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TMI BlogRECENT GST CLARIFICATIONS – PART 6X X X X Extracts X X X X X X X X Extracts X X X X ..... RECENT GST CLARIFICATIONS – PART 6 - By: - Dr. Sanjiv Agarwal - Goods and Services Tax - GST - Dated:- 29-8-2024 - Post 53rd GST Council meeting held on 22.06.2024 , CBIC has issued 23 Circulars bearing Nos. 207 to 229 , all dated between 26.06.2024 and 15.07.2024 clarifying taxability, place of supply, time of supply etc on various issues relating to goods and services. This Part-6 of the Article offers the gist of Circular No. 224 , 225 and 226 which are on the following topics: Circular No. / date In relation to Circular No. 224/18/2024-GST dated 11.07.2024 Recovery of GST dues in cases under Appeal Circular No. 225/19/2024-GST dated 11.07.2024 Taxability and Valuation of Services of Corporate Guarantee Circular No. 226/20/2024-GST dated 11.07.2024 Refund of additional IGST paid due to price revision of exports Recovery of GST dues in cases under Appeal - Circular No. 224/18/2024-GST dated 11.07.2024 CBIC has issued guidelines for recovery of outstanding dues, in cases wherein first appeal has been disposed of, till Appellate Tribunal comes into operation. These relate to cases where the first appellate authority has confirmed the demand created by the adjudicating authority, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fully or partially, and where appeal against such order of appellate authority could not be filed under section 112 of CGST Act due to non constitution of Appellate Tribunal (GSTAT) as yet. As per Section 112 of the CGST Act, 2017 every person has statutory remedy of appeal against the order passed by the First Appellate Authority or by a Revisional Authority, before the Tribunal. As per section 78 of CGST Act, 2017 , the recovery proceedings are to be initiated, if the amount payable as per the order issued is not paid by the concerned person within the said period of three months from the date of service of the impugned order. Further, if any person files an appeal in accordance with the requirement of sub-section (8) of section 112 of the CGST Act (i.e., on payment of prescribed pre-deposit), the recovery proceedings for the balance amount is deemed to be stayed till disposal of the appeal as per section 112(9) of the CGST Act, 2017 . Since appeal can not be filed before Tribunal presently, pre-deposit is also not possible and as such revenue is seeking recovery of tax dues as per section 78 of the CGST Act, 2017 . In order to pay pre-deposit and stay from recovery of demand, CB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IC has clarified that in cases where the taxpayer decides to file an appeal against the order of the appellate authority and wants to make the payment of the amount of pre-deposit as per section 112(8) of CGST Act, 2017 he can make the payment of an amount equal to the amount of pre-deposit by navigating to Services Ledgers Payment towards demand, from the dashboard. The amount so paid would be mapped against the selected order and demand amount would be reduced in the balance liability in the aforesaid register. The said amount deposited by the taxpayer will be adjusted against the amount of pre-deposit required to be deposited at the time of filing appeal before the Appellate Tribunal. The taxpayer should also file an undertaking/ declaration with the jurisdictional proper officer that he will file appeal against the said order of the appellate authority before the Appellate Tribunal, as and when it comes into operation, within the timelines On providing the said undertaking and on payment of an amount equal to the amount of pre-deposit as per the procedure, the recovery of the remaining amount of confirmed demand as per the order of the appellate authority will stand stayed as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er provisions of section 112(9) of CGST Act, 2017 . In case the taxpayer does not make the payment of the amount equal to amount of pre-deposit or does not provide the undertaking/ declaration to the proper officer, then it will be presumed that taxpayer is not willing to file appeal against the order of the appellate authority and in such cases, recovery proceedings can be initiated as per the provisions of law. When the Tribunal comes into operation, if the taxpayer does not file appeal within the timelines specified in Section 112 of the CGST Act read with Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 , the remaining amount of the demand will be recovered as per the provisions of law. Some taxpayers have already paid amounts that were intended to have been paid towards a demand, through FORM GST DRC-03 . In such cases, taxpayers can file an application in FORM GST DRC-03A , electronically on the common portal, and the amount so paid and intimated through the FORM GST DRC-03 shall be adjusted as if the said payment was made towards the said demand on the date of such intimation through FORM GST DRC-03. In cases where the concerned tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payer has paid an amount that was intended to have been paid towards a particular demand through FORM GST DRC-03 , has submitted an application in FORM GST DRC-03A on the common portal, the amount so paid and intimated through the FORM GST DRC-03 will be considered as if the payment was made towards the said demand on the date of such intimation through F ORM GST DRC-03 . The amount so paid shall also be liable to be adjusted towards the amount required to be paid as pre-deposit under Section 107 and Section 112 of the CGST Act , if and when the taxpayer files an appeal against the said