Indirect Tax(IDT) Amendments 2019 | CA Intermediate IDT Amendments 2019 for CA Intermediate

Indirect Tax Amendments(Taxation)

Dear Students, Professionals & Teachers;

We have complied all the amendments relevant for CA Intermediate NOV 2019.

We have added chapter wise indirect tax amendments(IDT Amendments) which we developed, these would immensely help you in deeper understanding of the provision. Select the chapter number to read all the amendments of that chapter. If you find any typing error or mistakes in the document please contact and let us know at 9228446565 or yash@konceptca.com

Happy Reading…… and remember amendments have weightage of about 30%-40% in your exam. The following document will help you to gain these crucial 10 - 15 marks.

indirect tax Amendments(IDT Amendments)

Chapter wise Amendments

CA Intermediate(IPCC) indirect tax amendments for nov 2019

Chapter 2 – Supply under GST

1. Definition of term business amended [Section 2(17)(h) of the CGST Act]

To view below table content please swipe it swipe to view table content
EarlierNow
As per section 2(17)(h) of the CGST Act, the term business includes services provided by a race club by
(1) way of totalisator or
(2) a licence to book maker in such club.
Clause (h) of said sub-section has been substituted to provide that business includes activities of a race club including by
(1) way of totalisator or
(2) a licence to book maker or
(3) activites of a licensed book maker in such club.

Thus, the scope of term ‘business’ has widened.


2. Definition of term service amended [Section 2(102) of the CGST Act]

There has been a clarification in the definition of ‘service’. The expression service includes facilitating or arranging transactions in securities.

Since securities are excluded from the definition of both ‘goods’ and ‘services’ in the CGST Act, they are neither goods nor services. However, facilitating or arranging transactions in securities is liable to GST.

Example: If some service charges or service fees or documentation fees or broking charges or such like fees or charges are charged in relation to transactions in securities, the same would be a consideration for provision of service and chargeable to GST.


3. Import of service without consideration from a related party/establishment outside India in course of furtherance of business to be deemed to be supply even if such service is received by a person other than a taxable person [Schedule I of the CGST Act]

To view below table content please swipe it swipe to view table content
EarlierNow
Import of service by Taxable person from related party for furtherance of business was deemed to be supply. Consideration doesn’t matter.Import of service by Any person from related party for furtherance of business is deemed to be supply. Consideration doesn’t matter.

4. Circular No. 57/31/2018 and Circular No. 73/47/2018 - Clarification on scope of principal and agent relationship under Schedule I of CGST Act, 2017 in the context of del-credere agent (DCA)

Who is DCA?

In commercial trade parlance, a DCA is a selling agent who is engaged by a principal to assist in supply of goods or services by contacting potential buyers on behalf of the principal. The factor that differentiates a DCA from other agents is that the DCA guarantees the payment to the supplier.

In such scenarios where the buyer fails to make payment to the principal by the due date, DCA makes the payment to the principal on behalf of the buyer (effectively providing an insurance against default by the buyer), and for this reason the commission paid to the DCA may be relatively higher than that paid to a normal agent.

DCA is an agent who guarantees the payment to the principal supplier. In order to guarantee timely payment to the supplier, the DCA can resort to various methods-

  1. Extending short-term transaction-based loans to the buyer
  2. Paying the supplier himself and recovering the amount from the buyer with some interest at a later date.

Issue of valuation of supply

This loan is to be repaid by the buyer along with an interest to the DCA at a rate mutually agreed between DCA and buyer. Concerns have been expressed regarding the valuation of supplies from principal to recipient where the payment for such supply is being discharged by the recipient through the loan provided by DCA or by the DCA himself. Issues arising out of such loan arrangement have been examined and the clarifications on the same are as below:

Issue: Whether a DCA falls under the ambit of agent under Para 3 of Schedule I of the CGST Act?

Clarification:

  • In case where the invoice for supply of goods is issued by the supplier to the customer, either himself or through DCA, the DCA does not fall under the ambit of agent.
  • In case where the invoice for supply of goods is issued by the DCA in his own name, the DCA would fall under the ambit of agent.

Issue: Whether the temporary short-term transaction-based loan extended by the DCA to the recipient (buyer), for which interest is charged by the DCA, is to be included in the value of goods being supplied by the supplier (principal) where DCA is not an agent under Para 3 of Schedule I of the CGST Act?

Clarification:
In such a scenario following activities are taking place:

  1. Supply of goods from supplier (principal) to recipient;
  2. Supply of agency services from DCA to the supplier or both;
  3. Supply of extension of loan services by the DCA to the recipient.

It is clarified that in cases where the DCA is not an agent under Para 3 of Schedule I of the CGST Act, the temporary short-term transaction based loan being provided by DCA to the buyer is a supply of service by the DCA to the recipient on principal to principal basis and is an independent supply.

Therefore, interest being charged by the DCA would not form part of the value of supply of goods supplied (to the buyer) by the supplier.

Issue: Whether DCA is an agent under Para 3 of Schedule I of the CGST Act and makes payment to the principal on behalf of the buyer and charges interest to the buyer for delayed payment along with the value of goods being supplied, whether the interest will form part of the value of supply of goods also or not?

Clarification: In such a scenario following activities are taking place:

  1. Supply of goods by the supplier (principal) to the DCA;
  2. Further supply of goods by the DCA to the recipient;
  3. Supply of agency services by the DCA to the supplier or the recipient or both;
  4. Extension of credit by the DCA to the recipient.

It is clarified that in cases where the DCA is an agent under Para 3 of Schedule I of the CGST Act, the temporary short-term transaction based credit being provided by DCA to the buyer no longer retains its character of an independent supply and is subsumed in the supply of the goods by the DCA to the recipient. It is emphasized that the activity of extension of credit by the DCA to the recipient would not be considered as a separate supply as it is in the context of the supply of goods made by the DCA to the recipient.

It is further clarified that the value of the interest charged for such credit would be required to be included in the value of supply of goods by DCA to the recipient as per section 15(2)(d) of the CGST Act.


5. Clarification on ITC and various doubts related to treatment of sales promotion schemes under GST.

  • A. Free samples and gifts:

    As per section 7(1)(a) of the CGST Act, the expression “supply” includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business.

    It is clarified that samples which are supplied free of cost, without any consideration, do not qualify as “supply” under GST, except where the activity falls within the ambit of Schedule I of the CGST Act.

    Example: Pharmaceutical companies often provide drug samples to their stockists, dealers, medical practitioners, etc. without charging any consideration. So, it will not qualify as a supply.

    It has been clarified that ITC shall not be available to the supplier on the inputs, input services and capital goods to the extent they are used in relation to the gifts or free samples distributed without any consideration.

    However, where the activity of distribution of gifts or free samples falls within the scope of “supply” on account of the provisions contained in Schedule I of the said Act, the supplier would be eligible to avail the ITC.

  • B. Buy one get one free offer:

    It may appear at first glance that in case of offers like “Buy One, Get One Free”, one item is being “supplied free of cost” without any consideration. In fact, it is not an individual supply of free goods, but a case of two or more individual supplies where a single price is being charged for the entire supply. It can at best be treated as supplying two goods for the price of one.

    Taxability of such supply will be dependent upon as to whether the supply is a composite supply or a mixed supply and the rate of tax shall be determined as per the provisions of section 8 of the CGST Act.

    It is clarified that ITC shall be available to the supplier for the inputs, input services and capital goods used in relation to supply of goods or services or both as part of such offers.

Chapter 3 – Charge of GST

1. Reverse charge on inward supplies from unregistered persons [Section 9(4) of CGST Act]

Section 9(4) of the CGST Act, which mandated all registered persons to pay the tax on reverse charge basis on intra-State purchases made from unregistered persons, was under suspension.

Said sub-section has now been substituted with a new sub-section (4) which provides as follows:

The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both. All the provisions of the CGST Act shall apply to such recipient as if he is the person liable for paying the tax in relation to such supply of goods or services or both.

The impact of this amendment is as follows:

As per the erstwhile provision, tax under reverse charge was payable by ALL registered persons on ALL intra-State supplies of goods and/or services received by such registered persons from any unregistered supplier. However, such tax liability had been deferred vide an exemption notification.

