Legislation UpdatesNotifications

G.S.R (E ).-In exercise of the powers conferred by sub-section (1) of Section 6 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, and on the recommendations of the Council, hereby exempts any supply of goods by a retail outlet established in the departure area of an international airport, beyond the immigration counters, to an outgoing international tourist, from the whole of the integrated tax leviable thereon under Section 5 of the Integrated Goods and Services Tax Act, 2017.

Explanation. – For the purposes of this notification, the expression “outgoing international tourist” shall mean a person not normally resident in India, who enters India for a stay of not more than six months for legitimate non-immigrant purposes.

2. The notification shall come into force with effect from the 1st day of July, 2019.

Ministry of Finance

Hot Off The PressNews

Goods and Services Tax (GST) was launched on the 01-07-2017 in a majestic ceremony held in the Central Hall of Parliament on the midnight of 30-06-2017.

As we enter the third year in the GST regime, let’s look at some of the advantages of this system along with the developments that have taken place since the year 2017.

Some advantages of GST:

  • Simplified Tax Structure:- Reduction in cascading effect of taxes, transparent and has harmonization of laws and procedures.
  • Easy Compliance:- compliance burden has come down with one pan-India tax replacing multiple taxes and automated processes.
  • Promoting Trade and Industry:- Seamless flow of tax credit.
  • Spurring Economic Growth:- Creation of unified common national market

Some developments during the GST journey since 2017:

  • Subsuming of taxes:- It was a new experience of subsuming 17 different types of taxes under GST. Pre – GST, Trade & Industry had to undergo compliances under Central Excise, Service Tax & VAT and doing business in multiple states involved adhering to different VAT laws, compliance through different portals and answering to different authorities. All that has been unified into a single robust online system. Starting up has become simple with one-stop online GST registration for wanting to do business anywhere in the country.
  • Formalization of the economy:- More and more businesses moving in the formal economy is evident from the significant increase in the GST taxpayer base. Moving to the formal economy has brought in more visibility and hence more opportunities for Trade and Industry.
  •  State borders:- The State boarders’ glitches and delays have come down significantly. Due to different VAT laws in different states, inter-state transactions were a pain for Trade and Industry. CST charged on inter-state transactions were an additional cost with no input-credit available and thousands of productive hours were wasted at state border crossings. Cost and time of doing inter-state transactions have come down significantly after the implementation of E – waybill.
  • Rate Rationalization:- Major changes in the Tax rates of various items whereby 28% items pulled to 18%, 18% items pulled to 12% & 12% items pulled to 5%. Further various essential goods were made tax free. Mostly goods are unbranded and manufactured by MSMEs. The reduction in almost all the cases has been from the higher to the immediately lower tax slab (whether from 12% to 5% or 18% to 12%) and involves indigenously processed foods, man-made textile yarn, stationery and other job-work items.
  • Return filing:- The original concept of four Tax returns in a month (GSTR3B, 1, 2 & 3) was gradually curtailed to two tax returns viz: GSTR-3B & 1. Further the Govt. extended due dates for filing tax returns as and when felt necessary. Quarterly Returns were also prescribed for small taxpayers. Reduction in the late fee payable for delay in filing tax returns from Rs 200/- per day to Rs 50/-per day /Rs 20/- per day. For the Trade and Industry whose turnover was turnover below five crores, quarterly return filling system is proposed. This will benefit 93% of the taxpayers, reduce their compliance burden and increase ease of doing business.
  • Exports & Refunds:- Exports are made possible on the basis of Bond/LUT and without payment of IGST tax. A major package for exporters/merchant exporters has been announced after discussions with various Export Promotion Councils & organizations like FIEO, APEC, GJEPC, EEPC, Handicraft EPC etc. Refund Fortnights were conducted on 15th March to 31st March, 2018, 31st May to 14th June, 2018 and 16th July to 30th July, 2018.
  • GST Law Amendment Act, 2018:- In its 28th meeting of GSTC held in New Delhi on 21.07.2018, the GST Council recommended certain amendments in the CGST Act, IGST Act, UTGST Act and the GST (Compensation to States) Act. In order to ensure that the changes in the Centre and the State GST laws are brought into force simultaneously, these amendments are made effective from 01.02.2019.
  • MSME support and outreach programme:- With effect from 2nd November 2018 GST Help desks were created by CBIC at 80 places all over India to support MSMEs and hand-holding of MSMEs was done with regard to GST Registration / Return Filing / Refunds / E – way bill etc.

