Indirect Taxes: - “A Fortnightly review” by Sinewave Computer Services Private Limited

Content :

From the Legal Desk

(Compiled by CA Aumkar S Gadgil and Shri Surendra G Gadgil)

1. Source TIOL 68-AAAR-GST , 2019-TIOL 311 GST

Bengal Peerless Housing Development Company Ltd

Issue in Brief: -

Bengal Peerless Housing Development Company Ltd (BPHDCL) is a real estate developer of an upscale residential housing project, providing construction service for residential flats in West Bengal. Being an upscale residential scheme, the service provider provides common amenities like allotted car parking, club house, Gymnasium, Swimming pool, children play garden etc (Common amenities without charging any consideration separately). Under the agreement for sale, option was also given for individual buyer to have choice of selecting specific units (flats) against payment of additional consideration for services like , floor rise, specific direction for being “vastu shastra compliant”(Preferential locational service (PLS) , specific external view etc. The agreement for sale mentioned the Total price including the consideration for optional services like floor rise, direction, external view etc.in the Schedule to the main agreement, and the cost of such specific was mentioned in such Schedule.

Notification 11/2017-CTR DT. 28-6-2017 provides for abatement of 1/3rd value of consideration for construction service covered under serial number 3(i) of the Table forming part of the said Notification read with para 2 . Under the deeming fiction abatement towards value of land involved in such service is notified to be 1/3rd of the value of construction on which GST is not payable.

As a matter of abundant precaution, WBPHDCL the developer billed separately for the specific services and paid GST @ 18% without claiming any abatement from value of such services. Subsequently the developer filed an application under with the relevant AAR to ascertain if the benefit of 1/3rd abatement as provided under Notification 11/2017-CTR DT. 28-6-2017 as amended could be claimed for such specific services like floor rise, PLS etc. It was contended before the AAR that construction service is a composite service, in which principal service is construction service, and buyer specific services like floor rise, PLS, directional services etc are naturally bundled in the ordinary course of business. As the value of composite service is the one as is applicable to principal service in terms of Section 8 of the CGST Act 2017, benefit of Notification 11/2017-CTR by way of abatement was available for the PLS also. Hence it was contended that abatement equal to1/3rd value was applicable to PLS. The AAR vide order 01/WBAAR/2019-20 dated 02.05.2019 upheld the contention and passed an order DT 2-5-19 stating that abatement could also be claimed for specific services being naturally bundled in conjunction with principal with main service and benefit Notification 11/2017-CTR was available by way of abatement from value.

Aggrieved by the above AAR order, Revenue filed appeal with AAAR. The AAAR held that the specific optional services are attributable as per choice of individual, hence it cannot be treated as naturally bundled service; that under the erst while service tax also such abatement from value was not available for PLS and were separately known as “builders special service” and separately classified under Service Accounting Code; that the WBHDCL themselves have paid the GST without claiming the abatement ; that such payment also endorses that PLS has nothing to do with value of land involved in it ; that such PLS would fall under Table serial No 3 (iii) and not under serial No 3 (i) ; Finally even for specific car parking attracting separate consideration by way of PLS if rendered would not be eligible for abatement , setting aside the original order.

Thus the original AAR order DT 2-5-19 stands modified by the order DT 25-9-2019 against appeal no Appeal Case No. O9/WBAAAR/APPEALI}0 I 9 dated 03.07.2019 Ref:- 2019 TIOL 68 AAAR-GST

2. Ref :-2019-TIOL-301-AAR-GST

IN THE WEST BENGAL AUTHORITY FOR ADVANCE RULING GOODS AND SERVICES TAX

Issues in Brief

Applicant is a tour operator. According to Explanation to Sl No. 23(i) of Notification No. 11/2017-CT (Rate) dated 28/06/2017 ( West Bengal State Notification No. 1135-FT dated 28/06/2017), as amended from time to time, the "tour operator" means any person engaged in the business of planning, scheduling, organizing, arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport, and includes any person engaged in the business of operating tours. Furthermore, SL No. 23(i) applies provided inter alia the bill issued for supply of the service indicates it is inclusive of charges of accommodation and transportation required for such a tour.