Under the amended provision, tax under reverse charge is payable by the NOTIFIED class of registered persons on NOTIFIED categories of intra-State supplies of goods and/or services received by such registered persons from any unregistered supplier.

Similar amendment has also been carried out in section 5(4) of the IGST Act by the IGST (Amendment) Act, 2018. Consequently, tax under reverse charge is payable by the NOTIFIED class of registered persons on NOTIFIED categories of inter-State supplies of goods and/or services received by such registered persons from any unregistered supplier.

This can be easily understood with the help of the given table.

EarlierNow
Buyer of goods/Receiver of serviceAny registered personBuyer of goods/ Receiver of serviceNotified class of registered persons
Type of goods /serviceDoes not matterType of goods /serviceNotified categories of intra-state supplies
Supplier of goods/ Provider of serviceUnregistered personSupplier of goods/ Provider of serviceUnregistered person
Then, tax under reverse charge is payableThen, tax under reverse charge is payable

2. Turnover limit for determining the eligibility for composition scheme enhanced to ₹ 1.5 crore

Earlier,
The Government had the power to increase the turnover limit for determining the eligibility for composition scheme (hereinafter referred to as eligibility turnover limit) upto ₹ 1 crore [First proviso to section 10 of CGST Act].

Now,
The said provision has been amended thereby empowering the Government to enhance the eligibility turnover limit for composition scheme upto ₹ 1.5 crore.

Consequently, in pursuance of aforesaid power, with effect from 01.04.2019, the eligibility turnover limit for composition scheme is enhanced from ₹ 1 crore to ₹ 1.5 crore. In other words, a registered person, whose aggregate turnover in the preceding financial year did not exceed ₹ 1.5 crore is eligible to opt for composition scheme. In order to give effect to the said amendment, erstwhile Notification No. 8/2017 CT dated 27.06.2017 has been superseded by Notification No. 14/2019 CT dated 07.03.2019.

Turnover limit for determining the eligibility for composition scheme in case of Special Category States - Notification No. 14/2019 CT dated 07.03.2019


EarlierNow
Special Category States- Special Category States-
Rs. 75 lakh limitRs. 75 lakh limit
Arunachal PradeshArunachal Pradesh
AssamUttarakhand
ManipurManipur
MeghalayaMeghalaya
MizoramMizoram
NagalandNagaland
SikkimSikkim
TripuraTripura
Himachal Pradesh
Rs. 1 crore limit-Rs. 1.5 crore limit-
UttarakhandAssam
Jammu and KashmirHimachal Pradesh
Jammu and Kashmir

3. Composition scheme taxpayers permitted to render services other than restaurant services3 upto a specified limit [Second proviso to section 10 of the CGST Act]

Generally, only a supplier of restaurant service is eligible for composition scheme. However, there are cases where a manufacturer/ trader is also engaged in supply of services other than restaurant service though the percentage of such supply of services is very small as compared to the supplies of goods. There may also be cases where a restaurant service provider is also engaged in supplying a small percentage of other services.

With a view to enable such taxpayers to avail of the benefit of composition scheme, second proviso has been added to section 10(1) which permits a registered person opting for composition scheme to supply services [other than restaurant services] of specified value. This specified value is value not exceeding:

  1. 10% of the turnover in a State/Union territory in the preceding financial year

    or


  2. ₹ 5 lakh,

whichever is higher.

Thus, it can be inferred that a registered person opting for composition scheme whose turnover is upto ₹ 50 lakh in the preceding financial year can supply services [other than restaurant services] upto a maximum value of ₹ 5 lakh in the current financial year. Further, a registered person opting for composition scheme whose turnover is more than ₹ 50 lakh and upto ₹ 1.5 crore in the preceding financial year can supply services [other than restaurant services] in the current financial year upto a maximum value of 10% of the turnover in a State/Union territory in the preceding financial year.

Example: Ramsewak has opted for composition scheme in the financial year 2019-2020. His aggregate turnover in FY 2018-19 is ₹ 60 lakh. Since his aggregate turnover in the preceding FY does not exceed ₹ 1.5 crore, he is eligible for composition scheme. Further, in FY 2019-2020, he can supply services [other than restaurant services] upto a value of not exceeding:

  1. 10% of ₹ 60 lakh, i.e. ₹ 6 lakh

    Or


  2. ₹ 5 lakh,

Whichever is higher. Thus, he can supply services upto a value of ₹ 6 lakh in FY 2019-2020.

If the value of services supplied exceeds ₹ 6 lakh, he becomes ineligible for the composition scheme and has to opt out of the composition scheme.

A co-joint reading of section 10(1) and section 10(2) (a) provides that the registered person shall be eligible to opt for the composition scheme provided:

  1. either he is not at all engaged in supply of services other than restaurant services

    or


  2. (ii) in case he supplies services other than restaurant services, value of such services does not exceed 10% of the turnover in a State/Union Territory in the preceding financial year or ₹ 5 lakh, whichever is higher.

4. Rates under composition scheme - [Notification No. 03/2019 CT dated 29.01.2019].

Under composition scheme, a (i) manufacturer, (ii) restaurant service provider and (iii) any other supplier eligible for composition levy, is required to pay tax @ (i) ½%, (ii) 2½% and (iii) ½% respectively.

Earlier,
Tax rate under category (iii) was ½% of turnover of taxable supplies of goods in the State or Union territory.

Now,
With effect from 01.02.2019, tax rate under category (iii) is ½% of turnover of taxable supplies of goods and services in the State or Union territory


5. Interest income to be excluded while computing aggregate turnover for determining eligibility for composition scheme. Interest income not to render a person ineligible for composition scheme

In view of the amended provisions of composition levy, Order No. 01/2017 CT dated 13.10.2017 which was issued in view of the erstwhile position of law has been superseded by Order No. 01/2019 CT dated 01.02.2019.

Said order clarifies that the value of supply of exempt services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount, shall not be taken into account


  1. for determining the eligibility for composition scheme under second proviso to section 10(1). Under this proviso, a registered person opting for composition scheme may supply services [other than restaurant services] of value not exceeding 10% of the turnover in the preceding financial year in a State/Union territory or ₹ 5 lakh, whichever is higher. Thus, while computing value of services [other than restaurant services] as referred in second proviso to section 10(1), interest on loans/deposit/advances will not be taken into account
  2. in computing aggregate turnover in order to determine eligibility for composition scheme.

6. Effective date in case of denial of composition option by tax authorities - [Circular No. 77/51/2018 GST dated 31.12.2018].

In case of denial of option to pay tax under composition levy by the tax authorities, it has been clarified that the effective date of such denial shall be from a date, including any retrospective date, as may be determined by tax authorities. However, such effective date shall not be prior to the date of contravention of the provisions of the CGST Act/ CGST Rules.


7. Option to pay concessional tax @ 3%

Notification No. 2/2019 CT(R ) dated 07.03.2019 OPTION TO PAY CONCESSIONAL TAX @ 3%

indirect tax amendment chapter 3

(I) Option to pay concessional tax @ 3%

Option to pay concessional tax @ 3%

*Meaning of 1st Supplies –

  • For determining eligibility of a person to pay tax under this notification,
    Include Supplies from –
    01st April of a FY __________________________Date from which become Liable for Registration
  • For determination of tax payable –
    Supplies shall not include -
    01st April of a FY __________________________Date from which become Liable for Registration

** कौन है ये लॉग –

Reg. Person -
Exclusively engaged in supplying Services OTHER THAN Restaurant Services

(II) Various conditions to avail this Scheme –

  1. Supplies are made by a Reg. Person who is –
    Supplies are made by a Reg. Person who is
  2. Reg. Person shall not -
    1. Collect any tax from the recipient on supplies made by him
    2. Be entitled to any ITC
  3. Reg. Person shall –
    1. Issue Bill of Supply instead of Tax Invoice
    2. Following words on Top of Bill of Supply – “Taxable Person paying tax in terms of Notification No. 2/2019 CT (R ) dated 07.03.2019, not eligible to collect tax on supplies.

