GST - LATEST DECISIONS DT.18.1.18

Decisions relating to Services in the 25^th meeting of GST Council held at New Delhi on 18.01.2018

The following decisions relating to exemptions / changes in GST rates / ITC eligibility criteria, rationalization of rates / exemptions and clarification on levy of GST on services were taken by the Council in the meeting held at New Delhi on 18.01.2018. The information is being uploaded immediately after the GST Council’s decision and it will be subject to further vetting during which the list may undergo some changes. The decisions of the GST Council are being communicated for general information and will be given effect to through Gazette notifications / circulars which shall have force of law. 

(A)                  Exemptions / Changes in GST Rates / ITC Eligibility Criteria

(1)To extend GST exemption on Viability Gap Funding (VGF) for a period of 3 years from the date of commencement of RCS airport from the present period of one year. 

(2)To exempt supply of services by way of providing information under RTI Act, 2005 from GST. 

(3)To exempt legal services provided to Government, Local Authority, Governmental Authority and Government Entity. 

(4)To reduce GST rate on construction of metro and monorail projects (construction, erection, commissioning or installation of original works) from 18% to 12%.

(5)To levy GST on the small housekeeping service providers, notified under section 9 (5) of GST Act, who provide housekeeping service through ECO, @ 5% without ITC.

(6)To reduce GST rate on tailoring service from 18% to 5%.

(7)To reduce GST rate on services by way of admission to theme parks, water parks, joy rides, merry-go-rounds, go-carting and ballet, from 28% to 18%.

(8)To grant following exemptions:

To exempt service by way of transportation of goods from India to a place outside India by air;

To exempt service by way of transportation of goods from India to a place outside India by sea and provide that value of such service may be excluded from the value of exempted services for the purpose of reversal of ITC. The above exemptions may be granted with a sunset clause upto 30th September, 2018.

(9)To exempt services provided by  the Naval Insurance Group Fund by way of  Life Insurance to personnel of Coast Guard under the  Group Insurance Scheme of the Central Government retrospectively w.e.f. 1.7.2017. 

(10)To exempt IGST payable under section 5(1) of the IGST Act, 2017 on supply of services covered by item 5(c) of Schedule II of the CGST Act, 2017 to the extent of aggregate of the duties and taxes leviable under section 3(7) of the Customs Tariff Act, 1975 read with sections 5 & 7 of IGST Act, 2017 on part of consideration declared under section 14(1) of the Customs Act, 1962 towards royalty and license fee includible in transaction value as specified under Rule 10 (c) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. 

(11)To allow ITC of input services in the same line of business at the GST rate of 5% in case of tour operator service.

(12)To reduce GST rate (from 18% to 12%) on the Works Contract Services (WCS) provided by sub-contractor to the main contractor providing WCS to Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity, which attract GST of 12%. Likewise, WCS attracting 5% GST, their sub-contractor would also be liable @ 5%. 

(13)To enhance the exemption limit of Rs 5000/- per month per member to Rs 7500/- in respect of services provided by Resident Welfare Association (unincorporated or nonprofit entity) to its members against their individual contribution.

(14)To reduce GST rate on transportation of petroleum crude and petroleum products (MS, HSD, ATF) from 18% to 5% without ITC and 12% with ITC.

(15)To exempt dollar denominated services provided by financial intermediaries located in IFSC SEZ, which have been deemed to be outside India under the various regulations by RBI, IRDAI, SEBI or any financial regulatory authority, to a person outside India.

(16)To  exempt  (a) services by government or local authority to governmental authority or government entity, by way of lease of land, and (b) supply of land or undivided share of land by way of lease or sub lease where such supply is a part of  specified composite supply of construction of flats etc. and   to carry out suitable amendment in the provision relating to valuation of construction service involving transfer of land or undivided share of land, so as to ensure that buyers pay the  same effective  rate of GST on property built on leasehold and freehold land.

(17)To amend entry 3 of notification No. 12/2017-CT(R) so as to exempt pure services provided to Govt. entity.

