SBS i 16th Edition

NOTFICANTIONS

1. GST RATE CHANGES IN CASE OF SPECIFIED GOODS:

The applicable GST rates for the following goods have been changed in the manner as detailed in the below table. The changed rates are effective from 01.01.2019;

Description of Goods	Old rate	New rate
Vegetables which are frozen and provisionally preserved	5%	Exempted
Marble and travertine, crude or roughly trimmed	18%	5%
Walking-sticks including seat sticks	12%	5%
Fly ash bricks or fly ash aggregate with 90 per cent. or more fly ash content; Fly ash blocks	12%	5%
Parts and accessories of carriage for disabled persons	28%	5%
Natural cork, raw or simply prepared	12%	5%
Natural cork, debacked or roughly squared, or in rectangular (including square) blocks, plates, sheets or strip (including sharp-edged blanks for corks or stoppers)	18%	12%
Articles of natural cork such as Corks and Stoppers, Shuttlecock cork bottom	18%	12%
Agglomerated cork (with or without a binding substance) and articles of agglomerated cork	18%	12%
Music, printed or in manuscript, whether or not bound or illustrated	12%	Exempted
Flexible intermediate bulk containers	12%/5% depending on value	12%
Retreaded or used pneumatic tyres of rubber; solid or cushion tyres, tyre treads and tyre flaps, of rubber	28%	18%
Lithium-ion accumulators (other than battery) including lithium-ion power bank	28%	18%
Digital cameras and video camera recorders	28%	18%
Televisions upto 32inches	28%	18%
Video game consoles and machines, articles of funfair, table or parlour games, including pintables, billiards, special tables for casino games and automatic bowling alley equipment [other than playing cards, ganjifa card, chess board, carom board and other board games of 9504	28%	18%
Supply of gift items received by the President, Prime Minister, Governor or Chief Minister of any State or Union territory, or any public servant, by way of public auction by the Government, where auction proceeds are to be used for public or charitable cause	Taxable based on nature of goods	Exempted

 

{NOTIFICATION NO.24/2018-CENTRAL TAX (RATE), NOTIFICATION NO.25/2018-CENTRAL TAX (RATE), NOTIFICATION NO. 25/2018-INTEGRATED TAX(RATE) AND NOTIFICATION NO. 26/2018-INTEGRATED TAX (RATE) DATED 31.12.2018}

2. EXEMPTION FOR SUPPLY OF GOLD BY NOMINATED AGENCY FOR EXPORT:

Gold falling in heading 7108 are exempt when supplied by nominated agency to a registered person under the scheme for “Export Against Supply by Nominated Agency” as referred to in para 4.41 of the Foreign Trade Policy. The exemption is subject to the following conditions;

1. The Nominated Agency and the recipient shall follow the conditions and observe the procedures as specified in the Foreign Trade Policy read with Handbook of Procedures
2. The recipient registered person shall export the jewellery made out of such gold within a period of 90 (ninety) days from the date of supply of gold to such recipient and shall provide copy of shipping bill or bill of export containing details of Goods and Services Tax Identification Number (GSTIN) along with the invoice for exports to the Nominated Agency within a period of 120 (one hundred and twenty) days from the date of supply by the Nominated Agency;

• Wherever such proof of export is not produced within the period mentioned in condition (ii), the Nominated Agency shall pay the amount of central tax payable on the quantity of gold not exported, along with interest from the date when the said tax on such supply was payable, but for the exemption.

{NOTIFICATION NO.25/2018-CENTRAL TAX (RATE)& NOTIFICATION NO. 27/2018-INTEGRATED TAX(RATE) DATED 31.12.2018}

3. CHANGE IN GST RATES FOR THE SPECIFIED SERVICES: Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 and Notification No. 8/2017-Integrated Tax(Rate) dated 28.06.2017 which prescribes the GST rates for various services are now amended as under;
4. Air Travel of Pilgrims by non-scheduled/charter operations: It has been provided that air travel of pilgrims by non-scheduled/charter operations, for religious pilgrimage facilitated by the Government of India under bilateral arrangements shall attract the same rate of GST as applicable to similar flights in Economy class (i.e. 5% with ITC of input services). Previously, these services were taxable at 18%.
5. Third Party Insurance Premium: GST rate on third party insurance premium of goods carrying vehicles has been reduced from 18% to 12%.

• Cinema Tickets: GST rate on cinema tickets above Rs. 100 has been reduced from 28% to 18% and on cinema tickets upto Rs. 100 from 18% to 12%.

The changed rates are effective from 01.01.2019.

{NOTIFICATION NO.26/2018-CENTRAL TAX (RATE) & NOTIFICATION NO. 28/2018-INTEGRATED TAX(RATE) DATED 31.12.2018}

 

4. EXEMPTIONS FOR CERTAIN SPECIFIED SERVICES:

Notification No. 12/2017-Central Tax (Rate) and Notification No. 9/2017-Integrated Tax(Rate) dated 28.06.2017 which prescribes exemption for various services are now been amended to prescribe the following exemptions.

1. Goods transport agency services provided to a department or establishment of Government or local authority or Government agencies are exempt from GST if such recipients have taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017) only for the purpose of deducting tax under Section 51 and not for making a taxable supply of goods or services.
2. Services provided by a banking company to Basic Saving Bank Deposit (BSBD) account holders under Pradhan Mantri Jan Dhan Yojana (PMJDY)

• Services provided by rehabilitation professionals recognised under the Rehabilitation Council of India Act, 1992 by way of rehabilitation, therapy or counselling and such other activity as covered by the said Act are exempt when such services are provided at medical establishments, educational institutions, rehabilitation centres established by Central Government, State Government or Union territory or an entity registered under section 12AA of the Income tax Act, 1961.