The Applicant in addition to conducting the entire tour, is also engaged in providing only accommodation to those clients who make other arrangements on their own, and only ask. The Applicant does not have any hotels of his own and he arranges the accommodation through other hotels. Hence the application was made for getting a ruling as regards classification of service when only accommodation is arranged and whether the applicant can take ITC charged by those hotels from where he arranges accommodation.

Summary of QUESTIONS FOR ADVANCE RULING and Decision in brief

Q1) The applicant sought a ruling on following questions:-.

  • Whether the above service (arranging only accommodation) is classifiable as under the Category of Tour operator with SAC 9985 and covered under serial No 23 (i) of Notification 11/2017-CTR DT 28-6-2017(As per applicant this would not be the correct classification as all the conditions for serial No 23 (i) are not satisfied).
    ---------NO-------
  • Whether the applicant’s service is to be classified under SAC 996311 and covered under several clauses of Sl No. 7 of the Rate Notification 11/2017-CTR
    ----------NO----
  • Whether the applicant’s service is covered under Sl No. 23(iii) of the Rate Notification include services classified under SAC 998552 as Services covered under SAC 998552 includes arranging reservations for accommodation services for domestic accommodation, accommodation abroad etc.
    ----------------------YES-----
  • Whether the applicant’s service is to be classified under SAC 9997 under Sl No. 35 of the Rate Notification 11/2017-CTR
    ------------------NO-------

Q2) The applicant also wants to know whether the GST which the hotels charge on it can be claimed as an input tax credit----------------------YES------------

DISCUSSION AND DECISION BY THE ADVANCE RULING AUTHORITY

Arranging accommodation may also be a standalone business. Such a service cannot be classified as tour operating service under Heading 9985 as it does not cover all the activates described in column 3 of the Table to the Notification and also conditions as per Explanation to Sl No. 23(i) of the Rate Notification. Hence the applicant’s service cannot be classified as tour operator.

Neither is it the accommodation service as classified under SAC 996311. Accommodation service under SAC 996311 is limited to the one provided by the hotels, guest house etc. Sl No. 7 of the Rate Notification refers to the accommodation service as classified under SAC 996311, and, therefore, leaves no room for the suppliers like the Applicant who arrange such accommodation in hotels.

As per Explanatory Notes to the Scheme of Classification of Services, Services covered under SAC 998552 include arranging reservations for accommodation services for domestic accommodation, accommodation abroad etc. The Applicant's supply is specifically covered here and, therefore, classifiable under SAC 998552. lt is, therefore, taxable under Sl No. 23(iii) of the Notification 11/2017-CTR as amended by Notification 1/2018-CTR DT. 25-1-2018

The Applicant is eligible to claim the input tax credit as admissible under the law. The Authority did not find it necessary to discuss SAC 9997 as the applicant's supply is specifically covered under SAC 998552.

3- Classification of Locomotive Parts :SOURCE:- 2019-TIOL-302-AAR-GST

IN THE WEST BENGAL AUTHORITY FOR ADVANCE RULING GOODS AND SERVICE TAX 1

APPLICANT: - KAY PEE EQUIPMENTS PVT LTD .

ORDER NO AND DATE: - 25/WBAAR/2019-20 dated 23/09/2019

Issues in Brief :-

Section XVII of the Customs Tariff which is the basis for classification in the GST Act 2017 covers Goods namely VEHICLES, AIRCRAFT, VESSELS AND ASSOCIATED TRANSPORT EQUIPMENT. Chapter 86 of the Customs Tariff deals with classification of Railway or tramway locomotives, rolling-stock and parts thereof. While Ch Hd.8601 to 8606 covers various types of locomotives, parts of all Goods falling under Ch 8601 to 8606 are covered under Chapter 8607.

In terms of Notification 1/2017 CGST Rate DT 28-6-2017 read with Notification 5/2017-CGST Rate DT.28-6-2017, Goods classifiable under Ch 86 are subjected to 5% GST with no refund of unutilised credit which may arise due to inverted duty structure. Board vide circular Dated 25-1-2018 clarified that only those goods which would merit classification under Ch 86 would be eligible for 5% GST.

