Southern India Regional Council of
The Institute of Chartered Accountants Of India
(Setup by an Act of Parliament)

 

Professional Updates

 

Professional Updates- December 2018

GOODS AND SERVICES TAX UPDATES

  1. I. CLARIFICATIONS ON REFUND RELATED ISSUES – Circular No 70/44/2018 – GST dated 26th October, 2018

  • Status of Refund claim after issuance of deficiency memo

    • Vide circular no 59/33/2018-GST it was clarified that show cause notices are not required to be issued in case refund application is not re-submitted after the issuance of deficiency memo and ITC claimed as refund is to be re-credited to E-Credit ledger.

    • Though above clarifications were issued by the board, the common portal does not allow the applicant to apply for the refund again after issuance of deficiency memo.

    • Hence, vide this circular the board clarifies that till the time such facility is developed, taxpayers would be required to submit the rectified refund application under the earlier Application Reference Number (ARN) itself.

    • Thus, it is reiterated that when a deficiency memo in FORM GST RFD-03 is issued to taxpayers, re-credit in the electronic credit ledger (using FORM GST RFD-01B) is not required to be carried out and the rectified refund application would be accepted by the jurisdictional tax authorities with the earlier ARN itself.

  • Clarification on refund claim by exporters who procured capital goods through EPCG route:.

    • As per recent amendment in Rule 96(10), an exporter is restricted from availing the facility of refund of IGST paid on exports in certain scenarios.

    • It is clarified through this circular that any exporter who himself/herself imported any inputs/capital goods in terms of notification Nos. 78/2017-Customs and 79/2017-Customs both dated 13th October, 2017 shall be eligible to claim refund of the IGST paid on exports till the date of the issuance of the notification No. 54/2018 – Central Tax dated the 9th October, 2018.

    • Further, after the issuance of notification No. 54/2018 – Central Tax dated the 9th October, 2018, exporters who are importing goods in terms of notification Nos. 78/2017-Customs and 79/2017-Customs both dated 13th October, 2017 would not be eligible for refund of IGST paid on exports as provided in the said sub-rule.

    • However, exporters who are receiving capital goods under the EPCG scheme, either through import in terms of notification No. 79/2017-Customs dated 13th October, 2017 or through domestic procurement in terms of notification No. 48/2017-Central Tax, dated 18th October, 2017, shall continue to be eligible to claim refund of IGST paid on exports and would not be hit by the restrictions provided in the said sub-rule.

  1. II. TDS under GST - public sector undertaking - supply from one PSU to another PSU exempted from applicability of provisions relating to TDS - 61/2018 - Central GST (CGST) dt. 05th Nov, 2018

Vide above notification it is amended that requirement to comply TDS provisions is exempted when supply of goods or services or both is made by one Public Sector Undertaking to another Public Sector Undertaking whether or not a distinct person.

  1. III. Time limit for making the declaration in FORM GST ITC-04 for the period from July, 2017 to September, 2018 extended till the 31st day of December, 2018. - 59/2018 - Central GST (CGST)

Vide above notification, the time limit for submission of Form GST ITC 04 for the period July 2017 to September, 2018 is extended till 31st December, 2018.

 


Professional Updates- November 2018

GOODS AND SERVICES TAX UPDATES

Processing of Applications for Cancellation of Registration submitted in FORM GST REG-16 – Circular No. 69/43/2018-GST

F. No. CBEC/20/16/04/2017-GST dt 26.10.2018

  • Situations warranting cancellation of RC by the taxpayer – Sec 29 of CGST Act read with Rule 20

    • Discontinuance of business or closure of business;

    • Transfer of business on account of amalgamation, merger, de-merger, sale, lease or otherwise;

    • Change in constitution of business leading to change in PAN;

    • Taxable person (including those who have taken voluntary registration) is no longer liable to be registered under GST;

    • Death of sole proprietor;

    • Any other reason (to be specified in the application).

  • As per Rule 20, the tax payer has to apply for cancellation within 30 days of the occurrence of the event warranting cancellation. It might be difficult in some cases to exactly identify or pinpoint the day on which such an event occurs. For instance, a business may be transferred/disposed over a period of time in a piece meal fashion. In such cases, the 30-day deadline may be liberally interpreted and the taxpayers‟ application for cancellation of registration may not be rejected because of the possible violation of the deadline.

  • Except for the below stated reasons a proper officer should accept all applications within a period of 30 days from the date of filing the application.

