latest circulars, notifications and advance rulings in...

Latest Circulars, Notifications And

Advance Rulings in GST Industry-wise

By:

Advocate Rahul

Lakhwani

Chir Amrit Legal LLP

1© Chir Amrit Corporate School

GENERAL INDUSTRY ISSUES


SALE PROMOTION SCHEMES


In re: Biostadt India Limited (GST AAR Maharashtra)

4

• Applicant engaged in business of developing, manufacturing and distributing crop protection chemicals and hybrid seeds

• Had a contractual agreement to provide gold coins if distributor purchases certain amount of company's product or makes payment in a prescribed manner

Facts:

• Can ITC be claimed by applicant on procurement of Gold coins as ITC

Issue:

• Distribution of gold coins by applicant is nothing but gifts

• Transaction is covered by provisions of section 17(5) and

• Input Tax Credit not allowed as ITC on 'gifts’ is not allowed when GST is not being paid on their disposal

Held:

© Chir Amrit Corporate School

CIRCULAR 92/11/2019- GST dated 7th March, 2019


■ Discussed the credit relating to items given as free under

– Goods given away as free Samples

– ‘Buy one Get one free scheme’ where it is treated as supplying two goods for the price of one

– Buy more Save More Staggered discounts

– Secondary Discounts post sale discount not satisfying 15(3)(b)

■ Taxability of such supply will be dependent upon as to whether the supply is a composite supply or a mixed supply and the rate of tax shall be determined as per the provisions of section 8 of the said Act.

■ input tax credit shall not be available to the supplier on the inputs, input services and capital goods to the extent they are used in relation to the gifts or free samples distributed without any consideration. However, where the activity of distribution of gifts or free samples falls within the scope of ‘supply’ on account of the provisions contained in Schedule I of the said Act, the supplier would be eligible to avail of the ITC.

CSR ACTIVITY CREDIT


In re: Polycab Wires (P.) Ltd. (AAR KERALA)

7

Facts:

• Applicant dealer in electrical goods, cables of all kinds including winding wires, pipes etc. As part of their CSR Activity, they had supplied electrical goods free of cost in two ways:

• Free of cost to Kerala State Electricity Board through their distributors spread across the State for flood victims

• Directly distributed electrical items to flood affected people under CSR expenses for free

• Distributors billed the goods to KSEB and paid GST to Government.

• In the invoice, the distributor had distributors had shown sale value, GST and total amount with 100% discount. Later, distributor would raise claim to the applicant who would reimburse the amount.

Held:

• The distributors billed the goods to Kerala State Electricity Board and paid GST to Government with value shown as discount. They would be entitled for ITC on the goods supplied to KSEB

• As per Sec. 17(5)(h), input tax credit shall not be available in respect of goods lost, stolen, destroyed, written off or disposed by way of gift or free samples. In this case after availing input tax credit, the applicant disposed goods as free supply for CSR activities, Hence, the applicant is liable to reverse the input tax credit already availed


37. (1) Any expenditure (not being expenditure of the naturedescribed in sections 30 to 36 and not being in the nature of capitalexpenditure or personal expenses of the assessee), laid out orexpended wholly and exclusively for the purposes of the business orprofession shall be allowed in computing the income chargeableunder the head "Profits and gains of business or profession".Explanation 1.—For the removal of doubts, it is hereby declared thatany expenditure incurred by an assessee for any purpose which is anoffence or which is prohibited by law shall not be deemed to havebeen incurred for the purpose of business or profession and nodeduction or allowance shall be made in respect of such expenditure.Explanation 2.—For the removal of doubts, it is hereby declared thatfor the purposes of sub-section (1), any expenditure incurred by anassessee on the activities relating to corporate social responsibilityreferred to in section 135 of the Companies Act, 2013 (18 of 2013)shall not be deemed to be an expenditure incurred by the assessee forthe purposes of the business or profession.

© Chir Amrit Corporate School 8

Forms of CSR Expenses


■ Distribution of books, tables, chairs, water bottles or other articles

■ Construction of school, hospital etc.

■ Repair of school, hospital etc.

■ Sponsorship of cultural programs or sports programs

REVERSAL OF CREDIT


In re: M/s. MRF Limited (AAR Tamil Nadu)ITC on credit note from vendors post supply of goods by vendors

11

• Those registered with the platform place a discount offer for either annual percentage rate or a flat discount, to receive early payment.

• MRF was subscribing to an online platform, C2FO to connect buyer with vendors.

Facts:

• Could MRF avail of the ITC on the entire GST charged on the supply of invoice?

• Was proportionate reversal of ITC required if the vendor gave a post-purchase discount?

Issue:

• MRF can avail of the input tax credit only to the extent of the invoice value raised by the suppliers, less the discounts as given by the C2FO software.

• If input tax credit was taken on the full amount, it should reverse the difference Proviso, Section 16: where a recipient fails to pay to the supplier of goods or services or both, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability

Decision:


INVERTED DUTY STRUCTURE


Shree Ram Limes vs UOI…. HC of Rajasthan at Jodhpur JWELL ALLIANCE vs UOI…. HC of Rajasthan Bench Jaipur


• Section 54 (3)(ii) Refund of accumulated inputtax credit

• Section 2(59) definition of term ‘ínput’• Rule 89 (5) of the CGST Rules regarding

calculation of refund of inverted dutystructure

Clarification for Refund in Case of Inverted Duty Rate Structure

Circular No. 79/53/2018-GST

15

In case of inverted duty rate structure refund shall be allowed of the remaining ITC after adjusting output tax liability.