{NOTIFICATION NO.28/2018-CENTRAL TAX (RATE) AND NOTIFICATION NO. 29/2018-INTEGRATED TAX(RATE) DATED 31.12.2018}

5. ADDITIONAL SERVICES NOTIFIED FOR REVERSE CHARGE UNDER SECTION 9(3):

Notification No. 13/2017-Central Tax (Rate) and Notification No. 10/2017-Integrated Tax(Rate) dated 28.06.2017 notifies the specific services covered under reverse charge with respect to which the recipient of service is required to pay tax under reverse charge. These said notification are now amended to notify the following additional services under reverse charge;

1. Services provided by business facilitator to a banking company— the recipient banking company located in taxable territory is required to pay applicable GST under reverse charge
2. Services provided by an agent of business correspondent to business correspondent— the recipient business correspondent located in taxable territory is required to pay applicable GST under reverse charge

• Security services provided by a person other than body corporate by way of supply of security personnel to a registered person— the recipient registered person is required to pay applicable GST under reverse charge. However, it has been expressly provided that this reverse charge is not applicable when the services are provided to the following persons;
  1. Registered persons paying tax under section 10 i.e. Composition tax payer.
  2. Department or Establishment of Government or local authority or Government agencies in cases where they have taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017) only for the purpose of deducting tax under Section 51 and not for making a taxable supply of goods or services.

{NOTIFICATION NO.29/2018-CENTRAL TAX (RATE) & NOTIFICATION NO. 30/2018-INTEGRATED TAX(RATE) DATED 31.12.2018}

6. RELAXATION OF PRE-IMPORT CONDITION TO CLAIM EXEMPTION UNDER ADVANCE AUTHORIZATION:

Advance Authorization license obtainable by exporters under foreign trade policy are of two types. Under the first type, the exporters can procure inputs without paying duties and taxes with obligation to use the imported inputs in manufacture of goods to be exported. This type of license is called pre-import license i.e. inputs are procured prior to export and are meant for use in manufacture of goods to be exported. Under the second type, the license can be obtained subsequent to exports performance wherein based on previous export performance, exporter is given license to procure inputs without payment of duties and taxes and can be used for manufacturing of goods which may even be sold indigenously.  Notification No. 48/2017-Central Tax dated 18.10.2017 provides for exemption for GST payable by way of refund on goods supplied or procured under Advance Authorization scheme. The benefit of above-mentioned exemption from GST under the said notification was restricted only to first type of licenses i.e. imports/procurements are made prior to export. Now this notification is amended to extend the benefit even to second type of license i.e. procurement of inputs under license based on previous export performance. In case the inputs procured under second type of license are used for manufacture and supply of taxable goods (other than nil rated, exempted goods) indigenously, a certificate from CA shall be required to be submitted within six months of such supply.

{NOTIFICATION NO. 01/2019-CENTRAL TAX DATED 15.01.2019}

 

 

 

7. SUPPLIES BETWEEN GOVERNMENT DEPARTMENTS AND PSUS ARE EXEMPT FROM TDS REQUIREMENT:

Notification No. 50/2018-Central Tax dated 13.09.2018 has been issued to notify the provisions of TDS under section 51 of CGST Act, 2017 to Government Bodies, Government Societies and Public Sector Undertakings. This notification is now amended to provide that there is no requirement of TDS in case of exchange of goods or services between such specified Government bodies and Public Sector Undertakings.

 

{NOTIFICATION NO. 73/2018-INTEGRATED TAX(RATE) DATED 31.12.2018}

 

8. POWER CONFERRED ON CBIC TO ASSIGN SPECIFIED CASES TO CHIEF COMMISSIONER/COMMISSIONER:

Notification No. 2/2017-Central Tax dated 19.01.2017 prescribes for jurisdiction of Central Tax officers viz. Principal Chief Commissioner/Chief Commissioner of Central Tax, Principal Commissioner/Commissioner, Commissioner (Appeals) and Additional Commissioner (Appeals), Commissioner (Audit). This notification is now amended to confer specific power on CBIC to assign cases to Principal Commissioner/Commissioner of Central Tax and officers subordinate to him to exercise powers under sections 73, 74, 75 and 76 of CGST Act, 2017 throughout the territorial jurisdiction of corresponding Principal Chief Commissioner/Chief Commissioner

{NOTIFICATION NO.79/2018-CENTRAL TAX DATED 31.12.2018}

 

9. EXTENSION OF TIME PERIOD FOR THE MIGRATED TAXPAYERS WHO RECEIVED PROVISIONAL IDS BUT COULD NOT COMPLETE THE MIGRATION PROCESS:

A Separate procedure has been laid down for the migrated taxpayers who received provisional IDs but could not complete the migration procedure. In connection to the procedure laid down, time limit for furnishing the required documents to jurisdictional nodal officer of the Central Government or State Government is extended till 31^st January 2019. Further, such migrated taxpayers who have received the a new GSTIN and a new access token, are required to submit the basic details (as laid down in notification no. 31/2018 – CT dated 06.08.2018) to the GSTN for mapping the new GSTIN with Old GSTIN. The time limit to submit these details has been extended till 28^th February 2019. 

{NOTIFICATION NO. 67/2018 – CENTRAL TAX DATED 31.12.2018}

10. EXTENSION OF DUE DATE FOR FILING GSTR-3B FOR THE MIGRATED TAXPAYERS:

Central government has extended the due date for filing the GSTR-3B returns from the month of July 2017 to February 2019 till 31^st March 2019.