(III) Other Significant Points –

More than 1 Reg. Persons having same PAN –
CGST on Supplies by ALL SUCH Reg. Persons is paid at 3%
Agg. TO calculation –
Value of supply of exempt services (by way of extending deposits, loans or advances as represented by way of int or disc.)
Not to be taken into account.
Already availed ITC? Want to avail this scheme now?
Pay Amount = ITC in respect of inputs held in Stock & on Capital Goods by way of Debit in Elect. Credit/ Cash Ledger
Balance of ITC, if any, lying in ledger – Shall LAPSE
Reg. Person opting his scheme, shall be liable to pay –
  • CGST @ 3% on all OW Supplies – 1st Supplies of G &/ or S – Upto an Agg. TO of 50 Lacs
  • CGST on IW Supplies (RCM as applicable)
CGST Rules, 2017 as applicable for Composition Scheme, shall mutatis mutandis apply to person paying Tax under this notification –
Except to the following extent –
  1. Option to pay tax in this scheme applicable from beginning of FY or from date of registration (where new registration)
  2. This option is deemed to be applicable wrt all other places of business registered on same PAN

8. Amendment in the RCM provisions applicable to GTA

In case of goods transport agency (GTA) service where the tax is payable @ 5% (2.5% CGST + 2.5% SGST/UTGST or 5% IGST) and service is received by one of the specified recipients, namely, a factory registered under Factories Act, society registered under Societies Act, Co-operative society, body corporate and partnership firm including AOP – whether or not registered under GST law, person registered under GST law & registered casual taxable person, tax is payable under reverse charge by the recipient of service.

The said provisions have been amended stipulating that reverse charge mechanism (RCM) shall not apply to services provided by a GTA, by way of transport of goods in a goods carriage by road to-

  1. a Department/establishment of the Central Government/ State Government/ Union territory; or
  2. local authority; or
  3. Governmental agencies,

which has taken registration under the CGST Act, 2017 only for the purpose of deducting tax under section 51 and not for making a taxable supply of goods or services.

It may be noted that the said services have been simultaneously exempted from payment of tax vide Notification No. 28/2018 CT (R) dated 31.12.2018. Thus, there will be no tax liability in this case

The above amendment has become effective from 01.01.2019.


9. New services under the RCM


S.No.Category of supply of serviceSupplier of serviceRecipient of Service
1Services provided by Business facilitator to a banking company [Effective from 01.01.2019]Business facilitatorA banking company, located in the taxable territory
2Services provided by an agent of business correspondent to business correspondent. [Effective from 01.01.2019]An agent of business correspondentA business correspondent, located in the taxable territory.
3Security services (services provided by way of supply of security personnel) provided to a registered person. However, nothing contained in this entry shall apply to: (i) (a) a Department or Establishment of the Central Government or State Government or Union territory; or (b) local authority; or (c) Governmental agencies; which has taken registration under the CGST Act, 2017 only for the purpose of deducting tax under section 51 of the said Act and not for making a taxable supply of goods or services; or (ii) a registered person paying tax under composition scheme. [Effective from 01.01.2019]Any person other than a body corporateA registered person, located in the taxable territory.
4Services supplied by any person by way of transfer of development rights or Floor Space Index (FSI) (including additional FSI) for construction of a project by a promoter [Effective from 01.04.2019]Any personPromoter
5Long term lease of land (30 years or more) by any person against consideration in the form of upfront amount (called as premium, salami, cost, price, development charges or by any other name) and/or periodic rent for construction of a project by a promoter. [Effective from 01.04.2019]Any personPromoter

With effect from 01.01.2019, a new clause has been inserted in the Explanation to reverse charge notifications stipulating that the provisions of this notification, in so far as they apply to the Central Government, State Government, shall also apply to the Parliament and State Legislature.


10. Amendments in GST in real estate sector - [Notification No. 07/2019 CT (R) dated 29.03.2019/ Notification No. 07/2019 IT (R) dated 29.03.2019]

Earlier,
The effective rate of GST on real estate sector was 8% / 12% with ITC. With effect from 01.04.2019, the effective rates of GST for the new projects have been brought down to a large extent.
However, the promoters/builders have been given a one-time option to continue to pay tax at the old rates on ongoing projects (buildings where construction and actual booking both have started before 01.04.2019) which have not been completed by 31.03.2019.

New effective rates of GST for the new projects by promoters are as follows:

  1. New rate of 1% without ITC on construction of affordable houses (area 60 sqm in metros/ 90 sqm in non-metros and value upto ₹ 45 lakh).
  2. New rate of 5% without ITC shall be applicable on construction of:
    1. all houses other than affordable houses, and
    2. commercial apartments such as shops, offices etc. in a residential real estate project (RREP) in which the carpet area of commercial apartments is not more than 15% of total carpet area of all apartments.

Conditions:

Above tax rates shall be available subject to following Conditions:

  1. Input tax credit shall not be available.
  2. 80% of inputs and input services [other than services by way of grant of development rights, long term lease of land (against upfront payment in the form of premium, salami, development charges etc.) or FSI (including additional FSI), electricity, high speed diesel, motor spirit, natural gas], used in supplying the service shall be purchased from registered persons11.

However, if value of inputs and input services purchased from registered supplier is less than 80%, promoter has to pay GST on reverse charge basis, under section 9(4) of the CGST Act, at the rate of 18% on all such inward supplies** (to the extent short of 80% of the inward supplies from registered supplier).
Further, where cement is received from an unregistered person, the promoter shall pay tax on supply of such cement on reverse charge basis, under section 9(4) of the CGST Act, at the applicable rate which is 28% (CGST 14% + SGST 14%) at present.
Moreover, GST on capital goods shall be paid by the promoter on reverse charge basis, under section 9(4) of the CGST Act at the applicable rates.
Supply of TDR, FSI, long term lease (premium) of land by a landowner to a developer exempt from GST
Supply of TDR, FSI, long term lease (premium) of land by a landowner to a developer have been exempted subject to the condition that the constructed flats are sold before issuance of completion certificate and tax is paid on them.
Exemption of TDR, FSI, long term lease (premium) shall be withdrawn in case of flats sold after issue of completion certificate, but such withdrawal shall be limited to 1% of value in case of affordable houses and 5% of value in case of other than affordable houses. This will achieve a fair degree of taxation parity between under construction and ready to move property.
The liability to pay tax on TDR, FSI, long term lease (premium) has been shifted from land owner to builder under the reverse charge mechanism (RCM) – as discussed in detail in point 2.(b)(4)/(5) above.

Chapter 4 – Exemptions from GST

1. Notification No. 28/2018 CT (R) dated 31.12.2018/ Notification No. 4/2019 IT (R) dated 29.3.2019 - Amendments relating to exemptions for supply of services

S.No.Nature of amendmentDescription of services
1New entry 21B inserted - New exemptionServices provided by a goods transport agency, by way of transport of goods in a goods carriage, to, -
  1. Department or Establishment of the Central/State Government/Union territory; or
  2. local authority; or
  3. Governmental agencies,

which has taken GST registration only for the purpose of deducting tax under section 51 and not for making a taxable supply of goods or services. [Effective from 01.01.2019]

2New entry 27A inserted- New exemptionServices provided by a banking company to Basic Saving Bank Deposit (BSBD) account holders under Pradhan Mantri Jan Dhan Yojana (PMJDY) [Effective from 01.01.2019].
3Entry 34A amended – Scope of exemption enhancedServices supplied by Central/State Government/Union territory to their undertakings or Public Sector Undertakings (PSUs) by way of guaranteeing the loans taken by such undertakings or PSUs from the banking companies and financial institutions [Effective from 01.01.2019]. (The words ‘banking companies’ have been inserted in the entry)
4New entry 74A inserted- New exemptionServices provided by rehabilitation professionals recognised under the Rehabilitation Council of India Act, 1992 by way of rehabilitation, therapy or counselling and such other activity as covered by the said Act at medical establishments, educational institutions, rehabilitation centres established by Central/State Government/ Union territory or an entity registered under section 12AA of the Income Tax Act, 1961
[Effective from 01.01.2019].
5Entry 67 withdrawnEarlier, services provided by Indian Institutes of Managements (IIMs) as covered under entry No. 67 of said notification were exempt. However, under the amended position, with effect from 01.01.2019, entry No. 67 has been omitted as IIMs are now covered under the definition of ‘educational institution’ whose services are exempt under entry No. 66 of the said notification.
In this regard, Circular No. 82/01/2019 GST dated 01.01.2019 has clarified as under: With effect from 31.01.2018, all the IIMs are “educational institutions” as defined under Notification No. 12/ 2017 CT (R) dated 28.06.2017 as they provide education as a part of a curriculum for obtaining a qualification recognized by law for the time being in force.
IIMs also provide various short duration/ short term programs for which they award participation certificate to the executives/ professionals as they are considered as “participants” of the said programmes. These participation certificates are not any qualification recognized by law. Such participants are also not considered as students of IIM. Services provided by IIMs as an educational institution to such participants is not exempt from GST. Such short duration executive programs attract standard rate of GST @ 18% (CGST 9% + SGST 9%)
[Effective from 01.01.2019].
6New entries 41A and 41B inserted- New exemptionSupply of TDR, FSI, long term lease (premium) of land by a landowner to a developer have been exempted subject to the condition that the constructed flats are sold before issuance of completion certificate and tax is paid on them.
Exemption of TDR, FSI, long term lease (premium) shall be withdrawn in case of flats sold after issue of completion certificate, but such withdrawal shall be limited to 1% of value in case of affordable houses and 5% of value in case of other than affordable houses. This will achieve a fair degree of taxation parity between under construction and ready to move property
[Effective from 01.04.2019].

