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SC upholds HC decision on ‘Form C’ availability after GST

SC upholds HC decision on ‘Form C’ availability after GST

The Supreme Court has upheld the decisionSC upholds HC decision on ‘Form C’ availability after GST of the Punjab and Haryana High Court that Form – ‘C’ should be made available to an assessee even after implementationof the goods and services tax (GST).

A Bench led by justice Ranjan Gogoi, while dismissing a Haryana government’s appeal, observed that “if you (Haryana government) poke industries like this, they will run away”.

The issue before the court was whether after the amendment to the Central Sales Tax Act, 1956, power company Caparo Power was entitled to be issued ‘C’ Forms in respect of natural gas purchased from Gujarat-based BPCL and IOC in the course of inter-state sales for generation of electricity.

The HC held that the sale tax law as defined in Section 2(i) of CST Act will mean the law for the time being in force in any state for levy of taxes on sale and purchase of goods. It further ruled that the definition is inclusive, and not restrictive, hence will include the HGST Act 2017 as well.

Form C is issued by a purchasing dealer to a selling dealer to avail of the benefit of the concessional rate of CST. The objectives of providing benefit vide C Form are to negate effect of high rate of taxation and to safeguard the consumers’ interest.

The Haryana government in its appeal said Caparo was not engaged in re-selling of these goods and its registration under the CST Act lapsed on the commencement of the HGST Act. So, the company was not entitled for Form C. It further said the provisions of the CST Act would apply only if it sold the same goods that it had purchased (natural gas).

However, the HC said the CST Act does not restrict the usage of Form C only for the purpose of resale, but can be used for resale, manufacture, processing or generation/distribution of electricity.

Caparo had challenged the Haryana government’s refusal to issue ‘C’ Forms on the grounds that there had been no change of law with regard to inter-state sale of natural gas in pre-GST or post-GST.

Stating that inter-state sales are outside the domain and control of any state, counsel Ankur Saigal, who appeared for Caparo, argued that the issuance of Form C is under CST Act and not under HVAT Act and the state government is only the implementing agency and has no discretion to refuse the Form C if all the conditions are satisfied, as the issuance of Form C does not impact purchasing dealer state’s revenue.

Source :  Financial Express
IMF Advises India To Consider Simpler GST Rate Structure

IMF Advises India To Consider Simpler GST Rate Structure

The International Monetary Fund (IMF) today described the Goods and Services Tax (GST) as a “milestone reform” in IMF Advises India To Consider Simpler GST Rate StructureIndia’s tax policy, but pushed for a simplified structure, saying the multiple rate structure and other features could give rise to high compliance and administrative costs.

In its annual country report, the International Monetary Fund also said that a dualrate structure with a low standard rate and an additional higher rate on select items can be progressive and preserve revenue neutrality.

The GST is an indirect tax levied on the supply of goods and services in India. It came into effect on July 1, 2017.

The IMF said that GST is a milestone reform in India’s tax policy, taking the important step of unifying and harmonising numerous indirect taxes across all states of the federation and the central government.

“Yet, the GST has a complex structure with a relatively high number of rates (and exemptions), which could be simplified without sacrificing progressivity of the current GST and with potentially significant gains from lower compliance and administrative costs,” it said.

A dual rate structure with a low standard rate and an additional higher rate on select items can be progressive and preserve revenue neutrality, while streamlining exemptions would further contribute to progressivity and reduce compliance and administrative costs, the IMF recommended.

The IMF said that with the consumption basket of the rich taxed at higher rates than that of the poor, the GST as presently designed has an effective tax rate rising with household consumption. A revenue-neutral reduction in the number of rates would raise the effective rates for poorer households while reducing those for richer households. This is the key cost of moving to a simpler system, it argued.

In its report the IMF said the implementation of the GST led to the key step of harmonising indirect tax rates on goods and services that previously differed across different states and the centre, and brought services into the state tax net.

However, India belongs in a small group of five countries having four or more GST rates: four non zero rates of five per cent, 12 per cent, 18 per cent, and 28 per cent; special low rates of three per cent on gems and jewelry and 0.25 per cent on rough diamonds; and a GST “cess” levied on demerit goods. In comparison, among 115 countries with VATs, 49 have a single rate, and 28 have two rates, it noted.

“The multiple rate structure and other features of India’s GST environment could give rise to high compliance and administrative costs,” it said.

