GST REGULATORY UPDATES OCTOBER 2021

GST REGULATORY UPDATES

NOTIFICATION NO. 45/2021, DATED 29-09-2021

No Customs Duty on import of COVID-19 vaccine till 31st December, 2021.

Editorial Note: The Government has issued notification to exempt Customs Duty on import of COVID-19 vaccine till 31st December, 2021. This notification shall come into force on 1st October, 2021.

PUBLIC NOTICE NO. 25/2015-2020, DATED 28-09-2021

Constitution of Group of Ministers for Rate Rationalization and GST System Reforms: Office Memorandum

Editorial Note: The GST Council has decided in its 45th meeting that Group of Ministers (GoMs) would be formed for rates rationalization and GST system reforms separately. Accordingly, GoMs have been constituted and shall give recommendations to the Council.

NOTIFICATION NO. 33/2015-2020, DATED 28-9-2021

Government extended the existing FTP 2015-20 for further 6 Months

Editorial Note: The existing Foreign Trade Policy which is valid up to September 30, 2021 is extended by the Government for further 6 months up to March 31, 2022.

NOTIFICATION NO. 75/2021, DATED 23-09-2021

CBIC notifies Electronic Duty Credit Ledger Regulations, 2021

Editorial Note: CBIC has notified Electronic Duty Credit Ledger Regulations, 2021 for providing credit under RoDTEP and RoSCTL scheme. Any shipping bill or bill of export, presented on or after the 1st January, 2021 and having a claim of duty credit under these Scheme,

shall be processed in the customs automated system.

NOTIFICATION NO. 28/2015-2020, DATED 23-09-2021

Extension in Export Obligation period of Advance and EPCG Authorization till 31st December, 2021 

Editorial Note: The extension has been provided in Export Obligation period expiring between 1st August, 2020 and 31st July, 2021 of Advance and EPCG Authorization till 31st December, 2021. In this regard, notification has been issued.

NOTIFICATION NO. 76/2021, DATED 23-09-2021

CBIC notifies the manner to issue duty credit for goods exported under RoDTEP Scheme

Editorial Note: CBIC has issued notification to provide the manner to issue duty credit for goods exported under the Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP).

CIRCULAR NO. 02/2021-21, DATED 22-09-2021

CBIC issues instructions for issuing SCNs by officers in time bound manner

Editorial Note: The CBIC has issued instructions for issuing show cause notices (SCNs) by GST officers under section 73 or 74 in time bound manner.

CIRCULAR NO. 159/15/2021-GST, DATED 20-09-2021

CBIC issues clarification in respect of certain GST related issues on recommendation of GST Council

Editorial Note: CBIC has issued three circulars to provide clarification on certain issues. First circular provides clarification on scope of Intermediary and its services. Second circular provides clarification on amendment brought by Finance Act, 2020, to delink the date of issuance of debit note from the date of issuance of the underlying invoice for availing ITC. Third circular clarifies a company incorporated in India and a body corporate incorporated under foreign laws are separate persons.

TRADE NOTICE NO. 18/2021-2022, DATED 20-09-2021

De-Activation of IECs not updated on the DGFT

Editorial Note: The DGFT has issued notice to provide that IECs which are not yet updated shall be de-activated with effect from 06.10.2021.

45TH GST COUNCIL MEETING –IMPORTANT RECOMMENDATIONS

The changes and clarifications recommended shall be given effect through issuance of respective notifications and circulars. A Summary for quick reference is as below:

1. Extension of existing concessional GST rates (currently valid till 30 September, 2021) on following COVID-19 treatment drugs, up to 31 December, 2021, namely:
2. Amphotericin B –nil
3. Remdesivir – 5%

iii. Tocilizumab –nil

1. Anti-coagulants like Heparin – 5%

Further, reduction of GST rate to 5% on more COVID-19 treatment drugs, up to 31 December, 2021, namely:

1. Itolizumab
2. Posaconazole

iii. Infliximab

1. Favipiravir
2. Casirivimab & Imdevimab
3. 2-Deoxy-D-Glucose

vii. Bamlanivimab & Etesevimab

2. IGST on import of following medicines reduced from 12% to NIL, namely:
3. Zolgensma for Spinal Muscular Atrophy
4. Viltepso for Duchenne Muscular Dystrophy

iii. Other medicines used in treatment of muscular atrophy recommended by Ministry of Health and Family Welfare and Department of pharmaceuticals.

3. GST Rate on following goods to be increased. The increase in GST rate will help mines and industries to adjust their ITC accumulated due to inverted duty structure, which was otherwise not eligible for refund.
4. Ores and concentrates of metals such as iron, copper, aluminum, zinc and few others increased from 5% to 18%
5. Specified Renewable Energy Devices and parts from 5% to 12%
6. Cartons, boxes, bags, packing containers of paper etc. from 12/18% to 18%
7. Waste and scrap of polyurethanes and other plastics from 5% to 18%
8. All kinds of pens from 12/18% to 18%
9. Railway parts, locomotives & other goods in Chapter 86 from 12% to 18%
10. Miscellaneous goods of paper like cards, catalogue and printed material (Chapter 49 of tariff) from 12% to 18%
11. GST rate reduced to 5% on Retro fitment kits for vehicles used by the disabled, Fortified Rice Kernels for schemes like ICDS etc., Medicine Keytruda for treatment of cancer and Biodiesel supplied to OMCs for blending with Diesel.
12. MENTHA OIL – Supply of mentha oil from unregistered person has been brought under reverse charge. Further, Council has also recommended that exports of Mentha oil should be allowed only against LUT and consequential refund of input tax credit. Hence export of menthe oil with payment of IGST and getting refund of the same will not be allowed.
13. BRICK KILNS would be brought under special composition scheme with threshold limit of Rs. 20 lakhs, with effect from 1.4.2022. Bricks would attract GST at the rate of 6% without ITC under the scheme. GST rate of 12% with ITC would otherwise apply to bricks.
14. Various state transport authorities are charging GST on transport vehicles given on hire to transport operators. This GST leads to increase in their cost of service as the output service is exempted. GST Council has now clarified that the renting of vehicle by State Transport Undertakings and Local Authorities is covered by expression ‘giving on hire’ for the purposes of GST exemption
15. There has been long confusion in GST rate on Royalty paid on mining rights for the period 01.07.2017 to 31.12.2018. The confusion has been due to various contrary advance rulings. However it is now clarified that the services by way of grant of mineral exploration and mining rights attracted GST rate of 18% e.f. 01.07.2017.
16. Admission to amusement parks having rides etc. attracts GST rate of 18%. The GST rate of 28% applies only to admission to such facilities that have casinos etc.
17. Now Unutilized balance in CGST and IGST cash ledger may be allowed to be transferred between distinct persons (entities having same PAN but registered in different states), without going through the refund procedure.
18. The GST council had already clarified in its earlier meeting that Interest u/s 50 shall be charged only on delayed payment of tax from cash ledger. There has been continuous effort from the department to demand interest at 24% on all kinds of ITC reversals, even if it is ITC availed and not utilized, causing undue hardship on assesses.

However the GST council has now clarified that section 50(3) of the CGST Act to be amended retrospectively, w.e.f. 01.07.2017, to provide that interest is to be paid by a taxpayer on “ineligible ITC availed and utilized” and not on “ineligible ITC availed”. It has also been decided that interest in such cases should be charged on ineligible ITC availed and utilized at 18% w.e.f. 01.07.2017.

12. E-invoice – There is no need to carry the physical copy of tax invoice in cases where invoice has been generated from e-invoice portal having IRN;

    13. As per the provision of section 54(3) of GST law, no refund of unutilized ITC shall be allowed in cases where the goods exported out of India are subjected to export duty. There has been a dispute from department that goods attracting NIL rate of duty is also a rate of duty as per the judgment of Hon’ble Supreme Court and therefore goods attracting NIL rate shall also be considered as goods subject to export duty, hence refund not allowed.

The issue is now clarified that only those goods which are actually subjected to export duty i.e., on which some export duty has to be paid at the time of export, will be covered under the restriction imposed under section 54(3) of CGST Act, 2017 from availment of refund of accumulated ITC.

14. GST law shall be amended to restrict registered person from filing of FORM GSTR-1, if he has not furnished the return in FORM GSTR-3B for the preceding month. Currently the condition is on non-filing of FORM GSTR-3B for the preceding two months.

NOTIFICATION NO. 42/2021-CUSTOMS, DATED 10-09-2021

Basic Customs Duty on Crude Palm Oil, Crude Soyabean oil and Crude Sunflower Oil reduced to 2.5%

Editorial Note: In order to reduce edible oil prices, the CBIC has issued notification to reduce the basic customs duty on Crude Palm Oil, Crude Soyabean oil and Crude Sunflower Oil to 2.5%.