Reforms in current fiscal (2019-20):

  • New return system:- Introduction of New Return System on trial basis from 01-07-2019 and on mandatory basis from 01-10-2019. SAHAJ & SUGAM Returns for small taxpayers are proposed
  • Single Cash Ledger: – Rationalization of Cash Ledger in such a manner that earlier 20 heads are merged into 5 major heads. There is only one Cash Ledger for Tax, interest, penalty, fee & others.
  • Single Refund Disbursing:- The Central or State Government which sanctions refund disburses all four major heads of refunds namely CGST, SGST, IGST and Cess.
  • Threshold limit for goods: – Threshold Limit of Rs. 40 Lacs is offered of suppliers of goods as per the choice of States.
  • Composition Scheme for Services: – Composition Scheme for small service providers up to annual turnover of Rs 50 lacs with a tax rate of 6%
  • E-invoicing system: – electronic invoicing system in a phase-wise manner for B2B transactions is proposed to be introduced.
  • GSTAT: – GST Appellate Tribunals are being established at various State Headquarters and area benches also.

[Press Release]

[Source: Central Board of Direct Taxes and Customs]

[Image Credits: The Hindu]

Recommendations to read more on GST:

Case BriefsTribunals/Commissions/Regulatory Bodies

Authority for Advance Ruling, Chhattisgarh: The Members comprising of Kalpana Tiwari, Joint Commissioner of State Tax and Rajesh Kumar Singh, Additional Commissioner of CGST and Central Excise, held that a supplier is required to charge GST upon service recipient on the total amount including cost of diesel provided by recipient company for transportation of its goods.

Applicant herein (supplier) had an agreement for transporting cement of a company named Shree Raipur Cement (service recipient). It was agreed that the diesel required for said transportation would be provided by the service recipient. The applicant sought clarification as to whether the supply of diesel by the service recipient would be included or excluded while charging GST on freight amount to be charged by the applicant.

The Authority noted that in the instant case, the service recipient, i.e., cement company was providing diesel to the vehicles used by the applicant for transporting cement/clinker in the course of business of cement by the service recipient. Diesel so provided by it to the applicant, was an important and integral component of this business process, without which the process of supply of cement could not be materialised.

It was opined that as per Sections 7(1) and 15(2)(b) of the Central Goods and Services Tax Act, 2017 which define ‘supply’ and ‘value of supply’ respectively, any amount that the supplier is liable to pay in respect of supply but which has been incurred by the recipient of supply and not included in the price actually paid or payable for the goods or services or both, is includible in value of supply of goods/ services.

Thus, the applicant was required to charge GST upon Shree Raipur Cement on the total amount including the cost of diesel, i.e., on the total freight amount inclusive of the cost of diesel so provided by the service recipient.[Advance Ruling No. STC/AAR/10 A/2018, In an application filed by M/s Shri Navodit Agarwal, Order dated 26-03-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

Authority for Advance Rulings (GST), Uttarakhand: Vipin Chandra and Amit Gupta (Members), addressed an application stating the following question:

“Whether “Business Transfer Agreement” as a going concern on slump sale basis is exempted from the levy of GST?”

The present application was filed by Innovative Textiles Limited under sub-section (1) of Section 97 of the CGST/SGST Act, 2017 and the rules made thereunder in respect of the question stated above.

While deciding the stated question of “Whether “Business Transfer Agreement” as a going concern on slump sale basis is exempted from the levy of GST in terms of serial No. 2 of the Notification No. 12/2017-Central Tax (rate) dated 28-06-2017”, the relevant portion of the notification was reproduced and on perusal of the same it was observed that,

“services by way of transfer of a going concern, as a whole or an independent part thereof is to be treated as supply of service and covered under Chapter 99 of the Service Code (Tariff) and is exempted from GST.”

The members of the tribunal observed that, a transfer of a business as a going concern is the sale of a business including assets. In terms of financial transaction, ‘going concern’ has the meaning that at the point in time to which the description applies, the business is live or operating and has all parts and features necessary to keep it in operation.

Further, they added that, internationally accepted guidelines are also applicable in the present cases which are issued by His Majesty’s Revenue & Customs to treat the transfer of a business as a going concern. The guidelines are as under:

  1. The assets must be sold as a part of a ‘business’ as a ‘going concern’.
  2. The purchaser intends to use the assets to carry on the same kind of business as the seller.
  3. Where only part of a business is sold, it must be capable of separate operation.
  4. There must not be a series of immediately consecutive transfers.

Therefore, in view of the above, applicant intends to sale the ongoing Sitarganj business along with all the assets and liabilities and stated that it is live/ operating and purchaser has purchased the business to carry on the same kind of business and applicant has supplied services by way of transfer as a going concern, the same is exempted from levy of GST. [Innovative Textiles Ltd., In re, Ruling No. 20/2018-19, Order dated 26-03-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

Authority on Advance Rulings (GST), Karnataka: A Bench of Harish Dharnia, Additional Commissioner of Central Excise (Member-Central Excise) and Dr Ravi Prasad M.P., Joint Commissioner of Commercial Tax (Member-State Tax) ruled that the long-duration Post-Graduate Diploma/Degree Programmes offered by the India Institute of Management, Bengaluru, other than those specifically mentioned in SI. No. 67 of the Notification no. 12 of 2017 – Central Tax (Rate) dated 28-06-2017 as amended by Notification No.2 of 2018 dated 25-1-2018, are not exempted from Goods and Services Tax liability on education. So also, the supply of online educational journals or periodicals to IIM-B is not exempted from the reverse charge liability under SI. No. 66 of the said notification.

