2019-TIOL-GST-253 Dated: Wednesday, January 30, 2019

GST NEWS

CGST RULES NOTIFICATION

06/2019

Seeks to amend notification No. 65/2017-Central Tax dated 15.11.2017 in view of bringing into effect the amendments (to align Special Category States with the explanation in section 22 of CGST Act, 2017) in the GST Acts

05/2019

Seeks to amend notification No. 8/2017-Central Tax dated 27.06.2017 so as to align the rates for Composition Scheme with CGST Rules, 2017

04/2019

Seeks to amend notification No. 2/2017-Central Tax dated 19.06.2017 so as to define jurisdiction of Joint Commissioner (Appeals)

03/2019

Seeks to amend the CGST Rules, 2017

02/2019

Seeks to bring into force the CGST (Amendment) Act, 2018

CGST RATES NOTIFICATION

01/2019

Seeks to rescind notification No. 8/2017-Central Tax (Rate) dated 28.06.2017 in view of bringing into effect the amendments (regarding RCM on supplies by unregistered persons) in the GST Acts

IGST RULES NOTIFICATION

03/2018

Seeks to amend notification No. 10/2017-Integrated Tax dated 13.10.2017 in view of bringing into effect the amendments (to align Special Category States with the explanation in section 22 of CGST Act, 2017) in the GST Acts

02/2019

Seeks to amend notification No. 7/2017-Integrated Tax dated 14.09.2017 to align with the amended Annexure to Rule 138(14) of the CGST Rules, 2017.

01/2019

Seeks to bring into force the IGST (Amendment) Act, 2018

IGST RATES NOTIFICATION

01/2019

Seeks to amend notification No. 8/2017- Integrated Tax (Rate) so as to notify IGST rates of various services as recommended by Goods and Services Tax Council in its 25th meeting held on 18.01.2018.

UTGST RULES NOTIFICATION

01/2019

Seeks to bring into force the UTGST (Amendment) Act, 2018

UTGST RATES NOTIFICATION

01/2018

Seeks to rescind notification No. 8/2017-Union Territory Tax (Rate) dated 28.06.2017 in view of bringing into effect the amendments (regarding RCM on supplies by unregistered persons) in the GST Acts

CESS RULES NOTIFICATION

01/2019

Seeks to bring into force the GST (Compensation to States) Amendment Act, 2018

GST AAR CASES

2019-TIOL-20-AAR-GST

Vedika Exports Tea Pvt Ltd

GST - Applicant is a contract packer of tea bags and seeks a ruling on the classification of the services provided by way of packing of tea bags and the rate of GST thereon - process of service undertaken involves assembly of materials on machine, including blended tea leaves and other inputs received from the recipient of service - applicant used to classify the services under SAC 998540 as Support services and charge GST @9% under sl. No. 23(iii) of notification 11/2017-CTR - on 1.11.2018, they received a communication from one of the recipients of their services viz. Hindustan Unilever Ltd. informing that the service should be taxed @2.5% under sl. No. 26(f) being services by way of job work in relation to all food and food products falling under ch. 1 to 22 of first Schedule to CTA, 1975 viz. SAC 9988 (Manufacturing services on physical inputs (goods) owned by others) - applicant, therefore, seeks a ruling with respect to services provided to HUL since none of the other recipients have raised similar issue to whom the services provided continue to be classified as ‘packaging service' and is taxed accordingly.

Held: Applicant's service to HUL for manufacturing tea bags is service for manufacturing a product classified under TI 0902 40 40 where the physical inputs are owned by the recipient - the supply is, therefore, to be classified under SAC 9988 and taxed under sl. No. 26(f) of the rate notification 11/2017-CTR - applicant also provides service of packaging the manufactured tea bags in cartons, wraps them and puts them in specially designed boxes - applicant is, therefore, making a composite supply to HUL where the service of manufacturing tea bags from the physical inputs owned by HUL is the principal supply - service classifiable under SAC 9988 @5% under sl. No. 26(f) of notfn. 11/2017-CTR: AAR

2019-TIOL-19-AAR-GST

Abhishek Tibrewal (Huf)

GST - Applicant, a manufacturer of Springs of Iron and Steel for supply to the Railways seeks a ruling on the classification of these items.

