GST WEEKLY UPDATE : 20/2021-22 (15.08.2021) By CA Vipul Khandhar

By CA Vipul Khandhar, Ahmedabad

1. Government continues ‘Rebate of State and Central Taxes and Levies scheme’ for textile articles:

• The Central Government, Ministry of Textiles vide Notification bearing File no. 12015/11/2020-TTP dated August 13, 2021has further continued Rebate of State and Central Taxes and Levies scheme (“RoSCTL scheme”) on Export of Apparel/ Garments and made-ups in exclusion of RoDTEP.

• This notification shall remain in force till March 31, 2024 for apparel/ garments (Chapter 61 and 62) and Made-ups (Chapter 63) with the rates as notified vide Notification no. 14/26/2016-IT dated March 08, 2016.

• Rebate under RoSCTL scheme shall be in the form of transferable Duty Credit Scrip which can be used for making payment of Basic Customs Duty.

2. Extension in period of modification of IEC till 31.08.2021 and waiver of fees for IEC updation done during August, 2021:                               

• An IEC holder has to ensure that details in its IEC is updated electronically every year, during April-June period. However, for the current year only, this period is extended by another month i.e till 31st August, 2021.

• In cases where there are no changes in IEC details same also needs to be confirmed online.

·       Period of modification of IEC is extended for the year 2021-22 only till 31.08.2021, and no fee shall be charged on modifications carried out in IEC during the period up to 31st August, 2021.

 3.      Trial period of Chip Imports Monitoring System further extended till September 30, 2021:

The DGFT vide *_Notification No. 15/2015-2020 dated August 09, 2021_* has amended para 3 of Notification No. 05/2015-2020 dated May 10, 2021 so as to extend trial period of Chip Imports Monitoring System ( *“CHIMS”* ) by further two months i.e. upto September 30, 2021 and the registration at CHIMS portal will be effective from October 01, 2021. Earlier, the CHIMS trial was to end on July 31, 2021.

4. Procedure and criteria for submission and approval of applications for export of Diagnostic Kits:                         

The DGFT issued Trade Notice No. 15/2021-2022 dated August 09, 2021 for procedure and criteria for submission and approval of applications for export of Diagnostic Kits and their components/laboratory reagents.

5. Recent AAR & Judicial Decisions:-

(i) Decision Of Madras Highcourt Regarding rebate on exports where fraudulent entry in Credit was regularized by subsequent payment:

(Applicant – REIL Electricals India Ltd)

The Hon’ble Madras High Court in REIL Electricals India Ltd. Vs Joint Secretary and ors. [W.P No. 13597 decided on June 11, 2021] held that, owing to the squaring up of liability by Assessee along with interest to regularize its mistake of fraudulent entry made in CENVAT account, permits to grant rebate claim together with interest thereon is in accordance with law.

(ii) AAR On 18% GST payable on Cost of Diesel incurred for Running DG Set in the Course of providing DG Rental Service:

(Applicant – M/s Goodwill Auto’s)

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 GST on Supply of drinking water at concessional rate by charitable organisation:

(Applicant – Vijayavahini Charitable Foundation)

The said supply is not covered under exemption as explained supra and taxable @ 18% Vide Notification No. 1/2017-Central Tax (Rate), dated, 28th June, 2017 as amended from time to time.

(iv) AAR On 12% GST on Services of Repairs, Maintenance, Renovation, Alterations of Residential Complex meant for Railway Employees:

(Applicant – M/s Bindu Projects)

The Karnataka Authority of Advance Ruling ruled that 12% GST is applicable on services of repairs, maintenance, renovation, and alterations of residential complexes meant for Railway employees.

The applicant has engaged in executing works contract services to South Western Railways. The applicant has sought an advance ruling in respect of applicability of GST rates for works contract services doing original works with South Western Railways.

The AAR observed that as far as the question of rate of tax, it is submitted by the applicant that a contract is a single contract and it consists of multiple works. On the question of whether this contract amounts to a composite supply or mixed supply or a bunch of separate supplies, it is seen that the same cannot be a composite supply of works contracts as there is no principal supply and the works are not. naturally bundled. It cannot be a mixed supply also because the valuations of each of the supply of works are valued separately and they would amount to separate contracts. Hence, there is no common price for all the contracts. Hence it can be safely decided that each of the works mentioned in a schedule is a separate contract in itself and this is bolstered by the fact that the works are not in the same place and also are different in nature.

The AAR ruled that the services of repairs, maintenance, renovation and alterations of residential complex meant for use of the Railway employees are covered under entry 3(vi) of the Notification and hence eligible for tax at 6% CGST and 6% SGST.

 “Other repair works of old construction involved in the contract are liable to tax at 18% (9 % CGST and 9% SGST) as per entry no.3 (xii) of Notification No. 11/2017 -Central Tax (Rate) dated 28.06.2017 as amended from time to time,” the AAR said.

(v) AAR On GST payable on Charges for arranging trucks to goods transport agency:

(Applicant – M/s Deeraj Goyal)

The applicant is engaged in the business of transportation of goods by road wherein he acts as an intermediary between truck owners and goods transportation agencies. The issue at hand is the classification of the service provided by the applicant by way of arranging trucks to the GTA and the rate of tax applicable for the said service.

The applicant arranges trucks to the goods transport agency and charges the commission or brokerage for the said service and falls within the ambit of ‘Agent’ under the CGST/SGST Act.

The service provided by the applicant in relation to transportation of goods fall under the serial No.11 under the Heading 9967(ii) supporting services in transport other than services of Goods Transport Agency and liable to be taxed @18% ( 9% CGST+ 9% SGST) as per the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017.

The applicant will be classified as ‘Agent’ providing supporting service for transportation of goods under heading 9967(ii) as per the Notification No. 11/2017 Central Tax (Rate) and the amount received by him will form part of his turnover.

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)