February 14, 2018

By Vijay Kumar

IN this column on January 24, 2018, I wrote, "The Government, it is understood, is soon going to give a clarification that elephant/camel joy rides are not classified as transportation services and attract GST @ 18% with threshold exemption to small services providers." And the CBEC has now issued a Circular No. 32/06/2018-GST, dated 12th February 2018 clarifying, Elephant/ camel joy rides cannot be classified as transportation services. These services will attract GST @ 18% with threshold exemption being available to small service providers .

The CBEC has also issued some more clarifications based on the decisions taken by the GST Council at its meeting on 25th January, 2018. The clarifications given now include:

1. Hostel accommodation services do not fall within the ambit of charitable activities as defined in para 2(r) of notification No. 12/2017-CT(Rate).

2. Fee paid by litigants in the Consumer Disputes Redressal Commissions are not leviable to GST. Any penalty imposed by or amount paid to these Commissions will also not attract GST.

3. Food supplied to the in-patients as advised by the doctor /nutritionists is a part of composite supply of healthcare and not separately taxable. Other supplies of food by a hospital to patients (not admitted) or their attendants or visitors are taxable.

Now, what will happen if the food is not advised by the doctor/nutritionists. And who is the doctor/nutritionists. What will happen if the patient has the option to order his own food. Is the hospital required to maintain elaborate accounts on who ate what food from the hospital canteen. And, why make a distinction between 'patients'. Is an in-patient different from an outpatient. Of course, the fact is that one is admitted and the other only attends the hospital for treatment without staying overnight. When the larger purpose of the exemption is to grant exemption for health care services why bring in such convoluted interpretation. Surely, the notification is itself not a healthy one!

Remember there was a controversy on "substantial and satisfying meal". A Service Tax notification defined food as a substantial and satisfying meal. Mandap Keepers got an abatement from the Service tax payable if they supplied food also - that is a substantial and satisfying meal . 'Food for thought', as one of our esteemed columnists said in his article, Food-Cooked in VAT but Poor Service!

In fact, this issue as to whether high-tea is a substantial and satisfying meal was a matter of agitation before the CESTAT. The Commissioner had taken a view that breakfast and High-Tea cannot be considered as substantial and satisfying meal. The Member Technical was of the view that the matter has to go back to the Original Adjudicating Authority for ascertaining whether this type of breakfast amounting to food as per the Notification was provided and appellants are eligible for exemption. However, the Judicial Member observed,

The said expression 'substantial and satisfying meals' does not stand defined anywhere. What has to be substantial and satisfying would thus vary from person to person. Commissioner has recorded that high tea cannot be considered as 'substantial and satisfying meal'. Apart from the fact that the said interpretation is based upon the adjudicating authority's own opinion, I find that high tea is a concept associated with the early evening meal, as contended by the appellant. It is not providing of simple tea or coffee, but the adjective 'high' is used, when the same indicates that high tea is in the social context, replacement of dinner. Each and every invoice disclosing as to whether the supplied item was only tea or coffee or the same was inclusive of how many number of snacks etc. so as to fulfill the meaning of 'substantial and satisfying meal' is not required to be gone through. It is sufficient if, as a mandap keeper, the assessee is providing catering services and the invoices so raised by him show that the same were inclusive of charges for catering services. Even if such high tea is as per the fixed menu agreed upon between service provider and their client and is not unlimited like break-fast, the same, in my view, has to be held as 'substantial and satisfying meal'. It is not that menu so agreed upon is required to be scrutinized in each and every case and wherever it is found to be on the lesser side, the same has to be held as not satisfying meal.This exercise would not only be impracticable, but would be impossible also. It cannot, be held to be the intention of the notification in question.

Finally, the Technical Member agreed with the Judicial Member and it was held that high-tea was food satisfying the definition of being a 'substantial and satisfying meal'. ­ 2009-TIOL-35-CESTAT-AHM.

You may also try reading our edit, Is 'high tea' a meal, satisfying and substantial. and TIOL-DDT 1483 09.11.2010 for more insight into the complicated word 'food'. Will we have the same kind of litigation in GST.

