India: Indirect Tax Updates: Clarification On Refund Related Issues, New Functionalities On GSTN Portal, New MVAT Audit Report

Last Updated: 14 June 2018
Article by SKP  

Important rulings by the Authority for Advance Ruling (AAR)

  • Whether the sale of an independent unit of an entity along with its assets and liabilities would amount to supply of goods or supply of services or both? Furthermore, whether such transaction would be exempt in accordance with entry at Sr. No. 2 of Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017?

    AAR, Karnataka has held that since the unit being sold is functional and is desired to be transferred as a whole, it amounts to a transfer of a going concern. The transfer of a going concern, either as a whole or an independent part thereof, for a lump sum consideration, does not constitute an activity taking place in the course of business or for furtherance of business. However, since the definition of 'supply' under Section 7(1) of the CGST Act, 2017 used the word 'includes' the scope of 'supply' goes beyond the meaning of the expression 'in the course or furtherance of business.' Therefore, transfer of a going concern even if does not constitute an activity carried out in the course of regular business or for furtherance of business, the activity may still qualify to be termed as a supply. Furthermore, such supply shall be classified as supply of services and not supply of goods in accordance with Notification No. 12/2017- Central Tax (Rate) dated 28 June 2017. The notification further provides 'Nil' rate of tax on 'Services by way of transfer of a going concern.' [2018 (5) TMI 1651 - M/s Rajashri Foods Private Limited]
  • Whether supply of turnkey Engineering, Procurement and Construction (EPC) contract for construction of solar power plant wherein both goods and services are supplied can be construed to be a composite supply?

    The applicant intended to seek clarity whether a turnkey EPC contract can be construed as a composite supply, the principal supply being a supply of 'Solar Power Generating System,' and thereby taxable to GST at 5%. AAR, Karnataka has held that supply of turnkey EPC contract for construction of solar power plant would not be termed as a composite supply if equipment (i.e., PV modules) is directly transferred to the owner by way of high sea sale. Since the bill of entry is filed by the end customer and not by the supplier, the customer becomes the title owner. The draft contract demonstrates that in such projects the owner can procure the major equipment's on his own also, and the contractor may carry out supply of services. Thus, the concept of natural bundling does not apply to the present supply. Therefore, construction service and supply of equipment would not be clubbed as a composite supply. [2018-VIL-36-AAR - M/s Giriraj Renewables Private Limited]
  • Whether non-trading goods like office stationery, office equipment, etc. supplied to branches at zero value, can be valued at cost price under Second Proviso to Rule 28 of CGST Rules, 2017, which allows valuation at the invoice value, instead of the First Proviso which requires valuation to be done at 90% of MRP?

    AAR, West Bengal has ruled that supply made to distinct or related party can be valued as per Second Proviso to Rule 28 instead of First Proviso. The Second Proviso deems the invoice value to be the open market value and allows the same to be adopted if the recipient is eligible for full input tax credit. The Second Proviso, unlike the First Proviso, does not mention "where goods are supplied to a recipient for further supply as such." Thus, the Second Proviso is deemed to apply to goods used in the course of furtherance of business. Accordingly, the applicant has the option to value the goods in terms of the Second Proviso. [2018-VIL-49-AAR - GKB Lens Private Limited]
  • What will be the rate of GST applicable in a case where the applicant enters into two separate contracts, one for the supply of materials at ex-factory price, and the other for supply of allied services like transportation, insurance, loading, etc. for delivery of material?

    AAR, West Bengal had observed that both the contracts are linked by a cross fall breach clause which specified that breach of one contract would be deemed to be a breach of the other contract. The two promises, i.e., supply of goods and their transportation, are not separately enforceable in the present context. Accordingly, the supply is to be considered as naturally bundled and categorized as a composite supply with supply of goods being the principal supply, and the rate of GST to be applied accordingly. [2018-VIL-41-AAR - IAC Electricals Private Limited]


Clarification on refund related issues
The government vide Circular No. 45/19/2018-GST dated 30 May 2018 has provided following clarifications on issues related to refund claims:

Issue

Clarification issued

Para 2 of Circular No. 24/24/2017-GST dated 21 December 2017 mandates that a refund claim can be filed only after filing GSTR-1 (for the relevant tax period) and GSTR-3B (for the last tax period).
However, Input Service Distributor (ISD), composition dealers and non-resident taxable person are not required to file GSTR-1 and GSTR-3B. Can they still file refund claim?

