INDIRECT TAX LAWS

UNDER GRADUATE COURSE FOR VIITH SEMESTER

Winter Session: July 2022 – November 2022

National Law University Odisha,

Kathajodi Campus,
Sector – 13, CDA,
Cuttack – 753015.
Odisha (India).

Course Prepared By:

Dr. PRIYANKA ANAND

Asst. Prof. of Law

Course Instructors:

Dr. PRIYANKA ANAND,

Ms. KAUSHIKI BRAHMA &
Mr. SUBHAPRAD MOHANTY
INTRODUCTION OF THE COURSE:

Taxes are the main source of Government revenues. Taxes can be ‘direct’ taxes or ‘indirect’
taxes. Direct taxes are the taxes which are levied and collected directly from the person,
Company etc. When the Government collects money directly from the ultimate person/
consumer, who bears it, then it is called as ‘Direct Tax’. Taxes such as Income Tax, Wealth
tax are examples of direct taxes. In the last semester, we have dealt with the direct taxes.

In the present semester, we would be dealing with Indirect taxes which are levied and
collected from consumers through manufacturers, traders or service providers. Thus, in case,
of the Government collects tax through a third person (such as manufacturers in excise,
service providers in Service tax, traders in VAT) than the person who bears it ultimately, then
it is called as ‘Indirect Tax’. In legal sense, the responsibility to pay an indirect tax rests with
the manufacture/ seller/ service providers though finally the tax is collected from the
consumer. Indirect taxes are levied on activities such as manufacture, sale, trading of goods
and provision of services by Central, State and Local Governments. Each time goods/
services exchange hands, typically, they are subjected to indirect tax levies and prescribed
compliances.

Our tax laws are said to be the most complicated ones in the world. A student of taxation will
have to make a detailed study of taxing policy and taxing system in India. An analysis of this
aspect will have to be made so that the reasons for such complications can be known. The
following course content has been designed to provide a comprehensive picture of Indirect
taxation in India.

OBJECTIVE OF THE COURSE:

 To acquaint the students with the principles and practice of Indirect Tax Laws and the
relevant Rules by giving a comprehensive overview of the Indirect Tax Laws in India.

 To facilitate the ability and knowledge to the students so that they can apply the
provisions of laws in actual taxation practices.

 To appreciate the manner in which the Indian Tax regime is upgrading itself to meet
the international standards.
EVALUATION SCHEME :

SERIAL EXAM NAME MARKS

NUMBER

1. Internal Assessment

a. Research Paper/ Research Project 20

b. Viva on Research Project 5

2. Mid Term Examination 25

3. End Term Examination 45

4. Attendance 5

Total 100

DISTRIBUTION OF CLASS HOURS:

SERIAL MODULE NUMBER – NAME NUMBER OF

NO. SESSIONS

1. Module 1 – Introduction 3

2. Module 2 – Pre-Gst Indirect Taxes – (Central 10

Excise Laws, Service Tax, VAT & CST)

3. Module 3 – Customs Act 17

4. Module 4 – 27

1. GST in India – An introduction

2. Supply under GST
3. Charge of GST
4. Exemptions from GST
5. Time of Supply
6. Value of Supply
 7. Input Tax Credit

5. Module 5- 8

1. Adjudication
2. Assessment
3. Appeals

TOTAL CLASS HOURS 65

DETAILED COURSE OUTLINE:

Module 1: Introduction

India is a socialist, democratic and republic country. Constitution of India is supreme law of
land. All other laws, are subordinate to the Constitution of India. The Constitution provides
that ‘no tax shall be levied or collected except by Authority of Law’. The Constitution
includes three lists in the Seventh Schedule providing authority to the Central Government
and the State Governments to levy and collect taxes on subjects stated in the lists. Indirect
Taxes are the charges levied by the State on consumption, expenditure, privilege, or right but
not on income or property. Customs duties levied on imports, excise duties on production,
sales tax or value added tax (VAT) at some stage in production-distribution process, are
examples of indirect taxes because they are not levied directly on the income of the consumer
or earner. Also called consumption taxes, they are regressive measures because they are not
based on the ability to pay principle.

In this module, the students would be introduced to the basics for taxation, basic features
of indirect tax, Constitutional validity of Indirect taxes; the Indirect Tax structure in India
and the changes brought through the 101st Constitutional Amendment Act, 2016.

