GST Updates
- GSTN issued an advisory dated 04.08.2021 for taxpayers regarding the blocking of the E-Way Bill (EWB) generation facility to be resumed from August 15,
Due to COVID, the blockage in the generation of e-way was suspended but the government has decided to resume the blocking of the EWB generation facility on the EWB portal, for all taxpayers in terms of Rule 138 E (a) and (b) of the CGST Rules, 2017, after 15th August onwards.
Thus, after 15th August 2021, the System will check the status of returns filed in
Form GSTR-3B or the statements filed in Form GST CMP-08, and block the generation of EWB in cases of:
- Non-filing of two or more returns in Form GSTR-3B (Monthly/Quarterly frequency as may be applicable) for the tax periods up to June 2021 and
- Non-filing of 02 or more statements in Form GST CMP-08 for the quarters up to April to June 2021
To avail continuous EWB generation facility on the EWB Portal, you are therefore advised to file your pending Form GSTR 3B (Monthly/Quarterly frequency as may be applicable)Returns/ Form GST CMP- 08 Statements immediately.
2. The Goods and Services Tax Network (GSTN) has enabled annual returns (GSTR-9) for the FY 2020-21 on the GST Portal for filing.
Case Laws
- F R Trade Links Vs. State Tax Officer (Kerala High Court) WPC 28917 of 2020 Disposing of a Writ Petition in F.R Trade Links Vs. The State Tax Officer & Ors), the Hon’ble High Court of Kerala has declared that the proper officer is not vested with any power to cancel the registration certificate of a dealer, for reasons not prescribed under section 29 (2) of the Central Goods & Services Tax Act/State Goods & Services Tax Act, 2017 (CGST Act & SGST Act).In this case, the registration of the petitioner was canceled and it was observed that the proper officer can cancel the registration only if the circumstances specifically stipulated in Section 29 have been fulfilled. In the absence of the same, the registration can’t be invoked..Crux – Registration can be canceled only under specific conditions mentioned in Section 29.
- Deem Distributors Private Ltd Vs Union of India (Telangana High Court) Writ Petition no. 7063 of 2021
The Hon’ble Telangana High Court held that M/S Deem Distributors Private (the assessee/ the petitioner) cannot be asked to
make a payment towards tax, interest, or
penalty while the investigation is underway. The petitioner was registered under GST and was carrying out the business of ferrous metal.
It was contended by the proper officer that the petitioner engaged in the issuance of fake invoices but it was also admitted that the investigation was still being conducted and no notice was issued under Section 74 of the CGST Act but still demand was raised. It was observed that no tax demand can be issued or raised when the investigation is still in progress.
The respondents cannot be allowed to put the cart before the horse and collect any tax, interest, or penalty before they determine, in an inquiry, after putting the petitioner/assessee on notice, and the action is wholly arbitrary and without jurisdiction.
Crux – Demand can’t be raised when the investigation is still going on.
3. R.K. Ganapathy Chettiar Vs Assistant Commissioner (ST) (Madras High Court) W.P. Nos. 14166 & 14175 of 2021
The honorable Madras High Court held that input lost in the manufacturing process doesn’t block ITC.
The petitioners were engaged in the manufacture of MS Billets and Ingots. MS scrap is an input in the manufacture of MS Billets and the latter, in turn, constitutes an input for the manufacture of TMT/CTD Bars. There is a loss of a small portion of the inputs, inherent to the manufacturing process.
Orders were given to seek to reverse a portion of the ITC claimed by the petitioners, proportionate to the loss of the input, referring to the provisions of Section 17(5)(h) of the GST Act. The matter was brought before the Hon’ble Madras High Court via Writ petition.
The court while quashing the orders observed that reversal of ITC involving Section 17(5)(h) by the revenue, in cases of loss by consumption of input which is inherent to manufacturing loss is misconceived, as such loss is not contemplated or covered by the situations adumbrated under Section 17(5)(h).
It was further observed that to say that what is contained in the finished product is only a quantity of all the inputs of the same weight as that of the finished product would presuppose that all manufacturing processes would never have an inherent loss in the process of manufacture.
The expression ‘inputs of such finished product’, ‘contained in finished products’ cannot be looked at theoretically with its semantics. It has to be understood in the context of what a manufacturing process is. If there is no dispute about the fact that every manufacturing process would automatically result in some kind of loss such as evaporation, creation of by-products, etc., the total quantity of inputs that went into the making of the finished product represents the inputs of such products in entirety.
