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AMENDMENTS IN CENTRAL GOODS & SERVICES TAX (CGST)

AMENDMENTS IN CENTRAL GOODS & SERVICES TAX (CGST)

Extension of Time limit for filing details in FORM GSTR-5A for month of July

Time limit for filing of details in form GSTR-5A (Form for submission of return by persons providing online information and database access or retrieval services from a place outside India to unregistered person in India) for the month of July 2017 up to 15th September 2017. Prior to this notification, the time limit for filing such details was on or before the twentieth day of the month succeeding the calendar month i.e 20th August, 2017.

[Notification No.25/2017-Central Tax, dated. 28-08-2017]

 

Extension of Time limit for filing ISD Return in FORM GSTR-6 for month of July & August

The Central Government vide Notification No.26/2017-Central Tax, dated. 28-08-2017 has extended the time limit for filing of details in form GSTR-6 (Form for submission of return by input service distributor) for the month of July 2017 up to 8th September, 2017 and for the month of August 2017 up to 23rd September, 2017. Prior to this notification, the time limit for filing such details was on or before the 13th day of the month succeeding such calendar month.

[Notification No.26/2017-Central Tax, dated. 28-08-2017]

 

Procedure for electronic sealing of containers

Central government had previously issued Circular No. 26/2017-Customs dated 1st July, 2017 which provided for a simplified procedure for stuffing and sealing of export goods in containers under self-sealing procedure where exporter shall seal the container with the tamper proof electronic-seal of standard specification.

Further to aforesaid circular, the Central Government vide Circular no. 36/2017 dated 28th August, 2017- Customs has now prescribed the detailed procedure to be followed while electronic sealing of containers by exporters under self-sealing procedure. The said procedure is available at www.cbec.gov.in.

[Circular no. 36/2017 dated 28th August, 2017- Customs]

 

SUBSTITUTION IN DESCRIPTION OF SERVICE AND TAX RATES

Central Government vide Notification No. 20/2017- dated 22nd August, 2017 has amended the rates and description, as the case may be, of the following services:

S No.

(1)

Description of service

(2)

Rate%

CGST/UTGST

(3)

Rate%

IGST

(4)

Conditions

(5)

3 (iii) Composite supply of works contract supplied to the Government by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, – (a) a historical monument, archaeological site,

(b) canal, dam or other irrigation works;

(c) pipeline, conduit or plant

 

 

 

 

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

 

12

 

 

 

 

 

 

 

 

 

 

(iv) Composite supply of works contract supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, –

(a) a road, bridge, tunnel, or terminal;

(b) a civil structure pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana;

(c) a civil structure or any other original works pertaining to the “In-situ rehabilitation of existing slum dwellers using land as a resource through private participation” under the Housing for All (Urban)Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers;

(d) a civil structure or any other original works pertaining to the “Beneficiary led individual house construction / enhancement” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;

(e) a pollution control or effluent treatment plant, except located as a part of a factory; or

(f) a structure meant for funeral, burial or cremation of deceased

(v) Composite supply of works contract, supplied by way of construction, erection, commissioning, or installation of original works pertaining to, –

(a) railways, excluding monorail and metro;

(b) a single residential unit otherwise than as a part of a residential complex;

(c) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India;

(d) low cost houses up to a carpet area of 60 square metres per house in a housing project approved

(vi) Construction services other than (i), (ii), (iii), (iv) and (v) above. 9 18
8 (vi) Transport of passengers by motorcab where the cost of fuel is included in the consideration charged from the service recipient 2.5 5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation no. (iv)]
6 12
9 (iii) Services of goods transport agency (GTA) 2.5 5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken
6 12 Provided that the GTA opting to pay central tax @ 6%
10 (i) Renting of motorcab 2.5 5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken
6 12
26 “(ii) Services by way of any treatment or process on goods belonging to another person, in relation to- (a) printing of newspapers; (b) printing of books 2.5 5
(iii) Manufacturing services on physical inputs owned by others, other than (i) and (ii) above. 9 18

 

AMENDMENT TO LIST OF EXEMPTED SERVICES

List of services exempted under GST regime vide Notification No.12/2017- Central Tax (Rate), dated the 28th June 2017 has been amended the aforesaid notification to provided exemptions from GST to the following services::

