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CBIC vide Notification No. 40/2021 - Central Tax dated 29 December 2021 notifies the CGST (10th Amendment) Rules, 2021. The said notification inter alia extends the due date for furnishing Annual Return in Form GSTR-9 and Reconciliation Statement in Form GSTR-9C for the F.Y. 2020-21 till 28 February 2022 

The Ministry of Corporate Affairs ('MCA') vide General Circular No. 22/2021 dated 29 December 2021 has relaxed the additional fees for annual financial statement/return filings for the F.Y. ended on 31 March 2021. It has been clarified that no additional fees shall be levied upto 15 February 2022 for the filing of e-forms AOC-4, AOC-4 (CFS), AOC-4 XBRL, AOC-4 Non-XBRL and upto 28 February 2022 for filing of e-forms MGT-7/MGT-7A. It has also been clarified that only normal fees shall be payable for the filing of the aforementioned e-forms.

The Applicant had sought an advance ruling before the Maharashtra AAR to ascertain the tariff classification of CNG Dispensers supplied for use at CNG dispensing stations for vehicles and automobiles. The Applicant submitted that although they had been classifying the CNG Dispensers under CTH 8413 chargeable to 28% GST, it seemed to be more appropriately classifiable under CTH 9032 chargeable to 18% GST. The Applicant had submitted that the CNG Dispensers manufactured by them does not have any pumping function of CTH 8413 but act as an automatic control system of CTH 9032.

The Maharashtra AAR observed that the CNG dispenser causes the CNG to flow from the filling station to the CNG tank of the vehicle. Thus, the Dispenser functions as a pump. The AAR further observed CHT 841311 categorically covers ‘pump for dispensing, duel or lubricants of the type used in filling stations or garages’. Accordingly, as the Dispenser is designed to dispense fuel and used in filling stations and acts as a pump which causes CNG to move from one place to another, the same is classifiable as a pump.

In view of the above, the Maharashtra AAR held that the CNG Dispenser performing the function of a pump of a type used in filling stations to dispense CNG Fuel is classifiable under CTH 8413 chargeable to 28% GST and not under CTH 9032 chargeable to 18% GST.

Parker Hannifin India Private Limited [2021-TIOL-298-AAR-GST]

The Applicant, inter alia engaged in manufacturing of electronics equipment for locomotives and coaches for Indian Railways and Metro Railways had entered into contract with South Central Railway for design, supply, installing, testing and commissioning of train collision avoidance system in locomotives. As per the agreement, the Applicant had to supply multiple items and provide various services including annual maintenance. In view of the above, the Applicant had sought an advance ruling before the Telangana AAR to ascertain whether the scope of work, as provided above, is classifiable as composite supply and the applicable rate of GST.

The Telangana AAR observed that the Railways had published a handbook on Train Collision Avoidance System (‘TCAS’) wherein had been provided that the entire system is based on signalling equipment and RFID tags. Further, referring to Section 2(30) of the CGST Act, it had been observed that Composite Supply is essentially a naturally bundled supply where two or more different supplies invariably exist along with each other. In this regard, it was observed that the principal goods in the instant case, would be the electrical signalling equipment classifiable under HSN 8530. 

In view of the above, the Telangana AAR held that the supply made by the Applicant to the Railways is a composite supply and the rate of tax applicable is the rate at which the principal supply to be taxed i.e., Electrical signalling equipment with HSN code ‘8530’ chargeable to 18% GST.

Medha Servo Drives Private Limited [TSAAR Order No.23/2021 dated 05 November 2021]

The CBIC vide Notifications No. 38 and 39/2021 – Central Tax dated 21 December 2021 has notified the amendments proposed in the Finance Act, 2021 to be effective from 01 January 2021. The details of the key amendments have been tabulated hereunder:

GLS Comments:

The amendment to Section 16 of the CGST Act had been proposed to avoid the challenge to Rule 36(4) of the CGST Rules. The said rule prescribes a condition for availing 5% ITC on invoices/debit notes not uploaded by the supplier in GSTR-1. However, the said such rule will no longer be relevant w.e.f. 01 January 2022 as the recipient would not be able to take any ITC if the same is not appearing in the recipient’s GSTR-2B. Accordingly, the issues relating to Rule 36(4) have essentialy been put to rest. However, the condition prescribed u/s. 16 of the CGST Act is likely to be challenged. 

 M/s Prag Polymers (‘the Applicant’), engaged in the manufacture and supply of railway Locomotives parts had sought an advance ruling before the UP AAR to ascertain the classification of Switch Board Cabinet. The Applicant had submitted that the Switch Board Cabinets were manufactured by them specifically on the basis of drawings and designs approved by the Railways. Further, such goods are not viable for use elsewhere. Accordingly, the Applicant opined that the such goods were appropriately classifiable under HSN 8607 chargeable to 12% GST.

The AAR observed that HSN 8607 categorically covers parts of railways, tramways, etc. However, the said heading does not cover switch boards. It was further observed that HSN 8537 clearly includes cabinets for electric control and distribution of electricity. It had also been observed that Note 2(f) to Section XVII inter alia provides that parts and parts and accessories of electrical machinery of Chapter 85 do not apply to HSN 8607 whether or not they are identifiable as goods of Section XVII (Railways).

The AAR further observed that the CBIC vide Circular No. 30/4/2018 – GST dated 25 January 2018 had clarified that goods, falling under any chapter other than 86, would attract the general applicable rate of 18% GST even if supplied to the Railways. It was also observed Entry 8607 is very restrictive entry for the purposes of consideration of goods to be classifiable as parts of railway bogies to avail the benefit of reduced rate of taxes.