The applicant manufactures various parts and supplies to railways. Some parts manufactured by the applicant are Composite Goods which consist of more than one individual item / components. For the sake of understanding let us assume, that applicant manufactures individual components say “A, B, C, D, E” and assembles the same into a product known as “F” and supplies to Railways as “parts of locomotive” under Ch 8607. Such item F is referred in the order as “MSU” i.e. Motor Suspension Unit in the Advance Ruling Order. The applicant also supplies individual item say “D” which is a spring made of iron and steel as ‘parts of locomotive”.

A. Question referred for ruling and Decision in Brief
The applicant has sought Advance Ruling seeking order on the question: -

  • i. Whether the “MSU (F”) will be classified as part of Railway locomotive under Ch heading 8607 attracting 5% GST.? --------------YES------
  • ii. Whether the “Spring (D)” when supplied individually will be classified as part of Railway locomotive under Ch heading 8607.? --------------NO------ It will be classified under heading 7220

B. Discussion and decision by the AAR

From the scrutiny of the list of the goods manufactured and the relevant purchase orders It appeared to the Authority that, all items supplied are components of railway locomotive. The AAR noted that the list given by the applicant was only illustrative and not exhaustive and hence opted to lay down / describe the method or guidelines to be followed for classifying such articles instead of passing order in respect of list of items mentioned in the application.

The AAR described the method as under: -

Though every item supplied may be part of railway locomotive, before classifying such part under Ch 8607, it has to undergo following further tests.

Note 3 of Section XVII states that such parts or accessories shall be suitable for use solely or principally with the articles of Chapter 86 (Railway Locomotive in this case) and

Such part should not be specifically prohibited to be classified under Ch 8607 in terms of Section Notes 2 and 3 of Section XVII,

Such parts should also not be parts of general use, of base materials or plastics as defined in Note 2 of Section XV, of base metal whether or not they are identifiable as for the goods of Section XVII.

Note 2 to Section XV defines the expression "parts of general use" to mean: -

  • (a) articles of headings 7307, 7312, 7315, 7317 or 7318 and similar articles of other base metals,
  • (b) springs and leaves for springs of base metal, other than clocks or watch springs, and

C. Articles of headings 8301, 8302, 8308, 8310 and frames and mirrors, of base metal, of heading 8306. Further where the part under assessment for classification is covered under "the heading which provides the most specific description such heading shall be preferred to headings providing a more general description" Thus in the case referred the item MSU which is a composite supply, is to be used solely or principally as parts of locomotive , further it is not prohibited to be classified under Ch 8607 as per Section Note 2 and 3 of Section XVII as well as it is not disqualified as per Section Note 2 of Section XV to be classified under Ch 8607.

However Springs even though are parts of locomotive as per the purchase order of the Railways and used by Railways as parts of locomotive, are to be classified under Ch heading 7220 as these are covered by specific description attracting GST as applicable to Ch 72.

Knowledgebase

(Compiled by CA Aumkar S Gadgil)

Concept of Job Work under GST

Job worker has been a well-established terminology in the manufacturing sector. Where a person carries out manufacturing or any other processing activity, on goods belonging to any person other than him, then in such case the person is said to be undertaking the such activity in the capacity of a job worker.

Why is there a need of job worker?
Often in the manufacturing sector, it is possible that a manufacturer is willing to outsource some portion or at times the entire manufacturing process. Now certainly it would come to one’s mind that if at all the entire process is to be outsourced, then why to call himself as the manufacturer is first place?

Fully outsourced manufacturing:
Generally, in case of goods in the FMCG sector, it is possible that the demand for the product is very high. As against that there are constraints in a single factory to meet the demands. However, in such case the business owners immediately do not set up a new factory as setting up and running a factory involves a lot of associated costs along with it. In such case, one of the options sought it to outsource an entire activity. In such scenarios the arrangement to fully outsource the manufacturing activity can be seen. In such case the person who outsources such manufacturing activity, is called as the “Principal Manufacturer” and the person who actually carries out the manufacturing activity is called as the “Job worker”.

Partially outsourced manufacturing:
Where a person who is a “Principal Manufacturer”, actually carries out the manufacturing activity, however he chooses to outsource only a part of the activity, it may involve some element of the manufacturing processes, in such case it can be recognized as a partially outsourced manufacturing. However even in such case the relation of the “Principal Manufacturer” and the “Job Worker” exists.

