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GST: Relaxation to assessee whose GSTIN has been cancelled during Mar 15, 2020, to Mar 14, 2021

GST: Relaxation to assessee whose GSTIN has been cancelled during Mar 15, 2020, to Mar 14, 2021

The Commercial Tax Department Chennai issued the instructions to all the territorial joint commissioners in respect of the exclusion of the period from March 15, 2020, to March 14, 2021, from the limitation period.

The Department has highlighted the Supreme Court’s observation, in view of the Global Pandemic Situation across the Country, took Suo Motu cognizance of the situation arising out of the difficulties faced by the litigants in filing petitions/applications/suits/appeals/all other proceedings within the period of limitation prescribed under the general law of limitation or any under special law and finally by way of an order dated March 8, 2021, has issued various directions.

In computing any period of Limitation, for any suit, appeal, application or proceedings, the period from March 15, 2020 till March 14, 2021 shall stand excluded. Consequently, the balance period of Limitation remaining as on March 15, 2020, if any shall become available with effect from March 15, 2021.

In cases where limitation would have expired during the period between March 15, 2020 till March 14, 2021, notwithstanding the actual period of limitation remaining, all persons shall have a limitation period of 90 days from 15-03-2021. In the event, the actual balance period of limitation remaining, with effect from 15 03-2021, is greater than 90 days, that longer period shall apply.

Under Article 142 of the Indian Constitution, the above Supreme Court order shall be applicable for the Taxpayers under GST Act, 2017 also and therefore, a proper officer defined under this Act is bound to act in accordance with the directions issued in the above Supreme Court order.

“The affected taxpayers, whose registration have been cancelled for non filing of returns during the period from March 15, 2020 to March 14, 2021, when approached the proper officer for Revocation of Cancellation of Registration after the prescribed period of 30 days, the said application was rejected by the proper officer on the ground that the limitation period prescribed by the Act had already expired,” the department said.

Hence, all the taxpayers whose applications have been rejected by the proper officer for the above said reasons approached the DC, GST Appeals and obtained order of Revocation of cancellation.

The Proper officer, being a quasi-judicial authority and Deputy Commissioner, GST Appeals, Joint Commissioner, GST Appeals being judicial authorities are also bound by the order of the Supreme Court and hence, for the purpose of revoking the cancellation of Registration issued under GST Act, 2017, various instructions are issued.

Source: TaxScan. 

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GST on director salaries: Firms receive notices despite diverse AAR rulings

GST on director salaries: Firms receive notices despite diverse AAR rulings

Even as authorities of advance rulings (AARs) differ on the liability to pay the GST on salaries paid by firms to directors, some states have already started issuing notices to companies asking them to provide details of the GST paid through reverse charge on such remunerations.

One of the notices seen by FE has been issued by the GST administration in Chhattisgarh to a company asking it to disclose the GST paid on the remuneration received by directors of the company since July 1, 2017. It fails to make any distinction between executive or non-executive directors.

The notice follows despite the Karnataka Bench of AAR ruling that came earlier this month, saying an executive director provides services to a company as an employee does to the employer, and the same can’t be treated as supply of services according to the GST Act. However, it said that a non-executive director, who doesn’t receive remuneration from the company as an employee and only gets fees for attending board meetings would be required to pay the GST on such fees through the reverse charge mechanism.

In April, the Rajasthan Bench of AAR had ruled that remuneration paid to directors of a company would be subject to the GST. The ruling was contradicted by the Karnataka AAR a month later.

Although AAR ruling is applicable only to applicants who seek clarity on interpretation of laws, experts said GST authorities are taking conginazance of such ruling while issuing notices in similar matters.

“Divergent views on taxation of director salary by two state advance ruling authorities were already enough of a nuisance for taxpayers. Adding to the woes of taxpayers, officers under other jurisdiction have already initiated issuing notices to taxpayers on the same issue,” Rajat Mohan, senior partner, AMRG & Associates, said.

