GST slabs trigger classification woes – Times of India

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NEW DELHI: Multiple GST slabs and interpretations — both by businesses and government authorities — are ensuring that there is never any shortage of classification problems. At least three cases have been dealt with by various authorities, with companies seeking production interpretations, which in many cases were clear.
Take the case of Dabur odomos, which has been used as a mosquito repellent for years. But the company decided to question its classification as a mosquito repellent, which attract 18% GST, and suggested that it should be classified as a medicament and face a 12% levy.
The Uttar Pradesh Authority for Advance Ruling (AAR), however, rejected the contention, which means that it will face 18% tax. It observed that the product’s odour makes the conditions unattractive for mosquitoes, when it is coated on a human body.
Similarly, a Noida-based company sought a ruling on “breaded cheese”, arguing that it was cheese and should attract 12% tax. Again, it was arguing before the UP AAR. The authority, however, did not accept the plea.

Relying on the definition, it observed that the product should retain its character as cheese even after being coated with batter and bread crumbs and should be partially pre-cooked. “…these are not cheese per se but have converted into an article of cheese having the identity and characteristics of snack foods,” it said. It further added that products made from potato or flour are sold as distinct food items and not as the basic ingredient.
Besides, it observed that with 55% content, cheese was a major component but it wasn’t present in a quantity that it pre-dominated or overwhelmed the presence of other ingredients, while rejecting the plea.
In a third case, the bone of contention was whether cycle locks should be treated as parts and accessories of bicycles and are distinct from locks which are used for general purpose.
“More than 400 pages of HSN code book with around 19,000 tariff entries, multiple use of products, dichotomy between usage and key components, technical meaning vs common parlance, specific use vs generic use, etc, are all ingredients for the classification dispute recipe. Around 49 countries use single rate and 28 use dual rates. Having single rate or fewer slabs appears to be the only solution for reducing classification disputes in India,” said Harpreet Singh, partner for indirect taxes at KPMG.
Although the government has ruled out moving to a single rate, fewer slabs is part of the long-term plan. But when exactly will that plan be taken up by the all-powerful GST Council is not quite clear.

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Foreign cos use GST gaps, cause loss: PIL – Times of India

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NEW DELHI: The Supreme Court on Wednesday sought responses of the finance ministry, the GST Council and the Central Board of Indirect Taxes and Customs (CBIC) on a PIL seeking a mechanism to levy GST on foreign companies, like Facebook and Google, in business-to-business transactions for Online Information Database Access and Retrieval (OIDAR) services.
Petitioner Pradeep Goyal, through senior advocate Sonia Mathur, told the SC that the government had no mechanism to track total GST paid on OIDAR services used by Indian recipients, which do not qualify to be Non-Taxable Online Recipients (NTORs), under reverse charge basis.
“The nature of OIDAR services are such that they can be provided online from a remote location outside the table territory. The overseas suppliers of such services would have an unfair tax advantage should the services provided by them be left out of the tax net,” Mathur said.

A bench of Chief Justice S A Bobde and Justices A S Bopanna and V Ramasubramanian termed the PIL, which the petitioner claimed to be non-adversarial or for any personal gain, to be a good one, needing adjudication by the apex court. The PIL, filed through advocate Charu Mathur, said the government was losing millions of dollars as goods and services tax as it did not have any mechanism to plug the gaps exploited by foreign entities.
“Figures of revenue generated out of services provided to non-NTORs are not reported anywhere in GST returns. As most overseas service providers maintain their accounts in foreign jurisdictions and are audited as per local laws of the country in which they are located, the Indian government has no mechanism to verify the total receipts earned by these service providers from India and check GST compliances,” the petitioner said.

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Foreign companies use GST gaps, cause loss: PIL – Times of India

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NEW DELHI: The Supreme Court on Wednesday sought responses of the finance ministry, the GST Council and the Central Board of Indirect Taxes and Customs (CBIC) on a PIL seeking a mechanism to levy GST on foreign companies, like Facebook and Google, in business-to-business transactions for Online Information Database Access and Retrieval (OIDAR) services.
Petitioner Pradeep Goyal, through senior advocate Sonia Mathur, told the SC that the government had no mechanism to track total GST paid on OIDAR services used by Indian recipients, which do not qualify to be Non-Taxable Online Recipients (NTORs), under reverse charge basis.

“The nature of OIDAR services are such that they can be provided online from a remote location outside the table territory. The overseas suppliers of such services would have an unfair tax advantage should the services provided by them be left out of the tax net,” Mathur said.
A bench of Chief Justice S A Bobde and Justices A S Bopanna and V Ramasubramanian termed the PIL, which the petitioner claimed to be non-adversarial or for any personal gain, to be a good one, needing adjudication by the apex court. The PIL, filed through advocate Charu Mathur, said the government was losing millions of dollars as goods and services tax as it did not have any mechanism to plug the gaps exploited by foreign entities.
“Figures of revenue generated out of services provided to non-NTORs are not reported anywhere in GST returns. As most overseas service providers maintain their accounts in foreign jurisdictions and are audited as per local laws of the country in which they are located, the Indian government has no mechanism to verify the total receipts earned by these service providers from India and check GST compliances,” the petitioner said.

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