The said taxpayers are not required to file GSTR-1 and GSTR-3B to claim a refund. They can claim a refund of balance in the electronic cash ledger on the filing of GSTR-6 (by ISD), GSTR-4 (by composition taxpayer) and GSTR-5 (by non-resident taxable person).

Certain taxpayers, while filing GSTR-3B committed errors in declaring the export of services on payment of IGST or zero-rated supplies made to an SEZ developer or an SEZ unit on payment of IGST by disclosing such supplies under 3.1(a) instead of 3.1(b) of GSTR-3B. Such transactions were disclosed correctly in GSTR-1.

Such taxpayers are unable to file refund application for refund of IGST due to an inbuilt validation check in the system which restricts the refund amount claimed to the amount of IGST/cess disclosed under 3.1(b).

It has been clarified that for tax periods from 1 July 2017 to 31 March 2018, taxpayers who have committed such errors would be allowed to file a refund application on the common portal through Form GST RFD-01A subject to the condition that the amount of refund of integrated tax/cess claimed should not be more than the aggregate amount of integrated tax/cess mentioned under 3.1(a), 3.1(b) and 3.1(c) of GSTR-3B filed for the corresponding tax period.

Whether bond or Letter of Undertaking (LuT) is required in case of zero-rated supply of exempted or non-GST goods and whether a refund can be claimed by the exporter of such goods?

It has been clarified that in respect of refund claims on account of export of non-GST and exempted goods without payment of IGST, LuT/bond is not required. Such exporters of non-GST goods should comply with the requirements prescribed under other laws, i.e., Central Excise Act, 1944, VAT law of the respective states, or the Customs Act, 1962 if any. Furthermore, the exporter would be eligible for a refund of unutilized input tax credit.


New functionalities on GSTN portal
Following key functionalities have been added to the GST common portal:

  • Option in relation to 'Application Revocation of Cancelled Registration' has been activated, wherein the cancellation is done suo moto by the officer. Such application for revocation can be made only after filing pending returns and payment of tax if any.
  • Data in relation to export of goods is validated by the GST common portal, and post validation, it is transmitted to the ICEGATE portal for processing of refund by the customs authorities. A functionality is now available on the GST Portal to track the status of such transmitted data.
  • Export ledger can be accessed via GST common portal by following the given procedure: Login to GST Portal - Services - Refunds - Track status of invoice data to be shared with ICEGATE.

Camps for quick disposal of EODC applications
The Directorate General of Foreign Trade vide Trade Notice No. 17/2018 dated 7 June 2018 with a view of quick disposal of applications for Export Obligation Discharge Certificate (EODC) and Advance Authorizations has announced the arrangement of camps from 11 June 2018 to 22 June 2018.

New MVAT audit report
In view of the implementation of GST, the Maharashtra government vide Notification No. VAT/AMD-2018/1B/ADM-8 dated 5 June 2018 has amended the VAT audit report in Form-704 under the Maharashtra Value Added Tax Act, 2002.

SKP's Comments

  • The ruling by AAR, West Bengal in the case of GKB Lens Private Limited will ease the burden on the working capital of entities undertaking similar transactions by allowing them the option to value such supplies at a lower price, thereby reducing the GST payable on such supplies.
  • Allowing exporters who have made errors in their GSTR-3B to file refund claims comes as a huge relief in view of such being committed by a large number of exporters. However, since such refund processes will not be subjected to system validation check, there is a possibility that the jurisdictional officers will issue notices to verify the authenticity of such refund claims. Exporters should ensure that they maintain proper documentation to avoid any penal action at a later stage.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions