Total 7 clarifications issued in GST: Dated the 17th June, 2021

7 clarifications issued by GST

List of SEVEN GST Circulars issued providing clarity on the following issues:

Sr No Circular No.    SubjectLink
1Circular No. 149/05/2021-GSTClarification regarding applicability of GST on supply of food in Anganwadis and Schoolshttps://www.cbic.gov.in/resources//htdocs-cbec/gst/Circular_Refund_149.pdf;jsessionid=1F334EF88A4D4E5E89D2F201081BF5FD
2Circular No.150/06/2021-GSTClarification regarding applicability of GST on the activity of construction of road where considerations are received in deferred payment (annuity)https://www.cbic.gov.in/resources//htdocs-cbec/gst/Circular_Refund_150.pdf;jsessionid=EC7AA07C201018C4446D7A114E4A0316
3Circular No. 151/07/2021-GSTClarification regarding GST on supply of various services by Central and State Board (such as National Board of Examination)https://www.cbic.gov.in/resources//htdocs-cbec/gst/Circular_Refund_151.pdf;jsessionid=442FF297CFFFB52F91A072829BD06447
4Circular No. 152/08/2021-GST

Clarification regarding rate of tax applicable on construction services provided to a Government Entity, in relation to construction such as of a Ropeway on turnkey basishttps://www.cbic.gov.in/resources//htdocs-cbec/gst/Circular_Refund_152.pdf;jsessionid=7C1D217F17926F1FEE53433861F21406
5Circular No. 153/09/2021-GSTGST on milling of wheat into flour or paddy into rice for distribution by State Governments under PDShttps://www.cbic.gov.in/resources//htdocs-cbec/gst/Circular_Refund_153.pdf;jsessionid=017412FC6DDE3CE2938FBCE2BD6DE40B
6Circular No. 154/09/2021-GSTGST on service supplied by State Govt. to their undertakings or PSUs by way of guaranteeing loans taken by themhttps://www.cbic.gov.in/resources//htdocs-cbec/gst/Circular_Refund_154.pdf;jsessionid=14F0DF23EA9592A27D6F3B6EA4B21D83
7Circular No. 155/09/2021-GSTClarification regarding GST rate on laterals/parts of Sprinklers or Drip Irrigation Systemhttps://www.cbic.gov.in/resources//htdocs-cbec/gst/Circular_Refund_155.pdf;jsessionid=CB5EB1EB792E11B003D0960C7AC2CAF7
  1. Applicability of GST on supply of food in Anganwadis and Schools.(Circular No. 149/05/2021-GST )

Key Points:-

  • The CBIC vide Circular No. 149/05/2021-GST dated June 17, 2021clarified that services provided TO an educational institution by way of serving of food ( catering including mid- day meals) is EXEMPT from levy of GST irrespective of its funding from government grants or corporate donations.
  • Educational institutions as defined in the notification include aganwadi
  • Hence, No GST on Supply of Food in Anganwadis and Schools.

2. Applicability of GST on the activity of construction of road where considerations are received in deferred payment (annuity).(Circular No. 150/06/2021-GST dated June 17, 2021)

Key Points:-

  • It clarified that Entry 23A of notification No. 12/2017-Central Tax does NOT exempt GST on the annuity (deferred payments) paid for construction of roads.
  • GST is exempt on service, falling under heading 9967 (service code), by way of access to a road or a bridge on payment of annuity [entry 23A of notification No. 12/2017-Central Tax]. Heading 9967 covers “supporting services in transport” under which code 996742 covers “operation services of National Highways, State Highways, Expressways, Roads & streets; bridges and tunnel operation services”. Entry 23 of said notification exempts “service by way of access to a road or a bridge on payment of toll”. Together the entries 23 and 23A exempt access to road or bridge, whether the consideration are in the form of toll or annuity [heading 9967].
  • Services by way of construction of road fall under heading 9954.
  • This heading inter alia covers general construction services of highways, streets, roads railways, airfield runways, bridges and tunnels. Consideration for construction of road service may be paid partially upfront and partially in deferred annual payments (and may be called annuities). Said entry 23A does not apply to services falling under heading 9954 (it specifically covers heading 9967 only). Therefore, plain reading of entry 23A makes it clear that it does not cover construction of road services (falling under heading 9954), even if deferred payment is made by way of instalments (annuities).

3. GST on supply of various services by Central and State Board (such as National Board of Examination – NBE). (Circular No. 151/07/2021-GST)

Key Points:-

  • GST is exempt on services provided by Central or State Boards ( including the boards such as NBE) by way of conduct of examination for the students, including conduct of entrance examination for admission to educational institution [under S. No. 66 (aa) of notif No. 12/2017-CT(R)]. Therefore, GST shall NOTapply to any fee or any amount charged by such Boards for conduct of such examinations including entrance examinations.
  • GST is exempt on input services relating to admission to, or conduct of examination, such as online testing service, result publication, printing of notification for examination, admit card and questions papers etc, when provided to such Boards [under S. No. 66 (b) (iv) of notif No. 12/2017- CT(R)].
  • GST at the rate of 18% applies to other services provided by such Boards, namely of providing accreditation to an institution or to a professional ( accreditation fee or registration fee such as fee for FMGE screening test ) so as to authorise them to provide their respective services.

4. GST rate on construction services provided to a Government Entity w.r.t construction of a Ropeway on turnkey basis. (Circular No. 152/08/2021-GST)

Key Points:-

  • Whether services supplied to a Government Entity by way of construction such as of “a ropeway” are eligible for concessional rate of 12% GST.
  • It clarified that works contract service provided by way of construction such as of rope way shall fall under entry at Sl. No. 3(xii) of notification 11/2017-(CTR) and attract GST at the rate of 18%.