.Crux – ITC would not be reversed for inputs lost in the manufacturing process.
4. Union of India Vs Bangalore Turf Club Limited (Karnataka High Court) WA 727/2021
Karnataka High Court stayed the Judgment of Single Judge dated 02.06.2021 in which he held that Goods and Service Tax (GST) cannot be levied on the entire bet amount received in the totalisator as it would take away the principle that tax can only be levied on consideration received under the Central Goods and Service Tax Act, 2017 (“CGST Act”). The Court had also declared Rule 31A(3) of the Central Goods and Service Tax Rules, 2017 (“CGST Rules”) and Karnataka Goods and Services Tax Rules, 2017 (“KGST rules”) as ultra virus of the CGST Act.
The petitioner was engaged in the business of race clubs where they received a commission on the total amount of bet/winnings for holding the amount. They were earlier subject to service tax but this activity was included in the GST regime by the government. The central government also introduced Rule 31A(3) which required the Horse Race clubs to pay GST on the amount of bet or the total amount paid to the totalizer.
A writ petition was filed against this amendment contending it to be ultra vires and an issue was raised as to what shall be the value of supply – the commission or
amount of bet. The high court held that for Horse race clubs, GST shall be applicable on the amount of commission received. But this judgment has been given a stay by Karnataka High Court.
Crux – The amount on which GST should be applicable in cases of horse races is still a conundrum.
Advance Rulings
- In re Deccan Transco Leasing Private Limited (GST AAR Telangana) TSAAR Order No. 08/2021
M/s Deccan Transcon Leasing Private Limited ( DTLPL ) are Non-vessel owner container carriers/ Operators (NVOCC) who are based in India but lease containers from suppliers outside the country and in turn, use them in the transportation of bulk chemicals. They have a lease agreement wherein they lease the tank containers and agree to buy them at a later stage. The same is reflected on the Balance sheet of the applicant. It is contended that since tank containers are a supply of goods and the same didn’t reach India, GST should be levied accordingly.
The question raised by the applicant was whether GST was liable to be paid on leasing of tank containers taken to form a supplier i.e. the lessor who is located outside India and the tank containers do not reach India. As it is a finance lease, it is the supply of goods and tank containers does not reach the Indian Territory.
The authority ruled that yes, the applicant is liable to pay IGST on importation of lease services into India in light of the above discussion. It was observed that the terms of the agreement indicate that the property in goods passes to the applicant only when he exercises the option of failing which the property has to be returned which is not specifically mentioned.
Therefore, till such an option is exercised, the lease will remain in service and won’t fall under entry 1(c) of Schedule II to the CGST Act.
Crux – The import of tank containers on the lease was considered to be a service.
2. In re SHV Energy Private Limited (GST AAR Telangana) TSAAR Order No. 06/2021
M/s. SHV Energy Private Limited is the supplier of LPG to domestic and industrial users. Since setting up of this system involves substantial investment the customer is obliged to purchase LPG exclusively from the applicant and the conditions of the agreement specify the minimum quantity lifted from SHV.
In the event of the purchaser not lifting the minimum quantity, such purchaser has to pay commitment charges at the rate of Rs.2,900/- per metric ton of such shortfall in quantity.
The advance ruling was sought on whether the sale of LPG, Collection of Take or Pay Charges for not lifting minimum assured quantity, and rental charges for supplier gas system installed at the customer premises to store the LPG which is a condition precedent for the supply of LPG be treated as composite supply under section 2(30) of GST Act, 2017?
It was observed that it would not be treated as a composite supply. It was observed that the contract was in nature of Take or Pay which resembles the penalty for not fulfilling contractual obligation rather
than being a naturally bundled good which is a necessity for a good to be regarded as a composite supply.
Thus, the charges come into existence only when there is no supply of LPG. That means the supply of LPG and ‘Take or Pay’ Charges are mutually exclusive and can never exist together. The forbearance comes into existence only upon breach and hence the requirements of a composite contract mentioned above are not fulfilled.
Crux – The penalty imposed for not fulfilling the contract wouldn’t come under composite supply.
3. In re Sri Avantika Contracts (I) Limited (GST AAR Telangana) TSAAR Order No. 05/2021
M/s. Sri Avantika Contractors (I) Limited is engaged in construction services providing works contract services. They have secured a contract from National Buildings Construction Corporation Limited (NBCCL) Delhi for constructing a building in Addu City, Maldives.
