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Recent circulars

Stay informed about recent GST circulars regarding government sales, penalties for delayed returns, and tax rates for debit/credit notes. Get insights from SKKA Associates.

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Recent circulars

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  1. Recent circulars

  2. Circular No. & Date: 76/50/2018-GST dated 31st December, 2018 Topic: Sale by Government Departments to unregistered persons Background: Notification No. 36/2017-Central Tax (Rate) and Notification No. 37/2017-Integrated Tax (Rate) both dated 13.10.2017 had notified that intra and inter state supply respectively of used vehicles, seized and confiscated goods, old and used goods, waste and scrap by the Central Govt., State Govt. Union Territory or local authority to any registered person, would be subject to reverse charge basis as per which tax is payable by the recipient of such supplies. A doubt has arisen about taxability of intra-State and inter-State supply of used vehicles, seized and confiscated goods, old and used goods, waste and scrap made by the Central Government, State Government, Union territory or a local authority to an unregistered person. SKKA Comments: Any supply to an unregistered person is a taxable event; however the above is not covered in notification No 36/2018-Centra Tax (Rate) and 37/2018-Integrated Tax(Rate). Hence in such an event, the Govt Department shall be liable to get registered and pay tax under forward charge basis. S. K. Kanodia & Associates

  3. Circular No. & Date: 76/50/2018-GST Dated 27th December, 2018 Topic: Leviability of Penalty u/s 73(11) of the CGST Act in case of delayed filing of return Background: As per the provisions of section 73(11) of the CGST Act, penalty is payable in case self-assessed tax or any amount collected as tax has not been paid within a period of thirty days from the due date of payment of such tax. The provisions of section 73(11) of the CGST Act can be invoked only when the provisions of section 73 are invoked (i.e. where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised for any reason under the provisions of section 73(1) of the CGST Act). It is accordingly clarified that penalty under the provisions of section 73(11) of the CGST Act is not payable in case where there has been a delay in filing of Form 3B. It has been clarified that since tax has been paid late in contravention to the provisions of the GST Act, a general penalty u/s 125 of the CGST Act may be imposed. SKKA Comments: According to the General Penalty clause u/s 125, every registered person shall be liable to pay Rs. 25,000/- under each Act for each default. Hence in the present case, the registered person shall be liable to pay Rs. 25,000/- under each act for each return for which there is a delay in filing. S. K. Kanodia & Associates

  4. Topic: Rate of tax in case of debit note/credit note issued u/s 142(2) of the CGST Act Circular No. & Date: 76/50/2018-GST Dated 27th December, 2018 Background: It may be noted that as per the provisions of section 142(2) of the CGST Act, in case of revision of prices of any goods or services or both on or after the appointed day (i.e., 01.07.2017), a supplementary invoice or debit/credit note may be issued which shall be deemed to have been issued in respect of an outward supply made under the CGST Act. It is accordingly clarified that in case of revision of prices, after the appointed date, of any goods or services supplied before the appointed day thereby requiring issuance of any supplementary invoice, debit note or credit note, the rate as per the provisions of the GST Acts (both CGST and SGST or IGST) would be applicable. SKKA Comments: The circular clarifies that for any credit note/debit note issued for pre GST regime, it shall be deemed that the same has been issued for supplies made in the GST regime and hence the rate of tax shall be same as that of the supply in the GST Regime. S. K. Kanodia & Associates

  5. Topic: Valuation Methodology for ascertainment of GST on Tax collected at source under the provisions of IT Act, 1961 Circular No. & Date: 76/50/2018-GST Dated 27th December, 2018 Background: Section 15(2) of CGST Act specifies that the value of supply shall include “any taxes, duties cesses, fees and charges levied under any law for the time being in force other than this Act, the SGST Act, the UTGST Act and the GST (Compensation to States) Act, if charged separately by the supplier.” It is clarified that as per the above provisions, taxable value for the purposes of GST shall include the TCS amount collected under the provisions of the Income Tax Act since the value to be paid to the supplier by the buyer is inclusive of the said TCS. SKKA Comments: GST shall be levied on the value of Tax Collected at source under the ITC Act at the rate of tax applicable on the goods or service supplied for which tax was being collected. S. K. Kanodia & Associates