    • The application in FORM GST REG-16 is incomplete

    • In case of transfer, merger or amalgamation of business, the new entity in which the applicant proposes to amalgamate or merge has not got registered with the tax authority before submission of the application for cancellation.

  • The proper officer may reject the application only if no reply is received from the recipient within 7 days from the date of communication of nature of discrepancy in the application.

  • The proper officer has to record his reason for rejecting the application.

  • As per section 29(5) read with rule 20 taxpayer seeking cancellation of registration shall have to pay, by way of debiting either the electronic credit or cash ledger, the input tax contained in the stock of inputs, semi-finished goods, finished goods and capital goods or the output tax payable on such goods, whichever is higher.

  • For the purpose of this calculation, the stock of inputs, semi-finished goods, finished goods and capital goods shall be taken as on the day immediately preceding the date with effect from which the cancellation has been ordered by the proper officer i.e. the date of cancellation of registration.

  • However, it is clarified that this requirement to debit the electronic credit and/or cash ledger by suitable amounts should not be a prerequisite for applying for cancellation of registration. This can also be done at the time of submission of final return in FORM GSTR-10.

  • In any case, once the taxpayer submits the application for cancellation of his/her registration from a specified date, he/she will not be able to utilize any remaining balances in his/her electronic credit/cash ledgers from the said date except for discharging liabilities under GST Act upto the date of filing of final return in FORM GSTR-10.

  • Therefore, the requirement to reverse the balance in the electronic credit ledger is automatically met. In case it is later determined that the output tax liability of the taxpayer, as determined under sub-section (5) of section 29 of the CGST Act, was greater than the amount of input tax credit available, then the difference shall be paid by him/her in cash.

  • It is reiterated that, as stated in sub-section (3) of section 29 of the CGST Act, the cancellation of registration does not, in any way, affect the liability of the taxpayer to pay any dues under the GST law, irrespective of whether such dues have been determined before or after the date of cancellation.

  • In case final return is not filed within the stipulated date, then notice in Form GSTR 3A shall be issued by the proper officer.

  • It the tax payer still fails to file the return within 15 days of receipt of notice, then proper officer may issue assessment order in Form GST ASMT-13 based on the information available with him.

  • If the tax payer files the final return within 30 days of receipt of assessment order, then the said order shall be deemed to have been withdrawn. However the payment of interest and late fee shall continue.

CA G SARAVANAKUMAR

MADURAI


 


Professional Updates- October 2018

GOODS AND SERVICES TAX UPDATES – Oct 2018

UPDATES ON ADVANCE RULINGS

  1. Composite Supply – Solar Water pumping system whether taxable @5% or taxable @ 18% considering as works contract service?

Solar Power Generating Systems and parts - Works Contract - Whether Supply, commissioning, installation and maintenance of Solar Water Pumping System would be taxable at the rate of 5% considering it as a composite supply where the principle supply being that of goods i.e. supply of Solar Power generating system having HSN Code 84 or 85? - Whether separate bills can be raised by the Applicant with respect to Supply and Goods and Supply of Services Purely in respect of the contract of the Applicant with RHDS enclosed herewith? - Will the said transaction be classified as a “Works Contract” and taxable at the rate of 18% being Supply of Services?

Held: It was held that said supply falls under the ambit of “Works contract services” which comes under the purview of Works contract as per section 2(119) of CGST Act and attracts 18% rate of tax under the IGST Act or 9% each under the CGST Act and SGST Acts, aggregating to 18% for the following reasons:

  • Solar Photovoltaic (SPV) water pumping system has a permanent location (at specified farmer’s field in Rajasthan) as its works is undertaken on instructions of the Rajasthan Horticulture Development Society under subsidy scheme wherein the Solar Water Systems are required to be installed at the farmer’s field meant for supply of water using solar energy. Such plant would therefore have an inherent element of permanency.

  • Contract also includes civil work such as development of site, structure foundation for mounting PV modules on metallic structures and fencing of the system to ensure security and safety and such other civil structure related activities as set out in Scope of work and in the Technical Specifications. Civil structure cannot be dismantled and moved away.

  • The scope of work includes procurement, supply, development, testing, commissioning and providing maintenance service for 10 years in respect of supply of a Solar Photovoltaic (SPV) water pumping system

  • Accordingly it is not getting covered under supply of ‘Solar Power Generating System’ under Entry 234 of Schedule I of the Notification no. 1/2017 - Central Tax (Rate), dated 28th of June, 2017 under HSN code 84 or 85.