The applicant sought an Advance Ruling on whether the construction of the Institute
of Security and Law Enforcement Studies at Addu City in the Maldives, constructed for the Government of Maldives under a Memorandum of Understanding between India and Maldives falls within the GST net? If yes, who would be the recipient, and what would be the place of supply?
It was ruled that the same shall be within the ambit of GST and NBCCL would be considered to be the recipient of services. Since both the supplier and recipient are located in India, the place of supply shall be the location of the recipient.
It was observed that the applicant does not have any mutual or successive relationship with the Government of Maldives. Hence Government of Maldives is not the recipient of any service from the applicant.
Further, an agreement is reached by National Buildings Construction Corporation Ltd., (NBCCL) New Delhi 86 Sri Avantika Contractor Ltd to construct the building at Addu City in the Maldives. Hence Sri Avantika Contractor Ltd. is a supplier of the service of the works contract and National Buildings Construction Corporation Ltd., New Delhi is the recipient of the Service.
Crux – If the immovable property is outside India but the recipient is within India, the place of supply shall be the location of the recipient.
4. In re Tata Motors Ltd. (GST AAR Gujarat) Advance Ruling No. GUJ/GAAR/R/39/2021
The applicant submitted that they maintained a canteen facility for its employees at its factory premises to comply with the mandatory requirement of maintaining the canteen as per the Factories Act, 1948.
The applicant submitted that as per the proviso to Section 17(5) (b) of Central Goods & Service Tax Act, 2017, ITC of GST paid on goods or services or both shall be available, where an employer must provide the same to its employees under any law for the time being in force.
The applicant raised a question as to whether input tax credit (ITC) would be available to the Applicant on GST charged by the service provider on the canteen facility provided to employees working in a factory. Further two more questions were
raised. First, whether GST is applicable on the nominal amount recovered by Applicants from employees for the usage of the canteen facility, and second If ITC is available as per question no. (1) above, whether it will be restricted to the extent of the cost borne by the Applicant (employer)?
The ruling was given that ITC on GST paid on canteen facility is blocked credit under Section 17 (5)(b)(i) of CGST Act and inadmissible to the applicant. GST, at the hands-on of the applicant, is not leviable on the amount representing the employee’s portion of canteen charges, which is collected by the applicant and paid to the Canteen service provider.
Further, it was held that Section 17(5)(b)(i) sub-clause ending with a colon and followed by a provision which ends with a semicolon is to be read as independent sub-clause, independent of sub-clause Section 17(5)(b)(iii) and its proviso [of subclause iii]. Thereby, the proviso to section 17(5)(b)(iii) is not connected to the sub-clause of Section 17(5)(b)(i) and cannot be read into it.
Crux – ITC paid on canteen facility shall be blocked.
5. In re Shailesh Ramsunder Pande (GST AAR Maharashtra) Advance Ruling No. GST-Ara- 66/2019-20/B-49A
M/s Pooja Vaishnavi School Bus Services, the applicant entered into a contract with M/s Rattan India Power Limited for the supply of NON AC Buses for transportation of their staff under contract carriage.
They were providing transportation of passengers excluding tourism, conducting tours, charters, or hiring Non-Air Conditioned Buses under a contract carriage with their customer. The applicant also incurs expenses on fuel and maintenance of the buses, and for all these services provided by the applicant, they are paid fixed hire cost plus fixed fuel cost at predetermined rates of fuel plus mileage. RIPL also controls the deployment of the buses.
An advance ruling was sought on whether GST is applicable for the same contract.
It was ruled that The provisions of notification no. 12/2017 Central Tax (Rate) dated 28.06.2017 is not applicable in the subject case and the service provided by the applicant is not exempted under the said notification as discussed above i.e. since the subject Service does not fall under the ‘non-airconditioned contract carriage’ category but is covered under ‘rent a cab’ Service. The applicable rate shall be 5% without ITC or 12% with ITC.
It was observed that All activities of Renting any motor vehicle/transport vehicle which is designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient are chargeable to either 5% GST or 12% GST depending on availment of Credit.
Therefore in the subject case, since there is a Renting of any motor vehicle/transport vehicle that is designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient i.e. RIPL, the applicant will have to pay GST @ 12%, if the credit of input tax charged on goods and services used in supplying the service,
other than the input tax credit of input service in the same line of business (i.e. service procured from another service provider of transporting passengers in a motor vehicle or renting of a motor vehicle) has not been taken.