  6. Circular No. & Date: 77/51/2018-GST Dated 31st December, 2018 Topic: Denial of Composition option by tax authorities and effective date thereof Background: The notification clarifies: Composition taxpayer shall pay tax under sub-section (1) of section 9 of the CGST Act as a normal taxpayer from the day he ceases to satisfy any of the conditions of the composition scheme and shall issue tax invoice for every taxable supply made thereafter. Registered person who intends to withdraw from the composition scheme shall, before the date of such withdrawal, file an application in FORM GST CMP-04 on the common portal within 7 days from the occurrence of such event. Where the proper officer has reasons to believe that the registered person was not eligible to pay tax under section 10 of the CGST Act or has contravened the provisions of the CGST Act or the CGST Rules, he may issue a notice to such person in FORM GST CMP-05 to show cause as to why the option to pay tax under section 10 of the CGST Act shall not be denied. Upon receipt of the reply to the show cause notice from the registered person in FORM GST CMP-06, the proper officer shall, in accordance with the provisions of sub-rule (5) of rule 6 of the CGST Rules, issue an order in FORM GST CMP-07 within a period of thirty days of the receipt of such reply, either accepting the reply, or denying the option to pay tax under section 10 of the CGST Act from the date of the option or from the date of the event concerning such contravention, as the case may be. It is clarified that in a case where the taxpayer has sought withdrawal from the composition scheme, the effective date shall be the date indicated by him in his intimation/application filed in FORM GST CMP-04. S. K. Kanodia & Associates

  7. Circular No. & Date: 78/52/2018-GST Dated 31st December, 2018 Topic: Clarification on export of services under GST Background: Where an exporter of service appoints a foreign party to provide service to its customer, two transaction occur: Export of service to a foreign country (to satisfy conditions of section 2(6) of the IGST Act) Import of service (Liable for tax to be pain on reverse charge basis) In such a scenario, where the ultimate recipient is paying to the foreign service provider, that portion of the consideration shall also be treated as receipt of consideration for export of services in terms of section 2(6)(iv) of the IGST Act, provided the: IGST has been paid by the supplier located in India for import of services on that portion of the services which has been directly provided by the supplier located outside India to the recipient of services located outside India; and RBI by general instruction or by specific approval has allowed that a part of the consideration for such exports can be retained outside India. SKKA Comments: The clarification has been brought forward to determine the value of the consideration to be taken for the export of service in such cases. The value of consideration shall be the full value including the value remitted to the third party if it is approved by the RBI, thus extending export benefit for the entire value. S. K. Kanodia & Associates

  8. Topic: Clarification on refund related issues: Physical Submission of refund claims with jurisdictional proper officer Circular No. & Date: 79/53/2018-GST Dated 31st December, 2018 Background: The circular has simplified the process of submission of documents to the department: All documents/statements/undertakings shall be submitted online on the common portal. Circular No. 59/33/2018-GST dated 04.09.2018 specified that instead of providing copies of all invoices, a statement of invoices needs to be submitted in a prescribed format and copies of only those invoices need to be submitted the details of which are not found in FORM GSTR-2A for the relevant period. However, the taxpayer will still have the option to physically submit the refund application to the jurisdictional proper officer in FORM GST RFD-01A, along with supporting documents, if he so chooses. The ARN will be generated only after the claimant has completed the process of filing the refund application in FORM GST RFD-01A, and has completed uploading of all the supporting documents. If a refund application is electronically transferred to the wrong jurisdictional officer, he/she shall reassign it to the correct jurisdictional officer electronically within a period of three days. Deficiency memos shall not be issued in such cases merely on the ground that the applications were received electronically in the wrong jurisdiction. SKKA Comments: The circular simplifies the process for application of refund by enabling submission of the documents online. Further, it also states that the application shall be deemed to have been filed under rule 90(2) of the CGST Rules, 2017 on the date of generation of the said ARN and the time limit of 15 days to issue an acknowledgement shall be counted from that date. Accordingly, the acknowledgement for the complete application or deficiency memo, as the case may be, would be issued by the jurisdictional tax officer based on the documents so received electronically from the common portal. S. K. Kanodia & Associates

  9. Topic: Clarification on refund related issues: Calculation of refund amount of ITC for inverted duty structure Circular No. & Date: 79/53/2018-GST Dated 31st December, 2018 Background: For inverted duty structure, refund shall be available in the following manner: i. Suppose a manufacturing process involves the use of an input A (attracting 5 per cent GST) and input B (attracting 18 per cent GST) to manufacture output Y (attracting 12 per cent GST). ii. The refund of accumulated ITC in the situation at (i) above, will be available under section 54(3) of the CGST Act read with rule 89(5) of the CGST Rules, which prescribes the formula for the maximum refund amount permissible in such situations. iii. Further assume that the claimant supplies the output Y having value of Rs. 3,000/- during the relevant period for which the refund is being claimed. Therefore, the turnover of inverted rated supply of goods and services will be Rs. 3,000/-. Since the claimant has no other outward supplies, his adjusted total turnover will also be Rs. 3,000/-. iv. If we assume that Input A, having value of Rs. 500/- and Input B, having value of Rs. 2,000/-, have been purchased in the relevant period for the manufacture of Y, then Net ITC shall be equal to Rs. 385/- (Rs. 25/- and Rs. 360/- on Input A and Input B respectively). v. Therefore, multiplying Net ITC by the ratio of turnover of inverted rated supply of goods and services to the adjusted total turnover will give the figure of Rs. 385/-. vi. From this, if we deduct the tax payable on such inverted rated supply of goods or services, which is Rs. 360/-, we get the maximum refund amount, as per rule 89(5) of the CGST Rules which is Rs. 25/-. SKKA Comments: This clarification has been brought to the departmental officers are denying 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 as specified in rule 89(5) of the CGST Rules. S. K. Kanodia & Associates