Job Worker under GST
As per the provisions of section 143 (1) of the CGST Act 2017, A registered person (hereafter in this section referred to as the “principal”) may under intimation and subject to such conditions as may be prescribed, send any inputs or capital goods, without payment of tax, to a job worker for job work and from there subsequently send to another job worker and likewise, and shall (a) bring back inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out, to any of his place of business, without payment of tax.

(b) supply such inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out from the place of business of a job worker on payment of tax within India, or with or without payment of tax for export, as the case may be.

Possible work models under Job Work:

Provided that the principal shall not supply the goods from the place of business of a job worker in accordance with the provisions of this clause unless the said principal declares the place of business of the job worker as his additional place of business except in a case—

  • (i) where the job worker is registered under section 25; or
  • (ii) where the principal is engaged in the supply of such goods as may be notified by the Commissioner.

(2) The responsibility for keeping proper accounts for the inputs or capital goods shall lie with the principal.

(3) Where the inputs sent for job work are not received back by the principal after completion of job work or otherwise in accordance with the provisions of clause (a) of sub-section (1) or are not supplied from the place of business of the job worker in accordance with the provisions of clause (b) of sub-section (1) within a period of one year of their being sent out,it shall be deemed that such inputs had been supplied by the principal to the job worker on the day when the said inputs were sent out.

(4) Where the capital goods, other than moulds and dies, jigs and fixtures, or tools, sent for job work are not received back by the principal in accordance with the provisions of clause (a) of sub-section (1) or are not supplied from the place of business of the job worker in accordance with the provisions of clause (b) of sub-section (1) within a period of three years of their being sent out, it shall be deemed that such capital goods had been supplied by the principal to the job worker on the day when the said capital goods were sent out.

(5) However, any waste and scrap generated during the job work may be supplied by the job worker directly from his place of business on payment of tax, if such job worker is registered, or by the principal, if the job worker is not registered.

Explanation.––For the purposes of job work, input includes intermediate goods arising from any treatment or process carried out on the inputs by the principal or the job worker.

Who is allowed, to claim Input tax credit in case of Job worker?
The principal manufacturer shall, subject to such conditions and restrictions as may be prescribed, be allowed input tax credit on inputs sent to a job worker for job work. Even in case of a purchase made by “Principal Manufacturer”, in a “bill to ship to model”, the principal manufacturer shall be entitled to take credit of input tax on inputs even if the inputs are directly sent to a job worker for job work without being first brought to his place of business.

Where the inputs sent for job work are not received back by the principal after completion of job work or otherwise or are not supplied from the place of business of the job worker within one year of being sent out, it shall be deemed that such inputs had been supplied by the principal to the job worker on the day when the said inputs were sent out. Provided that where the inputs are sent directly to a job worker, the period of one year shall be counted from the date of receipt of inputs by the job worker. In such case, there would be no need of reversal of Input tax credit, however the tax liability will be required to be paid as if the supply was made on the day on which the inputs were sent out. Such tax liability will be payable along with interest under section 50(1).

The principal shall, subject to such conditions and restrictions as may be prescribed, be allowed input tax credit on capital goods sent to a job worker for job work. Even in case of a purchase made by “Principal Manufacturer”, in a “bill to ship to model”, the principal manufacturer shall be entitled to take credit of input tax on capital goods even if the capital goods are directly sent to a job worker for job work without being first brought to his place of business.

Where the capital goods sent for job work are not received back by the principal within a period of three years of being sent out, it shall be deemed that such capital goods had been supplied by the principal to the job worker on the day when the said capital goods were sent out. Provided that where the capital goods are sent directly to a job worker, the period of three years shall be counted from the date of receipt of capital goods by the job worker.
In both the above cases, if the Job worker, sends the goods after the period of 1 year and 3 years respectively, then it shall be deemed that the goods are supplied by the Job worker and he would be liable to pay tax as if it is a supply. Likewise he would be required to issue an invoice. The “Principal Manufacturer in such case would have to treat it as an inward supply and would be entitled to Input tax credit, in respect of tax charged by the “Job worker”. However, where the capital goods being moulds and dies, jigs and fixtures, or tools sent out to a job worker for job work.