Crux – GST shall be applicable on services provided for the transportation of passengers if affiliated services are also provided along with the vehicle.
6. In re Yashaswi Academy for Skills (GST AAR Maharashtra) Advance ruling No. GST-ARA- 84/2019-20/B-48
Yashaswi Academy for Skills, the applicant/`YAS’ is a not-for-profit company under sec. 25 of Companies Act 1956. Applicant Company is registered as an Agent under the National Employability Enhancement Mission (`NEEM’).
NEEM agent is a facilitator for extending support for mobilizing the trainees under the NEEM Scheme of the Government of India as per regulations under the notification issued by the All India Council for Technical Education (AICTE) for providing trainees on-the-job practical
training in industries to enhance their future employability.
As per agreements, the industry partner is under obligation to pay a stipend to trainees and also to provide uniform and safety shoes and ensure the trainee students. YAS is acting as an agent on behalf of an industry partner as far as providing a stipend, insurance premium, uniform, and safety shoes.
An advance ruling was sought on three issues-
- Whether the reimbursement by an Industry Partner to M/s Yashaswi Academy for Skills of the stipend paid to students attract GST?
- Whether the reimbursement by the Industry Partner to M/s Yashaswi Academy for Skills of the insurance premium attract GST?
- Whether the reimbursement by the Industry Partner to M’s Yashaswi Academy for Skills of the expenses for uniform and safety shoes attract GST?
It was ruled that the reimbursement doesn’t attract GST and thus other questions become irrelevant.
It was observed that the stipend is not directly paid to the trainees by the companies, rather the same is routed through the applicant.
The applicant had submitted that the entire amounts received as a stipend from the companies are paid to the trainees without any amount being retained.
Thus, it is seen that the applicant is only acting as an intermediary in collecting the stipend from the companies and then disbursing the same to the trainees in full. Hence the amount of stipend received by the applicant from the industry partners and paid in full to the trainee is not taxable at the hands of the applicant.
Crux – Reimbursement of stipend won’t attract GST.
Customs Updates
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- Notification 40/2021- customs dated 30.08.2021 Seeks to amend notification No. 28/2021-Customs to extend the exemptions under the said notification up to 30th September 2021.
- Notification 40/2021- customs dated 19.08.2021 seeks to amend Notification number 34/2021- Customs dated 29.06.2021, for the reduction in the BCD on Crude Soya Oil [1507 10 00] from 15% to
7.5%; Crude Sunflower Oil [1512 11 10] from 15% to 7.5%; Refined Soya Oil [1507 90 10] from 45% to 37.5%; Refined
Sunflower Oil [1512 19 10] from 45% to 37.5%, from 20th August 2021 till 30th September 2021
- Notification 39/2021- customs dated 19.08.2021 provided relief to taxpayers and amended the Notification No. 57/2000-Customs, dated the 8th May 2000. A new provision was added which states that where the last date of exports falls between the 1st February 2021 and the 30th June 2021, the last date of exports stands extended by six months.
- Circular No. 19/2021-customs dated 16.08.2021 amended Circular No. 38/2016 dated 22.08.2016. The amendment inserted new entry 5(d) to enable the commissioners to reduce the amount of security required in case of provisional assessment under customs.
- Instruction No. 18/2021-customs dated 17.08.2021 was issued regarding the difficulties faced under CAROTAR, 2020. The problems were highlighted and proper officers were advised to indicate the reason for believing that the goods do not meet the prescribed criteria
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- Instruction No. 19/2021-customs dated 17.08.2021 directed that Directorates/ Commissionerate/Audit shall not issue any Circulars/Reports/Alerts, etc. which are in the nature of interpretation
/clarification/prescription for the sake of uniformity, on matters covered under Section 151A of the Customs Act, 1962. Clarifications on all such matters should only be issued by the Board under Section 151A of the Customs Act, 1962.
- The Central Board for Indirect Taxes & Customs (CBIC) via press release dated 04.08.2021 launched the Indian Customs Compliance Information Portal (CIP) at cip.icegate.gov.in/CIP for providing free access to information on all Customs procedures and regulatory compliance for nearly 12,000 Customs Tariff Items.
Disclaimer: Information in this newsletter is for educational purposes only. Bhasin Sethi and Associates assumes no responsibility for any mistakes which, despite all precautions, may be found therein. The material contained in this document does not constitute any professional advice that may be required before acting on any matter.