence or the evidence is Duty shall be calculated separately at the rate
available regarding the value of any of the articles applicable to each article.
liable to different rates of duty such article

Classification of accessories and spare parts

Accessories and spare parts or maintenance and repairing
implements for any article if
a) such accessories are imported along with that article Duty on article is same as that of duty on the
b) they are compulsorily supplied main product
c) no separate charge is made for such supply i.e. price is
included in the price of main article
Optional Accessories Classification shall be done independently

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 54

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Customs Valuation (Determination of Value of Export Goods) Rules, 2007

Rule 3: Determination of the method of valuation

• Value of export goods shall be the transaction value. The transaction value shall be accepted even where
the buyer and seller are related, provided that the relationship has not influenced the price.
• If value cannot be determined, it shall be determined by proceeding sequentially through rules 4 to 6.

Rule 4: Determination of export value by comparison

The value of the export goods shall be based on the transaction value of goods of like kind and quality
exported at or about the same time to other buyers in the same destination country of importation or in its
absence another destination country of importation adjusted to differences in dates, commercial levels etc.

Rule 5: Computed value method

If the value cannot be determined under rule 4, it shall be based on a computed value, which shall include:
a) cost of production , manufacture or processing of export goods
b) charges, if any, for the design or brand
c) an amount towards profit.

Rule 6: Residual method

Value shall be determined using reasonable means consistent with the principles and general provisions of
these rules provided that local market price of the export goods may not be the only basis for determining
the value of export goods.

Section 3(8A)/3(10A) of Customs Tariff Act

Where the goods deposited in a warehouse are sold to any person before clearance for home
consumption or export, the value of such goods for the purpose of calculating the integrated tax under
section 3(7) / goods and services tax compensation cess under section 3(9) shall be
where the whole of (Assessable Value + Basic Customs Duty + Social Welfare Surcharge) or the
the goods are sold transaction value of such goods, whichever is higher
where any part of the Proportionate value of (Assessable Value + Basic Customs Duty + Social Welfare
goods is sold Surcharge) or the transaction value of such goods, whichever is higher

Where whole or any The transaction value to considered in above cases is that of the last such
part of such goods are transaction.
sold more than once
before such clearance

Note
• In respect of warehoused goods which remain unsold, the value or the proportionate value, as the case
may be, of such goods shall be determined in accordance with the provisions of section 3(8)/3(10) i.e.
(Assessable Value + Basic Customs Duty + Social Welfare Surcharge) or the transaction value of such
goods, whichever is higher.
• Transaction value, in relation to warehoused goods, means the amount paid or payable as consideration
for the sale of such goods.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 55

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar

Chapter 17 : Baggage

Section 77: Entry of baggage by owner

Under this section the owner of the baggage has to make a declaration of its contents to the proper officer
of customs, for the purpose of clearing it. This is known as Baggage Declaration Form.

Section 80: Temporary detention of baggage

• Where the baggage of a passenger contains any article which is dutiable or the import of which is
prohibited and in respect of which a true declaration has been made under section 77,
• the proper officer may, at the request of the passenger, detain such article
• for the purpose of being returned to him on his leaving India and
• if for any reason, the passenger is not able to collect the article at the time of his leaving India the
article may be returned to him through any other passenger authorised by him and leaving India or as
cargo consigned in his name.

Exemption to laptop Computer (Notification no. 11/2004)

Laptop Computer (notebook computer) brought as baggage by person over 18 years of age (other than
members of crew) is fully exempt from customs duty.

Baggage Rules, 2016

Rule 3: Passengers arriving from countries other than Nepal, Bhutan or Myanmar
• An Indian resident or a foreigner residing in India or a tourist of Indian origin, not being an infant,
arriving from any country other than Nepal, Bhutan or Myanmar, shall be allowed clearance free of duty
articles in his bona fide baggage, i.e. used personal effects, travel souvenirs and articles other than those
mentioned in Annexure I, upto the value of Rs.50,000 if these are carried on the person or in the
accompanied baggage of the passenger.
• Tourist of foreign origin, not being an infant, shall be allowed clearance free of duty articles in his bona
fide baggage, i.e. used personal effects, travel souvenirs and articles other than those mentioned in
Annexure I, upto the value of Rs.15,000 if these are carried on the person or in the accompanied
baggage of the passenger:
• Where the passenger is an infant, only used personal effects shall be allowed duty free.
• Free allowance of a passenger shall not be allowed to be pooled with the free allowance of any other
passenger.
• Infant means a child not more than two years of age.

Rule 4: Passengers arriving from Nepal, Bhutan or Myanmar

• An Indian resident or a foreigner residing in India or a tourist, not being an infant, arriving from Nepal,
Bhutan or Myanmar, shall be allowed clearance free of duty articles in his bona fide baggage i.e. used
personal effects, travel souvenirs and articles other than those mentioned in Annexure I upto the value
of Rs. 15,000 if these are carried on the person or in the accompanied baggage of the passenger:
• Where the passenger is an infant, only used personal effects shall be allowed duty free.
• Where the passenger, is arriving by land, only used personal effects shall be allowed duty free.
• Free allowance of a passenger shall not be allowed to be pooled with the free allowance of any other
passenger

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 56

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Annexure–I Goods
• Fire arms.
• Cartridges of fire arms exceeding 50.
• Cigarettes exceeding 100 sticks or cigars exceeding 25 or tobacco exceeding 125 gms.
• Alcoholic liquor or wines in excess of two litres.
• Gold or silver in any form other than ornaments.
• Flat Panel (Liquid Crystal Display/Light-Emitting Diode/ Plasma) television.