Anti-Profiteering Provisions

What is the meaning of Anti-Profiteering?
One of the most discussed concepts under the Goods and Services Tax Laws is the concept of Anti-Profiteering. While the provisions are not much in length, however the impact of the same is certainly a lot deeper. The essential purpose of incorporating the provisions relating to anti-profiteering was that, the registered person should not enjoy any benefits which would accrue to him as a reason of availability of Input tax credit or reduction in output tax rate. That is to say, the intention of the law is crystal clear, that if a registered person has any benefit arising on above mentioned counts, then he shall not retain the benefits, but should pass on the same to the consumers.

Legal Provisions under the Law?
As per the provisions of Section 171 (1) of the CGST Act 2017, Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices.

It is very essential for the registered person, to ascertain if any benefits are accruing to him on account of either of “Availability of Input tax credit” or “Reduction in tax rate”. The computation of the benefits accruing if any needs to be done in this regard and basis such computation, the benefits will be required to be passed on to consumer by way of commensurate reduction in selling prices.

Who would be the governing authority to check the compliance of this provision?
As per the provisions of Section 171(2) of the CGST Act 2017, The Central Government may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him.
Based on this provision, the “National Antiprofiteering Authority” has been established. The said authority has been entrusted powers to address the queries raised by consumers. The authority has the powers to call for necessary information based on the complaints received also pass orders based on the hearings conducted.
A process has been laid down, whereby a consumer can lodge a complaint, where he feels aggrieved by the actions of the supplier of goods or services, if the said supplier has not reduced the consumer prices even when such supplier is legally bound to do so.

What is the procedure of the proceedings with the National Anti-Profiteering Authorities?
The Authority shall, within a period of three months from the date of the receipt of the report from the Director General of [Antiprofiteering]105 determine whether a registered person has passed on the benefit of the reduction in the rate of tax on the supply of goods or services or the benefit of input tax credit to the recipient by way of commensurate reduction in prices.
An opportunity of hearing shall be granted to the interested parties by the Authority where any request is received in writing from such interested parties. Where the Authority determines that a registered person has not passed on the benefit of the reduction in the rate of tax on the supply of goods or services or the benefit of input tax credit to the recipient by way of commensurate reduction in prices, the Authority may order- (a) reduction in prices; (b) return to the recipient, an amount equivalent to the amount not passed on by way of commensurate reduction in prices along with interest at the rate of eighteen per cent. from the date of collection of the higher amount till the date of the return of such amount or recovery of the amount including interest not returned, as the case may be;
(c) the deposit of an amount equivalent to fifty per cent. of the amount determined under the above clause in the Fund constituted under section 57 and the remaining fifty per cent. of the amount in the Fund constituted under section 57 of the Goods and Services Tax Act, 2017 of the concerned State, where the eligible person does not claim return of the amount or is not identifiable.

Statutory Updates under GST Law

(Compiled by CA Aumkar S Gadgil and Shri Abhinay Soman)

Circulars issued under GST:

Circular No. & Date of issue Particulars
Circular No.110/29/2019 - GST dt 03-10-2019 Several registered persons have inadvertently filed a NIL refund claim for a certain period under a particular category on the common portal in FORM GST RFD-01A/RFD-01 in spite of the fact that they had a genuine claim for refund for that period under the said category. Hence, the circular providing clarification that registered persons may be allowed to re-file the refund claim for the period and the category under which the NIL claim has inadvertently been filed only if he satisfies the following two conditions:
1) The registered person must have filed a NIL refund claim in FORM GST RFD-01A/RFD-01 for a certain period under a particular category; and
2) No refund claims in FORM GST RFD-01A/RFD-01 must have been filed by the registered person under the same category for any subsequent period.
However, condition (b) shall apply only for refund claims falling under the following categories:
a) Refund of unutilized input tax credit (ITC) on account of exports without payment of tax;
b) Refund of unutilized ITC on account of supplies made to SEZ Unit/SEZ Developer without payment of tax;
c) Refund of unutilized ITC on account of supplies made to SEZ Unit/SEZ Developer without payment of tax;
Registered persons satisfying the above conditions may file the refund claim under “Any Other” category instead of the category under which the NIL refund claim has already been filed for same period and alongwith all other supportive documents.
Circular No.111/29/2019 - GST dt 03-10-2019 This circular has clarify the procedure to be followed by a registered person to claim refund after receiving the favourable order in appeal or any other forum against rejection of a refund claim in FORM GST RFD-06 as follows:
The registered person need to file a fresh refund application under the category “Refund on account of assessment/provisional assessment/appeal/any other order” claiming refund of the amount allowed in appeal or any other forum. Since the amount debited, if any, at the time of filing of the refund application was not re-credited, the registered person shall not be required to debit the said amount again from his electronic credit ledger at the time of filing of the fresh refund application under the category “Refund on account of assessment/provisional assessment/appeal/any other order”. The registered person shall be required to give details of the type of the Order (appeal/any other order), Order No., Order date and the Order Issuing Authority. The registered person would also be required to upload a copy of the order of the Appellate or other authority, copy of the refund rejection order in FORM GST RFD 06 issued.
Circular No.112/29/2019 - GST dt 03-10-2019 Withdrawal of Circular No.105/24/2019-GST dated 28.06.2019 wherein certain clarifications were given in relation to various doubts related to treatment of secondary or post-sales discounts under GST.
Circular No.113/29/2019 - GST dt 11-10-2019 Clarification regarding GST rates & classification for following Goods:
  • 1) Classification of leguminous vegetables such as grams when subjected to mild heat treatment
  • 2) Almond Milk
  • 3) Applicable GST rate on Mechanical Sprayer
  • 4) Taxability of imported stores by the Indian Navy
  • 5) Taxability of goods imported under lease.
  • 6) Applicable GST rate on parts for the manufacture solar water heater and system
  • 7) Applicable GST on parts and accessories suitable for use solely or principally with a medical device
Circular No.114/29/2019 - GST dt 11-10-2019 This circular has clarified the scope of the entry “services of exploration, mining or drilling of petroleum crude or natural gas or both” at Sr. No. 24 (ii) of heading 9986 in Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017.
Circular No.115/29/2019 - GST dt 11-10-2019 Passenger Service Fee (PSF) is charged under rule 88 of Aircraft Rules, 1937 according to which the airport licensee may collect PSF from embarking passengers at such rates as specified by the Central Government. According to the rule the airport license shall utilize the said fee for infrastructure and facilitation of the passengers. User Development Fee (UDF) is levied under rule 89 of the Aircraft rules 1937 which provides that the licensee may levy and collect, at a major airport, the User Development Fee at such rate as may be determined under clause (b) of sub-section (1) of section 13 of the Airports Economic Regulatory Authority of India Act, 2008.
Further, Director General of Civil Aviation has clarified vide order No. AIC Sl. No. 5/2010 dated 13.09.2010 that in order to avoid inconvenience to passengers and for smooth and orderly air transport/airport operations, the User Development Fees (UDF) shall be collected from the passengers by the airlines at the time of issue of air ticket. Hence, The above facts clearly indicate that PSF and UDF are charged by airport operators for providing the services to passengers.
However, Section 2(31) of the CGST Act states that “consideration” in relation to the supply of goods or services or both includes any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person. Thus, PSF and UDF charged by airport operators are consideration for providing services to passengers.
Hence, services provided by an airport operator to passengers against consideration in the form of UDF and PSF are liable to GST.
PSF and UDF being charges levied by airport operator for services provided to passengers, are collected by the airlines as an agent and is not a consideration for any service provided by the airlines. Thus, airline is not responsible for payment of ST/GST on UDF or PSF provided the airline satisfies the conditions prescribed for a pure agent under Rule 33 of the CGST Rules.
Circular No.116/29/2019 - GST dt 11-10-2019 No Levy of GST on the service of display of name or placing of name plates of the donor in the premises of charitable organisations receiving donation or gifts by individual donors wherein following three conditions has been fulfilled by said donor:
  • 1) The gift or donation is made to a charitable organization
  • 2) The payment has the character of gift or donation