(18)To expand pure services exemption under S. No. 3 of 12/2017-C.T. (Rate) so as to include composite supply involving predominantly supply of services i.e. upto 25% of supply of goods.

(19)To reduce job work services rate for manufacture of leather goods (Chapter 42) and footwear (Chapter 64) to 5%.

(20)To exempt services relating to admission to, or conduct of examination provided to all educational institutions, as defined in the notification. To exempt services by educational institution by way of conduct of entrance examination against consideration in the form of entrance fee.

(21)To enhance the limit to Rs 2 lakh against Sl. No. 36 of exemption notification No. 12/2017-C.T. (Rate) which exempts services of life insurance business provided under life micro insurance product approved by IRDAI upto maximum amount of cover of Rs. 50,000. 

(22)To exempt reinsurance services in respect of insurance schemes exempted under S.Nos. 35 and 36 of notification No. 12/2017-CT (Rate). [It is expected that the premium amount charged from the government/insured in respect of future insurance services is reduced.]

(23)To increase threshold limit for exemption under entry No. 80 of Notification No. 12/2017-C.T. (Rate) for all the theatrical performances like Music, Dance, Drama, Orchestra, Folk or Classical Arts and all other such activities in any Indian language in theatre GST from Rs.250 to 500 per person and to also extend the threshold exemption to services by way of admission to a planetarium.

(24)To reduce GST on Common Effluent Treatment Plants services of treatment of effluents, from 18% to 12%. 

(25)To exempt services by way of fumigation in a warehouse of agricultural produce.

(26)To reduce GST to 12% in respect of mining or exploration services of petroleum crude and natural gas and for drilling services in respect of the said goods.

(27)To exempt subscription of online educational journals/periodicals by educational institutions who provide degree recognized by any law from GST.

(28)To exempt the service provided by way of renting of transport vehicles provided to a person providing services of transportation of students, faculty and staff to an educational institution providing education upto higher secondary or equivalent.

(29)To extend the concessional rate of GST on houses constructed/ acquired under the Credit Linked Subsidy Scheme for Economically Weaker Section (EWS) / Lower Income Group (LIG) / Middle Income Group-1 (MlG-1) / Middle Income Group-2 (MlG-2) under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana (Urban) and low-cost houses up to a carpet area of 60 square metres per house in a housing project which has been given infrastructure status, as proposed by Ministry of Housing & Urban Affairs, under the same concessional rate.  

(30)To tax time charter services at GST rate of 5%, that is at the same rate as applicable to voyage charter or bare boat charter, with the same conditions. 

(31)To levy concessional GST @12% on the services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of building used for providing (for instance, centralized cooking or distributing) mid-day meal scheme by an entity registered under section 12AA of IT Act. 

(32)To exempt services provided by and to Federation International de Football Association (FIFA) and its subsidiaries directly or indirectly related to any of the events under FIFA U-20 World Cup in case the said event is hosted by India.

(33)To exempt government’s share of profit petroleum from GST and to clarify that cost petroleum is not taxable per se.

(B)                 Rationalization of certain exemption entries

(1)To provide in CGST rules that value of exempt supply under sub-section (2) of section 17, shall not include the value of deposits, loans or advances on which interest or discount is earned (This will not apply to a banking company and a financial institution including a non-banking financial company engaged in providing services by way of extending deposits, loans or advances).

(2)To defer the liability to pay GST in case of TDR against consideration in the form of construction service and on construction service against consideration in the form of TDR to the time when the possession or right in the property is transferred to the land owner by entering into a conveyance deed or similar instrument (e.g. allotment letter). No deferment in point of taxation in respect of cash component. 

(3)To tax renting of immovable property by government or local authority to a registered person under reverse Charge while renting of immovable property by government or local authority to un-registered person shall continue under forward charge

(4)To define insurance agent in the reverse charge notification to have the same meaning as assigned to it in clause (10) of section 2 of the Insurance Act, 1938, so that corporate agents get excluded from reverse charge.