He added that ruling by an AAR should not form the basis for issuing tax notices in other tax jurisdictions, but tax officials are indulging in it without ‘application of mind’, causing anguish to the ailing industry already suffering from the pandemic.

To deal with conflicting ruling by two state AARs, the GST Council in December 2018 had approved setting up of a centralised Appellate Authority for Advance Ruling. This was ratified by the Cabinet a month later.

Source: Financial-Express.

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12% GST applicable on Printing and Supply of Textbooks to Government Departments: AAR

12% GST applicable on Printing and Supply of Textbooks to Government Departments: AAR

The Authority of Advance Ruling (AAR) held that 12% of Goods and Service Tax (GST) is applicable to printing and supply of textbooks to government departments which are registered under Goods and Service Tax (GST) Acts, 2017.

The applicant, M/s Department of Printing, Stationery and Publication are a Government Press under the control and supervision of the Primary and Secondary Education Secretariat to cater to the Printing and Stationery requirements of the State Government offices namely Governor’s Office, Legislature, Government Secretariat, High Court, and Other Government Departments.

The applicant approached the Advance Ruling Authority on three grounds, namely, (i) whether GST exemption is granted to the activity of printing & supply of textbooks & printed materials, provided by the applicant to various Departments of Government of Karnataka? (ii) Whether the textbooks supplied to public or recognized bookstalls eligible for exemption?  and, (iii) the rate of tax applicable to these services if they are subject to taxation.

The Authority of Advance Ruling (AAR) consisting of Additional Commissioner of Commercial Tax, Dr. Ravi Prasad and Joint Commissioner of Central Tax, Mashood ur Rehman Farooqi held that these services are not eligible for GST exemption and 12% of Goods and Service Tax (GST) is applicable on the activity of printing and supply of textbooks to government departments which are registered under Goods and Service Tax (GST) Act.

However, the authority clarified that in the case of the printing and supply of textbooks to government departments that are not registered under the Goods and Service Tax (GST) Act, the applicant is exempted from the liability to pay tax.

Source: TaxScan.

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CBIC clarifies on issues under GST Law for Companies under IBC

CBIC clarifies on issues under GST Law for Companies under IBC

The Central Board of Indirect Taxes and Customs ( CBIC ) has issued clarifications in respect of issues under GST law for companies under the Insolvency and Bankruptcy Code, 2016 (IBC) in connection with the notification issued on  Saturday.

As per the Code, no coercive action can be taken against the corporate debtor for dues of the period prior to insolvency commencement date and such dues shall be treated as ‘operational debt’ for which claims may be filed by the PO before the NCLT in accordance with the provisions of IBC.

“The tax officers shall seek the details of supplies made/received and total tax dues pending from the corporate debtor to file the claim before the NCLT. Moreover, section 14 of the IBC mandates the imposition of a moratorium period, wherein the institution of suits or continuation of pending suits or proceedings against the corporate debtor is prohibited,” the CBIC Circular said.

Regarding the cancellation of GST registration of corporate debtor, the circular clarified that registration of an entity for which CIRP has been initiated should not be cancelled. However, the Proper Officer may suspend the registration. In case of cancellation of registration of an entity undergoing CIRP within the permitted time, the Circular advises that appropriate steps should be taken.

According to the circular, IRP/RP are not bound to file returns for the pre-CIRP period as the Code does not impose an obligation on them to comply with all legal requirements for period after the Insolvency Commencement Date.

For the purpose of the notification issued on Saturday, the corporate debtor who is undergoing CIRP is to be treated as a distinct person of the corporate debtor and shall be liable to take a new registration in the appropriate State/UT, the circular said.

“Further, IRP/RP appointed prior to the said notification shall take GST registration within thirty days of issuance of the said notification, with effect from date of his appointment as IRP/RP,” it added.

As specified in the Notification, it is mandatory for the IRP/RP to file returns under section 40 of the GST Act for the period it takes registration till the date on which registration has been granted.

