GST WEEKLY UPDATE : 29/2021-22 (17.10.2021) By CA Vipul Khandhar

By Vipul Khandhar, (Charterd Accounts)

1. GST Advisory On Availability Of ITC For F.Y.2020-21:

• As per Section 16(4) of CGST Act, 2017, no taxpayer shall take input tax credit in respect records (invoices and debit notes) for supply of goods or services (or both) for Financial Year 2020-21 after the due date of furnishing the return for the month of September 2021. The due date for the GSTR-3B for September 2021 is either 20th October 2021 for monthly filers and 22nd or 24th October 2021 depending on the State/UT of registration of the taxpayer. In view of the same, the following may kindly be noted:

(i) Records (invoice or debit notes) pertaining to Financial Year 2020-21 reported in GSTR-1 after due date of GSTR-3B of September 2021 will not reflect as “ITC Available” in GSTR-2B of the recipients. Such records will reflect in “ITC Not Available” section of GSTR-2B and such ITC shall in turn not be auto-populated in GSTR-3B

(ii) Records (invoice or debit notes) pertaining to Financial Year 2020-21 reported in GSTR-1 after due date of GSTR-3B of September 2021 will also not reflect as “ITC as per GSTR-2A” in Table-8A of GSTR-9 of the recipients.

• It is requested that the taxpayers may take note of the above and ensure that their records pertaining to Financial Year 2020-21 are reported on or before the due date of their GSTR-3B for the month September 2021, or for the quarter of July to September 2021 in case of quarterly GSTR-3B filers. Availment of ITC by the recipients contrary to the legal provisions in GST may entail action by the tax administrations in accordance with law

2. Invoice Incentivisation:

• Mera Bill Mera Adhikaar is conceptualised as scheme which incentivises citizens & consumers to ask for genuine invoices from the seller when making business to consumer (B2C) purchase of goods or services, which are under the purview of Goods and Services Tax. This would serve the objective of encouraging tax compliant behaviour, in the business to consumer (B2C) stage of the transactions, by the consumers & business across India.
• GSTN, with it’s partner for this application (M/s e-connect Solutions Pvt. Ltd.), is developing a technology platform which will enable citizens to register themselves and upload invoices on a user friendly mobile application and portal. Robust technology will allow this mobile application & portal to automatically read the key details from printed invoices, like GSTIN, invoice number, amount paid & tax amount.
• At the end of a month, few lucky invoices would be identified by a process of draw of lots, and given reward as an incentive of observing tax compliant behavior. The draw of lots will be conducted by another Government agency. Since the draw of lots would be conducted on individual invoices, every invoice could be a potential future reward at the time of upload. Thus, uploading more invoices in a month would increase a consumer’s chance of winning the reward. Consequently, citizens would be incentivised to report maximum number of transactions on this system. The system would also facilitate verification of winning invoices before disbursal of reward, to ensure that only genuine invoices are given the reward.
• This scheme would serve multiple objectives of incentivizing and rewarding compliant behaviour by the consumers, encouraging tax compliant businesses, boosting consumer spending, and, checking tax evasion.

3. Implementation of Electronic Cargo Tracking System for sealing and monitoring of goods at Tughlakabad ICD

• The Office of the Principal Commissioner of Customs (Import) Tughlakabad, New Delhi issued Public Notice No. 31/2021 dated October 13, 2021r.t application of Electronic Cargo Tracking System (“ECTS”)for sealing and monitoring of goods to be deposited in Customs Bonded Warehouses under Chapter IX of the Customs Act, 1962.
• Accordingly, a pilot project is envisaged by using Electronic Cargo Tracking System (ECTS) which consists of GPS-enabled high security seals and a blockchain technology based online module that seeks to address the above issues and bring in more efficiency, visibility, and monitoring capability. ECTS allows monitoring of movement of containers/vehicles on real-time basis and provide immediate alerts, in case of any violations so that immediate action can be initiated.
• At the destination (bonded warehouse), the warehouse keeper will check whether the ECTS seal is intact and unseal the same. The details of seal number, date and time of movement from the source location, the date and time of entry in the destination location and the unsealing will be captured by the portal. A trip report will be generated thereafter, which can be seen by the customs officers, and by the stakeholders involved. The trip report will serve as the proof of receipt of the goods. In case the ECTS seal is found to be tampered, customs will initiate investigative action, based on the alert generated.

4. Issues Instruction on Alternate method for transfer of space by an existing unit under SEZ

• The Government has issued the instruction on an Alternate method for transfer of space by an existing unit under Rule 74 of the SEZ. As per existing provisions, an SEZ unit can exit from an SEZ either under the provisions of rule 74 or 74A of SEZ Rules, 2006. The Government has received representations from stakeholders including SGJMA expressing difficulties in following the extant procedures as the existing units are not able to recover the value of their financial assets.
• The SEZ Authority shall engage an independent valuer to assess the current value of the physical assets as well as financial assets, in the nature of an unutilized portion of any upfront lump sum payment, if any, in the nature of premium, advance lease rentals, etc. made by the exiting unit paid at the time of issuance of LoA. When the existing unit identifies a potential buyer, such potential buyers shall be required to indicate the periodic lease rent for the space that they are prepared to pay to the Authority for the space being vacated by the existing unit. The lease rent so indicated by the identified buyer shall be disclosed to all bidders as part of the e-auction process.
• It is noteworthy that the e-auction terms & conditions shall also include a condition to the effect that the successful bidder in addition to other customary fixed and recurring charges, will have to separately pay to the authority, a predetermined amount based on depreciated cost/value of usable physical assets existing at the site as well as unutilized portions of financial assets, if any, as assessed by the independent valuer, which would be transferable to the previous occupant as the fair current value of assets being left off the exiting unit.
• If the highest bid in the e-auction process is less than the amount indicated initially by the potential buyer identified by the existing unit, such identified buyer shall emerge successful in the e-auction process and the lease rent shall be the amount indicated initially by the potential buyer. Such an entity shall be issued an LoA by following due process.
• The e-auction terms and conditions shall clearly indicate the aforesaid position for the benefit of all potential bidders. It shall be mandatory to complete the entire transfer process, including the E-auction process in a time-bound manner and in any case, within 100 days from the date of receipt of complete application from a unit expressing its intent to exit the SEZ