Held: Springs of Iron & Steel for Railways are specifically classifiable under HSN Code 7320 (taxable @18%) under sl. No. 234 of schedule III of Notification 1/2017-CTR - General description under Chapter heading 8607 is not applicable - Circular 30/4/2018-GST dated 25.01.2018 relied upon: AAR

2019-TIOL-18-AAR-GST

Dinman Polypacks Pvt Ltd

GST - Poly Propylene Leno Bags used for packing of dry vegetables and fruits in bulk are correctly classifiable as plastic bags under HSN 3923 and would attract @18% GST - TRU clarification under 80/54/2018-GST dated 31.12.2018 followed: AAR

2019-TIOL-17-AAR-GST

Ex-Servicemen Resettlement Society

GST - Applicant is a registered society providing “Security services” and “Scavenging services” to various hospitals under the State Government as well as the Central government - they seek a ruling as to whether exemption from GST is available in terms of Notification 12/2017-CTR.

Held: Exemption notification makes it clear that exemption from GST is granted under sr. no. 3 to ‘pure services' provided to Central Government/State Government or Union Territory or local authority or a governmental authority by way of any activity in relation to a function entrusted to a panchayat under article 243G or in relation to any function entrusted to a municipality under article 243W of the Constitution - Applicant's service is classifiable as ‘pure service' as they are not supplying any goods while provisioning the services - recipient is government or governmental authority - Before deciding applicability of Sl. No. 3 of exemption notification, the functions of a Panchayat or Municipality under the Constitution needs to be discussed - Reading Article 243G, 243W of the Constitution along with a study of the two functional item lists placed in the Eleventh Schedule and the Twelfth Schedule of the Indian Constitution makes it clear that “Security Services” provided to government hospitals and medical colleges as institutions of Central/State/District/local authorities are clearly not covered under either of the lists - so also, no entry includes any of the services the applicant has bundled under the description of “Scavenging services” - cleaning of hospital premises is not classified under ‘sanitation or similar service' - therefore, supply of security services and the bundle of service described as scavenging service is not entitled for the benefit of exemption notified against sr. no. 3 of notification 12/2017-CTR: AAR

2019-TIOL-16-AAR-GST

Nis Management Ltd

GST - Sweeper, plumber, security guard, electrician, carpenter services that the applicant supplies to the Housing Directorate of the Government of West Bengal cannot be classified as an activity in relation to any function entrusted to a Panchayat under Article 243G or in relation to any function entrusted to a Municipality under Article 243W of the Indian Constitution - exemption under sl. No. 3 or 3A of Notification 12/2017-CTR is, therefore, not applicable to such supplies: AAR

2019-TIOL-15-AAR-GST

Storm Communications Pvt Ltd

GST - Applicant is a supplier of Event Management Services - Question is whether the applicant registered in West Bengal can claim/adjust/avail ITC on the CGST & SGST charged on invoices issued by Tamil Nadu Suppliers - location of the supplier providing hotel, banquet hall or restaurant is in Tamil Nadu and the location of the recipient applicant is also in Tamil Nadu and so the applicant can avail ITC on the said invoices in Tamil Nadu only, if registered in Tamil Nadu - in no case the applicant can claim/adjust/avail ITC outside Tamil Nadu on the said invoices even if the invoices are issued as B2B mentioning applicant's GSTIN in West Bengal - Applicant is not registered under section 25(1) of the CGST Act in Tamil Nadu, therefore, the SGST and CGST paid on intra-state inward supply in Tamil Nadu is not ‘input tax' to the applicant - GST Act does not contain any concept of ‘input tax' in relation to an unregistered person, no credit of it is, therefore, admissible - A person registered in WB cannot claim ITC for CGST & SGST of other States; they cannot adjust the ITC of one State's CGST for payment of another State's CGST; Applicant cannot adjust ITC of Tamil Nadu GST for payment of IGST since he is not registered in Tamil Nadu: AAR

