GST WEEKLY UPDATE : 52/2022-23 (26.03.2023) By CA Vipul Khandhar

-By CA Vipul Khandhar

1.   Advisory for the taxpayer wishing to register as “One Person Company” in GST dt. 21/03/2023:

• As per provision of section 2(62) of The Companies Act, 2013 “One Person Company” is defined as a company which has only one person as member.
• Some issues have been raised by the persons registering as ‘One Person Company’ while they take GST registration. Upon analysis, it has been noticed that the option of choosing One Person Company is not there in form notified by CGST/SGST Acts and hence not available on the GSTN portal also.
• As a work around, it is advised that in the ‘Part B’ of GST Registration Form ‘REG-01’, applicant may select (Constitution of Business under ‘Business Details’ tab using dropdown list) option “Others”, if the taxpayer wants to register for GST as “One Person Company”. After selecting option as “Others”, the applicant shall also mention “One Person Company” in the text field and follow the steps for a normal registration application to complete the process.

2.    HSN Code Reporting in e-Invoice on IRPs Portal dt. 22/03/2023:

As per Notification no. 78/2020 – Central Tax dated 15th October 2020. As per the above-said notification, it is now mandatory for taxpayers to report a minimum of six-digit valid HSN code for their outward supplies having AATO of more than 5 crores in any previous financial year.

This requirement has already been implemented in the GST system, the E-invoice portal is now in the process of implementing the same at IRPs portal in collaboration with our IRP partners including NIC. It is further suggested that in case wherever valid six digit HSN code is not available, a corresponding valid eight digit HSN code be reported instead of artificially creating six digit HSN code.

They will communicate the exact date of implementation to us shortly.

3. GST Number To Professionals Working From Home:

Will the Minister of Finance be pleased to state:-

(a) whether it is a fact that Management consultants, Architects and other professionals operating from their homes are not allowed to get GST numbers for working from the residential premises;

(b) if so, the details thereof;

(c) whether it is a fact that post COVID-19 pandemic, most of senior professionals and consultants have started their professional activities under the Work from Home (WFH) concept; and

(d) if so, the steps Government is contemplating to allow all Professionals and Management Consultants to work from home and allot GST numbers?

ANSWER THE MINISTER OF STATE FOR FINANCE (SHRI PANKAJ CHAUDHARY)

(a) to (c) The Central Goods & Services Tax Act, 2017 does not restrict GST registration of Management consultants, Architects and other professionals operating from residential premises, due to covid-19 pandemic or otherwise.

(d) Does not arise in view of above.

4. Restaurants can levy GST on service charges, says FinMin:

A provision in law permits restaurants to levy GST on service charges.

5. Advisory on New e-Invoice Portal

We would like to inform you that GSTN has on boarded four new IRPs (Invoice Reporting Portals) for reporting e-invoices in addition to NIC-IRP. As a result, the beta launch of a new e-Invoice portal (www.einvoice.gst.gov.in), has been done where taxpayers can find comprehensive information on e-invoice compliance in a user-friendly format, such as check your enablement status, self-enable themselves for invoicing, search for IRNs, web links to all IRP portals – all the relevant links/information in one convenient location. Taxpayers can log in to the new e-invoice portal using their GSTN credentials for select services pertaining to their GSTIN profiles.

Taxpayers may note that the portal <einvoice.gst.gov.in> is reference site for all masters (data), news and updates, latest releases etc. For registering e-invoices and to access APIs, you still need to go to <einvoiceX.gst.gov.in>sites. The urls of IRPs sites authorised to generate IRNs as on date are as follows:

Also, at the helpdesk for e-invoice issues, for supporting the taxpayers vis-a-vis IRP issues is available at our Grievance Redressal Portal <selfservice.gstsystem.in> where the relevant IRP can be selected using the dropdown created for each of the private IRP.

Please note that taxpayers can continue to report e-invoices on the NIC IRP portal <einvoice1.gst.gov.in>as previously.

GSTN is committed to making your compliance journey as smooth as possible. If you have any questions or concerns, please do not hesitate to contact us. 

6. AAR & Judicial Decisions:

(i) AAAR On Sale of small plots of land with development work is not taxable under GST:

(Applicant – M/s. Rabia Khanum)

AAAR, Karnataka, in the matter of M/s. Ms. Rabia Khanum [KAR/AAAR /02/2023 dated February 14, 2023] has upheld the advance ruling passed by AAR, Karnataka and held that the amounts received by the assessee due to the consideration, advance received on the sale of small plots which have the development work are not taxable under GST.  Stated that, the sale of land developed by the assessee falls under the scope of the term “sale of land” as mentioned in Entry 5 of Schedule III of the Central Goods and Services Tax Act, 2017 (“the CGST Act”), hence it is not taxable.

Held:

The AAAR, Karnataka in KAR/AAAR /02/2023 held as under:

• Observed that, the Respondent owns a land and intends to develop the same with basic amenities required for human inhabitation and form small plots and sell them to individuals after obtaining necessary permission from the concerned Government authorities.
• Noted that, the transfer of land ownership to buyers can only occur after the completion of development works overseen by the relevant authorities. The sale of land is the dominant intention, with development being incidental to it.
• Stated that, in a plotted development, any amounts received from interested buyers are only advances for the purchase of land, not for the development works.
• Further observed that, the Respondent is developing the land because it is required by law to sell the plots, not because the purchaser has requested any services. The development of the land is incidental to the sale of land, and any consideration received is only for the sale of the land. Hence, the Respondent provides no service to the buyer.
• Further stated that, if the Respondent engages a third party to carry out the development activity or provides any additional development work beyond what is mandated by local authorities, that transaction will be taxable under GST as a service.
• Noted that, as per the Impugned Circular,the sale of land, whether as it is or after some development work such as laying down drainage lines, water lines, electricity lines, etc., is covered under SI. No 5 of Schedule III of the CGST Act is not taxable under GST.
• Relied on the judgment of the Hon’ble Supreme Court in the matter of Paper Products Ltd v. Commissioner of Central excise [1999 (112) ELT 765 dated August 24, 1999], wherein, it was held that Board’s circulars are binding on the Department and any action taken by the Department will have to be consistent with the circular which is in force at the relevant point of time therefore, the consideration received from prospective buyers whether as advances or full consideration is only towards obtaining a transfer in the title of the plot of land and hence not taxable under GST in terms of entry 5 of Schedule III of the CGST Act.
• Held that, the sale of land developed by the Respondent falls under the scope of the term “sale of land” as mentioned in entry 5 of Schedule III of the CGST Act.
• Upheld the Impugned Ruling.

Relevant Provisions:

Entry 5 of Schedule III of the CGST Act:

“Activities or transactions which shall be treated neither as a supply of goods nor a supply of services

(5.) Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.”

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.

(Author is a well known Chartered Accountant practicing on taxation at Ahmedabad, Gujarat)