March - April 2018 High Lights

GST Council keeps RCM on hold till June -  Businesses under composition levy need not furnish related data

18th April 2018

GST Council has decided to keep the "reverse charge mechanism" (RCM) on hold till June. The RCM model of taxation is similar though not identical to TDS  applicable in direct taxes. In RCM purchases made from any unregistered business becomes taxable in the hands of the recipient. This measure is intended to ensure that GST applies universally on all transactions including those from fully exempted businesses. However this will not add to the tax burden in the value chain as the tax paid under RCM is also allowed as input tax credit to the recipient businesses.           

Consequent to the decision to keep the RCM on hold, the Finance Minstry in a statement on 17th April has clarified as under regarding the quarterly on return to be filed by businesses that have opted for composition scheme :

"Since auto-population of the details of the inward supplies, including supplies on which tax is to be paid on reverse charge is not taking place, taxpayers who have opted to pay tax under the composition levy shall not furnish the data in serial number 4A of Table 4 of Form GSTR-4 for the tax periods January, 2018 to March, 2018 and subsequent tax periods"                                         


Dissenting order by Supreme Court - "Parachute Oil" whether "coconut oil" or "Preparation for use in hair"


16th April 2018

The Hon’ble Supreme Court Judges presiding on the classification of “Parachute Oil” have dissented in their conclusion in a judgement dated 13th April, 2018. Consequently, the matter has been referred to the CJI for further decision and orders.                               

The product “Parachute Oil” is packed and marketed in unit containers of upto 2 Lt /500 ml. Two alternative classifications were being considered for the product - whether as “coconut oil” under Chapter Heading 1513 or as “Preparations for use in hair” under Chapter Heading 3305.  To download full judgement click : CCE Vs Madhan Agro Ind (I) Pvt. Ltd.


“Natural gas” purchase eligible for concessional CST rate under “C” Form even after GST

By a judgement passed on 28th March, 2018, the Hon'ble Punjab & Haryana High Court  in Carpo Power Limited Vs State of Haryana & Ors has held that  the Petitioners will continue to be eligible for concessional CST rate under "C" Forms even after the introduction of GST on all their purchases of "natural gas" from M/s BPCL & M/s IOL in Gujarat.  The Court accordingly directed the respondents' to issue `C’ Forms.


CBIC issues circular to intercept and inspect conveyances for e-way bills& recovery of taxes

14th April 2018

Procedure to intercept & inspect documents covering conveyances and goods. To detain, release and confiscate.

The Central Board of Indirect Tax & Customs (CBIC) issues Circular No. 41/15/2018-GST dated 13th April, 2018 to ensure uniformity in procedure relating to interception, inspection, detention, seizure, release, confiscation of goods and conveyances in transit under section 129 and 130 of the CGST Act read with rules 138 to 138D of the CGST Rules.

Procedure for recovery of taxes under legacy laws & for reversal of inadmissible credit

The CBITC set out the procedure through Circular No 42/16/2018-GST dated 13th April, 2018 for recovery of taxes under the legacy laws i.e. central excise, service tax or for the recovery of inadmissible cenvat credit or credit wrongly carried forward as transitional credit under sec 140 of the CGST Act, and interest, penalty etc. consequent to assessment, adjudication, appeal proceedings.


Bombay HC  - GST leviable on any "consideration" incl one-time premium on lease

13th April 2018

Bombay High Court in a recent judgement dated 28th March, 2018 ruled in favour of the Revenue and CIDCO saying that Goods & Services Tax (GST) is leviable on “any consideration” even if it is styled as “a  one-time premium” on lease of land. Builders Association & Ors Vs Union of India & Ors

The Court dwelt on section 7(1)(a) of the CGST Act which defines the expression “supply” the main ingredient determining GST liability. “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”. In addition to section 7(1)(a) the Court also referred to Schedule II of the CGST Act which lists the activities to be treated as “supply of goods or supply of services”.  In particular, item No 2 in the said Schedule II which relates to leasing of land or any building was referred to.  Reading these provisions harmoniously the High Court concluded :

“Once this law, in terms of the substantive provisions and the Schedule, treats the activity as supply of goods or supply of services, particularly in relation to land and building and includes a lease, then, the consideration therefor as a premium/one-time premium is a measure on which the tax is levied, assessed and recovered. We cannot then probe into the legislation any further.”


