GST WEEKLY UPDATE : 19/2022-23 (07.08.2022) By CA Vipul Khandhar

By CA Vipul Khandhar

GST WEEKLY UPDATE : 19/2022-23 (07.08.2022)

1. E-Invoicing:

• E-invoicing is made applicable w.e.f  01.10.2022 for the registered person having aggregate turnover of Rs.10 crore and above only vide Notification No. 17/2022–Central Tax dated 01.08.2022. 

• E-invoicing provisions are applicable when the stated aggregate turnover threshold limits crosses in any of previous financial year(s)starting from FY 2017-18. Thus, aggregate turnover limit of current financial year is not to be considered.

• Certain Entity are not required to generate e-invoicing even though their annual aggregate turnover crosses specified limit viz. SEZ units (not developer), insurer or banking company or financial institution, GTA, passenger transport service provider and invoicing in case of services by way of admission to exhibition of cinematograph films in multiplex screens, a government department, a local authority.

• Applicable only for B2B Taxable Supplies of Goods or Services or both, DN/ CN, Exports

• Not Applicable for B2C Supplies, Exempted Supplies (Bill of Supply), Receipt Voucher (on advance received for supply of services), Refund Voucher (Refund of advance money received), Payment Voucher & Self-Invoice (for RCM liability received from unregistered person), ISD Invoice.

2.    The clarifications regarding applicable GST rates & exemptions on certain services has been issued by the CBIC: Circular No. 177,178 & 179/09/2022-TRU dated August 03, 2022:

• Relaxation to ice-cream parlors during the period from 01.07.2017 to 05.10.2021 for the payment of GST @ 5%:

It has been clarified that GST on supply of ice-cream by ice-cream parlors @ 5% without ITC shall be treated as fully GST paid to avoid unnecessary litigation. No refund of GST shall be allowed, if already paid at 18%. With effect from 6.10.2021, the ice Cream parlors are required to pay GST on supply of ice-cream at the rate of 18% with ITC.

• Exemption of GST on application fee charged for entrance or the fee charged for issuance of eligibility certificate for admission or for issuance of migration certificate by educational institutions

It is clarified that the amount or fee charged from prospective students for entrance or admission, or for issuance of eligibility certificate to them in the process of their entrance/admission as well as the fee charged for issuance of migration certificates by educational institutions to the leaving or ex-students is covered by exemption under Sl. No. 66 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

• The storage or warehousing of cotton in baled or ginned form is covered under entry 24B of Notification No. 12/2017-Central Tax (Rate) which exempted services by way of storage and warehousing of raw vegetable fibres such as cotton before 18.07.2022 & now taxable w.e.f. 18.07.2022 @ 18%.

It is clarified that service by way of storage or warehousing of cotton in ginned and or baled form was covered under entry 24B of notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 in the category of raw vegetable fibres such as cotton. It may however be noted that this exemption has been withdrawn w.e.f 18.07.2022

• The services associated with transit cargo both to and from Nepal and Bhutan exemption under Sl. No. 9B of notification No. 12/2017- Central Tax (Rate) dated 28.06.2017:

It is also clarified that movement of empty containers from Nepal and Bhutan, after delivery of goods there, is a service associated with the transit cargo to Nepal and Bhutan and is therefore covered by the exemption.

• Sanitation and conservancy services supplied to Army and other Central and State Government departments exempt from GST.

It is clarified that if such services are procured by Indian Army or any other Government Ministry/Department which does not perform any functions listed in the 11th and 12th Schedule, in the manner as a local authority does for the general public, the same are not eligible for exemption under Sl. No. 3 and 3A of Notification 12/2017- Central Tax (Rate).

• The selling of space for advertisement in souvenirs is liable GST rate @ 5%.

It is clarified sale of space for advertisement in souvenir book is covered under serial number (i) of entry 21 of Notification No. 11/2017-Central Tax (Rate) and attracts GST @ 5%.

• The transport of minerals from mining pit head to railway siding, beneficiation plant etc., by vehicles deployed with driver for a specific duration of time taxable @ 18% .

It is clarified that such renting of trucks and other freight vehicles with driver for a period of time is a service of renting of transport vehicles with operator falling under Heading 9966 and not service of transportation of goods by road. This being so, it is not eligible for exemption under Sl. No. 18 of notification No. 12/2017- Central Tax (Rate) dated 28.06.2017. On such rental services of goods carriages where the cost of fuel is in included in the consideration charged from the recipient of service, GST rate has been reduced from 18% to 12% with effect from 18.07.2022. Prior to 18.07.2022, it attracted GST at the rate of 18%.

