GST WEEKLY UPDATE : 21/2021-22 (22.08.2021) by CA Vipul Khandhar

By CA Vipul Khandhar

(Author is an eminent Charted Accountant practicing at Ahmedabad) 

1. Government ‘restricts’ export policy of COVID-19 Rapid Antigen testing kits:

The Directorate General of Foreign Trade vide Notification No. 18/2015-2020 dated August 16, 2021 has put restriction on export of COVID-19 rapid Antigen testing kits with immediate effect. Existing policy of export of COVID-19 rapid Antigen testing kits was ‘Free’.

Government has declaraed RODTEP incentive scheme for the exporter:

• Notification No. 19/2015-2020 – Dated 17th August, 2021Central Government has announced a much awaited RoDTEP (Remission of Duties and Taxes on Exported Products.
• Incentive rates has been prescribed in Appendix 4R covering almost all HSN Codes.
• MEIS Scheme: RoDTEP Scheme shall replace MEIS Scheme.
• Applicability: RoDTEP Scheme shall be applicable from 01st January, 2021.
• The tax incentive rates range from 0.5 per cent to 4.3 per cent for various sectors.
• Rebate would be granted to the eligible exporters at a notified rate as a percentage of FOB value.
• All exporters of goods are eligible to take benefit under this scheme. Such exporter may either be the merchant or manufacturer exporter. However, such goods should have been directly exported by such person. 8555 tariff items have been provided on which the rebate is available.

However, the following supplies / items / categories have been treated as ineligible for rebate:

2. Export of imported goods covered under paragraph 2.46 of FTP
3. Exports through trans-shipment, meaning thereby exports that are originating in third country but trans-shipped through India

iii. Export products which are subject to Minimum export price or export duty

1. Products which are restricted for export under Schedule-2 of Export Policy in ITC (HS)
2. Products which are prohibited for export under Schedule-2 of Export Policy in ITC (HS).
3. Deemed Exports

vii. Supplies of products manufactured by DTA units to SEZ/FTWZ units

viii. Products manufactured in EHTP and BTP

1. Products manufactured partly or wholly in a warehouse under section 65 of the Customs Act, 1962 (52 of 1962)
2. Products manufactured or exported in discharge of export obligation against an Advance Authorization or Duty Free Import Authorization or Special Advance Authorization issued under a duty exemption scheme of relevant Foreign Trade Policy
3. Products manufactured or exported by a unit licensed as hundred per cent Export Oriented Unit (EOU) in terms of the provisions of the Foreign Trade Policy

xii. Products manufactured or exported by any of the units situated in Free Trade Zones or Export Processing Zones or Special Economic Zones

xiii. Products manufactured or exported availing the benefit of the Notification No. 32/1997-Customs dated 1st April, 1997.

xiv. Exports for which electronic documentation in ICEGATE EDI has not been generated/ Exports from non-EDI ports

1. Goods which have been taken into use after manufacture

• Rebate would not be dependent on the realization of export proceeds at the time of issue of rebate. However, adequate safeguards would be put in place so that rebate would be disallowed in case of non-receipt of sale proceeds within the time allowed under Foreign Exchange Management Act 1999.
• The scrips would be transferable to any other person having a valid IEC and valid ICEGATE Registration.
• The e-scrips would be utilized for payment of duty of Customs leviable under First Schedule to the Customs Tariff Act, 1975 i.e. Basic
• Customs Duty. It cannot be utilized towards payment of any other taxes like IGST, Compensation Cess etc. upon the import of goods.

2. Recent AAR & Judicial Decisions:-

(i) AAR On 18% GST payable on Gota Flour, Khaman Flour, Dalwada Flour, Dahiwada Flour, Dhokla Flour, Idli Flour, Dosa Flour:

(Applicant – M/S. Kitchen Express Overseas)

The Gujarat Authority of Advance Ruling ruled that 18% GST payable on Gota Flour, Khaman Flour, Dalwada Flour, Dahiwada Flour, Dhokla Flour, Idli Flour, and Dosa Flour.

The applicant, is a supplier of Pulses, Flours, Namkeen, Mix Flours, and other food products including Khaman Flour, Gota Flour, Dalwada Flour, Dahiwada Flour, Dhokla Flour, Idli Flour, and Dosa Flour, supplied in a unit container under the registered brand name of ‘KITCHEN XPRESS’. These flours are in the form of an instant mix of flour of grains, which is then used to prepare instant farsan and other similar dishes by following the directions of the recipe after adding such other ingredients as required.