(5)To insert a provision in GST Rules under section 15 of GST Act that the value of lottery shall be 100/112 or 100/128 of the price of lottery ticket notified in the Gazette (the same is currently notified in the rate notification).

(6)To add, in the GST rate schedule for goods at 28%, actionable claim in the form of chance to win in betting and gambling including horse racing.

(7)To insert in GST rules under section 15 of GST Act,-

Notwithstanding anything contained in this chapter, value of supply of Betting & Gambling shall be 100 % of the face value of the bet or the amount paid into the totalizator.

(C)                 Clarifications

(1)To clarify that exemption of Rs 1000/- per day or equivalent (declared tariff) is available in respect of accommodation service in hostels.

(2)To clarify that fee paid by litigants in the Consumer Disputes Commissions and any penalty imposed by these Commissions, will not attract GST.

(3)To clarify that elephant/ camel joy rides are not classified as transportation services and attract GST @ 18% with threshold exemption to small services providers.

(4)To clarify that leasing or rental service, with or without operator, of goods, attracts same GST as supply of like goods involving transfer of title in the said goods. Therefore, the GST rate for the rental services of self-Propelled Access Equipment (Boom. Scissors/Telehandlers) is 28%.

(5)To clarify that,-

1) Services provided by senior doctors/consultants/technicians hired by the hospitals, whether employees or not, are healthcare services which is exempt.    2) Hospitals also provide healthcare services. The entire amount charged by them 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. 

3) Food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of healthcare and not separately taxable. Other supplies of food by a hospital to patients (not admitted) or their attendants or visitors is taxable.

(6)      To clarify that services by way of,- 

          1.admission to entertainment events or access to amusement facilities including casinos, race-course

          2.ancillary services provided by casinos and race-course in relation to such admission.

         3.services given by race-course by way of totalisator (if given through some other person or charged separately as fees for using totalisator for purpose of betting, are taxable at 28%. Services given by race-course by way of license to bookmaker which is not a service by way of betting and gambling, is taxable at 18%. 

GST - E-WAY BILL

The e-way bill for the inter-state movement has been advanced to February 1 from April 1, while the trial began from January 16. The e-way bill requires online pre-registration of goods before transportation under the new GST regime. Under the e-way mechanism, all goods worth over Rs 50,000 will have to be pre-registered online before they are moved for sale beyond 10 km. The e-way bill mechanism has been introduced in the GST regime to plug tax evasion loopholes. Tax evasion was one of the reasons cited by the government for the fall in revenue collection in October.

Modes of generation of the e-way bill:

1)Web online using browser on a laptop, desktop, phone etc.

2)Android-based mobile app on mobile phones

3)Via SMS through registered mobile number

4)Via API( Application Program Interface) i.e. integration of IT system of the user with e-way bill system for generation of the e-way bill.

5) Tool based bulk generation of e-way bills

6) Third party-based system of Suvidha providers

When an e-way is generated, a unique e-way bill number (EBN) is allocated and is available to the supplier, recipient, and the transporter. As per the schedule of implementation, the nationwide e-way bill system will be ready to be rolled out on a trial basis latest by January 16, 2018. Trade and transporters will be able to use it on a voluntary basis from January 16.

E-way bill is generated when there is a movement of goods:

1) In relation to the supply.

2) For reasons other than a supply (say a return).

3) Due to inward supply from an unregistered person.

In this case, a supply can either be:

1) Sale – sale of goods and payment made

2) Transfer – branch transfers for instance

3) Barter/Exchange – where the payment is by goods instead of in money

Benefits:

1) Taxpayers or transporters need not visit any tax officers or check posts for generation of e-way bill or movement of goods through states.

2) No waiting time at check-posts and faster movement of goods thereby optimum use of vehicles or resources, since there are no check posts in GST regime.

3) User-friendly e-way bill system.

4) Easy and quick generation of e-way bill.

5) Checks and balances for smooth tax administration and process simplification for easier verification of e-way bill by tax officers.