{NOTIFICATION NO. 68, 69 & 70/2018 – CENTRAL TAX DATED 31.12.2018}

11. EXTENSION OF DUE DATE FOR FILING GSTR-1 FOR THE MIGRATED TAXPAYERS:

Central government has extended the due date for filing the GSTR-1 from the month of July 2017 to February 2019 till 31^st March 2019.

{NOTIFICATION NO. 71 & 72/2018 – CENTRAL TAX DATED 31.12.2018}

 

 

12. WAIVER OF LATE FEE IN RESPECT OF GSTR-1/3B/4 RETURNS FOR THE PERIOD JULY 2017 TO SEPTEMBER 2018:

The amount of late fee payable under section 47 in respect of GSTR-3B/GSTR-1/GSTR-4 returns to be filed for the months of July 2017 to September 2018 shall stand waived if such returns are filed between the period from 22^nd December 2018 to 31^st March 2019.

{NOTIFICATION NO. 75, 76 & 77/2018-CENTRAL TAX DATED 31.12.2018}

13. EXTENSION OF DUE DATE FOR FURNISHING ITC-04 FOR THE PERIOD JULY 2017 TO DECEMBER 2018:

In terms of Rule 45 of CGST Rules, 2017, Principal Manufacturer is required to furnish details of goods sent to job workers and received back from such job workers in FORM GST ITC-04 which is required to be filed on quarterly basis. The due date for furnishing the said return for the period from July 2017 to September 2018 has been extended from 31.03.2018 to 31.03.2019

{NOTIFICATION NO. 78/2018-CENTRAL TAX DATED 31.12.2018}

 

14. EXTENSION OF TIME LIMIT TO AVAIL ITC ON INVOICES/DEBIT NOTES PERTAINING TO FY 2017-18:

As FY 2017-18 is the first year of implementation of GST in India, taxpayers were still in the process of familiarizing themselves with the new tax system and due to lack of said familiarity, the registered persons eligible to avail input tax credit could not claim the same within the stipulated time under section 16(4) because of missing invoices or debit notes. Further, the registered person furnishing details of outward supplies under section 37 could not rectify time any error or omission in the details of outward supplies furnished for FY 2017-18 within the stipulated time under proviso to section 37(3). In view of these reasons, difficulties have arisen in giving effect to time limits specified under the said sections. The present Removal of Difficulty Order has been issued to insert proviso in section 16(4) to allow taxpayer to avail input tax credit of invoices or debit notes pertaining to FY 2017-18 till the due date for furnishing the GSTR-3B for the month of March 2019. Similarly, the present Removal of Difficulty Order has also inserted second proviso to Section 37(3) to extend the time limit to rectify errors or omissions in the outward supply details of FY 2017-18 furnished in GSTR-1 returns till the due date for furnishing GSTR-1 return for the month of March 2019 or January to March 2019 Quarter as the case may be.

 

{ORDER NO. 02/2018- CENTRAL TAX DATED 31.12.2018}

 

15. EXTENSION OF DUE DATE FOR FILING ANNUAL RETURN UNDER SECTION 44(1) FOR THE FY 2017-18:

In view of the reason that electronic system to be developed in GST portal for filing annual return for FY 2017-18 is at advanced stage and is likely to take some more time for being made operational, the due date for filing annual return has been extended from 31^st March 2019 to 30^th June 2019.

{ORDER NO.03/2018-CENTRAL TAX DATED 31.12.2018}

16. CENTRAL GOODS AND SERVICES TAX (FOURTEENTH AMENDMENT) RULES, 2018:

The following are amendments introduced in Central Goods and Services Tax Rules, 2017.

1. Facilitation to E-Com Operator to Register in a State without Physical Presence: Rule 12 has now amended to insert a sub-rule (1A) to facilitate persons required to obtain registration to collect tax under Section 52 (E-Commerce Operators) to register in a State or Union Territory where he does not have physical presence by having a different name of the State or Union Territory in PART A as compared to PART B in FORM GST REG-07 wherein he can mention the State or Union Territory in which the principal place of business is located.
2. Issuance of Electronic Invoice without Affixing Signature or Digital Signature: Rule 46 and 49, 54(2) & 54(4) are amended to insert provisos which provide that there is no requirement to affix signature or digital signature of the supplier or his authorised representative in case of issuance of electronic invoice, electronic bill of supply, consolidated tax invoice or any other document in lieu thereof, ticket in accordance with the provisions of the Information Technology Act, 2000 (21 of 2000).

• Clarification on ‘Adjusted Total Turnover’ & ‘Relevant Period’: Explanation has been inserted in Rule 89(5) to provide that the terms “Adjusted Total Turnover” and “Relevant Period” used in the formula given for refund of ITC accumulated on inputs on account of inverted tax structure shall have same meaning as assigned in Rule 89(4) in connection with refund of accumulated ITC on account of zero-rated supplies.

1. Department Audit can be Conducted for Any Part of a Financial Year: Rule 101 provide that audit by department under section 65 can be carried out for a financial year or multiples thereof. This provision is now amended to enable department to conduct audit even for any part of a financial year.
2. No Requirement to Furnish Details of Goods Sent from One Job Worker to Another in ITC-04: Rule 45(3) has been amended to provide that the details of delivery challan for goods sent from one job worker to another job worker are not required to be disclosed in FORM GST ITC-04.
3. Restriction on Issuance of e-Way bill for Taxpayer Defaulted in Return Filing: A new rule, Rule 138E has been inserted whereby no person (including consignor, consignee, transporter, an e-commerce operator, courier agency) can issue an e-way bill by filling details in Part A of FORM GST EWB 01 in respect of a registered person (whether as supplier or recipient) who has defaulted in furnishing GST returns for a consecutive period of two tax periods,

However, on sufficient cause being shown and for reasons to be recorded in writing, the Commissioner, by order may allow furnishing of the said information in PART A of FORM GST EWB 01, subject to such conditions and restrictions as may be specified by him.