GST HIGH COURT CASES

2019-TIOL-23-HC-DEL-GST

Hindustan Unilever Ltd Vs UoI

GST - The petitioner-company filed the present writ, raising several issues - Regarding the issue of duty demanded on amounts recovered from dealers & already deposited, the petitioner claimed to have pre-deposited some amount of duty - It was also aggrieved by denial of TRAN-2 credit as well as North East Exemption - The petitioner was also aggrieved by denial of extra grammage being claimed.

Held - The petitioner must pre-deposit a certain sum with the Central Consumer Welfare Fund, in two instalments - It is seen that that the petitioner already deposited a considerably higher sum - Hence no coercive steps be taken against it - Nonetheless, the investigation may continue & orders be passed - Counter-affidavit be filed in 4 weeks time & rejoinder be filed within 4 weeks thereafter - Matter listed for hearing on April 16: HC

- Case deferred: DELHI HIGH COURT

2019-TIOL-21-HC-AHM-GST

North Western Carrying Corporation Vs UoI

GST - SCN dated 13 March 2018 issued u/s 73 of the Finance Act, 1994 for recovery of Service Tax - Petitioner submitting that the provisions relating to service tax have been repealed by section 173 of the CGST Act, 2017 and hence the SCN is without jurisdiction.

Held: Issue Notice returnable on 20 February 2019 - Further proceedings pursuant to the impugned SCN are stayed by way of ad interim relief: High Court [para 2]

- Ad interim relief granted : GUJARAT HIGH COURT

2019-TIOL-20-HC-AHM-GST

Bipson Surgical India Pvt Ltd Vs State of Gujarat

GST/VAT - Petitioners are engaged in the business of manufacture and distribution of Surgical Dressing items such as Bandages, Gauze etc. - respondent GMSCL is a procuring agency of Government of Gujarat which procures the drugs, surgical items etc. from different manufacturers and distributors for the supply of the same to the Government Hospitals throughout the State of Gujarat - GMSCL invited tenders and the petitioners were awarded contracts and asked to supply the items - as per the tender terms, the petitioners were asked to provide rates prepacking unit (without applicable VAT / CST) as well as provide percentage of VAT / CST, if applicable in different columns - according to the petitioners, VAT / CST were to be borne by the GMSCL which although were recovered by the petitioners but was indeed paid to the State Government or appropriate Authority on behalf of the GMSCL - pursuant to introduction of GST, petitioners informed GMSCL that GST was applicable at 12% to the products the petitioner was supplying and, therefore, to make appropriate changes or accommodate the new tax rates which were applicable to the products that were supplied by the petitioner to respondent - petitioners wrote a letter to the GMSCL asking for the payment that was due where the petitioner had also agreed to accept the payment as per 5% tax subject that in future the petitioner gets payment for rest 7% tax - pursuant to its meeting, GMSCL communicated that "since the Finance Department, Government of Gujarat did not agree to revise a rate due to GST effect, the Board decided to seek consent of firms for supply of the items as per rate contract" and that "if the firms do not agree, the GMSCL will float fresh tender and as per the agreement terms and conditions for the existing rate contract for such items" - Feeling aggrieved and dissatisfied with the impugned decision, petitioners have filed the present Special Civil Application under Article 226 of the Constitution of India - counsel for State submits that as per Clause 49 of the Tender Documents, the claim of price revision of finished goods under any pretext or reason including of revision of duty / excise / cost will not be allowed at any stage after the last date of submission of the tenders; that, therefore, there is no clause for variation in case of revision of any tax; that, therefore, the rate quoted by the petitioners were inclusive of VAT, excise duty etc. applicable at relevant time; that instead of VAT, CGST / GST at 12% has been introduced; that in absence of any specific clause for variation of the rate and/or price revision under any pretext or reason including the revision of duty / excise / cost, the State Government is right in not providing the price revision of rate contract.

