RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

Moody’s have now lowered India’s growth rate forecast to 5.8% from 6.2% for the current fiscal 2019-20, on Indian economy experiencing slowdown. It feels that the drivers of the deceleration are multiple, mainly domestic and in part long-lasting. It expects growth to pick up again to 6.6% in Financial Year 2011. Recently, Reserve Bank of India also lowered the growth expectation to 6.1%.

MOF has planned to commence next year’s budget exercise from 14^th October, 2019, with meetings with various stakeholders keeping in mind the ongoing economic slowdown and not so good revenue collections and revised budget estimates. The estimates for 2020-21 will be provisionally finalized.

Central Government has set up a Committee to recommend changes in law and procedures needed to augment goods and Service Tax revenue. This also indicates that Government is open to revisit and overhaul the indirect tax system led by GST. It has been asked to submit its first report within 15 days to GST Council. The suggestions shall be to carry out systemic changes in GST including check and balances to prevent misuse, measures to improve voluntary compliances, policy measures and relevant changes needed in the law, measures for expanding tax base, better compliance monitoring, anti-evasion measures using better data analytics and better administrative coordination. It has also been decided that a Committee of Officers from centre and states is required to suggest steps to be taken to improve revenue collection.

CBIC has issued Notification Nos. 44 to 49-Central Tax, all dated 09.10.2019 prescribing inter alia, due dates for furnishing forms GSTR-3B and GSTR-1, making filing of Form GSTR-9 optional for financial year 2017-18 and 2018-19 for assessees having aggregate turnover upto ₹ 2 crore in a financial year and waiver of late fees for assessees in J & K state for late filing of Forms GSTR-1, GSTR-3B and GSTR-7 for the months of July and August, 2019. Certain rules have also been amended in relation to ITC, extension of date for filing Form TRAN-1 and TRAN-2 upto 31.12.2019 and 31.01.2020 etc respectively.

CBIC has also recently issued three Circulars Nos. 111, 112 and 113, all dated 03.10.2019 to clarify on eligibility to file a refund application for a period and category under which NIL refund application has already been filed; Procedure to claim refund subsequent to favourable order in appeal or any other forum; and withdrawal of Circular No. 105 dated 28.06.2019 on discounts and incentives. Further, Circular No. 113 to 121,  all dated 11.10.2019 have been issued to clarify on various issues of rate and taxability.

Gist of GST Notifications issued on October 9, 2019

CBIC has issued six Notifications Nos. 44 to 49, all dated October 9, 2019, gist of which is as follows :

1. Due Dates of furnishing Form GSTR-3B and Form GSTR-1 for the period October, 2019 to March, 2020

• Due dates specified for furnishing monthly returns in Form GSTR-3B for each of the months from October, 2019 to March, 2020 (Notification No. 44/2019-Central Tax):

Month	Due Date
October, 2019	November 20, 2019
November, 2019	December 20, 2019
December, 2019	January 20, 2020
January, 2020	February 20, 2020
February, 2020	March 20, 2020
March, 2020	April 20, 2020

• Due dates specified for furnishing the details of outward supplies in Form GSTR-1 for registered persons having aggregate turnover of up to ₹ 1.5 crore in the preceding or current financial year, for the last two quarters of the F.Y. 2019-20 (Notification No. 45/2019-Central Tax)  

Quarters	Due Date
October, 2019 to December, 2019	January 31, 2020
January, 2020 to March, 2020	April 30, 2020

• Due dates specified for furnishing the details of outward supplies in Form GSTR-1 for registered persons having aggregate turnover of more than ₹ 1.5 crore in the preceding or current financial year, for each of the months from October, 2019 to March, 2020 (Notification No. 46/2019-Central Tax)

Month	Due Date
October, 2019	November 11, 2019
November, 2019	December 11, 2019
December, 2019	January 11, 2020
January, 2020	February 11, 2020
February, 2020	March 11, 2020
March, 2020	April 11, 2020

2. Filing of annual return in Form GSTR-9 on or before the prescribed due date for F.Y. 2017-18 and F.Y. 2018-19 has been notified as optional for registered persons with aggregate turnover in F.Y does not exceed ₹ 2 crore (Notification No. 47/2019-Central Tax).