  10. Topic: Clarification on refund related issues: Disbursal of refund amounts after sanction Circular No. & Date: 79/53/2018-GST Dated 31st December, 2018 Background: Section 56 of the CGST Act clearly states that if any tax ordered to be refunded is not refunded within 60 days of the date of receipt of application, interest at the rate of 6 per cent (notified vide notification No. 13/2017-Central Tax dated 28.06.2017) on the refund amount starting from the date immediately after the expiry of sixty days from the date of receipt of application (ARN) till the date of refund of such tax shall have to be paid to the claimant. It may be noted that any tax shall be considered to have been refunded only when the amount has been credited to the bank account of the claimant. Therefore, interest will be calculated starting from the date immediately after the expiry of sixty days from the date of receipt of the application till the date on which the amount is credited to the bank account of the claimant. Accordingly, 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. SKKA Comments: The clarification has been brought forward stating that interest will be calculated starting from the date immediately after the expiry of sixty days from the date of receipt of the application till the date on which the amount is credited to the bank account of the claimant. S. K. Kanodia & Associates

  11. Topic: Clarification on refund related issues: Refund applications that have been generated on the portal but not physically received in the jurisdictional tax offices Circular No. & Date: 79/53/2018-GST Dated 31st December, 2018 Background: The following guidelines are laid down for refund where application has been made but no physical submission of documents have been made: All refund applications in which the amount claimed is less than the statutory limit of Rs. 1,000/- should be rejected and the amount re-credited to the electronic credit ledger of the applicant through the issuance of FORM GST RFD-01B. For all applications wherein an amount greater than Rs. 1000/- has been claimed, a list of applications which have not been received in the jurisdictional tax office within a period of 60 days starting from the date of generation of ARN may be compiled. A communication may be sent to all such claimants on their registered email ids, informing that the application needs to be physical submitted to the jurisdictional tax office within 15 days of the date of the email. The contact details and the address of the jurisdictional officer may also be provided in the said communication. The claimant may be further informed that if he/she fails to physically submit the application within 15 days of the date of the email, the application shall be summarily rejected and the debited amount, if any, shall be re-credited to the electronic credit ledger. For the applications generated on the common portal before the issuance of this Circular in relation to refund of excess balance from the electronic cash ledger which have not yet been received in the jurisdictional office, the amount debited in the electronic cash ledger in such applications may be re-credited through FORM GST RFD-01B provided that there are no liabilities in the electronic liability register. SKKA Comments: Guidelines have been laid to clarify the process of refund where application has been filed online but no physical documentation has been submitted to the department. The same process has been discussed above. S. K. Kanodia & Associates

  12. Topic: Clarification on refund related issues: Issue related to refund of accumulated ITC of Compensation Cess (1) Circular No. & Date: 79/53/2018-GST Dated 31st December, 2018 Background: A registered person uses inputs on which compensation cess is leviable to export goods on which no cess is leviable; no ITC availed of such cess. Vide Circular No. 45/19/2018-GST dated 30.05.2018, it was clarified 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. After the issuance of this Circular, the registered person decides to start exporting under bond/LUT without payment of tax. He also decides to avail he ITC of compensation cess, paid on the inputs used in the months of July, 2017 to May, 2018, in the month of July, 2018. How should the amount of compensation cess to be refunded be calculated? In the instant case, refund on account of compensation cess is to be recomputed as if the same was available in the respective months in which the refund of unutilized credit of CGST/SGST/UTGST/IGST was claimed on account of exports made under LUT/Bond. If the aggregate of these recomputed amounts of refund of compensation cess is less than or equal to the eligible refund of compensation cess calculated in respect of the month in which the same has actually been claimed, then the aggregate of the recomputed refund of compensation cess of the respective months would be admissible. S. K. Kanodia & Associates