Getting ready for litigation. The shaky foundation on which the gigantic litigation edifice stands is the 'Show Cause Notice'. And this is the most confused part. There are doubts on who should issue the notice, when, how, why….. Now that GST is unstably settling down, the 'Show Cause Notice' manufacturing has to start. As per Sections 73 and 74 of the GST Act, the Proper Officer is to issue the Show Cause Notices and adjudicate them. Now who is the 'proper officer'. CBEC had earlier issued two circulars specifying the proper officers for various powers. Board also issued a Circular No.31/05/2018-GST, dated 9th February 2018 specifying and clarifying the powerful proper officers.

Now a Superintendent can also issue notices and adjudicate cases involving fraud, suppression etc. up to a value of Rs.20 lakhs of tax demand. Assistant and Deputy Commissioners have a monetary limit of two crores and the powers of Joint and Additional Commissioners are unlimited! The Audit and 'Intelligence' officers can only issue notices, but cannot adjudicate. With so many empowered 'proper officers' around, we can expect a bounty of notices and that will ensure that our litigation industry is sound. Consultants only need a little patience before they can smile all the digital way to the banks or places where money can be deposited.

The recent Economic Survey succinctly (when you are referring to a sacred document like the Economic Survey, you are expected to use such words) stated -

What is interesting is that the success rate of the Department at all three levels of appeal -- Appellate Tribunals, High Courts, and Supreme Court-- and for both direct and indirect tax litigation is under 30%. In some cases it is as low as 12% (See Table 5). The Department unambiguosuly loses 65% of its cases. Over a period of time, the success rate of the Department has only been declining, while that of the assessees has been increasing (Annex XV). Nonetheless, the Department is the largest litigant.

Incidentally, the Economic survey spells 'unambiguously' as 'unambiguosuly'. That's their prerogative! After all, there is so much ambiguity – in litigation and language.

Advisory to the Exporters: the GST portal www.gst.gov.in shows the following advisory dated 12.02.2018:

a) Advisory to the Exporters for Refund of IGST Paid on Export of Goods:

1. File FORM GSTR 1 for the corresponding tax period.

2. Fill complete and correct data of export of goods in Table 6A of FORM GSTR 1 of the relevant tax period.

3. Pay your tax and File FORM GSTR 3B return for the corresponding tax period.

4. While filing GSTR 3B Return for the said tax period, please make sure that that table 3.1 (b) of Form GSTR 3B is filled correctly and the amount shown in this should be equal to or more than the amount of IGST in table 6A, and table 6B (Supply to SEZ),of GSTR1.

b) Advisory for exporters on correctly filing Table 3.1(b) of GSTR 3B:

While filing GSTR 3B Return for the said tax period, please make sure that that table 3.1 (b) of Form GSTR 3B is filled correctly.

1. GSTR-3B of corresponding return period must be filed.

2. The IGST amount paid should be shown through Table 3.1(b) of FORM GSTR-3B, and the amount must be equal to or greater than the total IGST amount shown in Table 6A, and Table 6B, of GSTR-1 for the corresponding tax period.

3. NONE of the export invoices filed in Table 6A of GSTR-1, of the corresponding return period, shall get transmitted to ICEGATE if correct IGST amount is not filed in Table 3.1(b) of GSTR-3B. Hence the refund of IGST amount paid on exports will be impacted.

It is not stated who has given the advisory – must be some competent and concerned authority.

The State Way Bill is back : After the e-way bill fiasco, at least one state, Telangana has brought back its own way bill for intra-State movement of goods. Waybill is required for the movement of goods, which are not exempted under the Act, for all purposes for the movement within the State, when the total value of consignment i.e. value of Tax Invoice / bill of supplies / delivery challan including State Tax / Central Tax / Integrated Tax / Cess exceed Fifty Thousand Rupees. The State Notification stipulates, "The Form "Waybill" and documents specified shall accompany the goods and shall be tendered by the person-in-charge of the goods vehicle to the officer who checks the vehicle, where the goods vehicle first checked in the State and after getting it verified and attested by the officer, the original should be retained by the officer and the duplicate shall be returned to the person submitting such Form "Waybill" and he shall carry duplicate form along with goods vehicle ."Clear.

Now, wait for the Central e-way bill to reappear.