Rule 5: Jewellery
A passenger residing abroad for more than one year, on return to India, shall be allowed clearance free of
duty in his bona fide baggage of jewellery
a) upto a weight of 20 grams with a value cap of Rs. 50,000 if brought by a gentleman passenger, or
b) 40 grams with a value cap of Rs. 1,00,000 if brought by a lady passenger.

Rule 6: Transfer of residence

A person, who is engaged in a profession abroad, or is transferring his residence to India, shall, on return, be
allowed clearance free of duty in addition to what he is allowed under rule 3 or 4, articles in his bonafide
baggage to the extent given below

Duration of stay Articles allowed free of duty Conditions Relaxation

abroad
From 3 months Used personal and household Indian passenger -
upto 6 months articles, other than in Annexure I or
II but including in Annexure III upto
an aggregate value of Rs. 60,000
From 6 months Used personal and household Indian passenger -
upto 1 year articles, other than in Annexure I or
II but including in Annexure III,
upto an aggregate value of
Rs.1,00,000
Minimum stay of 1 Used personal and household The Indian passenger should not -
year during articles, other than in Annexure I have availed this concession in
preceding 2 years. but including articles mentioned in the preceding three years.
Annexure II or Annexure III, upto
Rs.2 Lacs
Minimum stay of 2 Used personal and house i) Minimum stay of two years See Note
years or more. household articles, other than in at abroad, immediately
Annexure I but including in preceding the date of his
Annexure II or III, upto a value limit arrival on transfer of
of Rs.5,00,000 residence
ii) Total stay in India on short
visit during the two
preceding years should not
exceed six months
iii) Passenger has not availed
this concession in the
preceding three years.
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 57
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Note
• For condition (i), shortfall of upto two months in stay abroad can be condoned by Deputy Commissioner
of Customs or Assistant Commissioner of Customs if the early return is on account of -
 terminal leave or vacation being availed of by the passenger or
 any other special circumstances for reasons to be recorded in writing.
• For condition (ii), the Principal Commissioner or Commissioner of Customs may condone short visits in
excess of six months in special circumstances for reasons to be recorded in writing
• For condition (iii), no relaxation.

Annexure II Goods Annexure III Goods

1. Colour Television. 1. Video Cassette Recorder or Video Cassette Player or
2. Video Home Theatre System. Video Television Receiver or Video Cassette Disk Player.
3. Dish Washer. 2. Digital Video Disc player.
4. Domestic Refrigerators of capacity up to 300 3. Music System.
litres or its equivalent. 4. Air-Conditioner.
5. Deep Freezer. 5. Microwave Oven.
6. Video camera or the combination of any 6. Word Processing Machine.
such Video camera with one or more of the 7. Fax Machine.
following goods, namely:- 8. Portable Photocopying Machine.
(a) television receiver 9. Washing Machine.
(b) sound recording or reproducing apparatus 10. Electrical or Liquefied Petroleum Gas Cooking Range
(c) video reproducing apparatus. 11. Personal Computer (Desktop Computer)
7. Cinematographic films of 35mm and above. 12. Laptop Computer (Note book Computer)
8. Gold or Silver, in any form, other than 13. Domestic Refrigerators of capacity up to 300 litres or
ornaments. its equivalent.

Rule 8: Provisions regarding unaccompanied baggage

• These rules shall apply to unaccompanied baggage except where they have been specifically excluded.
• Unaccompanied baggage had been in the possession, abroad, of the passenger and is dispatched within
one month of his arrival in India or within such further period as the AC/DC of Customs may allow:
• It may land in India upto two months before the arrival of the passenger or within such period, not
exceeding one year, as AC/DC of Customs may allow, if he is satisfied that the passenger was prevented
from arriving in India within the period of two months due to circumstances beyond his control, such as
sudden illness of the passenger or a member of his family, or natural calamities or disturbed conditions
or disruption of the transport or travel arrangements in the country or countries concerned or any other
reasons, which necessitated a change in the travel schedule of the passenger.

Rule 9: Application of these rules to members of the crew

• These rules shall also apply to the members of the crew engaged in a foreign going conveyance for
importation of their baggage at the time of final pay off on termination of their engagement.
• A member of crew of a vessel or an aircraft other than those referred above, shall be allowed to bring
articles like chocolates, cheese, cosmetics and other petty gift items for their personal or family use
which shall not exceed the value of Rs 1,500.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 58

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar

Chapter 18 : Customs Procedures

Import Procedure
Procedure 1: Arrival of vessels and aircraft in India at customs port or a customs airport (Section 29)

Procedure 2: Delivery of Arrival Manifest or import manifest or report (details of goods / passengers
on board) (Sec 30)
The person-in-charge is required to file
Conveyance Vessel or Aircraft Vehicle
Document to be filed Import Manifest / Arrival Manifest Import Report
Time Limit to file Prior to the arrival within 12 hours after its arrival
Type of filing Electronically Principal Commissioner It can be submitted in such form and
or Commissioner of Customs may manner as may be prescribed
allow it by any other mode

Section 30A: Passenger and Crew Arrival Manifest and Passenger Name Record Information
The person-in-charge of a conveyance that enters India from any place outside India of any other person as
may be specified by the Central Government, shall deliver to the proper officer
a) the passenger and crew arrival manifest before arrival in the case of an aircraft or a vessel and upon
arrival in the case of a vehicle and
b) the passenger name record information of arriving passengers, in such form, containing such particulars,
in such manner and within such time, as may be prescribed.