  13. Topic: Clarification on refund related issues: Issue related to refund of accumulated ITC of Compensation Cess (2) Circular No. & Date: 79/53/2018-GST Dated 31st December, 2018 Background: A registered person uses coal for the captive generation of electricity which is further used for the manufacture of goods (say aluminium) which are exported under Bond/Letter of Undertaking without payment of duty. Refund claim is filed for accumulated Input Tax Credit of compensation cess paid on coal. Can the said refund claim be rejected on the ground that coal is used for the generation of electricity which is an intermediate product and not the final product which is exported and since electricity is exempt from GST, the ITC of the tax paid on coal for generation of electricity is not available? 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. SKKA Comments: Where any intermediate inputs are used for the furtherance of business be it directly or as captive consumption, refund cannot be denied for the same. It shall qualify for refund for export under bond/LUT. S. K. Kanodia & Associates

  14. Topic: Clarification on refund related issues: Refund of accumulated ITC of input service and capital goods on Inverted Duty Structure Circular No. & Date: 79/53/2018-GST Dated 31st December, 2018 Background: Section 54(3) of the CGST Act 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). Further, 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. Thus, inputs do not include services or capital goods. Therefore, clearly, the intent of the law is not to allow refund of tax paid on input services or capital goods as part of refund of unutilized input tax credit. Accordingly, in order to align the CGST Rules with the CGST Act, notification No. 26/2018-Central Tax dated 13.06.2018 was issued wherein it was stated that the term Net ITC, as used in the formula for calculating the maximum refund amount under rule 89(5) of the CGST Rules, shall mean input tax credit availed on inputs during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both. SKKA Comments: In view of the above, it is clarified that both the law and the related rules clearly prevent the refund of tax paid on input services and capital goods as part of refund of input tax credit accumulated on account of inverted duty structure. S. K. Kanodia & Associates

  15. Circular No. & Date: 91/10/2019-GST Dated 18th February, 2019 Topic: Supply of Warehoused goods before clearance from 01st July 2017- 31st march 2018 Background: Circular No 3/1/2018-IGST dated 25.05.2018 clarified that w.e.f1st of April, 2018 the supply of warehoused goods before their clearance from the warehouse would not be subject to the levy of integrated tax. However during the period from 1st of July, 2017 to 31st of March, 2018 (hereinafter referred to as the “said period”), IGST was applicable on the said transaction but due to non-availability of the facility on the common portal, suppliers have reported such supplies as intra-State supplies and discharged central tax and state tax on such supplies instead of integrated tax. Hence to provide one time exception, it has been decided that suppliers who have paid central tax and state tax on such supplies, during the said period, would be deemed to have complied with the provisions of law as far as payment of tax on such supplies is concerned as long as the amount of tax paid as central tax and state tax is equal to the due amount of integrated tax on such supplies SKKA Comments: This Circular brings relief to the bonafide supplier who have discharged CGST and SGST on supply of warehoused goods before clearance during the period July 17-March 18 due to portal constraints. S. K. Kanodia & Associates

  16. Topic: Compliance of Rule 46(n) of the CGST Rules,2017 while issuing invoices in case of inter state supplies Circular No. & Date: 90/09/2019-GST Dated 18th February, 2019 Background: In order to ensure that the tax paid by a registered person accrues to the State in which the consumption of goods or services or both takes place, Circular 90/09/2019-GST instructed that all registered persons making supply of goods or services or both in the course of inter-State trade or commerce shall specify the place of supply along with the name of the State in the tax invoice. Contravention of any of the provisions of the Act or the rules made there under attracts penal action under the provisions of sections 122 or 125 of the CGST Act. SKKA Comments: This circular clarifies the importance of mentioning place of supply on the invoice in order to avoid the penalty which may extend up to the input tax credit availed or passed on or distributed irregularly or Rs 50000/- whichever is higher per invoice. S. K. Kanodia & Associates

  17. Topic: Mentioning details of inter-State supplies made to unregistered persons Circular No. & Date: 89/08/2019-GST Dated 18th February, 2019 Background: A registered supplier is required to mention the details of inter -State supplies made to unregistered persons, composition taxable persons and UIN holders in Table 3.2 of FORM GSTR-3B. Further, the details of all inter-State supplies made to unregistered persons where the invoice value is up to Rs 2.5 lakhs (rate-wise) are required to be reported in Table 7B of FORM GSTR-1. Contravention of any of the provisions of the Act or the rules made there under attracts penal action under the provisions of section 125 of the CGST Act. SKKA Comments: This circular highlights the importance of mentioning Place of supply in case of inter state supply, failure to disclose the same will attract general Penalty upto Rs 50,000/- per invoice. S. K. Kanodia & Associates