demand, before the appellate authority or the appellate tribunal, and the remaining amount of confirmed demand as per the order of the adjudicating authority or the appellate authority, as the case may be, will stand stayed as per provisions of section 107(6) and section 112 (9) of CGST Act, 2017 . If the taxpayer does not file appeal within the timelines prescribed in Section 107 and Section 112 of the CGST Act , as the case may be, read with Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 , the remaining amount of the demand will be recovered as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of law. It may be noted that application in FORM GST DRC-03A for adjustment of demand liability against the payment through FORM GST DRC-03 cannot be made in cases where against the payment made through the said FORM GST DRC-03 , proceedings have already been concluded by issuance of an order in FORM GST DRC-05 as per the Rule 142(3) of CGST Rules, 2017 . Till the time the functionality for filing of application in Form DRC-03A is made available on the portal, taxpayer may intimate the proper officer about the same, and on such intimation, the proper officer may not insist on recovery for the remaining amount payable by the concerned taxpayer, till the time such functionality of FORM GST DRC-03A is made available on the portal. Once the functionality of FORM GST DRC-03A is made available on the portal, the concerned taxpayer may file an application in FORM GST DRC-03A on the common portal at the earliest, and on doing so, the amount paid vide FORM GST DRC-03 may be adjusted against the pre-deposit under section 107 or section 112 of the CGST Act, 2017 . In case the taxpayer fails to file an application in FORM GST DRC-03A on the common portal, the proper officer may proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed to recover the amount payable as per provisions of section 78 and section 79 of CGST Act, 2017 . Taxability and Valuation of Services of Corporate Guarantee - Circular No. 225/19/2024-GST dated 11.07.2024 CBIC has issued clarification on various issues pertaining to taxability and valuation of supply of services of providing corporate guarantee between related persons. Rule 28(2) of Rule 28 of CGST Rules has been amended retrospectively with effect from 26.10.2023 vide notification No. 12/2024 dated 10th July 2024 . CBIC clarifications inter alia , cover the following: Supply of service of providing corporate guarantee to any banking company or financial institution by a supplier to a related recipient, on behalf of the said recipient, was taxable even before the insertion of rule 28(2)(3) of CGST Rules with effect from 26th October, 2023. If the corporate guarantee is issued or renewed on or after 26th October 2023, then the valuation of the said supply will be required to be done as per Rule 28(2) of CGST Rules. Value of supply of the service of providing a corporate guarantee will be calculated based on the amount guaranteed and will not be based on the amount of loan actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly disbursed to the recipient of the corporate guarantee. Recipient of the service of providing corporate guarantee shall be eligible to avail the ITC, subject to other conditions irrespective of when the loan is actually disbursed to the recipient, and irrespective of the amount of loan actually disbursed. If the loan issued by the banking company/ financial institution is taken over by another banking company/ financial institution, the said activity of taking over of the loan does not fall under the service of providing corporate guarantee to any banking company or financial institution by a supplier to a recipient. In such cases, there will be no impact on GST, unless there is issuance of fresh corporate guarantee or there is a renewal of the existing corporate guarantee. If the takeover of the loan is followed/ accompanied by issuance of fresh corporate guarantee, then GST would be payable on the same. In cases where corporate guarantee is being provided by multiple related entities, the value of such services of providing corporate guarantee shall be the sum of the actual consideration paid/ payable to co-guarantors, if the said amount of total consideration is higher than on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e per cent of the amount of such guarantee offered. Where the sum of the actual consideration is less than one per cent of the amount of such guarantee offered, then GST shall be payable by each co-guarantor proportionately on one per cent of the amount guaranteed by them. In cases where such guarantee is provided by the foreign/ overseas entity for a related entity located in India, then GST would be payable under reverse charge mechanism, by the recipient of service, i.e., the related entity located in India. Value of supply of the service of providing corporate guarantee to a banking company or a financial institution on behalf of a related recipient shall be one per cent of the amount guaranteed per annum or the actual consideration, whichever is higher. The value of supply of the service of providing corporate guarantee to a banking company or a financial institution on behalf of a related recipient for a particular number of years shall be one per cent of the amount of such guarantee offered multiplied by the number of years for which the said guarantee is offered or the actual consideration whichever is higher. Where the corporate guarantee is provided for a period less than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a year, say 6 months (half a year), then in those cases as well, the valuation may be done on proportionate