5. Recent AAR & Judicial Decisions:

(i) AAR On Concessional GST rate applicable on dwelling units falling under PMAY scheme:

(Applicant – Honer Developer Private Limited)

The applicant is in the business of construction and selling of residential flats. Their current project contains (760) flats of various dimensions and they intend to sell them in the market. They have informed that some of the customers are claiming that they are eligible for the benefit of PMAY scheme and hence insisting to pay a reduced rate of tax under Notification No. 01/2018 dated: 25.01.2018.

Government of India in Notification No. 01/2018 of central tax (rate) dated: 25.01.2018 has inserted the following entry in Notification No. 11/2017 dated: 28.06.2017 against Serial No. 3, in column (3), in item (4) at sub item (db).

“a civil structure or any other original works pertaining to the —houses constructed or acquired under the Credit Linked Subsidy Scheme for Economically Weaker Section (EWS)/ Lower Income Group (LIG)/ Middle Income Group-1 (MlG-1)/ Middle Income Group-2 (MlG-2)|| under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban).”

In view of the above new entry, if a person is acquiring a dwelling under the credit linked subsidy scheme for economically weaker section fulfilling all the conditions and formalities from designated banks/financial institutions under such scheme then he is eligible for the concessional rate of tax under the said notification.

(ii) AAR On GST payable on EPF, ESI, Salary, or Wages reimbursed by Hospital:

(Applicant – Smt. Bhagyalakhsmi Devamma Vangimallu)

The applicant has made various averments regarding the deductibility of Wages / Salaries, EPF, ESI contribution which are reimbursed by the Hospital from the value of supply which is exigible tax under CGST/SGST Act.

AAR held that Applicant is not a pure agent under GST Law. Further the deductions available under Section 15 of the CGST Act do not include the amounts pertaining to EPF, ESI, Salary, or Wages. Therefore entire amount received from the Hospital are exigible to CGST / SGST Act 2017.

(iii) Hon’ble Madras High Court Decision Regarding SEZ falls within the meaning of ‘any person’ as given under Section 54 of the CGST Act and shall be entitled to refund:

(Applicant – Platinum Holdings Pvt. Ltd.)

The Hon’ble Madras High Court in the case of Platinum Holdings Pvt. Ltd. v. Additional Commissioner of GST & Central Excise [W.P.No.13284 of 2020 decided on August 11, 2021] has held that a Special Economic Zone (“SEZ”) falls withing the meaning of ‘any person’ under the provisions of Section 54 of the Central Goods and Services Tax Act, 2017 (“CGST Act”) dealing with applications for refund read with Rule 89(1) of the Central Goods and Services Tax Rules, 2017 (“CGST Rules”).

Platinum Holdings Pvt. Ltd. (“the Petitioner”), a SEZ, had filed applications for refund of the taxes erroneously remitted by it on various dates to its suppliers.  A show cause notice was issued where the locus of the Petitioner to claim the refund was questioned on ground that as per Section 54 of the CGST Act read with Rule 89 of CGST Rules, only a supplier of services would be entitled to claim refund and not the SEZ itself.

The Hon’ble Madras High Court held that the statutory scheme for refund under the CGST Act and State GST Acts, permits any entity to seek a refund of taxes, including an SEZ. It was observed that the provisions of Section 54 of the CGST Act, providing for a refund, apply to any person who claims such refund and who makes an application for the grant of the same. Thus, it was held that in the present case, the Petitioner shall fall within the meaning of ‘any person’ as enumerated under Section 54 of the CGST Act and accordingly, shall be eligible to seek refund of the taxes paid by it.

(iv) Hon’ble Madras High Court Decision Regarding E-way Bill not necessary for transporting personal effects including motor vehicles:

The Hon’ble Kerala High Court in the current application observed that the motor vehicle was detained only on the ground of not having E-way Bill. Under Rule 138(14)(a) of the KGST Rules the goods classifiable as used, personal and household effect are exempted from the requirement of E-way Bill.

Further, relied on the case of KUN Motor Company Private Limited and Others v. the Assistant State Tax Officer, Squad No.3 Kerala State, Goods and Service Tax Department and Others [(2019) 60 GSRT 144 (Kerala)], wherein was held that used vehicles, even if it has run only negligible distances, the motor vehicles are to be categorized as “used personal effect”.

Concurring with the observations made in the above case, the Hon’ble Kerala High Court noted since the facts of the present case is almost similar to the above-mentioned case and that appeal was dismissed in the relied upon case, the Court propounded that E-way Bill is not necessary for transportation of personal effects and as such detention under Section 129 of the CGST Act.

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 endeavor 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 know Chartered Accountant practicing at Ahmedabad)