Note: This rule will be effective from a date to be notified later

{NOTIFICATION NO.  74/2018 – CENTRAL TAX DATED 31ST DECEMBER 2018}

 

 

 

 

CIRCULARS

17. GUIDELINES FOR REFUND OF CENTRAL TAXES UNDER SEVA BHOJ YOJNA SCHEME:

The Ministry of Culture has introduced Seva Bhoj Yojna(SBY) scheme with effect from 01.08.2018 under which a financial assistance by way of reimbursement of Central tax and Central Government’s share of Integrated Tax paid on purchase of specified raw food items viz. ghee, edible oil,sugar, burra, jaggery, rice etc used for distributing free food to general public/devotees by charitable/religious institutions like Gurudwaras, temples, Dharmik Ashrams, Mosques, Dargahs, Churches, Math, Monasteries, etc.

It has been clarified that the officers who have been designated as nodal officers for the purpose of facilitating the processing of refund applications for UIN entities as per Circular No. 36/10/2018-GST shall also act as nodal officers for the purpose of claiming these refunds. The details of nodal officer State/Union Territory wise are enclosed in the Circular.

It has been clarified that the above specified institutions shall be first required to register in Darpan Portal of Niti Ayog to obtain unique Id and thereafter register in CSMS portal of Ministry of Culture website www.indiaculture.nic.in. by filing application in prescribed format, upload the requisite documents. The eligible institutions shall be provided with unique enrolment number by the said Ministry. After such enrolment, the eligible institutions are required to file application in Form SBY-01 to obtain unique identity number called SBY-UIN. The same shall be provided in Form SBY-02. Separate UIN is required for each of the State in which the institution have operations as the said taxes are refunded State wise by nodal officers.

The application for refund of said taxes shall be made in SBY-03 for each quarter within six months from the last day of quarter in which purchases are made. It shall be accompanied by self-attested copies of invoices relating purchases made during the quarter, a CA certificate certifying the quantity, price & the amount of taxes paid on purchases, the claimant is engaged in charitable activities for distributing free food to public/devotees etc, conditions specified in guidelines issued by Ministry of Culture are satisfied & reimbursement claimed is not more than the purchases made in the previous corresponding quarter plus a maximum of 2.5%/10% for the current quarter/year as the case may be;

An acknowledgment for receipt of application shall be given in Form SBY-04 within 15 days of receipt of application. The refund order shall be given in Form SBY-05 and the corresponding payment advice shall be sanctioned in Form SBY-06.

{CIRCULAR NO. 75/49/2018 – GST DATED 27.12.2018}

18. CLARIFICATION ON CERTAIN ISSUES RELATING TO GST:
19. Sale of Old Goods by Government Departments to unregistered Persons: With respect to sale of supply of used vehicles, seized and confiscated goods, old and used goods, waste and scrap by Government Departments, it is now clarified for supplies to unregistered persons that such Government Departments are required to register and pay the applicable GST subject to section 22 and 24 of CGST Act. In case of supply to registered persons, GST is payable by such registered persons under reverse charge in terms of Notification No. 36/2017-CT(Rate) & Notification No. 37/2017-IT(Rate) both dated 13.10.2017

 

2017. Penalty for Delay in Payment of Tax Beyond 30 days from Due Date: Section 73(11) provides for penalty equivalent to ten percent of tax or ten thousand rupees whichever is higher, in cases where the self-assessed tax or any amount collected as tax has not been paid within 30 days from the due date for payment of such tax. In this context, it is examined whether penalty under this sub-section can be levied in all the cases where there is delay in filing GSTR-3B return for a month. It is clarified that the provisions of section 73(11) can be invoked only when the provisions of section 73(1) i.e. issuance of SCN for recovery of tax not paid or short paid or recovery of erroneously sanctioned refund are issued. Therefore, the penalty under section 73(11) can be imposed only in cases where SCN is issued to recover the tax amounts and not in every case of delay in filing GSTR-3B return and the corresponding taxes. However, it has been clarified that a general penalty under section 125 shall be imposed in cases of delay in filing GSTR-3B return since tax has been paid late in contravention of provisions of CGST Act, 2017.

 

1. Rate to be Applied for Debit Notes and Credit Notes Issued Under Section 142(2): In cases of any goods or services supplied before the appointed day (01.07.2017) but their prices are revised after the appointed day, a supplementary invoice, debit note, or credit note shall be required to be issued under Section 142(2) of CGST Act, 2017. It is clarified that such supplementary invoice or debit note or credit note shall be issued by applying the rates applicable under GST laws.

 

13. Clarification on Applicability of TDS Provisions: Notification No. 50/2018-CT dated 13.09.2018 has been issued to notify that the provisions of TDS under Section 51 of CGST Act, 2017 are applicable to an authority or body established under any Act of Parliament/State Legislature or established by Government with 50% or more participation by way of equity or control. It has been clarified the condition relating to participation with 50% or more by way of equity or control is applicable to both the cases of authority or body set up by an Act of Parliament/State Legislature or to an authority or body established directly by Central Government. Thus, the provisions of TDS are applicable to bodies established under Act of Parliament/State Legislature or directly established by Government only when Government participation by way of equity or control is 50% or more. If the participation of Government by way of equity or control is less than 50% in any authority or body irrespective of the fact whether they are setup by any Act or otherwise, the provisions of TDS are not applicable.