basis for the said period. If a corporate guarantee is issued, say for a period of one year and is renewed five times, for a period of one year each, then tax would be payable on one per cent of the amount of such guarantee offered, or the actual consideration, whichever is higher, on the issue of such corporate guarantee in the first year as well as on every renewal in subsequent years. In cases involving the supply of service of corporate guarantees provided between related persons, where full input tax credit is available to the recipient of services, the value declared in the invoice shall be deemed to be the value of supply of the said service. The provisions of the rule 28(2) will not apply in cases where the recipient of the services of providing corporate guarantee between related persons is located outside India. Accordingly, the provisions of the said sub-rule shall not apply to the export of the services of providing corporate guarantee between related persons. Refund of additional IGST paid due to price revision of exports - Circular No. 226/20/2024-GST dated 11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07.2024 CBIC has issued a mechanism for refund of additional Integrated Tax (IGST) paid on account of upward revision in price of the goods subsequent to exports. Presently, where there is upward revision in price of goods subsequent to exports, the exporter is required to pay additional IGST on account of upward price revision along with applicable interest but there exists no mechanism or procedure for allowing them to claim refund of such additional IGST paid. The refund of IGST paid on account of export of goods is processed by the proper officer of Customs in an automated manner without manual intervention in terms of provision of rule 96 of Central Goods and Services Tax Rules, 2017. Exports, by the proper officer of customs. Therefore, it has been decided that such exporter may file an application for refund of such additional IGST paid in FORM GST RFD-01 electronically on the common portal and such application for refunds would be processed by the jurisdictional GST officer of the concerned exporter. CGST Rules have been amended vide Notification No. 12/2024-CT dated 10.07.2024 to provide for filing of such refund application in FORM GST RFD-01 , which shall be dealt with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per rule 89 of CGST Rules . As per section 54(14) of the CGST Act, 2017 , no such refund shall be paid if the amount claimed is less than one thousand rupees. As per Rule 89(1B), application for refund of additional IGST paid can be filed before the expiry of two years from the relevant date as per clause (a) of Explanation (2) of section 54 of the CGST Act . Where relevant date is before 10.07.2024, refund application can be filed before the expiry of a period of two years from the date on which the said sub-rule has come into force. Documents to be accompanied with refund claim to establish that refund is due to exporter: Copy of shipping bill or bill of exports; Copy of original invoices; Copy of contract/ other document(s), as applicable, indicating requirement for the revision in price of such goods subsequent to exports; Copy of the original invoices as well as relevant debit note(s)/ supplementary invoices; Proof of payment of additional IGST and applicable interest and details of the relevant FORM GSTR-1 / FORM GSTR-3B furnished by the applicant in which the said debit note(s)/ supplementary invoice(s) were declared and tax and interest thereon had been paid by the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant; Proof of receipt of remittance of additional foreign exchange (FIRC) issued by Authorised Dealer-I banks; A certificate of a practising chartered accountant or a cost accountant certifying therein that the said additional foreign exchange remittance is on account of such upward revision in price of the goods subsequent to export; Statement 9A of FORM GST RFD 01 ; and Statement 9B of FORM GST RFD 01 . Proper officer shall verify that the exporter has duly reported the details of the export invoice and the debit note in his statement of outward supplies in FORM GSTR-1 and has duly paid such additional amount of IGST along with applicable interest for which refund is being sought in their FORM GSTR-3B return. Proper officer verify the revised value declared by the exporter in his FORM GSTR-1 / FORM GSTR-3B and details of foreign exchange remittances received thereof. Proper officer shall scrutinize the application with respect to its completeness and eligibility Only if the proper officer is satisfied that the whole or any part of the amount claimed is payable as refund, he shall proceed to issue the refund sanction order in FORM GST RFD-06 and the payment order in FORM GST RFD-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 . The proper officer shall also upload a detailed speaking order along with the refund sanction order in FORM GST RFD-06 in terms of Instruction No. 03/2022-GST dated 14.06.2022 . In case of downward revision of prices subsequent to exports when exported without payment of IGST, supplier of goods/exporter is required to deposit the refund of the IGST received in proportion to the reduction in price of exported goods, along with applicable interest. The proper officer shall also verify whether the exporter has deposited the excess refund amount in the cases where there is a downward revision in price of goods subsequent to exports, during the relevant tax period, if any. (To be continued ) **************** - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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