The Ministry of Finance vide Press Release dated 28 February 2021 has decided to extend the due date for filing Annual Return in Form GSTR-9 and Reconciliation Statement in Form GSTR-9C for the F.Y. 2019-20 till 31 March 2021 with the approval of Election Commission of India
The CBIC vide Notification No. 14/2020 – CT dated 21 March 2020 had notified that Dynamic QR Code would be required on B2C invoice issued by taxpayers having aggregate turnover of more than Rs. 500 crore, w.e.f. 01 December 2020. Further, the penalty had been waived for non-compliance of the provisions of the said notification till 31 March 2021, subject to certain conditions.
In respect of the said notification, the CBIC vide Circular No. 146/02/2021-GST dated 23 February 2021 has issued further clarifications:
Sr. No. |
Issue |
Clarification |
1 |
To which invoice is NN. 14/2020 applicable? Would the requirement be applicable on invoices issued for supplies made for Exports |
NN. 14/2020 is applicable to tax invoices issued to an unregistered person by a registered person whose annual aggregate turnover exceeds Rs. 500 Cr in any of the financial years from 2017-18 onwards. However, the said notification is not applicable to an invoice issued in following cases: Where the supplier is: · an insurer or a banking company or a financial institution, including NBFC; · GTA supplying services in relation to transportation of goods by road in a goods carriage; · supplying passenger transportation service; · supplying services by way of admission to exhibition of cinematograph in films OIDAR supplies made by any registered person, who has obtained registration under section 14 of the IGST Act 2017, to an unregistered person. As e-invoices are required to be issued in respect of supplies for exports, treating them as B2B supplies, NN. 14/2020 is not be applicable to them.
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2 |
What parameters / details are required to be captured in the QR Code?
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Following information is required to be captured in QR Code: · Supplier GSTIN number; · Supplier UPI ID; · Payee’s Bank A/c number and IFSC; · Invoice number & invoice date; · Total Invoice Value and · GST amount along with breakup i.e., CGST SGST, IGST, CESS, etc. |
3 |
If a supplier provides QR Code, but the customer opts to make payment without the same, whether the cross reference of such payment, on the invoice, be considered as compliance of QR Code on the invoice? |
If the supplier has issued invoice having QR Code for payment, the said invoice shall be deemed to have complied with the requirements. In cases where the supplier, has digitally displayed the QR Code and the customer pays for the invoice: - · Using any mode like UPI, credit/ debit card or online banking or cash or combination of various modes of payment, with or without using Dynamic QR Code, and the supplier provides a cross reference of the payment on the invoice; or · In cash, without using QR Code and the supplier provides a cross reference of the amount paid in cash, along with date of such payment on the invoice.
The said invoice shall be deemed to have complied with the requirement of having QR Code. |
4 |
If the supplier makes available to customers an electronic mode of payment or similar other modes of payment, through mobile applications, where though QR Code is not displayed, but the details of merchant as well as transaction are displayed otherwise, how can the requirement of QR Code be complied with?
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In such cases, if the cross reference of the payment made using such electronic modes of payment is made on the invoice, the invoice shall be deemed to comply with the requirement of QR Code. However, if payment is made after generation of invoice, the supplier shall provide Dynamic QR Code on the invoice. |
5 |
Is generation of QR Code on B2C invoices mandatory for pre-paid invoices?
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If cross reference of the payment received either through electronic mode or through cash or combination thereof is made on the invoice, then the invoice would be deemed to have complied with the requirement of QR Code. In cases other than pre-paid supply, the supplier shall provide Dynamic QR Code on the invoice.
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6 |
Once the E-commerce operator or the online application has complied with the QR Code requirements, will the suppliers using such e-commerce portal or application for supplies still be required to comply with the requirement of QR Code?
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The provisions of NN. 14/2020 shall apply to each supplier separately, if such person is liable to issue invoices with QR Code for B2C supplies. In case, the supplier is making supply through the E-commerce portal or application, and the said supplier gives cross references of the payment received in respect of the said supply on the invoice, then such invoices would be deemed to have complied with the requirements of QR Code. In cases other than pre-paid supply, the supplier shall provide Dynamic QR Code on the invoice. |
The Ministry of Finance vide Press Release dated 22 February 2021 has clarified that the time limit for sanction of pending IGST refunds stands extended till 31 March 2021, in such cases where records have not been transmitted to ICEGATE due to GSTR1 and GSTR3B mismatch. The Ministry of Finance further provided that such facilitation overcomes the problem of refund blockage by allowing refunds subject to post refund audit scrutiny and undertakings of CA certificates by the exporters.