The applicant has sought the advance ruling on the issue under which Chapter, Tariff Heading and HSN, the different varieties of Flours i.e. Gota Flour, Khaman Flour, Dalwada Flour, Dahiwada Flour, Dhokla Flour, Idli Flour, and Dosa Flour manufactured and supplied by applicants will attract CGST or SGST.

The AAR held that the products i.e. Gota Flour ii. Khaman Flour iii. Dalwada Flour iv. Dahiwada Flour v. Dhokla Flour vi. Idli Flour and vii. Dosa Flour is classifiable under HSN. 2106 90 (Others) attracting 18% GST (9% CGST and 9% SGST) as per Sl. No. 23 of Schedule-III to the Notification No.01/2017- Central Tax (Rate) dated June 28, 2017. “thus, ‘Food preparations not elsewhere specified or included’ falling under Chapter Heading 2106 are covered under the aforesaid Entry at Sr. No. 23 of Schedule- III of Notification No. 1/2017-Central Tax, as amended, attracting Goods and Services Tax @ 18% (CGST 9% + SGST 9%), though some of the specific products of Chapter Heading 2106 excluded from this entry are covered under different entries of Schedule-I or Schedule-II, attracting Goods and Services Tax @ 5% or 12%. None of the aforesaid 7 products of various Instant Mix / Ready Mix Flour being supplied by the applicant are the products which have been excluded from the entry at aforesaid Sr. No. 23 of Schedule – III or which have been specifically included in any other entry of other Schedule of Notification No. 1/2017-Central Tax, as amended or in any of the entries of Notification No. 2/2017-Central Tax,” the AAR said.

(ii) AAR On No GST leviable on Amount representing Employees portion of Canteen Charges:

(Applicant – M/s Tata Motors)

The AAR ruled that 18% GST is payable on the cost of the diesel incurred for running DG Set in the course of providing DG Rental Service.

The Applicant, M/s Goodwill Auto’s is a partnership firm registered under the Goods and Services Tax Act, 2017 and is engaged in the business of leasing DG Set to customers like LIC of India, Syndicate Bank, and SBI in various districts of Karnataka. Further, the applicant has entered into an agreement with Life Insurance Corporation of India (LIC), Branch Office at Koppa, Udupi to install Diesel Generator on a hire basis for rent along with reimbursement of diesel cost per hour on the usage of the DG Set.

Since diesel is a non-GST good as per section 9 of the CGST/KGST Act, 2017,The applicant sought the advance ruling in respect of GST applicability of cost of the diesel incurred for running DG Set in the course of providing DG Rental Service. The cost of the diesel incurred for running DG Set in the course of providing DG Rental Service is nothing but additional consideration for the supply of DG Set on rent as per section 15 of the CGST/KGST Act and hence attracts 9% CGST and 9% KGST.

(iii) AAR On IGST on importation of tank containers lease services into India:

(Applicant – Deccan Transco Leasing Private Limited)

GST liable to be paid on leasing of tank containers taken form a supplier i e., lessor who is located outside India and the tank containers do not reach India? As it is finance lease, it is supply of goods and tank containers do not reach the Indian Territory.

(iv) AAR On Bus Body Building on chassis supplied by customer on job work basis is supply of Services:

(Applicant – Tvl Anamallais Engineering (p) Ltd.)

The activity of bus body building undertaken on the chassis supplied by the customers to the applicant amounts to supply of service as per Schedule II clause 3 of CGST Act 2017

The service rendered is classified under SAC 998881 and the applicable rate will be CGST @ 9% and SGST @ 9% as per entry no.26 of Notification no.11/2017-Central Tax (Rate) dt. 28.06.2017 (as amended) and Sl.No.26 of Notification No. I1(2)/CTR/532(d-14)/2017 vide G.O. (Ms) No. 72 dated 29.06.2017(as amended) respectively.

Disclaimer:

This publication contains information for general guidance only. It is not intended to address the circumstances of any particular individual or entity. Although the best of endeavour has been made to provide the provisions in a simpler and accurate form, there is no substitute to detailed research with regard to the specific situation of a particular individual or entity. We do not accept any responsibility for loss incurred by any person for acting or refraining to act as a result of any matter in this publication.