NOTIFICATIONS
Extension in due date to file annual return for composition suppliers in GSTR -4 for the financial year 2019-20
Due date to file Form GSTR-4 for the financial year 2019-20 has been extended from July 15, 2020 to August 31, 2020.
Notification No. 59/2020-Central Tax dated July 13, 2020
GST APPELLATE AUTHORITY RULINGS
Where any service tax has been paid by the service provider which has been realized from the service recipient, no bar can be put on availment on CENVAT credit on the ground that no services were actually provided by the service provider
The case herein is very much comparable to the AMC contract service provider wherein service recipient enters into AMC contract with service providers. In such cases, service recipient may or may not be in a position to utilize the services, but have to pay to the service provider. In such cases, no bar can be put on the availment of CENVAT Credit where service tax has been paid by the service provider and realized from the recipient. Where, a contract has been entered into for sharing common expenses in lieu of sharing of common services or facilities to optimize the benefit of specialization and to achieve economies of scale, by way of minimization of costs for member companies, charges allocated for common expenses shall be treated as ‘input services’ eligible for availment of ITC.
M/s Hindalco Industries Limited v. Assistant/Deputy Commissioner of CGST & CX, Ranchi South Division, Ranchi
ADVANCE AUTHORITY RULINGS
Input tax credit in respect of purchase and installation of lift in the hotel building is blocked in terms of section 17(5)(d) and hence, not allowed
Credit in respect of goods or services or both used in construction of immoveable property is not allowed even if such goods or services or both are used in the course or furtherance of business. Hotel being immoveable property, any goods or services going into its construction shall be ineligible for ITC availment, as the lift, after construction, becomes part of the building and hence, falls under the exclusion from ‘plant and machinery’.
M/s Jabalpur Hotels Private Limited (Madhya Pradesh AAR)
Work relating to supply, installation and fixation of customized furniture is not a works contract but a composite supply of goods
Items of furniture have been made or manufactured at the supplier’s place which have been installed or fixed at the recipient’s place and such installations of furniture can be removed or moved to any place without any damage being caused to such furniture. Such supply, installation and fixation of customized furniture cannot be treated as works contract, as it does not result into construction of immoveable property or does not become part of such immoveable property. The supply made by the applicant consists of two taxable supplies of goods and services which are naturally bundled and supplied in conjunction with each other, where the supply of goods i.e. furniture is the principal supply.
Methodex Systems Private Limited (Madhya Pradesh AAR)
Eligibility of input tax credit in respect of goods or services used in construction of water park
Water slides are fastened with steel and civil structures which are affixed to earth. Hence, these water slides shall fall within the meaning of the term apparatus, equipment and machinery and hence, shall be eligible for ITC. The foundation of wave pool machine is eligible to be part of machinery and ITC in respect of the same shall also be available. However, machine room, which is a civil structure, erected for protecting machine is neither foundation nor civil structure for machine. Accordingly, credit in respect of goods or services used in construction of such machine room shall not admissible. Expenditure on land development like site formation shall form part of the value of land and are liable to be capitalized and shall form part of the land itself. Hence, in term of the specific exclusion of land from the term ‘plant and machinery’, credit in respect of such expenses shall not be available in terms of section 17(5)(d) of CGST act. Also, ITC related to construction of swimming pool and wave pool, subject to their capitalization, shall not be available, as they are not plant and machinery. Further, facilities like transformers, sewage treatment plant, electrical wiring and fixtures, DG sets, lifts etc., shall be treated as part of the building or civil structure and shall not be eligible for ITC.
M/s Atriwal Amusement Park (Madhya Pradesh AAR)
Interest/penalty collected for delayed payment of consideration from customer is a supply under GST
To qualify an amount as interest, there must be some specific percentage to be charged on daily/monthly or periodical basis. The additional amount charged on delayed payment, which the customer had to be make within a stipulated time period, but failed to do so, cannot be classified as interest. In the present case, the principal supply is ‘financial and related services’ and all the ancillary services shall take colour from the principal supply only, and shall accordingly be classified as principal supplies only, i.e. financial and related services. Hence, the amount collected on account of delayed payment of consideration cannot be treated as interest and hence, exemption in terms of Entry 27 of notification 12/2017 is not applicable.
M/s Ushabala Chits Private Limited (Andhra Pradesh AAR)
Coaching services provided by the applicant to aspirant of CA/CWA does not lead to grant of certificate or diploma or degree or qualification recognized by the law, and hence not exempt.
The service provided by the applicant to the aspirants of CA (Inter & Final) and ICWA (Inter & Final) does not ensure that the student obtains a qualification recognized by any law and hence the same does not fall under clause (ii) of the definition given to ‘Educational Institution’. Further, coaching or training as imparted by the applicant is neither mandatory nor sine qua non to the students appearing for CA / ICWA examination. The coaching or training imparted by the applicant is only a facilitation / improvisation of the preparation for the said exams and cannot be considered as a coaching/training leading to grant of certificate, qualification etc. recognized by law
Accordingly, the applicant is not eligible for the exemption under Entry No.66(a) of Notification No.12/2017-CT(Rate) dated 28.06.2017, as amended.
