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The Applicant had purchased an industrial plot on which GST @18% had been charged by the seller for sale of transferring the rights of the industrial plot. The Applicant had sought an advance ruling before the Gujarat AAR to ascertain the eligibility of ITC of GST paid on input services of Lease Premium paid. The Applicant had submitted that obtaining land on lease cannot be considered to be a service used for construction of immovable property and thus, ITC cannot be disallowed u/s. 17(5)(d) of the CGST Act.

The AAR observed that the expression ‘plant and machinery’ excludes land. Accordingly, with the expression of Plant and Machinery excluding land, explicitly incorporated in the Blocked Credit provision u/s. 17(5) CGST Act, the legislature has expressed its intent that ITC shall not be available in respect of services pertaining to land received by a taxable person for construction of an immovable property including when such services are used in the course or furtherance of business. In view of the above, it was held that ITC shall not be available on lease premium.

JM Chemicals [2021-TIOL-276-AAR-GST]

Authors’ Notes:

In terms of Section 17(5) of the CGST Act, only those supplies, having direct nexus with construction activity are ineligible for credit and not any related activity. The industry is of the view that leasing of land, as a separate transaction, does not have any direct nexus with construction activity and corresponding ITC should be available. However, it is seen that Advance Ruling authorities often take a pro-Revenue approach in such matters. Similar view had been taken by the Tamil Nadu AAR in RE: Inox Air Products Private Limited [2021-TIOL-199-AAR-GST].

The GSTN vide its Update dated 03 January 2022 has informed that w.e.f. 01 January 2022, if a monthly filer has not filed the GSTR-3B for the preceding month, then such taxpayer will not be allowed to file the GSTR-1 for the subsequent month, till the GSTR-3B for the preceding month is filed. This functionality will be implemented on the GST Portal shortly, after which, the system will check the filing of preceding GSTR-3B before permitting to file GSTR-1 for the subsequent month.

The Petitioner had filed a refund application for the period June and August 2018 on 19 April 2021. The said application came to be rejected by the Revenue on the ground that limitation, being filed 2 years beyond the relevant date. Aggrieved, the Petitioner challenged the same before the Madras HC, contending that SC’s Suo Moto Order in [2021-TIOL-246-SC-MISC-LB] which extended the limitation period for various proceedings.

The Madras HC observed that the benefit of the SC’s suo moto order, extending various limitations due to COVID-19 pandemic and the consequential restrictions, would be available to the Petitioner. Basis the said observation, the HC directed the Revenue to consider the refund application afresh.

GNC Infra LLP [W.P.No.18165 and 18168 of 2021]

Authors’ Notes:

It shall be noted that the CBIC vide Circular No. 157/13/2021 – GST dated 20 July 2021 had categorically clarified that proceedings that need to be initiated or compliances that need to be done by the taxpayers would continue to be governed only by the statutory mechanism and time limit provided/ extensions granted under the statute itself. Thus, a view may be taken that the refund applications, being a proceeding to be initiated by the taxpayer is not eligible for the SC’s limitation extension order.

The World Customs Organization had formulated the Harmonized System for coding of goods in 1988 for easement of global trade and bringing about uniformity in classification of goods. While this objective has been substantially met and what has been achieved so far in harmonizing the tariff codes has been nothing short of a phenomenon, there is a long way to go in achieving complete harmonization!

To ensure the harmony in classification, the DGFT had issued notices urging the importers/exporters to use specific classification and avoid residual categories. The DGFT had also proposed to bring about a licensing regime for classifying the goods under such residual category. However, an immediate switch from classifying goods under residual category to specific tariff headings may not be as simple as it seems as there are various hurdles in doing so. Delving into the intricacies of tariff classification and the consequences of changes, the authors have penned down an article titled ‘Classification of Goods Under ‘Others’ Category - A Catch – 22 Situation!!’

The article as published on the Taxsutra portal has been attached herewith. We hope that reading of the Article would bring an enriching experience to you!!

The DGFT vide Notification No. 48/2015-2020 dated 31 December 2021 has amended Para 3.13A of the FTP to extend the due date of submitting applications for scrip-based schemes under MEIS, SEIS, ROSCTL, ROSL and 2% additional ad hoc incentive, to 31 January 2022

The much-awaited extension for furnishing of Annual Return in Form GSTR-9 and Reconciliation Statement in Form GSTR-9C for the F.Y. 2020-21 has been extended to 28 February 2022 vide Notification No. 40/2021 – Central Tax dated 29 December 2021. The key highlights of the Notification No. 40/2021, notifying the 10th amendment to CGST Rules, have been summarised hereunder:

Conditions for availing ITC – Rule 36(4)

Rule 36(4) of the CGST Rules has been amended to provide that the recipient would not be able to take any ITC if the same is not appearing in his GSTR-2B.

Due Date for filing of Annual Return for F.Y. 2020-21

The due date for furnishing of Annual Return in Form GSTR-9 and Reconciliation Statement in Form GSTR-9C for the F.Y. 2020-21 has been extended to 28 February 2022

Refund of Tax without UIN on invoice

Rule 95 of the CGST Rules has been so amended to provide that refund in cases where Unique Identification No. (‘UIN’) is not mentioned in the invoice in respect of which refund is claimed, shall be available only if the same is duly attested by the authorised representative and submitted along with the refund application. The said amendment has come into effect from 01 April 2021

Detention / Seizure of Vehicles

The time limit to pay the tax and penalty determined u/s. 129 of the CGST Act for detention / release of vehicles, post the issuance of Show Cause Notice has been reduced from 14 days to 7 days 

Recovery of penalty by sale of goods or conveyance detained or seized in transit

Rule 144A has been inserted into the CGST Rules which empowers the proper to recover penalty by way of sale or disposal of the goods or conveyance so detained where the owner of the goods has not paid the penalty so determined u/s. 129 of the CGST Act, within 15 days of receipt of the order

Disposal of proceeds of sale of goods and movable or immovable property

Rule 154 of the CGST Rules has been so amended to provide appropriation of proceeds of sale of goods or conveyance and movable or immovable property, against the following sequentially:

• the administrative cost of the recovery process;
• the amount to be recovered in respect of the payment of the penalty payable u/s. 129(3) in relation to detention of goods or conveyance;
• any amount due from the defaulter under the GST Acts or Rules made thereunder;
• any balance, to be paid to the defaulter

Thereafter, a sub-rule 2 has been inserted to provide that where it is not possible to pay the balance of sale proceeds to the person concerned within a period of six months, such balance of sale proceeds shall be deposited with the Fund

Provisional attachment of property

Rule 159 of the CGST Rules has been amended to inter alia provide that the Commissioner shall send a copy of the order of attachment in FORM GST DRC-22, be sent to the person whose property is being attached under section 83. The said rule has been further amended to prescribe that the objection to the attachment order is to be filed in Form GST DRC-22A.

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]