 

1. Income Tax TCS shall be Included in Taxable Value to Pay GST: It has been clarified that in cases where supply concerned attracts the provisions of TCS under Income Tax Act, 1961, it has been clarified that such TCS amount shall also be considered as value of taxable supply since the value to be paid to the supplier by the buyer is inclusive of said TCS.

 

1. Clarification on Owner of Goods in case of Detention/Seizure: Section 129 of CGST Act, 2017 provides for detention or seizure of goods which are transported or stored during transit in contravention of provisions of the said Act or rules made thereunder. The said section provides that the goods detained or seized shall be released upon payment of applicable tax and penalty as specified by the owner of goods. It is now clarified for the purposes of this section, the owner of goods shall be deemed to be either consignor or consignee if the said goods are accompanied by any invoice or other specified document. If goods are not accompanied by invoice or other specified documents, then the proper officer is required to determine who should be declared as owner of goods.

{CIRCULAR NO. 76/50/2018-GST DATED 31.12.2018}

19. EFFECTIVE DATE FOR WITHDRAWAL OR DENIAL OF COMPOSITION SCHEME:

Composition scheme opted by a tax payer can be withdrawn voluntarily by the tax payer by filing an application in this regard in FORM GST CMP-04. Similarly, in cases, where the proper officer identify that a tax payer has violated the conditions relating to eligibility of composition scheme, he may issue show cause notice for denial of such scheme in FORM GST CMP-05 to which the taxpayer is required to file their reply in FORM GST CMP-06. The proper officer is required to order in FORM GST CMP-07 either accepting the reply of taxpayer or denying the scheme. In this regard, doubts have been raised about the effective date from which the said option should be withdrawn or denied. It is clarified that the effective date for withdrawal of option by tax payer shall be the date indicated by him in FORM GST CMP-04 which shall not be the date prior to financial year in which such application to withdraw from scheme has been made. In case of officers denying the scheme, the denial is effective from the date on which the conditions relating to eligibility of composition scheme are violated as determined by tax authorities.

{CIRCULAR NO. 77/51/2018-GST DATED 31.12.2018}

20. CLARIFICATION ON EXPORT OF SERVICES INVOLVING OUTSOURCING A PORTION OF SERVICE TO PERSON LOCATED OUTSIDE INDIA: Circular has clarified the tax position on export of services undertaken to a recipient located outside India wherein a portion of the services involved are outsourced to a person located outside India. It has been clarified that the value of export undertaken by exporter shall be the entire contract value including the outsourced portion. The position remains same even if the recipient of service located outside India pays a portion of the consideration to the person undertaking such outsourced services if the exporter in India has obtained a general or specific approval to permit that part of the consideration be retained outside India. The outsourced services received by exporter from person located outside India shall be considered as import of services and are subject to GST in the hands of exporter under reverse charge.

{CIRCULAR NO. 78/52/2018-GST DATED 31.12.2018}

21. CLARIFICATION ON APPLICABILITY OF GST ON LATERALS OF SPRINKLER SYSTEM:

Sl.No 195B of Notification No. 1/2017-CT(R) provides that goods of description ‘Sprinklers; drip irrigation system including laterals’ are subject to GST at 12%. Doubts were raised that this entry does not cover “laterals of sprinklers” and “sprinklers irrigation system”, while laterals of drip irrigations are covered by this entry. It has been clarified that ‘sprinklers’ in the said entry covers sprinkler irrigation system. Accordingly, sprinkler system consisting of nozzles, lateral and other components are covered by the said entry and would attract GST at 12%.

{CIRCULAR NO. 81/55/2018-GST DATED 31.12.2018}

22. APPLICABILITY OF GST ON VARIOUS PROGRAMMES CONDUCTED BY THE INDIAN INSTITUTES OF MANAGEMENTS (IIMS):

IIMs are declared as institutions of national importance and are educational institutions with effect from 31^st January 2018 as they provide education as a part of curriculum for obtaining a qualification recognized by law for the time being in force. All long-term duration programs  (one year or more) provided by IIMs are exempt from GST and all short-term duration programs provided by IIMs subject to levy. Prior to 31-01-2018 only three long-term services provided by IIMs are exempt from levy of GST under Sl.No 67 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. For the period from 31-01-2018 to 31-12-2018 two exemption entries under Sl No.66 (exemption applicable to all educational institutions in general) and Sl No.67 (exemption specific to IIMs) of the said notification are available to IIMs and IIMs can avail exemption either of them.

{CIRCULAR NO.82/1/2019 -GST DATED 01.01.2019}

23. APPLICABILITY OF GST ON ASIAN DEVELOPMENT BANK (ADB) AND INTERNATIONAL FINANCE CORPORATION (IFC):

The ADB Act, 1966 and IFC Act, 1958 provides an outright exemption from all the taxation and custom duties.  ADB and IFC are also exempt from any obligation for payment, withholding or collection of any tax or duty. By referring to final order of CESTAT Mumbai in the case of M/s Coastal Gujarat Power Ltd wherein it was held that when enactments that honour international agreements specifically exempts the operations of service provider from taxability, a law contrary to that will not prevail. There is no need for a separate exemption and existing laws enacted by the sovereign legislature of the Union suffice for the purpose of giving effect to such International Agreements.

Accordingly, it is clarified that the services provided by IFC and ADB are exempt from GST in terms of specific provisions of IFC Act, 1958 and ADB Act, 1966. It is also clarified that the exemption will be available only to the services provided by ADB and IFC and not to any entity appointed by or working on behalf of ADB or IFC.