GST – EVASION OF TAX

In a recent survey, it is found that the taxpayers have bypassed each and every strict tax vigilance until now as the taxpayers and businessman have been implementing their own ways to evade the taxes. The tax evasion experiments are been tried with the latest GST regime indicating the facts of protests against the provisions and clauses of GST which mandates matching of sales and purchase invoices and e-way bill to track the goods supplied.

As from the evident examples where the garments having an upper price tag of INR 1000 being taxed at 12 percent and lower than it taxed at 5 percent has made a lot of eruption in the industry making the garment prices slightly lower than before to evade the taxes and compliances both.

Also, some businessman had tried different ways of supplying their goods to evade the taxes through partial means. As the goods sent by trucks may have chances of getting checked every time at the check post, the businessman tried other means of transport like railways which have no means of checking of goods.

A tax consultant has confirmed that many of the businessmen of Gujarat and Surat have used the same bill thrice while transporting their goods to other parts of the nations via the means of trucks. he added that “I don’t know why it’s three times but it is an industry norm.” The industry also uses kuccha and pakka bill to differentiate the goods and taxation affair while destroying the pakka bill once the goods have been transported.

It is also in the reports that the taxpayers, especially from Delhi, have been taking illegal benefits of input tax credits in which it is stated that, “bill to one and shift to another” kind of strategy is followed. The tax evaders try to fake the invoices generated in the favour of the entities who are interested in input tax credit with those who don’t want the ITC.

GST - E-WAY BILL

GST E Way Bill registration or enrollment is an easy procedure on Indian Government official portal (ewaybill.nic.in) as we have described a very simple manner. To generate GST e way bill, there are certain steps which have to be followed by the taxpayers. To generate the GST e-way bill, it is mandatory to register on the e-way bill portal.

The businesses have to be registered and have to prepare GST e waybill every time they transport goods above the value of INR 50,000. There are various e-way bill validity period and distance meter which the government had authorized for the transportation of the goods. Finally after the decision of rolling out GST e-way bill across the nation, there are provisions and steps available on the complete GST e-way bill system and generating methods.

There are 3 types of taxpayers under the GST e-way bill system:

Registered Suppliers

Registered/Unregistered Transporters

Unregistered Suppliers

It must be noted that the GST e way bill is compulsory to be implemented from the 1st February for all the inter-state transactions and 1st June 2018 for all the intra-state transactions. The GST e way bill registration is compulsory for all the transporters and suppliers whether they fall under any threshold limit guided by the GST Council.

Here we expressed some of the early preparation steps which are needed to be taken care of by business units and transporters while implementing the e waybill:

Trial Run Across the Business Operation for Early Understanding

The government has recently announced the trial version of the GST e waybill across the nation and it strengthens the purpose of an e way bill by swiftly introducing the e-way bill concept into the mainstream application. The trial run of the e waybill will be from mid-January to February 1 as a deadline after which the GST e waybill is to be implemented for the interstate transactions.

Regenerating the Expired GST E Way Bill

In case, a truck breaks down middle of journey and its e way bill gets expired before its validity due to some unexplainable situations, he may get a new GST e way bill by regenerating the same and get a new number for the bill from the transporter which will help to extend the validity of the e waybill and resolve the purpose of transacting the goods.

Also one must keep in mind that the separate registration is needed for the e way to generate and operationalise within the environment of logistics.

Take Suggestions from Already E Way Bill Running Transport Companies

The most advisable tip for implementing anything new into the mainstream operation is to take advice. The dealers, business units and taxpayers should consult and take suggestions from the states and the declared of where the e way bill is already incorporated into the system. This will help the units to bring more ideas and solutions of problems which might be common to a particular state or community.

AADHAAR: Frequently Asked Questions

Q 1: UIDAI has all my data including biometrics, bank account, PAN, etc. Will they be used to track my activities?

A: Absolutely false. UIDAI database has only the following information ‑

(a) Your name, address, DOB, gender, date of birth

(b) Ten finger prints, two IRIS scans, facial photograph

(c) Mobile number and email ID.