Sl. No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition
9A Chapter 99 Services provided by and to Fédération Internationale de Football Association (FIFA) and its subsidiaries directly or indirectly related to any of the events under FIFA U-17 World Cup 2017 to be hosted in India. Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U- 17 World Cup 2017.”
11A Heading 9961 or Heading 9962 Service provided by Fair Price Shops to Central Government by way of sale of wheat, rice and coarse grains under Public Distribution System(PDS) against consideration in the form of commission or margin Nil Nil
11B Heading 9961 or Heading 9962 Service provided by Fair Price Shops to State Governments or Union territories by way of sale of kerosene, sugar, edible oil, etc. under Public Distribution System (PDS) against consideration in the form of commission or margin. Nil Nil

 

FURTHER AMENDMENTS:

Chapter, Section, Heading, Group or Service Code (Tariff) Existing description of service Revised description of service Impact
Heading 9971 or Heading 9991 (h) Weather Based Crop Insurance Scheme or the Modified National Agricultural Insurance Scheme,

(j) National Agricultural Insurance Scheme (Rashtriya Krishi Bima Yojana)

(h)Restructured Weather Based Crop Insurance Scheme (RWCIS)

(j) Pradhan Mantri Fasal BimaYojana (PMFBY)

The amendment is made to change the scheme for which exemption from tax will be given. Earlier, service of general insurance under Weather Based Crop Insurance Scheme or the Modified National Agricultural Insurance Scheme was exempt. Now, by this notification it has been substituted by Restructured Weather Based Crop Insurance Scheme (RWCIS)

Similarly, service of general insurance under National Agricultural Insurance Scheme (Rashtriya Krishi Bima Yojana) was exempt . Now, by this notification it has been substituted by Pradhan Mantri Fasal BimaYojana (PMFBY)

 

NORMAL CHARGE ON GTA SERVICE WHEN OPTED TO PAY CENTRAL TAX @ 6% WITH FULL ITC

Central Government vide Notification no.22/2017 dated 22nd August 2017 has provided that

  • the goods transport agency opting to pay central tax @ 6% to avail full ITC in respect of transportation of goods by road needs to pay the tax under normal / forward charge.
  • Service provided by goods transport agency to specified categories of recipient on which GTA has opted to pay central tax at the rate of 2.5% with non availment of input tax credit charged on goods and services used for providing such GTA service, recepient need to pay tax under reverse charge.
  • Option to be exercised by GTA at the start of the year.
  • Limited Liability Partnership will be considered as partnership firm. GTA provides services to LLP, LLP would be liable to pay tax under Reverse Charge.

 

TAX ON INTRA-STATE SUPPLIES OF HOUSEKEEPING SERVICE SHALL BE PAID BY THE ELECTRONIC COMMERCE OPERATOR

Central Government vide Notification no.23/2017 dated 22nd August 2017 has provided that

  • Unregistered person providing house-keeping such as plumbing, carpentering etc,services through e-commerce operator then such e-commerce operator would be responsible for payment of GST on such services.
  • Where, the person supplying such service is liable for registration under section 22(1) of CGST Act, 2017 then tax needs to be paid by such registered person only.

 

 

 

 

 

 

 

GST ON SELLING OF SPACE FOR ADVERTISEMENT IN PRINT MEDIA – CLARIFICATION REGARDING

  • GST on Selling of space for advertisement in print media is leviable @ 5%.
  • If the advertisement agency works on principal to principal basis, that is, buys space from the newspaper and sells such space for advertisement to clients on its own account, that is, as a principal, it would be liable to pay GST @5% on the full amount charged by advertisement agency from the client.

Illustration: If a newspaper sells a unit of space worth Rs. 100 to advertisement agency for Rs. 85/- (after trade discount of Rs. 15), the advertisement agency sells the same unit of space to client at Rs. 100/-, newspaper would be liable to pay GST @ 5% on Rs. 85 i.e. Rs. 4.25 and the advertisement agency would be liable to pay GST on full value i.e. Rs. 100 @ 5% i.e. Rs. 5 and may utilize ITC of Rs. 4.25 for paying the same.

 

  • If the advertisement agency sells space for advertisement as an agent of the newspaper on commission basis, it would be liable to pay GST@ 18% on the sale commission it receives from the Newspaper. ITC of GST paid on such sale commission would be available to Newspaper.

Illustration: Advertisement agency sells unit of space to the client not on its own account but on account of the newspaper for Rs. 100/- and receives commission of Rs. 15/- for such sale from newspaper. In such a case, advertisement agency would be liable to pay GST @ 18% on sales commission of Rs. 15 i.e. Rs. 2.7, ITC of which shall be available to newspaper for payment of GST @ 5% on Rs. 100/- (value of space for advertisement sold by the newspaper).