The occasion for the above ruling arose when IIM-B filed an application for an Advanced Ruling under Section 97 of the CGST Act, 2017 and the Karnataka GST Act, 2017 read with rule 104 of the Rules thereof. The advance ruling was sought in relation to the two questions enquiring whether the above-noted two heads were exempt from the liability under GST. It was contended that the services which were not exempted under Entry 67, should be treated as exempted under Entry 66.

The Authority noted that Entry 66 is a general entry in relation to exemption of services provided by an educational institution and/or to the educational institution. Entry 67  also relates to educational services, however, it was seen that Entry 66 was carved out specifically and only for the educational services provided by IIMs. In other words, IIMs have been segregated from other educational institutions services.

It was concluded that when the Notification provides for specific entry for IIMs at SI. No. 67, the provisions of Serial No. 66 shall not apply to them. On such a conclusion, both the questions referred to the Authority by IIM-B were answered in the negative. It was clarified that the ruling is valid subject to the provisions under Section 103(2), until and unless declared void under Section 104(1) of the GST Acts.[Indian Institute of Management, Bengaluru, In re, Advance Ruling No. Kar ADRG 25 of 2018, dated 25-10-2018]

Case BriefsTribunals/Commissions/Regulatory Bodies

West Bengal Authority for Advance Ruling (AAR): The Bench of Sydney D’Silva and Parthasarathi Dey (Members) addressed an application sought on the classification of the services provided in a way of packing of tea bags and rate of GST thereon.

In the present application, it has been submitted that the process of service undertaken by the applicant (Contract Packer of Tea) involves assembly of materials on machine, including blended tea leaves and other inputs received from the recipient of service. Applicant used to classify it as “packaging service”.

Applicant received a communication from Hindustan Unilever Ltd., one of its recipients of services informing that the service should be taxed under Sl No. 26 (f) of the Rate Notification, which applies to “manufacturing service”.

The issue to be addressed in this application was “Whether the applicant’s services to HUL are classifiable as packaging service or manufacturing service or both?”

The Applicant used to classify it as packaging service under SAC 998540 and charged 18% GST.

“The flow chart as mentioned in the “Agreement” between the applicant and HUL, has the processes undertaken at applicants manufacturing unit and shows that the blended tea received from HUL, after quality control procedure, is passed through hoppers, magnetic grill and mesh, and ends with filling tea leaves into the tea bag pouches and stitching. The tea bags are then subjected to quality control before being packed in cartons, wrapped and put into boxes, stored and delivered to HUL after sample testing.”

In accordance to Section 2(72) of CGST Act, 

“Manufacture” is the processing of raw materials or inputs in any manner that results in the emergence of a new product having a distinct name, character and use.

Consuming tea contained in a tea bag does not require the tea leaves to be taken out of the bag. The tea bags are porous and filled with tea leaves, therefore, are distinct from tea leaves which excludes them from the category of “packaging material”.

Thus, it is evident that the applicant’s service to HUL for manufacturing of tea bags is service for manufacturing a product classified under Tariff item 0902 40 40, where physical inputs are owned by the recipient.

Ruling of the Authority:

Applicant makes a composite supply to Hindustan Unilever Ltd. where the service of manufacturing tea bags from the physical inputs owned by the latter is the principal supply. It is classifiable under SAC 9988 and taxable at 5% rate under Sl No. 26(f) of Notification No. 11/2017-CT (Rate) dated 28/06/2017, as amended from time to time. [Application of Vedika Exports Tea (P) Ltd., In Re,  Case No. 41 of 2018, dated 10-12-2018]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Anti-Profiteering Authority (NAA): The Quorum of B.N. Sharma, Chairman and J.C. Chauhan, R. Bhagyadevi and Amand Shah, Technical Members, dealt with an application alleging profiteering on the supply of “Paint” by not passing on the benefit of reduction in the rate of tax of GST.

For the above-stated issue, the application was examined by the Standing Committee on Anti-Profiteering and was further referred to Director General of Anti-Profiteering (DGAP).

DGAP in its report on investigating the issue in a detailed manner stated in its report that vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017, the rate of GST was reduced from 28% to 18% on the said product. Respondent had reduced the selling price (including GST) of the above product from Rs 175.40 to Rs 161.70 by maintaining the base price of Rs 137.03 (after discount) and charging GST at a lower rate of 185 on the said price.

DGAP on the analysis of the scenario stated that, there was no contravention of Section 171 of the CGST Act, 2017 relating to profiteering.

On careful consideration of the DGAP’s report and the documents placed on record, the Authority stated that it is evident that the respondent had maintained the same base price post reduction in the rate of tax resulting in the cum-tax price from Rs 175.40 to Rs 161.70. Since the benefit of reduction has been passed on by the respondent by a commensurate reduction in his price, he cannot be held guilty under Section 171 of the CGST Act. [Kerala State Screening Committee on Anti Profiteering v. Asian Paints Ltd., 2019 SCC OnLine NAA 15, Order dated 13-03-2019]

Legislation UpdatesNotifications

Various representations have been received seeking clarification on issues raised with respect to tax treatment of sales promotion schemes under GST. To ensure uniformity in the implementation of the law across the field formations, the Board, in exercise of its powers conferred under Section 168 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “the said Act”) hereby clarifies the issues.

Some of the promotional schemes have been examined and clarification on the aspects of taxability, valuation, availability or otherwise of Input Tax Credit in the hands of the supplier (hereinafter referred to as the “ITC”) in relation to the said schemes are detailed hereunder:

A. Free samples and gifts:

(i) It is a common practice among certain sections of trade and industry, such as, pharmaceutical companies which often provide drug samples to their stockists, dealers, medical practitioners, etc. without charging any consideration. As per sub-clause (a) of sub-section (1) of Section 7 of the said Act, the expression “supply” includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. Therefore, the goods or services or both which are supplied free of cost (without any consideration) shall not be treated as “supply” under GST (except in case of activities mentioned in Schedule I of the said Act). Accordingly, it is clarified that samples which are supplied free of cost, without any consideration, do not qualify as „supply? under GST, except where the activity falls within the ambit of Schedule I of the said Act.

(ii) Further, clause (h) of sub-section (5) of Section 17 of the said Act provides that ITC shall not be available in respect of goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples. Thus, it is clarified that input tax credit shall not be available to the supplier on the inputs, input services and capital goods to the extent they are used in relation to the gifts or free samples distributed without any consideration. However, where the activity of distribution of gifts or free samples falls within the scope of “supply” on account of the provisions contained in Schedule I of the said Act, the supplier would be eligible to avail of the ITC.

B. Buy one get one free offer:

(i) Sometimes, companies announce offers like ‘Buy One, Get One free’ For example, “buy one soap and get one soap free” or “Get one tooth brush free along with the purchase of tooth paste”. As per sub-clause (a) of sub-section (1) of Section 7 of the said Act, the goods or services which are supplied free of cost (without any consideration) shall not be treated as “supply? under GST (except in case of activities mentioned in Schedule I of the said Act). It may appear at first glance that in case of offers like “Buy One, Get One Free”, one item is being “supplied free of cost” without any consideration. In fact, it is not an individual supply of free goods but a case of two or more individual supplies where a single price is being charged for the entire supply. It can at best be treated as supplying two goods for the price of one.

(ii) Taxability of such supply will be dependent upon as to whether the supply is a composite supply or a mixed supply and the rate of tax shall be determined as per the provisions of Section 8 of the said Act.

(iii) It is also clarified that ITC shall be available to the supplier for the inputs, input services and capital goods used in relation to supply of goods or services or both as part of such offers.

C. Discounts including ‘Buy more, save more’ offers:

(i) Sometimes, the supplier offers staggered discount to his customers (increase in discount rate with an increase in purchase volume). For example- Get 10 % discount for purchases above Rs. 5000/-, 20% discount for purchases above Rs. 10,000/- and 30% discount for purchases above Rs. 20,000/-. Such discounts are shown on the invoice itself.

(ii) Some suppliers also offer periodic / year ending discounts to their stockists, etc. For example- Get an additional discount of 1% if you purchase 10000 pieces in a year, get additional discount of 2% if you purchase 15000 pieces in a year. Such discounts are established in terms of an agreement entered into at or before the time of supply though not shown on the invoice as the actual quantum of such discounts gets determined after the supply has been effected and generally at the year-end. In commercial parlance, such discounts are colloquially referred to as “volume discounts”. Such discounts are passed on by the supplier through credit notes.

(iii) It is clarified that discounts offered by the suppliers to customers (including staggered discount under “Buy more, save more? scheme and post supply / volume discounts established before or at the time of supply) shall be excluded to determine the value of supply provided they satisfy the parameters laid down in sub-section (3) of Section 15 of the said Act, including the reversal of ITC by the recipient of the supply as is attributable to the discount on the basis of document (s) issued by the supplier.

(iv) It is further clarified that the supplier shall be entitled to avail the ITC for such inputs, input services and capital goods used in relation to the supply of goods or services or both on such discounts.