Rest assured, UIDAI does not have your information about family, caste, religion, education, bank accounts, shares, mutual funds, financial and property details, health records etc. and will never have these information in its database. In fact, Section 32(3) of the Aadhaar Act 2016 specifically prohibits UIDAI from controlling, collecting, keeping or maintaining any information about the purpose of authentication either by itself or through any entity.

Q 2: But when I link my bank accounts, shares, mutual funds and my mobile phones with Aadhaar, will UIDAI not get these information?

A: Absolutely No. When you give Aadhaar number to your banks, mutual fund companies, mobile phone companies, they only send Aadhaar number, your biometrics (given at the time authentication) and your name etc. to UIDAI for verification for your identity. They do not send your bank account or its details to UIDAI.

So far as UIDAI is concerned, it responds to such verification requests by replying either ‘Yes’ or ‘No’. In few cases, if the verification answer is ‘Yes’, your basic KYC details (name, address, photo etc.) available with UIDAI are sent to the service provider.

Q 3: If someone gets to know my Aadhaar number, they can use it to hack my bank account.

A: Absolutely false. Just like by merely knowing your ATM card number, no one can withdraw money from the ATM machine, by knowing your Aadhaar number alone, no one can hack into your bank account and withdraw money. Your bank account is safe if you don’t part with your PIN/OTP given by banks. Rest assured, there has not been a single case of financial loss due to Aadhaar.

Q 4: Why am I being asked to link all my bank accounts with Aadhaar?

A: For your own security, it is necessary to verify identity of all bank account holders and link them with Aadhaar to weed out the accounts being operated by fraudsters, money-launderers, criminals etc. When every bank account is verified and linked with Aadhaar and then if anyone fraudulently withdraws money from your account, through Aadhaar such fraudster can easily be located and punished.

Therefore, by linking your bank accounts with Aadhaar, your accounts becomes more secure and not the other way around.

Q 5: Why am I being asked to verify and link my mobile numbers with Aadhaar?

A: For your own security and security of our country, it is necessary to verify identity of all mobile subscribers and link them with Aadhaar to weed out mobile numbers being operated by fraudsters, money-launderers, criminals etc.

It has been found that most criminals and terrorists get SIM cards issued in the name of fictitious and even real people without their knowledge and use them for committing frauds and crime.

When every mobile number is verified and linked with Aadhaar, then fraudsters, criminals, and terrorists using mobiles can be easily identified and punished in accordance with law.

Q 6: Can the mobile company store my biometrics taken at the time of SIM verification and use it for other purposes later?

A: No one, including, mobile phone companies can store or use your biometrics taken at the time of Aadhaar verification and linking. The biometrics are encrypted as soon as Aadhaar holder places his finger on fingerprint sensor and this encrypted data is sent to UIDAI for verification.

Regulation 17(1)(a) of the Aadhaar (Authentication) Regulations 2016, strictly prohibits any requesting entity which includes mobile phone companies, banks etc. from storing, sharing or publishing the finger-prints for any reason whatsoever and neither shall it retain any copy of such fingerprints. Any violation of this provision is a punishable offence under the Aadhaar Act 2016.

Q 7: Do NRIs need Aadhaar for banking, mobile, PAN and other services?

A: Aadhaar is only for residents of India. NRIs are not eligible to get Aadhaar. The respective service providers like banks and mobile companies have laid down NRI-specific exemptions. NRIs should simply tell the banks and other service providers such as credit card companies etc. that they are not required to provide Aadhaar numbers by virtue of being non-resident Indians.

Q 8: Aren’t the poor being denied essential services like pension & rations for want of Aadhaar?

A: No. It is clearly mentioned in Section 7 that until a person is assigned an Aadhaar number, he/she cannot be denied rations or pensions or such other entitlements for want of Aadhaar and the concerned department should verify the identity of the person using alternate means of identification as per the relevant Notification.

If any government official of a department denies the benefits or services for lack of Aadhaar or failure of verification for technical reasons contrary to the relevant notification, a complaint should be lodged against the higher authorities of those departments for such unlawful denials.