  • If the advertisement agency supplies any service other than selling of space for advertisement, such as designing or drafting the advertisement, and such supply is not a part of any composite supply, the same would be liable to tax @18%.

NOTE: If such supplies are part of any composite supply, the rate applicable for the principal supply shall apply. Therefore, everything depends on the terms of the contract between the newspaper, advertisement agency and the client.

 

 

 

 

 

 

 

 

TIME PERIOD FOR FILING OF DETAILS IN FORM GSTR-1, GSTR-2 AND GSTR-3

  • for the first two months of GST implementation, the tax would be payable based on a simple return (Form GSTR-3B) containing summary of outward and inward supplies which will be submitted before 20th of the succeeding month.

Notification No. 18/2017- Central tax dt 08-08-2017, Notification No. 19/2017- Central tax dt 08-08-2017, Notification No. 20/2017- Central tax dt 08-08-2017 and Notification No. 21.2017 – Central tax dt 08-08-2017 PRESCRIBE EXTENSION OF TIME LIMIT FOR FILING THE INVOICE-WISE DETAILS IN GSTR-1, GSTR-2 AND GSTR-3 AS UNDER:-

 

Time of Filing/

Month

Form 3B (Simple return) Outward supplies in FORM GSTR-1 Inward supplies in FORM GSTR-2 FORM GSTR-3
July, 2017 20th Aug, 2017 1st – 5th Sep, 2017 6th – 10th Sep, 2017 11th – 15th Sep, 2017
August, 2017 20th Sep, 2017 16th – 20th Sep, 2017 21st – 25th Sep, 2017 26th – 30th Sep, 2017

 

 

INCREASE IN MAXIMUM CEILING OF CESS LEVIABLE ON MOTOR VEHICLES FROM 15% TO 25%

In its 20th meeting held on the 5th of August 2017, GST Council recommended –

  • Central Government may move legislative amendments required for increasing the maximum ceiling of cess leviable on motor vehicles falling under headings 8702 and 8703 including SUVs, to 25% instead of present 15%.
  • Cabinet today cleared ordinance to allow hike in GST cess on cars.
  • GST Council, in its next meeting on September 9, decide on the date when the increased cess will be appliocable.

It is to be noted that after introduction of GST, the total tax incidence on motor vehicles [GST + Compensation Cess] has come down vis-a-vis the total tax incidence in pre-GST regime. The Schedule to the Goods and Service Tax (GST) (Compensation to State) Act 2017, specifies the maximum rate at which Goods and Service Tax Compensation Cess may be collected. In respect of motor vehicles, the maximum rate at which GST Compensation Cess may be collected was set at 15% in the said Act.

 

 

 

 

SUMMARY OF KEY DECISIONS TAKEN ON SERVICES AT 20TH GST COUNCIL MEETING ON AUGUST 5th

The GST Council in its 20th Meeting took following decisions regarding the change in rates on various services whereby: –

  1. Rate on Job work services in respect of the textiles and textile products have been reduced to 5%
  2. Rate on services by way of printing of newspapers, books, journal and periodicals (if only content provided by publisher and all input of paper etc belongs to printer) will be 12%
  3. Rate on services by way of printing of newspapers, books, journal and periodicals (if input used belongs to publisher and not printer) will be 5%
  4. Rate on works contract services provided to government, local or governmental authority will be 12% with full ITC
  5. Rate on services in respect of post-harvest storage infrastructure for agricultural produce, mechanized food grain handling system will be 12% with full ITC
  6. Rate on margin/commission payable to Fair Price Shop Dealers by Central/ State Governments reduced to Nil.
  7. Rate on Admission to planetarium reduced to 18% with full ITC
  8. An option of 12% GST on Rent-a- Cab service will be allowed along with full ITC. Otherwise, 5% GST with no ITC will also continue.
  9. An option of 12% GST is allowed on Goods transport Agency Services (GTA) with full ITC under forward charge. Otherwise, 5% GST with no ITC will also continue. However, GTA has to give an option at the beginning of financial year.
  10. In case of small house-keeping service providers (plumbers/carpenters) providing services through Electronic Commerce Operators (ECO), liability to pay GST placed on ECO
  11. Partnership firm or a firm includes LLP have been notified for the purposes of levy (including exemption therefrom) of GST on legal services.

