India: Key Updates On Goods And Services Tax

Last Updated: 18 April 2018
Article by SKP  

The outset of the new financial year continues to witness new amendments and clarifications being brought in by the government under GST. Certain key developments are:

Advance Rulings/Writ Petition

  • The Authority for Advance Ruling (AAR), Kerala has ruled that the recovery of food expenses from the employees for canteen services provided by the company would come under the definition of 'outward supply' and hence, it would be taxable under GST.
  • In a writ petition, the Bombay High Court held that a one-time lease premium consideration on any lease or letting-out building, including commercial, industrial or residential complex for business, either wholly or partly, would qualify as supply under Section 7 of the CGST Act, 2017 and would attract GST.
  • The AAR, Kerala has re-confirmed the clarification issued in Circular No. 33/2017-Customs that IGST would not be charged in the case of high sea sale transactions. IGST would be levied only when goods are imported in India and IGST would be payable at the time of importation.

Letter of Undertaking for Exports made Without Payment of GST in FY 2018-19

The Central Board of Indirect Taxes and Customs (CBIC) has vide Circular No. 40/14/2018-GST dated 6 April 2018 has issued the following clarifications:

  • A Letter of Undertaking (LuT) will be deemed to be accepted as soon as the Application Reference Number (ARN) of online application is generated.
  • No documents are required to be physically submitted to the jurisdictional officer for the acceptance of LuT.
  • Later, if it is discovered that an exporter whose LuT has been so accepted was ineligible to furnish such LuT, the LuT will be liable for rejection. In the case of rejection, the LuT will be deemed to have been rejected ab initio.

E-Way Bill System

Following the smooth roll out of the e-Way Bill system for inter-state movement of goods, the government is gradually implementing the e-Way Bill system for intra-state movement of goods as well. Whilst Karnataka was the first state to introduce and successfully implement the system for intra-state movement of goods from 1 April 2018, following are five other states that would implement the e-Way Bill system for intra-state movement of goods from 15 April 2018 (press release by PIB on 10 April 2018 - Release ID 1528436):

  1. Andhra Pradesh
  2. Gujarat
  3. Kerala
  4. Telangana
  5. Uttar Pradesh

New Features on the Online GST Portal

Following are the key features that have been recently updated on the GST portal:

  • A new facility to track the status of Export Invoices (Table 6A of GSTR 1) with ICEGATE has been introduced under the refunds tab.
  • A summary showing the ledger balance as on the date of Electronic Liability Register, Electronic Cash Ledger and Electronic Credit Ledger has been introduced on the dashboard of the portal.
  • A summary of all the notices/orders and saved forms is now available on the dashboard for quick and easy access.

GST Rate on Supply of Food and/or Drinks

  • Railways: The CBIC vide Order No. 02/2018 has clarified that the GST rate on the supply of food and/or drinks by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd (IRCTC) or their licensees, will be 5% without Input Tax Credit (ITC). The rate would apply across railway catering services, irrespective of the fact whether the service is mobile or static catering.
  • Educational Institutions: GST on the supply of food and drinks in a mess or canteen in an educational institution would be levied at the rate of 5% without ITC. However, schools up to the higher secondary level in which food is directly supplied to students have been exempted from GST.

SKP's Comments

  • One of the major expectation from the upcoming 27th GST Council meet, which is yet to be scheduled, is the decision regarding compliances under GST.
  • The Group of Ministers, constituted by the GST Council, has invited 20 leading indirect tax professionals for a discussion to be held at Delhi-Vigyan Bhavan to provide comments on GST compliances and suggestions to improve the same.
  • It would be interesting to watch how and in what form would the government introduce the revamped compliance structure and the timeline of the due dates.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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