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Indirect Tax

Goods and Service Tax is close to becoming a reality in India. However, till the time it is introduced, we have to grapple with a plethora of indirect taxes in India. As of now, indirect taxes are levied by both the Central (Federal) Government and the respective State Governments.

The various types of indirect taxes are Service Tax on Services, Excise Duty on manufacturing of goods, Customs duty on goods at the point of import, Sales Tax / Value Added Tax (“VAT”) and Central Sales Tax (“CST”) on sale of goods and Entry Tax on entry of goods into a state.

Since these taxes can vary from state to state, management of indirect taxes is a challenging task and one needs experts’ advice to navigate through the complicated maze of this tax structure. The complex and long supply chain of medium to large enterprise pose humongous challenge in the compliance and management of indirect taxes. Our indirect tax professionals have in-depth knowledge of the various laws and regulations pertaining to each state and making you supply chain tax efficient.

We provide the following services to our clients across India.

Advisory & Strategic Consulting Support

  • Formulating efficient supply chain models for minimization of indirect tax cost.
  • Advisory on Indirect Tax issues including: Value Added Tax (VAT) / Sales tax, Service tax, Custom and Excise duties and Foreign Trade Policy-related matters.
  • Evaluating bids for tender to assess the impact of indirect taxes.

Registration & Compliance Support across India

  • Obtaining required registrations and licenses including:
    • Service Tax Registration under Finance Act, 1994
    • Manufacturer, Dealer registration under The Central Excise Act, 1944
    • Registration under Value Added Tax (VAT) / Central Sales Tax (CST) in different states of India
    • Obataing Registration under
    • Import Export Code
  • Preparation and filing of Excise Returns, Value Added Tax (VAT) Returns and Sales Tax Returns
  • Preparation and filing of Service Tax Returns.
  • Assistance in releasing of Service tax refund from the department.

Representation and Litigation Support

  • Assistance in obtaining order from the Special Valuation Bench of the Customs.
  • Preparation of responses to letters of enquiry or routine notices
  • Representing before the appellate authorities for Service Tax, Value Added Tax (VAT) and Central Sales Tax (CST) Litigation
  • Representation before relevant Tax authorities on tax and trade policy issues
  • Filing and pleading appeals  before appellate authorities and Courts

Special Valuation Branch

The Special Valuation Branch ("SVB") is a unit of the Indian custom authorities that investigates valuation of goods during imports between related parties. A special relationship between an Indian importer and a foreign supplier may impact the transaction price of the import and thereby affect the customs duty imposed on such transaction. SVB's function is precisely to examine the impact of such relationship on the invoice value of the imported goods.

Under Section 14 of the Customs Act, 1962, customs duty is imposed on the value of the imported goods. If the Indian buyer and foreign supplier are related say as holding and subsidiary the goods may be imported at a discounted price that could be lower than the normal market price. Accordingly, the customs duty imposed will be lower leading to a potential loss in revenue accruing to the authorities. We help organizations understand the criteria laid down in Rule 2(2) to determine if the importer or exporter are related. The Customs Valuation (Determination of Value of Imported Goods), Rules, 2007 ("Rules") require every importer to furnish information to the custom authorities in a bill of entry on the basis of which the customs duty is assessed. We help organizations file the information on timely basis

We help organizations in following manner:

  • Registration of Special Valuation Branch (SVB) with the Customs department
  • Drafting appropriate agreements between importer & supplier
  • CA Certifications by Customs Department
  • Summary statement of import
  • Submission of replies for the questionnaire and coordination with Custom Departments

Registration, Renewal and Appeal with Special Valuation Branch

In India, every import and export transaction requires a clearance from the Customs Department, however, every import and export transaction occurring between related parties requires a clearance from the Special Valuation Branch of Indian Customs Department.

A Special Valuation Branch also known as SVB specializes in investigating the import and export transactions done by Holding/subsidiary companies, sole agents or sole distributor including special features like Collaboration Agreement, Joint Venture Agreement or any other Agreement/contract with the foreign supplier, etc.

Who is required to get registered with SVB?

The parties to the transaction, i.e., if the importer and supplier are related to each other by way of officers or directors of one another’s businesses, employer and employee, legally recognized partners in business, directly or indirectly owns, controls or holds 5 per cent or more of the outstanding voting stock or shares of both of them, directly or indirectly controlled by a third person or members of the same family etc., are required to get registered with SVB.

We, at AKM Global help assist your organization prepare for SVB by:

  • Drafting Collaboration Agreement, Joint Venture Agreement, Technical Assistance Agreement or any other agreement/contracts with the Supplier.
  • Assisting in the preparation of the reply to the Questionnaire to be filled by importers and exporters who are related to the foreign supplier/purchaser
  • CA Certification and Preparation of last three years statements
  • Collating all the necessary and critical documents required for registration
  • Assistance in obtaining the renewal of the order of SVB
  • Assistance in filing an appeal to the Commissioner of Customs (Appeal) of the respective jurisdiction.