With regard to the procedure for availing input tax credit for invoices issued to registered persons where IRP/RP has been appointed before issuance of NN 11/2020, the circular further clarified that the exception to the procedure stated under R. 36(4) as has been provided under Notification No. 11/2020 C.T. dated 21.03.2020 shall apply only for filing the first return. 

It was further clarified that the claim of refund of deposit in the cash ledger deposited by IRP/RP of erstwhile registration of the corporate debtor from the date of notification specifying the special procedure for corporate debtors undergoing CIRP, shall be available for refund to the erstwhile registration under the head refund of cash ledger, even though the relevant FORM GSTR-3B/GSTR-1 is not filed for the said period.

Source: TaxScan.

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Delhi HC directs GST Department to Open Online Portal to file the Form TRAN-1 electronically, or to Accept Manually

Delhi HC directs GST Department to Open Online Portal to file the Form TRAN-1 electronically, or to Accept Manually

The Delhi High Court has directed Goods and Services Tax ( GST ) department to either open the online portal so as to enable the petitioner to file the Form TRAN-1 electronically or to accept the same manually on or before 20.11.2019.

The petitioner contended that, it is engaged in the business of trading of steel pipes and is registered under the Central Goods and Service Tax Act, 2017. Before the introduction of the GST Act, as on 30.06.2017, the petitioner had a closing stock of pipes purchased from M/s Avon Steel Industries Private Limited of Rs. 71,35,431/- inclusive of excise duty of Rs.7,92,826/-. Petitioner was entitled to the transition of credit of the amount of Excise duty in terms of Section 140 (iii) of the GST Act. In order to avail transition of credit, petitioner was required to submit a declaration in Form TRAN-1 on the GST Portal within the stipulated period of 90 days. Since a large number of taxpayers could not complete the process within the aforesaid period on account of technical glitches and difficulties faced by them, the government extended the time period for filing TRAN-1 several times and lastly on the recommendation of GST Council, it was extended up to 27.12. 2017.

The Petitioner also submitted that, Pursuant to the aforesaid extension, the petitioner filed Form TRAN-1 on the common portal before the deadline. However, it was unable to log in to the common portal between 24.12.2017 to 27.12.2017 and avail transition of credit, presumably because of low bandwidth, given the fact that a large number of assessees all over India were trying to submit the declaration in Form TRAN-1 before the last date i.e. on 27.12.2017. Petitioner has annexed the screenshot of the Form TRAN-1, available on the common portal along with the petition.

The division bench comprising of Justice Vipin Sanghi and Justice Sanjeev Narula has said that, “the factual position in the present case is not any different and thus, we allow the present petition and direct the respondents to either open the online portal so as to enable the petitioner to file the Form TRAN-1 electronically or to accept the same manually on or before 20.11.2019”.

The Court also directed to process the petitioner’s claim in accordance with law once the GST Form TRAN–1 is filed.

Source: TaxScan.

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No GST Registration Needed for Co-Owner in AoP until the Turnover Reached the Threshold Limit: AAR

No GST Registration Needed for Co-Owner in AoP until the Turnover Reached the Threshold Limit: AAR

The Authority of Advance Ruling in West Bengal has ruled that, GST Registration is not needed for Co-Owner in Association of Persons ( AoP ) until the turnover reached the Threshold limit under the GST Act, 2017.

The Applicant is one of the co-owners of immovable property, jointly owned by three individuals. All three co-owners, including the Applicant, hold an equal share in the property. The property is let out to CGST & CX, Chandannagar Division. Total rental received exceeds the threshold provided under section 22(1) of the GST Act, but the share of each of the three co-owners does not cross the said threshold.

The Applicant seeks a ruling on whether he and the other two co-owners are to be treated as an association of persons or a body of individuals and, therefore, a person as defined under section 2(84)(f) of the GST Act, who is required to be registered under section 22(1) of the Act.

