Problems in migration in GST, Goods and Services Tax - GST

[Jasbir Uppal]

Dear professionals we are facing problems in migration to G.S.T.

1. A person who is partner in more then one firm and also registered as a taxable service provider in service tax act. He has used his DSC in one firm as a authorized person. But he is also authorized by the partners of the other firm where he is a partner. When we plug his DSC for verification of migration to GST of all these firm the portal is not accepted he DSC because the DSC is already used.
2. In the company case a person other then director is authorized for migration in GST and the resolution of the company has been up loaded on portal during the process of migration. But when we plug his DSC on the site, then asked the DIN no. His DIN no is not be allotted because he is not a director of the company.
3. A dealer who has opted compounding as a trader in VAT and paid compounding fee on his turnover of sale. Can such dealer can claim Input tax credit on the date of informant of G.S.T. i.e. 01.07. 2017.
4. In civil work construction dealers are eligible to take input tax for material consumed for execution of work and adjusted on output tax liability. But in G.S.T. civil work treated as services. Whether such dealers are eligible to take input tax credit on material consumed.

Posts / Replies

[MUKUND THAKKAR]

1. A person who is partner in more then one firm and also registered as a taxable service provider in service tax act. He has used his DSC in one firm as a authorized person. But he is also authorized by the partners of the other firm where he is a partner. When we plug his DSC for verification of migration to GST of all these firm the portal is not accepted he DSC because the DSC is already used.
2. please use E signature in partnership firm. not need to use DSC. for E signature you can use your Addhar number for registration.
3. In the company case a person other then director is authorized for migration in GST and the resolution of the company has been up loaded on portal during the process of migration. But when we plug his DSC on the site, then asked the DIN no. His DIN no is not be allotted because he is not a director of the company.
4. please use authorized person DSC not director.
5. A dealer who has opted compounding as a trader in VAT and paid compounding fee on his turnover of sale. Can such dealer can claim Input tax credit on the date of informant of G.S.T. i.e. 01.07. 2017.
6. credit of eligibility duties and taxes on inputs held in stock to be allowed to a taxable person switching over from composition scheme under vat law .
7. In civil work construction dealers are eligible to take input tax for material consumed for execution of work and adjusted on output tax liability. But in G.S.T. civil work treated as services. Whether such dealers are eligible to take input tax credit on material consumed.
8. No credit in input if works under work contract..

[madina kapoor]

Now one obvious question will be raised as to whether the migration of existing registration into the GST has any legal validity? Section 166 of Revised Model GST law talk about migration of existing taxpayers to GST. According to Sub-section (1) to section 166, after enactment of the GST Act, every person registered under existing law (i.e. Central Excise, Service tax and VAT) and having valid PAN shall be issued a certificate on provisional basis for the period of 6 months. On submission of necessary documents, the registration provided provisionally shall be converted into final registration. Since, CGST, SGST and IGST Acts are yet to pass into the parliament of India and respective State assemblies, there is no legal validity for migration of registration as of now or rather the activity which was started from 8th November 2016 is voluntary and is called as enrollment for migration of registration to GST.

[Naina Bakul]

The Union Cabinet chaired by the Prime Minister has approved the Integrated GST, Central GST, Union Territory GST and GST Compensation bills on March 20, 2017. These four bills will now have to be passed by the Parliament. It is expected that the bills will be introduced in the Parliament early next week as a ‘money bill’ (note that the Rajya Sabha does not have the power to amend or reject money bills and is required to return it to the Lok Sabha within 14 days). Should the July 1, 2017 target for the introduction of GST in India be met, the Parliament will have to pass these bills before the end of the budget session (on April 12, 2017).

Earlier, on March 16, 2017, the GST Council had approved the draft State GST law as well. All States will have to introduce the draft law as a bill before the respective State legislatures. Given that all decisions relating to the model GST laws were taken by consensus at the GST Council (and not by voting), it is hoped that States will adopt the State GST law in letter and spirit, without substantial amendments, in keeping with the ‘one nation one tax’ objective of GST.