  18. Topic: Consequent to the GST Amendment Acts, the following circulars issued earlier under the CGST Act, 2017 are hereby amended with effect from 01.02.2019 Circular No. & Date: 88/07/2019-GST Dated 1 st February, 2019 Background: Circular No. 8/8/2017 dated 04.10.2017 The circular is revised in view of the amendment carried out in section 2(6) of the IGST Act, 2017 vide section 2 of the IGST (Amendment) Act, 2018 allowing realization of export proceeds in INR, wherever allowed by the RBI. Circular No. 38/12/2018 dated 26.03.2018 This circular is revised in view of the amendment carried out in section 143 of the CGST Act, 2017 vide section 29 of the CGST (Amendment) Act, 2018 empowering the Commissioner to extend the period for return of inputs and capital goods from the job worker. Further on account of amendment carried out in section 9(4) of the CGST Act, 2017 vide section 4 of the CGST (Amendment) Act, 2018 done in relation to reverse charge, certain amendments to the Circular are required. S. K. Kanodia & Associates

  19. Topic: Consequent to the GST Amendment Acts, the following circulars issued earlier under the CGST Act, 2017 are hereby amended with effect from 01.02.2019 Circular No. & Date: 88/07/2019-GST Dated 1 st February, 2019 Background: Circular No. 41/15/2018 dated 13.04.2018 This circular is revised in view of the amendment carried out in section 129 of the CGST Act, 2017 vide section 27 of the CGST (Amendment) Act, 2018 allowing 14 days for owner/transporter to pay tax/penalty for seized goods. Circular No. 58/32/2018 dated 04.09.2018 For wrongly availed CENVAT credit under the existing law and inadmissible transitional credit through Table 4(B)(2) of FORM GSTR-3Bmay be discharged by the taxpayers, either voluntarily in FORM GST DRC-03 or may be recovered vide order uploaded in FORM GST DRC-07, and payment against the said order shall be made in FORM GST DRC-03. It is further clarified that the alternative method of reversing the wrongly availed CENVAT credit under the existing law and inadmissible transitional credit through Table 4(B)(2) of FORM GSTR-3B would no longer be available to taxpayers. The applicable interest and penalty shall apply in respect of all such amounts, which shall also be paid in FORM GST DRC-03. S. K. Kanodia & Associates

  20. Topic: Consequent to the GST Amendment Acts, the following circulars issued earlier under the CGST Act, 2017 are hereby amended with effect from 01.02.2019 Circular No. & Date: 88/07/2019-GST Dated 1 st February, 2019 Background: Circular No. 69/43/2018 dated 26.10.2018 The circular is revised in view of the amendment carried out in section 29 of the CGST Act, 2017 vide section 14 of the CGST (Amendment) Act, 2018 allowing suspension of registration. S. K. Kanodia & Associates

  21. Topic:Central Goods and Services Tax (Amendment) Act, 2018- Clarification regarding section 140(1) of the CGST Act, 2017-reg Circular No. & Date: 87/06/2019-GST Dated 2nd January 2019 Background: Attention is invited to sub-section (a) of section 28 of the CGST (Amendment) Act, 2018 (No. 31 of 2018) which provides that section 140(1) of the CGST Act, 2017 be amended with retrospective effect to allow transition of CENVAT credit under the existing law viz. Central Excise and Service Tax law, only in respect of “eligible duties”. In this regard, doubts have been expressed as to whether the expression “eligible duties” would include CENVAT credit of Service Tax within its scope or not. In the captioned circular ,the intention behind the amendment of section 140(1) to include the expression "eligible duties” has been indicated in the “Rationale/ Remarks” column (at Sl. No. 37) of the draft proposals for amending the GST law which was uploaded in the public domain for comments. It is clear that the transition of credit of taxes paid under section 66B of the Finance Act, 1994 was never intended to be disallowed under section 140(1) and therefore no such remark was present in the document. SKKA Comments: This circular brings the clarity with respect to transitional credit of service tax under the definition of eligible duties in relation to the amendment made in sub-section (a) of section 28 of the CGST (Amendment) Act, 2018 which provides that section 140(1) of the CGST Act, 2017 be amended with retrospective effect to allow transition of CENVAT credit under the existing law viz. Central Excise and Service Tax law, only in respect of “eligible duties”. S. K. Kanodia & Associates

  22. Topic: Treatment of sales promotion scheme “ Free samples & gifts” under GST- Reg Circular No. & Date: 92/11/2019-GST dated 7th March,2019 Background: In Common trade parlance, certain trade & Industry distribute free samples & gifts to their dealers, stockists, without charging any consideration. Attention is invited to subclause (a) of sub-section (1) of section 7 of the said Act, the expression “supply” includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. Further, clause (h) of sub-section (5) of section 17 of the said Act provides that ITC shall not be available in respect of goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples. • SKKA Comments: • This Circular clarify that samples which are supplied free of cost, without any consideration, do not qualify as 'supply‟ under GST, except where the activity falls within the ambit of Schedule I of the CGST Act, 2017. • Further, ITC 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. S. K. Kanodia & Associates