Q 9: Some agencies are not accepting eAadhaar. They insist on original Aadhaar. Why?

A: eAadhaar (downloaded Aadhaar) from UIDAI website is as legally valid as original Aadhaar issued by UIDAI . Both should be acceptable by all Agencies.

In fact downloaded e-Aadhaar has updated address etc. of the Aadhaar holders and therefore should be preferable.

If anyone refuses to accept downloaded e-Aadhaar, the Aadhaar holder may lodge complaints with higher authorities of those departments/ agencies.

Q 10: How has Aadhaar benefited the common man?

A: Aadhaar has empowered 119 crore Indians with a credible identity. Today the fact is that Aadhaar inspires more confidence and trust than any other identity document in India. For example, if you are an employer, which identity document will you prefer from your prospective employees? Or, just ask your maid servant, household help, driver, poor living in slums and villages as to how they are using Aadhaar to prove their identity to get jobs, open bank accounts, for rail travel, and to get various entitlements and government benefits directly into their bank accounts without middlemen. Ask them and they will tell you how empowered they are by having Aadhaar.

Q 11: We keep hearing in media that Aadhaar data was breached. Is it true?

A: Aadhaar database has never been breached during the last 7 years of its existence. Data of all Aadhaar holders is safe and secure. Stories around Aadhaar data breach are mostly cases of mis-reporting. UIDAI uses advanced security technologies to keep your data safe and secure and keeps upgrading them to meet emerging security threats and challenges.

GST - E-WAY BILL

GST - LATTER OF GST PRACTITIONER'S OF MAHARASHTRA

Date: 14th December 2017

Necessity to change the system of filing returns under GST

Implementation of GST and subsuming almost all indirect taxes all over India in `one tax’ is really appreciable huge reform in indirect tax system brought in by the Indian Government. If the system of filing of returns under GST is kept simplified, no one can deny that it is a great relief to the business community from compliance of various indirect tax laws. Therefore, for success of GST, it was utmost necessary that the simplified system of compliance of returns must have been brought in. However, it is very unfortunate that, every person in the Country who is concern with compliance of GST return has become panic because of complicated and long procedure for compliance of returns. Your Honour would appreciate, day in day out trade and practitioners are bringing to the notice of the Departmental Authorities and GSTN, various shortfalls in the online system. It is also unfortunate to note that even the Departmental Authorities are helpless and cannot give solution for technical defaults of online system.

The system of compliance of return is very long which involves several steps as explained below:

(i) Step 1– 10th day of every month: – Filing of invoice wise sales register in Form GSTR-1.

(ii) Step 2– 11th to 15thday of every month: – Purchase register in Form GSTR 2A is generated online on the basis of sales register in form GSTR-1 filed by seller. The invoices reflected in the said register are to be accepted or rejected or additional invoices to be entered after checking and comparing each invoice in books of account.

(iii) Step 3– 15th day of every month: – Invoice wise purchase register to be filed with necessary modifications in Form GSTR 2 (i.e. either accepting or rejecting or adding invoices in Form GSTR 2A). Kindly note, GSTR 2A is not automatically converted in GSTR 2 on GSTN portal.

(iv) Step 4– 16th & 17th day of every month: – Sales Register in Form GSTR 1A would be generated online on the basis of purchases modified by the purchaser. Invoices reflected in said register are to be accepted or rejected or additional invoices to be entered after checking and comparing each invoice in books of account.

(v) Step 5- 17th day of every month: – Invoices in Form GSTR 1A are to be accepted or rejected.

(vi) Step 6- 20th day of every month: – Tax to be paid and actual return with computation of tax to be filed in Form GSTR 3.

Your Honour will appreciate the above explained steps and procedure of online filing of returns is very cumbersome and complicated. Further the technical glitches on the online GSTN portal make addition to the pain full time- consuming process.