Prior to the introduction of GST, a fifth bill will also have to be introduced by the Parliament to amend the existing excise and customs acts for products which will remain outside the purview of the levies of GST (petroleum products).

Once the Parliament and the State legislatures pass the respective bills, the text of the law will be made available to the public at large. Should the GST regime be introduced w.e.f. July 1, 2017, the trade and industry will have minimal time to prepare for the transition. This is a concern that has been voiced while urging that September 1, 2017 should be fixed as the GST go-live date.

Constitution of GST Working Groups

The Ministry of Finance (MOF) has decided to constitute working groups to address certain sector specific concerns which require a closer look. The issues penned down in an office order (F. No. 349/36/2017-GST dated March 24, 2017) issued by the MOF, to be examined are:

1. Services provided between establishments of same entity without invoice or payment in certain sectors with high volumes of transactions with operations spread on a country-wide basis;
2. Compliance challenges for small and medium sector in an automated environment with end-to-end matching of invoices;
3. Issues raised by sectors employing large work force and with vast disparity, e.g., textiles;
4. Special regime in sectors with disproportionate high value with relatively lesser value addition and large number of job workers;
5. Cascading due to the exclusion of certain products from the GST and commitments relating fiscal stability clause in Production Sharing Contracts;
6. Issues due to existing abatements in transport sector together with compliance challenges;
7. Critical infrastructure of the country;
8. Exports, including value addition and manufacturing in domestic tariff area (DTA) for export /EOUs and SEZs;
9. Government services to obtain clarity as to what constitutes a taxable supply for consideration.

The sectors for which working groups are being constituted are the Banking, Financial and Insurance, Telecom, Exports (incl. EOUs and SEZs), IT/ITES, Transport and Logistics, Textiles, MSMEs, Oil and Gas, Gems and Jewellery, and Government services. The working groups are expected to relook into the specified issues, interact with the key industry bodies / associations and suggest ways to overcome the concerns in a report to be presented to the MOF by April 10, 2017.

This will be the opportunity, for industry players to voice concerns directly to the MOF.

Deliberation on proposal of centralized assessment for service industries

As per the draft GST laws, service providers are required to be registered in every State from where services are provided. An option of centralized registration has not been provided, unlike in the present service tax law. Various industries (such as telecom, insurance, banking, IT etc.) along with Government departments voiced concerns over how a decentralised registration system of registration and assessment would prove to be a compliance nightmare for the service sector. For instance, today an insurance company hold a single centralised service tax registration and filed two returns annually. Under GST, an insurance company will have to obtain registration in every State where it provides insurance services, and file thirty seven returns per State annually. Considering these representations, the GST Council is deliberating on the proposal of centralized assessment interface for such service industries. This will potentially reduce the compliance burden on taxpayers operating in these industries.

GST on petroleum products and land

The Finance Minister in the Rajya Sabha yesterday said that the Government is keen to roll out the GST on July 1, 2017. Therefore, the other aspects such as inclusion of petroleum products and land within the ambit of GST will be considered after the first year of implementation of GST.

1% TCS on e-commerce transactions

The draft GST law as approved by the Cabinet contains a provision requiring 1% tax collection at source (TCS) by all e-commerce operators, who operate or manage electronic platforms for e-commerce, from suppliers who use their platform for supplies of goods and/or services. This provision in the draft law has raised concerns as also applause. On one hand, e-commerce operators have expressed that this provision will increase onus, compliance burden and costs on e-commerce operators, since hitherto, e-commerce operators only acted as service providers to suppliers / sellers.

On the other hand, certain large vendors have welcomed this provision. The prices quoted by large vendors are often much higher than those quoted by smaller vendors since large vendors factor in tax costs, whereas many smaller vendors escape tax by depicting that they are under the threshold for registration and tax payment. With this provision, such smaller vendors will be brought out of the woodwork, and will have to be tax compliant, making the prices of large vendors more competitive.

The GST Council has capped TCS at 1%. It was represented that a benign rate should be prescribed to ensure that there is no accumulation of credit in the hands of the suppliers. Whether 1% is benign or not is debatable.