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GSTN releases offline tool of new GST return for trial run

Goods and Services Tax Network (GSTN) on July 30 released trial version of offline tools of GST forms related to supply of goods and services. The offline tools have been released for Annexure of supplies (GST ANX-1) and Annexure of Inward Supplies (GST ANX-2), GSTN, which is the IT backbone of the indirect tax regime, said in a statement.

These two forms would be part of the proposed GST Return filing system under which a taxpayer would have to file FORM GST RET-1 (Normal) or FORM GST RET-2 (Sahaj) or FORM GST RET-3 (Sugam) on either monthly or quarterly basis.

Wednesday, July 31, 2019

GST Highlights 25th July 2019

Now, interest to apply only on net cash liability of unpaid GST The amendment to section 50 was proposed in the Union Budget on the July 5, 2019, and the Finance Bill 2019 was passed in the Lok Sabha on the July 18, 2019. 

The Union Budget 2019 has provided relief to GST-registered taxpayers with several new updates. One such amendment relates to the interest on the delayed payment of GST liability. This is a big relief for taxpayers, because, until this amendment was passed, interest has always been charged on the entire amount of tax paid after the due date 

Thursday, July 25, 2019

Bombay HC sets aside AAAR order denying ITC on ‘cash carry vans’ for fresh disposal in accordance with law

Recently, the Hon’ble HC of Bombay has admitted the writ petition challenging the order dated August 6, 2018 passed by Appellate Authority for Advance Ruling (“AAAR”), Maharashtra ruling that the input tax credit (“ITC”) is not available on purchase of motor vehicle/vans to carry cash. HC set aside the AAAR order and directed to consider the submissions made by the petitioner and give its conclusion thereon duly supported by the reasons.

Facts:

M/s. CMS Info Systems Limited (“the Petitioner”) is having cash management network pan India. During the course of providing the cash management services, the Petitioner is, inter alia, engaged in managing cash circulation through transporting cash from currency chest to bank branches through the security vans popularly known as “cash carry vans”.

The Hon’ble AAAR, Maharashtra vide order dated August 6, 2018, observed that ITC is not available on purchase of motor vehicles i.e. cash carry vans, which are purchased and used for cash management business and supplied post usage as scrap. It was observed that since the cash carry vehicles are deployed to carry cash and bullion for other than for numismatic purposes, the cash carried by them is to be construed as money and not goods.

Being aggrieved, the Petitioner challenged the order of AAAR, claiming that there was a flaw in the decision making the process as the order failed to deal with the principal submissions of the assessee (after recording the same in the impugned order) viz. ITC would be available in respect of motor vehicles used for transport of money, in view of the definition of ‘goods’ and ‘money’ in the GST law.

Issue involved:

Whether ITC is available on purchase of motor vehicles i.e. cash carry vans which are purchased, used for cash management business and supplied post usage as scrap?

Held:

The Hon’ble High Court of Bombay in Writ Petition No. 5801 of 2019 dated July 9, 2019, noted Petitioner’s submission that the ‘goods’ would include ‘money’ as the cash being transported by them in motor vehicles was not used as a legal tender. Therefore, it was to be treated as ‘goods’ and Section 17(5) of the CGST Act, 2017 at the relevant time had excluded the benefit of ITC in respect of motor vehicles, unless used for transport of ‘goods’.

Accordingly, the HC observed as under:

• The aforesaid principal submission though recorded, has not been dealt with at all in the impugned order. This there is a flaw in the decision making process of AAAR.

• Reliance placed in the impugned order upon the press note issued subsequent to a GST Council recommending to allow ITC in respect of the motor vehicles used for transportation of money, would not by itself lead to the conclusion that prior thereto, money was not included within the definition of ‘goods’. This has to examined in terms of the definition of 'goods' and 'money' found in the CGST Act.

• The entire issue before the AAR that whether the vans/motor vehicles in which the Petitioners were transporting cash, would be money for the purpose of Section 2(52) of the CGST Act, has not been dealt with in the impugned order.

• It is necessary for the Authority to consider the submissions made by the parties before it and give its findings in the context of the submissions made. Ignoring a submission would render the order vulnerable to judicial review by this Court.

Hence, the Hon’ble HC set aside the impugned order and directed the AAAR to consider the submissions made by th

Thursday, July 18, 2019 Read More

Case Law

AAP AND CO., CHARTERED ACCOUNTS THROU AUTHORISED PARTNER

Versus

UNION OF INDIA & others

Summary of the case

The writ-application has been filed seeking quashing and setting aside of the press release dated 18th October 2018 to the extent that its para 3 purports to clarify that the last date for availing the input tax credit relating to the invoices issued during the period from July 2017 to March 2018 is the last date for the filing of the return in Form GSTR-3B for the month of September 2018.

It is submitted that the aforesaid clarification is not in consonance with Section 16(4) of the CGST Act/GGST Act which provides for the last date for taking the input tax credit.

Section 16(4) of the CGST Act/GGST Act provides that the last date for taking the input tax credit in respect of any invoice or debit note pertaining to a financial year is the due date of furnishing of the return under Section 39 for the month of September following the end of the financial year or furnishing of the relevant annual return, whichever is earlier.

However, considering technical glitches in the GSTN portal as well as difficulty faced by the tax payers it was decided to keep filing of GSTR-2 and GSTR-3 in abeyance. Therefore, in order to ease the burden of the taxpayer for some time, it was decided in the 18th GST Council meeting to allow filing of a shorter return in Form GSTR-3B for initial period. It was notified vide Notification No.44/2018 Central Tax dated 10th September 2018 that the due date of filing the return under Section 39 of the Act, for the months of July 2017 to March 2019 shall be subsequently notified in the Official Gazette.

Thus, in view of the above, the impugned press release dated 18th October 2018 could be said to be illegal to the extent that its para-3 purports to clarify that the last date for availing input tax credit relating to the invoices issued during the period from July 2017 to March 2018 is the last date for the filing of return in Form GSTR-3B.

The said clarification could be said to be contrary to Section 16(4) of the CGST Act/GGST Act read with Section 39(1) of the CGST Act/GGST Act read with Rule 61 of the CGST Rules/GGST Rules.

With the above, this writ-application stands disposed of for Detail

Thursday, July 11, 2019 Read More

Changes in respect of GST

Updation of Aadhar No. is compulsory for all existing and new registrations.

Taxpayers having annual turnover of less than ₹5 crore can now file quarterly returns in GST.

An electronic invoice system is proposed that will eventually eliminate the need for a separate e-way bill.

Fully automated GST Refund module shall be implemented; multiple tax ledgers to be replaced by one; invoice details to be captured in a central system.

"Section 31A" The Government may, on the recommendations of the Council, prescribe a class of registered persons who shall provide prescribed modes of electronic payment to the recipient of supply of goods or services or both made by him and give option to such recipient to make payment accordingly, in such manner and subject to such conditions and restrictions, as may be prescribed.”

 In "Section 50" The interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be levied on that portion of the tax that is paid by debiting the electronic cash ledger.”.

 In "Section 49" A registered person may, on the common portal, transfer any amount of tax, interest, penalty, fee or any other amount available in the electronic cash ledger under this Act, to the electronic cash ledger for integrated tax, central tax, State tax, Union territory tax or cess, in such form and manner and subject to such conditions and restrictions as may be prescribed and such transfer shall be deemed to be a refund from the electronic cash ledger under this Act.

Monday, July 8, 2019

The CBIC has issued a Circular No. 102/21/2019-GST dated 28 June 2019, in which clarification has been made regarding leviability of GST on Additional/Penal Interest in case of late payment of Equated Monthly Instalments (EMI).

Generally, there are two options involving EMI as prevalent in the industry -

1. X purchases a phone of Rs. 40,000/- from Y. Y gave an option to pay the amount in instalments i.e. Rs. 11,000/- for every four months (Rs 11,000 * 4 = Rs. 44,000). The same has to be paid on 10th day of every month and in case of default an additional / penal interest amounting to Rs. 500/- per month will also be payable. 

2. X purchases phone of Rs. 40,000/- from Y. For making payment to Y, X took loan from Mr. ABC Ltd. of Rs. 40,000/- at interest of 2.5% per month. The terms of the loan from M/s ABC Ltd. allows X a period of four months to repay the loan and an additional / penal interest @ 1.25% per month for any delay in payment.

Here it is pertinent to mention that as per sub-clause (d) of sub-section (2) of section 15 of the CGST Act, the value of supply shall include "interest or late fee or penalty for delayed payment of any consideration for any supply". Further in terms of Sl. No. 27 of exemption Notification No. 12/2017- Central Tax (Rate) dated the 28 June 2017, "services by way of (a) extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount (other than interest involved in credit card services)" stands exempt. 

Accordingly, the taxability as determined by the aforesaid circular in both scenarios is as follows -

In scenario 1, since the transaction is solely between the X and Y, therefore, in terms of sub-clause (d) of sub-section (2) of section 15 of the CGST Act, the penal interest would be taxable and it would form part of the value of mobile, irrespective of the manner of invoicing.

In scenario 2, The additional / penal interest is charged for a transaction between X and M/s ABC Ltd., and the same is getting covered under Sl. No. 27 of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017, and therefore would be exempt from GST. The value of supply of mobile by Y to X would be Rs. 40,000/- for the purposes of levy of GST.

It has been further clarified that the transaction of levy of additional / penal interest does not fall within the ambit of entry 5(e) of Schedule II of the CGST Act i.e. "agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act", as this levy of additional / penal interest is covered under the definition of "interest".

Wednesday, July 3, 2019

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