- GSTN issued advisory w.r.t. availing ITC as per law and GSTR-2B:
- The Goods and Services Tax Network (“GSTN”) has issued an Advisory dated June 18, 2022 regarding availing Input Tax Credit (“ITC”) as per law and GSTR-2B.
- For some of the taxpayers, there was an issue in relation to duplicate entries in GSTR-2B which has since been fixed and correct GSTR-2B has been generated. In this regard, taxpayers while filing GSTR-3B are advised to check and ensure that the value of ITC they are availing is correct as per the law.
- They may check the correct ITC value from the download of Auto drafted ITC statement GSTR-2B or pdf of System Generated GSTR-3B or on the ITC observed on the mouse hover of Table 4 in GSTR-3B, particularly in any such case where there is any difference observed between the correct figures available at places as stated above and the prefilled GSTR-3B observed on screen.
2. Guidelines for Refund Claims in GST CBIC (GST Policy Wing) has issued guidelines on the procedure relating to sanction, post audit and review of refund claims:
- For sanction of refund : While passing the refund sanction order in FORM GST RFD-06, the proper officer should also upload a detailed speaking order along with refund sanction order in FORM GST RFD-06.CBIC has clarified that such speaking order should inter alia contain details as per guidelines. Certain additional details will be required in case of the refund of accumulated ITC (on account of zero-rated supplies/ inverted rated structure) and refund of IGST paid on account of zero-rated supplies, deemed exports, refund of excess balance in cash ledger etc.
- For post audit & review : All refund orders are required to be reviewed for examination of legality and propriety of the refund order and for taking a view whether an appeal to the appellate authority under provisions of section 107(2) of the CGST Act is required to be filed against the said refund order.
- Post-audit may henceforth be conducted only for refund claims amounting to Rs. 1 lakh or more till further instructions. Till the time the functionality for conducting post-audit online is developed on ACES-GST portal, post-audit of refund orders may be conducted in offline mode.
- The post-audit and review of the refund claims shall be conducted keeping in mind the following guidelines:
a) All the refund orders passed should be immediately transmitted online to the review module after issuance of refund order in FORM GST RFD-06. The review and post- audit officers shall have access to all documents/ statements on ACES-GST portal pertaining to the said refund claims.
b) For the purpose of post-audit of refund order, a Post-Audit Cell under a Deputy/Assistant Commissioner along with one/ two Superintendents and Inspectors as required, may be created in Commissionerate Headquarters.
c) The post-audit should be concluded within 3 months from the date of issue of FORM GST RFD-06 The findings of the post-audit shall be communicated to the review branch within the said time period of 3 months.
d) The review of refund order shall be completed at least 30 days before the expiry of the time period allowed for filing appeal under Section 107(2)of the CGST Act.
3. Tamilnadu SGST issue guideline for New Registrations:
Any application for new registration filed has to undergo the process of matching with the database as to whether any of the following six parameters pertaining to cancelled registration found to have been matched with details provided in the application for new registration, to invariably undertake pre-verification of the business premises, by the jurisdictional proper officer as per the notification in the reference cited, so as to deter the bill traders from applying
For new registration.:
(i) Place of business,
(iii) Mobile number,
(iv) e-mail ID,
(v) Authorized signatory and
(vi) Bank account number
4. Extension of Bill of Entry Submission and Write off of amount payable:
- AD Category I banks shall give extension for submission of BoE (Bill of Entry) beyond the prescribed period in terms of the extant guidelines on the matter, and the same will be reported in IDPMS [Import Data Processing and Monitoring System] as per the message “Bill of Entry Extension” and the date up to which extension is granted will be indicated in “Extension Date” column.
- AD Category I banks can consider closure of BoE/ORM [Outward Remittance Message] in IDPMS that involves write off to the extent of 5% of invoice value in cases where the amount declared in BoE varies from the actual remittance due to operational reasons and AD bank is satisfied with the reasons submitted by the importer.
- AD Category I banks may close the BoE for such import transaction where write off is on account quality issues; short shipment or destruction of goods by the port/customs/health authorities in terms of extant guidelines on the matter subject to submission of satisfactory documentation by the importer irrespective of the amount involved. AD Bank shall settle and close ORM/BoE with appropriate “Adjustment Indicator” in IDPMS. The above operational guidelines for extension and write off are meant to facilitate closure of bills in IDPMS and will be subject to extant guidelines on the matter and not absolve the importer from remitting/receiving the amount in case of change in circumstances.