The AAR observed that, “the Applicant and the other two co-owners cannot be treated as an association of persons and, therefore, as a person defined under section 2(84X0 of the GST Act, where their income from renting is separately ascertainable and assessed for income tax individually at the hand of each co-owner. Whether the Applicant is required to be registered under section 22(1) of the GST Act will, therefore, depend on his gross turnover, ascertained separately from the other co-owners, exceeding the threshold as provided under the Act”.

Source: TaxScan.

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No GST on Reimbursement of Expenses to Employee by Employer: AAR

No GST on Reimbursement of Expenses to Employee by Employer: AAR

The Authority of Advance Ruling ( AAR ) in Karnataka has ruled that, the amounts paid to the employees of the applicant company as reimbursement of expenses incurred by them in the course of employment of the applicant company are not liable to tax under the provisions of the Goods and Services Tax Act, 2017 as the transaction of the services supplied by a supplier to the employee and paid by the employee is liable to tax after 30.09.2019.

The AAR also ruled that, the remuneration paid to the Director of the applicant company is liable to tax under reverse charge mechanism under sub-section (3) of section 9 in the hands of the applicant company as it is covered under entry no. 6 of Notification No. 13/2017- Central Tax (Rate) dated 28.06.2017.

The applicant has been examined and its found that the applicant’s employees incur expenses on behalf of the company in the course of employment and the said amounts are reimbursed by the applicant on a periodical basis. These expenses are incurred by the applicant and are only paid by the employee and later on reimbursed to the employee by the applicant. The issue is whether the amount paid as reimbursement of the expenses paid by the employee amounts to supply liable to tax.

Services by an employee to the employer in the course of or in relation to his employment are covered under Clause 1 of the. Schedule III which relates to the activities or transactions which shall be treated neither as a Supply of Goods nor as a Supply of Services. Hence the services provided by the employees of the applicant to the applicant are not a supply. Further, the expenses incurred by the employees are expenses of the applicant and the consideration is payable by the applicant himself and later on reimbursed by the applicant.

The AAR observed that, “The amount paid by the employee to the supplier of service is covered under the term “consideration” as if it is paid by the applicant himself for the services received by them on behalf of the company. This amount reimbursed by the applicant to the employee later on would not amount to consideration for the supplies received as the services of the employee to his employer in the course of his employment is not a supply of goods or supply of services and hence the same is not liable to tax. However, if any tax is applicable, it is on the services received by the employee on behalf of the applicant in the course of his employment, irrespective of the fact that it is paid by the applicant or the employee and later reimbursed by the applicant”.

Regarding the remuneration to the Directors paid by the applicant, the services provided by the Directors to the Company are not covered under clause (1) of the Schedule III to the Central Goods and Services Tax Act, 2017 as the Director is not the employee of the Company. The consideration paid to the Director is in relation to the services provided by the Director to the Company and the recipient of such service is the Company as per clause (93) of section 2 of the CGST Act and the supplier of such service is the Director.

Source: TaxScan.

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CAIT asks FM to probe biz model of e-tailers, says deep discounts causing GST loss

CAIT asks FM to probe biz model of e-tailers, says deep discounts causing GST loss

Traders’ body CAIT  urged the government to probe the business model of e-commerce majors like Amazon and Flipkart, alleging that deep discounts on products were causing loss of GST revenue to the Centre and state governments.

In a letter to Union Finance Minister Nirmala Sitharaman, the Confederation of All India Traders ( CAIT) has claimed that e-commerce companies Amazon and Flipkart and others were selling goods much below their market value thus denying the Government of its due legitimate GST revenue.

CAIT Secretary General Praveen Khandelwal has “urged the Finance Minister to institute a probe into this business model which is causing huge GST revenue losses to the government and recover the difference of GST between billed price and market value from the period of implementation of GST”.

According to the traders’ body, under GST Act, the government has a power to determine actual market value of the products if it appears that it is under billed. CAIT has sent similar letters to Union Commerce Minister Piyush Goyal and finance ministers of all states.

Source: Money-Control.