The goods and services tax created a unified national market for the first time by lowering internal barriers to trade – effectively establishing a free trade agreement for a market of over 1.3 billion people, said Ranil Salgado, IMF mission chief for India.

The tax is also expected to increase the amount of economic activity taking place in the formal sector of the economy – leading to better quality and more reliable jobs, he added.

“As a result, the goods and services tax should improve productivity and boost medium term potential growth, while also creating room for the government to increase much needed social and infrastructure spending,” Mr Salgado added.

Source : NDTV
GST Council may replace 12% and 18% slabs with 14-15% one: Sushil Modi

GST Council may replace 12% and 18% slabs with 14-15% one: Sushil Modi

GST Council might replace the 12 per cent and 18 per cent slabs with a 14-15 per cent one, Sushil Modi: GST Councilsaid Bihar Deputy Chief Minister Sushil Modi on Thursday.

While addressing a seminar on the GST, organized by the Institute of Chartered Accountants of India, Modi said this slab rationalisation was likely to be taken up only after the GST collections have reached Rs 1 trillion. Experts claim this might take nine months to a year to reach this target.

This would reduce the number of GST rates to four. Also, the GST rates of items such as refrigerators, washing machines, small television sets, and paint and varnish could go down further after they were cut from 28 per cent to 18 per cent recently.

Except for April, the GST has never yielded revenue of Rs 1 trillion.

This was also an aberration since arrears of the previous months were paid. In July, Rs 964.83 billion was collected, against Rs 956.1 billion in June and Rs 940 billion in May.

“Pruning the number of GST rate slabs is definitely a good idea. But I don’t foresee that happening in the next nine to 12 months till the tax collections consistently reach the desired Rs 1-trillion-per-month target,” said Harpreet Singh, partner at KPMG.

At present, around 49 countries use a single GST rate, 28 use two rates and four countries including India have more rates.

Source :  Business Standard
Consumption behaviour, populism behind GST rate cuts

Consumption behaviour, populism behind GST rate cuts

Over the last 13 months, the goods and services tax (GST) Council has effected tax cuts on 384 goods and 68 services under the indirect tax system. The total estimated revenue loss to the exchequer from the rate cuts was pegged at ₹ 70,000 crores, according to the government. Consumption behaviour, populism behind GST rate cuts

Consumption patterns

The rate cuts reflect the changing consumer behavior. Items that were earlier considered a luxury, such as refrigerators and washing machines, are now a necessity for middle-class households.

Fearing a huge revenue gap under GST, the Council had initially included most consumer durable and personal use items in the highest tax slab. So refrigerators, washing machines, television sets, and shampoos were taxed at 28%. In comparison, these items attracted over 30% tax in the earlier tax regime, which comprised excise duty and value-added tax.

However, as revenues stabilized, the Council looked to evolve tax categories that would reflect contemporary consumption trends and increase consumption demand.

After the recent round of tax cuts, the majority of items in the 28% category are luxury items such as big cars or sin goods such as tobacco, pan masala, and aerated drinks. The other items in the highest tax slab include cement, air-conditioners and big screen television sets. The government is considering lowering the tax rates on these items as well.

Also Read: GST regime brings in nearly 50 lakh new taxpayers


The first big step to reduce tax rates was in November 2017, just before the assembly elections in Gujarat and Himachal Pradesh. Tax rates were cut on 177 items, including food, personal grooming, construction material, wood, and rubber. The recent reduction comes months before three Bharatiya Janata Party (BJP)-ruled states, Rajasthan, Chhattisgarh and Madhya Pradesh, go to polls. States ruled by opposition parties have been complaining that the frequent rate cuts under the GST are just a populist measure and are hurting revenues.

Revenue buoyancy

GST has helped in improving collections with tax buoyancy pegged at 1.2, giving policy makers more room to cut rates. The Union and state governments collected ₹ 94,016 crores by way of GST in May (for April sales), which was better than the ₹89,885 crore monthly average in the previous fiscal.

According to a government analysis of the past five-year revenue trend, May receipts for April sales represented just 7.1% of annual tax collection receipts, which indicated a promising start for the year. In June, the collection improved to ₹95,610 crore. E-way bills enforced nationwide for shipment of goods is expected to aid the growth in revenue collections. GST is also helping to curb evasion of income tax, as the technology-driven system makes it difficult to understate sales.