Cases:

 In Re. The Bill To Amend S. 20 Of The Sea Customs Act, AIR 1962 SC 1281
 Jindal Stainless LTD & ANR. Vs State of Haryana & ORS. – 2016 - Supreme Court -
C.A. NO. 6383-6421/1997

Module 2: Pre-Gst Indirect Taxes – (Central Excise Laws, Service Tax, VAT & CST)
With an aim of simplifying tax structure in India, GST proposes to remove the geographical
obstacles for trading, and transforming the entire nation to ‘One Common Market Place.’
While it is believed that the ‘One Nation- One Tax’ regime is paving path towards a better
economy of our country, questions related to how is this reform going to be any better than
the earlier tax transformations India has seen over the past years (VAT-Service Tax-Excise),
is a matter of concern. How is the new tax structure going to effect the consumer and the
impact it will have on various sectors? To de-code this myth, it is imperative to have a broad
based understanding of the earlier indirect tax structure before GST and thus, this module
gains its importance for the students. 

In this module, the students would be introduced to the basics of Central Excise Act,
Service Tax, VAT and CST. The emphasis would be to discuss the taxable event and basis
of charging the taxes based on the erstwhile statutes of indirect taxation.

CASES:

 UOI v Bombay Tyres International 1983 (14) ELT 1896 - (SC)

 UOI v Atic Industries Ltd 1984 (17) ELT 323 – (SC)
 Flash Laboratoeies Ltd. v CCE 2003 (151) ELT 241 – (SC)
 Alembic Glass Industries Ltd v CCE 2002 (143) ELT 244 – (SC)
 CCE v TISCO Ltd. 2004 (174) ELT 307 – (SC)
 CCE v Voltas Ltd. 2004 (170) ELT 523 – (SC)
 CCE v I.T.E.C. (P) Ltd. 2002 (145) ELT 280 – (SC)
 UOI v Kaira Distt. Co-op Milk Producers Union Ltd. 2002 (146) ELT 502 – (SC)
 CCE v Kwality Ice Cream Co. 2010 (260) ELT 327 – (SC)
 CCE v Xerographic Ltd. 2010 (257) ELT 11 – (SC)
 National Leather Cloth Manufacturing Co. Ltd. v UOI 2010 (256) ELT 321 – (SC)
 Moriroku UT India Pvt. Ltd. v. State of UP 2008 (224) ELT 365 – (SC)
 TISCO General Office Recreation Club v State of Bihar (2002) 126 STC 547 – (SC)
 Deputy Commissioner of Sales Tax (Law) Board of Revenue (Taxes) v M/s. Advani
Oerlikon (P.) Ltd. AIR 1980 SC 609
 Hindustan Sugar Mills v State of Rajasthan AIR 1978 SC 1496
 Ramco Cement Distribution Co. Pvt. Ltd. v State of Tamil Nadu (1993) 88 STC 151 –
(SC)
  India Meters Limited v State of Tamil Nadu (2010) 34 VST 273 – (SC)
 State of Tamil Nadu v Associated Cement Companies Ltd. (2010) 29 VST 153 (Mad)
HC
 State of Kerala v Mukkadan’s Hotel [2011] 41 VST 500 (Ker) HC
 Addl. CST v Sehgal Autoriders (P.) Ltd. 2011 7 GST 104 (Bom) HC
 CTO v Godrej G.E. Appliances Ltd. 2011 46 VST 372 (Raj) HC
 Idea Mobile Communication v CCE 2011 (23) STR 433 – (SC)
 Em Pee Motors Ltd. 2012 (25) STR 68 (Tri-Del)

Module 3: CUSTOMS ACT, 1962

The Custom Duty in India is one of the most important tariffs. The custom duty in India is
regulated by the Customs Act of 1962. The main purpose of the custom duty in India is the
prevention of the illegal export and import of goods. The rates of the custom duty levied on
the imported and exported goods are assigned in the Custom Act, 1962. The Customs Act
was formulated in 1962 to prevent illegal imports and exports of goods. Besides, all imports
are sought to be subject to a duty with a view to affording protection to indigenous industries
as well as to keep the imports to the minimum in the interests of securing the exchange rate of
Indian currency. Duties of customs are levied on goods imported or exported from India at
the rate specified under the customs Tariff Act, 1975 as amended from time to time or any
other law for the time being in force. For the purpose of exercising proper surveillance over
imports and exports, the Central Government has the power to notify the ports and airports
for the unloading of the imported goods and loading of the exported goods, the places for
clearance of goods imported or to be exported, the routes by which above goods may pass by
land or inland water into or out of Indian and the ports which alone shall be coastal ports. The
Basic customs Duty and Exports Duty (types of Custom Duty) are not going to be subsumed
within the upcoming GST and therefore the detailed discussion of this module is necessary as
well as relevant for the students under the Indirect Tax laws of India.