  • “Supply, installation, commissioning and maintenance of Solar Water Pumping Systems” falls under the purview of Works Contract as per Section 2(119) of GST Act.

  • In instant case as per terms and conditions of agreement, it is a single contract of supply, installation, commissioning and maintenance of Solar Water Pumping Systems and hence cannot be split in two separate contracts. Hence in instant case separate bills for supply of goods and supply of services cannot be raised.

  • The contract for “supply, installation, commissioning and maintenance of Solar Water Pumping Systems” falls under the ambit of “Works Contract Services” which comes under the purview of Works Contract as per Section 2(119) of CGST Act and attracts 18% rate of tax under IGST Act, or 9% each under the CGST and SGST Acts, aggregating to 18%.


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Professional Updates- February 2017

IMPORTANT CLARIFICATIONS FROM CBEC ON GST

1. Clarifications on Brand name - Notification Nos. 27/2017-central tax(rate), 28/2017-central tax(rate), 27/2017-Integrated tax(rate), 28/2017-Integrated tax(rate), 27/2017-Union territory tax(rate), 28/2017-Union territory tax(rate)

The GST Council, in its 21st meeting held on 9th September, 2017 at Hyderabad has, inter alia, recommended that for 5% GST rate on cereals, pulses and flours etc. put up in unit container and bearing a registered brand name:

a) A brand registered as on 15.05.2017 under the Trademarks Act, 1999 shall be deemed to be a registered brand for the purposes of levy of 5% GST, irrespective of whether or not such brand is subsequently deregistered.

b) A brand registered as on 15.05.2017 under the Copyright Act, 1957 shall also be treated as a registered brand for the purposes of levy of 5% GST.

c) A brand registered as on 15.05.2017 under any law for the time being in force in any other country shall also be deemed to be a registered brand for the purposes of levy of 5% GST.

d) A mark or name in respect of which actionable claim is available shall be deemed to be a registered brand name for the purposes of levy of 5% GST.

Regarding aforesaid recommendations of the Council, these notifications, interalia, provide that 5% GST will apply if on brand name [as defined in the notification] an actionable claim or enforceable right in court of law is available. In this context, these notifications also provide that this 5% GST will, however, not apply if the person concerned voluntarily foregoes any actionable claim or enforceable right on such brand name, subject to the conditions that he:

a) files an affidavit to the effect that he is voluntarily foregoing his actionable claim or enforceable right on such brand name with the jurisdictional Commissioner of Central Tax or State Tax, or the jurisdictional officer of Union Territory Tax, as the case may be, and

b) prints in indelible ink, both in English and local language on each such unit container, that in respect of brand name printed on the unit containers he has voluntarily foregone his actionable claim or enforceable right.

4. The above mentioned notifications are effective from 22nd September, 2017.

2. No GST liability on freight cost if supplied through any person other than GTA:

Goods Transport Agency means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called; Thus it can be seen that issuance of consignment note is sine-qua-non for a supplier of service to be considered as goods transport agency. If such consignment note is not issued by the transporter, the service provider will not come within the ambit of goods transport agency. It is only the service of GTA, who assumes agency functions, that is being brought into the GST net. Individual truck / tempo operators who do not issue any consignment note are not covered within the meaning of GTA. As a corollary, the services provided by such individual transporters who do not issue any consignment note will be covered by the entry no 18. of notification no 12/2017-Central Tax (Rate), which is exempt from GST.

Source:http://www.cbec.gov.in/resources//htdocs-cbec/gst/goods_transport_service.pdf

CA G SARAVANAKUMAR
MADURAI


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Professional Updates- November 2017