• Refund shall be allowed even if GST on some inputs are equal to or more than Output GST

Refund of input services and capital goods shall not be allowed in case of inverted duty rate structure

• Refund of only inputs shall be allowed

INTEREST ONNON-FILING OF THE

RETURN


Interest on not filing the return


■ M/s Megha Engineerings vs CTO 44517 of 2018 HC of State of Telangana

– Section 50 Interest has to be paid on the amount which remains unpaid

– Section 16 (2) Entitlement to avail input tax credit

– Section 41(2) Credit of input tax credit self-assessed will be available in return

– Section 49(2) Input Tax Credit as self-assessed shall be credited to his electronic cash ledged

– Section 49(4) amount available in the Electronic cash ledger shall be used for making payment of tax

REAL ESTATE


Highlights of New Scheme

Effective GST rate: 5% for non – affordable housing and 1% in case of affordable housing.

Affordable Residential Apartment: means residential apartments with

• carpet area not exceeding 60 sqm in metropolitan cities or

• 90 sqm in other places

• gross consideration <= Rs. 45 lakhs

19


ITC not available

Availed ITC cannot be used for payment of such GST liability.

Optional for the existing projects and mandatory for the new projects.

Option to be exercised by filing the prescribed form on or before 10th May 2019

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IMPACT ON SALE PRICE OF THE PROJECT


Clause in the Agreement


■ “The Total Price is escalation free, save and except increaseswhich the Allottee(s) hereby agrees to pay, due to increase onaccount of development charges payable to the competentauthority and/or any other increase in charges/taxes/levies orintroduction of new charges/levies/taxes which may be leviedor imposed by the competent authority, from time to time. ThePromoter undertakes and agrees that while raising a demandon the Allottee(s) for increase in development charges,cost/charges/taxes imposed by the competent authorities, thePromoter shall enclose the said notification/ order/ rules/regulations to that effect along with the demand letter beingissued to the Allottee(s), which shall only be applicable onsubsequent payments.”

Exclusive GST Contract

▫

23

Particulars Value GST Total

Before 01.04.2019

Cost per sq. ft. of unit

1,200/- 96/- (8%) 1,200/-

Selling Rate per sq. ft. of unit

2,000/- 160/- (8%) 2,160/-

From 01.04.2019


1,200/- 96/- (8%) 1296/-


2,000/- 20/- (1%) 2,020/- OR 2,116/-?

Inclusive GST Contract

▫

24


Before 01.04.2019


1,200/- 96/- (8%) 1,200/-


2,160/- 160/- (8%) 2,160/-

From 01.04.2019


1,200/- 96/- (8%) 1296/-


2,160/- or 2020/-or 2,116/-

20/- (1%) 2,160/- or 2020/-or 2,116/-

CONCEPT OF IMPLIED CONTRACT


Implied Contract

▪ Section 9 of Contract Act: Promises, express and implied▫ In so far as the proposal or acceptance of any promise is made in words, the promise is said

to be express. In so far as such proposal or acceptance is made otherwise than in words,the promise is said to be implied.

▪ Southern Foundries (1926) Ltd v Shirlaw▫ 'Prima facie that which in any contract is left to be implied and need not be expressed is

something so obvious that it goes without saying; so that, if while the parties were makingtheir bargain an officious by-stander were to suggest some express provision for it in theiragreement, they would testily suppress him with a common, 'Oh, of course'.

▪ Section 171 CGST Act: Anti-profiteering measure▫ 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.

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REIMBURSEMENT OF EXPENSES BY LESSEE TO

LESSOR ON ACTUALS


E Square Leisure (AAR Maharashtra)

▪ Supply of uninterrupted electricity through DGand public distribution

▪ Reimbursement of water charges filtered throughRO.

▪ Ruling▫ Nature of other activities is ancillary to the

main supply and hence they are in compositein nature;

▫ No authorization to act as a pure agent

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PLC OTHER CHARGES


Bengal Peerless (AAR West Bengal)

▪ Single consolidated price for constructionservices, car parking and preferential locationcharges.

▪ Ruling▫ Composite supply in terms of section 2(30);▫ Construction service is the Principal Supply

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CREDIT NOTES


Credit Notes in Real Estate on Cancellation

▪ Section 32 provides for issuing credit notes onlyin case goods supplied are returned and forservices the corresponding provision is absent;

▪ FAQ No. 22 issued on 07.05.2019

▪ Manner of presentation in return

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LANDMARK JUDGEMENTS


Saji S. & Ors vs. Commissioner, State GST Department [2018 [19] G.S.T.L. 385]GST Paid under One Head can be Adjusted under Another Head

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• Assessee’s goods detained in transit, tax and penalty paid by the Assessee.

• Paid under the head ‘SGST’ instead of ‘IGST’.

Facts

• Assessee should under the correct head and seek refund of the amount paid wrongly

• Adjustment of the amount would take a few months if carried out by the department.

Department’s contention:

• Department was empowered to adjust the amount of tax paid under one head with the other

• Such adjustment was already allowed between refund amount and other demands under the act. Further inconvenience should not be caused to Assessee.

Held:


Torrent Power Ltd. vs. Union of IndiaEssential Activities having Direct and Close Nexus with Principal Supply will be Covered under Composite Supply

35

Issue: • Levy of GST/service tax on the recovery charges like application fees,

meter rent, testing fees etc. collected by DISCOMS from Consumers.

Circular under challenge:

• Circular No. 34/8/2018-GST dated 01.03.2018 clarifying that GST will be leviable on these charges.

Argument: • These services are ancillary/related to exempted service of

‘Transmission and Distribution of Electricity’

Held:

• These services are essential services required to provide the principle supply of ‘Transmission and Distribution of Electricity’

• These services have direct and close nexus with the principal supply.

• Taxability of such ancillary/ related services will be as per the levy of GST on principal supply and thus will also be exempted


Capro Power Ltd. vs. State of Haryana &

OrsForm-C under CST Act can be

Issued in GST Regime

36

Section 7, CST Act: dealers registered under ‘State sales tax law’ also be required to register under CST Act.

Held:

• Dealers are still registered dealers under section 7, CST Act

• State ‘sales tax law’ will include State GST Act.

• Registration under State GST will be construed as registered under state sales tax law

• Under Section 8, CST Act: Form-C can still be issued for inter-state movement of Petroleum crude; high speed diesel; motor spirit (commonly known as petrol); natural gas; aviation turbine fuel; and alcoholic liquor for human consumption which are used for telecommunication, mining, generation and distribution of electricity or any other form of power


Sheen Golden Jewels (India) Pvt. Ltd. vs. the State of KeralaUpheld validity of VAT assessments after GST rollout

37

Contentions:

States’ power to levy tax on sale of goods came from Entry 54, List II which has been

repealed after 101st Constitutional Amendment Act

All laws inconsistent with GST expired on 16.09.2017 (one year from enactment of

amendment act)

After this date no proceedings under the KVAT Act would be sustainable

Decision:

Deletion of Entry 54 did not take away the power of the State to impose tax

Amendment also introduced Article 246A, which provided for simultaneous sharing of power between the Centre and the States

Kerala GST Act enacted under this power

KGST Act saved the power of the State to initiate or continue adjudication and recovery of any previous taxes due from the Assessees.


Filco Trade Centre Pvt. Ltd vs. Union of India

Struck Down Section 140(3)(iv) of the CGST Act Denying CENVAT Credit on Stock of Goods Purchased Prior to One Year

■ Section 140(3)(iv): first stage dealer could claim credit of eligible duties only for those goods which were purchased twelve months before 01.07.2017.

■ Held:

– benefit of these duties was a vested right of the first stage dealer

– The provision could not curtail this right with retrospective effect

– without any rational or reasonable basis for imposition of the same

■ The provision was struck down as unconstitutional.


Industry Specific Updates

HOSPITALITY


Levy of GST/Service

Tax on License

Fees paid to State Excise department

40

Discussion held in 26th GST Council Meeting dated 08.03.2018

Clarified that GST was not leviable on licence fee for alcoholic liquor for human

consumption

Also applicable on Service Tax/Excise authorities on license fee for alcoholic

liquor in the Pre-GST era i.e. for the period from

01.04.2016 to 30.06.2017.

Based on Circular No. 192/02/2016-Service tax dated 13.04.2016 specifying that service tax is leviable on the on any payment, in lieu of

any permission or license granted by the Government or a local authority.

Department started issuing Show Cause Notices to the Restaurants/ Bars which serves alcoholic liquor for human consumption alleging that they are liable to pay service tax on the license fees paid by them to the State

Excise Department.


Cases on the matter

Delhi High Court

Jagatjit Industries Ltd. vs. UOI [WP 3277/2017]

Sabmiller India Ltd. vs. UOI [WP 4204/2017]

Punjab and Haryana High Court

Divya Singla & Ors. vs. UOI [CWP 12390/2017]

Rajwindra Singh vs. Commissioner, CGST, Jalandhar [CWP 8002/2018]

Orissa High Court

United Spirits Limited vs. UOI [WP (C) No. 9049/2017]

In all the decisions,Hon’ble High Court reliedon the GST CouncilMinutes and MOFCircular No. F. No.336/14/2018-TRU dated31.06.2018 and held thatno GST/ST is leviable onlicense fees collected bythe State ExciseAuthorities.


Reasons for Non-levy

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License fees on alcoholic liquor for human consumption collected by the State Government is in nature of tax and thus, there cannot be tax on tax.

The matter is in relation to Alcoholic Liquor for Human Consumption is regulated by the State Government under Entry 8, 51 and 54 of List II of Seventh Schedule. Thus, no GST/service tax can be levied on the same as it is under State List.

Granting of license is not a business undertaken by the State and is not in furtherance of business, it is rather regulation to control the use of alcohol. It is punitive levy to desist the use of alcohol.

License fee is part of excise revenue of state and there is no quid pro quo involved in provision of license.


In re M/s Kundan Mishthan Bhandar (AAAR Uttarakhand)

Sale of sweets, namkeens, cold drinks and other edible items through restaurant will be treated as ‘composite supply’

• Restaurant supply will be the principal service.

• Existing GST rates on restaurant service will also be applicable on all such sales

• No input credit will be allowed.

Sale of sweets, namkeens, cold drinks and other edible items from sweetshop counter will be treated as supply of goods

• with applicable GST rates of the items being sold

• input credit will be allowed on such supply.

applicant should maintain separate records for restaurant and sweetshop with respect to input and output and billings as well as other accounting records should also be separately maintained


Inner Wheel Clubs of India. (AAAR, WB)


Schedule II lists activities which are to be treated as supply of goods or as supply of services.

Supply of goods by any unincorporated association to a member shall be treated as

supply of goods.

These provisions imply that supply of services by an unincorporated association to

a member shall be treated as supply of services.

'person’ under GST Act includes an association of persons or a body of individuals, whether incorporated or not

Applicant Association supplied services against consideration received in form of subscription and membership fees. Would this be supply?

Bengal Rowing Club (AAR, WB)■ The applicant, a non-profit making company, was engaged in providing its members privileges

and amenities of a club such as swimming facility, gymnasium, indoor games, restaurant service etc.

■ Supply of food, by way of or as part of any service or in any other manner whatsoever, from the applicant's restaurant is classifiable under SAC 9963 and taxable under Sl No. 7(i) or 7(iii) of the Notification No. 11/2017-CT (Rate) dated 28/06/2017 (corresponding State Notification No. 1135-FT dated 28/06/2017), depending upon the criteria mentioned therein.

■ If food is supplied by way of or as part of the services associated with organizing social events at the club premises, together with renting of such premises, it will be classifiable under SAC 9963 and taxable under Sl No. 7(vii) of the above-mentioned rate notification.


CIRCULARS


Verification of applications for grant of new registration

Circular No. 95/14/2019-

GST

For persons who were applying for fresh registrations after revocation of registrations instead of applying for cancellation of revocation

Often, to evade previous tax dues and liability

Cancellation under S. 25(10) of the CGST Act r/w Rule 9 provides for rejection of application for registration if the information submitted is deficient.


■ Proper officer may compare the information pertaining to earlier registrations with

the information contained in the present application

■ Data may be verified on common portal

■ Not applying for revocation of cancellation of registration shall be deemed to be a

“deficiency” within the meaning of Rule 9(2) of the CGST Rules

■ If proper officer finds that

– application for revocation of cancellation of registration has not been filed and

– the conditions specified in section 29 of the CGST Act are still continuing

■ Then officer may reject application for registration in terms of Rule 9 of CGST Rules


■ RODA 23.04.2019 order no 23.04.2019

■ Revocation application can be filed up to

22.07.2019 incase cancellation happened

prior to 31.03.2019


Section 73(11)Penalty on Late Filing of GSTR-3B

52

•Section 73(11): Penalty equivalent to 10% of tax or Rs.10,000/-, whichever ishigher, shall be payable where any amount of self-assessed tax or any amountcollected as tax has not been paid within a period of 30 days from the duedate of payment of such tax.

•Clarification:

•Provision of Section 73 generally not invoked in case of late filing of GSTR-3B as tax along with interest already paid

•Thus, 73(11) penalty not payable in case of late filing of GSTR 3B. However,general penalty under Sec. 125 may be payable.

Section 73: Demand other than fraud etc. cases



Detention & Seizure:Owner of Goods?

Owner of the Goods’ u/s 129?

54

‘If invoice or any other specified document is accompanying the consignment of goods:

•Consignor or Consignee

Other cases:

•Proper officer should determine


Composition Scheme: Effective Date of Denial

56

•Effective date: Date indicated by him in his intimation/application filed in FORM GST CMP-04

•Such date may not be prior to the commencement of the FY in which such intimation/application for withdrawal is being filed.

Taxpayer withdraws from Composition Scheme:

•Effective date: Date, including any retrospective date as may be determined by tax authorities.

•Such date shall not be prior to the date of contravention of the provisions of the CGST Act or the CGST Rules.

Denial of composition by tax authorities in case composition not eligible or in case of any contravention



Transfer of input tax credit in case of death of sole proprietor

Circular No. 96/15/2019-GST■ Section 18 lays out availability of credit in case of special circumstances and transfer of

business with the specific provisions for transfer of liabilities

■ Would it cover the transfer of unutilized credit to the transferee in case of death of the sole

proprietor

■ Clarified that for the purpose of cancellation of registration under the Act, the reason for

transfer of business includes ‘death of proprietor’

■ S. 93(1) states in case the person who is liable to pay tax, interest or any penalty dies then the person who continues the business after his death shall become liable to pay the said dues

■ Since liabilities are transferred the unutilized credit shall also get transferred

■ by filing FORM REF-01 with reason to obtain registration as ‘death of the proprietor’

■ FORM ITC-02 shall be filed by the successor/ transferee with a request for transfer of unutilized input tax credit

■ transferee shall apply for the cancellation of existing registration in FORM REG-16 wherein the

new GSTIN of the transferee shall also be mentioned to link it with the GSTIN of the transferor


ARREST AND BAIL UNDER GST


Sanjay Kumar Bhuwalka VS UOIHIGH COURT OF CALCUTTA

■ Reasonable belief or reason to believe as a standard to arrest requires that arresting officer subjectively believe that the suspect has committed the offence and that objectively reasonable person would reach the same conclusion. Reasonable grounds do not require as much evidence as a prima facie case but do require that thing believed to be more likely than not.

■ It is settled position of law that grant of bail is a rule and rejection of bail is an exception. Maximum punishment provided in the Act is for a term of five years. The accused persons were arrested on 12-5-2018 and investigation has to be concluded within 60 days from the date of arrest as per provision of section 167(2) of Cr. P.C. In view of submission of the opposite party/Union of India investigation is still going on and will take a considerable period of time in conclusion of investigation to submit a final report against the accused petitioners to face the trial in open Court. 60 days period is going to lapse on 10-7-2018 so obviously he would be entitled to statutory bail.


Shravan A. Mehra, Mr. Anil K. Mehra v. Superintendent of Central Tax HIGH COURT OF KARNATAKA ■ On close reading of sections 132, 138 and 139, it is seen that the maximum

punishment provided under the GST Act is five years and fine and if that is taken

into consideration, the magnitude of the alleged offence is not punishable with

death or imprisonment for life. Even as per the said provision, the alleged offence is

also compoundable with the Authority, who has initiated the said proceedings. The

only consideration which the Court has to consider while releasing the petitioners on

anticipatory bail is that whether the petitioners can be secured for the purpose of

investigation or for the purpose of trial. Under such circumstances, the Court feels

that by imposing stringent conditions if the petitioners are ordered to be released on

anticipatory bail, it would meet the ends of justice


Mehul Kheria v. Commissioner, CGST & Central Excise, Indore HIGH COURT OF MADHYA PRADESH ■ The Competent Authority in the course of investigation found that the petitioner and

his partner defrauded Government Exchequer and evaded the GST to the tune of Rs.

3,422.02 lakhs by creating bogus firms. He accordingly arrested the petitioner

under section 69 for the offence punishable under section 132(1)(a), (b) and (c) and

recorded his statement under section 70

■ In view of the fact that the main accused has not been arrested so far, the petitioner

is not entitled for grant of bail.


Vikas Goel v. Central Goods & Services Tax Commissionerate, Gurugram HIGH COURT OF PUNJAB AND HARYANA■ since in instant case evasion of tax involved for more than Rs. 80 crores and offence

was punishable with imprisonment for a period of five years, there was no ground to

grant benefit of regular bail to petitioner - Held, yes - Whether bail petition deserved

to be dismissed - Held, yes

■ Keeping in view the facts and circumstances of the instant case, nature and gravity

of the offence and in view of the fact there were justifiable grounds to arrest the

petitioner under section 69 and further in view of the fact that case involves evasion

of more than Rs. 80 crores of tax and offence is punishable with imprisonment for a

period of five years and complaint is stated to have already been filed, there is no

ground to grant benefit of regular bail to the petitioner.