- While allowing write off, AD Category – I banks must ensure that:
a. The case is not the subject matter of any pending civil or criminal suit;
b. The importer has not come to the adverse notice of the Enforcement Directorate or the Central Bureau of Investigation or any such other law enforcement agency; and
c. There is a system in place under which internal inspectors or auditors of the AD Category – I banks (including external auditors appointed by authorised dealers) should carry out random sample check/percentage check of write off of import bills.
5. AAR & Judicial Decisions:
(i) Decision of Mumbai Highcourt Regarding Services rendered abroad amounts to Export of Services, No GST applicable:
(Applicant – Jar Productions Private Limited)
The Bombay High Court has held that GST does not apply to the services rendered abroad as they amount to the export of services.
The petitioner/assessee is in the business of providing production services to “A Suitable Company Ltd.” (ASCL) located in London. The petitioner has entered into an agreement with ASCL for the purpose of providing the services. The agreement provides that if any refund of tax component is received by the petitioner, the production expenses shall be reduced from the consideration while computing the consideration towards production services. The amount of the tax component received as a refund will be deducted from the production expenses.
The department rejected the claim of the petitioner on the ground that the incidence of tax has been passed on to the client, resulting in unjust enrichment of the petitioner. The respondent rejected the claim for a refund of the GST.
The petitioner contended that the principle of unjust enrichment does not apply to export services. Being a zero-rated supply, the principle of unjust enrichment does not apply to the services rendered by the petitioner. The agreement clearly stipulates that if a refund is received, it shall be deducted from the expenses of production. The principle of unjust enrichment does not apply to export services.
The court observed that the ASCL is located outside of India and the petitioner company is located in India. The production services are rendered by the petitioner in the U.K. It is, thus, clear that the services rendered by the petitioner fall within the expression “export of services”.
“When services are rendered abroad, CGST will not apply. In the case at hand, also, the petitioner has rendered services to the ASCL abroad, i.e., in the U.K. Therefore, GST does not apply to the services rendered abroad as they amount to the export of services.
(ii) AAR On Laden/unladen IBCs imported into India are eligible to avail exemption
(Applicant – GDPK Returnable Solutions India Private Limited)
Temporary import/re-export of Intermediate Bulk Containers (IBCs) as reusable packing containers and its eligibility to avail duty exemption.
(a) the laden/ unladen IBCs imported into India are eligible to avail the exemption under the Notification No. 104/94-Cus., dated 16.03.1994; (b) There is no requirement to declare any unique identification number of the IBCs in the import/ export documentation. (c) Re-export bond given at the time of import can be cancelled on the basis of dimension, shape, weight, colour, numerical count etc. of IBCs in the export documentation.
(iii) AAR On GST not payable under RCM on commission paid to Overseas Commission Agent
(Applicant – Singareni Collieries Company Limited)
Overseas Commission Agent is covered within the definition of the term ‘intermediary as provided under section 2(13) of the IGST Act 2017-
Services received by applicant from the Overseas Commission Agent do not fall within the meaning of the term ‘import of services as provided under section 2(11) of the IGST Act, 2017;
The applicant is not required to pay GST on RCM basis under section 5(3) of the IGST Act, 2017 on commission paid to the Overseas Commission Agent.
(iv) AAR On ITC not eligible on Good & Services procured for building LNG Jetties
(Applicant – Swan LNG Pvt. Ltd.)
AAAR held that (1) LNG Jetties being built by the appellant are not covered within the expression ‘plant and machinery’ as foundation to equipment, apparatus, machinery to be installed on it in terms of Section 17 of the CGST Act, 2017 and (2) the appellant cannot avail input tax credit of GST paid on inputs, input services and capital goods procured for the purpose of building the LNG Jetties in terms of Section 16 of the CGST Act, 2017.
This publication contains information for general guidance only. It is not intended to address the circumstances of any particular individual or entity. Although the best of endeavour has been made to provide the provisions in a simpler and accurate form, there is no substitute to detailed research with regard to the specific situation of a particular individual or entity. We do not accept any responsibility for loss incurred by any person for acting or refraining to act as a result of any matter in this publication.