Procedure 3: Entry inwards granted (Section 31)

The master of a vessel shall not permit the unloading of any imported goods until an order has been given
by the proper officer granting entry inwards. (Vessel found a berthing place for discharge of cargo)

Procedure 4: Unloading of Goods

Goods shall be unloaded subject to
a) Imported goods shall be unloaded only if they are mentioned in Arrival Manifest or Import Manifest or
Report (Section 32)
b) Unloading and loading of goods shall be done at approved places only. (Section 33)
c) They shall be unloaded from or loaded on any conveyance under the supervision of proper
officer.(Section 34)

Procedure 5: Restrictions on custody and removal of imported goods (Section 45)

• All imported goods unloaded in a customs area shall remain in the custody of person called as
Custodian who shall be approved by the Commissioner of Customs.
• if any imported goods are pilfered in his custody, he shall be liable to pay duty on such goods (Rate
as on the date of delivery of an Arrival Manifest or import manifest or report to the proper officer)

Procedure 6: Entry of goods on importation (Section 46)

• The importer of any goods, other than goods intended for transit or transhipment, shall present a bill of
entry for home consumption or warehousing electronically on the customs automated system in such
form and manner as may be prescribed.
• Principal Commissioner or Commissioner of Customs may allow it by any other mode in cases where it is
not feasible to make entry by presenting electronically on the customs automated system.
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 59
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
• Time limit to present Bill of entry
 The importer shall present the bill of entry before the end of the next day following the day
(excluding holidays) on which the aircraft or vessel or vehicle carrying the goods arrives at a customs
station at which such goods are to be cleared for home consumption or warehousing.
 A bill of entry may be presented at any time not exceeding thirty days prior to the expected arrival of
the aircraft or vessel or vehicle by which the goods have been shipped for importation into India.
 Where the bill of entry is not presented within the time so specified and the proper officer is satisfied
that there was no sufficient cause for such delay, the importer shall pay such charges for late
presentation of the bill of entry as may be prescribed.

Option 1: Clearance for home consumption (Section 47)

• In case the importer files the Bill of Entry for home consumption and the proper officer may make an
order permitting clearance of the goods for home consumption.
• Such order may also be made electronically through the customs automated system on the basis of risk
evaluation through appropriate selection criteria.
• The importer shall pay the import duty
 on the date of presentation of the bill of entry in the case of self-assessment or
 within one day (excluding holidays) from the date on which the bill of entry is returned to him by
the proper officer for duty payment in case of assessment, reassessment, provisional assessment;
 in the case of deferred payment from such due date as may be specified by rules
• and if he fails to pay the duty within the time so specified, he shall pay interest on the duty not paid or
short-paid till the date of its payment, at 15% p.a.
• Compulsory e-payment of duty on ICEGATE website
a) Importers registered under Accredited Clients Programme
b) Importers paying customs duty of Rs. 10,000 or more per bill of entry.

Option 2: Warehousing of imported goods

The importer shall file an Into-Bond Bill of Entry for warehousing and shall execute a bond binding himself
in a sum equal to THRICE the amount of the duty assessed on such goods. The proper officer shall make
an order permitting the deposit of the goods in a warehouse. Subsequently, the importer of any
warehoused goods may clear them for home consumption provided:-
a) an ex-Bond Bill of Entry has been presented to the proper officer and duty is assessed and paid by him
b) rent and warehousing charges along with any penalty have been paid by importer
c) an order for clearance of such goods for home consumption has been made by the proper officer

Option 3: Transit of goods (Section 53)

Where any goods are mentioned, in the import manifest/import report/arrival manifest, as for transit in the
same conveyance to any place outside India or any customs station, they may be allowed to be so transited
without payment of duty.

Option 4: Transhipment of goods (Section 54)

Where any goods are mentioned in the import manifest/import report, as for transhipment to any place
outside India or to any major port/other port as notified /any other customs station, they may be allowed to
be so transhipped without payment of duty. The importer shall present the Bill of transhipment to the
proper officer.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 60

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Option 5: Relinquishment of title
The owner may, at any time before an order for clearance of goods for home consumption or an order for
permitting warehousing has been made, relinquish his title to goods. He shall not be liable to pay the duty

Option 6: Goods not cleared, warehoused or transhipped within 30 days after unloading (Section 48)
Any goods brought into India may be sold by the Custodian if they are not cleared for home consumption
or warehoused or transshipped within 30 days from the date of the unloading or further allowed time or if
the title to any imported goods is relinquished such goods. Notice to the importer and permission of the
proper officer is required. Animals, perishable goods and hazardous goods may be sold at any time. Arms
and Ammunition may be sold as the Central Government may direct.

Deferred Payment of Import Duty Rules, 2016

1. Notified Importers: Importers certified under Authorized Economic Operator Programme as AEO (Tier-
Two) and AEO (Tier-three). AEO means Authorized Economic Operator certified by the Directorate
General of Performance Management under CBEC.

2. Information about intent to avail benefit of notification to be intimated to the Principal

Commissioner/Commissioner of Customs

3. Compulsory Electronic payment of duty. However, AC/DC of Customs may for reasons to be recorded
in writing, allow payment of duty by any mode other than electronic payment.

4. Deferred payment not to apply in certain cases: If there in default in payment of duty by due date
more than once in three consecutive months, this facility of deferred payment will not be allowed unless
the duty with interest has been paid in full. The benefit of deferred payment of duty will not be available
in respect of the goods which have not been assessed or not declared by the importer in the entry.

5. Due dates for deferred payment of import duty: The eligible importer has to pay the duty by the
dates mentioned below inclusive of the period (excluding holidays) as mentioned in section 47(1):
For goods corresponding to bill of entry returned for payment from Duty to be paid by
1st to 15th day of any month 16th day of that month
16th day till the last day of any month other than March 1st day of next month
16th day till the 31th day of March 31st March

Export Procedure

Procedure 1: Entry of goods for exportation (Section 50)

The exporter shall make entry by presenting
a) Vessel or Aircraft: Shipping bill (electronically on the customs automated system; Principal
Commissioner or Commissioner may allow to submit in other manner if it is not feasible to make entry
by presenting electronically on the customs automated system
b) Vehicle: Bill of Export (in such form and manner as may be prescribed)

Procedure 2: Clearance of goods for exportation (Section 51)

Proper officer may make an order permitting clearance and loading of the goods for exportation.
Such order may also be made electronically through the customs automated system on the basis of risk
evaluation through appropriate selection criteria.
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 61
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Procedure 3: Entry Outward (Section 39)
A vessel intending to start loading of export goods must be first granted an ‘Entry Outwards’ by the proper
officer. Export goods shall not be loaded on vessel until entry-outwards granted to such vessel.

Procedure 4: Loading of goods on conveyance (Section 40)

Export goods shall not be loaded unless export has been duly permitted by proper officer

Procedure 5: Delivery of export manifest or export report or departure manifest (Section 41)
The person-in-charge of a conveyance carrying export goods shall, before departure of the conveyance
from a customs station, deliver to the proper officer
 vessel or aircraft: an export manifest or departure manifest
 vehicle: an export report

If the person-in-charge fails to deliver the departure manifest or export manifest or the export report or any
part thereof within such time, and the proper officer is satisfied that there is no sufficient cause for such
delay, such person-in-charge shall be liable to pay penalty not exceeding Rs. 50,000.

Section 41A: Passenger and crew departure manifest and passenger name record information.
The person-in-charge of a conveyance that departs from India to a place outside India or any other person
as may be specified by the Central Government, shall deliver to the proper officer
i. the passenger and crew departure manifest; and
ii. the passenger name record information of departing passengers, in such form, containing such
particulars, in such manner and within such time, as may be prescribed.

Penalty on Person-in-charge for non-filing / delay in filing above documents – upto Rs. 50,000

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 62

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar

Chapter 19 : Refund and Duty Drawback

Section 26: Refund of Section 26A: Refund of Import duty

Export duty
On the exportation of If on import of goods, duty has been paid on clearance for home consumption,
any goods if duty has such duty shall be refunded if
been paid, such duty • goods are defective or not as per specifications (goods have not been worked,
shall be refunded if repaired or used after importation except if it was indispensable to discover the
a) the goods are defects or non-conformity with the specifications)
returned to such • importer does not claim drawback under any other provisions of this Act and
person otherwise a) the goods are exported
than by way of b) importer relinquishes his title to the goods and abandons them to customs
resale c) such goods are destroyed or rendered commercially valueless in the
b) the goods are re- presence of the proper officer,
imported within 1 within a period not exceeding 30 days of order for the clearance for home
year from the date consumption (extension by Principal Commissioner or Commissioner of
of exportation and Customs upto 3 months)
c) an application for • Refund is not available for the goods
refund is made a) regarding which an offence appears to have been
within 6 months b) in respect of perishable goods and goods which have exceeded their shelf
from the date of life or their recommended storage-before-use period.
order for the • An application for refund of duty shall be made before the expiry of six months
clearance of the from the date of order of exportation or relinquishment or destruction of
goods. goods.

Section 27 of the Customs Act, 1962: Refund of Duty

The refund claim can be filed within one year from the relevant date.
Where the amount of refund of Customs Duty claimed is less than Rs. 100, the same shall not be refunded.

Refund will be allowed in following cases

1. if the importer has not passed on the incidence of such duty and interest to any other person
2. if imports were made by an individual for his personal use
3. if the buyer who has borne the duty and interest, has not passed on the incidence of such duty and
interest to any other person
4. if amount found refundable relates to export duty paid on goods which has returned to exporter as
specified in section 26
5. if amount relates to drawback of duty payable under section 74 and 75
6. if the duty or interest was borne by a class of applicants which has been notified for such purpose in the
Official Gazette by the Central Government
7. if the duty paid in excess by the importer before an order permitting clearance of goods for home
consumption is made where
i. such excess payment of duty is evident from bill of entry in the case of self-assessed bill of entry or
ii. the duty actually payable is reflected in the reassessed bill of entry in the case of reassessment

Consumer Welfare Fund

• Assistant Commissioner shall make an order that the whole or any part of the duty is refundable and the
amount so determined shall be credited to the “Consumer Welfare Fund”.
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 63
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
• Any money credited to the Fund shall be utilized by the Central Government for the welfare of the
consumers.
• Central Government shall maintain proper and separate account and other relevant records in relation to
the Fund in such form as may be prescribed in consultation with the Comptroller and Auditor- General
of India

Section 27A of the Customs Act: Interest on Delayed Refund

• If any duty ordered to be refunded has not been refunded within 3 months from the date of receipt of
the refund application, interest at 6% p.a. shall have to be paid on such duty from the date immediately
after the expiry of three months from the date of receipt of application till the date of refund of such
duty.
• Where any order of refund is made by Commissioner (Appeals) or Tribunal or Court the said order shall
be deemed to be a refund order.
• Interest is always with reference to date of application and not with reference to the date of passing of
order.

