Articles

Automatic and hybrid generation of status holder certificate by DGFT
 
Status Holder Certificates issued under FTP 2015-20 will remain valid till 30th September 2023 only and any IEC holder willing to avail the Status Holder Certificate under the FTP 2023. It has been provided by Public Notice No: 32/2023 & Trade Notice No. 28/2023-24 issued by the DGFT that The Status Holder Certificate (SHC) shall now be electronically generated based on export data available in DGCI&S database with no requirement by the exporter to file any kind of application in most cases. However, in certain cased an application may still be required to be filed online.

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Gold Coins; white goods given free by principals to dealers for achieving targets are supply under GST
 
The gold coins and white goods distributed by principals to the dealers, on the quantity lifted by the dealers, cannot be regarded as ‘gifts’ as the dealer is eligible for the gold coins and white goods only to the extent of amount lying as credit to his account and is subjected to the satisfaction of the terms and conditions of the Scheme. This would result in the enhancement of the sales of the company and could be considered as furtherance of business.
The transfer is not gratuitous and cannot be demanded, to qualify as gifts. Hence ITC on transfer of such gold coins would not be regarded as blocked ITC u/s 17(5)(h) of The CGST Act 2017. The Honourable Supreme Court in the case of Sonia Bhatia v. State of UP [1981 (3) TMI 250- Supreme Court) – 1981-VIL-06-SC, ruled wherein ‘gift’ has been held to hit a voluntary transfer of property by one to another, without any consideration or compensation.
Therefore A ‘gift’ is a gratuity and an act of generosity and does not require a consideration:
if there a consideration for the transaction, it is not a gift. In the same case, it was also held that a gift is a transfer which does not contain any element of consideration in any shape and form Love, affection, spiritual benefit and many other factors may enter in the intention of the donor to make a gift, but these filial considerations cannot be called or held to be legal considerations as understood by law.

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GST Rate Amendments w.e.f. 20th October 2023
 
This article explains the following GST Rate Amendments –
1. GST Inverted Refund available on works contract & other construction services
2. Certain ITC available for Rent a Cab operators
3. GST exemption on services to “Govt. Authorities” for water supply, etc
4. Services by Indian Railways under forward charge
5.  Forward charge on bus supplied by corporates through E-Commerce Operators
6. GST Rate amendment on millets, molasses & certain spirits
7. Other rate amendments

Download the full Article below:GST Rate Amendments from 20th Oct 23

Can GST Amount credited in Cash Ledger be considered as cash payment or not? Commissioner shall follow High Court directions or appeal against but cannot act in contempt

Many cases are pending wherein, during the initial years of GST, the taxpayers had issues and technical problems and the GST Authorities also did not have a solution. The cases include few like the following –
A. GSTR 3B return filed without showing an amount as payable in a month and the taxpayers were not guided that Form DRC-03 could be used to pay such an amount. Thus, they paid the same vide next GSTR-3B. Important to note
also is that Circular 26/26/2017 in this respect also was issued after quite some time into the GST regime.
B. Taxpayers were automatically migrated, and they could not file returns.
C. Taxpayers clicked the “save” button and not “submit” button while filing GSTR-3B and the same was considered as filed.

Download the full Article below: Can GST Amount credited in Cash Ledger be considered as cash payment or not? Commissioner shall follow High Court directions or appeal against but cannot act in contempt

 

Welcome Notices to note for Exporters and Importers

a. Exporters and importers in New Delhi/CLA, Mumbai, Coimbatore, Kolkata, Surat, Ahmedabad, Bangalore, Rajkot, Hyderabad, Chennai and Ludhiana, can get their pending EODCs for AdvanceAuthorisations and EPCG disposed off
b. GST-ITC allowed in case of transfer of duty free imported or indigenously procured materials, between the units located in same or different States
Exporters and importers in New Delhi/CLA, Mumbai, Coimbatore, Kolkata, Surat, Ahmedabad, Bangalore, Rajkot,Hyderabad, Chennai, and Ludhiana, can get their pending applications for Export Obligation Discharge Certificate
(EODC) for Advance Authorisations and EPCG disposed off with ease between 13.11.2023 to 24.11.2023, as provided by Trade Notice No. 29/2023-24 dated 13th October 2023. Exporters whose EODC applications are pending, and
their licence status is not reflected as ‘Closed’ on the DGFT Website, should make use of the 2-week EODC camp and ensure that un-redeemed licence pendency is disposed. The following points should be noted –
i. For applications wherein physical files were submitted for redemption / closure to the RA earlier, the RA on examination of the said files should generate the EODC letter online.
ii. Also, for cases where the authorisation was redeemed earlier but not updated by the RA online, the authorisation status should be duly updated in the online systems.
iii. Alternatively, the AAEPCG Authorisation holder may also submit EODC status update application by navigating to DGFT website –> Services –> AA / EPCG –> EODC Status update.
iv. RA as well as the Exporter is mandated to ensure that the status of all redeemed AA/EPCG authorisations are duly updated in the DGFT online systems.
v. EODC issued online are transmitted electronically to Customs ICEGATE System in near real-time, to facilitate the discharge of Customs bond and other related activities at the Customs port.
In another development, in a welcome move, vide Public Notice No. 34/2023 dated 13th October 2023, in case of transfer of duty free imported or indigenously procured materials, on which GST has been paid, between the units located in same or different States, the availment of Input Tax Credit has been allowed and shall be governed as per the provisions of the GST law & the rules made thereunder. Vide Para 4.10 (i) of the Handbook of Procedures 2023,
The DGFT had already permitted the transfer of any duty-free material imported or procured against Advance Authorisation from one unit of a company to another unit for manufacturing purpose with prior intimation to
jurisdictional Customs Author.