M/s Master Minds (Andhra Pradesh AAR)
Classification and rate of tax on alcohol-based hand sanitizers
Hand Sanitizers manufactured by the applicant are of the category of Alcohol-based hand sanitizers and are classifiable under heading 3808 of HSN to which rate of GST applicable is 18 per cent. Merely classifying any goods as essential commodity will not be the criteria for exempting such goods from GST
Springfields (India) Distilleries (Goa AAR)
HSD oil issued free of cost by the recipient of services to the supplier shall form part of the value of supply
Diesel provided by the service recipient to the applicant for use in the equipment and vehicles of the applicant forms an important and integral component of this business process. As per Section is 15(2)(b) of CGST Act, the value of supply includes any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both is includible in value. The HSD Oil issued free of cost by the service recipient to the applicant would form part of value of supply of service by the applicant.
M/s Pulluri Mining & Logistics Private Limited (Andhra Pradesh AAR)
Taxability of services provided to clients in India on behalf of foreign company
Applicant providing marketing and consultancy services is facilitating the supply of goods in India. Further, the fact, that transactions are not being done on his own account also confirms that it is a clear case of intermediary services provided to a recipient located outside India leviable to IGST.
M/s DKV Enterprises Private Limited (Andhra Pradesh AAR)
Taxability of medicine supplied to in-patients through pharmacy and taxability in case of medicine supplied to in-patients during medical treatment or procedure
The supply of medicine to in-patients through pharmacy are not leviable to tax and are to be treated as part of composite supply, health care services being the principal supply, exempt under notification 12/2017 dated June 28, 2017. Same principle shall apply to the supply of medicine to in-patients during the medical treatment or procedure.
M/s CMC Vellore Association (Andhra Pradesh AAR)
CESTAT RULINGS
Applicability of service tax on foreclosure charges collected by banks/NBFC’s on premature termination of loan agreements
Foreclosure charges are not consideration for performance of lending services but are imposed as a condition of the contract to compensate for the ‘loss of expected interest’ when the loan agreement is terminated prematurely. Foreclosure charges are collected as a compensation for disruption of services and not towards lending services. Hence, such charges are not leviable to service tax under banking and other financial services.
Commissioner of Service Tax, Chennai v. M/s Repco Home Finance Limited (CESTAT Chennai, Larger Bench)
COURT RULINGS
Writ application challenging the intimation issued in Form DRC-01A under section 74(5) of CGST Act is not maintainable
It is just an intimation and the writ applicant is at his liberty to ignore it. If the applicant decides to ignore it, it may entail the consequences of further show cause notice in terms of section 74(1) of the Act for which an opportunity of being heard shall be provided, before the actual liability is determined.
M/s Cera Sanitaryware Limited v. State of Gujarat (Gujarat HC)
Time limit given under Rule 117(1) to file GST TRAN-1 is mandatory, not directory
The rule making power (including powers to frame rules with retrospective effect subject to certain limitation) under section 164 is implied in wide terms and enables the Government to frame rules to give effect to the provisions of the Act. Pursuant to the powers conferred under section 164, Rule 117 was framed whereby a time limit was fixed for submitting the Form TRAN-1 electronically. Retrospective amendments were made in section 140, by Finance Act 2020, to confer expressly the power to prescribe time limit in section 140 itself. Prior to the amendment to Section 140 of the CGST Act, the power to frame rules fixing a time limit was arguably not traceable to the unamended Section 140 of the CGST Act, but it was and continues to be traceable to Section 164, which is widely worded and imposes no restrictions on rule making powers except that such rules should be for the purpose of giving effect to the provisions of the CGST Act. ITC has been held to be a concession, not a vested right. In context of transitional credit, time limit is compelling and disregarding the time limit and permitting the party to avail ITC in perpetuity would render the provision unworkable. Hence, time limit prescribed under Rule 117 is held to be mandatory and not directory.
M/s P.R. Mani Electronics v. Union of India (Madras HC)
OTHERS
Clarification on issue of rate of GST on alcohol-based sanitizers
Ministry of Finance has clarified that alcohol-based hand sanitizers are taxable under GST at the rate of 18 per cent. It has been further clarified that inputs used for manufacturing of sanitizers are chemical, packing material, input services which also attract 18 per cent GST rate and reducing the rate on sanitizers would lead to inverted duty structure and put the domestic manufacturers at disadvantage vis-à-vis importers.
Clarification, Ministry of Finance dated July 15, 2020
CBIC issues compilation of FAQ’s relating to manufacture and other operations in customs bonded warehouse
CBIC has issued FAQ’s relating to manufacture and other operations in custom bonded warehouse which inter alia include eligibility, manufacture in public bonded warehouses licensed u/s 57 of Customs Act, control of customs, renewal of license or permission, import of inputs and capital goods without payment of duties, availability of benefits under FTP and other regulations, inventory control method, procedure and documentation of re-entry of goods returned by customer for repair or otherwise and surrender of license etc.
CBIC FAQ’s on Manufacture and Other Operations in Customs Bonded Warehouses
Disclaimer
Information contained herein are only for reference purposes and are based on the information publicly available as on the date of this publication. The author takes no responsibility for its reliability and accuracy. It is advised to take appropriate legal/professional advice before undertaking any business activity or otherwise based on the above. Neither Author nor Yes GST assume no responsibility thereof.