{CIRCULAR NO. 83/02/2019 – GST DATED 01.01.2019}

24. CLARIFICATION ON ISSUE OF CLASSIFICATION OF SERVICES BY WAY OF PRINTING OF PICTURES:

The issue whether services provided by way of printing of pictures is classifiable under 998386— ‘Photographic and Videographic Processing Services’ which attract GST at 18% or under 998912—‘Printing and Reproduction Services of recorded media on a fee or contract basis’ which attract GST at 12% has been examined. It is clarified that explanatory notes to the scheme of classification of services under service code 998386 provides that it includes services of the nature of colour printing of images from film or digital media. Accordingly, the services by way of printing of pictures is classifiable under service code 998386 which attract GST at 18%.

{Circular No. 84/03/2019 – GST dated 01.01.2019}

25. CLARIFICATION ON ISSUE OF CLASSIFICATION OF SERVICES BY WAY OF PRINTING OF PICTURES:

The words “school, college” appearing in Explanation 1 to Entry 7 (i) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 give rise to doubt whether supply of food and drinks by an educational institution to its students is eligible for exemption under Sl. No 66 of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017, which exempts services provided by an educational institution to its students, faculty and staff. It has been clarified that entries in Notification No. 11/2017-Central Tax (Rate) prescribing GST rates on service have to be read together with entries in exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. A supply which is specifically covered by any entry of Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017 is exempt from GST notwithstanding the fact that GST rate has been prescribed for the same under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. Accordingly, services provided by an educational institution by way of supply of food and beverages to its students, faculty and staff is exempt under Sl.No. 66 of Notification No. 12/2017-Central Tax(Rate). However, such supply of food and beverages by any person other than the educational institutions based on contractual agreement with such institution is leviable to GST at 5%.

{CIRCULAR NO. 85/04/2019 – GST DATED 01.01.2019}

26. GST ON SERVICES OF BUSINESS FACILITATOR (BF) OR A BUSINESS CORRESPONDENT (BC) TO BANKING COMPANY:

IT has been clarified that as per RBI guidelines, BF/BC are prohibited to charge any fee from customers for the services rendered by them on behalf of bank. On the other hand, banks are permitted to collect reasonable service charges from the customers for such service undertaken through BF/BC in a transparent manner. Hence, banking company is the service provider to the ultimate customer and is liable to pay GST on the entire value of service charge or fee charged to customers whether or not such services are provided via BF/BC.

{CIRCULAR NO. 86/05/2019 – GST DATED 01.01.2019}

27. CLARIFICATION REGARDING GST RATES & CLASSIFICATION OF CERTAIN GOODS:

This circular has been issued to clarify GST rates and classification of certain goods;

1. GST on Chhatua or Sattu: Chhatua and Sattu is a mixture of flour of ground pulses and cereals. Such flour is improved by way of addition of very small amounts of additives. Such flour is classified under HSN Code 1106 which includes the flour, meal and powder made from peas, beans or lentils. If such flour is supplied by way of unbranded product it attracts NIL rate and if it is supplied as branded product, it attracts GST at 5%.

  

1. GST on Fish meal and other raw materials used for making cattle/poultry/aquatic feed: A number of raw materials such as fish meal falling under heading 2301, meat and bone meal also falling under heading 2301, oil cakes of various oil seeds, soya seeds, bran, sharps, residue of starch and all other goods falling under headings 2302, 2303, 2304, etc are used to manufacture/formulation of, aquatic feed, animal feed, cattle feed, poultry feed etc. These raw materials/inputs cannot be directly used for feeding animal and cattle. It has been clarified that inputs for animal feed are different from the animal feed.

 

It has been clarified that S. No. 102 of Notification No. 1/2017-Central Tax(Rate) covers the prepared aquatic/ poultry/cattle feed falling under headings 2309 and 2301. This entry does not apply to raw material/inputs like fish meals or meat cum bone meal (MBM) falling under heading 2301. Accordingly, it has been clarified that fish meals, meat cum bone meal etc. attract GST at 5% under S.No. 103 in N.N. 1/2017 – CT (R).

 

1. GST on Animal Feed Supplements/feed additives from drugs: With respect to the applicability of GST rate on animal feed supplements and feed additivities, it has been clarified that HSN, 2309 interalia covers reading vitamins and provitamins which improve digestion and, more generally, ensure that the animal makes good use of the feeds and safeguard its health. On the other hand, HS code 2936 coves vitamins and provitamins which are medicinal in nature and have much higher concentration of active substance.

 

Vitamins and provitamins are normally covered under code heading 2936, but if they are prepared as food supplements in the form of tablets, etc, they would not be classifiable under this heading as the way they are presented, they are suitable for a specific use. Heading 2309 would cover items like feed supplements for animals that contain vitamins and other ingredients such as cereals and proteins. These are covered in chapter 23 under heading code 2309, or antibiotic preparations used in animal feeding - for example a dried antibiotic mass on a carrier like cereal middling. The antibiotic content in these items is usually between 8% and 16%. Thus, HS code 2309 would cover only such product, which in the form supplied, are capable of specific use as food supplement for animals and not capable of any general use. If the vitamins, provitamins are supplied in a form in which they are capable of general use, i.e. in the form in which it could be used as inputs or raw materials for further processing, instead of being ready to use, then these would be classifiable under heading 2936.