Section 74: Drawback Allowable on Re-Export of Duty Paid Goods

a) The goods should have been imported into India and duty of customs should be paid thereon.
b) The goods should be capable of being easily identified as the goods, which were originally imported.
c) The goods should have been entered for export
d) Proper officer after proper examination of the goods and after ensuring that there is no prohibition or
restriction on their export should have permitted clearance of the goods for export.
e) Goods are identified to the satisfaction of AC/DC as the goods, which were imported
f) Goods are entered for export within 2 years from date of payment of duty on the importation thereof
If these conditions are satisfied, then the export goods are entitled to drawback of 98%.
If sufficient reason is shown by the importer as to why he was prevented from exporting the goods within
the said period of two years, CBEC may extend the period further depending upon the merits of each case.

Amount of Drawback where Imported Goods are used before Re exportation

Period between date of clearance for home consumption and the date % of import duty
when the goods are placed under Customs control for export as Drawback
Not more than three months 95%
More than three months but not more than six months 85%
More than six months but not more than nine months 75%
More than nine months but not more than twelve months 70%
More than twelve months but not more than fifteen months 65%
More than fifteen months but not more than eighteen months 60%
More than eighteen months 0
Even if imported goods are merely tested though not used, it will be treated as used after importation

Special rate of drawback in respect of motor vehicles and goods imported by the person for his
personal and private use.
a) If the car or specified goods are re-exported immediately = 98% of the duty paid is refundable.
b) If the car or specified goods are re-exported after being used = Percentage of reduction of the
drawback is related to use of the motor vehicle per quarter as under:-
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 64
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Year Drawback of duty shall be calculated by reducing the import duty by
1st 4% per quarter or part thereof
2nd 3% per quarter or part thereof
3rd 2.5% per quarter or part thereof
4th 2% per quarter or part thereof
Where such cars are exported after two years, the drawback would be allowed only if CBEC extends the
period for expiry beyond two years. No drawback shall be allowed if such motor car or goods have been
used for more than four years.

List of goods which are not entitled to drawback at all under this notification
No drawback of import duty will be allowed for goods, if they have been used after their importation in
India
Wearing Apparel Tea Chests Exposed cinematograph films Unexposed photographic films,
passed by Board of Film Censors paper, plates, and X-ray films.
in India.

Section 75: Drawback on Imported Materials used in the Manufacture of Export Goods
All Industry Rate Brand Rate Special Brand Rate
Drawback may be allowed at such Where no amount Where the rate is lower than 4/5 of the
amounts and such rates determined by or rate of drawback duty/taxes paid on duties paid on the
Government and reduced by any has been materials or components used in the
amount of exemption availed on the determined for any production or manufacture of the said
export of goods. goods goods

Rule 8: Minimum amount of duty drawback Rule 8A: Upper Limit

No amount or rate of drawback shall be determined The upper limit of drawback
a) if the export value is less than the value of the imported materials money or rate should not
used or exceed one third of the market
b) if the export value is not more than notified percentage of the value price of the export product.
of the imported materials used

Section 76: No drawback

a) on goods if its market price (as prevailing in India) is less than drawback
b) if drawback is less than Rs. 50.

Section 75A: Interest on Drawback

Any drawback payable to a claimant under section Where any drawback has been paid to the claimant
74 or 75 is not paid within a period of one month erroneously or it becomes otherwise recoverable
from the date of filing a claim for payment of such under this Act or the Rules,
drawback,
Interest at the rate of 6% p.a. from the date after Interest at the rate of 15% p.a. from the date of
the expiry of the said period of one month till the payment of such drawback to the claimant till the
date of payment of such drawback. date of recovery of such drawback.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 65

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar

Chapter 20 : Foreign Trade Policy

New Foreign Trade Policy 2015-2020 has come into effect from April 1, 2015 for the period between
01.04.2015 and 31.03.2020. The main legislation is the Foreign Trade (Development and Regulation) Act,
1992 (For Nov 2020 exam, new FTP will apply)

Administration of the FTP

1. Director General of Foreign Trade (DGFT)
2. Central Board of Excise and Customs (CBEC)
3. Reserve Bank of India (RBI)
4. State VAT Departments

ITC(HS) are Indian Trade Classification Code based on Harmonized System of Coding. Indian custom uses
eight digit ITC-HS Codes to suit the national trade requirements. The codes are divided into two schedules.

ITC(HS) Import Schedule I ITC(HS) Import Schedule II

It describes the rules and guidelines It describes the rules and regulation related to export policies.
related to import policies. Presently, Schedule II contains very few products, where export is
most of the goods can be imported prohibited or restricted. Excluding those items, export of all
without any authorization. other goods is free.

