Goods and Service Tax (GST) Weekly Update
WEEKLY UPDATE OF GST:
- Recommendations by 43rd GST Council Meeting
- CBIC issues Guidelines on Cancellation of GST Registration
- E-Way Bill: Rule138E–Restriction on furnishing of information in PartA of Form GST EWB-01
- Recent AAR & Judicial Decisions
1.Recommendations by 43rd GST Council Meeting:
(A)Exemption for Services:
- The Council proposed that services provided by way of examination including entrance examination, where the fee is charged for such examinations, by the National Board ofExamination (NBE), or similar Central or State Educational Boards, and input servicesrelatingthereto are exemptfrom GST.
- Service provided to MRO units of aviation sector to MRO units of ships/vessels so as toprovidelevelplayingfieldtodomesticshippingMROsvisavisforeignMROsandaccordingly, GST on MRO services in respect of ships/vessels shall be reduced to 5% (from18%).PoS of B2B supply of MRO Services in respect of ships/vessels would be the location of the recipient of service.
- The supply of service by way of milling of wheat/paddy into flour (fortified with mineralsetc. by millers or otherwise )/rice to Government/ local authority etc. for distribution ofsuch flour or rice under PDS is exempt from GST if the value of goods in such compositesupplydoes notexceed25%.
Otherwise, such services would attract GST at the rate of 5% if supplied to any personregisteredinGST, includingapersonregistered forpaymentofTDS.
- GST is payable on annuity payments received as deferred payment for construction of road. Benefit of the exemption is for such annuities which are paid for the service by way of access to a road or a bridge.
- Services supplied to a Government Entity by way of construction of a rope-wayattract GSTatthe rate of 18%.
- The services supplied by the Government to its undertaking/PSU by way of guarantee in loans taken by such entities from banks and financial institutions are exempt from GST.
(B) Exemption For Goods:
- Medical oxygen, oxygen concentrators, and other oxygen storage and transportation equipment, certain diagnostic markers test kits and COVID-19 vaccines, etc., have been recommended for full exemption from IGST ,even if imported on payment basis, for donating to the government or on the recommendation of state authority to any relief agency. This exemption shall be valid up to August 31,2021.
- IGST exemptionwas applicable only whenthese goods were imported “free of cost” forfree distribution. The same will also be extended till 31.8.20201. It may be mentioned that these goods are already exempted from Basic Customs duty.
- In view of rising Black Fungus cases, the above exemption from IGST has been extended to AmphotericinB.
- Amnesty Scheme with reduced late fee to be launched for GST Small Taxpayers. GST Amnesty Scheme for all Small Taxpayers (MSME) The GST Council is likely to announce an amnesty scheme on late fee in GST return filing to provide a huge relief to small taxpayers- Due to Covid-19 pandemic:-
- Pending GSTR-3B returns from July-2017 to till April 2021.
- Amnesty scheme could be from 1st June 2021 till 31st August2 021
(D)Annual Return form to be rationalized, Govt to amend CGST Rules.
The filing of annual return in FORM GSTR-9 / 9A for FY 2020-21 to be optional for taxpayers having aggregate annual turnover up to Rs 2 Crore. The reconciliation statement in FORM GSTR-9C for the FY 2020-21 will be required to be filed by taxpayers with an annual aggregate turnover above Rs 5Crore.
The retrospective amendment in section 50 of the CGST Act with effect from 01.07.2017,providing for payment of interest on a net cash basis.
E. Proposed Late Fee Waiver:
|Sr.No.||Criteria||Late Fee Quantum|
|1||For the Period Of Jul-17 to April-2021*|
|(a)No Tax Liability||Maximum Rs. 500|
|(b)Other Cases||Maximum Rs. 1000|
|2||For the Period After April- 2021|
|(a)No Tax Liability||Maximum Rs. 500|
|(i)Turnover upto Rs.1.5Cr||Maximum Rs. 2000|
|(ii)Turnover between Rs.1.5 Cr to 5cr||Maximum Rs.5000|
|(iii)Turnover above Rs. 5cr||Maximum Rs. 10000|
- *Condition – Pending GSTR-3B returns are to be filed between 01.06.2021 to 31.08.2021
2) CBIC issues Guidelines on Cancellation of GST Registration:
The CBIC notified the Guidelines regarding cancellation of Registration under Rule 22 (3) ofCGST Rules, 2017. Rule 22 (3) of CGST Rules, 2017 specifies the procedure to be followed for processing of application filed by taxpayers for cancellation of registration:
- The proper officer is required to issue an order in FORM GST REG-19 in respect of the application for cancellation of registration filed by the taxpayer within a period of thirty days from the date of the application submitted by the taxpayer and direct him to pay arrears of any tax, interest or penalty including the amount liable to be paid under sub section (5) of section29.
- The proper officer should accept all such applications within a period of 30 days from thedateof filingthe application,exceptinthe two circumstances.
- The application in FORM GST REG-16 is incomplete, i.e., where all the relevant particulars, as detailed in para 4 above, have not been entered.
- In case of transfer, merger or amalgamation of business, the new entity in which the applicant proposes to amalgamate or merge has not got registered withthe tax authority before submission of the applicationfor cancellation.
- In such circumstances the application for cancellation of registration should be immediately accepted by the proper officer and the order for cancellation should be issued in FORM GST REG-19 with the effective date of cancellation being the same as the date from which the applicant has sought cancellation in FORM GST REG-16.
- In any case the effective date cannot be a date earlier to the date of application for the same.
- The cancellation applications were found pending even after more than 120 days.“Considering that the legal provision stipulates passing of the order in respect of the application of cancellation of registration within 30 days of the date of the application, andcancellation of registration has no effect on the liability of the taxpayer for any Acts of commission/omission committed before or after the date of cancellation, the proper officer should act as per prescribed legal process within the stipulated time in order to avoid any delay.
3)E-Way Bill: Rule138E–Restriction on furnishing of information in Part A of Form GST EWB-01:
Fourth Amendment (2021) to CGST Rules… For, “Not with standing any thing contained in sub-rule(1)of rule138, no person (including a consignor, consignee, transporter, an ecommerce operator or a courier agency) shall be allowed to furnish the information in PARTA of FORM GST EWB-01 in respect of any outward movement of goods of a registered person,who, ”
Now Registered Person who has defaulted in filing returns can receive, inward supply of goods. But he can’t made outward movement of goods via E-Way Bills.
4) Recent AAR & Judicial Decisions:-
(i) AAR On Dubai Chamber Liaison office to pay GST on activities on behalf of DCCI UAE:
(Applicant-Dubai Chamber of Commerce And Industry)
The AAR held that the Liaison office of Dubai Chamber of Commerce and Industry as services provided to various businesses in India and Dubai. The applicant, Dubai Chamber of Commerce and Industry, Liaison office is established by DCCIUAE in Mumbai, Maharashtra.
Applicant is also a non-profit organization, formed to represent, support and protect the interests of the Dubai business community in India, by creating a favourable environment, promoting Dubai businesses and by supporting development of business in India. Under the ambit of RBI norms, applicant shall undertake liaison/representation activities in India namely Liaison between India office and Dubai office, Attending and representing DCCI invarious seminars, conferences & trade fairs and Connecting businesses in India with businesspartners in UAE and vice versa Organizing events & interactions with Indian stakeholders forsharing information about Dubai. All expenses incurred by applicants (predominantly officerent, salaries, consultancy services), are to be reimbursed from DCCI UAE on a cost-to-costbasis. Applicant is not a separate legal entity, rather it is a mere extension of DCCI UAE. Reimbursement of expenses received from DCCIUAE cannot be treated as consideration under GST law and hence. Applicants are not liable to obtain GST registration.
The applicant has sought the advance ruling on the issue whether activities performed by DCCILO shall be treated as supply under GST law.
AAR held that activities undertaken by the DCCI is nothing but “Business”. The terms “Supply”and “Business” are defined under GST Act, in an inclusive manner and have wide connotations. Hence the reply filed by the applicant to cross objection is incorrect. Activities undertaken by the applicant are covered by the scope ofword “commerce”,“Business” and also coveredunder the scope of “Supply”. The AAR ruled that the applicant is receiving consideration fromits Head Office in excess of expensesincurred by it, and the applicant cannot be treated as anon-profit organization. Also, the application is providing intermediary services for which it is liable to pay GST.
(ii) AAR On Supply of medicines and allied items provided by the hospital through the pharmacy to the in-patients and out-patients:
Health care services provided by a clinical establishment, an authorized medical practitioner or paramedics are exempted vide Sl. No. 74 of Notification No.12/2017 CT(Rate).
Read Also: GST Returns: Use of GSTR 2B in GSTR 3B
In case of inpatient as well as out patient, medicines are dispensed based on prescriptions.There is no privilege for the hospitals that are dispensing medicine to outpatients. Pharmacyrun by hospital dispensing medicine to outpatient or bye standers or others can be treated asindividual supply of medicine and not covered under the ambit of health care services. Hence such supply of medicines and allied goods are taxable.
Clarifications issued on the 25th GST Council meeting,was clarified that food supplied to the inpatients as advised by the doctor/nutritionist is a part of composite supply of health care and not separately taxable. Other supplies of food by hospital to patients not admitted are taxable. The same principle is applicable in the case of dispensing of medicines also. AAR held that the supply of medicines and allied items provided by the hospital through the pharmacy to the in-patients is part of composite supply of health care treatment and hence not separately taxable. However,The supply of medicines and allied items provided by the hospital through the pharmacy to the out-patients is taxable.
The author of the above article is CA Jayprakash Pandey. CA Jayprakash Pandey is a Practicing CA under the firm name Jayprakash P & Company with Office at Mumbai, having 5+ years of professional experience, excellence in the field of TAX and audit services. If you have any query then author can be reached out – firstname.lastname@example.org
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