 

 

 

NO TAX DEDUCTION AT SOURCE (TDS) UNDER INCOME TAX ON ‘GST ON SERVICES’ COMPONENT

TAX WILL NOT BE DEDUCTED ON SUCH ‘GST ON SERVICES’ COMPONENT

CBDT vide Circular No. 23/2017 dated 19th July 2017 clarified

  • wherever in terms of the agreement or contract between the payer and the payee, the component of ‘GST on services’ comprised in the amount payable to a resident is indicated separately, tax will be deducted on the amount paid or payable without including such ‘GST on services’ component. In other words,

 

  • GST for these purposes will include Integrated Goods and Services Tax, Central Goods and Services Tax, State Goods and Services Tax and Union Territory Goods and Services Tax.

 

  • Any reference to ‘service tax’ in an existing agreement or contract which was entered prior to 01/07/2017 will be treated as ‘GST on services’ with respect to the period from 01/07/2017 onward till the expiry of such agreement or contract.

 

 

 

TIME LIMIT FOR FILING INTIMATION FOR COMPOSITION LEVY EXTENDED

Order No. 01/2017-GST dated 21st July 2017

  • extended the time limit for filing intimation for Composition levy (filing of intimation FORM GST CMP-01) up to 16th August 2017. Prior to this amendment, the time limit for filing such intimation was till 21st July 2017 i.e. 30 days from 22nd June 2017 when section 25 of the CGST Act, 2017 came into force.
  • the period of applying for Cancellation of Registration is being extended up to 30th September 2017.

 

 

 

 

 

 

 

 

POSITION REGARDING APPLICABILITY OF GST ON LEGAL SERVICES PROVIDED BY INDIVIDUAL ADVOCATES INCLUDING SENIOR ADVOCATES AND A FIRM OF ADVOCATES

 

  • Applicability of GST on legal services provided by advocates was challenged before Delhi High Court in JK Mittal & Co. Vs. UOI, questioning whether it is in forward charge or reverse charge?

 

  • Clarified that legal service has been defined to mean any service provided in relation to advice, consultancy or assistance in any branch of law, in any manner and includes representational services before any court, tribunal or authority vide Notification No. 13/2017-Central Tax (Rate) dated 28.6.2017 which provides – the following service under reverse charge mechanism, –

“Services supplied by an individual advocate including a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory, including where contract for provision of such service has been entered through another advocate or a firm of advocates, or by a firm of advocates, by way of legal services, to a business entity.”

The words “by way of legal services” are preceded and succeeded by comma. Therefore, the said words apply to an individual advocate including a senior advocate and a firm of advocates. Legal services provided by either of them are liable for payment of GST under reverse charge by the business entity. The words “by way of representational services before any court, tribunal or authority….” appear in conjunction with senior advocate without a comma and merely describe the nature and mode of representational services provided by a senior advocate to a business entity. It, therefore, follows that legal services, which includes representational services, provided by advocates are under reverse charge.

 

APPLICABILITY OF THE MARGIN SCHEME UNDER GST FOR DEALERS IN SECOND HAND GOODS IN GENERAL AND FOR DEALERS IN OLD AND USED EMPTY BOTTLES IN PARTICULAR

Notification No.10/2017-Central Tax (Rate), dated 28.06.2017 exempts Central Tax leviable on intra-State supplies of second hand goods received by a registered person, dealing in buying and selling of second hand goods [who pays the central tax on the value of outward supply of such second-hand goods as determined under sub-rule (5)] from any supplier, who is not registered.

This has been done to avoid double taxation on the outward supplies made by such registered person, since such person operating under the Margin Scheme cannot avail input tax credit on the purchase of second hand goods.

 

 

 

 

 

 

CONDITIONS & SAFEGUARDS FOR FURNISHING LETTER OF UNDERTAKING IN PLACE OF A BOND FOR EXPORT WITHOUT PAYMENT OF INTEGRATED TAX FOR EXPORTS

Rule 96Aof the Central Goods & Services Tax Rules, 2017 provides for procedure for refund of integrated tax paid on export of goods or services under bond or Letter of Undertaking.

Any registered person availing the option to supply goods or services for export without payment of integrated tax shall furnish, prior to export, a bond or a Letter of Undertaking in FORM GST RFD-11 to the jurisdictional Commissioner, binding himself to pay the tax due along with the interest specified under section 50(1).

Central Government vide Notification No. 16/2017-Central Tax, dt. 07-07-2017 has notified conditions and safeguards for the registered person who intends to supply goods or services for export without payment of integrated tax, for furnishing a Letter of Undertaking in place of a Bond.