While political and revenue compulsions forced the government to go in for a five-slab tax structure under GST, the eventual goal was to have fewer tax slabs to make the system simpler. This is possible by converging the 12% and 18% slabs, besides keeping the highest slab lean or doing away with it entirely.

Source: Live Mint
GST regime brings in nearly 50 lakh new taxpayers

GST regime brings in nearly 50 lakh new taxpayers

The Goods and Services Tax (GST) regime has seen a significant change in the assessee segmentation compared to the pre-GST era when VAT and Central excise were in place. There are fewer assessees now in the lowest and highest slabs while all the other slabs have seen an increase.

As on July 25, a total of 63.7 lakh taxpayers migrated from the old system, while 49.53 lakh new taxpayers became part of the indirect tax system taking the total number of taxpayers under GST to more than 1.13 crore. These include 17.66 lakh taxpayers who have opted for the composition scheme.

The government expects the total number of assessees to go up as the GST Council has decided to give businesses one more chance to migrate to the new system. To incentivise them, migrants may be allowed to file GST return for the July 2017-August 2018 period without any late fee.

GST: Percentage of Taxpayers

The GST regime requires any business with an annual turnover of 20 lakh or more (10 lakh in some North-Eastern States and hilly States) to get registered. Earlier, different States had different slabs for registration under VAT/ST, which was as low as 1 lakh and could go up to 10 lakh: the thresholds for service tax and Central excise were 10 lakh and 1.5 crore, respectively.

The GSTN study found that during the pre-GST regime, more than 60 per cent taxpayers were in the turnover slab ‘up to 20 lakh’. Post-GST, that came down to 52.24 per cent. Since some States earlier had a threshold of below 20 lakh or even below 10 lakh, many small businesses went out of the tax net, lowering their share in the total GST payers. The share of taxpayers with turnover of 5 crore or less has fallen to 93.29 per cent, against 94.25 per cent earlier.

The share of taxpayers in the 100-crore slab has fallen by eight basis points. This could be because some products are — crude oil, petrol, diesel, ATF and natural gas, and alcohol for human consumption — are still under the old regime.

Also, big taxpayers are smaller in numbers, so even if a few don’t come under the new regime, it will have a significant impact on the share of the highest turnover slab.

Source: The Hindu Business Line
GST rate cut impact: Synthetic textiles to be 5-7% cheaper from August

GST rate cut impact: Synthetic textiles to be 5-7% cheaper from August

Synthetic manufacturers are planning to cut the prices of their products by at least 5 per cent from August following the government’s decision to reduce the effective GST Centre promises to refund textile GST dues in 20 days(goods and services tax) rate on its raw materials by 7 per cent from July 27.

The GST Council in its meeting held on Saturday had decided to allow input credit on manmade fabric equivalent to 7 per cent. This will provide a level-playing field to synthetic textile manufacturers through a uniform tax rate on the entire value chain. The move will cut effective GST on manmade (synthetic) fabric to 5 per cent from 12 per cent earlier. The revised GST rate will be applicable from July 27.

As of now, all textile raw materials, including cotton yarn and its fabric and synthetic yarn attract 5 per cent GST. But synthetic fabric manufacturers were forced to pay 12 per cent of duty without having any opportunity to claim a refund of duty difference. This means the synthetic fabric was the only product in the textile value chain with 12 per cent of GST.

Also Read: 28th GST Council Meeting- Key Highlights & Rate Changes

“The cut in GST rate will provide a level playing field for synthetic fabric manufacturers. Assuming 1-2 per cent of the cost goes for value addition, synthetic textile raw materials will be cheaper by at least 5 per cent. This cost-benefit will certainly be passed on to consumers resulting in 5 per cent cheap synthetic textiles from August,” said Madhusudan Bhagaria, Chairman and Managing Director, Filatex India, one of the country’s largest players in the synthetic textile industry.

India produces around 4 million tonnes (mt) of synthetic yarn annually. Considering synthetic textiles’ major consumption in the lower class, a 5 per cent price cut would bring in a big respite for consumers. The GST cut will also help clear backlog of nearly Rs 10 billion of duty differential which the synthetic textile industry was demanding from the government.

Trading between Rs 140-150 a kg currently, synthetic yarn prices remained volatile in the last one year due to range bound crude oil prices.

“The GST rate cut will bring additional demand of synthetic textiles in coming years,” said a senior official of a leading synthetic yarn and fabric manufacturer.