CIRCULAR NO. 158/14/2021-GST, DATED 06-09-2021

CBIC issued clarification regarding extension of time limit to apply for revocation of cancellation of registration

Editorial Note: CBIC has issued a circular to clarify the issues relating to the extension of timelines for application for revocation of cancellation of registration. This circular also clarifies the cases where the due date of filing applications for revocation of registration can be extended further for the period of 60 days (30 + 30) by the Joint Commissioner/ Additional Commissioner/ Commissioner.

RECENT JUDICIAL RULINGS ON GST

CLASSIFICATION OF GOODS

Fruit bowl: Supply of sealed fruit bowl containing only cut fresh fruits without addition of any preservatives or additives, which are sold under brand name is covered under Entry No. 59 of Schedule I of Notification No. 1/2017 – Central Tax (Rate), dated 28-6-2017 vide Heading No. 1106 and is liable to tax at rate of 5 per cent GST – Juzi Fruits (P.) Ltd., In re – [2021] 130 taxmann.com 243 (AAR – KARNATAKA)

CLASSIFICATION OF SERVICES

Pure labour services: Where applicant-Institute which is set up by Central and State Government to cater needs of manpower in technology for country has been receiving funds from Central Government, which substantiates requirement of more than 90 per cent financial participation from Central or State Government, applicant is a Government Entity under GST law – National Institute of Technology, In re – [2021] 130 taxmann.com 244 (AAR – TAMILNADU)

SECTION 2(74) OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 – SUPPLY

Mixed supply: Where applicant is engaged in process of buying, processing and selling of various varieties of cut fresh/dry fruits and nuts ready for human consumption under specified brand name both directly to customers and other vendors, fruit bowl containing both cut fresh fruits and dry fruits & nuts are forming single contract for supply of both goods and if supplied for a single price would be covered under mixed supply – Juzi Fruits (P.) Ltd., In re – [2021] 130 taxmann.com 243 (AAR – KARNATAKA)

SECTION 9 OF THE CENTRAL GOODS AND SERVICES TAX

ACT, 2017 – LEVY AND COLLECTION OF TAX

Where applicant-Government entity is receiving security services from body corporate, it is not liable to pay tax under reverse charge mechanism (RCM), however, it is liable to pay tax under RCM on legal services received by it – National Institute of Technology, In re – [2021] 130 taxmann.com 244 (AAR – TAMILNADU)

SECTION 17 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 – INPUT TAX CREDIT

Credit and blocked credit, apportionment of : Where applicant is engaged in process of buying, processing and selling of various varieties of cut fresh/dry fruits and nuts ready for human consumption under specific brand name both directly to customers and other vendors, applicant is eligible for input tax credit on tax paid on inward supplies of inputs and input services involved in supply, which is taxable – Juzi Fruits (P.) Ltd., In re – [2021] 130 taxmann.com 243 (AAR – KARNATAKA)

SECTION 51 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 – TAX DEDUCTION AT SOURCE

Where applicant is a body set up by Act of Parliament with more than 51 per cent participation by way of funding, applicant is liable to deduct TDS from its suppliers under section 51 – National Institute of Technology, In re – [2021] 130 taxmann.com 244 (AAR – TAMILNADU)

SECTION 140 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 – TRANSITIONAL PROVISIONS – INPUT TAX CREDIT

 Transitional arrangement for: Where petitioners filed writ petition seeking direction to respondent authorities to allow petitioners to submit/revise/re-revise electronically, their respective declarations on Form GST TRAN-1 and GST TRAN-2, under provisions of GST Act to carry forward Cenvat and VAT input tax credit, under CGST Act, 2017 and UP GST Act, 2017, it was held that petitioners/’registered persons’ were unreasonably obstructed on account of technical glitches and errors on GST Portal during limited time they were required to submit/revise electronically, Form GST TRAN-1/TRAN-2 electronically and, therefore, a reasonable opportunity ought to have been granted to all ‘registered persons’/taxpayers to submit/revise/ re-revise electronically their Form GST TRAN-1/TRAN-2 – Ratek Pheon Friction Technologies Pvt. Ltd. v. Principal Commissioner – [2021] 130 taxmann.com 367 (Allahabad)