GST anti-evasion unit asks Tata Sons to pay Rs 1,524 crore

■ Tata Sons is liable to pay 18 percent GST on payment of $1.17 billion to Japanese telecom firm NTT Docomo

■ Tatas settled a three-year-old dispute with NTT Docomo last year, which enabled the Japanese company to exit its 26.5 percent stake in Indian telecom operator Tata Teleservices Ltd

■ tax due has been considered on the payments made to NTT Docomo

■ Settlements between warring business partners frequently have restrictive clauses which could be interpreted as being made in order to tolerate an act or situation.

■ In the pre-GST scenario, under Section 66E (erstwhile service tax law) the consideration arising from an agreement to tolerate an act or situation would attract service tax at the earlier rate of 15 percent . This provision has been continued in the GST law under Para 5 of Schedule II at a charge of 18 percent. Thus the government has considered this tax due


SSI Benefit for Service Providers

Description of Supply: Rate 6%

First supplies of goods or services or both upto an aggregate turnover of Rs. 50 Lakh made on or after the 1st day of April in any financial year, by a registered person.


Registered person Conditions

Aggregate turnover in the preceding FY upto Rs. 50 lakhs

• Not to include value of supply of exempt services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount

Not eligible for Section 10(1)

No non-taxable supply

No inter-state outward supply

Not a a casual taxable person nor a non-resident taxable person

No E-commerce supply

No supply as mentioned in Annexure

Pay ITC on inputs and capital goods same as Section 18(4), Balance ITC will lapse


Other Conditions

Tax on supplies by all the registered persons on such PAN is at 6%

All supplies to be at 6%, no other exemption or rate

RCM at applicable rates

Neither ITC nor collection of tax

Issue Bill of Supply

Mention ‘taxable person paying tax in terms of notification No. 2/2019-Central Tax (Rate) dated 07.03.2019, not eligible to collect tax on supplies’.


Explanation and Rules

For the purposes of this notification, the expression “first supplies of goods or services or both” shall,

•For determining eligibility : Include supplies from the 01st April of a FY to the date from which he becomes liable for registration under the said Act

•But for tax payable: Not include supplies from 01st April of a FY to the date of liable for registration under the Act.

CGST Rules as applicable for Section 10 persons will apply


Circular

FORM GST CMP-02 by 30th April, 2019: Category of registered person as “Any other supplier eligible for composition levy”.

Statement in FORM GST ITC03

Option would be effective from the beginning of the FY or from the date of registration in case of new registration


REGISTRATION EXEMPTION40 LAKHS


Notification No. 10/2019-Central Tax

Any person, who is engaged in exclusive supply of goods and whose aggregate turnover in the financial year does not exceed forty lakh rupees, except

• (a) persons required to take compulsory registration under section 24 of the said Act

• (b) persons engaged in making supplies of the goods as mentioned in annexure

• (c) persons engaged in making intra-State supplies in the States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand

• (d) persons taking registration voluntary, or such registered persons who intend to continue with their registration under the said Act


Valuation:GST on TCS under IT Act

74

GST applicable

ValueTCS

(IT Act)

TCS (IT Act) applicable

Value GST



Export of Service:Convertible Foreign Exchange Short Received


76

Export 100$

Recipient of

Service

Outside

India

India

A

B C

Import of Service

40$

Paid

40$

Main Supplier of

Service

Outsourced

Supplier of

Service© Chir Amrit Corporate School

Refunds

Clarification for Refunds

78

Journey so far….

As per GST law online refund

application has to be filed

• Electronic refund module was not available

Circular 17/17/2017 dt. 15.11.2017

and

Circular 24/24/2017 dt. 21.12.2017

• All documents including the RFD-01A shall be submitted manually

Circular 59/33/2018- GST

dt. 04.09.2018

• Copies of only those invoices shall be submitted manually which are not present in GSTR-2A


79

Refund application along with relevant documents shall be filed electronically

•Manual filing of application is on the discretion of the applicant

Unallocated tax payer has to file refund application manually.

•Refund can be filed by the unallocated tax payer either before the central or the state authorities.

Acknowledgment/ deficiency memo shall be issued on the basis of the electronic application.

•Deficiency memo shall be issued manually

•No deficiency memo shall be issued for filing application before the wrong authority.

Interest shall be paid if the refund is not allowed within 60 days of application (ARN)

•Tax shall be considered to be refunded only when it is credited in bank a/c.



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Intimation shall be sent for the application which are electronically filed but documents not submitted

•If documents not submitted within 15days then application shall be rejected.


Removal of Difficulty Order for Taking Credit of F.Y.17-18 Invoices till 31.03.2019

Order No. 02/2018-CT dt. 31.12.2018

Power given under Section 172 of the Act for removing difficulty exercised

Proviso added to Section 16(4):

• ITC for FY 2017-18 can be taken till due date of furnishing of return underSection 39(GSTR 3) for the month of March 2019.