Source: Business Standard
Revenue boost, returns filing on GST Council agenda

Revenue boost, returns filing on GST Council agenda

28th gst council meeting

The Goods and Services Tax (GST) Council, in its next meeting, will take stock of the improving revenue performance of states, and also consider solutions for improving the rate of filing of returns, government officials said. Additionally, the Council will also be apprised of the status of the IT system which hasn’t so far been free of complaints. According to sources in the finance ministry, the states’ GST revenue deficit, compared with the protected revenue, narrowed to 13% in the August 2017-June 2018 period, compared with 17% in the year-ago period. Till June, states like Maharashtra, Tamil Nadu, Andhra Pradesh and Telangana have GST revenue deficit of less than 5%.

Among large states, Punjab and Bihar have the deficit of over 30%, compared with the protected revenue. However, the number of taxpayers filing summary returns (GSTR-3B) by the stipulated deadline continues to hover around 60%, compared with the government’s own estimate of 80%, ideally. Worryingly, the filing of GSTR-1 —which contains details of outward supply — has declined over the past few months. “While there has been a 10 percentage point gap between the two returns, this has started to get wider lately. The Council may consider imposing a late fee on GSTR-1 filing, as currently there is no provision for the same,” an official said.

The Council will also consider the reports of the group of ministers (GoM) on IT issues. The committee, headed by the Bihar deputy chief minister, is believed to have recorded its concerns with Infosys’ performance. Infosys is the vendor for the GST Network. The Council will consider these reports along with proposals for improvement. Officials said many IT functionality, including advance ruling and appeal among others, are only partly ready. “The GoM has not found the progress satisfactory and asked Infosys to expedite development by deploying more resources,” an official privy with the GoM’s reports said. Additionally, taxpayers were still facing issues with GSTR-1 and TRAN-2 filing.

Also Read: 28th GST Council meet on Saturday: Return simplification, law tweaks, setting up of tribunal on table

Infosys has assured the GoM to resolve these issues by the month-end after it was asked the reason for such glitches despite server utilisation being less than 30% at peak load. The Council will also take up a report on the reasons for accumulation of unsettled integrated GST, which has been a sticky problem as it doesn’t properly reflect the revenue position of states and the Centre. Till June, over Rs 1.16 lakh crore of IGST remains unsettled even after two ad hoc settlements this year. “One of the main reasons identified for this accumulation of unsettled IGST is the balance in IGST credit ledger. Since the most important trigger for settlement of IGST into CGST/SGST is the cross utilisation of IGST credit for payment of CGST/SGST liability, a build-up of balance in IGST credit ledger will prevent full settlement of IGST,” an official said.

The report on the issue has proposed amending the GST law to make it mandatory for taxpayers to first use IGST credit for payment of CGST/SGST before using the CGST/SGST credit. This will increase the cross-utilization and help reduce the balance in IGST ledger, another official said. The proposal would be taken up by the Council for approval in its meeting on the 28th.

Source :  Financial Express
GST on land lease: High Court ruling upsets status quo

GST on land lease: High Court ruling upsets status quo

The Bombay High Court has ruled that the one-time premium payable for long-term lease GST on land lease: High Court ruling upsets status quo(30 years or more) of land would attract goods and services tax (GST) as it constituted ‘supply’ under the GST Act.Experts said that the order went against the accepted principle of considering long-term leases as “sale of immovable property”, which is outside the purview of GST.

Short-term lease (less than 30 years) are anyway subject to GST and had attracted service tax in the previous regime.

In the present case, the petitioners, who are builders and developers, won bids for leasing land from City Industrial and Development Corporation of Maharashtra (CIDCO) in Navi Mumbai and Panvel. But they questioned the GST levy on the one-time lease premium (along with monthly rentals that are taxable) when the allotment letter was issued. The revenue department contended that the grant of leases constituted ‘supply’ for a ‘consideration’ and was, hence, eligible for GST.

“Envisaging GST on one-time lease premium paid for acquisition of leasehold land may trigger yet another controversy questioning the applicability of GST on all transactions of leasehold land deals in the corporate arena,” said Rajat Mohan, partner, AMRG & Associates.

“This ruling challenges the tradition of treating a long-term lease of an immovable property as akin to sale of immovable property for the purposes of charging indirect taxes,” Mohan added.