In the present module, the learners would be introduced to the Background of Customs
Act, 1962; the various Sources of levy of Customs Duty in India; the Concept of customs
duty; Import and Export Procedure; Concept of Goods in Transit and Transhipment,
Circumstances of levy of custom duty; Circumstance under which no Custom Duty will be
levied; Classification of Goods under Customs Act and the types of Custom duties under
the Customs Act.

CASES

 Tirupati Udyog Ltd. Vs UOI (2011) 272ELT209 (AP)

 CC v. Aggarwal Industries. Ltd. 2011 (272 ELT 641(SC)
 CC v. Living Media India Ltd. (2011) 271 ELT 3 (SC)
 Hyderabad Industries Ltd v. UOI (1999) 108 ELT 321 (SC)
 CC v. Biecco Lawrie Ltd. 2008 (223) ELT 3 (SC)
 CC v. Shreeji Overseas India Pvt. Ltd. (2013) 289 ELT 401 (Guj)
 SBEC Sugar Ltd. V. UOI 2011 (264) ELT 492 (SC)
 JK Cement Works v. CCEx 2008 (223) ELT 138 (Raj)
 UOI v. Padam Naraian Aggarwal 2008 (231) ELT 397 (SC)
 CCE v. Ram Kumar Aggarwal (2012) 280 ELT 13 (MP)
 Sunil Mittal v. CCE (2013) 289 ELT 441 (Del)
 Textoplast Industries v. ACC 2011 (272) ELT 513 (Bom)
 CC v. Jaya Singh Vijaya Jhaveri 2010 (251) ELT 38 (Ker)
 Raj Chemicals v. UOI (2013) 287 ELT 145 (Bom)
 Thakker Shipping Pvt Ltd. V. CC (2012) 37 STT 664 (SC)
 L’Oreal India Pvt. LTD. V. UOI (2013) 290 ELT 541 (Bom)

Module 4: Goods and Services Tax

The Central government has taken various steps towards the implementation of the country's
most ambitious indirect tax reform of Goods and Services Tax which was rolled out from 1 st
July, 2017. The following bills were passed in the parliament on 29th March, 2017:

1. Central Goods & Services Tax Bill

2. Integrated Goods & Services Tax Bill

3. Union Territory Goods Services Tax Bill

4. GST Compensation to States Bill

GST has facilitated a uniform tax levied on goods and services across the country. Earlier, so
many indirect taxes were imposed on one item in India like sales tax, Vat, excise duty on
production of goods. GST has replaced many of the indirect taxes and levied only at the
destination end i.e. at the time of final delivery of goods or services. Both states and centre
have the power to legislate on GST. Amalgamating several Central and State taxes into a
single tax would mitigate cascading or double taxation, facilitating a common national
market. The simplicity of the tax should lead to easier administration and enforcement. From
the consumer point of view, the biggest advantage would be in terms of a reduction in the
overall tax burden on goods, which is currently estimated at 25%-30%, free movement of
goods from one state to another without stopping at state borders for hours for payment of
state tax or entry tax and reduction in paperwork to a large extent. This method allows GST-
registered businesses to claim tax credit to the value of GST they paid on purchase of goods
or services as part of their normal commercial activity. Introduction of Goods and Services
Tax (GST) is a significant step in the reform of indirect taxation in India.

This module would introduce the Goods and Service Tax specifically discussing the
concept of dual-tax method in intra state trade; IGST not being a tax by itself but a system
of credit transfer to Destination State; Supply in contrast to sale, service and any 4 of the
other forms of supply; Forward charge and right to recover tax; Reverse charge and duty
to pay tax by person named; Definition of supply and all 8 forms of supply; Concepts in
schedule II specially focussing on all 6 forms of deemed sales; Intra-State supply; Inter-
State supply; Levy of GST with focus on CGST and SGST; Purpose of time of supply with
reference to previous discussion on levy of GST.

Cases:

 Indian Hotels & Restaurant Association v Union of India (2014) 455 Bombay High
Court
 Hotel East Park v Union of India (2014) 341 (Chhattisgarh) HC
 Kerala Classified Hotels & Resorts Association v Union of India (2013) 568 (Ker).
 Bharat Raj Punj v Commissioner of Central Goods and Service Tax (2019) 76
(Rajasthan) HC
 Optival Health Solutions Pvt. Ltd. v UOI (2019) 14 (Kolkata High Court)
 Vikas Goel and Another v Central Goods and Services Tax Commissionerate (2019)
234 (Punjab and Haryana) HC
  Tvl. R K Motors v State Tax Officer (2019) 1287 (Madras) HC
 M/s. Jeyyam Global Foods (P) Ltd. v Union of India (2019) 937 (Madras) HC

Module 5: Adjudication, Assessment and Appeals

“Every right when withheld must have a remedy, and every injury it’s proper redress” stated
by William Blackstone in the Commentaries on the Laws of England. Without understanding
the available remedies under the Indirect Taxation this course will be incomplete. This
module will firstly deal with the Adjudication where the main focus will be as follows:

1. Adjudication, Adjudicating authority and assessment meaning

2. Power of Adjudication – Whether the adjudicating authority is a quasi judicial
authority
3. Validity of an Act cannot be questioned by ‘quasi judicial’ authorities
4. Whether notice issued by officer without the authority/jurisdiction would be invalid

In this module, the next topic will be the Assessment of the property to impose taxes, where
the main topics will be as follows:

1. Assessment versus Adjudication

2. Types of Assessment under indirect taxes
3. Scope of Assessment procedure

In this module, the last topic will be Appeal, as Stated by Robert Houghwout Jackson, U.S.
Supreme Court – in Brown v. Allen case that “We are not final because we are infallible, but
we are infallible only because we are final”. Appeal is required to review the decision of the
subordinate courts by the superior court in the hope that the decision will be modified or
reverse the former. Under this the main topics will be as follows:

1. Right to Appeal – Vested Right

2. Cause of Action
3. Who can Appeal
4. Conditions for filling an appeal
5. Appeal to Tribunal
6. Appeal to High Court
7. Appeal to Supreme Court

Cases:
 CC v Jindal Vijaya Nagar Steel Ltd. (2007) 207 ELT 47 (Kar)
 MIL India Ltd. v CCE (2007) 210 ELT 188 (SC)
 Orient Paper Mills Ltd v. Union of India (1978) 2 ELT J345 (SC)
 Asst. Collector of Central Excise, Calcutta v National Tobacco Co. of India Ltd.
(1978) 2 ELT J416 (SC)
 CCE & Land Customs v. Sanawarmal Purohit (1979) 4 ELT J 613 (SC)
 Oryx Fisheries Private Limited v UOI (2011) 266 ELT 422 (SC)
 Automotive Tyre Manufacturers Asson. v Designated Authority (2011) 263 ELT 481
(SC)
 A.K. Kraipak v. Union of India AIR 1970 SC 150
 Fedco (P) Ltd. v. S.N. Bilgrami (1999) 110 ELT 92 (SC)
 Automotive Tyre Manufacturers Asson. v. Designated Authority (2011) 263 ELT 481
(SC)
 Gullapalli Nageswara Rao v Andhra Pradesh State Road Transport Corporation AIR
1958 SC 308
 East India Commercial Co. Ltd, v. Collector of Customs (1983) 13 ELT 1342 (SC).
 Union of India v Jesus Sales Corporation (1996) 83 ELT 486 (SC)
 K.S. Venkataraman & Co. (P.) Ltd. v. State of Madras (1966) 60 ITR 112 (SC)
 CC v. Sayed Ali (2011) 265 ELT 17 (SC)
 Mangali Impex Ltd. v. UOI (2016) 335 ELT 605
 Aeon’s Construction Products Ltd. v CCE (2005) 184 ELT 120 (SC)
 UOI v Madhumilan Syntex Ltd. (1988) 35 ELT 349
 CCE v. Kosan Metal Products Ltd. (1988) 38 ELT 573
 CCE v. Ballarpur Industries (2007) 215 ELT 489 (SC)
 CC v. Toyo Engineering India Ltd. (2006) 201 ELT 513 (SC)
 Saci Allied Products Ltd. v. CCE (2005) 183 ELT 225 (SC)
 CCE v. J.K. Udaypur Udyog Ltd. (2004) 171 ELT 289 (SC).
 Serai Kella Glass Works P. Ltd. v. CCE (1997) 91 ELT 497 (SC)
 Commissioner v Steel Authority of India Ltd. (2008) 225 ELT A130 (SC)
 CCE v Deora Engineering Works (2010) 255 ELT 184 (P & H)
 Harichand K. Khanna v. C.C.E. (2002) 150 ELT 1323 (Tri-LB)
 M/s Century Knitters (India) Ltd. v UOI 2013-TIOL-580-HC-P&H-CUS
  ICICI Bank Ltd. v Union of India, 2015 (38) STR 907 (Bom.)
 Solvay Specialities India Pvt. Ltd v Union of India, 2015 (37) STR 465 (Guj)
 Kunj Power Project Ltd v Union of India, 2016 (41) STR 3 (All.)

Reference Reading Material –

Suggested Text Books:

 Singhania Vinod K. and Monica Singhania, Students’ Guide to Indirect Taxes,

Taxmann Publications Pvt. Ltd., Delhi.
 Datey, V.S., Indirect Tax Law and practice, Taxmann Publications Pvt. Ltd., Delh.
 Kumar, Sanjeev, Systematic Approach to Indirect Taxes.
 Gupta, S. S. Service Tax -How to meet your obligation, Taxmann Publications Pvt.
Ltd., Delhi.
 Ahuja, Grish and Ravi Gupta, Indirect Taxes, Flair Publication Pvt. Ltd
 Bimal Jain and Isha Bansal; GST Law & Analysis with Conceptual Procedures
(October 2020)
 G.Sekar, Paduka's Students Referencer on Indirect Taxes (For CA Final), 12th edition,
2020.
 Mohd. Rafi, Applied Indirect Taxation : GST, Customs, Transfer Pricing and Exim
Policy (English) 14th Edition, 2020, Bharat Publications.

Suggested References and Reading Materials:

 ‘Basic Concepts and Features of Good and Service Tax In India’ Girish Garg,
International Journal of scientific research and management (IJSRM) ||Volume||2||
Issue||2||Pages||542- 549||2014||
 A Primer on Goods and Services Tax in India, published by Centre for Budget and
Governance Accountability, 2011
 Abhishek A. Rastogi; India Needs Gst-Giant Leap Towards Reforms
 Bimal Jain and Isha Bansal; GUIDE to Revised Model GST Law
 CENVAT Law & Practice, Kanga & Palkhivala (Taxman allied service (P) Ltd.)
 Goods And Service Tax - An Introductory Study, CA. Sudhir Halakhandi, April 2007
The Chartered Accountant p. 1595-1601
  Indirect Tax: Materials and modules drawn by Institute of Chartered Accountants of
India
 Jayaram Hiregange; India GST for Beginners
 K Vaitheeswaran, Students Handbook On Indirect Taxes, Snow White Publications
Pvt. Ltd.
 Modules for Indirect taxes by Institute of Company Secretaries of India.
 P. Verra Reddy, Central Excise Manual (Law and Procedure), Asia Law House
 Sukumar Mukhopadhyay, Essays on Indirect Taxation, Manupatra Information
Solutions Pvt Ltd.
 V S Datey, Student’s Guide to Service Tax and VAT, Taxman Allied Services Pvt.
Ltd. Books in India.
 V. Nagaragan, Indirect Taxes, Asia Law House
 V.Raghuraman, Landmark Decisions in Indirect Taxes (with Explanation of
Principles in Excise, Customs, Service Tax and VAT Laws), 2nd edition, 2014.

Committee Reports/Bills

 101st Constitutional Amendment Act, 2016

 Kelkar Committee Report on Indirect Tax
 Shome Group Recommendations on Tax Reform
 Raja Chellaiah Committee on Indirect Tax
 115th Law Commission Report on Tax Courts

Suggested website References:

 www.cbec.gov.in
 www.icai.org
 www.taxlawsonline.com
 www.taxguru.com
 www.tax4india.com/vat/vat.html
 www.india.gov.in/citizen/salestax.php
 www.indiataxes.com
 www.indialawnews.com