• Details of respective invoices/DN must be uploaded by supplier in GSTR 1 by due date of filing GSTR 1 for March 2019

82

Amendment in GSTR-1 for the F.Y. 2017-18

Order No. 02/2018-CT dt. 31.12.2018

Proviso also added to Section 37(3):

Any rectification/error/omission in GSTR 1 for FY 2017-18 may be made till due date

of GSTR 1 for March 2019

84

Whether transition credit includes CENVAT credit of service tax

Section 28 of CGST

(Amendment) Act,2018

o In Section 140(1)-CENVAT credit of “eligible

duties” can be carried forward

o Word duties and taxes need to read harmoniously

o No intention to disallow transitional credit of

service tax

o Word “eligible duties” to cover “eligible

duties and taxes” also

o Linking of Section 140(1) to explanation 1

and 2 not to be notified

o No transition of credit of cesses allowed as

per explanation 3 added to Section 140 vide

Section 28(d) of CGST Amendment Act,

2018


Amendments in CGST Rules, 2017 vide N.No.74/2018-Central Tax (Rate)

Requirement of Signature over Documents

Computer Generated Invoices■ Rule 46: Tax Invoice.■ Subject to rule 54, a tax invoice referred to in section 31 shall be issued

by the registered person containing the following particulars, namely,-■ (a) name, address and Goods and Services Tax Identification Number of

the supplier; ■ (b) a consecutive serial number not exceeding sixteen characters, in one

or multiple series, containing alphabets or numerals or special characters hyphen or dash and slash symbolised as ―-‖ and ―/‖ respectively, and any combination thereof, unique for a financial year;

■ (c) date of its issue; ■ *** ■ (p) whether the tax is payable on reverse charge basis; and

89

(q) signature or digital signature of the supplier or hisauthorized representative:


***Provided also that a registered person may not issue a tax invoice in accordance with theprovisions of clause (b) of sub-section (3) of section 31 subject to the following conditions,namely,-(a) the recipient is not a registered person; and(b) the recipient does not require such invoice, andshall issue a consolidated tax invoice for such supplies at the close of each day in respect of allsuch supplies.

91

Provided also that the signature or digital signature of the supplier or his authorisedrepresentative shall not be required in the case of issuance of an electronic invoice inaccordance with the provisions of the Information Technology Act, 2000 (21 of 2000).

Similar amendments has been made in the following documents

93

Rule 49

• Electronic Bill of Supply

01Rule 54(2)

• Consolidated Tax Invoice issued by an insurer or a banking company or a financial institution, including a non-banking financial company,

02Rule 54(4)

• Tickets issued by the person providing the passenger transportation services

03


No Return = E-Way Bill = No Movement of Goods

Insertion of Rule 138E

95

Rule 138E: Restriction on furnishing of information in PART A of FORM GST

EWB-01.

Notwithstanding anything contained in sub-rule (1) of rule 138, no person (including a consignor, consignee,transporter, an e-commerce operator or a courier agency) shall be allowed to furnish the information in PART Aof FORM GST EWB-01 in respect of a registered person, whether as a supplier or a recipient, who,—

(a) being a person paying tax under section 10, has not furnished the returns for two consecutive tax periods; or

(b) being a person other than a person specified in clause (a), has not furnished the returns for a consecutiveperiod of two months:

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

Insertion of Rule 138E

96

Provided further that no order rejecting the request of such person to furnish the information in PART A ofFORM GST EWB 01 under the first proviso shall be passed without affording the said person a reasonableopportunity of being heard:

Provided also that the permission granted or rejected by the Commissioner of State tax or Commissioner ofUnion territory tax shall be deemed to be granted or, as the case may be, rejected by the Commissioner.

Explanation:– For the purposes of this rule, the expression ―Commissioner shall mean the jurisdictionalCommissioner in respect of the persons specified in clauses (a) and (b).

Consequences for Non-Filing of Returns

97

Return for two consecutive tax periods not filed

Information in Part A of E-Way Bill cannot be furnished

Movement of goods cannot be done

Amendments in Services Exemption Notification i.e. N.N. 12/2017- Central Tax (Rate) w.e.f. 01.01.2019

GST UPDATES■ The due dates for furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover upto Rs. 1.5

crores for the months of April, May and June 2019 has been notified as 31st July 2019 vide Notification No. 11/2019-Central Tax dated 07.03.2019 issued by the CBEC.

■ The due dates for furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of more than Rs. 1.5 crores for the months of April, May and June 2019 has been notified as 11th of the month subsequent to the return period for all the monthly taxpayers vide Notification No. 12/2019-Central Tax dated 07.03.2019 issued by the CBEC.

■ The due dates for the monthly GSTR-3B for the periods April 2019 to June 2019 has been notified as 20th of the month subsequent to the return period for all the monthly taxpayers vide Notification No. 13/2019-Central Tax dated 07.03.2019 issued by the CBEC.

■ The limit to opt for the composition scheme has been increased from Rs 1 crore to Rs 1.5 crore with effect from 1st April 2019 vide Notification No. 14/2019-Central Tax dated 07.03.2019 issued by the CBEC.

■ The due date for furnishing of FORM GST ITC-04 in respect of goods dispatched to a job worker or received from a job worker, during the period from July 2017 to March 2019 is extended till the 30th June 2019 vide Notification No. 15/2019-Central Tax dated 28.03.2019 issued by the CBEC.

■ 18/2019-Central Tax ,dt. 10-04-2019 extend the due date for furnishing FORM GSTR-7 for the month of March, 2019 from 10.04.2019 to 12.04.2019 18/2019-Central Tax ,dt. 10-04-2019

■ 17/2019-Central Tax ,dt. 10-04-2019 extend the due date for furnishing FORM GSTR-1 for taxpayers having aggregate turnover more than Rs. 1.5 crores for the month of March, 2019 from 11.04.2019 to 13.04.2019


IMPLICATION ON REAL ESTATE & OTHER ISSUES

IN GST (AMENDMENTS)


Notifications and other material

101

NN No. Amended Sections Gist

03/2019-CT(Rate)

,dt. 29-03-2019

N No. 11/2017 -

CT (Rate)

9(1), (3),(4), 11(1), 15(5) , 16(1) & 148

New rates for Real estate sector, ITC calculation

04/2019-CT(Rate)

,dt. 29-03-2019

N No. 12/2017 -

CT (Rate)

Section 11(1) Exemption to DR+FSI and LT Lease for residential apartments

05/2019-CT(Rate)

,dt. 29-03-2019

N No. 13/2017 -

CT (Rate)

Section 9(3) RCM services: DR+FSI and LT Lease (upfront + periodic)

06/2019-CT(Rate)

,dt. 29-03-2019

NA Section 148 Time of supply for DR+FSI, Upfront LT Lease and

Construction service to land owner agst DR+FSI

07/2019-CT(Rate)

,dt. 29-03-2019

NA Section 9(4) notify certain services to be taxed under RCM under section

9(4) of CGST Act as recommended by

08/2019-CT(Rate)

,dt. 29-03-2019

N No. 1/2017-

CT (Rate)

Section 9(1) and 15(5)

notify CGST rate of certain goods as recommended by

Goods and Services Tax Council for real estate sector.