D. Secondary Discounts:

(i) These are the discounts which are not known at the time of supply or are offered after the supply is already over. For example, A supplies 10000 packets of biscuits to B at Rs 10 per packet. Afterwards, A re-values it at Rs 9 per packet. Subsequently, A issues credit note to B for Rs 1 per packet.

(ii) Provisions of sub-section (1) of Section 34 of the said Act provides as under:

“Where one or more tax invoices have been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient one or more credit notes for supplies made in a financial year containing such particulars as may be prescribed.”

(iii) Representations have been received from the trade and industry that whether credit notes(s) under sub-section (1) of Section 34 of the said Act can be issued in such cases even if the conditions laid down in clause (b) of sub-section (3) of Section 15 of the said Act are not satisfied. It is hereby clarified that financial/commercial credit note(s) can be issued by the supplier even if the conditions mentioned in clause (b) of sub-section (3) of Section 15 of the said Act are not satisfied. In other words, credit note(s) can be issued as a commercial transaction between the two contracting parties.

(iv) It is further clarified that such secondary discounts shall not be excluded while determining the value of supply as such discounts are not known at the time of supply and the conditions laid down in clause (b) of sub-section (3) of Section 15 of the said Act are not satisfied.

(v) In other words, value of supply shall not include any discount by way of issuance of credit note(s) as explained above in para 2 (D)(iii) or by any other means, except in cases where the provisions contained in clause (b) of sub-section (3) of Section 15 of the said Act are satisfied.

(vi) There is no impact on availability or otherwise of ITC in the hands of the supplier in this case.

[Circular No. 92/11/2019-GST]

Ministry of Finance

Case BriefsTribunals/Commissions/Regulatory Bodies

National Anti-Profiteering Authority (NAA): The Coram of B.N. Sharma (Chairman), and J.C. Chauhan and R. Bhagyadevi (Technical Members) dismissed an application filed by Kerala State Screening Committee for being devoid of merit.

Respondent’s case was referred to the Standing committee on Anti-Profiteering (Standing Committee) by Kerala State Screening Committee alleging profiteering on the supply of trousers. It was alleged that respondent had indulged in profiteering in contravention of Section 171 of Central Goods and Services Tax Act, 2017 (CGST) by not passing on benefits of reduction in tax post implementation of the Goods and Services Tax. In this regard, the applicant placed reliance on two invoices issued by the respondent – invoice dated 29-04-2017 (pre-GST) and invoice dated 12-09-2017 (post-GST).

The Standing Committee, after examining the case, referred it to Directorate General of Anti-Profiteering (DGAP) for detailed investigations under Rule 129 (1) of CGST Rules, 2017. DGAP’s report stated that being exempt from central excise duty, ‘trousers’ only attracted fixed GST of 5 percent. Further, the rate of tax and base price of the product had remained the same in the pre-GST and post-GST period.

The Authority held that, on the basis of evidence on record, there was neither reduction in the rate of tax nor increase in per unit base price of the product. Hence, anti-profiteering provisions of Section 171 of the CGST Act were not attracted. In view thereof, the application was dismissed.[Kerala State Screening Committee v. Emke Silks & Garments (P) Ltd., 2019 SCC OnLine NAA 7, Order dated 11-02-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise & Service Tax Appellate Tribunal: This appeal was preferred before P. Dinesha, J., against the interest liability and penalty under Section 78 of the Finance Act, 1994.

Appellant was a registered service provider, providing ‘Manpower Recruitment/Supply Agency Services’. It was found while verification of Third Party Data that appellant’s total income did not tally with that declared in its balance sheet thus a show cause notice (SCN) was issued demanding service tax, interest under Section 75 of the Finance Act, 1994, along with penalty under Section 78 of the Act.  

After this, an order was passed confirming service tax demand, interest and penalty. Aggrieved by the demand an appeal was filed before the Commissioner of GST & CE who vide impugned order partly allowed and partly rejected the appellant’s claim. The assessee submitted that the Commissioner had deleted the tax liability on the reimbursements but the final tax liability was not decided after the exclusion of such reimbursement. Tribunal was of the view that authorities below had demanded an amount beyond the SCN without any explanation and according to the settled position of law such action was not sustainable thus the re-quantified interest liability over and above the interest demanded in the SCN was set aside.

Tribunal noted that appellant had proved its bonafides when it claimed that it had made payments right from investigation stage itself and thus, appellant had made out a case for exercising discretion under Section 80 of the Finance Act, 1994 and hence, Tribunal directed the deletion of penalty under Section 78 of the Finance Act, 1994. Therefore, the appeal was partly allowed and partly remanded. [Sasi Enterprises v. Commissioner (GST), Appeal No. ST/42721/2018, dated 28-02-2019]

Business NewsNews

Charging of Service Tax is not valid.

The Government in April 2017 issued guidelines on fair trade practices related to charging of Service Charge from consumer by hotel/restaurants. As per these guidelines, Service Charge is optional and payment of it depends entirely upon the discretion of the consumers. An aggrieved consumer can approach a consumer forum of appropriate jurisdiction for redressal of his grievance related to charging of service charges by hotels and restaurants.

[Source: PIB]

Ministry of Consumer Affairs, Food & Public Distribution

Note: Guidelines on Fair Trade Practices Related to Charging of Service Charge from Consumers by Hotels/Restaurants

Business NewsNews

The total gross GST revenue collected in the month of January, 2019 is Rs 1,02,503 crore of which CGST is Rs 17,763 crore, SGST is Rs 24,826 crore, IGST is Rs 51,225 crore (including Rs 24,065 crore collected on imports) and Cess is Rs 8,690 crore (including Rs 902 crore collected on imports). In FY 2018-2019, it is for the third time that GST Revenue collection has crossed One Lakh Crore. The total number of GSTR 3B Returns filed for the month of December up to 31st January, 2019 is 73.3 lakh.

The government has settled Rs 18,344 crore to CGST and Rs 14,677 crore to SGST from IGST as the regular settlement. The total revenue earned by Central Government and the State Governments after regular settlement in the month of December, 2018 is Rs 36,107 crore for CGST and Rs 39,503 crore for the SGST.

The collection in January 2019 is a significant increase from the collection of Rs 94,725 crore in December, which was a decline from Rs 97,637 crore in November and Rs 1,00,710 crore in October. January 2019 collections are 14% above the January 2018 collections of Rs 89,825 crore. This jump has been achieved despite various tax reductions having come into force that provided major relief to the consumers. The gross GST collections over the last three-month period has been 14% higher than the corresponding period last year.

Ministry of Finance

Press Release

Case BriefsHigh Courts

Kerala High Court: The Bench of Dama Seshadri Naidu J. hearing a civil writ petition filed by a vehicle dealer granted an interim stay on the levy of Goods and Services Tax on the amount collected by vehicle dealers from purchasers.

Petitioner, a motor vehicle dealer, challenged the applicability of Section 15(2) of the GST Act, 2017 which mandates that the value of supply should include any taxes, duties, cesses, fees and charges levied under any other law in force. His contention was that the amount of 1% that the dealer of motor vehicle collects from the purchaser of a car worth more than ten lakhs (which is the tax collected at source), under Section 206C (1F) of the Income Tax Act, 1961 cannot be treated as an integral part of the value of the goods and services supplied by the petitioner. This is so because the dealer of the motor vehicle, acts only as an agent for the State to collect income tax under Section 206C(1F) of the IT Act and that amount eventually goes to the vehicle purchaser’s credit.

The Court concluded that the petitioner had raised a prima facie issue which needed Court’s attention and further and deeper adjudication. In view thereof, it directed the tax authorities to not act on the clarification at serial no. 5 of the notification issued by the Central Board of Indirect Taxes and Customs till the disposal of the instant petition.[PSN Automobiles (P) Ltd. v. Union of India, WP (C) No. 680 of 2019, order dated 17-01-2019]

Case BriefsHigh Courts

Kerala High Court: The Bench of Dama Seshadri Naidu, J. granted a stay on encashment of bank guarantee by tax authorities until the statutory appeal preferred in that regard was considered by the competent court.

Petitioner herein was transporting certain goods from Tamil Nadu to Perinthalmanna. When the authorities checked the documents carried along with the goods, they found the same to be defective. Suspecting tax evasion, authorities detained the goods and demanded a penalty, as well as tax. Aggrieved, the petitioner filed a petition for the release of goods and for the expeditious completion of adjudication. In terms of the judgment delivered in the said petition, the petitioner furnished a bank guarantee for the entire amount demanded and had the goods released.

Later, the primary authority completed the adjudication and issued an order under imposing a penalty under Section 129(3) of the State Goods & Services Tax Act, 2017 and also appropriating the bank guarantee. The petitioner filed an appeal under Section 107 of the Act against the said order. However, by way of caution, he preferred the instant appeal as he apprehends that the authorities, in the meanwhile, may encash the bank guarantee.

In view of the fact that a statutory appeal had already been filed, the Court directed the respondent authority to keep the bank guarantee untouched till the appeal is considered. [Vinod P.A. v. Assistant State Tax Officer, 2019 SCC OnLine Ker 39, dated 03-01-2019]

Business NewsNews

Historic tax reform, the Goods and Service Tax (GST), has resulted in formalization of economy and consequently information flow would eventually augment not only the Indirect Tax collections but also Direct Tax collections. In the past, the Centre had little data on small manufacturers and consumption because the excise was imposed only at the manufacturing stage while the States had little data on the activities of local firms outside their borders. Under the GST, there will be now seamless flow of availability of common set of data to both the Centre and the States making Direct and Indirect Tax collections more effective.

There are early signs of tax base expansion. Between June and July 2017, 6.6 lakh new agents, previously outside the tax net, sought GST registration. This is expected to rise consistently as the incentives for formalization increase. Entire Textile chain is now brought under tax net. Further, a segment of land and real estate transactions has also been brought into tax net “works contracts”, referring to housing that is being built. This in turn would allow for greater transparency and formalization of cement, steel and other sales which earlier tended to be outside the tax net. The formalization will occur because builder will need documentation of these input purchases to claim tax credit.

The introduction of GST, a common Indirect Tax for both the States as well as the Central Government with its end to end digitization of all processes, is the biggest reform measure which is already creating more jobs in formal sector and eliminating transactions which are not recorded earlier in the books of accounts and thus, were outside the tax net so far. GST is designed to bring about better tax compliance and transparency in tax system. It is putting a premium on honesty. It would make increasingly difficult for those (who are liable to pay tax) to remain outside the tax net.

A number of procedural changes have also been made since the roll-out of GST on 1st July, 2017 in order to simplify the processes. An extensive exercise was undertaken for tax payers education and facilitation by way of knowledge sharing, dissemination of information and replies to FAQs among others. Further, steps are also being undertaken for further simplification in order to facilitate the tax payers and to extend benefit to the customers.

Ministry of Finance

Amendments to existing lawsLegislation Updates

G.S.R. 524(E).—In exercise of the powers conferred by Section 53 read with Section 17 of the Central Goods and Services Tax Act, 2017 (12 of 2017), Sections 17 and 18 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017) and Section 21 of the Union Territory Goods and Services Tax Act, 2017 (14 of 2017), the Central Government hereby makes the following further amendments in the Goods and Services Tax Settlement of Funds Rules, 2017, namely:

1. (1) These rules may be called the Goods and Services Tax Settlement of Funds (Second Amendment) Rules, 2018.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Goods and Services Tax Settlement of Funds Rules, 2017, in rule 11, for sub-rule (3), the following shall be substituted, namely:

“(3) At any point of time in any particular financial year, the Central Government may, on the recommendations of the Council, provisionally settle any sum of integrated goods and services tax collected in that particular financial year which has not been settled so far which will be adjusted in the subsequent month(s)/year(s), based on the returns filed by the taxpayers”.

[F. No. 31013/16/2017-ST-I-DoR]

Note: The principal rules were published in Gazette of India, Extraordinary, Part- II, Section 3, Sub-Section (i), vide number G.S.R. 964(E), dated the 27th July, 2017 and first amendment published in the Gazette of India, Extraordinary, Part- II, Section 3, Sub-Section (i), vide Notification No. G.S.R. 145(E) dated the 6th February, 2018.

Ministry of Finance


Hot Off The PressNews

The GST council in its 27th meeting, held on 04-05-2018, has approved the principles for filing of new return design based on the recommendations of the Group of Ministers on IT simplification.


The key elements of the new return design are as follows

  • One monthly Return: All taxpayers excluding a few exceptions like composition dealer shall file one monthly return. Return filing dates shall be staggered based on the turnover of the registered person to manage load on the IT system. Composition dealers and dealers having nil transaction shall have facility to file quarterly return.
  • Unidirectional Flow of invoices: There shall be unidirectional flow of invoices uploaded by the seller on anytime basis during the month which would be the valid document to avail input tax credit by the buyer. Buyer would also be able to continuously see the uploaded invoices during the month. There shall not be any need to upload the purchase invoices also. Invoices for B2B transaction shall need to use HSN at four digit level or more to achieve uniformity in the reporting system.
  • Simple Return design and easy IT interface: The B2B dealers will have to fill invoice-wise details of the outward supply made by them, based on which the system will automatically calculate his tax liability. The input tax credit will be calculated automatically by the system based on invoices uploaded by his sellers. Taxpayer shall be also given user friendly IT interface and offline IT tool to upload the invoices.
  • No automatic reversal of credit: There shall not be any automatic reversal of input tax credit from buyer on non-payment of tax by the seller. In case of default in payment of tax by the seller, recovery shall be made from the seller however reversal of credit from buyer shall also be an option available with the revenue authorities to address exceptional situations like missing dealer, closure of business by supplier or supplier not having adequate assets etc.
  • Due process for recovery and reversal: Recovery of tax or reversal of input tax credit shall be through a due process of issuing notice and order. The process would be online and automated to reduce the human interface.
  • Supplier side control: Uploading of invoices by the seller to pass input tax credit who has defaulted in payment of tax above a threshold amount shall be blocked to control misuse of input tax credit facility. Similar safeguards would be built with regard to newly registered dealers also. Analytical tools would be used to identify such transactions at the earliest and prevent loss of revenue.
  • Transition: There will be a three stage transition to the new system. Stage I shall be the present system of filing of return GSTR 3B and GSTR 1. GSTR 2 and GSTR 3 shall continue to remain suspended. Stage I will continue for a period not exceeding 6 months by which time new return software would be ready. In stage  2, the new return will have facility for invoice-wise data upload and also facility for claiming input tax credit on self declaration basis, as in case of GSTR 3B now. During this stage 2, the dealer will be constantly fed with information about gap between credit available to them as per invoices uploaded by their sellers and the provisional credit being claimed by them. After 6 months of this phase 2, the facility of provisional credit will get withdrawn and input tax credit will only be limited to the invoices uploaded by the sellers from whom the dealer has purchased goods.
  • Content of the return and implementation: Return shall be simplified also by reducing the content/information required to be filled in the return. The details of the design of the return form, business process and legal changes would be worked out by the law committee based on these principles. Government is keen to introduce the simplified return design at the earliest to reduce the compliance burden on the trade in keeping with the philosophy of ease of doing business.