• The location charges or preferential location charges (PLC) collected in addition to the lease premium for long term lease of land constitute part of the lease premium or of upfront amount charged for long term lease of land and are eligible for the same tax treatment;

The payment of honorarium to the Guest Anchors liable to GST in the hands of guest anchors as per applicable rate:

It is clarified that supply of all goods & services are taxable unless exempt or declared as ‘neither a supply of goods nor a supply of service’. Services provided by the guest anchors in lieu of honorarium attract GST liability. However, guest anchors whose aggregate turnover in a financial year does not exceed Rs 20 lakhs (Rs 10 lakhs in case of special category states) shall not be liable to take registration and pay GST.

• The additional toll fees collected in the form of higher toll charges from vehicles not having fastag is exempt from GST

It is clarified that additional fee collected in the form of higher toll charges from vehicles not having Fastag is essentially payment of toll for allowing access to roads or bridges to such vehicles and may be given the same treatment as given to toll charges.

• The GST on services in form of Assisted Reproductive Technology (ART)/ In vitro fertilization (IVF) exempt from GST. It is clarified that services by way of IVF are also covered under the definition of health care services for the purpose of above exemption notification.
• The sale of land after levelling, laying down of drainage lines etc., is taxable under GST:

It is clarified that sale of such developed land is also sale of land and is covered by Sr. No. 5 of Schedule III of the Central Goods and Services Tax Act, 2017 and accordingly does not attract GST.

Any service provided for development of land, like levelling, laying of drainage lines (as may be received by developers) shall attract GST at applicable rate for such services.

• RCM applicability to corporate recipients are liable to pay GST on renting of motor vehicles designed to carry passengers

It is clarified that where the body corporate hires the motor vehicle (for transport of employees etc.) for a period of time, during which the motor vehicle shall be at the disposal of the body corporate, the service would fall under Heading 9966, and the body corporate shall be liable to pay GST on the same under RCM. It may be seen that reverse charge thus would apply on act of renting of vehicles by body corporate and in such a case, it is for the body corporate to use in the manner as it likes subject to agreement with the person providing vehicle on rent.

However, where the body corporate avails the passenger transport service for specific journeys or voyages and does not take vehicle on rent for any particular period of time, the service would fall under Heading 9964 and the body corporate shall not be liable to pay GST on the same under RCM.

• The hiring of vehicles by firms for transportation of their employees to and from work is exempt under Sr. No. 15(b) of Notification No. 12/2017-Central Tax (Rate) transport of passengers by non-air conditioned contract carriage

It is clarified that ‘charter or hire’ excluded from the above exemption entry is charter or hire of a motor vehicle for a period of time, where the renter defines how and when the vehicles will be operated, determining schedules, routes and other operational considerations.

In other words, the said exemption would apply to passenger transportation services by non-air conditioned contract carriages falling under Heading 9964 where according to explanatory notes, transportation takes place over pre-determined route on a pre-determined schedule. The exemption shall not be applicable where contract carriage is hired for a period of time, during which the contract carriage is at the disposal of the service recipient and the recipient is thus free to decide the manner of usage (route and schedule) subject to conditions of agreement entered into with the service provider.

• The supply of service of construction, supply, installation and commissioning of dairy plant on turn-key basis constitutes a composite supply of works contract service and is eligible for concessional rate of GST prior to 18.07.2022 @ 12% & after 18.07.2022 gst @ 18%.

It is clarified that a contract of the nature described here for construction, installation and commissioning of a dairy plant constitutes supply of works contract. There is no doubt that dairy plant which comes into existence as a result of such contracts is an immovable property.

It is also clarified that such works contract services were eligible for concessional rate of 12% GST under serial number 3(v)(f) of notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 prior to 18.07.2022. With effect from 18.07.2022, such works contract services would attract GST at the rate of 18% in view of amendment carried out in notification No. 11/2017- Central Tax (Rate) vide notification No. 03/2022- Central Tax (Rate).

• On sale of tickets of private ferry used for passenger transportation:

It is further clarified that, the expression ‘public transport’ used in the exemption notification only means that the transport should be open to public. It can be privately or publicly owned. Only exclusion is on transportation which is predominantly for tourism, such as services which may combine with transportation, sightseeing, food and beverages, music, accommodation such as in shikara, cruise etc.

• GST on payments in the nature of liquidated damage, compensation, penalty, cancellation charges, late payment surcharge The entry at serial 5(e) of Schedule II would reveal that it comprises the aforementioned three different sets of activities viz.

(1). Agreeing to the obligation to refrain from an act – This would include non-compete agreements, where one party agrees not to compete with the other party in a product, service or geographical area against a consideration paid by the other party. Another examples is activities would be a builder refraining from constructing more than a certain number of floors, even though permitted to do so by the municipal authorities, against a compensation paid by the neighbouring housing project, which wants to protect its sunlight.