Parallel exemptions from IGST have been extended to supply of inter-State services by amending Notification No. 9/2017 IR) dated 28.06.2017, which grants exemption to supply of inter-State services from IGST vide Notification No. 29/2018 IT (R) dated 31.12.2018 / Notification No. 4/2019 CT (R) dated 29.3.2019.

2. Clarification on availability of GST exemption on the upfront amount payable in installments for long term lease of plots

In respect of GST exemption granted vide Entry 4112 on the upfront amount which is determined upfront but is paid or payable in instalments for long term (30 years, or more) lease of industrial plots or plots for development of financial infrastructure, it has been clarified vide Circular No. 101/20/2019 GST dated 30.04.2019 that GST exemption on the upfront amount is admissible irrespective of whether such upfront amount is payable or paid in one or more instalments, provided the amount is determined upfront.

Chapter 5 – Time and Value of Supply

UNIT I: Time of Supply

1. Notification No. 6/2019 CT (R) dated 29.03.2019/ Notification No. 6/2019 IT (R) dated 29.03.2019 - Special procedure for determining the time of supply of services in certain cases

With effect from 01.04.2019, supply of services by a landowner to a developer by way of –

  1. transfer of transferable development rights (TDR) or floor space index (FSI);
  2. granting of long term lease,

for construction of residential apartments have been exempted subject to the condition that the constructed flats are sold before issuance of completion certificate or first occupation of the project, whichever is earlier, and tax is paid on them.

Such exemption for TDR, FSI, long term lease (premium) shall not be available in case of flats which remain un-booked on the date of issuance of completion certificate or first occupation of the project, whichever is earlier.

The promoter (developer) shall be liable to pay tax at the applicable rate, on reverse charge basis, on such proportion of

  1. value of development rights and/or FSI,

    or


  2. upfront amount paid for long term lease,

as is attributable to such un-booked residential apartments.

In view of the above change, with effect from 01.04.2019, a special procedure for payment of tax has been laid down for following classes of registered persons, namely-

  1. a promoter who receives development rights or FSI (including additional FSI) on or after 1st April, 2019 for construction of a project against consideration payable or paid by him, wholly or partly, in the form of construction service of commercial or residential apartments in the project or in any other form including in cash;
  2. a promoter, who receives long term lease of land on or after 1st April, 2019 for construction of residential apartments in a project against consideration payable or paid by him, in the form of upfront amount. Such upfront amount is called as premium, salami, cost, price, development charges or by any other name.

For such persons, the liability to pay tax on, -

  1. the consideration paid by him in the form of construction service of commercial or residential apartments in the project, for supply of development rights or FSI (including additional FSI);
  2. the monetary consideration paid by him, for supply of development rights or FSI (including additional FSI) relatable to construction of residential apartments in project;
  3. the upfront amount paid by him for long term lease of land relatable to construction of residential apartments in the project; and
  4. the supply of construction service by him against consideration in the form of development rights or FSI (including additional FSI),

shall arise on the date of issuance of completion certificate or first occupation of the project, whichever is earlier.

UNIT II: Value of Supply

1. Circular No. 76/50/2018 - Clarification on valuation methodology for ascertainment of GST on TCS under Income Tax Act, 1961

According to Section 15(2) of CGST Act, value of supply shall include “any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, SGST, UTGST Act and GST (Compensation to States) Act, if charged separately by the supplier.

Tax collected at source (TCS) under the provisions of the Income Tax Act, 1961 would not be included as it is an interim levy.


2. Circular No. 86/05/2019 - Clarification on value to be adopted for computing GST on services of Business Facilitator (BF) or a Business Correspondent (BC) to Banking Company

It has been clarified that banks can collect service charges from customers for services provided by BF or BC as per RBI’s Circular. Banks may pay reasonable commission/fees to BF, the rate of which may be reviewed periodically. All agreements/contracts with the customer shall clearly specify that the bank is responsible to the customer for acts of omission and commission of the BF/BC.

The banking company is liable to pay GST (as banking company is the service provider) on the entire value of service charge or fee charged to customers whether or not received via BF or BC.


3. Circular No. 92/11/2019 - Clarification on discounts

  • A. Discounts including ‘Buy more, Save more’ offers

    Suppliers offer different types of discounts to customers. It is clarified that such discounts shall be excluded to determine the value of supply provided they satisfy the parameters laid down in section 15(3) of the CGST Act, including the reversal of ITC by the recipient of the supply as is attributable to the discount on the basis of document issued by the supplier.

    • Staggered Discount:
      It is increase in discount rate with increase in purchase volume.
      Example: Get 10% discount on purchases above Rs.5000, 20% discount on purchase above Rs.10000 and 30% discount on purchase above Rs. 20000.
    • Periodic Discount:
      These discounts are referred as Volume discount. Such discounts are passed on by the supplier through credit notes.
      Example: Get additional discount of 1% if you purchase 10,000 pieces in a year, get additional discount of 2% if you purchase 15,000 pieces in a year.
  • B. Secondary Discounts

    These are the discounts which are not known at the time of supply or are offered after the supply is already over.

    For example, A supplies 10,000 packets of biscuits to B at Rs. 10 per packet. Afterwards A re-values it at Rs. 9 per packet. Subsequently, A issues credit note to B for Rs. 1 per packet.

    It is hereby clarified that financial / commercial credit note(s) can be issued by the supplier even if the conditions mentioned in section15(3)(b) of the CGST Act are not satisfied.

    It is further clarified that such secondary discounts shall not be excluded while determining the value of supply as such discounts are not known at the time of supply and the conditions laid down in section 15(3)(b) of the CGST Act are not satisfied.

    There is no impact on availability or otherwise of ITC in the hands of supplier in this case.

Chapter 6 – Input Tax Credit

1. Provisions introduced for availing ITC in case of bill to ship to situations in case of services [Explanation to section 16(2)(b) of the CGST Act]

As per the amended explanation, it shall be deemed that the registered person has received the goods or, as the case may be, services–

  1. where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;
  2. where the services are provided by the supplier to any person on the direction of and on account of such registered person.
ch registered person.