The whole objective behind employing the above stated long procedure of filing returns is to stop ineligible claim of Input Tax Credit (ITC), the tax in respect of which would not have been actually paid in to Government Treasury by seller. The said objective of the Government may be absolutely logical and necessary to be achieved when the seamless ITC is offered under the GST Law. However, every month matching of each invoice of seller with each invoice of purchaser is herculean task made to perform by way of above stated lengthy process of return. Prior to GST the tax payer had to access the Government’s web-site only once for uploading return once it is prepared. However, for GST return one has to access web-site thousand times because filing of GST return does not involve simply uploading return. It involves uploading invoice wise registers and thereafter matching each invoice etc. as stated above. This has created huge burden and panic amongst the Trade and practitioners.

The objective of the Government of matching seller’s sales with purchaser’s purchases can be achieved even by asking to file party wise sales and purchases annexures instead matching each invoice. This will reduce the burden on the Trade and Practitioners as well as the burden on the online system. The said party wise annexures used to be filed under Maharashtra VAT Act up to 31st March, 2016, which was the most successful system of returns implemented by the Maharashtra Government in VAT era. The Maharashtra Government had achieved satisfactory success when the system of party wise annexure of sales and purchases was implemented. It could successfully identify the mismatched in the sales of seller and purchases of purchaser. It is necessary to note that the said system was accepted and welcomed even by Trade and Practitioners all over Maharashtra. Therefore, for success of GST, such system of party wise annexures of sales and purchases which was adopted by the Maharashtra Government up to 31st March, 2016 should be adopted all over India.

After implementation of GST, huge revenue has been received in the Government Treasury as published by the Government. This situation of receipt of satisfactory revenue in the Government Treasury has been witnessed by the Government even though system of return filing is collapsed and not yet properly and fully available. Utility of filing actual return in form GSTR- 3 is yet to be made available even for the month of July, 2017, still people have paid legitimate tax. This is a proof that almost whole business community and Trade in India are law compliant, barring may be few. Therefore, it is necessary that Government should realize that it would have had more increased revenue, if it would have timely implemented simplified return system instead of making it complicated for matching invoice level transactions. Therefore, we hereby suggest Honorable Sir the following:

1. The whole lengthy procedure of filing GST returns as explained above should be discarded.

2. Return Form GSTR 3B should made final return under GST.

3. The taxable persons should be made to file party wise annexures of sales and purchases in addition to the return in Form GSTR 3B.

4. Online matching of Sales and Purchases should be automatic and mismatch report should be generated.

5. Once the mismatch report is generated on the web-site, the necessary recovery action should be taken against the defaulting seller who would not have paid tax into Government Treasury.

6. The tax should be recovered from the purchaser by disallowing input tax credit only after exhausting all the machineries of recovery against the defaulting seller and only when the collusion between seller and buyer is proved.

Honorable Sir, it is utmost necessary that the above suggestions should be implemented for success of GST and to avoid panic among st Trade and Practitioners.

Apart from above procedural problems, certain technical issues have to be addressed immediately which are as under:

1. Merchant Exporters:

It is really appreciable steps taken for the benefit of merchant exporters by exempting taxes in excess of the amount calculated at the rate of 0.05% or 1.0% when such goods are procured from registered persons under GST by issuance of Notification No. 40/2017 – CT (Rate) – Dated 23-10-2017.

When registered supplier supplies goods to such merchant exporters, they will supply by levying 1.0% tax on output side whereas on input side they may have paid taxes and resultantly there would be excess input tax credit. Pursuant to Section 54 of CGST Act, 2017, such excess input tax credits are not eligible to refund as refund is eligible only under a situation when supplies are (i) zero rated- Section 16 of IGST Act, 2017, made without payment of tax and (ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than Nil rated or fully exempt supplies)

Section 54 has not taken in to consideration such scenario wherein excess input tax credit is on account of such a situation wherein supplier had supplied goods to merchant exporters. Hence, it would be difficult for the suppliers to claim the un-utilized input tax credit arises when supplies to merchant exporters which leads to blockage of credits and hence supplier would not like to pass on the benefit of input tax credit at the time of supplying to merchant exporters.