Letter of Undertaking in place of a bond may be submitted for following registered persons:

 

  1. a status holder as specified in paragraph 5 of the Foreign Trade Policy 2015- 2020. Status Holders are business leaders who have excelled in international trade and have successfully contributed to country’s foreign trade. All exporters of goods, services and technology having an import-export code (IEC) number shall be eligible for recognition as a status holder. For granting status, export performance is necessary in at least two out of three years; or

 

  1. who has received the due foreign inward remittances amounting to a minimum of 10% of the export turnover, which should not be less than one crore rupees, in the preceding financial year

and he has not been prosecuted for any offence under the Central Goods and Services Tax Act, 2017 or under any of the existing laws in case where the amount of tax evaded exceeds Rs. 2,50,000.

The Letter of Undertaking needs to be furnished in duplicate for a financial year in the annexure to FORM GST RFD – 11 referred to in rule 96A(1) of the Central Goods and Services Tax Rules, 2017 and it shall be executed by the working partner, the Managing Director or the Company Secretary or the proprietor or by a person duly authorised by such working partner or Board of Directors of such company or proprietor on the letter head of the registered person.

Further Central Government, vide Circular No. 2/2/2017-GST dt. 04-07-2017 has w.e.f 1st July 2017 clarified that the Bond/Letter of Undertaking may be furnished manually to the jurisdictional Deputy/Assistant Commissioner in the format specified in FORM RFD-11 till the module for furnishing of FORM RFD-11 is available on the common portal.

Clarification regarding Letter of Undertaking in place of a bond for export without payment of integrated tax for Exports

In addition to above, Central Government vide Circular No. 4/4/2017-GST dt. 07-07-2017 has further clarified the following:

  1. The bond to be furnished on non-judicial stamp paperof the value as applicable in the State in which bond is being furnished.The procedure for submission and acceptance of bond has already been prescribed vide Circular No. 2/2/2017-GST dated 4th July 2017.
  2. the exporters will furnish a running bond, in case he is required to furnish a bond, in FORM GST RFD -11 as the consignment wise bond would be a significant compliance burden on the exporters. The bond would cover the amount of tax involved in the export based on estimated tax liability as assessed by the exporter himself. The exporter will ensure that the outstanding tax liability on exports is within the bond amount. In case the bond amount is insufficient to cover the tax liability in yet to be completed exports, the exporter will furnish a fresh bond to cover such liability.

 

  1. The jurisdictional Commissioner may decide about the amount of bank guarantee depending upon the track record of the exporter. If Commissioner is satisfied with the track record of an exporter then furnishing of bond without bank guarantee would suffice. In any case the bank guarantee should normally not exceed 15% of the bond amount.

 

  1. LUT will be valid for 12 months. If the exporter fails to comply with the conditions of the LUT he may be asked to furnish a bond. Exports may be allowed under existing LUTs/Bonds till 31st July 2017. Exporters will submit the LUTs/bond in the revised format latest by 31st July 2017.

 

  1. the Bond/LUT will be accepted by the jurisdictional Deputy/Assistant Commissioner having jurisdiction over the principal place of business of the exporter. The exporter is at liberty to furnish the bond/LUT before Central Tax Authority or State Tax Authority till the administrative mechanism for assigning of taxpayers to respective authority is implemented.

 

Note: Writ petition filed by Aphro Ecommerce Solutions Private Limited before Delhi High Court challenging constitution validity of Rule 96A and Notification No. 16/2017-Central Tax, dt. 07-07-2017notice issued to Central Government – discrimantory and de hors Section 16 of IGST Act and Article 14 of Constitution of India – big players advantage.

 

Challenge to constitutional validity of GST (Compensation to States Act) 2017 in –

 

MOHIT MINERALS PVT. LTD. vs UOI,W.P. (C) No. 74591/2017 at Hon’ble High Court of Delhi –

 

Issue:

  • Clean Energy Cess on Coal – levied vide Finance Act, 2010;
  • Repealed vide Taxation Laws (Amendment) Act, 2017 (“TLA Act”);
  • Section 18 of the COI 101st Amendment Act does not enable the Parliament to levy any cess which stood abolished in terms of the Third Schedule of the TLA Act.

 

  • Clause 4 (f) of Article 279 A of the Constitution of India, states that the GST Council may recommend special rates for a specified period “to raise additional resources during any natural calamity or disaster.
  • Parliament did not propose or intend to use the GST regime to impose new cesses. Purpose was to compensate the Stales for loss of revenue, that had to be done by some other means.
  • Problem of ITC of Clean Energy Cess paid Coal Stock upto 30.06.2017.
  • Stay Granted on recovery of Cess imposed on Coal of Rs. 400/- per MT.

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