2. Scope of blocked credits reduced [Clauses (a) and (b) of section 17(5) of the CGST Act, 2017]

Provisions relating to credit availability have undergone a change in respect of goods and services like motor vehicles, vessels and aircrafts, general insurance, servicing, repair and maintenance, food & beverages, outdoor catering, membership of club, travel benefits etc. Under the amended position, the restriction and availability of ITC in respect of such goods and services is as under:

To view below table content please swipe it swipe to view table content
S. No.Goods and/or services on which credit is blockedExceptions to goods and/or services mentioned in column (2) on which credit is allowedRemarks
(1)(2)(3)(4)
(i)Motor vehicles for transportation of persons with seating capacity ≤ 13 persons (including the driver) Such motor vehicles when used for-
  • making further taxable supply of such motor vehicles;
  • making taxable supply of transportation of passengers;
  • making taxable supply of imparting training on driving such motor vehicles.
  • ITC on motor vehicles for transportation of persons with seating capacity ≤ 13 persons (including the driver) used for any purpose other than ones mentioned in S. No. (i) of column (3) is not allowed.
  • ITC on motor vehicles for transportation of persons with seating capacity > 13 persons (including the driver) used for any purpose is allowed.
  • ITC on any other motor vehicle (e.g. motor vehicle used for transportation of goods, dumpers, tippers etc.) used for any purpose is allowed.
Examples
  1. ITC on cars purchased by a manufacturing company for official use of its employees is blocked.
  2. ITC on cars purchased by a car dealer for sale to customers is allowed.
  3. ITC on cars purchased by a company engaged in renting out cars for transportation of passengers, is allowed.
  4. ITC on cars purchased by a car driving school is allowed.
  5. ITC on buses purchased by a company for transportation of its employees from their residence to office and back, is allowed.
  6. ITC on trucks purchased by a company for transportation of its finished goods is allowed.
(ii)Vessels and aircraftsVessels and aircraft when used for-
  • making further taxable supply of such vessels or aircraft;
  • making taxable supply of transportation of passengers;
  • making taxable supply of imparting training on navigating such vessels;
  • making taxable supply of imparting training on flying such aircrafts;
  • transportation of goods
ITC on vessels and aircrafts used for any purpose other than the ones mentioned in S. No. (ii) of column (3) is not allowed.
Examples
  1. ITC on aircraft purchased by a manufacturing company for official use of its CEO is blocked.
  2. ITC on aircraft purchased by an Aviation School providing training on flying aircrafts, is allowed.
(iii)General insurance, servicing, repair and maintenance relating to:
  • Motor vehicles for Transportation of persons with seating capacity ≤ 13 persons (including the driver),
  • Vessels
  • Aircraft
Vessels and aircraft when used for-
  • making further taxable supply of such vessels or aircraft;
  • making taxable supply of transportation of passengers;
  • making taxable supply of imparting training on navigating such vessels;
  • making taxable supply of imparting training on flying such aircrafts;
  • transportation of goods
ITC on vessels and aircrafts used for any purpose other than the ones mentioned in S. No. (ii) of column (3) is not allowed.
Examples
  1. ITC on aircraft purchased by a manufacturing company for official use of its CEO is blocked.
  2. ITC on aircraft purchased by an Aviation School providing training on flying aircrafts, is allowed.
(iv)
  • Food and beverages
  • Outdoor catering
  • Beauty treatment
  • Health services
  • Cosmetic and plastic surgery
  • Leasing, renting or hiring of motor vehicles, vessels or aircraft on which ITC is not allowed
  • Life insurance and health insurance
  • Such goods and/or services when used by a registered person for making an outward taxable supply of the same category of goods and/or services (sub-contracting) or as an element of a taxable composite or mixed supply
  • When such goods and/or services are provided by an employer to its employees under a statutory obligation
  • ITC on such goods and/or services when used for any purpose other than the ones mentioned in Sl. No. (iv) of column (3), is not allowed.
  • When such goods and/or services are provided by the employer to its employees without any statutory obligation, ITC thereon is blocked.
Examples
  1. AB & Co., a caterer of Amritsar, has been awarded a contract for catering in a marriage to be held at Ludhiana. The firm has given the contract for supply of snacks, to be served in the marriage, to CD & Sons, a local caterer of Ludhiana. ITC on such outdoor catering services availed by AB & Co., is allowed.
  2. ITC on outdoor catering services availed by a company, for a team development event organised for its employees, is blocked.
  3. ITC on outdoor catering service availed by a company to run a canteen in its factory. The Factories Act, 1948 requires the company to set up a canteen in its factory. ITC on such outdoor catering is allowed.
(v)Membership of a club, health and fitness centre When such services are provided by an employer to its employees under a statutory obligationWhen such goods and/or services are provided by the employer to its employees without any statutory obligation, ITC thereon is blocked.
(vi)Travel benefits extended to employees on vacation such as leave or home travel concessionWhen such services are provided by an employer to its employees under a statutory obligationWhen such goods and/or services are provided by the employer to its employees without any statutory obligation, ITC thereon is blocked.

4. SGST/ UTGST to be used for payment of IGST only when credit of CGST is not available [Section 49 of the CGST Act, 2017] ITC of IGST to be fully utilised first [New section 49A of the CGST Act, 2017] Order of utilization of ITC [New section 49B of the CGST Act, 2017] New mechanism prescribed for utilisation of ITC [New rule 88A inserted in the CGST Rules, 2017]

The above mentioned sections and rules deal with ‘Order of utilization of input tax credit’. There have been some changes in this order. Please refer the Flow Chart to understand the concept.

The following illustration would further amplify the impact of newly inserted rule 88A: Illustration:
Amount of ITC available and output tax liability under different tax heads

HeadOutput tax liabilityITC
IGST10001300
CGST300200
SGST/UTGST300200
Total16001700

Option 1:

ITC ofDischarge of output IGST liabilityDischarge of output CGST liabilityDischarge of output SGST/UTGST liabilityBalance of ITC
IGST10002001000
ITC of IGST has been completely exhausted
CGST0100-100
SGST/UTGST0-2000
Total1000300300100

Option 2:

ITC ofDischarge of output IGST liabilityDischarge of output CGST liabilityDischarge of output SGST/UTGST liabilityBalance of ITC
IGST10001002000
ITC of IGST has been completely exhausted
CGST0200-0
SGST/UTGST0-100100
Total1000300300100

5. Transfer of credit on obtaining separate registrations for multiple places of business within a State/Union territory [New rule 41A inserted in the CGST Rules, 2017] – Notification No. 03/2019

A registered person (transferor) who has obtained separate registration for multiple places of business and who intends to transfer, either wholly or partly, the unutilised ITC lying in his electronic credit ledger to any or all of the newly registered place of business, should furnish the prescribed details on the common portal within a period of 30 days from obtaining such separate registrations. Upon acceptance of such details by the newly registered person (transferee) on the common portal, the unutilised ITC would get credited to his electronic credit ledger.

The ITC is transferred to the newly registered entities in the ratio of the value of assets held by them at the time of registration. Here, the ‘value of assets’ means the value of the entire assets of the business whether or not ITC has been availed thereon.


6. Value of assets for the purpose of apportionment of ITC in case of demerger to include value of entire assets of the business, whether or not ITC has been availed thereon [Explanation inserted after proviso to rule 41(1) of the CGST Rules, 2017] – Notification No. 16/2019

Rule 41 prescribes provisions for transfer of credit on sale, merger, amalgamation, lease or transfer of a business. Proviso to sub-rule (1) of the said rule lays down that in the case of de-merger, the ITC shall be apportioned in the ratio of the value of assets of the new units as specified in the demerger scheme.


7. Value of exempt supplies and total turnover for the purpose of reversal of ITC under rules 42 and 43 to exclude central sales tax also [Rules 42(1) and 43(1) of the CGST Rules, 2017] - Notification No. 03/2019

With effect from 01.02.2019, the value of exempt supplies and the total turnover under rules 42 and 43 will exclude the amount of any duty or tax levied under entry 84 and entry 92A of List I of the Seventh Schedule to the Constitution and entry 51 and 54 of List II of the said Schedule.

In other words, apart from excise duty, State excise duty and VAT, the value of exempt supplies and the total turnover as provided under rules 42 and 43 would now exclude central sales tax also.


8. Clarification in respect of transfer of ITC in case of death of sole proprietor – Circular No. 96/15/2019

For the purpose of section 18(3) of the CGST Act, 2017 and rule 41(1) of the CGST Rules, 2017, transfer or change in the ownership of business will include transfer or change in the ownership of business due to death of the sole proprietor.


9. Procedure in respect of return of time expired drugs or medicines - Circular No. 72/46/2018

Goods which have crossed their date of expiry are colloquially referred to as time expired goods and are returned back to the manufacturer, on account of expiry, through the supply chain. For such goods and lieu of representations received CBIC vide Circular No. 72/46/2018 GST dated 26.10.2018 has prescribed the following procedure for return of time expired drugs or medicines. In case of return of time expired medicines/drugs, either of the following two options can be followed:

A. Return of time expired goods to be treated as fresh supply

To view below table content please swipe it swipe to view table content
S. No.Person returning the time expired goodsConditionValue of the returned goodsWhether ITC available
a)a registered person (other than a composition taxpayer)return the said goods by treating it is as a fresh supply and thereby issuing an invoice for the sameas shown in the invoice/ bill etc on the basis of which the goods were supplied earlier may be taken as the value of such return supplyRecipient of such return supply eligible to avail Input Tax Credit subject to the fulfilment of the conditions specified in Section 16
b)a composition taxpayerIssue a bill of supply and pay tax at the rate applicable to a composition taxpayerNo ITC available to recipient of return suppy
c)an unregistered personIssue any commercial document without charging any tax on the sameNA

Illustration: Supposedly, manufacturer has availed ITC of Rs. 10/- at the time of manufacture of medicines valued at Rs. 100/-. At the time of return of such medicine on the account of expiry, the ITC available to the manufacturer on the basis of fresh invoice issued by wholesaler is Rs. 15/-. So, when the time expired goods are destroyed by the manufacturer, he would be required to reverse ITC of Rs. 15/- and not of Rs. 10/.