Held: Merely because the VAT / excise duty has been abolished, which was there at the relevant time when the prices were quoted and the rate contracts were executed and thereafter has been substituted by the GST, the petitioners cannot be permitted to change the rate contract / rates and cannot be permitted to have the price revision - Otherwise the same shall be contrary to the terms and conditions of the relevant tender documents / rate contracts - It is required to be noted that as such so far as the petitioners are concerned, they will have to pay to the Government the same price which was quoted by them and as per the rate contracts, which otherwise they agreed to charge - merely because now the VAT and excise duty have been deleted and instead the same is substituted by GST which may be at 12%, the petitioners cannot claim the price revision on the aforesaid ground - otherwise also the liability to pay VAT / excise duty etc. was upon the suppliers, therefore, the grant of any relief as prayed in the present petitions would tantamount to varying terms and conditions of the tender document / rate contracts which in exercise of powers under Article 226 of the Constitution of India shall not be permissible - In the present case the decision taken by the respondent GMSCL in not permitting the price revision is after due application of mind and even after considering the opinion of the Finance Department, State of Gujarat and a conscious decision has been taken by the Committee which is neither perverse nor arbitrary and/or contrary to the terms and conditions of the tender documents / rate contracts - the impugned decision since not suffering from any malafides and/or arbitrariness, the same is not required to be quashed and set aside in exercise of powers under Article 226 of the Constitution of India - Special Civil Applications fail and the same are dismissed: High Court [para 9.3, 9.4, 11, 12]

- Petitions dismissed : GUJARAT HIGH COURT

2019-TIOL-19-HC-KERALA-GST

PK Construction Company Vs Commissioner Kerala State GST Department

GST - Petitioner, an assessee under KVAT Act faced problems in migrating from the earlier regime to the GST regime and has, therefore, filed Writ petition seeking reliefs viz. allow them to submit form GST REG-26; direct respondents to revive provisional registration to enable them to conduct business - Petitioner now informs that they have been granted a new registration number; that for the previous period, after commencement of GST, returns have to be validated - Counsel for GSTN informed that the authority would look into the petitioner's claim for validation - in view thereof, Writ Petition closed as it does not survive for further consideration: High Court [para 4]

- Petition closed: KERALA HIGH COURT

2019-TIOL-18-HC-AHM-GST

Mono Steel India Ltd Vs State Of Gujarat

GST - Show cause notices were issued on 21st and 26th December, 2018 and immediately thereafter Bank accounts of the petitioner were provisionally attached by issuing notices u/s 83 of the Gujarat GST Act, 2017 for recovery of a sum of more than rupees three crores - Petitioner is before the High Court and submits a statement showing the details of the bank accounts indicating that the petitioner has a large amount of cash lying at its disposal in those accounts and seeks release of the attachment.

Held: Perusal of the record of the case reveals that the petitioner is not a fly by night operator and has paid duty and tax to the tune of more than rupees one hundred crore in the previous year - it is, therefore, necessary for the respondent to explain the expediency and the rationale behind ordering attachment of all the bank accounts of the petitioner and virtually bringing the business of the petitioner to a grinding halt - Notice issued returnable on 23 rd January 2019 and in the meanwhile, by way of ad-interim relief, respondent directed to release the attachment over the bank accounts, subject to the petitioner maintaining an amount of Rs.4 crores in its account with Dena Bank: High Court [para 2, 3]

- Ad-interim relief granted: GUJARAT HIGH COURT

2019-TIOL-17-HC-KERALA-GST

Leo Logistics Vs UoI

GST - Petitioner attempted to upload form GST TRAN-1 but failed due to system error - directions sought to enable them to take credit of available tax.