  23. Topic: Taxability of “ Buy one get one free offer” under GST- Reg Circular No. & Date: 92/11/2019-GST dated 7th March,2019 Background: Attention is invited to clarify that offers like ‘Buy One, Get One Free’, where one item is being ‘supplied free of cost’ without any consideration is not an individual supply of free goods but a case of two or more individual supply where a single price is being charged for the entire supply. It can at best be treated as supplying two goods for the price of one. • SKKA Comments: • This circular clarifies that taxability 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. • Further, ITC shall be available to the supplier for the inputs, input services and capital goods used in relation to supply of goods or services or both as part of such offers.  S. K. Kanodia & Associates

  24. Topic: Treatment of discounts offers like “ Buy more, save more” under GST- Reg Circular No. & Date: 92/11/2019-GST dated 7th March,2019 Background: Section 15(3) of the CGST Act, 2017 excluded from the transaction value, Pre supply discount if such discount has been duly recorded in the invoice; Post supply discount if agreement is established before or at the time of supply and ITC attributable to discounts has been reversed by the recipient. In commercial parlance, Supplier offers staggered discounts like: Increase in discount rate with increase in purchase volume: Such discounts are shown in the invoice itself; Periodic or year ending discounts: such discounts are passed on by the supplier through credit notes • SKKA Comments: • The clarification has been brought that Discounts offered by the suppliers to customers (including staggered discount under 'Buy more, save more" scheme and post supply / volume discounts established before or at the time of supply) shall be excluded to determine the value of supply provided they satisfy the conditions of sub-section (3) of section 15 of the said Act, including the reversal of ITC by the recipient of the supply as is attributable to the discount on the basis of document (s) issued by the supplier. • Supplier shall be entitled to avail the ITC for such inputs, input services and capital goods used in relation to the supply of goods or services or both on such discounts.  S. K. Kanodia & Associates

  25. Topic: Treatment of secondary discounts under GST- Reg Circular No. & Date: 92/11/2019-GST dated 7th March,2019 Background: Secondary Discounts is discounts which are not known at the time of supply or are offered after the supply is already over, many times credit notes are issues subsequently for such discounts. Section 15(3) of the CGST Act, 2017 excluded from the transaction value Pre supply discount if such discount has been duly recorded in the invoice; Post supply discount if agreement is established before or at the time of supply and ITC attributable to discounts has been reversed by the recipient. Attention is invited to clarify whether credit note u/s 34(1) can be issued even if the conditions laid down in clause (b) of Sub- section (3) of section 15 has not been satisfied. • SKKA Comments: • The clarification has been brought that Credit note(s) can be issued as a commercial transaction between the two contracting parties even though conditions mentioned in clause (b) of sub-section (3) of section 15 are not satisfied.  • However, such secondary discounts shall not be excluded while determining the value of supply as such discounts are not known at the time of supply and the conditions laid down in clause (b) of sub-section (3) of section 15 of the said Act are not satisfied. S. K. Kanodia & Associates

  26. Topic: Nature of Supply of Priority Sector lending Certificates Circular No. & Date: 93/12/2019-GST dated 8th March,2019 Background: Circular No. 62/36/2018-GST dated 12.09.2018 was issued clarifying that GST on PSLCs for the period 1.7.2017 to 27.05.2018 will be paid by the seller bank on forward charge basis and GST rate of 12% will be applicable on the supply. Further, Notification No. 11/2018-Central Tax (Rate) dated 28.05.2018 was issued levying GST on PSLC trading on reverse charge basis from 28.05.2018 onwards to be paid by the buyer bank. Attention is invited to clarify whether IGST or CGST/SGST is payable for trading of PSLC by the banks on e-kuber portal of RBI. • SKKA Comments: • The clarification has been brought that nature of supply of PSLC between banks may be treated as a supply of goods in the course of inter-State trade or commerce. • Accordingly, IGST shall be payable on the supply of PSLC traded over e-Kuber portal of RBI for both periods i.e 01.07.2017 to 27.05.2018 and from 28.05.2018 onwards. However, where the bank liable to pay GST has already paid CGST/SGST or CGST/UTGST as the case may be, such banks for payment already made, shall not be required to pay IGST towards such supply. S. K. Kanodia & Associates