 

1. GST on Supply of Liquefied Petroleum Gas for Domestic Use:

In case of supply of LPG gas by refiner/fractionator like GAIL and ONGC to an Oil Marketing Company (OMC) for ultimate supply to household domestic customers, Ministry of Petroleum and Natural Gas has given a representation that the said supply was not considered as supply for domestic use by field formations which would deny the benefit of opting for concessional rate of 5% under Sl.No 165A of Notification No. 1/2017-Central Tax (Rate).

 

The circular has clarified that domestic LPG is differentially priced and packed differently from commercial LPG. The usage of LPG for domestic supply is known at the time of supply being made by refiner/fractionators to OMCs. Therefore, LPG supplied in bulk, whether by a refiner/fractionator to an OMC or by one OMC to another for bottling and further supply for domestic use will fall under the Sl.No. 165A of the notification No. 1/2017- Central Tax (Rate) dated 28.06.2017 and shall, accordingly, attract a GST at 5%

 

1. GST on supply of Polypropylene Woven and Non-Woven Bags and PP Woven and Non-Woven Bags laminated with BOPP: It has been clarified that in the context of chapter note to chapter 39, the expression “plastics” means those materials of heading 39.01 to 39.14 which are or have been capable, either at the moment of polymerisation or at some subsequent stage, of being formed under external influence (usually heat and pressure, if necessary with a solvent or plasticizer) by moulding, casting, extruding, rolling or other process into shapes which are retained on the removal of the external influence.  Polypropylene Woven and Non-Woven Bags and PP Woven and Non-Woven Bags laminated with BOPP would be classified as plastic bags under HS code 3923 and would attract GST at 18%. Non-laminated woven bags would be classified as per their constituting materials.

 

1. GST on Supply of Wood Logs for Pulping: It has been clarified that the wood in rough/timber/log is classifiable under heading 4403 and attracts GST at 18%.

 

1. GST on Supply of Bagasse Based Laminated Particle Board: Sl.No 92 of Schedule II to the Notification No. 1/2017-Central Tax (Rate) covers bagasse boards falling under tariff heading 44 or any other chapter which attract GST at 12%. Further, it is also stated the description “Bagasse board” in the said entry also covers Bagasse Board whether plain or laminated.

 

1. Applicability of GST on supply of embroidered fabric sold in three piece for lady suits: Earlier, vide Circular no. 13/13/2017-CGST dated 27th October 2017, it has been clarified that mere packing of fabrics into pieces of different lengths will not change the nature of these goods and such pieces of fabrics would continue to be classifiable under the respective heading as the fabric (chapter 50 to 55 and chapter 60) and attract the GST at 5%. It is now clarified that the clarification of said circular would equally apply to three pieces of fabrics sold in a pack as ladies salwar suit. Any embroidery on a fabric piece or certain embellishment thereon does not change the basic nature of their being a fabric. The chapter 63 covers garment, including the unstitched garments which may or may not be sufficiently completed to be identifiable as garments or parts of garments. However, heading 6307 would not cover a fabric pieces or a set of pre-packed fabric pieces, even if embroidered or embellished. Such set of fabric pieces would be classifiable under respective headings of fabric and attract GST at 5%.

 

 

1. Applicability of GST on supply of Waste to Energy Plant(WTEP): It has been clarified that the goods used in the setting up of waste to energy plants in terms of Sl. No. 234 of Schedule I of Notification No 1/2017 – Central Tax (Rate) will attracts GST at 5%. The said entry covers renewable energy devices & parts for their manufacture. The said entry of the above notification specifically applies only to the goods falling under chapters 84, 85 and 94 of the Tariff. Therefore, this concession would be available only to such machinery, equipment etc., which fall under Chapter 84, 85 and 94 and used in the initial setting up of renewable energy plants and devices including WTEP. This entry does not cover goods falling under other chapters, say a transport vehicle falling under Chapter 87 that may be used for movement of waste to WTEP.

 

It also been clarified that the supplier would self-assess and need to satisfy that the goods falling under chapter 84, 85 and 94 would be used for waste to energy plants by seeking requisite documents from a buyer such as supply contracts/order for WTEP from the concerned authorities before supplying goods to claim concession GST rate of 5% under said entry 234.

 

1. Applicability of GST on supply of Turbo Charger for railways: It has been clarified that, Turbo charger is specifically classified under chapter HS code 8414 80 30. It is stated in the circular that some suppliers are classifying turbo chargers supplied to railways under chapter 86 and paying GST at the rate of 5%. It continues to remain classified under this code irrespective of its use by Railways. Therefore, it is clarified that the turbo charger is classified under heading 8414 and attracts GST at 18%.

 

1. Applicability of GST on Supply of Cranes, Rigs, Tools & Spares and other Machinery when moved from one State to Another by a Person on his Account for their use for Supply of Service: It has been clarified that any inter-state movement of goods for provision of service on own account by a service provider using regular means of conveyance, where no transfer of title in such goods or transfer of goods to the distinct person by way of stock transfer is not involved, does not constitute a supply of such goods. Hence, such movement on own account (not involving distinct person in terms of section 25) is not intended for further supply of such goods does not constitute a supply and would not be liable to GST. Similar clarification was given on interstate movement of rigs, tools & spares and all goods on wheels.

 

{CIRCULAR NO. 80/54/2018 – GST DATED 31.12.2018}

28. CLARIFICATION ON REFUND RELATED ISSUES:

This circular has been issued to clarify the following issues related to refund claims;

15. Option of Submission of Relevant Documents in Electronic Mode: In order to simplify the refund process, it has been prescribed that all documents/undertaking/statements to be submitted along with the claim for refund in Form GST RFD-01A shall be uploaded in common portal at the time of filing refund application. Statement of invoices on which ITC and consequent refund was claimed along with copies of invoices which are not found in GSTR-2A shall also be submitted on common portal at the time of filing refund claim. It is also clarified that taxpayer will still have the option to physically submit the refund application to jurisdictional officer along with supporting documents. A taxpayer whose jurisdiction is not allocated will necessarily have to submit the refund application physically. They can choose to do so before the jurisdictional proper officer of either the State or the Central tax authority, as was earlier clarified vide Circular No. 17/17/2017 - GST dated 15.11.2017.