Accordingly, it is suggested to amend the Section 54 and includes circumstances mentioned above. Meantime, it is also expected to provide clarification pursuant to Section 172 of CGST Act, 2017 that such suppliers would be eligible to claim the refund of such un-utilized input tax credits just like other tax payers supplies to exporters.

2. Deemed Exporters    

One more benevolent steps taken for the Indian Exporters is to notify supplies of goods by a registered person would be considered as Deemed Exports when supplies to (i) Export Oriented Units which also includes Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio-Technology Park Unit approved in accordance with the provisions of Chapter 6 of the Foreign Trade Policy 2015-20; (ii) Supply of goods by a registered person against Advance Authorization; (iii) Supply of capital goods by a registered person against Export Promotion Capital Goods Authorization.

We would require “clarification / amendment in law in respect of followings –

a. When supplier supplies to Export Oriented Units located with the same State, whether such supplies would be considered as Exports? Exports are defined under section 2(5) of IGST Act, 2017 and it means taking out of India to a place outside India. Accordingly, such supplies would not constitute exports of goods.

b. If such supplies are considered as export of goods, whether supplier of such goods can exports by without making payment of tax and would be eligible to furnish Letter of Undertaking as provided under N. No. 37/2017- Central Tax Dated 04-10-2017?

c. If such supplies are not considered as export of goods, whether supplier of such goods have to charge CGST and SG ST as both supplier and Export Oriented Units are located in same State or supplier have to charge IGST. At present GSTN portal consider such supplies to Export Oriented Unit under Interstate transactions.

d. Export Oriented Units are eligible to sale their goods in local market i.e. in India subject to certain conditions. In such a scenario, when Export Oriented Units supplies goods, whether such transactions would be considered as Inter-State transactions or Intra- State transactions pursuant to Section 7 of IGST Act, 2017.

3. Refund to tax payers supplies goods locally as well as exporting:

Tax payers is exporting goods outside India, such supplies are considered as zero rated supplies [S. 16 of IGST Act, 2017] and tax payers are eligible for refund of taxes paid on goods or services or both pursuant to provisions of Section 54 of CGST Act, 2017. When such tax payers supplies any goods within India (Local Sales) whether DEPB License or any other goods or services, Rule 89(4) provides for eligibility of input tax credit on proportionate basis of zero rated supplies upon Turnover in State (includes local taxable supplies). Accordingly, though majority of expenses are in relation to export of goods, since tax payers is selling very meager amount of local sales, for availing input tax credit, tax payers needs to do the proportion of such turnover which results in to lower amount of refund attributable to export turnover.

4. Composition Scheme:

The CGST Rules, 2017 (Registration and Composition) Rule 3(4)provided that any person who files an intimation under sub-rule 1 to pay tax under section 10 (Composition) .shall furnish details of stock, including URD purchases, held by him on the day preceding the date from which he opts to pay tax under the said section in FORM GST CMP 03. According to sub-rule 1 migrated dealer those who opts composition have to file CMP-01.

These rules are provided that if the migrated dealer those who are not opting composition under existing law have to file CMP-01 and CMP-3 if they opts to composition under the GST.

Now, see the Maharashtra Value Added Tax (Amendment) Rules 2017 date 30/06/2017 in Rule 53 for sub rule(5) new sub rule shall be substituted- “Rule 53(5)(c) if the dealer who has not opted to pay tax under composition scheme provided as per sec. 42 or 43 during the previous year but opts for the composition scheme provided under the GST Act, then is such cases the set off on the purchases corresponding the goods held in stock as on the date immediately preceding the date of commencement of the GST shall be disallowed and accordingly be reduced fully”.

We would like to get clarification, whether tax payers have to file revised return for the 30th June and to give effect to reduced setoff under MVAT? Whether the intimation CMP-03 without payment of GST? However fact remains that tax payers are not able to file CMP-03 without making payment of taxes.

It is further observed that in case the of those tax payers who have applied composition after 16/08/17 their periodicity shown on GSTN portal for the period July to September and hence such tax payers are not able to file either monthly or quarterly return for the period July to September.