5. GST on milling of wheat into flour or paddy into rice for distribution by State Governments under PDS.(Circular No. 153/09/2021-GST)

Key Points:-

  • IT clarified that Public Distribution specifically figures at entry 28 of the 11th Schedule to the constitution, which lists the activities that may be entrusted to a Panchayat under Article 243G of the Constitution. Hence, said entry No. 3A would apply to composite supply of milling of wheat and fortification thereof by miller, or of paddy into rice, provided that value of goods supplied in such composite supply (goods used for fortification, packing material etc) does not exceed 25% of the value of composite supply. It is a matter of fact as to whether the value of goods in such composite supply is up to 25% and requires ascertainment on case-to-case basis.
  • In case the supply of service by way of milling of wheat into flour or of paddy into rice, is NOT eligible for exemption under Sl. No. 3 A of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 for the reason that value of goods supply in such a composite supply exceeds 25%, then the applicable GST rate would be 5% if such composite supply is provided to a registered person, being a job work service (entry No. 26 of notification No. 11/2017- Central Tax (Rate) dated June 28, 2017). Combined reading of the definition of job-work [section 2(68), 2(94), 22, 24, 25 and section 51] makes it clear that a person registered only for the purpose of deduction of tax under section 51 of the CGST Act is also a registered person for the purposes of the said entry No. 26, and thus said supply to such person is also entitled for 5% rate.

6. GST on service supplied by State Govt. to their undertakings or PSUs by way of guaranteeing loans. (Circular No. 154/09/2021-GST)

Key Points:-

  • Itclarified that guaranteeing of loans by Central or State Government for their undertaking or PSU is specifically EXEMPT under Entry No. 34A of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017.
  • What is Entry No. 34A of Notification no. 12/2017-Central Tax (Rate) dated June 28, 2017 exempts ?

“Services supplied by Central Government, State Government, Union territory to their undertakings or Public Sector Undertakings (PSUs) by way of guaranteeing the loans taken by such undertakings or PSUs from the banking companies and financial institutions.”

7. GST rate on laterals/parts of Sprinklers or Drip Irrigation System.(Circular No. 155/09/2021-GST)

IT clarified the intention of notifying GST rate on laterals/parts of Sprinklers or Drip Irrigation System at 6% (each CGST and SGST).

S. No.Chapter Heading/ Sub-heading/Tariff ItemDescription of GoodsCGST rate
195B8424Sprinklers; drip irrigation systems including laterals; mechanical sprayer6%

The GST rate on Sprinklers or Drip Irrigation System along with their laterals/parts aregoverned by S.No. ‘195B’ under Schedule II of notification No. 1/2017- Central Tax (Rate), dated June 28, 2017 which has been inserted vide notification No. 6/2018- Central Tax (Rate), dated January 25, 2018 and reads as below:

The intention of this entry has been to cover laterals (pipes to be used solely with with p irrigation system) and such parts that are suitable for use solely or principally with ‘sprinklers or drip irrigation system’, as classifiable under heading 8424 as per Note 2 (b) to Section XVI to the HSN. Hence, laterals/parts to be used solely or principally with sprinklers or drip irrigation systems, which are classifiable under heading 8424, would attract a GST of 12%, even if supplied separately. However, any part of general use, which gets classified in a heading other than 8424, in terms of Section Note and Chapter Notes to HSN, shall attract GST as applicable to the respective heading.

All Circulars 7 GST Circulars as mentioned below

  1. Applicability of GST on supply of food in Anganwadis and Schools
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2. Applicability of GST on the activity of construction of road where considerations are received in deferred payment (annuity)

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3. GST on supply of various by Central and State Board (such as National Board of Examination)

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4. GST rate on construction services provided to a Government Entity w.r.t. construction of a Ropeway on turnkey basis

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5. GST on milling of wheat into flour or paddy into rice for distribution by State Government under PDS

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6. GST on service supplied by State Govt. to their undertakings or PSUs by way of guaranteeing loans

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7. GST rate on laterals/parts of Sprinklers or Drip Irrigation System

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Read more at: DID YOU KNOW ALL ABOUT E-WAY BILL CONCEPT AND RELATED PROVISION UNDER GST?

BIO of Author:-  CA JAYPRAKASH PANDEYThe author, CA Jayprakash Pandey is a practicing Chartered Accountant (Founder of Jayprakash P & Company) having Office at Mumbai, with more than 5 years of professional cum practical experience, Direct Tax, International Taxation, Indirect Tax & FEMA related advisory, litigation & compliance matters.

Disclaimer:

The purpose of this is to share knowledge and it is for education purpose only. This does NOT constitute NOR does this form part of neither it is to be construed as, A LEGAL OPINION. The analysis is solely based on the reading abilities of the Author. They may be correct/incorrect as per you. No representation or warranty, express or implied, is made or given in respect of any information provided. UNDER NO circumstances should any recipient rely on this communication as a basis for any legal decision. The views expressed are of personal to the author. They do not reflect the views of any organization he may be directly/indirectly associated with. Neither author nor any of its affiliates accepts any legal liability, or responsibility, for, or provides any assurance or guarantee of accuracy, authenticity, completeness, correctness, dependability, reliability, suitability or timeliness of, any part of this article. The contents of this article are based only on the understanding of the Law, Rules, Notifications, etc. of the author and THEY ARE NOT BASIS FOR ANY LEGAL OPINION.

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