Powers of Director General of Foreign Trade

1. Interpretation of policy
2. Issue of Import Export Code
3. Specifying Procedure
4. Exemption from Policy/Procedure
5. Principles of Restriction
6. Export/import of restricted goods/services – Issuing Authorization

Authorization
Every Authorization shall be valid for prescribed period of validity and shall contain such terms and
conditions as may be specified by Regional Authority (RA).
No person may claim an Authorization as a right and DGFT or RA shall have power to refuse to grant or
renew the same in accordance with provisions of FT(D&R) Act, rules made there under and FTP.

Mandatory documents
for export of goods from India for import of goods into India
1. Bill of Lading/Airway Bill/Lorry Receipt/Railway 1. Bill of Lading/Airway Bill/Lorry Receipt/Railway
Receipt/Postal Receipt Receipt/Postal Receipt
2. Commercial Invoice cum Packing List 2. Commercial Invoice cum Packing List*
3. Shipping Bill/Bill of Export 3. Bill of Entry

Violation of FTP
• Every exporter or importer shall comply with the provisions of the FT (D&R) Act, the rules and orders
made there-under, the FTP and terms and conditions of any authorization granted to him.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 66

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
• All imported goods shall also be subject to domestic laws, rules, orders, regulations, technical
specifications, environmental and safety norms as applicable to domestically produced goods unless
specifically exempted.
• Violations would cover situations when import or export has been made by unauthorized persons who
are not legally allowed to carry out import or export or when any person carries out or admits to carry
out any import or export in contravention of the basic FTP.

Penal Provisions in case of violation

a) IEC number can be cancelled by the office of DGFT and thereupon that exporter or importer would not
be able to transact any business in export or import.
b) The premises can be searched and the suspicious material seized.

Special Provisions relating to Imports

• Second hand goods

Category Import Condition
Policy
Second hand Capital Goods
a) Personal computers / laptops including their
refurbished/ re-conditioned spares
b) Photocopier machines/ Digital multifunction Restricted Importable against
Print & Copying Machines Authorisation
c) Air conditioners
d) Diesel generating sets
Subject to production of
Refurbished / re-conditioned spares of Capital Free Chartered Engineer certificate to
Goods the effect that such spares have
at least 80% residual life
of original spare.
All other second hand capital goods Free --

Second Hand Goods other than capital goods i.e. Restricted Importable against
Inputs Authorisation
Subject to the condition that
waste generated during repair /
Second Hand Goods imported for the purpose of refurbishing of imported items is
repair / refurbishing / reconditioning or Free treated as per domestic law /
reengineering Rules / Orders / Regulations /
technical specifications /
Environmental / safety and health
norms and the imported item is
re-exported back as per Customs
Notification

• Removal of scrap/ waste from SEZ

It shall be allowed to be disposed in DTA freely, subject to payment of applicable customs duty.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 67

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
• Import of goods used in projects abroad
After completion of projects abroad, project contractors may import, without an Authorization, goods
including capital goods used in the project provided they have been used for at least one year.

• Import under lease financing

It is freely permitted. Permission of Regional Authority is not required for import of capital goods under
lease financing. However, RBI approval is required in some cases.

• Clearance of goods from customs

Goods already imported/ shipped/ arrived, in advance, but not cleared from customs may also be
cleared against an Authorization issued subsequently. However, this facility will not be available to
restricted items or items traded through STEs.

• Execution of BG/ LUT

Whenever goods are imported duty free or otherwise specifically stated, importer shall execute
prescribed LUT (Letter of Undertaking)/ BG (Bank Guarantee)/ Bond with Customs Authority before
clearance of goods. In case of indigenous sourcing, Authorization holder shall furnish LUT/ BG/ Bond to
RA concerned before sourcing material from indigenous supplier/ nominated agency.

Special Provisions relating to Exports

• Export of spares
Warranty spares (whether indigenous or imported) of plant, equipment, machinery, automobiles or any
other goods, [except restricted] may be exported along with main equipment or subsequently, but
within contracted warranty period of such goods subject to approval of RBI.

• Third party exports

Third-party exports means exports made by an exporter or manufacturer on behalf of another
exporter(s). Export documents such as shipping bills shall indicate name of both manufacturing
exporter/manufacturer and third party exporter(s). BRC, GR declaration, export order and invoice should
be in the name of third party exporter. Such third party exports shall be allowed under FTP.

• Export of imported goods

Goods imported may be exported in same or substantially the same form without an Authorization, if it
is not restricted. Exports against payment in freely convertible currency would be permitted provided
export proceeds are realized in freely convertible currency. However export to notified countries will be
permitted in Indian rupees subject to at least 15% value addition. Such exports shall not be eligible for
any export incentives.

• Export of replacement goods

Goods or parts thereof on being exported and found defective/ damaged may be replaced free of
charge by the exporter. They shall be allowed clearance by customs authorities, if they are not restricted.

• Denomination of export contracts

All export contracts and invoices shall be denominated either in freely convertible currency or Indian
rupees but export proceeds shall be realised in freely convertible currency.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 68

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Export proceeds against specific exports may also be realized in rupees, provided it is through a freely
convertible Vostro account of a non resident bank situated in any country other than a member country
of Asian Clearing Union (ACU) or Nepal or Bhutan.

• Non-realisation of export proceeds

If an exporter fails to realise export proceeds within time specified by RBI, he shall be liable to action in
as per FT(D&R) Act, rules, orders and provisions of FTP.

• Free movement of export goods

Consignments of items meant for exports shall not be withheld/ delayed for any reason by any agency
of Central/ State Government. In case of any doubt, authorities concerned may ask for an undertaking
from exporter and release such consignment.

• No seizure of export related stock

No seizure of stock shall be made by any agency so as to disrupt manufacturing activity and delivery
schedule of exports. In exceptional cases, concerned agency may seize the stock on basis of prima facie
evidence of serious irregularity. However, such seizure should be lifted within 7 days unless the
irregularities are substantiated.

Import of Samples Export of Samples

Authorisation for import of samples is required Export of bona fide trade and technical samples of
only in case of vegetable seeds, bees and new freely exportable item shall be allowed without any
drugs. Samples of tea upto Rs. 2,000 (CIF) per limit.
consignment will be allowed without authorization. In case of restricted items, application should be
Samples upto Rs. 3,00,000 can be imported by all made to DGFT. Such samples can be exported as part
exporters without duty. of passenger baggage without an Authorisation.

Import of Gifts Export of Gifts

Import of gifts shall be permitted where such Goods, including edible items, of value not exceeding
goods are otherwise freely importable under Rs. 5,00,000 in a licensing year, may be exported as a
ITC(HS). In other cases, a Customs Clearance Permit gift. However, items mentioned as restricted for
(CCP) shall be required from DGFT. exports in ITC(HS) shall not be exported as a gift,
without an Authorization.

Re-import of goods repaired abroad Re-export of Repaired Goods

Capital goods, equipments, components, Goods or parts exported and found defective, damaged or
parts and accessories, whether imported otherwise unfit for use may be imported for repair and
or indigenous, except those restricted subsequent re-export. Such goods shall be allowed clearance
under ITC(HS) may be sent abroad for without an Authorization.
repairs, testing, quality improvement or However, re-export of such defective parts/spares by the
upgradation or standardization of Companies/firms and Original Equipment Manufacturers shall
technology and re-imported without an not be mandatory if they are imported exclusively for
Authorization. undertaking root cause analysis, testing and evaluation purpose.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 69

 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Export Promotion Schemes
Duty Exemption Scheme Duty Reward Schemes Status Export Promotion
 Advance Authorisation Remission  Merchandise Exports Holder Capital Goods Scheme
Scheme Scheme from India Scheme (EPCG)
 Duty Free Import Duty  Service Exports from It allows duty free import
Authorisation Scheme Drawback India Scheme of Capital Goods

Reward Schemes
• They are the schemes which entitle the exporters to duty credit scrips subject to various conditions.
• These scrips can be used for
a) payment of customs duties on import of inputs/goods
b) payment of excise duties on domestic procurement of inputs/goods including capital goods
c) payment of service tax on procurement of services.
• These scrips are transferable, i.e. they can be sold in market, if the holder of duty credit scrip does not
intend to import goods against the scrips. Goods imported under the scrip are also freely transferable.
• Duty credit scrip shall be permitted to be utilized for payment of customs duty in case of import of
capital goods under lease financing.

Merchandise Exports from India Scheme (MEIS) Service Exports from India Scheme (SEIS)
Under MEIS, exports of notified goods/products to A service provider (with active IEC at the time of
notified markets shall be eligible for reward at the rendering services) located in India, providing
specified rate(s) on lower of notified services rendered in the specified manner
a) on realised FOB value of exports in free foreign shall be eligible for reward at the notified rate(s) on
exchange or net foreign exchange earned provided the
b) on FOB value of exports as given in the Shipping minimum net free foreign exchange earnings of
Bills in free foreign exchange such service provider in preceding financial year is:
a) individual service providers and sole
Exports of notified goods through courier or post of proprietorship: $ 10,000
FOB value upto Rs. 5,00,000 per consignment shall b) other service providers: $ 15,000
be entitled for rewards under MEIS.
Net Foreign exchange earnings
If the value of exports is more than Rs 5,00,000 per = Gross Earnings of Foreign Exchange minus Total
consignment then MEIS reward would be calculated expenses/ payment/ remittances of Foreign
on the basis of FOB value of Rs. 5,00,000 only. Exchange by the IEC holder, relating to service
sector in the financial year.

Duty Exemption Scheme

Advance Authorization Scheme Duty Free Import Authorization (DFIA) Scheme
INPUTS which are used in the export product can be DFIA shall be issued on post export basis for
imported without payment of customs duty. Advance products for which SION have been notified. Duty
Authorization is issued for inputs in relation to the Free Import Authorisation (DFIA) is issued to allow
resultant product on the basis of duty free import of inputs. Also, import of oil and
a) As per SION notified catalyst which is consumed / utilised in the process
b) On the basis of self declaration of production of export product, may also be
c) Applicant specific prior fixation of norm by the allowed.
Norms Committee.
d) On the basis of Self Ratification Scheme
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 70
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
The goods imported are exempt from basic customs The goods imported are exempt ONLY from basic
duty, additional customs duty, education cess, anti- customs duty. Additional customs duty/excise duty,
dumping duty and safeguard duty, IGST and GST shall be adjusted as CENVAT credit or Input Tax
Compensation Cess have been exempted upto Credit
31.3.2020.
Minimum value addition required to be achieved Minimum value addition required to be achieved
under Advance Authorization is 15%, For tea, under DFIA is 20%
minimum value addition required shall be 50%.
Actual user condition: It will not be transferable
even after completion of export obligation. However, No DFIA shall be issued for an export product where
there will be an option to dispose off product SION prescribes ‘Actual User’ condition for any
manufactured out of duty free inputs once export input.
obligation is completed.

Eligibility Condition to obtain Advance Authorisation for Annual Requirement

a) Exporters having past export performance (in at least preceding two financial years) shall be entitled for
Advance Authorisation for Annual requirement.
b) Entitlement in terms of CIF value of imports shall be upto 300% of the FOB value of physical export and /
or FOR value of deemed export in preceding financial year or Rs 1 crore, whichever is higher.
c) Authorisation for Annual Requirement shall be issued only where SIONs or valid Ad hoc norms exists on
the date of issue of Authorisation. It is not available on self-declaration basis.

Export Promotion Capital Goods Scheme (EPCG)

• EPCG permits exporters to import capital goods for pre-production, production and post-production at
zero customs duty or procure them indigenously without paying duty in the prescribed manner. Capital
Goods are also exempt from whole of Integrated Tax / Compensation Cess upto 31.3.2020.
• In return, exporter is under an obligation to fulfill the export obligation.
• Import of capital goods shall be subject to Actual User condition till export obligation is completed.
• After export obligation is completed, capital goods can be sold or transferred.
• Import under EPCG scheme shall be subject to an export obligation equivalent to 6 times of duties, taxes
and cess of duty saved on capital goods to be fulfilled in 6 years reckoned from the date of issue of
authorization. (In case of indigenous goods, 4.5 times of notional customs duty)
• In case integrated tax and compensation cess are paid in cash on imports under EPCG, incidence of the
said integrated tax and compensation cess would not be taken for computation of net duty saved
provided input tax credit is not availed.

Ineligible capital goods (These are now eligible)

Second hand capital goods and Any capital goods for generation/transmission of power
Specific export Average export Incentives for early Post Export EPCG Duty
obligation obligation fulfillment of EO Credit Scrip(s)
6 times of duty Average level of If Authorization holder has Capital goods are imported
saved on capital exports made by the fulfilled 75% or more of on full payment of applicable
goods imported applicant in the specific export obligation duties in cash. Later, basic
under EPCG preceding 3 licensing and 100% of Average customs duty paid on Capital
scheme, to be years for the same and Export Obligation till date, if Goods is remitted in the
fulfilled in 6 years similar products. It has any, in half or less than half form of freely transferable
reckoned from to be achieved within the original export duty credit scrip(s) Specific
www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 71
 CA Final Indirect Taxes Revision cum Amendment Notes for May / Nov 2020 Exam by CA Kedar Junnarkar
Authorization the overall EO period obligation period specified, EO shall be 85% of the
issue-date. Specific (including extended remaining export obligation applicable specific EO.
EO is over and period unless shall be condoned Average EO remains
above Average EO. otherwise specified). unchanged.

Status Holder
An applicant shall be categorized as status holder upon achieving export performance during current and
previous three financial years, as indicated below: However, for Gems & Jewellery Sector, the performance
during the current and previous two financial years shall be considered for recognition as status holder
Status Category Export Performance [FOB/ FOR (as converted) Value (US $ million) ]
INR should be converted into $ as per CBEC rate on 1st April of each FY
One Star Export House 3
Two Star Export House 25
Three Star Export House 100
Four Star Export House 500
Five Star Export House 2000
For calculating export performance for grant of One Star Export House Status category, exports by IEC
holders under the following categories shall be granted double weightage:
 Micro, Small & Medium Enterprises (MSME) as defined in Micro, Small & Medium Enterprises
Development (MSMED) Act 2006
 Manufacturing units having ISO/BIS
 Units located in North Eastern States and Jammu & Kashmir
 Units located in Agri Export Zones.

Privileges of Status Holders

 Authorisation and custom clearances for both imports and exports on self-declaration basis.
 Fixation of Input Output Norms (SION) on priority i.e. within 60 days.
 Exemption from compulsory negotiation of documents through banks. The remittance receipts,
however, would continue to be received through banking channels.
 Exemption from furnishing of Bank Guarantee in Schemes under FTP.
 Two Star Export Houses and above are permitted to establish export warehouses.
 Three Star and above Export House shall be entitled to get benefit of Accredited Clients Programme
(ACP) as per the guidelines of CBEC.
 Status holders shall be entitled to export freely exportable items on free of cost basis for export
promotion subject to an annual limit of 2% of average annual export realization during preceding three
licensing years, whichever is lower (For exporters of Gems and Jewellery, Articles of Gold and precious
metals - 2% Rs. 1 Crore or 2% of average annual export realization during preceding three licensing
years, whichever is lower)
Supplies of pharmaceutical products, vaccines and lifesaving drugs to health programmes of
international agencies such as UN, WHO-PAHO and Government health programmes - 8% of the
average annual export realisation during preceding three licensing years

EOU, EHTP, STP & BTP Schemes / Deemed Exports / SEZ to be read from our Class Notes

Separate Notes for Customs Case Laws will be provided.

www.junnarkarkedar.com www.facebook.com/junnarkarkedar www.youtube.com/junnarkarkedar 8149108826 72