Advance Authority Rulings on GST issues - Kerala

11th April 2018

1. Rubber trees whether liable to GST :

The contract for "supply" requires the rubber trees to be severed before supply, it is movable and comes under the definition of 'goods'. " 'Goods' means every kind of movable propertv other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply." Authority for Advance Ruling - Kerala : Sri. N.C. Varghese, Thrissur : Order No. CT/3270/18-C3 dated 26th March, 2018

2. No GST liability on good procured and sold directly outside India without importing into India :

Sale of goods procured from China and supplied to USA directly will not be liable to GST. Also, no GST liability on goods stored in the warehouse in Netherlands and supplied to customer in & around Netherlands, procured from China as goods are not imported into India:  Synthite Industries Ltd : Order No. CT 12275/18-C3 dated 26th March, 2018

3. Recovery of food expenses from employees liable to GST :

Whether recovery of food expenses from employees for the canteen provided by company comes under the definition of outward supplies are taxable under GST Act? The Authority rules, yes such recoveries would amount to a taxable supply. Also, under service tax, such recoveries were specifically exempted. No such exemption exists under GST law : Caltech Polymers Order No. CT/531118-C3 dated 26th March, 2018


CBITC provides relief to exporters on LUT acceptance under GST

7th April, 2018

The Central Board of Indirect Taxes & Customs (CBITC) has issued a Circular No 40/14/2018-GST dated 6.4.2018 to remove difficulties faced by the officers in the field and exporters relating to exports.

Presumably due to an IT glitch, the LUTs submitted on-line in the common portal in FORM GST RFD-11 are not visible to jurisdictional Central Tax Officers and in a few States. CBITC has clarified by simultaneously modifying the earlier Circular No. 8/8/2017-GST dated 4th October, 2017.  LUTs submitted online in FORM GST RFD-11  “...shall be deemed to be accepted as soon as an acknowledgement for the same, bearing the Application Reference Number (ARN), is generated online.”

This relief will be available only to those exporters who are eligible to furnish a LUT instead of a Bond. So this will not apply to exporters who are supposed to execute a Bond


Govt sets up IT Grievance Redressal Mechanism for GST

4th April, 2018

To address difficulties faced by tax payers in complying with the GST regulations due to IT glitches, the Central Government has set up an IT grievance redressal mechanism through a circular No 39/13/2018 - GST dated 3rd April 2018.

This redressal mechanism is expected to deal with bonafide cases where attempts have been made by the taxpayer to either file the return or to amend the same but the attempts have failed due to IT glitches. The tax payer is expected to have collateral evidence to establish the bonafide attempts made to comply. This redressal mechanism will only cover common issues affecting a large cross section of tax payers. It is not intended to address local or individual issues such as non-availability of internet connectivity etc.

Applications made by tax payers with the evidences will be collated by the nodal officer and sent to the GSTN which will examine the issue and send it further to the IT Grievance Redressal Committee alongwith suggested solutions. for a decision.


Madras HC dismisses PIL petition to include petroleum products in GST

The Hon'ble Madras High Court dismissed on 15th March, 2018 in K.K.Ramesh Vs. Union of India & Ors a PIL  petition seeking the inclusion of petroleum products in GST. The petitioner argued that excluding petroleum  products from GST is detrimental to the common man as it increases price of petroleum products which in turn has a spiralling effect on price of essential commodities. So petrol and diesel prices should be brought into GST. This will truly refelect as "One Nation One Tax".

Madras HC observed that Courts cant direct the Government to include petroleum products in GST, Government policy cant be determined by a Court. As per Section 9(2) of the CGST Act, its the GST Council which has to recommend. Click to read the full text of the judgement


Govt makes GST concessions - Extends time limits

29th March, 2018

The Central Government has issued notifications dated 28th March, 2018 mainly extending time limits to file various returns under the GST rules by different classes of persons.  Not 20/2018-Central Tax extends the time to file refund of tax paid on inward supplies of goods and services. The details are very briefly explained below :

  • Not 17/2018 Central Tax : Persons with less than Rs 1.5 Cores shall furnish the details for the quarter Apr-Jun, 2018  of outward supply in FORM GSTR-1 by  the 31st day of July, 2018.

  • Not 18/2018 Central Tax : Persons with more than Rs 1.5 Crores turnover may file their monthly GSTR1 returns as per the last date indicated in the Table below :

Period Last Date
April 2018 31st May 2018
May 2018 10th June 2018
June 2018 10th July 2018
  • Not 19/2018 Central Tax  : This notification extends the time limit for GSTR6 returns to be filed by an Input Service Distributor for the months of July, 2017 to April, 2018, till the 31 st day of May, 2018.

  • Not 20/2018 Central Tax : This notification extends the period for filing returns. Now the claims can be filed  "before the expiry of eighteen months from the last date of the quarter in which such supply was received".