 

1. Calculation of Refund Amount on Account of Inverted Tax Structure: The circular stated that in serval cases relating to refund on account of inverted tax structure, department officers have denied the refund of ITC of GST paid on those inputs which are procured at equal or lower rate of GST than the rate of GST on outward supply by not including the amount of such ITC while calculating the maximum refund amount specified in Rule 89(5) of CGST Rules. It is clarified that ITC of GST paid on such inputs shall also be considered for refund as the formula provided in rule 89(5) of CGST Rules provide the term ‘Net ITC’ covers ITC availed on all inputs in the relevant period, irrespective of their rate of tax.

 

• Disbursal of Refund Amount after their Sanction: Section 56 of the CGST Act, 2017 clearly states that any tax ordered to be refunded, if not refunded within 60 days of the receipt of application ,interest is payable to claimant at the rate of 6% on the refund amount starting from the date immediately after the expiry of sixty days from the date of receipt of ARN till the date on which the amount is credited to the bank account of the claimant. In view of this obligation to pay interest, all tax authorities are advised to issue the final sanction orders in FORM GST RFD-06 within 45 days of the date of generation of ARN, so that the disbursement is completed within 60 days by both Central and State Tax Authorities for CGST / IGST / UTGST / Compensation Cess and SGST respectively.

 

1. Refund Applications Generated on Common Portal but are not Physically Submitted: There are large number of applications for refund in FORM GST RFD-01A which have been generated on the common portal but have not yet been physically received in the jurisdictional tax offices. In this regard, it is now clarified that all such refund applications in which the amount claimed is less than the statutory limit of Rs. 1000/- should be rejected and amount re-credited to the electronic credit ledger of the applicant. In case of all other applications where physical applications have not been received within 60 days starting from the date of generation of ARN, a communication shall be sent to all such claimants on their registered email ids informing that application needs to be physical submitted to the jurisdictional tax office within 15 days of the date of the email. In case the applicant fails to submit the application within the said 15 days, the application shall be summarily rejected and the debited amount, if any, shall be re-credited to the electronic credit ledger.

 

30. Refund of Compensation Cess: In cases where inputs are subject to compensation cess but output goods exported are not subject to compensation cess, it has been clarified vide Circular 45/19/2018-GST dated 30.05.2018 that refund of accumulated ITC of compensation cess on account of zero-rated supplies made under Bond/Letter of Undertaking is available even if the exported product is not subject to levy of cess. It is now clarified that compensation cess paid on inputs used in the months of July 2017 to May 2018 (prior to clarification by above referred circular) can be claimed as refund in applications filed for subsequent months. However, it is also clarified that this option of claiming refund of compensation cess paid prior to clarification shall not be available in respect of those consignments exported on payment of IGST.

 

1. Refund of ITC of GST Paid on Coal used in Manufacture of Electricity for Captive Consumption in Manufacture of Export Goods (Say Aluminium): It is clarified that there is no distinction between intermediate goods or services and final goods or services under GST. Inputs have been clearly defined to include any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business. Since coal is an input used in the production of aluminium, albeit indirectly through the captive generation of electricity, which is directly connected with the business of the registered person, input tax credit in relation to the same cannot be denied.

 

• Non-consideration of ITC of GST Paid on Invoices of earlier Tax Period availed in Subsequent Tax Period: Instances are identified where officers are denying refund claim of ITC pertaining to those invoices of earlier tax period (say August 2017) availed in subsequent tax period (say September 2017) and accordingly claimed as refund. In this regard, it is clarified that „Net ITC‟ as defined in rule 89(4) of the CGST Rules means input tax credit availed on inputs and input services during the relevant period. Relevant period means the period for which the refund claim has been filed. Input tax credit can be said to have been availed when it is entered into the electronic credit ledger of the registered person through monthly return in FORM GSTR-3B. Further, section 16(4) of the CGST Act stipulates that ITC may be claimed on or before the due date of filing of the return for the month of September following the financial year to which the invoice pertains or the date of filing of annual return, whichever is earlier. Therefore, the input tax credit of invoices issued in earlier tax period (say August, 2017) availed in subsequent tax period (say September, 2017) cannot be excluded from the calculation of the refund amount for the month of September, 2017.

 

• Refund of ITC on Inward Supplies of Stores, Spares, Packing Material etc: For the purpose of sanctioning refund of ITC of GST paid on inward supplies of stores, spares, packing material etc which are not capitalised and charged to revenue in books of accounts, it has been clarified that these are eligible for ITC as inputs if they are used for the business of effecting taxable supplies including zero rated supplies. Accordingly, refund of ITC accumulated on such goods cannot be denied.

 

1. Refund of accumulated ITC on Input Services and Capital Goods arising on account of Inverted Tax Structure: Section 54(3) of the CGST Act, 2017 provides that refund of any unutilized ITC may be claimed where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies other than nil rated or fully exempt supplies. Refund on account of inverted duty structure includes refund only on inputs and excludes input services and capital goods. Section 2(59) of the CGST Act defines inputs as any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business.

{CIRCULAR NO.79/53/2018 -GST DATED 31.12.2018}