Basis the above observations, the AAR held that the switch board cabinet, though to be used in Railway coaches, cannot be called as parts of railway bogies under Chapter Headings 8607 of the Tariff, as a specific HSN is available for the same. Accordingly, it was ruled that switch board cabinets merit classification under HSN 8537 chargeable to 18% GST.

Prag Polymers [Advance Ruling No. UP ADRG 75/2021 dated 19 March 2021]

The Revenue had filed an Appeal against an order of the Commissioner (Appeals), which had been reversed by the Ahmedabad Tribunal. The Tribunal had also held that held that refund of pre-deposit was warranted and interest liability arises from the date of the order of the Tribunal. Aggrieved, the Revenue had preferred an Appeal before the HC, who also ruled against the Revenue and held that the interest liability arises from the date of the order of the tribunal and liability to pay interest would arise from the date of the order of the Tribunal.

Thereafter, the Commissioner (A) had passed an order vide which interest on refund was directed to be calculated from expiry of three months after passing of the Tribunal’s final order at 6% p.a. and the Appellant’s demand of interest on interest was denied. Aggrieved, the Appellant preferred an Appeal before the Tribunal.

The Tribunal held that in view of the concurrent orders of Tribunal as well as High Court, since it was held that the interest arises from the date of order and this finding was not challenged by the revenue, it attains finality. Therefore, it was held that the appellant was entitled for interest from the date of order of the tribunal and not from expiry of three months from the date of order.

As regards the demand for interest on interest, the Tribunal observed that there is no provision under the Customs Act to grant the same. Therefore, the Tribunal being a creature under Statute, cannot decide anything beyond the provisions of the law.

Bochasanwasi Shri Aksharpurushottam Swaminarayan Sansth [Customs Appeal No.63 of 2011]

The Petitioner's Electronic Credit Ledger had been blocked u/r. 86A of the CGST Rules on the allegation of wrong availment of credit. The exercise of the power of the said Rule to block the credit had been active as on 03 May 2020. Further, the same had been blocked as on 03 September 2021 as well. Aggrieved, the Petitioner preferred a Writ before the Karnataka HC seeking un-blocking of the credit ledger.

Referring to the Rule 86A(3) of the CGST Rules, the Karnataka HC observed that the period upto which the Credit Ledger can be blocked is one year and such restriction shall be ceased if continued beyond one year’s time. In the instant case, the Credit Ledger had been blocked beyond a period of one year. Therefore, the HC set-aside the blocking of the credit ledger of the Petitioner.

PSN Automotive Marketing Private Limited [Writ Petition No. 16727/2021]

GLS Comments:

Rule 86A had been inserted into the CGST Rules so as to empower the Revenue authorities to block credits for specified allegations, for a specific time period. However, the mis-use of the power had been apparent as the said Rule was being exercised beyond jurisdiction of specified conditions and beyond the time-period prescribed. Accordingly, in order to clarify the scope of Rule 86A and ensure judicious exercise of the Rule, the CBIC has recently issued a Guideline CBEC-20/16/05/2021-GST/1552 dated 02 November 2021. The said guideline categorically clarifies that restriction imposed u/r. 86A(1) shall cease to have effect after expiry of 1 year from the date of imposing such restriction. It is hoped that basis the said Guideline, the non-judicial exercise of Rule 86A can be kept in check.

The CBIC vide Circular No. 166/22/2021-GST dated 17 November 2021 has issued clarifications on various issues relating to refund. The key clarifications of the above-mentioned Circulars have been tabulated hereunder:

The Tamil Nadu Government vide Instruction No. Q1/17253/2019 dated 15 November 2021 had issued instructions on matters relating to E-way Bill system and acceptance of electronic copy of documents. However, given the nascent stage of GST during the issuance of the said circular, certain issues such as multiple places of delivery, multimodel shipment and over dimensional cargo etc. had not been addressed. Upon re-examination of the E-Way Bill issues, the Tamil Nadu Government has made the following amendments to the Circular:

• Where the person in charge of consignment of goods carries e-way bill, invoice or bill of supply or delivery challan, as the case may be, but the same involves minor defects not intended for evasion of tax but however if the documents otherwise clearly show sufferance of tax, then a penalty of up to Rs. 5000 per Act shall be levied;
• The person in-charge of a conveyance can carry the documents i.e. E-way bill and Invoice or bill of supply or delivery challan as the case may be in electronic form and the same shall be accepted. The Roving Squad officer cannot question the same.

GLS Comments:

It has been seen that the Revenue authorities often initiate proceedings against taxpayers for minor procedural lapses in E-Way Bills, even where the bona fide nature of the error is apparent on the face of the document. These proceedings unnecessarily add litigation burden on the already over-burdened judiciary. In order to resolve this issue, the CBIC vide Circular No. 64/38/2018-GST dated 14 September 2018 had prescribed a penalty of Rs. 1,000/- for minor clerical errors in E-Way Bills, such as spelling mistake, pin-code mistake, etc. However, the said Circular had not touched upon the errors committed without the intention to evade taxes.

The TN Government has commendably, issued the instant circular, bringing the errors committed in E-Way Bills, without intention to evade taxes, under a single umbrella of penalty amounting to Rs. 5,000/-. The CBIC shall also take note of the same and follow suit, which will ensure reduction of unnecessary litigation for minor lapses.