It has been further provided that the CBIC has also extended the facility for resolving invoice mismatch errors through customs officer interface on permanent basis. Earlier this facility was provided for a limited period i.e. in respect of shipping bills filed up to 31.12.2019. The exporter may now avail the facility of correction of Invoice mis-match errors in respect of all past shipping bills, irrespective of its date of filing subject to payment of prescribed fees.
The DGFT vide Trade Notice No. 42/2020-21 dated 19.02.2021 has proposed to issue online Certificate of Origin (Non-Preferential) tentatively w.e.f. 01 April 2021. The online applications for CoO would be processed in terms of the provisions of Rules of Origin as prescribed under the Handbook of Procedures, based on the declaration of exporter to the issuing agency without any scrutiny of documents.
However, the documents such as invoices, etc. would be available for scrutiny, where cross verification would be required. Further, the online CoO has been proposed to be issued at a uniform fee of Rs. 100/-. It has been further provided that the applicants will be able to avail CoO (non-preferential) in either online or manual till 30 March 2021. Thereafter, w.e.f. 01 April 2021, the applications would be accepted only in online mode.
The CBIC vide Notification No. 17/2021 – Customs (N.T.) dated 17 February 2021, has prescribed a fee of Rs. 1,000/- for amendment in Customs Automated System for handling a mis-match between Shipping Bill and GST Returns
The Applicant, situated in Pathderi, Haryana, had been supplying un-assembled sub-assembles of railway components, to its additional place of business located in Chennai. The sub-assemblies were then being assembled completely and finally supplied to the Integral Coach Factory, Chennai (‘ICF Chennai’). Accordingly, the Chennai unit of the Applicant, would bill to its parent unit in Pathderi and ship the assemblies directly to ICF Chennai.
In view of the afore-stated background, the Applicant sought an Advance Ruling before the Haryana AAR to ascertain the tariff classification of sub-assemblies supplied from Pathredi unit to Chennai unit as well as the IGST rate applicable.
Upon perusal of the invoice, the AAR observed by the AAR that the items supplied by Pathredi unit to the Chennai unit were in fact parts and sub-parts of sub-assemblies. It was further observed that fabrication of sub-parts was to be done at the Chennai unit. The AAR remarked that fabrication is generally defined as the process of making something from semi-finished or raw materials rather than from ready-made components, hence, the process done at Chennai unit amounted to work process or manufacturing.
The AAR further referred to the Explanatory Notes and the General Rules of interpretation, which provides that incomplete or unfinished articles presented unassembled or disassembled are to be treated as finished goods. However, it had been observed that in the instant case, parts which will are to be assembled in Chennai, are being assembled by adding some other components procured from other suppliers.
It was further observed that the Applicant would be undertaking the process involving in-house inspection, fabrication, welding, painting, leakage testing and final inspection. Accordingly, it can be said that assembly operation as well as addition of components was being undertaken to prepare the parent assembly in Chennai unit.
The AAR further referred to Para 4 of Circular No. 30/4/2018-GST dated 25 January 2018, wherein it has been clarified that only the goods classified under chapter 86 supplied to the railways would attract GST at 5% with no refund of unutilized ITC and other goods would attract the general rates even if supplied to railways.
Basis the above observations, the AAR held that the goods supplied from Pathredi unit of the Applicant to Chennai unit cannot be classified under chapter 86 and would therefore attract the general rate applicable as per the classification of each item in their respective chapters.
JSL India Private Limited [Advance Ruling No. HAR/HAAR/R/2018-19/51]
GLS Comments:
Even after more than 45 years of the introduction of Tariff in India, the classification of parts of railway goods is still a major subject of dispute. Although the Haryana AAR has not touched upon the Section Notes to the Tariff, it would be pertinent to note that the instant dispute is majorly on account of two rather contradictory Notes. While Note 2 to Section XVII of the Tariff Act (which covers railway goods) provides that parts of general use, even if being used in railways, shall be classified in respective chapters other than 86, Note 3 provides that parts, being used solely and principally with Railways shall be remain classifiable under Chapter 86.
It would be pertinent to note that the matter relating to classification of goods, where assembly occurs at the site of supply, has been majorly litigated in the excise regime as well. In the case of Bharat Heavy Electricals Limited [2018 (14) G.S.T.L. J74], it had been held that boiler parts cleared in unassembled form as incomplete boiler and assembled at site, are classifiable under sub-heading 8402 as boiler and not the sub-heading as parts. Taking note of the SC judgement, it seems that the instant AAR seems to have taken a different approach in this case.