  • 3) The purpose is philanthropic (i.e. it leads to no commercial gain) and not advertisement
Circular No.117/29/2019 - GST dt 11-10-2019 Under GST Law, vide Sl. No. 66 of the notification No. 12/2017- Central Tax (Rate) dated 28.06.2017, services provided by educational institutions to its students, faculty and staff are exempt from levy of GST. In the above notification, “educational institution” has been defined to mean an institution providing services by way of education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force.
Maritime Training Institutes and their training courses are approved by the Director General of Shipping which are duly recognised under the provisions of the Merchant Shipping Act, 1958 read with the Merchant Shipping (standards of training, certification and watch-keeping for Seafarers) Rules, 2014. Therefore, the Maritime Institutes are educational institutions under GST Law and the courses conducted by them are exempt from levy of GST.
Circular No.118/29/2019 - GST dt 11-10-2019 This circular has clarified on determination of place of supply in case of supply of software/design services by a supplier located in taxable territory to a service recipient located in non-taxable territory by using the sample hardware kits provided by the service recipient.
In contracts where service provider is involved in a composite supply of software development and design for integrated circuits electronically, testing of software on sample prototype hardware is often an ancillary supply, whereas, chip design/software development is the principal supply of the service provider. The service provider is not involved in software testing alone as a separate service. The testing of software/design is aimed at improving the quality of software/design and is an ancillary activity. The entire activity needs to be viewed as one supply and accordingly treated for the purposes of taxation. Artificial vivisection of the contract of a composite supply is not provided in law. These cases are fact based and each case should be examined for the nature of supply contracted.
Therefore, it is clarified that the place of supply of software/design by supplier located in taxable territory to service recipient located in non-taxable territory by using sample prototype hardware / test kits in a composite supply, where such testing is an ancillary supply, is the location of the service recipient as per Section 13(2) of the IGST Act. Provisions of Section 13(3)(a) of IGST Act do not apply separately for determining the place of supply for ancillary supply in such cases.
Circular No.119/29/2019 - GST dt 11-10-2019 This circular has provide the clarification regarding taxability of supply of securities and other transactions under Securities Lending Scheme, 1997:
1) Securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 are not covered in the definition of goods under section 2(52) and services under section 2(102) of the CGST Act. Therefore, a transaction in securities which involves disposal of securities is not a supply in GST and hence not taxable.
2) The clause 4 of para 4 relating to the Scheme under the Securities Lending Scheme, 1997 doesn’t treat lending of securities as disposal of securities and therefore is not excluded from the definition of services.
3) The lender temporarily lends the securities held by him to a borrower and charges lending fee for the same from the borrower. The borrower of securities can further sell or buy these securities and is required to return the lended securities after stipulated period of time. The lending fee charged from the borrowers of securities has the character of consideration and this activity is taxable in GST since 01.07.2017.
4) Further, the activities of the intermediaries facilitating lending and borrowing of securities for commission or fee are also taxable separately.
5) The supply of lending of securities under the scheme is classifiable under heading 997119 and is leviable to GST@18% under Sl. No. 15(vii) of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 as amended from time to time.
6) With effect from 1st October, 2019, the borrower of securities shall be liable to discharge GST as per Sl. No 16 of Notification No. 22/2019-Central Tax (Rate) dated 30.09.2019 under reverse charge mechanism (RCM). The nature of GST to be paid shall be IGST under RCM.
Circular No.120/29/2019 - GST dt 11-10-2019 This circular has provide clarification on representations received to amend the effective date of notification No. 17/2018-CTR dated 26.07.2018 whereby explanation was inserted in notification No. 11/2017- CTR dated 28.06.2017, Sr. No. 3(vi) to the effect that for the purpose of the said entry, the activities or transactions under taken by Government and Local Authority are excluded from the term ‘business’.
The explanation in question was inserted vide notification No. 17/2018-CTR dated 26.07.2018 in exercise of powers under section 11(3) within one year of the insertion of the original entry prescribing concessional rate, so that it would have effect from the date of inception of the entry i.e. 21.09.2017. However, like other notifications issued on 26.07.2018 to give effect to other recommendations of the GST Council, the said notification also contained a line in the last paragraph that the notification shall come into effect from 27.07.2018.
Hence, it is hereby clarified that the explanation having been inserted under section 11(3) of the CGST Act, is effective from the inception of the entry at Sl. No. 3(vi) of the notification No. 11/2017- CTR dated 28.06.2017, that is 21.09. 2017. The line in notification No. 17/2018-CTR dated 26.07.2018 which states that the notification shall come into effect from 27.07.2017 does not alter the operation of the notification in terms of Section 11(3) as explained in para 3 above.
Circular No.121/29/2019 - GST dt 11-10-2019 This circular clarifies that this special dispensation applies only to supply of service by way of grant of liquor licenses by the State Governments as an agreement between the Centre and States and has no applicability or precedence value in relation to grant of other licenses and privileges for a fee in other situations, where GST is payable.

