JANUARY 24, 2017

By S Ramaswamy

I would like to highlight the following in the Revised Draft Model GST Law:

The taxable event for the levy of GST is the supply of goods or services. Accordingly, the definition of manufacturer, first and second stage dealers do not augur well in the GST regime and adds more confusion rather than solution.

Suggestion –clauses 2(46), 2(63), 2(82),2(91) be deleted. .

The draft law envisages that the credit of GST on the goods or services can be availed only after the tax has been paid and the returns are filed even though the goods have been received under a valid invoice and utilized.

The credit of the ITC is deferred instead of immediate credit. The assesse can pay the tax after adjustment of the ITC. This will lead to lot of confusion, delayed payment to the suppliers of both tax and the invoice.

The clauses (c) and (d) of Section16(2) negates the intention and practicality .

Suggestion: Clauses (c) and clause (d) of 16(2) be deleted

An assessee who buys motor vehicles for transportation of his own goods for his business purpose viz. for movement of goods from / to job worker or to delivering to his customer or to pick up the goods from his supplier. However, the ITC is not allowed in such cases as per clause (a) of Section 17(4).

Further, the motor vehicles bought by an assessee that may be used for the transportation of their employees/ guest or goods is used in furtherance of business. Hence, it is suggested that ITC be allowed on motor vehicles.

Suggestion – The clause (a) of Section 17(4) be deleted.

An assessee provides canteen facility as mandated by statute. The assessee either has his own facility or he outsources it (outdoor catering). This is held to be input service as per catena of decisions. Similarly is the case of rent a cab, health insurance services.

Suggestion :the sub clause (i) and (iii) of Section 17(4) (b) be rephrased as:

(b) supply of goods and services, namely,

(i) food and beverages, outdoor catering, beauty treatment, heath services, cosmetic and plastic surgery except where such inward supply of goods or services is used by a registered taxable person directly or indirectly in relation to furtherance of business

(iii)rent a cab, life insurance, health insurance except when used by a registered taxable person directly or indirectly in relation to furtherance of business.

Though in the explanation – refund includes supplies regarded as deemed export, it is not forthwith in the main part of the section.

Suggestion: In first proviso to sub section 3 of section 48, after the words including zero rated supplies, and deemed exports be added.

As per the current provision, ITC is not available on CST. However, the goods in stock held on the appointed day shall suffer GST. Therefore, the transitional provision to provide ITC of CST paid on stocks held on the appointed day.

Suggestion:The CST (Central Sales Tax) on the stock of goods held by the manufacturer or a first stage dealer or a second stage dealer or a consignment agent or a commission agent on the appointed day be allowed as IGST credit as a transitional provision under this Chapter

After the clause (b) of sub section 1 of section 16, the following be added:

(c) supply of goods and /or services to a 100% EOU

(The author is Chief Commercial Officer,Nash Industries (I) Pvt Ltd and the views expressed are purely personal.)