Sale of land doesn’t attract GST even as states impose stamp duty and registration fees on such transactions. However, GST is payable on renting of immovable property or construction of a complex/building/civil structure. Put simply, sale of land will not attract GST and sale of the building after obtaining completion certificate or after its first occupation will not attract GST.

However, sale of the building before its first occupation or before issuance of completion certificate will be taxed under GST, and be treated as the supply of service.

The tax department issued a notification in 2016 exempting upfront amount (premium, ‘salami’, development charges, etc) received by state governments’ industrial development corporations for providing taxable services by way of granting a long-term lease of industrial plots to industrial units.

“At this stage, it is necessary to start discussions on the inclusion of the real estate sector including transactions involving land within the GST ambit so that issues in relation to leasing/renting of land are dealt with appropriately within the GST framework,” said MS Mani, partner, Deloitte India.

According to the GST Act, the sale of land doesn’t attract GST even as states impose stamp duty and registration fees on such transactions. However, GST is payable on renting of immovable property, construction of a complex, building, civil structure.

Source :  Financial Express
GST practitioners form national body to suggest changes

GST practitioners form national body to suggest changes

Practitioners of Goods and Services Tax (GST) from across the country have formed a Joint Action Committee (JAC) to suggest simplification in compliance GST practitioners form national body to suggest changesand filing of returns as well as to ensure that money (or businessmen) is not blocked in the form of refunds due to them. The JAC was announced on Sunday when the two-day national conclave of tax practitioners concluded in Ahmedabad.

The committee was formed to fill the gap of a nation-wide body to represent to the authorities the issues faced by businessmen and tax practitioners at the grass-root level. “GST is a national Act, which subsumes most of the Acts governing states and central taxes. There is no way local tax practitioners can represent their cases to GST Council. Such a national body is the need of the hour,” said Amit Dave, a tax practitioner from Indore.

Close to 200 delegates from 29 states and Union Territories participated in the conclave. Representatives from each state will be a part of the JAC. A core body within JAC will also be formed to coordinate the activities of JAC.

The conclave witnessed deliberations on a host of issues, and suggestions to simplify the system will be submitted to the GST Council. “The upcoming meeting of GST Council has suggested 46 amendments, the conclave deliberated on a wider range of issues. We were surprised with the kind of issues faced under GST in different parts of the country,” said Axat Vyas, one of the key organisers of the conclave.

Some of the major suggestions include single one-click monthly return, allowing rectification in returns and creation of an activity log for traders to trace their actions, among a host of others. The Conclave also deliberated on shortcomings of the Act.

Participants complained that the GST portal is not uniform across states and while it is functional in some states, it’s dysfunctional in neighboring states. Deepak Bapat, a tax practitioner from Maharashtra, said that the IT system is not robust enough and the Act is in place. “All commissioners are given an authority to extend the deadline to file taxes by three months, but they have never used this discretion,” said Bapat. Sreedhara Parthsarthy, a tax practitioner from Ballari, in Karnataka, advocated that traditional tax practitioners should also be allowed to audit GST returns. Under the GST regime, only Chartered Accountants and Cost Accountants are allowed to conduct audit reports.

Source :  DNA
GST worked well, generated sufficient revenue, says Piyush Goyal

GST worked well, generated sufficient revenue, says Piyush Goyal

GST Worked Well, Generated Sufficient Revenue: Finance Minister Piyush Goyal

Finance Minister Piyush Goyal has said that the Goods and Services Tax (GST) has worked well in past one year and has generated sufficient revenue.

Addressing the seminar organised by Chhattisgarh Chamber of Commerce and Industries (CCCI) under aegis Chhattisgarh State Infrastructure Development Corporation (CSIDC), Goyal said, “The GST in the past one year has successfully worked and has generated ample revenue. This year there won’t be a dearth of revenue if people continue to be a part of this system and pay their taxes. Just when people pay their taxes correctly, the government will be more empowered to reduce the rates even further, making the mechanism simpler.” The Union Minister further said that the tax-related cases in the Supreme Court will be withdrawn by the government.

“The government has decided to withdraw almost half of the Supreme Court cases relating to the taxation. Most of the cases in the Supreme Court are of small and medium scale businessmen,” he added. He also stated that the digitalisation of taxation has been done to stop the interference of Government in their business. In a major initiative to ease the tax system of the country, the Centre rolled out the GST on July 1, 2017. Under the GST regime, a regulated tax system was introduced in India.

Source: (ANI)