[Press Release no. 1531331, dt. 04-05-2018]

Ministry of Finance

Business NewsNews

Electronic bill exchanges are the latest match-making venues for lenders seeking new clients and small entities desperate for capital. The fledgling exchanges, opened under the Trade Receivables Discounting System (TReDS), have attracted a host of lenders otherwise shy of financing companies with low credit ratings, since the new system allows them to find creditworthy clients and build new relationships. System gives small firms access to cash, helps banks find new creditworthy customers.

Typically, micro, small and medium enterprises (MSMEs) that supply products or services to larger companies raise their bills (or trade receivables) but have to wait long to be paid, resulting in a shortage of working capital. Under TReDS, the MSME uploads the same bill on a TReDS bill discounting exchange, where lenders bid to buy the bill, depending on the creditworthiness of the bigger company. The selected lender which offers the lowest discount or margin pays the MSME, and later receives the payment from the larger company. It’s a win-win situation for both the MSME (which gets immediate cash) and the lender (which find new creditworthy customers, though with less risk due to the payment due from the larger company). Joining TReDS has helped new MSME clients get access to priority sector lending-compliant loans and build stronger portfolios.

The benefit of such collaborations is that the exposure is on a stronger entity and banks get opportunity to build a relationship with both the large companies as well as MSMEs. Also, availability of more authentic data due to GST will enable banks to do better due-diligence and help give more credit to MSME. The state-owned lender has tied up with all three TReDS exchanges licensed by the Reserve Bank of India in November 2015. According to bankers, goods and service tax (GST) has brought many companies under the tax umbrella, making banks confident of lending to them. MSMEs are usually capital-starved because of limited access to bank credit. One of the key reasons is lack of documentation and skills to predict future cash flows, weak account maintenance, and non-compliance with taxation rules. Additionally, demonetization had impacted their finances, which were already stretched because of delays in payments by large companies at least by over a quarter. Apart from TReDS, other announcements too are likely to boost credit demand to the sector. Separately, RBI on 7 February, 2018, gave additional time for loan repayment to certain MSMEs affected by GST, without getting their accounts classified as non-performing. This facility is available only to those firms whose aggregate loans are less than Rs 25 crore. These steps may prompt more lenders to register themselves on these platforms.

[Source: Livemint]

Business NewsNews

The GST will not be charged on the cost of food served to patients by hospitals as advised by doctors. As per GST law, healthcare services have been defined to include any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicine in India. However, patients not admitted will have to pay tax on the total value of food served by the hospital. The Revenue Department also clarified that no Goods and Services Tax (GST) would be levied on services provided by senior doctors/consultants/ technicians hired by the hospitals as these are covered under healthcare services. The food supplied to in-patients are not separately taxable as they form part of composite supply of healthcare, which is exempt under the GST. The entire amount charged by them (hospitals) from the patients, including the retention money and the fee/payments made to the doctors etc, is towards the healthcare services provided by the hospitals to the patients and is exempt (from GST).

[Source: The Financial Express]

Business NewsNews

With a view to remove any doubt or uncertainty in the matter and bring uniformity in the rate of GST applicable to supply of food and drinks made available in trains, platforms or stations, it has been clarified with the approval of the competent authority that the GST rate on supply of food and drinks by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd., or their licensees, whether in trains or at platforms (static units), will be 5% without input tax credit [vide letter F.No. 354/03/2018-TRU dt. 31-03-2018 (Order No. 2/2018 – GST) issued to the Railway Board (available at www.cbec.gov.in)].

[Press Release no. 1528079]

Ministry of Finance