Download the full Article below :Welcome Notices to note for Exporters and Importers

 

Practical Application of GST on Gaming & Gambling vide Rule 31B & Rule 31C: Explanation with examples

Rule 31B of The CGST Rules inserted vide Not No 45/2023, provides for determining the Value of supply in case of online gaming including online money gaming. The same goes as follows –
Notwithstanding anything contained in this chapter, the value of supply of online gaming, including supply of actionable claims involved in online money gaming, shall be the total amount paid or payable to or deposited with the supplier by way of money or money’s worth, including virtual digital assets, by or on behalf of the player:
Provided that any amount returned or refunded by the supplier to the player for any reasons whatsoever, including player not using the amount paid or deposited with the supplier for participating in any event, shall not be deductible from the value of supply of online money gaming.
To explain with an example – Say a gamer deposits Rs. 1 Lakh before starting an online gaming session. He has to additionally pay Rs.28,000/- as GST. Thereafter he utilizes only Rs. 50,000 worth of his deposit, yet he will be refunded only Rs.50,000/- and not the proportionate GST of Rs.14,000/-.
Again, Rule 31C provides for Value of supply of actionable claims in case of casino as follows–
Notwithstanding anything contained in this chapter, the value of supply of actionable claims in casino shall be the total amount paid or payable by or on behalf of the player for –
(i) purchase of the tokens, chips, coins, or tickets, by whatever name called, for use in casino;
or
(ii) participating in any event, including game, scheme, competition or any other activity or
process, in the casino, in cases where the token, chips, coins or tickets, by whatever name called,
are not required:
Provided that any amount returned or refunded by the casino to the player on return of token, coins, chips, or tickets, as the case may be, or otherwise, shall not be deductible from the value of the supply of actionable claims in casino.
To explain with an example – Say a better deposits Rs. 1 Lakh before starting an a betting session. He has to additionally pay Rs.28,000/- as GST. Thereafter he utilizes only Rs. 50,000 worth of his deposit, yet he will be refunded only Rs.50,000/- and not the proportionate GST of Rs.14,000/-.
The silver lining is in the explanation to 31B & 31C which provides as follows –
Explanation.- For the purpose of rule 31B and rule 31C, any amount received by the player by winning any event, including game, scheme, competition or any other activity or process, which is used for playing by the said player in a further event without withdrawing, shall not be considered as the amount paid to or deposited with the supplier by or on behalf of the said player.”
To explain with an example – Say a better/gamer deposits Rs. 1 Lakh before starting a betting/gaming session. He has to additionally pay Rs.28,000/- as GST. Thereafter he utilizes only Rs. 50,000 worth of his deposit, but wins Rs.5,00,000/-, he will take home as follows –
Particulars Base Value GST Total
Inital Deposit -1,00,000.00 -28,000.00 -1,28,000.00
Prize money 5,00,000.00 5,00,000.00
refund of unutilized deposit amt. 50,000.00 50,000.00
Excess Take home 4,50,000.00 -28,000.00 4,22,000.00
Hence, the proviso to Rule 31B & 31C seems to change the taxable event from ‘supply’ to ‘expected supply’. Even though an actionable claim is a beneficial ownership in debt, yet when no supply is received at all, the non-reduction of the refunded amount from the value of supply seems to stretch the taxability. However, the explanation to the Rules makes it clear that the GST Authorities seek to control only the entry point and not post that and hence even the prize money is not taxable, just like in case of a lottery.

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Discipline regarding “quasi-criminal” penal proceedings

Discipline regarding penal action under various tax laws are widely discussed. Two interesting recent cases under Income Tax allows one to reflect further. Generally, losses are contested and seldom is it seen that assessee accept a loss return to be assessed as NIL. However, what if in spite of an irrefutable loss the assessee in good faith and, to avoid undue litigation, harassment and, to buy peace of mind agrees to get assessed at NIL income instead of declared loss, can a penalty/prosecution proceeding be initiated against the assessee u/s
271(1)(c) of the Income Tax Act? The answer is that it can be initiated. There is no provision for such pleas of bargain under the Income Tax Act to act as estoppels upon AOs. However, in case the plea is not accepted by the AO, the assessee should be show caused and there should be substance in enquiry and evidence to prove concealment. Penalty proceedings are distinct from assessment proceedings, though they emanate from the assessment proceedings; still, they are separate and independent proceedings all together. The Hon’ble Supreme Court of India in the case of CIT & Act. Vs. M/s SSA’s Emerald Meadows in CC dated 05.8.2016 [2016]73 Taxmann.com 48 (SC) has held that notice issued by the Assessing Officer under section 274 read with section 271(1)(c) of the Act was bad in law, as it did not specify under which limb of section 271(1)(c) of the Act, penalty proceedings has been initiated, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The assessee should know the grounds which has to meet, otherwise the principles of natural justice are offended. Further, the order has to specify the offence alleged to be committed, as was held in the case of M/s UNITECH REALTY PVT. LTD Vs DCIT, CIRCLE – 27(1), NEW DELHI [2023-VIL- 1036-ITAT-DEL].

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Non-filing of the returns does not empower the GST Authorities to cancel the registration retrospectively

In some cases, such is the interpretation of some of certain field officers that SCNs flow to recipients of earlier supplies, even after a prospective cancellation/suspension of registration of suppliers after the date of such supply. Hence, retrospective cancellation would certainly involve denial of ITC of recipients who have received supplies before the cancellation/suspension of registration. However, It seems that for certain GST field officers cancellation of registration means retrospective cancellation – something which has serious ramifications. Section 29 of the CGST Act, 2017, grants discretionary powers to the concerned authority to cancel the registration from a retrospective date. However, such powers have to be exercised only in eligible cases. Cancellation on grounds that the petitioner had not filed the returns for a continuous period of six months does not justify retrospective cancellation from the date when the registration was granted. Where the taxpayer has closed its business altogether and thereafter stopped filing returns, a stand cannot be taken by the dept. to cancel the GST registration retrospectively thereby even making the earlier supplies of the taxpayer irregular. It’s a simple case when one reads the order in hindsight but it had to be contested by the taxpayer in High Court and a decree taken in the case of ASHISH GARG PROPRIETOR SHRI RADHEY TRADERS Vs ASSISTANT COMMISSIONER OF STATE GOODS AND SERVICE TAX, DELHI ZONE 7 WARD 82 .

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Sugar Manufacturing Co-operatives may now get their old IT demands dropped by filing applications u/s 154 and u/s 155(19)

The recent amendments in the Income Tax Act have provided much-needed relief to co-operative sugar factories operating in India by allowing deductions for sugarcane purchases made at or below the government-approved price. The Finance Act 2023 amended section 155 to allow AO to recompute the total income of a sugar mill co-operative and allow the deduction for sugarcane purchase expenditure that was equal to or less than the Government fixed price. The new section 155(19) empowers the Assessing Officer to recompute the total income for previous years with disputed deductions, resolving long-standing tax litigation. By following the SOP provided in Circular 14 of 2023 dated 27th July 2023, co-operative sugar factories can make applications to the JAO with the prescribed documents to resolve their tax disputes amicably.

Download the full Article below :Sugar Manufacturing Co-operatives may now get their old IT demands dropped by filing applications u_s 154 and u_s 155(19)

 

Analysis of GST Notifications dt’ed 31st July 2023

Friends,

One more set of notifications have been issued under GST, even as we await the 51st GST Council Meeting to be held on 2nd August 2023. The following are our brief analysis of the notifications as follows –

 

  1. Analysis of Not No 31/2023 – Central Tax –

 

Rule 8(4A) States as follows –

10[(4A) Where an applicant, other than a person notified under sub-section (6D) of section 25, opts for authentication of Aadhaar number, he shall, while submitting the application under sub-rule (4), undergo authentication of Aadhaar number and the date of submission of the application in such cases shall be the date of authentication of the Aadhaar number, or fifteen days from the submission of the application in Part B of FORM GST REG-01 under sub-rule (4), whichever is earlier.