  27. Topic: Valuation Methodology for ascertainment of GST on Tax collected at source under the provisions of IT Act, 1961 Corrigendum to Circular No. 76/50/2018- GST dated 7th March, 2019 Background: Vide serial number 5 of Circular No. 76/50/2018-GST dated 31st December, 2018, it was clarified that the taxable value for the purposes of GST shall include the Tax Collected at Source (TCS) amount collected under the provisions of the Income Tax Act, as the value to be paid to the supplier by the recipient is inclusive of the said TCS. After receiving the representation from the industry and consultation from CBDT, the CBIC has been clarified that the “TCS (Tax Collected at source) is not a tax on goods but an interim levy on the possible “INCOME” arising from the sale of goods by the buyer and to be adjusted against the final income- tax Liability of the buyer. SKKA Comments: The clarification has been brought that For the purpose of calculation of GST on a particular goods, the tax collected at source (TCS) under the Income tax Act 1961, would not be included in the price of the good as the same is an interim levy and to be adjusted against the income tax liability of the buyer. S. K. Kanodia & Associates

  28. Topic: Verification of applications for grant of new registration Circular No.95/14/2019-GSTdated 28th March, 2019 Background: Recently, Large no. of registrations have been cancelled by the proper officer on account of non- compliance of statutory provision. In this regard, instances have come to notice that such persons, who continue to carry on business and therefore are required to have registration under GST, are not applying for revocation of cancellation of registration as specified in section 30 of the CGST Act read with rule 23 of the CGST Rules. Instead, such persons are applying for fresh registration. SKKA Comments: The Clarification is brought that proper officer may exercise due caution while processing the application for registration submitted by the taxpayers, where the tax payer is seeking another registration within the State although he has an existing registration within the said State or his earlier registration has been cancelled. Also, Clarify that not apply for revocation of cancellation of registration along with continuance of the condition specified in clauses (b) and (c) of Section 29(2) shall be deemed to be deficiency. The proper officers are instructed to exercise due caution while processing the new application for registration submitted by the taxpayer where the applicant fails to furnish sufficient convincing justification or the proper officer is not satisfied with the clarification, information or documents furnished, then, his application for fresh registration may be considered for rejection. S. K. Kanodia & Associates

  29. Topic: Clarification in respect of transfer of input tax credit in case of death of sole proprietor – Circular No.96/15/2019-GSTdated 28th March, 2019 Background: Section 18(3) of the CGST Act provides for transfer of ITC under specified circumstances like sale, merger, demerger, transfer of business. 29(1) of CGST Act deals with cancellation of registration and as per sub-clause (a), reason for transfer of business includes “death of the proprietor”. Doubts have been raised whether section 18(3) provides for transfer of ITC which remains unutilized, to the transferee in case of death of the sole proprietor SKKA Comments: The circular clarifies that transfer or change in the ownership of business will include transfer or change in the ownership of business due to death of the sole proprietor. Thus, in case of death of sole proprietor if the business is continued by any person being transferee or successor, the ITC which remains unutilized in the electronic credit ledger is allowed to be transferred to the transferee as per the provisions of CGST Act and in the manner prescribed in the circular i.e by filing FORM GST ITC-02. S. K. Kanodia & Associates

  30. Topic: Clarification regarding exercise of option to pay tax under notification No. 2/2019- CT(R) dt 07.03.2019 – Reg– Circular No.97/16/2019-GSTdated 28th March, 2019 • Background: •  A registered person who wants to opt for composition scheme by availing the benefit of the notification no. 02/2019-CT(R) dated 7th March, 2019, may do so by filing intimation in the manner specified in rule 3(3) of the CGST Rules in FORM GST CMP-02 by selecting the category of registered person as “Any other supplier eligible for composition levy” as listed at Sl. No. 5(iii) of the said form, latest by 30th April, 2019. Such person shall also furnish a statement in FORM GST ITC-03 in accordance with the provisions of rule 3(3) of the CGST Rules. • The option to pay tax by availing the benefit of the said notification would be effective from the beginning of the financial year or from the date of registration in cases where new registration has been obtained during the financial year. • The option of payment of tax by availing the benefit of the said notification in respect of any place of business in any State or Union territory shall be deemed to be applicable in respect of all other places of business registered on the same Permanent Account Number. • The registered person shall issue, instead of tax invoice, a bill of supply as referred to in clause (c) of sub-section (3) of section 31 of the said Act with particulars as prescribed in rule 49 of Central Goods and Services Tax Rules.5 & shall mention the following words at the top of the bill of supply, namely: - ‘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’ S. K. Kanodia & Associates