16/2019-CT ,dt. 29-

03-2019

CGST Rules Section 164 Input tax credit and others with forms

Order No. 4/2019 –

CT

ROD Section 172 Credit attribution on area basis of the area of the construction

RATE CHANGE OR BUSINESS CHANGE!!



Effective GST rate: 5% for non – affordable housing and 1% in case of affordable housing.

Affordable Residential Apartment: means residential apartments with

• carpet area not exceeding 60 sqm in metropolitan cities or

• 90 sqm in other places

• gross consideration <= Rs. 45 lakhs

103


ITC not available

Availed ITC cannot be used for payment of such GST liability.

Optional for the existing projects and mandatory for the new projects.

Option to be exercised by filing the prescribed form on or before 10th May 2019

104

Impact areas on project in Transition and New

Input tax credit (‘ITC’)

Cost of projects

Anti-profiteering

Procurement contracts

Contracts/ agreements

with customers

IT/ERP systems etc.

Project wise analysis

105

IMPACT ON SALE PRICE OF THE PROJECT


Exclusive GST Contract

▫

107


Before 01.04.2019


1,200/- 96/- (8%) 1,200/-


2,000/- 160/- (8%) 2,160/-

From 01.04.2019


1,200/- 96/- (8%) 1296/-


2,000/- 20/- (1%) 2,020/- OR 2,116/-?

Inclusive GST Contract

▫

108


Before 01.04.2019


1,200/- 96/- (8%) 1,200/-


2,160/- 160/- (8%) 2,160/-

From 01.04.2019


1,200/- 96/- (8%) 1296/-


2,160/- or 2020/-or 2,116/-

20/- (1%) 2,160/- or 2020/-or 2,116/-

CONCEPT OF IMPLIED CONTRACT


Implied Contract

▪ Section 9 of Contract Act: Promises, express and implied▫ In so far as the proposal or acceptance of any promise is made in words, the promise is said

to be express. In so far as such proposal or acceptance is made otherwise than in words,the promise is said to be implied.

▪ Southern Foundries (1926) Ltd v Shirlaw▫ 'Prima facie that which in any contract is left to be implied and need not be expressed is

something so obvious that it goes without saying; so that, if while the parties were makingtheir bargain an officious by-stander were to suggest some express provision for it in theiragreement, they would testily suppress him with a common, 'Oh, of course'.

▪ Section 171 CGST Act: Anti-profiteering measure▫ 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.

110

REAL ESTATE TRANSACTIONS


Real Estate Transactions

1. Sale of land

2. Supply of rights

arising out of land

3. Supply of real estate

beforecompletion

4. Supply of real estate

after completion

112

CONSTRUCTION SERVICE


Definitions

Project

• Real Estate Project or a Residential Real Estate Project

Real Estate Project:

• the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartment, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common areas, the development works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto;

Residential Real Estate Project:

• REP in which the carpet area of the commercial apartments is not more than 15 per cent of the total carpet area of all the apartments in the REP;

114

Affordable Residential Apartment

a) Residential apartment in a project which commences on or after 1st April, 2019, or is an ongoing project

• Not exercised option of entry (ie) or (if)

• Carpet area <=60 sqmtr in metropolitan cities or <=90 sqmtr in cities or towns other than metropolitan cities

• Gross amount charged is <= 45 lakhs rupees

b) An apartment being constructed in an ongoing project under any of the existing schemes, where the option of (ie) and (if) has not been exercised

115

80IBA v/s GST

Carpet Area

• IT : 30 & 60 sqmt

• GST: 60 & 90 sqmt

Metro Cities

• IT: 4 metro

• GST: 4 metro + Bengaluru, Hyderabad, NCR

116

Ongoing Project &Project which commences on or after 1st

April, 2019

Commencement certificate issued & certified by any of the authorities specified that construction of the project has started

Completion certificate has not been issued or first occupation of the project

Apartments being constructed under the project have been, partly or wholly, booked on or before the 31st March, 2019

117

Residential and Commercial Apartment

▪ Residential: an apartment intended for residential use as declared to the RERA

▪ Commercial: Other than residential

118

Commencement certificate

▪ The commencement certificate or the building permit or the construction permit,by whatever name called issued by the competent authority to allow or permitthe promoter to begin development works on an immovable property, as per thesanctioned plan.

119

IDENTIFY PROJECT!!Case Studies


Identify Project!!

▪ Multistorey Ltd. has a plot of land admeasuring 6000 sqmt. It had planned to construct 2 towerson it in 2 phases. Phase 1, Construction has been started in January 2018 for first tower, whichis under construction as of now. Phase 2, Construction of Second tower will start in January2020.

▪ How many projects are there?

121

Rates

122

RATES


Rate Summary

Rea

l Est

ate

Pro

ject

Commercial

RREP

7.5%

Other REP 18%

Residential

New Project

Affordable RREP & REP 1.5%

Other than affordable RREP & REP 7.5%

On-going Project

Affordable

Option 12%

Default 1.5%

Other REP

Option 18%

Default 7.5%124

CONDITIONS FOR NEW RATES


Conditions for New RatesTax to be paid through cash ledger

Attribution of ITC (Annexure I and Annexure II)

Pay ITC attributable to time of supply of construction which is on or after 1st April, 2019

Promoter shall maintain project wise account of inward supplies from RD and URD

ITC not availed shall be reported every month by reporting the same as ineligible credit in GSTR-3B [Row No. 4 (D)(2)].

