Newsletter

In view of the apprehensions raised via various representations and to ensure uniformity in the implementation of the provisions of the law across field formations, CBIC ab-initio withdraws Circular No. 107/26/2019-GST dated 18 July 2019. 

It should be noted that the said Circular was issued wherein certain clarifications were given in relation to various doubts related to supply of Information Technology enabled Services (ITeS services) under GST.

GOI releases the FAQs on the blocking and unblocking of E-Way Bill (‘EWB’) generation facility in EWB Portal which have been made effective from 01 December 2019. It has been explained that blocking of EWB generation facility means disabling a taxpayer from generating EWB, in case of non-filing of 2 or more consecutive GSTR 3B Return on GST Portal, by such taxpayer. The GSTINs of such blocked taxpayers cannot be used to generate the EWB either as Consignor or Consignee

The Taxpayer whose EWB generation facility has been blocked may get it unblocked by filing the returns for the default period and thereby reducing the default period to less than 2 consecutive tax periods

Highlights of the FAQs:

• In case the GSTIN of a taxpayer has been blocked, even the transporter will not be able to generate EWB for such GSTINs as supplier or recipient;
• On filing of GSTR-3B return resulting in reduction of return filing default period to less than two tax periods, the same will be updated on the EWB portal and the GSTIN will be unblocked next day. Unblocking can also be done by the Jurisdictional officer upon application through offline / manual request;
• In case the taxpayer needs to immediately file an EWB subsequent to filing latest GSTR 3B returns thereby reducing the default to less than 2 tax periods then, they can login to the EWB portal and select the option to manually search their block status by entering the GSTIN. If the GSTIN is still shown as blocked, then they can use update option to get the latest filing status from the GST Common Portal. If their return filing default period is less than two, their return filing status will be communicated by GST System to E Way Bill Portal, and such blocked taxpayers GSTIN will be unblocked and their EWB generation facility will be restored on EWB Portal;
• Such blocking of EWB will have no effect on the already generated EWBs. These EWBs are valid and can be used to move goods to the destination;
• Transporters enrolled in EWB Portal and who are not registered on GST portal will not be impacted by this system. However, if the GSTIN of registered transporters is blocked, then that GSTIN cannot be used as Consignor, Consignee or transporter while generating e-way bill and updating transporter details;
• If a registered transporter’s GSTIN is blocked in EWB generation facility, then, such EWB generation facility will block the updating of Transporter ID

Andhra Pradesh AAR holds that benefit of concessional GST rate on works contract services provided to Government Companies shall not be available to an Assessee if the Government Company provides its services for commercial / business purposes. Notes that the Applicant's works are in of industrial nature as those are to be done to industrial feeders and said works are to a business entity

CBIC vide Circular No. 126/45/2019 – GST dated 22 November 2019 clarifies scope of entry at item (id) and (iv) under Heading 9988 of Notification No. 11/2017 – Central Tax (Rate) dated 28 June 2017 inserted w.e.f. 01 October 2019 prescribing 12% for job-work services while the rate of 18% was retained for manufacturing services.

Since both the above services were in relation to goods owned by others, it had led to confusion as to the applicability of GST rate on job-work transactions. In this regard, it has been clarified that the said entry no. (id) pertaining to job work services would only cover those services which involve treatment or processing undertaken on goods belonging to another registered person. Whereas, the entry no. (iv) pertaining to manufacturing services covers such services which are carried out on physical inputs (goods) which are owned by unregistered persons.

CBDT releases the much-awaited Taxation Laws (Amendment) Ordinance, 2019. This comes as a great relief to a number of Assessees and hopes to encourage domestic businesses. The proposal made under this ordinance shall attain finality upon the discretion of the Parliament and the President

Highlights:

• Domestic Companies shall have the option to pay the income tax at the rate of 22% (plus applicable surcharge and cess) for any previous year relevant to the assessment year beginning on 01 April 2019, in terms of the newly inserted Section 115BAA in the Income Tax Act, subject to the fulfillment of the prescribed conditions
  • Provided that where a domestic Company fails to satisfy the conditions of this Section, the option shall become invalid in respect of that year and subsequent years and other provisions of the Act shall apply as if the option was never exercised;
  • Further provided that the total income of the Company shall be computed without any set-off or allowance of unabsorbed depreciation deemed, if such loss or depreciation is attributable to any incentive, deduction or exemption which are not allowed once a domestic company exercises such option under this section
• Domestic Manufacturing Companies other than those falling under Section 115BA and 115BAA shall have the option to pay the income tax at the rate of 15% (plus applicable surcharge and cess)
  • Provided that where the Assessees fail to satisfy the conditions of this Section, the option shall become invalid in respect of that year and subsequent years and other provisions of the Act shall apply as if the option was never exercised.
• A new sub-section is proposed to be inserted to provide that in case of a unit in the IFSC, the domestic company shall be entitled to deduction under newly inserted Sec. 80LA in respect of such unit subject to fulfilment of conditions in the said section
• It has been clarified that the following businesses shall not be included in the business of manufacture or production of any article or a thing:
  • development of computer software in any form or in any media;
  • mining;
  • conversion of marble blocks or similar items into slabs;
  • bottling of gas into cylinder; 
  • printing of books or production of cinematograph film;
• It has also been clarified that surcharge of 10% would apply to all income of the Companies eligible for reduction rate of tax u/s. 115BAA and 115BAB of the IT Act;
• It has been proposed to provide that the income-tax payable in respect of income being short term capital gains derived from transfer of a capital asset on which no depreciation is allowable, shall be computed at the rate of 22% plus surcharge of 10% and cess of 4%