2. Agreeing to the obligation to tolerate an act or a situation – This would include a shopkeeper allowing a hawker to operate from the common pavement in front of his shop against a monthly payment by the hawker.
3. Agreeing to the obligation to do an act – This would include case where an industrial unit agrees to install equipment for zero emission/discharge at the behest of the RWA of a neighbouring residential complex against a consideration paid by such RWA, even though the emission/discharge from the industrial unit was within permissible limits and there was no legal obligation upon the individual unit to do so.

It has been clarified that GST will not be applicable in below cases : (subject to fact of the case)

• Liquidated Damages
• Compensation for cancellation of coal blocks
• Cheque dishonor fine/penalty Penalty imposed for violation of law
• Notice Pay recovery
• Compensation for not collecting toll charges
• Late payment of surcharge or fee (should be assessed at the same rate as Principal supply)
• Fixed Capacity charges for power
• Cancellation charges (depends upon nature of supply)Electric vehicles whether or not fitted with a battery pack, attract GST rate of 5%:

It is clarified that electrically operated vehicle is to be classified under HSN 8703 even if the battery is not fitted to such vehicle at the time of supply and thereby attract GST at the rate of 5% in terms of entry 242A of Schedule I of notification No. 1/2017-Central Tax (Rate).

• Stones otherwise covered in S. No. 123 of Schedule-I (such as Napa stones), which are not mirror polished, are liable for the gst @5%.

It is clarified that S. No. 123 in schedule-I to the notification No. 1/2017- Central Tax (rate) dated 28.06.2017 covers minor polished stones.

• Mangoes under CTH 0804 including mango pulp, but other than fresh mangoes and sliced, dried mangoes, attract GST at 12% rate:

It is hereby clarified that mangoes, fresh falling under heading 0804 are exempt; Mangoes, sliced and dried, falling under 0804 are chargeable to a concessional rate of 5%; while all other forms of dried mango, including Mango pulp, attract GST at the rate of 12%. To bring absolute clarity, the relevant entry at S. No. 16 of Schedule-II of notification no. 1/2017-Central Tax (Rate), dated 28th June, 2017, has been amended vide notification No. 6/2022-Central Tax (Rate), dated the 13th July, 2022.

Fresh mangoes, falling under heading 0804, continue to remain exempt from GST [S. No. 51 of notification No. 2/2017-Central Tax (Rate), dated the 28th June, 2017].

• Treated sewage water attracts Nil rate of GST:

It is hereby clarified that supply of treated sewage water, falling under heading 2201, is exempt under GST. Further, to clarify the issue, the word ‘purified’ is being omitted from the above-mentioned entry vide notification No. 7/2022-Central Tax (Rate), dated the 13th July, 2022.

• Nicotine Polacrilex Gum attracts a GST rate of 18%:

It is hereby clarified that the Nicotine Polacrilex gum which is commonly applied orally and is intended to assist tobacco use cessation is appropriately classifiable under tariff item 2404 91 00 with applicable GST rate of 18% [Sl. No. 26B in Schedule III of notification no. 1/2017-Central Tax (Rate), dated the 28th June, 2017].

• Fly ash bricks and aggregate – condition of 90% fly ash content applied only to fly ash aggregate, and not fly ash bricks:

It is clarified that the condition of 90 per cent. or more fly ash content applied only to Fly Ash Aggregates and not to fly ash bricks and fly ash blocks. Further, with effect from 18th July, 2022 the condition is omitted from the description.

• Applicability of GST on by-products of milling of Dal/ Pulses such as Chilka, Khanda and Churi: prior to 18.07.2022 either exempt or @5% regularized on as is basis & w.e.f. 18.07.2022 GSt @5% applicable:

The by-products of milling of pulses/ dal such as Chilka, Khanda and Churi are appropriately classifiable under heading 2302 that consists of goods having description as bran, sharps and other residues, whether or not in the form of pellets, derived from the sifting, milling or other working of cereals or of leguminous plants.

It is hereby clarified that the subject goods which inter alia is used as cattle feed ingredient are appropriately classifiable under heading 2302 and attract GST at the rate of 5% vide S. No. 103A of Schedule-I of notification no. 1/2017-Central Tax (Rate), dated the 28th June, 2017 and that for the past, the matter would be regularized on as is basis as mentioned in clarificatory circular.

3. DGFT extends the validity of Status Certificates issued in FY 2015-16 and 2016-17 under FTP 2015-20:

The DGFT vide Public Notice No. 21/2015-2020 dated August 05, 2022 regarding the extension of validity of Status Certificates issued in the Financial Year (“FY”) 2015-16 and 2016-17 under the current Foreign Trade Policy 2015-2020 (“FTP”) till September 30, 2022. Validity of Status Holder Certificates issued in the FY 2015-16 and 2016-17 under the provisions of FTP 2015-20 has been extended up to September 30, 2022.

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 at Ahmedabad in the field of Direct and Indirect Taxation)