  31. Topic: Clarification in respect of utilization of input tax credit under GST – Reg. Circular No.98/17/2019-GSTdated 23rd April, 2019 Background: Section 49 was amended & Section 49A and Section 49B were inserted vide CGST (Amendment) Act, 2018. Section 49A of the CGST Act provides that the input tax credit of Integrated tax has to be utilized completely before input tax credit of Central tax / State tax can be utilized for discharge of any tax liability. Further, as per the provisions of section 49 of the CGST Act, credit of Integrated tax has to be utilized first for payment of Integrated tax,then Central tax and then State tax in that order mandatorily. Clarification is required on account of order of utilization of ITC of integrated tax in a particular order, resulting in accumulation of ITC for one kind of tax (say State tax) in electronic credit ledger and discharge of liability for the other kind of tax (say Central tax) through electronic cash ledger. Rule 88A was inserted in the Central Goods and Services Tax Rules, 2017 in exercise of the powers under Section 49B of the CGST Act vide notification No. 16/2019- Central Tax, dated 29th March, 2019. SKKA Comments: Rule 88A clarified utilization of input tax credit of Integrated tax towards the payment of Central tax and State tax, or as the case may be, Union territory tax, in any order subject to the condition that the entire input tax credit on account of Integrated tax is completely exhausted first before the input tax credit on account of Central tax or State / Union territory tax can be utilized. S. K. Kanodia & Associates

  32. Topic: Clarification in respect of filing of application for revocation of cancellation of registration. Circular No.99/18/2019-GSTdated 23rd April, 2019 Background: Registration under GST has been cancelled due to the non-furnishing of return in FORM GSTR-3B or FORM GSTR-4. Section 29(2) of the CGST Act empower the proper officer to cancel the registration either from the date of order of cancellation of registration or from a retrospective date. Section 30(1) empower the registered person whose registration has been cancelled by the proper officer to apply for revocation of cancellation of the registration within 30 days from the date of service of cancellation order. Representations have been received that large number of persons whose registration were cancelled could not apply for revocation of the said cancellation of registration within the period of 30 days. SKKA Comments: RoD no. 05/2019-Central Tax dated the 23rd April, 2019 has been issued wherein persons whose registrations have been cancelled under sub-section (2) of section 29 of the said Act after they were served notice in the manner provided in section clause (c) and clause (d) of sub-section (1) of section 169 of the said Act and who could not reply to the said notice and for whom cancellation order has been passed up to 31st March, 2019, have been given one time opportunity to apply for revocation of cancellation of registration on or before the 22nd July, 2019. Further, vide notification No. 20/2019-Central Tax, dated the 23rd April, 2019, two provisos have been inserted in sub-rule (1) of rule 23 of the CGST Rules 2017. S. K. Kanodia & Associates

  33. Topic: Clarification in respect of GST applicability on Seed Certification Tags-reg. Circular No.100/19/2019-GSTdated 30th April, 2019 Background: CBIC clarifies the applicability of GST on supply of Seed Certification Tags; Explains the steps of processing of seed testing and certification followed in Tamil Nadu prescribed in Seeds Act 1966 and elaborated in Manual on Seed Production and Certification, published by Centre for Indian Knowledge Systems, Chennai includes (i) Application for seed production(ii) Registration of sowing report (iii) Field Inspection (iv) Seed Processing (v) Seed Sample and seed analysis (vi) Tagging and sealing; All the charges, including those for issue of seed certificates/tags by the Seed Certification Agency of Tamil Nadu and Uttarakhand to the seed producing organization/ companies are collected for the composite supply of seed testing and certification, which is exempt under Notification No. 12/2017-Central Tax (Rate) Sl. No. 47 (services by Central/State Governments by way of testing/certification relating to safety of consumers and public at large, required under any law); Clarifies that said clarification would apply to supply of seed tags by seed testing and certification agencies of other states also following similar seed testing and certification procedure; However, supply of seed tags by other departments/manufacturers to State Government/ Seed Certification Agencies is a supply of goods liable to tax, and whether same would be classifiable as tags made of paper or textile would depend upon the predominant material used in the tags: CBIC Circular No. 100/19/2019-GST dated April 30, 2019 S. K. Kanodia & Associates

  34. Topic: Clarification in respect of GST exemption on the upfront amount payable in installments for long term lease of plots Circular No.101/20/2019-GSTdated 30th April, 2019 Background: CBIC clarifies on admissibility of GST exemption on the upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable for long term lease (of thirty years, or more) of industrial plots or plots for development of infrastructure for financial business provided by the State Government Industrial Development Corporations or Undertakings or by any other entity having 50 per cent. or more ownership of Central Government, State Government, Union territory to the industrial units or the developers in any industrial or financial business area.” under Entry No. 41 of Exemption Notification 12/2017 - Central Tax(Rate) SKKA Comments: CBIC clarifies that the said exemption shall be available irrespective of whether such upfront amount is payable or paid in one or more instalments, provided the amount is determined upfront. S. K. Kanodia & Associates

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