The CBIC has recently released FAQs on services by way of transport and logistics to clarify various issues under GST. Following are the key highlights of the FAQs:
GTA Services
Sr. No. |
Issue |
Clarification |
1 |
I am a single truck owner-operator and I ply my truck mostly between States, carrying the goods booked for my truck by an agent; aggregate value of service which I provided exceeded twenty lakh rupees during last year. Am I supposed to take registration? |
Road Transporters are not liable for GST registration, as such services are exempt under GST under Notification No. 12/2017 - Central Tax (Rate) dated 28 June 2017 |
2 |
I own a single truck and I rent it to a major player, who provides GTA service; should I take a registration? Does my monthly rental/lease income attract GST? |
Truck owners who rent their trucks to major players providing GTA services are not required to obtain GST registration as the same is exempt under GST |
3 |
I am a truck supplier/broker. My job is to get orders for truck owners. I quote the rate for transportation to GTA on behalf of truck owners and I get a small amount as commission out of the truck hire fixed with the GTA. This brokerage is paid by the truck owners. As the services provided by way of transportation of goods by road are exempt from tax, am I liable to registration? |
Agents between truck owners and GTA service providers are liable to obtain GST registration if the aggregate amount of commission received by them exceeds Rs. 20 lakhs in a F.Y. |
4 |
Are intermediary and ancillary services, such as, loading/unloading, packing / unpacking, trans-shipment and temporary warehousing, provided in relation to transportation of goods by road to be treated as part of the GTA service, being a composite supply, or these services are to be treated as separate supplies. |
Any intermediary and ancillary service provided in relation to transportation of goods by road, and charges, for such services are included in the invoice issued by the GTA, such service would form part of the GTA service and would not be treated as a separate supply. Any service provided along with the GTA service that is part of the composite service of GTA is to be taxed along with GTA service and not as separate supplies. However, if such incidental services are provided as separate services and charged separately, they shall be treated as separate supplies |
5 |
As per Notification number 05/2017-Central Tax dated 19 June 2017, the persons who are only engaged in making supplies of taxable goods or services or both, the total tax on which is liable to be paid on reverse charge basis by the recipient of such goods or services or both under sub-section (3) of section 9 of the CGST Act, 2017 are exempted from obtaining registration under the said Act. Please clarify whether a GTA providing service in relation to transportation of goods by road under reverse charge mechanism (RCM) can avail of the benefit of this exemption. |
A GTA providing service in relation to transportation of goods by road under RCM can avail of the benefit of exemption under Notification No. 05/2017 – Central Tax (Rate) dated 19 June 2017 |
6 |
Please clarify whether input tax credit is available to the recipient of service, when the GST paid by him is at a concessional rate of 5% under RCM. |
ITC is available to the recipient of services, when the GST paid by him is at a concessional rate of 5% under RCM; |
Airline Services
Sr. No. |
Issue |
Clarification |
1 |
In section 2 (3) of the IGST Act, 2017, the term “continuous journey” has been defined to mean a journey for which a single or more than one ticket or invoice is issued at the same time, either by a single supplier of service or through an agent acting on behalf of more than one supplier of service, and which involves no stopover between any of the legs of the journey for which one or more separate tickets or invoices are issued.
Do all stopovers cause a break in continuous journey? Does the definition of “continuous journey” include instances whereby the stopover is for any period of time? |
The term ‘stopover’ means a place where a passenger can disembark either to transfer to another conveyance or break his journey for a certain period in order to resume it at a later point of time. However, all stopovers do not cause a break in continuous journey; |
2 |
How GST is to be charged on a multi-leg international journey, say Delhi- Dubai-Boston-Dubai-Delhi? Is GST chargeable for the entire journey and discharged at Delhi, or the GST is to be charged for Delhi-Dubai sector alone and discharged at Delhi, or GST is to be charged up to the farthest point of return, i.e. Delhi-Dubai-Boston at Delhi? |
In case of multi-leg international transactions, if a single invoice has been issued, it will be considered as a continuous journey and GST would be applicable. As for the return journeys, GST would be applicable only in cases where the location of the supplier is in India; |
3 |
Does the GST treatment on fees for ancillary services in relation to air transport follow that of the underlying air transport service? |
Ancillary services in relation to air transport, being part of the service of transporting a passenger by air, do not constitute a separate supply of service. Accordingly, ancillary services include services that are incidental to the transport of passengers by air. Therefore, ancillary services shall be treated within the same category of service as transport of passengers by air and shall attract the same rate of GST as applicable to the transport of passengers by air; |
While all eyes were on the Budget 2021-22 announced by the Finance Minister on 01 February 2021, there have also been substantial developments in the tax front in the month of January 2021 as well. Notably, the CBDT has already notified the Faceless Penalty Scheme, 2021 and the CBIC has notified the Custom Authority for Advance Ruling Regulations, 2021.
