GST WEEKLY UPDATE : 3/2023-24 (16.04.2023) By CA Vipul Khandhar

By CA Vipul Khandhar

1. E invoice rule: 7 Days Restriction applicable to all documents (Invoice, Credit Note, Debit Note) for which IRN is to be generated;(for the entities having turnover more then 100 core) w.e.f 01.05.2023:

• It has been decided by the Government to impose a time limit on reporting old invoices on the e-invoice IRP portals for taxpayers with AATO greater than or equal to 100 crores.
• To ensure timely compliance, taxpayers in this category will not be allowed to report invoices older than 7 days on the date of reporting.
• Please note that this restriction will apply to the all document types for which IRN is to be generated. Thus, once issued, the credit / Debit note will also have to be reported within 7 days of issue.
• For example, if an invoice has a date of April 1, 2023, it cannot be reported after April 8, 2023. The validation system built into the invoice registration portal will disallow the user from reporting the invoice after the 7-day window. Hence, it is essential for taxpayers to ensure that they report the invoice within the 7-day window provided by the new time limit.
• It is further to clarify that there will be no such reporting restriction on taxpayers with AATO less than 100 crores, as of now.
• In order to provide sufficient time for taxpayers to comply with this requirement, which may require changes to your systems, we propose to implement it from 01.05.2023 onwards.

2. DGFT has extended Validity of ANFs and Appendices issued under FTP (2015-20) old policy forms up to 31.05.2023:

• The DGFT vide Public Notice No. 5/2023 dated April 11, 2023extends the validity of ANFs and Appendices notified under Foreign Trade Policy (2015-20) till May 31, 2023.

• In exercise of powers conferred under paragraphs 1.03 and 2.04 of the Foreign Trade Policy, 2023, the Director General of Foreign Trade hereby extends the validity of ANFs and Appendices notified under Foreign Trade Policy (2015-20) till May 31, 2023 or up to the date on which new ANFs and Appendices are notified under Foreign Trade Policy 2023, whichever is earlier, insofar as they are not inconsistent with the provisions of FTP 2023 and HBP 2023.

3. AAR & Judicial Decisions:

(i) AAR On Transaction of Transfer/Sale of one of the independent running business divisions attracts 18% GST:

(Applicant – M/s. Tessolve Semiconductor Private Limited)

Karnataka AAR in the case of M/s Tessolve Semiconductor Private Limited held that the transaction of transfer or sale of one of the independent running business divisions as a whole, along with all the assets and liabilities of the independent business division on a going concern basis, constitutes a transaction of “supply” under Section 7 of the CGST Acts.

The AAR held that the supplier, i.e., the applicant, and the recipient of the supply are not related, and the price is the sole consideration for the supply, and thus the value of the impugned supply shall be the transaction value, which is the price actually paid or payable. The applicant, accordingly, has to arrive at the value of the supply. Thus, because the transaction is a financial service, it gets covered under SAC 997119. The rate of GST applicable to the impugned transaction is 18%.

(ii) AAAR on No GST Exemption on Supply of Manpower Services to Central, State or Local Government:

(Applicant – M/s. Sankalp Facilities and Management Services Pvt. Ltd)

Gujarat AAAR in the case of M/s. Sankalp Facilities and Management Services Pvt. Ltd held that the workers provided by the appellant to various government departments for security, housekeeping, cleaning, data input operators, etc. is ineligible for an exemption under input No. 3 of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017 as amended.

The authority observed that the words “or a Governmental authority or a Government Entity” in the heading Description of services against the referred Entry No.3 to Notification No.12/2017-Central Tax (Rate) has been omitted vide Notification No. l6/2021-Central Tax (Rate) dated 18.11.2021. Further the bench observed that the appellant in their appeal has admitted that there is no entry exempting such services provided to Government offices. The appellant made a mistake of assuming that entry No. 3 specifically exempts all services provided to government offices performing the duties listed in either article 243G or article 243W of the Indian Constitution. The authority observed that the manpower services provided were not related to any activity in relation to any function carried out by these service recipients as entrusted under articles 243G or 243W of the Constitution of India.

(iii) AAAR On Subcontractor of sub contractor of govt contractor not eligible for concessional rate of GST@ 12%:

(Applicant – M/s Shreeji Earth Movers)

Gujarat AAAR In a recent ruling, the Gujarat Appellate Authority for Advance Ruling (GAAAR) ruled that 18% Goods and Services Tax (GST) is applicable on the services supplied by the sub-sub-contractor to sub-contractors.

The appellant, a work contractor and executes and undertake composite supply of works contract as defined in Section 2(119) of Central Goods and Services Tax, 2017 and was awarded a sub-contract by another works contractor to execute the original work of civil construction works supply to the Irrigation department of Gujarat M/s. JSIW Infrastructure Pvt. Ltd (Contractor/original contractor), received the original contract from the irrigation department for the construction of the pumping station and supplying and laying MS pipeline with all allied works..etc and maintenance of the commissioned project for l0 years.

Further, M/s. JSIW Infrastructure executed the same contract with M/s. Radhe Construction (Sub contractor). The sub-contractor executed the same contract with the appellant. Therefore there is no doubt that the appellant got the contract from a sub-contractor who got the main contract from the original contractor. In the instant case the appellant has referred to Sr. No (iii) of Notification No.20/2017- CT (Rate) dated 22.08.2017 to submit that the rate applicable to them is l2%.

The bench observed that the entry No. 3(iii) of the subject Notification provides fbr rate of tax at l2% if any taxable person is providing composite supply of works contract as defined in section 2(119) of CGST Act, 2017 to Central Government, State Government, Union Territory, a local authority or a Governmental Authority or a Government Entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of: a historical monument. archaeological site or remains of national importance, archaeological excavation. or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act. 1958 (24 of 1958); canal, dam or other irrigation works; pipeline, conduit or plant for (i) water supply (ii) water treatment. or (iii) sewerage treatment or disposal. However, it is found that the appellant don’t have any work order issued in their favour by any of the aforesaid Governmental authorities.

The appellant additionally argued that the rate of GST applicable to the primary contractor should be collected from subcontractors as stated in the press release of the 25th meeting of the GST council held on January 18, 2018. The benefit of the lower GST rate only applies to the principal contractor’s subcontractors; the second level subcontractors are not eligible, according to the press release.

The bench held that the appellant is subject to tax discharge at a rate of 18% under Entry No. 3(ii) of Notification No. ll/2017-CT(R) of June 28, 2017, as subsequently revised by Entry No. 3(xii) of the aforementioned Notification.

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.