B. Return of time expired goods by issuing Credit Note

the manufacturer/ wholesaler who has supplied the goods to the wholesaler/ retailer has the option to issue a credit note as per section 34(1) of CGST Act in relation to the time expired goods returned by the wholesaler or retailer. The retailer/ wholesaler may return the time expired goods by issuing a delivery challan. There is no time limit for the issuance of a credit note in the law except with regard to the adjustment of the tax liability in case of the credit notes issued prior to the month of September following the end of the financial year and those issued after it.

if the credit note is issued within the time limit specified in section 34(2)(2) of the CGST Act, the tax liability may be adjusted by the supplier, subject to the condition that the person returning the time expired goods has either not availed the ITC or if availed has reversed the ITC so availed against the goods being returned.

if the time limit specified in section 34(2) of the CGST Act has lapsed, a credit note may still be issued by the supplier for such return of goods but the tax liability cannot be adjusted by him in his hands.

in case time expired goods are returned beyond the time period specified in section 34(2) of the CGST Act and a credit note is issued consequently, there is no requirement to declare such credit note on the common portal by the supplier (i.e. by the person who has issued the credit note) as tax liability cannot be adjusted in this case.

where the time expired goods, which have been returned by the retailer/wholesaler, are destroyed by the manufacturer, he/she is required to reverse the ITC attributable to the manufacture of such goods, in terms of the provisions of section 17(5)(h) of the CGST Act.

This has been illustrated in table below:

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Date of Supply*Date of return**Treatment in terms of tax liability & credit
01.07.201720.09.2018Credit note will be issued by supplier (manufacturer/ wholesaler) and the same to be uploaded by him on the common portal. Subsequently, tax liability can be adjusted by such supplier provided the recipient (wholesaler / retailer) has either not availed the ITC or if availed has reversed the ITC.
01.07.201720.10.2018Credit note will be issued by the supplier (manufacturer / wholesaler) but there is no requirement to upload the same on the common portal. Subsequently tax liability cannot be adjusted by such supplier.

* of goods from manufacturer/ wholesaler to wholesaler/ retailer

** of time expired goods from retailer/ wholesaler to wholesaler / manufacturer The clarification may also be applicable to return of goods for reasons other than being time expired.

Chapter 7 – Registration

1. Amendments in the threshold limit for registration

The definition of Special Category States has been amended. As a result of the amendment, now, only Mizoram, Tripura, Manipur and Nagaland are Special Category States for the purpose of section 22.

Arunachal Pradesh, Assam, Jammu and Kashmir, Meghalaya, Sikkim, Himachal Pradesh and Uttarakhand are not the Special Category States for said purpose.

Subsequently, with effect from 01.04.2019, Notification No. 10/2019 CT dated 07.03.2019 is issued which exempts any person who is engaged in exclusive supply of goods and whose aggregate turnover in the financial year does not exceed Rs. 40 lakh. Exceptions to this exemption are as follows:

  1. persons required to take compulsory registration under section 24 of the CGST Act.

  2. persons engaged in making supplies of ice cream and other edible ice, whether or not containing cocoa [2105 00 00], Pan masala [2106 90 20] and all goods of Chapter 24, i.e. Tobacco and manufactured tobacco substitutes.

  3. Persons engaged in making intra-State supplies in the States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand. Inter-State supplies of goods are nevertheless liable to compulsory registration and are thus covered in exception (i) above.

  4. Person who has opted for voluntary registration or such registered persons who intend to continue with their registration under the CGST Act.

The above discussion can be summarised as follows:

1. Position prior to amendment

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Threshold limit for persons engaged
Exclusively in supply of goodsin supply of services/ both goods and services
States other than Special Category StatesAllRs. 20 lakhRs. 20 lakh
Special Category States as per ConstitutionSpecial Category States as per ConstitutionManipur, Mizoram, Nagaland, Tripura, Arunachal Pradesh, Assam, Meghalaya, Sikkim, Himachal Pradesh, UttarakhandRs. 10 lakhRs. 10 lakh
OthersJammu and KashmirRs. 20 lakhRs. 20 lakh

2. Position after amendment

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Threshold limit for persons engaged
Exclusively in supply of goodsin supply of services/ both goods and services
States other than Special Category StatesPuducherryRs. 20 lakhRs. 20 lakh
TelanganaRs. 20 lakhRs. 20 lakh
OthersRs. 40 lakhRs. 20 lakh
Special Category States as per ConstitutionSpecial Category States as per Section 22Manipur, Mizoram, Nagaland, TripuraRs. 10 lakhRs. 10 lakh
Jammu and Kashmir, Assam, Himachal Pradesh, Arunachal PradeshRs. 40 lakhRs. 20 lakh
Meghalaya, Sikkim, UttarakhandRs. 20 lakhRs. 20 lakh

The above table can be simplified as follows with examples:

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States with threshold limit of Rs. 10 lakh for both goods and servicesStates with threshold limit of Rs. 20 lakh for both goods and servicesStates with threshold limit of Rs. 20 lakh for services and Rs. 40 lakh for goods**
ManipurArunachal PradeshJammu and Kashmir
MizoramMeghalayaAssam
NagalandSikkimHimachal Pradesh
TripuraUttarakhandAll other States
Puducherry
Telangana

**persons engaged exclusively in supply of goods

Examples:

To view below table content please swipe it swipe to view table content
SupplierEngagedAggregate turnoverApplicable threshold limit for registrationWhether liable to obtain registration?
Prithviraj of Assamexclusively in supply of shoesRs. 22 lakhRs. 40 lakh
exclusively in supply of pan masalaRs. 22 lakhRs. 20 lakh
exclusively in supply of taxable servicesRs. 22 lakhRs. 20 lakh
in supply of both taxable goods and servicesRs. 22 lakhRs. 20 lakh
Shivaji of Telanganaexclusively in supply of toysRs. 22 lakhRs. 20 lakh
exclusively in supply of toysRs. 22 lakhRs. 20 lakh
exclusively in supply of taxable servicesRs. 22 lakhRs. 20 lakh
in supply of both taxable goods and servicesRs. 22 lakhRs. 20 lakh
Ashoka of Manipurexclusively in supply of paperRs. 12 lakhRs. 10 lakh
exclusively in supply of tobaccoRs. 12 lakhRs. 10 lakh
exclusively in supply of taxable servicesRs. 12 lakhRs. 10 lakh
in supply of both taxable goods and servicesRs. 12 lakhRs. 10 lakh

2. Compulsory registration for e-commerce operator who is required to collect tax at source [Section 24(x) of CGST Act]

Section 24 of the CGST Act, 2017 enlists the categories of persons who are compulsorily required to obtain registration. In terms of clause (x) of said section, an e-commerce operator was earlier required to take compulsory registration irrespective of his turnover limit.
Now,
Said clause has been amended to provide that those e-commerce operators who are required to collect tax at source under section 52 of the CGST Act would only be required to obtain compulsory registration.


3. Separate registration for a person having multiple place of business in a State

Earlier,
A person seeking registration under the GST law is granted a single registration in a State or Union territory. Separate GST registrations within the same State/UT were permitted only for separate business verticals.
Now,
The requirement of having multiple business verticals to obtain separate registrations in a State has been dispensed with. Therefore, now a person having multiple places of business in a State or Union territory may be granted a separate registration for each such place of business, subject to such conditions as may be prescribed.