Held: Not only the petitioner but also many other people faced this technical glitch and have approached the High Court - Court on earlier occasions has permitted the petitioners to apply to the Nodal officer for issue resolution in the light of the Paragraph 5 of the CBIC Circular 39/13/2018 dated 03.04.2018 - petitioner to apply within two weeks and the Nodal Officer to consider the same and take steps within a week thereafter - If the uploading of FORM GST TRAN-1 is not possible for reasons not attributable to the petitioner, the authority will also enable it to take credit of the input tax available at the time of its migration - Petition disposed of: High Court [para 3 to 6]

- Petition disposed of: KERALA HIGH COURT

2019-TIOL-16-HC-KERALA-GST

Edayar Metals Vs UoI

GST - Petitioner attempted to upload form GST TRAN-1 but failed due to system error - directions sought to enable them to take credit of available tax.

- Petition disposed of: KERALA HIGH COURT

2019-TIOL-15-HC-AHM-GST + Case Story

Torrent Power Ltd Vs UoI

GST - Meaning of "transmission and distribution of electricity" does not change, either for the negative list regime or the GST regime - Services which stood included within the ambit of transmission and distribution of electricity during the pre-negative list regime cannot now be sought be excluded by merely issuing a clarificatory circular 34/8/2018-GST , that too, with retrospective effect - services provided by the petitioner are in the nature of composite supply and, therefore, in view of the provisions of clause (a) of section 8 of the CGST Act, the tax liability thereof has to be determined by treating such composite same as a supply of the principal supply of transmission and distribution of electricity. Consequently, if the principal supply of transmission and distribution of electricity is exempt from levy of service tax, the tax liability of the related services shall be determined accordingly - Paragraph 4 (1) of the impugned Circular No. 34/8/2018-GST dated 1.3.2018 is hereby struck down as being ultra vires the provisions of section 8 of the Central Goods and Services Tax Act, 2017 as well as Notification No. 12/2017- CT (R) serial no. 25 - summons dated 28.3.2018 is set aside - respondents shall drop the proceedings under the Finance Act, 1994 as well as under the CGST/SGST Acts sought to be initiated by virtue of the impugned summons to the extent the same is based upon item No. 4 (1) of the impugned circular dated 1 st March, 2018 – Petition disposed of: High Court [para 29 to 32]

- Petition disposed of: GUJARAT HIGH COURT

2019-TIOL-14-HC-KERALA-GST

PSN Automobiles Pvt Ltd Vs UoI

GST on TCS - Petitioner submits that the amount of 1% the dealer collects from the purchaser of the car worth more than ten lakhs under section 206C(1F) of the Income Tax Act cannot be treated as an integral part of the value of goods and services supplied by petitioner; that the petitioner as a dealer of the motor vehicle acts only as an agent for the State to collect income tax u/s 206C(1F) and that amount will eventually go to the vehicle purchaser's credit - Counsel for the department contends that section 15(2)(a) of the CGST Act, 2017 mandates that the value of supply shall include any taxes, duties, cesses, fees and charges levied under any other law in force.

Held: Constitution Bench of the Supreme Court in the case of Dilip Kumar & Co.- 2018-TIOL-302-SC-CUS-CB has held that any ambiguity in taxing provision should be resolved in the State's favour - Yet, in the present context, to conclude either way it needs further and deeper adjudication - Petitioner has raised a prima facie issue which needs Court's attention - Authority will, therefore, not act on the clarification given at Sl. No. 5 of Circular 76/50/2018-GST dated 31.12.2018 pending disposal of the Writ petition - however, it is clarified that this arrangement shall be subject to the outcome of the Writ Petition and without prejudice to the rights of the department in collecting the taxes in future if the Writ outcome is adverse to the petitioner: High Court [para 5, 6]

- Interim order : KERALA HIGH COURT

JEST GST by Vijay Kumar

GST on TCS

GST Jest in Uniform

ARTICLES

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GST - Agenda for the second year - Part XXI

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Issuance of Equity Shares by a Pvt Ltd Company - A Chaotic Valuation Disorder!!

GST Worries of Small Business & Government Worries of Revenue