126

CONDITION OF 80% PROCUREMENT


Conditions for New Rates

80% of value of input and input services used in supplying the service shall be received from RD only

80% excludes

• services by way of grant of dev. rights,• L.T. lease of land or FSI,• electricity,• high speed diesel,• motor spirit,• natural gas]

inputs and input services on which tax is paid on RCM basis shall be deemed to have been purchased from RD

128

Conditions for New Rates: Pay under RCM

Cement

• 28% GST under RCM wherecement is received from an URD[Calculate and pay every month]

Other Inputs and input services

• 18% GST under RCM on shortfallfrom 80% value [Calculate andpay after end of FY before nextquarter end (Prescribed Form)]

Capital Goods (RCM Notification)

• Applicable GST under RCM oncapital goods

129

Illustration: 1

130

Illustration 2

131

DEVELOPER & LAND OWNER CONDITION


Major Types of Development Agreements

Revenue Sharing

Area Sharing

Area Transfer

133

Developer Condition w.e.f. 01.04.2019• Developer shall pay tax on

supply of construction of apartments to the landowner

Tax

• Total amount charged for similar apartments in the project from the independent buyers nearest to the date of Joint Development Agreement less 1/3rd for land value.

Value

• Date of issuance of completion certificate or on its first occupation.

TOS

134

Land owner Condition w.e.f. 01.04.2019

• Landowner shall be eligible for ITC of taxes charged by the developer

ITC

• Further supplies such apartments before issuance of completion certificate or first occupation, whichever is earlier

Time limit

• Pays tax amount >=• Amount of tax charged from

him

Tax Amt.

135

RATE OF TAX FOR CONTRACTORS


Composite supply of works contract

Affordable residential apartments commencesfrom 01.04.2019 or an ongoing project other than(ie) or (if): 12% rate

• Carpet area of affordable residential apartments>= 50% of Total carpet area of all apartments

• Value for affordable residential apartment: Value of similar apartments booked nearest to the date of signing of the contract for supply of such service shall be adopted

• If finally carpet area of affordable residential apartments less than 50%: Promoter to pay differential tax (18%-12%)

137

DEVELOPMENT RIGHTS/ LT LEASE


Are Development Rights taxable?

‘Land’ includes rights in or over land, benefits to arise out of land.

Adverse Advance Ruling of Sri Patrick BernardinzD'sa22

Transfer of development rights are already subject to stamp duty

139

RCM for Promoter [Sec. 9(3)/5(3)]

1. Transfer of development rights or FSI for construction of a project by a promoter.

2. LT lease of land (30 yrs or more) for upfront amount and/or periodic rent for construction of a project by a promoter.

140

Exemption for DR/LT Lease

Transfer of DR/Upfront amount for LT Lease on or after 01.04.2019 for construction of residential apartments

Amount of exemption: Proportion of carpet area of residential & commercial apartments

No exemption in respect of apartments remain un-booked on the date of issuance of completion certificate/first occupation

RCM amount not to exceed 1%/5% for said un-booked apartments

141

REVERSAL IN CASE OF SALE OF UNITS POST

COMPLETION


Removal of Difficulty OrderNow, attribution of Credit b/w taxable and exempt supply based on area of construction.

Earlier, as per Section 17 of the CGST Act i.e. yearly ITC to be attributed.

143

CASE STUDIES


Questions▪ Whether all the apartments in a project has to satisfy the condition of affordable

housing in order to avail the concessional effective rate of 1% on the affordableresidential apartment?

▪ Whether the Landlord be eligible to avail input tax credit on the construction services which are taxable at the effective of rate of 1% and 5% in an on-going project?

▪ Whether a sub-contractor or any other person who is only providing construction services and is not involved in sale can claim the above concessional rates of tax?

145

Gross Amount Charged

▪ Mr. C (builder) sells a residential apartment to Mr. D(before obtaining CC) at Rs.40 lakhs (excluding GST). He charges an additional amount towards preferentiallocation charges.

▪ Comment on GST rate if:▫ Case 1: Preferential charges constitute Rs. 2.75 lakhs▫ Case 2: Preferential charges constitute Rs.8 lakhs

146

COMPUTATION OF REVERSAL


E-WAY BILLCASE LAWS


GATI KINTETSU EXPRESS PVT. LTD. vs COMMR. OF COMMERCIAL TAX

■ Mandatory for transporter to file Part B of E-way Bill disclosing all details including vehicle number before goods are loaded in vehicle, and penalty for not doing so rightly imposed


MODERN TRADERS vs. STATE OF U.P. (2018 (14) G.S.T.L. 184 (All.))

■ Goods can’t be seized if e-Way Bill is produced after interception but before passing of seizure order, where tax has already been paiD


RIVIGO SERVICES PVT. LTD. vs STATE OF U.P. [2018 (14) G.S.T.L. 177 (All.)]

■ Until and unless the goods/vehicle reached at the place of transport company from where it was required to be transported to its ultimate destination, it was not possible to fill up the details of vehicle when admittedly the details are not known or available to the consignor or the Driver


TORQUE PHARMACEUTICALS PVT. LTD.VersusSTATE OF U.P. 2018 (12) G.S.T.L. 119 (All.)

■ The movement of goods from Baddi to Gorakhpur and also from Derabassi to Gorakhpur, was on two different vehicles via Chandigarh, hence while uploading the details, the petitioner though tried to mention the numbers and details of both set of vehicles but since the portal was not accepting two vehicle numbers for one transaction, the petitioner has no option but to mention the subsequent vehicle number by hand.

■ Held: No irregularity by assessee or transport company since Assessee had no option but to mention details of subsequent vehicle by hand.