Example: Meethalal & Sons - a supplier in Delhi has three branches – two engaged in supply of garments and one engaged in supply of shoes. While as per the erstwhile provisions, Meethalal & Sons could obtain only registrations – one for business vertical of garments and another for business vertical of shoes, now it can obtain separate GST registration for each three branches.

Further, rule 11 enumerating the conditions for separate registration for multiple business verticals within a State/UT has also been subsequently substituted vide Notification No. 03/2019 CT dated 29.01.2019 with a new rule 11.

New rule stipulates that any person having multiple places of business within a State/UT, requiring a separate registration for any such place of business shall be granted separate registration in respect of each such place of business subject to the following conditions, namely:-

  1. such person has more than one place of business as defined in section 2(85);

  2. such person shall not pay tax under composition levy for any of his places of business if he is paying tax under normal scheme for any other place of business. Where any place of business of a registered person that has been granted a separate registration becomes ineligible to pay tax under composition scheme, all other registered places of business of the said person shall become ineligible to pay tax under said scheme.

  3. all separately registered places of business of such person shall pay tax under the Act on supply of goods or services or both made to another registered place of business of such person and issue a tax invoice or a bill of supply, as the case may be, for such supply.

A registered person opting to obtain separate registration for a place of business shall submit a separate application in prescribed form in respect of such place of business.

The provisions of rule 9 and rule 10 relating to the verification and the grant of registration shall, mutatis mutandis, apply to an application submitted under this rule.


4. Separate registration for SEZ unit or SEZ developer

Earlier,
first proviso to rule 8(1) of the CGST Rules provided that a person having unit in SEZ or an SEZ developer will make a separate application for registration as a business vertical distinct from his other units located outside SEZ. Thus, in case where two units of a tax payer were located in same State - one in SEZ and another outside SEZ, separate registrations were required to be obtained for each of the two units as separate business vertical.

With the dispensation of the requirement of having multiple business verticals to obtain separate registrations in a State/UT, the aforesaid provision has been accordingly modified with effect from 01.02.2019. Modified provision states that a person having a unit in SEZ or being a SEZ developer shall have to apply for a separate registration, as distinct from his place of business located outside the SEZ in the same State or Union territory.


5. Cancellation or suspension of registration [Section 29 of CGST Act and rule 21A of the CGST Rules]

Under section 29, the cancellation of the registration can either be initiated by the Department on their own motion or the registered person can apply for cancellation of their registration.

A proviso to section 29(1) has been inserted to provide that once a registered person has applied for cancellation of registration or the proper officer seeks to cancel his registration, the proper officer may suspend his registration during pendency of the proceedings relating to cancellation of registration filed by such registered person, for such period and in such manner as may be prescribed.

The intent of the said amendment is to ensure that a taxpayer is freed from the routine compliances, including filing returns, under GST law during the pendency of the proceedings related to cancellation of registration.

Period and manner of suspension of registration

Further, with effect from 01.02.2019, new rule 21A of the CGST Rules, 2017 has been inserted vide Notification No. 03/2019 CT dated 29.01.2019 which lays down the period and manner of suspension of registration as follows:

  1. Where registered person has applied for cancellation of registration:

    Where a registered person has applied for cancellation of registration, the registration shall be deemed to be suspended from:

    (a) the date of submission of the application

    or

    (b) the date from which the cancellation is sought,
    whichever is later,
    pending the completion of proceedings for cancellation of registration.
    ‘Cancellation is sought’ means the date from which the person wants the cancellation to be effective.
    ‘Cancellation is sought’ means the date from which the person wants the cancellation to be effective.

    • Mr.A submitted the application for cancellation on 01.08.2019 but he wants the cancellation to be effective from 03.08.2019. Here, the date from which the registration shall be deemed to cancelled will be 03.08.2019
    • Mr. B submitted the application for cancellation on 08.08.2019 but he wants the cancellation to be effective from 02.08.2019. Here, the date from which the registration shall be deemed to cancelled will be 08.08.2019

  2. Where cancellation of the registration has been initiated by the Department on their own motion:

    Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled, he may, after affording the said person a reasonable opportunity of being heard, suspend the registration of such person with effect from a date to be determined by him, pending the completion of the proceedings for cancellation of registration.

  3. A registered person, whose registration has been suspended as above:
    • shall not make any taxable supply during the period of suspension and
    • shall not be required to furnish any return under section 39.
  4. The suspension of registration shall be deemed to be revoked upon completion of the cancellation proceedings by the proper officer. Such revocation shall be effective from the date on which the suspension had come into effect.

5. Pending returns to be filed before revocation of cancellation of registration [Rule 23 of the CGST Rules, 2017] – Notification No. 20/2019 read with Circular No. 99/18/2019

Two newly inserted provisos provide as follows:

All returns due for the period from the date of the order of cancellation of registration till the date of the order of revocation of cancellation of registration shall be furnished by the said person within a period of 30 days from the date of order of revocation of cancellation of registration:

However, where the registration has been cancelled with retrospective effect, the registered person shall furnish all returns relating to period from the effective date of cancellation of registration till the date of order of revocation of cancellation of registration within a period of 30 days from the date of order of revocation of cancellation of registration.

6. Casual Taxable Persons (CTP) making inter-State taxable supplies of notified goods up to Rs. 20,00,000 – Notification No. 56/2018

As we have seen earlier that as per section 24, a CTP is liable to be registered compulsorily under GST irrespective of the threshold limit.

However, following categories of CTPs have been exempted from obtaining registration:

  1. CTPs making inter-State taxable supplies of handicraft goods notified under Notification No. 21/2018 CT (R) dated 26.07.2018.
  2. CTPs making inter-State taxable supplies of notified products, when made by the craftsmen predominantly by hand even though some machinery may also be used in the process.

Conditions to be fulfilled:

  1. CTPs are availing benefit of Notification No. 03/2018 IT dated 22.10.2018
  2. The aggregate value of such supplies, to be computed on all India basis, does not exceed an amount of Rs. 20 lakh [Rs. 10 lakh in case of Special Category States other than the State of Jammu and Kashmir] in a FY.
  3. Such persons have obtained a PAN and have generated an e-way bill

Chapter 8 – Tax Invoice; Credit and Debit Notes; E-way bill

1. One or more credit/ debit notes can be issued for multiple invoices [Subsections (1) and (3) of section 34 of the CGST Act]

The CGST (Amendment) Act, 2018 has amended sub-section (1) of section 34 to allow the registered person to issue one (consolidated) or more credit notes in respect of multiple invoices issued in a financial year without linking the same to individual invoices.

Similarly, sub-section (3) of section 34 has been amended to allow the registered person to issue one (consolidated) or more debit notes in respect of multiple invoices issued in a financial year without linking the same to individual invoices.


2. Signature/ digital signature of the supplier/ his authorized representative not required on (i) electronic tax invoice, (ii) electronic bill of supply, (iii) electronic consolidated tax invoice in case of banking companies etc. and (iv) electronic ticket for passenger transportation service [Rules 46, 49 and 54 of the CGST Rules, 2017] - Notification No. 74/2018

Signature or digital signature of supplier/ authorised representative not required on following documents-

  • Electronic tax invoice
  • Electronic bill of supply
  • Electronic consolidated tax invoice in case of Insurance/Banking companies, financial isntitutions including NBFCs
  • Electronic ticket issued for passenger transportation service

3. New contents prescribed for credit and debit notes - Notification No. 03/2019

A new sub-rule (1A) has been inserted in rule 53 to provide the contents of debit and credit notes separately. Consequently, sub-rule (1) now provides the contents of only the revised tax invoice.

Further, information relating to -

  • nature of document,
  • value of taxable supply of goods or services, rate of tax and the amount of the tax credited or debited to the recipient is no longer required to be mentioned on the revised tax invoice.

The new sub-rule (1A) sets out the contents of credit and debit note as under -

  1. name, address and GSTIN of the supplier;
  2. nature of the document;
  3. a consecutive serial number not exceeding 16 characters, in one or multiple series, containing alphabets or numerals or special characters hyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year;
  4. date of issue of the document;
  5. name, address and GSTIN or UIN, if registered, of the recipient;
  6. name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is un-registered;
  7. serial number(s) and date(s) of the corresponding tax invoice(s) or, as the case may be, bill(s) of supply;
  8. value of taxable supply of goods or services, rate of tax and the amount of the tax credited or, as the case may be, debited to the recipient; and
  9. signature or digital signature of the supplier or his authorized representative.

