India: Indirect Taxes Updates: Key Clarifications For The GST Representations Received

Last Updated: 4 July 2018
Article by SKP  

Amendments to CGST Rules

The government vide Notification Nos. 26/2018-Central Tax dated 13 June 2018 and 28/2018-Central Tax dated 19 June 2018 has made following key amendments to the Central Goods and Services Tax Rules, 2017 (CGST Rules, 2017):

Particulars Amendment
Rule 37 - Reversal of Input Tax Credit(ITC) in the case of non-payment of consideration
  • As per Section 15(2)(b) of the CGST Act, 2017 (the Act), value of supply includes any amount that the recipient has incurred on behalf of the supplier, and not included in the price actually paid or payable for the supply.
  • Furthermore, as per Second Proviso to Section 16(2) of the Act, where a recipient fails to pay to the supplier within a period of 180 days from the date of issue of invoice, proportionate ITC should be added back to the output tax liability.
  • Now, a proviso has been inserted to provide that, value of supplies paid by a recipient on behalf of the supplier and not included in price, will be deemed to have been paid by the recipient to the supplier.
Rule 58 - Records to be maintained by owner or operator of godown or warehouse and transporters
  • A clause has been inserted whereby, a transporter who is registered in more than one state or union territory (but having the same PAN), has been provided an option to apply for a unique common enrolment number.
  • The application is to be made in FORM GST ENR-02.
  • The transporter who has obtained such unique common enrolment number would have to use it instead of his GSTIN for all purposes related to e-Way Bill.
Sub-rule (14) of Rule 138 - Non-applicability of e-Way Bill Movement of empty cylinders for packing of liquefied petroleum gas for reasons other than supply, has been exempted from requirement of generation of e-Way Bill.
FORM GSTR-4 - Quarterly return for registered person opting for composition levy
  • Details of inward supplies from a registered supplier (other than supplies attracting reverse charge), are to be disclosed in Table 4A of GSTR-4.
  • Instruction No. 10 to GSTR-4, exempts the disclosure of the said details for tax periods of July 2017 - September 2017 and October 2017 - December 2017.
  • Now, vide this amendment, such exemption has been extended for tax periods of January 2018 - March 2018 and April 2018 - June 2018 as well.
FORM GST RFD-01 and FORM GST RFD-01A (manual application) - Application for Refund Now, the taxpayer would have to provide the GSTIN of the supplier in respect of his inward supplies in:
  • Statement 1A - Refund of ITC accumulated due to inverted tax structure; and
  • Statement 5B - Refund on account of deemed exports, of GST RFD-01 and GST RFD-01A.

Clarifications issued on key aspects under GST

In view of the representations received, the government has issued certain clarifications vide Circular No. 48/22/2018-GST dated 14 June 2018 and 49/23/2018-GST dated 21 June 2018.

Issue Clarification issued
Authority for Advance Ruling (AAR), Karnataka in the case of M/s Gogte Infrastructure Development Corporation had held that:
  • Hotel accommodation and restaurant services to employees and guests of Special Economic Zone (SEZ) units, would not be treated as supply of goods and services to SEZ units;
  • Place of provision of services would be the location of the hotel, i.e. outside the SEZ and hence liable to GST; and
  • The supply will be treated as intra-state supply.
Now, the government has provided the following clarifications:
  • If event management services, hotel accommodation services, consumables, etc. are received by a SEZ developer or a SEZ unit for authorized operations, as endorsed by the specified officer of the zone, the benefit of zero rated supply shall be available in such cases to the supplier.
  • Furthermore, it is an established principle of interpretation of statutes that in case of an apparent conflict between two provisions, the specific provision shall prevail over the general provision. Therefore, services of short-term accommodation, conferencing, banqueting, etc., provided to a SEZ developer or a SEZ unit shall be treated as an inter-state supply.
Whether job workers in the textile sector supplying job work services are eligible for refund of unutilized ITC) on account of inverted duty structure under Section 54(3) of the CGST Act, 2017, even if the goods (fabrics) supplied are not eligible under Notification No. 5/2017-Central Tax (Rate) dated 28 June 2017?
  • The said notification specifies the goods in respect of which refund of unutilized ITC on account of inverted duty structure under Section 54(3) of the CGST Act shall not be allowed.
  • In case of job workers, the output supply is the supply of job work services and not of goods (fabrics). Hence, the job workers would be eligible for refund of unutilized ITC on account of inverted duty structure.
Uncertainty in detention of conveyance carrying multiple consignments. When certain consignments of an intercepted conveyance are in violation of provisions of GST law, and the conveyance has other lawful consignments as well, only such consignments should be detained which are in violation of the GST law.


SKP's Comments

In view of conflicting decisions on critical issues pronounced by various AARs, it would be a welcome step if the government continues its proactive approach in issuing clarifications regarding the position of the Revenue on ambiguous issues to minimize the difficulties faced by taxpayers.

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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