3. Late fees waived off for the registered persons having principal place of business is in the State of Jammu & Kashmir when Form GSTR-1, Form GSTR-7 and Form GSTR-3B have been furnished for the months of July, 2019 and August, 2019 on or before the following dates (Notification No. 48/2019-Central Tax):

Type of Return	July, 2019	August, 2019
GSTR-1(Turnover more than ₹ 1.5 crores)	October 11, 2019	October 11, 2019
GSTR-7	October 10, 2019	October 10, 2019
GSTR-3B	October 20, 2019	October 20, 2019

4. CBIC has amended Central Goods and Services Tax (Sixth Amendment) Rules, 2019, which inter alia, include the following amendments. (Notification No. 49/2019-Central Tax):

•  Total unmatched credit cannot exceed 20% of ITC available in GSTR 2A
• Form GST DRC-01A has been prescribed for intimation of tax ascertained by Proper Officer as payable in fraud and non-fraud cases
• Due date of furnishing FORM GST TRAN-1 and FORM GST TRAN-2 has been extended to December 31, 2019 and January 31, 2020 respectively in respect of registered persons who could not submit the said declaration by the due date on account of technical difficulties on the common portal and in respect of whom the Council has made a recommendation for such extension.

Gist of GST Circulars issued on October 3, 2019

1. Clarification on eligibility to file refund application in Form GST RED-01 for period and category under which a NIL refund application has already been filed.

A registered person who has filed a NIL refund claim in FORM GST RFD-01A/RFD-01 for a given period under a particular category, may again apply for refund for the said period under the same category only if he satisfies the following two conditions:

1. The registered person must have filed a NIL refund claim in FORM GST RFD-01A/RFD-01 for a certain period under a particular category; and
2. No refund claims in FORM GST RFD-01A/RFD-01 must have been filed by the registered person under the same category for any subsequent period.

In all other cases, registered persons shall be allowed to re-apply even if the condition (b) is not satisfied

(Source: Circular No. 110 / 29/2019-GST dated 03.10.2019)

2. Clarification on procedure for claiming refund in Form GST RFD-01 arising out of favourable order in appeal or any other Forum :

In case a favourable order is received by a registered person in appeal or in any other forum in respect of a refund claim rejected through issuance of an order in FORM GST RFD-06, the registered person would file a fresh refund application under the category “Refund on account of assessment/provisional assessment/appeal/any other order” claiming refund of the amount allowed in appeal or any other forum. Since the amount debited, if any, at the time of filing of the refund application was not re-credited, the registered person shall not be required to debit the said amount again from his electronic credit ledger at the time of filing of the fresh refund application under the category “Refund on account of assessment/provisional assessment/appeal/any other order”. The registered person shall be required to give details of the type of the Order (appeal/any other order), Order No., Order date and the Order Issuing Authority. The registered person would also be required to upload a copy of the order of the Appellate or other authority, copy of the refund rejection order in FORM GST RFD 06 issued by the proper officer or such other order against which appeal has been preferred and other related documents.

Upon receipt of the application for refund under the category “Refund on account of assessment/provisional assessment/appeal/any other order” the proper officer would sanction the amount of refund as allowed in appeal or in subsequent forum which was originally rejected and shall make an order in FORM GST RFD 06 and issue payment order in FORM GST RFD 05 accordingly.

(Source: Circular No. 111 / 30 /2019-GST dated 03.10.2019)

3. Withdrawal of Circular No. 105/24/2019-GST dated 28.06.2019.

 Circular No. 105/24/2019-GST dated 28.06.2019 clarifying taxability of secondary or post sales discounts under GST has been with draws ab initio to ensure uniformity in the implementation of provisions of law.

(Source: Circular No. 112 / 31/2019-GST dated 03.10.2019)

Gist of GST Circulars issued on October 11, 2019

1. Clarification regarding GST rates & classification of goods

• Classification of leguminous vegetables when subjected to mere heat treatment.

Leguminous vegetables which are subjected to mere heat treatment for removing moisture, or for softening and puffing or removing the skin, and not subjecting to any other processing or addition of any other ingredients such as salt and oil, would be classified under HS code 0713. Such goods if branded and packed in a unit container would attract GST at the rate of 5% [S. No. 25 of notification No. 1/2017- Central Tax (Rate) dated 28.06.2017]. In all other cases such goods would be exempted from GST [S. No. 45 of notification No. 2/2017- Central Tax (Rate) dated 28.06.2017].

However, if the above dried leguminous vegetable is mixed with other ingredients (such as oil, salt etc) or sold as namkeens then the same would be classified under Sub heading 2106 90 as namkeens, bhujia, chabena and similar edible preparations and attract applicable GST rate.

• Classification and GST rate on almond milk

Almond milk is classified under the residual entry in the tariff item 2202 99 90 and attract GST rate of 18%.

• GST rate on mechanical sprayer

 Vide notification No. 6/2018- Central Tax (Rate), dated 25th January, 2018, GST at the rate of 12% was prescribed (entry No. 195B I Schedule II of notification No. 1/2017-Central Tax (Rate) dated 28.6.2017) Simultaneously, mechanical sprayers were excluded from the ambit of the S. No. 325 of Schedule III.

It is clarified that the S. No. 195B of the Schedule II to notification No. 1/2017- Central Tax (Rate), dated 28.06.2017 covers “mechanical sprayers” of all types whether or not hand operated (like hand operated sprayer, power operated sprayers, battery operated sprayers, foot sprayer, rocker etc.).

• Taxability of imported stores by Indian Navy

It is clarified that imported stores for use in navy ships are entitled to exemption from GST.

• Exemption of goods imported under lease
• GST rate on parts for the manufacture of solar water heater and system

 It is clarified that parts including Solar Evacuated Tube falling under chapter 84, 85 and 94 for the manufacture of solar water heater and system will attract 5% GST.

• GST on parts and accessories suitable for use solely or principally with medical device

Parts of ophthalmic equipment suitable for use solely or principally with an ophthalmic equipment should be classified with the ophthalmic equipment only and shall attract 12%.

It is clarified that 12% IGST would be applicable on the parts and accessories suitable for use solely or principally with a medical device falling under heading 9018, 9019, 9021 or 9022 in terms of Chapter note 2 (b).

(Source: Circular No. 113 / 32/2019-GST dated 11.10.2019)

2. Clarification on scope of support services to exploration, mining or drilling of petroleum crude or natural gas or both.

 (Source: Circular No. 114 / 33/2019-GST dated 11.10.2019)

3. GST on Airport levies

 The airport operators shall pay GST on the Passenger Service Fees (PSF) and User Development Fees (UDF) collected by them from the passengers through the airlines. Since, the airport operators are collecting PSF and UDF inclusive of ST/GST, there is no question of their not paying ST/GST collected by them to the Government.

The collection charges paid by airport operator to airlines are a consideration for the services provided by the airlines to the airport operator (AAI, DAIL, MAIL etc) and airlines shall be liable to pay GST on the same under forward charge. ITC of the same will be available with the airport operator.

(Source: Circular No. 115 / 34/2019-GST dated 11.10.2019)

4. Levy of GST on the service of display of name or placing of name plates of the donor in the premises of charitable organisations receiving donation or gifts by individual donors.

When the name of the donor is displayed in recipient institution premises, in such a manner, which can be said to be an expression of gratitude and public recognition of donor’s act of philanthropy and is not aimed at giving publicity to the donor in such manner that it would be an advertising or promotion of his business, then it can be said that there is no supply of service for a consideration (in the form of donation). There is no obligation (quid pro quo) on part of recipient of the donation or gift to do anything (supply a service). Therefore, there is no GST liability on such consideration.

(Source: Circular No. 116 / 35/2019-GST dated 11.10.2019)

5. Applicability of GST exemption to the DG Shipping approved maritime courses conducted by Maritime Training Institutes of India

The Maritime Institutes are educational institutions under GST Law and the courses conducted by them are exempt from levy of GST. The exemption is subject to meeting the conditions specified at Sl. No. 66 of the notification No. 12/ 2017- Central Tax (Rate) dated 28.06.2017.

(Source: Circular No. 117/ 36/2019-GST dated 11.10.2019)

6. Determination of place of supply in case of software/design services related to Electronics Semi-conductor and Design Manufacturing (ESDM) industry.

It is clarified that the place of supply of software/design by supplier located in taxable territory to service recipient located in non-taxable territory by using sample prototype hardware / test kits in a composite supply, where such testing is an ancillary supply, is the location of the service recipient as per Section 13(2) of the IGST Act. Provisions of Section 13(3)(a) of IGST Act do not apply separately for determining the place of supply for ancillary supply in such cases.

(Source: Circular No. 118/ 37/2019-GST dated 11.10.2019)

7. Taxability of supply of securities under Securities Lending Scheme, 1997.

For the past period i.e. from 01.07.2017 to 30.09.2019, GST is payable under forward charge by the lender and request may be made by the lender (supplier) to SEBI to disclose the information about borrower for discharging GST under forward charge. The nature of tax payable shall be IGST. However, if the service provider has already paid CGST / SGST / UTGST treating the supply as an intra-state supply, such lenders shall not be required to pay IGST again in lieu of such GST payments already made.

With effect from 1st October, 2019, the borrower of securities shall be liable to discharge GST as per Sl. No 16 of Notification No. 22/2019-Central Tax (Rate) dated 30.09.2019 under reverse charge mechanism (RCM). The nature of GST to be paid shall be IGST under RCM.

(Source: Circular No. 119/ 38/2019-GST dated 11.10.2019)

8. Clarification on the effective date of explanation inserted in notification No. 11/2017- CTR dated 28.06.2017, Sr. No. 3(vi).

It is clarified that the explanation having been inserted under section 11(3) of the CGST Act, is effective from the inception of the entry at Sl. No. 3(vi) of the notification No. 11/2017- CTR dated 28.06.2017, that is 21.09. 2017.

(Source: Circular No. 120/ 39/2019-GST dated 11.10.2019)

9. GST exemption on license fee charged by the States for grant of Liquor licences to vendors

This special dispensation applies only to supply of service by way of grant of liquor licenses by the State Governments as an agreement between the Centre and States and has no applicability or precedence value in relation to grant of other licenses and privileges for a fee in other situations, where GST is payable.

(Source: Circular No. 121/ 40/2019-GST dated 11.10.2019)

Discussions to this article

[Ganeshan Kalyani]

The wording in the notification providing 20% restriction on input tax credit seems not logical in the sense that 20% of inputs populated in GSTR 2A is the criteria to avail credit on the missed invoice. The restriction should be on each invoice. If the invoice is not in 2A report then 20% of the GST on that invoice should be allowed. This will be easier for the tax payer to keep track on the invoice and follow up the supplier.

[Ganeshan Kalyani]

Extra credit is now made available to the tax payer by prescribing the airlines to mention the GST part on PSF and UDF. Otherwise , these figures has GST component included in it. In short , gst on these two component was not separately shown in the invoice.

[Ganeshan Kalyani]

Parts of ophthalmic equipment suitable for use solely or principally with an ophthalmic equipment should be classified with the ophthalmic equipment only and shall attract 12%. The principal adopted to classify the spare in the HSN of the main machine may be adopted to classify the spares of other machines the parts of which are not mentioned specifically in the rate notification.

[Dr. Sanjiv Agarwal]

Seen your comments, Sir.

CBIC leaves some room for professonals to interpret and advise.