Notifications

Notification No and Date of Issue Particulars
Notification No. 44/2019 – Central Tax Form GSTR-3B to be filed for the months of October 2019 to March 2020, by 20th day of subsequent month. The tax payment on monthly basis will continue to be made along with the monthly return GSTR-3B.
Notification No. 45/2019 – Central Tax Registered persons, having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year, will be required to furnish return for outward supplies in form GSTR-1, as per the under mentioned timelines.
Quarter (October to December 2019) : return to be filed by 31/01/2019
Quarter (January to March 2020) : return to be filed by 30/04/2020
Notification No. 46/2019 – Central Tax The time limit for furnishing the details of outward supplies in FORM GSTR-1 of the Central Goods and Services Tax Rules, 2017, by such class of registered persons having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year, for each of the months from October, 2019 to March, 2020, is extended till the eleventh day of the month succeeding such month.
Notification No. 47/2019 – Central Tax Those registered persons whose aggregate turnover in a financial year does not exceed two crore rupees and who have not furnished the annual return under sub-section (1) of section 44 of the said Act read with sub-rule (1) of rule 80 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the said rules) before the due date, as the class of registered persons who shall, in respect of financial years 2017-18 and 2018-19, follow the special procedure such that the said persons shall have the option to furnish the annual return under sub-section (1) of section 44 of the said Act read with sub-rule (1) of rule 80 of the said rules.
Provided that the said return shall be deemed to be furnished on the due date if it has not been furnished before the due date.
Notification No. 48/2019 – Central Tax Notification issued in respect of returns to be filed by registered persons having a registration in the State of Jammu and Kashmir
Notification No. 49/2019 – Central Tax Amendment to the CGST Rules
1. If registration of a registered person has been suspended, then during such period, the person shall not issue any tax invoice under the law also should not collect any tax in respect of any taxable supply made during the period of suspension.
2. Where an order of revocation of suspension of registration has been passed in favor of a registered person, the such person shall, for the period of suspension, subsequently issue tax invoices and also shall collect and pay the tax and also furnish the declaration of supplies so made during the period under the provisions of Section 40.
3. For a tax period, the Input tax credit can be availed in respect of those invoices or debit notes, the details of which have been furnished by the supplier. However, for the said tax period, the Input tax credit in respect of Invoices or debit notes, the details of which have not been uploaded by the suppliers, can be availed maximum up to 20% of the Input tax credit which was available in respect of those invoices or debit notes, the details of which have been uploaded by the supplier.
Eg: If for the month of October 2019, the total ITC availed is Rs 2000. Now, out of the ITC availed, the actual ITC as per supplier’s data appearing in GSTR 2A, for the month of October 2019 is Rs 1400, whereas the details of ITC not appearing in GSTR-2A is Rs 600. In such case, as per the amended rule the maximum ITC, that can be availed for the month of October 2019 would be (Rs 1400+ 20% of Rs 1400), ie (Rs 1400 + Rs 280) ie Rs 1680.
4. Proviso inserted to sub-rule 5 of Rule 61 of the CGST Rules 2017, whereby Form GSTR-3B is recognized now as a return under GST. In the light of the recent judgement pronounced by Hon’ble High Court of Gujarat, this is an amendment with rooted impacts.
5. Sundry issues under CGST Rules 2017, including introduction of Rule 1A under Rule 142, whereby Form DRC-01A has been introduced to intimate amount of tax/interest/penalty payable issued by the department, prior to issuance of Show cause notice.




Disclaimer: The views provided above are on the basis of our understanding of the GST Laws, Rules and Regulations. The adjudicating or Judicial Authorities may or may not agree with the views expressed above.


CA Aumkar Surendra Prachi Gadgil