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Delhi government cancels GST registration of 1,282 traders for fraud

Delhi government cancels GST registration of 1,282 traders for fraud

The Delhi government has cancelled the GST registration of 1,282 traders who were found to be involved in the issuance of fake invoices. In addition, “show cause notices for cancellation have been issued to 3,221 dealers, of which proceedings are still underway​,” a government statement said on Wednesday. ​

The department has directed its tax officers to recover the entire amount of tax, interest and penalty from such dealers as well as to take other legal action against them.

Following directions from Deputy Chief Minister and Finance Minister Manish Sisodia, the Department of Trade and Taxes has identified around 56,000 suspicious​ and ​risky dealers on various risk parameters.

Sisodia reviewed the situation twice in the last one month and ordered strict action against them. The Department, through GST ​inspectors, has conducted ​field verification and inspection of 16,141 suspicious dealers so far. Of them, 4,618 dealers were found to be non-existent​ and ​bogus.

​“These dealers are non-existing/bogus dealers who got registration in GST to defraud the government exchequer by issue and use of fake invoices.​ ​A large number of GST fraud cases involving the use of fake invoices for wrong availment of input credit, which is further used to pay GST on outwards supplies has been detected​,” read the statement. ​

“​The purpose of use of such fake invoices is the fraudulent availment/encashment of input tax credit. The bogus entitles engaged in this activity also defraud other authorities such as banks by deflating turnovers, laundering of money etc.​,” it stated.​

The unscrupulous​ and ​bogus entitles engaged in such activities do not undertake actual trading of goods or services but involve in only paper transactions without physical delivery of goods​ and ​services​, the government noted. After their identification, assistant commissioners and GST officers from the department are taking action against the dealers in accordance with the provisions of GST Act and Rules.

Source: New-India-Express.

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High Court issues notice to Centre and Delhi govt on ‘blocked credits’ under GST

High Court issues notice to Centre and Delhi govt on ‘blocked credits’ under GST

The Delhi High Court on Monday issued a notice to the Centre and the Delhi government on the issue of ‘blocked credits’ under the Goods & Services Tax (GST) regime. Such a mechanism is affecting hotels and malls.

The GST Act has a provision, under Section 16, for input tax credit (ITC), which helps businesses deduct the tax paid on inputs at the time of paying tax on output, thus lowering the tax paid in cash. However, this Section is subject to certain restrictions as laid down under Section 17 of the Act. These restrictions are also referred to as ‘blocked credits’.

The related Section says: “Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business.”

The petition was moved by a firm building a five-star hotel in the Capital. It has been procuring multiple goods and services, including works contract services, for use in the construction of the property.

Denial of credit

The petition mentioned that by virtue of provisions under the Act, the input tax credit available on the procurement of goods and services or both, including works contract services used for the construction of the immovable property, is denied to the petitioner.

The denial of credit disregards that the property so constructed by the petitioner would be used by it for furtherance of business, it said.

The petition specifically talks about two provisions related with ‘blocked credits’. Section 17(5)(c) ITC shall not be available in respect of the “works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service”.

Similarly, Section 17(5)(d) says ITC will not be available for “…goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account, including when such goods or services or both are used in the course or furtherance of business.”

It was prayed before the court to quash and declare both the provisions as violating the fundamental right of the petitioner and, therefore, violation of Article 14 of the Constitution (equality before law).

According to Abhishek A Rastogi, partner at Khaitan & Co, who is arguing the matter in the Delhi High Court, the arbitrariness with respect to Section 17(5) of the CGST Act and the respective State Acts arises as these provisions intend to deny credit for construction projects while the objectives of the GST are completely different and provide for credits to the receiver when the output is in the course or furtherance of business. The impugned provisions have been challenged on the grounds of arbitrariness and vagueness of the phrase ‘on his own account’.

“The distinction between B2B (business to business) and B2C (business to consumer) transactions, especially for cases when the output activity is charged to GST, needs to be looked into to avoid tax cascading effect,” he said.

Source: The-Hindu-Business-Line.

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