The above amendments have become effective from 01.02.2019.

Chapter 9 – Payment of Tax

1. SGST/ UTGST to be used for payment of IGST only when credit of CGST is not available [Section 49(5) of the CGST Act] ITC of IGST to be fully utilised first [Section 49A of the CGST Act] Order of utilisation of ITC [Section 49B of the CGST Act]

Refer Chapter 6: Input Tax Credit for discussion on this amendment


2. Payment of liability to be made in accordance with the provisions of sections 49, 49A and 49B of the CGST Act, 2017- Notification No. 03/2019

Earlier-
Rule 85(3) of the CGST Rules, 2017 provided that payment of every liability by a registered person as per his return should be made by debiting the electronic credit ledger or the electronic cash ledger in accordance with section 49 of the CGST Act, 2017.
Further, rule 86(2) of the CGST Rules, 2017 provided that the electronic credit ledger would be debited to the extent of discharge of any liability in accordance with the provisions of section 49 of the CGST Act, 2017.

Now,
Due to the introduction of new sections 49A and 49B, rule 85(3) and rule 86(2) have been amended to include therein the reference of section 49A and section 49B along with section 49. The said amendments have become effective from 01.02.2019.


3. New mechanism prescribed for order of utilisation of ITC [New rule 88A inserted in the CGST Rules, 2017]

Refer Chapter 6: Input Tax Credit for discussion on this amendment

Chapter 10 – Returns

1. GST Practitioner enabled to perform other prescribed functions as well [Section 48(2) of the CGST Act]

Earlier,
as per section 48(2) of the CGST Act, 2017, a registered person could authorise a Goods and Services Tax Practitioner (GSTP) to furnish its details of outward supplies, inward supplies and returns.

Now,
The CGST (Amendment) Act, 2018 has amended section 48(2) to provide as under:

“A registered person may authorise an approved goods and services tax practitioner to furnish the details of outward supplies under section 37, the details of inward supplies under section 38 and the return under section 39 or section 44 or section 45 and to perform such other functions in such manner as may be prescribed.”


2. Notification No. 03/2019 CT dated 29.01.2019 - Books of accounts of Central/State Government or local authority which are subject to audit by CAG or an auditor appointed for auditing the accounts of local authorities are not subject to audit by a Chartered Accountant/Cost Accountant [Rule 80(3) of the CGST Rules, 2017]

Earlier,
Rule 80(3) of CGST Rules, 2017 provided that every registered person whose aggregate turnover during a financial year exceeds Rs. 2 crore shall get his accounts audited by a Chartered accountant or a Cost Accountant and furnish a copy of audited annual accounts and a duly certified reconciliation Statement along with the Annual Return.

Now,
The said sub-rule has been amended to exempt the department of the Central/State Government or a local authority, whose books of account are subject to audit by the Comptroller and Auditor-General of India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force, from the requirement of getting its accounts audited and furnishing the copy of audited annual accounts and a duly certified reconciliation Statement along with the Annual Return.

The said amendment has become effective from 01.02.2019.


3. Notification No. 03/2019 CT dated 29.01.2019 - Time period available to a sales tax practitioner/ tax return preparer enrolled as a GSTP to pass the examination conducted by NACIN increased from 18 months to 30 months

Earlier,
As per rule 83(3) of the CGST Rules, 2017, any person who has been enrolled as GSTP by virtue of being enrolled as a Sales Tax Practitioner or Tax Return Preparer under the earlier indirect tax laws could remain enrolled as a GSTP only for a period of 18 months from the appointed date unless he passed the examination conducted by NACIN (National Academy of Customs, Indirect Taxes and Narcotics) within the said period of 18 months.

Now,
With effect from 01.02.2019, the said sub-rule has been amended to provide that a sales tax practitioner and a tax return preparer shall be eligible to remain enrolled as GSTP only if he passes the said examination within 30 months from the appointed date.


4. Notification No. 03/2019 CT dated 29.01.2019 - Scope of activities that can be undertaken by a GSTP enhanced

Earlier,
As per rule 83(8) of the CGST Rules, 2017, a GSTP could undertake any or all of the following activities on behalf of a registered person, if so authorised by him to -

  1. furnish the details of outward and inward supplies;
  2. furnish monthly, quarterly, annual or final return;
  3. make deposit for credit into the electronic cash ledger;
  4. file a claim for refund; and
  5. file an application for amendment or cancellation of registration.

Now,
Under the amended position, apart from the above-mentioned activities, a GSTP could also undertake the following activities on behalf of the registered person:

  1. furnish information for generation of e-way bill;
  2. furnish details of challan in the prescribed form;
  3. file an application for amendment or cancellation of enrolment under rule 58; and
  4. file an intimation to pay tax under the composition scheme or withdraw from the said scheme.

The said amendment has become effective from 01.02.2019.


5. Notification No. 21/2019 CT dated 23.04.2019, Notification No. 20/2019 CT dated 23.04.2019 - Composition taxpayers and tax payers paying tax under Notification No. 2/2019 CT dated 01.03.2019 to file return annually and make payment quarterly

A special procedure for furnishing of return and payment of tax has been prescribed for the following persons:

  1. registered persons paying composition tax
  2. registered person paying tax by availing the benefit of Notification No. 02/2019 CT (R) dated 07.03.2019.

Such persons will:

  1. furnish a statement in the prescribed form containing details of payment of selfassessed tax, for every quarter (or part of the quarter), by 18th day of the month succeeding such quarter.
  2. furnish a return (GSTR 4) for every financial year (or part of the financial year), on or before 30th day of April following the end of such financial year.

The registered persons paying tax by availing the benefit of Notification No. 02/2019 CT (R) dated 07.03.2019 will be deemed to have complied with the provisions of section 37 and section 39 of the CGST Act, 2017 if they have furnished the prescribed statement and GSTR 4 as mentioned above.

In view of the above-mentioned special procedure, rule 62 of CGST Rules, 2017 which prescribed the provisions for quarterly return by the composition supplier has also been amended. The amended rule 62 whose heading has been changed to “Form and manner of submission of statement and return” provides as under:

  1. Every registered person paying tax under section 10 or paying tax by availing the benefit of Notification No. 02/2019 CT (R) dated 07.03.2019 shall electronically furnish –
    1. a statement in the prescribed form containing details of payment of self-assessed tax, for every quarter (or part of the quarter), by 18th day of the month succeeding such quarter; and
    2. a return (GSTR 4) for every financial year (or part of the financial year), on or before 30th day of April following the end of such financial year.
  2. Every registered person furnishing the statement under sub-rule (1) shall discharge his liability towards tax or interest payable by debiting the electronic cash ledger.
  3. The return furnished under sub-rule (1) shall include the- (a) invoice wise inter-State and intra-State inward supplies received from registered and un-registered persons; and (b) consolidated details of outward supplies made.
  4. A registered person who has opted to pay tax under section 10 or by availing the benefit of Notification No. 02/2019 CT (R) dated 07.03.2019 from the beginning of a financial year shall, where required, furnish the details of outward and inward supplies and return under rules 59, 60 and 61 relating to the period during which the person was liable to furnish such details and returns till the due date of furnishing the return for the month of September of the succeeding financial year or furnishing of annual return of the preceding financial year, whichever is earlier.

    Here, the person shall not be eligible to avail ITC on receipt of invoices or debit notes from the supplier for the period prior to his opting for the composition scheme or paying tax by availing the benefit of Notification No. 02/2019 CT (R) dated 07.03.2019.

  5. A registered person opting to withdraw from the composition scheme at his own motion or where option is withdrawn at the instance of the proper officer shall, where required, furnish a statement in the prescribed form for the period for which he has paid tax under the composition scheme till the 18th day of the month succeeding the quarter in which the date of withdrawal falls and furnish GSTR 4 for the said period till the 30th day of April following the end of the financial year during which such withdrawal falls.
  6. A registered person who ceases to avail the benefit of Notification No. 02/2019 CT (R) dated 7.03.2019, shall, where required, furnish a statement in the prescribed form for the period for which he has paid tax by availing the benefit under the said notification till the 18th day of the month succeeding the quarter in which the date of cessation takes place and furnish GSTR 4 for the said period till the 30th day of April following the end of the financial year during which such cessation happens.