Amendments made in 22nd GST Council meet and relevant notifications

  • 1. No RCM on inward supply received on or after 13th October 2017 – Notification No 38/2017-Central GST Rate & 32/2017- Integrated Tax Rate dt. 13.10.2017
Payment of tax under reverse charge mechanism under section 9(4) of CGST Act / 5(4) of IGST Act is suspended till 31.03.2018. This is applicable for all supplies made on and from 13.10.2017. Therefore no GST/IGST is to be paid for all supplies after 12.10.2017.
  • 2. State government officers are empowered to sanction refund – Notification no 39/2017-Central Tax dated 13th October, 2017
State government officers are empowered to sanction refund under section 54 & 55 of CGST Act except in case of refunds on exports. Refunds on exports shall be sanctioned by Central government officers.
  • 3. No GST is payable on receipt of advance for supply of goods – Notification No 40/2017-Central Tax dt. 13.10.2017
Tax is not payable on advance received by a taxable person towards supply of goods having turnover not exceeding Rs. 1.50 Crore in preceding financial year or whose turnover is not likely to exceed Rs. 1.50 Crore in the current financial year in case he has obtained registration in the current year. This exemption is applicable only for supply of goods and not for supply of services. Hence no GST is payable for receipt of advances against supply of goods after 12th October, 2017.
  • 4. Extension of time limits for filing various GST Returns – Notification No 41/42/43/44 /2017 CGST dt 13.10.2017
In terms of above notifications time limit for filing following GST returns have been extended as under:
  • GSTR – 4 – Original due date of 18.10.2017 for quarter ended September 2017 has been extended to 15.11.2017.
  • Due date for filing the return GSTR-5A by online information and database access or retrieval services from a place outside India to a non-taxable online recipient, for July, Aug, Sept 17 has been extended to 20.11.2017.
  • Due date for filing the return in GSTR-6 by ISD for Jul, Aug, Sept 17 has been extended to 15.11.2017.
  • Persons opting out of composition scheme in Jul, Aug, Sept 17, shall file declaration for credit in ITC-01 on or before 31.10.2017.
  • 5. Amendments to CGST Rules through Notification no 45/2017-Central Tax dated 13.10.2017
  • Option to exercise composition scheme has been extended till 31.03.2018.
  • A registered taxable person supplying taxable as well as exempted supplies to an unregistered persons shall issue a single “invoice-cum-bill of supply”.
  • The invoices to be issued by Insurance Co/Banks/ NBFCs is renamed as "consolidated tax invoice" and such consolidated tax invoice shall be issued at the end of the month for the supplies made during the month.
  • Procedure to file GST-4 by persons opting for composition scheme in between quarter has been specified.
  • In GSTR-1, Table 6 has been substituted by adding a column for Cess.
  • In GSTR-1A, Table 4 has been substituted by adding a column for Cess.
  • Instruction No. 10 has been added in GST-4 which states for the qtrs ended Sep 17 & Dec 17, details in 4A of Table 4 need not be given.
  • 6. Threshold exemption for registration is applicable for persons making inter-state supply of services – Notification No 10/2017-Integrated Tax dated 13.10.2017

Persons whose turnover has not exceeded Rs. 20lacs/10lacs can make inter-state supplies without obtaining the registration.


Professional Updates- September 2017

UPDATES ON GOODS AND SERVICES TAX

CLARIFICATIONS ISSUED BY GOVT ON VARIOUS ISSUES

GST on Selling of space for advertisement in print media – Press release dated 23rd August, 2017

  1. Selling of space for advertisement in print media is leviable to 5% GST.
  2. If the advertisement agency works on principal to principal basis, that is, buys space from the newspaper and sells such space for advertisement to clients on its own account, that is, as a principal, it would be liable to pay GST @5% on the full amount charged by advertisement agency from the client.
  3. If newspaper sells a unit of space for worth Rs. 100/- to advertisement agency for Rs. 85/- say after a discount of Rs. 15/-, the advertisement agency sells the same unit of space to client at Rs. 100/- newspaper would be liable to pay GST @5% on Rs. 85 (Rs. 4.25/-) and the advertisement agency would be liable to pay GST on full value, that is, Rs. 100/- (Rs. 5/-) and may utilize ITC of Rs. 4.25/- for payment of the same.
  4. On the other hand, if the advertisement agency sells space for advertisement as an agent of the newspaper on commission basis, it would be liable to pay GST@ 18% on the sale commission it receives from the Newspaper. ITC of GST paid on such sale commission would be available to Newspaper.
  5. Advertisement agency sells unit of space to the client not on its own account but on account of newspaper for Rs. 100/- and receives commission of Rs. 15/- for such sale from the newspaper. In such case advertisement agency shall be liable to pay GST @18% on the sale commission of Rs. 15/- (Rs. 2.7/-) ITC of which shall be available to newspaper for payment of GST @ 5% on Rs. 100/- (value of space for advertisement sold by newspaper).
  6. However, if the advertisement agency supplies any service other than selling of space for advertisement, such as designing or drafting the advertisement, and such supply is not a part of any composite supply, the same would be liable to tax @18%. If such supplies are part of any composite supply, the rate applicable for the principal supply shall apply.
  7. Therefore, everything depends on the terms of the contract between the newspaper, advertisement agency and the client.