Download the full Article below :Article – 31st July 23 – GST Notifications Analysis – TC

 

EV Vehicle charging stations to provide ‘battery charging service’ and not supply or distribution of ‘electricity’ – liable to GST @ 18%

Classification under GST Law can sometimes be contrary to general understanding. The charging of a battery in EVs requires electricity and an electricity company will provide electricity supply to the public charging stations which will in-turn provide the electricity to all electric vehicle users who can access these pubic charging stations for battery charging. General understanding is that the EV vehicle battery shall be charged with electricity (which is an exempt goods)’, but The AAR dug deep and concluded that it is ‘Battery Charging Service’. The AAR Karnataka has opined that the charging of EV vehicles will be a service liable to GST @18% in the case of M/s CHAMUNDESWARI ELECRICITY SUPPLY CORPORATION LIMITED [2023-VIL-147-AAR].

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Analysis of the GST, Compensation and Customs rate Notifications issued on 26th July 2023 apropos the recommendations of the 50th GST Council Meeting.

CGST Rate Notifications

  1. Amendment to Notification No. 11/2017-Central Tax (Rate) so as to notify change in GST with regards to services as recommended by GST Council in its 50th meeting
  1. Amendment to Notification No. 12/2017-Central Tax (Rate) so as to notify change in GST with regards to services as recommended by GST Council in its 50th meeting
  1. Amendment to Notification No. 13/2017-Central Tax (Rate) so as to notify change in GST with regards to services as recommended by GST Council in its 50th meeting
  1. Amendment to Notification No. 01/2017-Central Tax (Rate) to implement the decisions of 50th GST Council Meeting
  1. Amendment to Notification No. 26/2018-Central Tax (Rate) to implement the decisions of 50th GST Council Meeting

 

Compensation Cess Notification

  1. Amendment to Notification No. 1/2017-Compensation Cess (Rate) to implement the decisions of 50th GST Council Meeting

 

Customs Notification

  1. Amendment to Notification No. 45/2017-Customs, Notification No. 47/2017-Customs and Notification No. 50/2017-Customs all dated 30th June, 2017

Download the full Article below : 27th July 2023 – Analysis of Notifications

 

Incase of cancellation of contracts, the supplier cannot sit on refund of GST to the recipient, pending receipt of refund from the GST Department

Government Customers or suppliers always try to have the upper hand in dealings with private players. Incase contracts are cancelled, there is always a question of how to adjust the GST paid earlier, especially if no outward tax liability is available. In this regard, Sl No 3 of Circular No. 137/07/2020-GST dated 13.4.2020 specifies the following –

 

1. An advance is received by a supplier for a Service contract which subsequently got cancelled. The supplier has issued the invoice before the supply of service and paid the GST thereon. Whether he can claim a refund of tax paid or is he required to adjust his tax liability in his returns?

In case GST is paid by the supplier on advances received for a future event which got cancelled subsequently and for which an invoice is issued before the supply of service, the supplier is required to issue a “credit note” in terms of section 34 of the CGST Act. He shall declare the details of such credit notes in the return for the month during which such credit note has been issued. The tax liability shall be adjusted in the return subject to conditions of section 34 of the CGST Act. There is no need to file a separate refund claim. However, in cases where there is no output liability against which a credit note can be adjusted, registered persons may proceed to file a claim under “Excess payment of tax, if any” through FORM GST RFD-01.

Download the full Article below : Incase of cancellation of contracts, the supplier cannot sit on refund of GST to the recipient, pending receipt of refund from the GST Department

 

GST Circulars & Notifications dt. 17th July 23 w.r.t. 50th GST Council Decisions_Tax Connect’s Analysis
We are pleased to put forth our Tax Connect’s Analysis of GST GST Circulars & Notifications  dt. 17th July 23 w.r.t. 50th GST Council Decisions as follows –
Circular Remarks
Circular 195 of 2023 No GST on Warranties
Circular 199 of 2023 ISD & Cross Charge – Both Are Valid
Circular 192 of 2023 No Interest when IGST-ITC is wrongly availed & utilized.. To the extent accumulated balance of CGST/SGST ITC is available
Circular 193 of 2023 ITC Mismatches – Extension of Circular 183 of 2022, till 31.12.2021
Circular 197 of 2023 GST Refunds – Various Clarifications
Circular 194 of 2023 TCS where multiple ECO operators are involved
Circular 198 of 2023 E-Invoicing to Govt. departments
Circular 196 of 2023 No GST on Group Companies holding
Notifications 18 to 26 of 2023 – CGST Extention of Amnesty Schemes
We hope this Analysis add value in your professional sphere!