Bringing you all the relevant judicial, legislative and regulatory developments in Direct and Indirect Tax, we are glad to present you the 6th Edition of our ‘Vision 360’ Newsletter in association with TIOL.
We hope that reading of the newsletter would bring an enriching experience to you! Your valuable feedback is always welcome at consult@gstlegal.co.in or updates@gstlegal.co.in.
The CBIC vide Circular No. 145/01/2021-GST dated 11 February 2021 has issued a Standard Operating Procedure (‘SOP’) for implementation of the provision for suspension of registrations. As per Section 21(2A) of the CGST Act, registration shall be suspended, where upon comparison of the returns, it is indicated that there are significant differences or anomalies indicating contravention of the provisions of the Act or the Rules.
The said Rule specifies that the registration of taxpayers shall be suspended and system generated intimation of suspension and notice of cancellation of registration shall be intimated vide Form GST REG-31. However, as the functionality of GST REG-31 has not been made operational yet, the CBIC has provided the following guidelines for implementation of the provision of suspension of registrations:
The Applicant, having multiple locations throughout India, had been engaged in the business of passenger and cargo transport and services by air. The Applicant, having its Corporate Office in Haryana (‘HO’), had been procuring various goods / services under their GSTIN, while the same were being directly supplied at its Branch Offices (‘BO’)’.
In order to ensure up and running condition of the aircrafts, the Applicant maintained various spare parts at its HO itself. In reference thereto, the Applicant had taken aircraft under lease model. Accordingly, the Applicant had entered into various contracts, (contractual location being Haryana) with different vendors on which the IGST was being paid under RCM on the lease rentals in the State of Haryana.
Further, the spares were ordered by the HO and the bill of entry was also filed with their GSTIN, however, the goods were being dispatched at the respective locations as per the requirement. The Applicant further procured assurance services (for repair of aircraft) from vendors located outside India in the State of Haryana and paid the GST under RCM. Further, the HO had entered into an agreement with its BO's for supply of maintenance services including assurance. The cost of such supply shall be equal to the cost of assurance services plus the cost of spares plus any other costs incurred plus mark-up thereon.
In view of the above, the Applicant had sought a ruling before the Haryana AAR to ascertain whether:
Referring to Section 7 of the CGST Act, the AAR observed that the term ‘supply’ includes all forms of supply including licence, rental, lease or disposal for a consideration in the course or furtherance of business. It was further observed that the HO had been charging a mark-up over and above the cost of assurance services, cost of spare parts and any other cost in relation to upkeep and maintain the aircrafts, thereby adding value to the cost and hence, incurring a taxable supply of service.
The AAR further noted that the HO and BO being separate GST registrants, qualify as ‘distinct persons’ and therefore any supply between the two parties would be chargeable to GST. Accordingly, it was ruled that the charges in lieu of maintenance services recovered by the HO from the BO shall qualify as supply of service.
Further, referring to Section 2(93) of the CGST Act, it was observed by the AAR that ISD is the 'recipient' as it is the person making payment of consideration for the supply of goods or services. It was further observed that the very basis of the ISD related provisions under the CGST Act is that the ISD is not a supplier of goods or services and does not make any 'outward supply' but is entitled to distribute credit.
The AAR further noted that ISD mechanism is meant only for distributing the credit on common invoices pertaining to input services only and not goods inputs or capital goods. Accordingly, it was ruled that the ITC pertaining to services only on the procurement made by HO towards maintenance of aircraft shall be distributed by way of ISD mechanism and the credit pertaining to goods, including capital goods, shall be distributed by normal mechanism.
GLS Comments:
The issue of treatment of common services has always been a contentious issue in the GST regime. This instant AAR has correctly ruled that a corporate office and a branch office are two distinct persons and therefore the transactions between the two would qualify as 'supply'. The Haryana AAR in the instant case has followed the ruling of Karnataka AAR in the case of Columbia Asia Hospitals Private Limited [Advance Ruling No. KAR ADRG 15/2018 dated July 27, 2018], wherein it had been ruled that activities performed by the employees at the corporate office in the course of or in relation to employment such as accounting, other administrative services for the units located in the other states shall be treated as supply as per Entry 2 of Schedule I of the CGST Act. The instant ruling of Haryana AAR has re-affirmed this position of law under GST.
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