Karnataka AAR: The activities undertaken by an Assessee involving construction of residential property on land under Joint Development Agreement, amounts to supply of service which is a taxable supply

With a view to streamline the process of fully electronic GST refund claims across all field formations, the CBIC has issued Circular No. 125/44/2019 – GST dated 18 November 2019 which lays down the procedure for electronic processing of GST Refund claims to be followed henceforth. The capabilities for making the refund procedure fully electronic, in which steps for submission and processing to be done electronically, have already been deployed on the common portal with effect from 26 September 2019.

Key Highlights of Circular No. 125/44/2019 – GST dated 18 November 2019

• Filing of refund application electronically which will unclude filing of statements / declarations / undertakings which are part of the said form itself;
• The Application Reference Number (ARN) shall be generated within 15 days of the submission of application only if the applicant has completed the uploading of all necessary documents as required and the amount has been debited from the electronic credit / cash ledger;
• In case the refund applications are inadvertently filed with the wrong jurisdictional officer, he /she shall reassign it to the correct jurisdictional officer not later than 3 working days from the date of generation of ARN;
• Refund claim for a tax period may be filed only after furnishing all the corresponding returns in Form GSTR-1 and Form GSTR-3B before the date on which the refund application is being filed;
• In case a deficiency memo has been issued with respect to a refund application, the said application would not be further processed and a fresh application would have to be filed. Any amount of ITC debited from electronic credit / cash ledger would be re-credited automatically once the deficiency memo has been issued;
• Rejection of any refund amount would require the proper officer to issue a show cause notice, requiring the Applicant to show cause as to why the refund amount of the ineligible ITC should not be rejected and recovered;
• In case of refund claims of unutilized ITC, the applicants shall upload a copy of GSTR – 2A for the relevant period for which refund is claimed. This shall serve as evidence of the accountal of supply by the corresponding supplier in relation to which ITC has been availed by the applicant;
• In case of inverted tax structure, the phrase ‘Net ITC’ shall not include transitional credit availed under the Central Excise law and Service Tax law;
• In case of refund of IGST paid on exports, the shipping bill filed by an exporter is deemed to be the refund application, but the same is deemed to be filed only when export manifest or export report is filed and the applicant has filed GSTR – 3B for the relevant period duly indicating the IGST paid on goods exported. The exporter is further expected to furnish the details of export in GSTR – 1 for the relevant period so that the common portal is able to validate the consistency of the details entered by the applicant and forward the relevant information to the Customs system. The proper officer would check the Shipping Bill details through the ICEGATE website;
• In case where taxes have been deducted or collected and deposited under wrong head, thereby creating excess balance in the cash ledger of the deductor or collector, then such excess credit may be claimed by such person as the excess balance in the electronic cash ledger. 
• The proper officer shall refund 90% of the refundable amount of the claim and final sanction of refund shall be made subsequently as per CGST Rules. 

As a relief, the Hon’ble Punjab and Haryana HC has directed the Department to allow 102 Petitioners to file / revise their incorrect TRAN-1 by 30 November 2019. Notes that unutilized credit arising on account of duty / tax paid under erstwhile Acts is a vested right which cannot be taken away on procedural or technical grounds

CBIC vide Notification No. 56/2019 – Central Tax dated 14 November 2019 gives affect to CGST (Seventh Amendment) Rules, 2019 for the much-awaited simplification of the Annual Return and Reconciliation Statement

Highlights:

• GSTR - 9
  • ITC can either be reported separately under the break-up of ‘Inputs’, ‘Input Services’ and ‘Capital Goods’ or under the single heading of ‘Inputs’;
  • HSN level information of inputs or outputs for inward supplies not be provided;
  • Supplies may be reported separately under the headings of ‘Exempted’, ‘Nil rated’ and ‘Non-GST Supply’ or consolidated information of all such supplies under the single heading of ‘Exempted’;
  • In case there is any difficulty in reporting net of amendments / debit notes / credit notes separately under, the same may be filled under Table 4B to 4E and Table 5A to 5F.

• GSTR - 9C
  • Cash flow statement is to be reported only if available;
  • Table No. 14 has been made optional for F.Y. 2017-18 and F.Y. 2018-19 which pertains to ITC availed, claimed and eligible for each kind of expenses;
  • Auditors to provide true and fair view instead of true and correct view.

CBIC: Due Date for filing GSTR-9 and GSTR-9C for the F.Y. 2017-18 extended till 31 December 2019. Further, due date for filing GSTR-9 and GSTR-9C for F.Y. 2018-19 extended till 31 March 2020

Source: CNBC TV 18