Article discusses  Whether recovery from employees amounts to supply,  Whether GST applicable on delayed payment charges collected on exempt supplies, Whether RCM liability under service tax on freight charges, Can Form GST TRAN-1 would be amended/rectified and Whether offline Form GST TRAN-1 can be accepted.

1. Whether recovery from employees amounts to supply?

In the ruling given by AAR Maharashtra, in the case of Jotun India (P) Ltd., assessee, is manufacturer of paints, introduced Parental Health Insurance Scheme for employees’ parents, as per scheme it initially pays entire premium to insurance company and thereafter recovers 50 percent of premium amount from employees and balance 50 percent is borne by assessee. Assessee sought ruling on recover of premium amount from employees amounts to supply of service.

Discussion & Ruling:

Assessee is not engaged in the business of providing insurance coverage, activity done cannot be treated as an activity in the course of business or in furtherance of business. Recovery of 50 percent of premium from employees does not amount to supply of service under section 7 of the CGST Act.

There was contrary ruling  given by Kerala AAR In re: Caltech Ploymers Pvt. Ltd., which had ignored the provisions of the GST Act and passed the ruling “….recovery of food expenses from employees for the canteen service provided by the company is outward supplies and are taxable under canteen service…”.

2. Whether GST applicable on delayed payment charges collected on exempt supplies?


Assessee is, a stock broker, engaged in the business of purchasing and selling of shares on behalf of clients on Stock Exchange, the client makes delay in payment paid for purchase of securities from the stock exchange (i.e.Trading day +1 day for payment as per SEBI regulations/norms), thereby, assessee sought ruling of liability to pay GST on the delayed payment charges.


In the case of SPFL Securities Ltd. (AAR- Uttar Pradesh), has given ruling stating that assessee business was of buying and selling of securities, which were exempt under GST as per Section 2(52) and 2(102) of CGST Act, 2017, thereby, ruled that assessee was not liable to pay GST on delayed payment charges collected from clients, as the same was exempted. 

3. Whether RCM liability under service tax on freight charges?


Assessee supplying goods to dealers for a price inclusive of freight charges, which was reimbursed by assessee, dept. has served notice alleging that service tax was not paid on the freight.


Freight charges paid by dealer and reimbursing freight amount to dealer on sale of goods would be liable for payment of service tax.

[Refer: Nirmal Seeds (P) Ltd. Vs. CCE  ([2019] 110 123(SC) / [2019] 76 GST 480 (SC))] 

4. Can Form GST TRAN-1 would be amended/rectified?


Assessee had opening stock and reported stock details in Form GST TRAN-1 but the same was not reflected in column-4 of Form GST TRAN-2 for the reason that assessee reported under column 7(d) instead of 7(b) of Form GST TRAN-1. Hence, assessee submitted representations and requested GST Authorities to rectify the said error but the same has been not considered.

Discussions & Decision:

Argument of the revenue that a Nodal Officer was appointed for redressal of grievances, accordingly, assesse should approach the said Officer. Hon’ble high court held that assessee to approach respective Nodal Officer with representations, on receipt of the said request Nodal Officer shall consider on merits.

[Refer: Calcutta Canvas Co. Vs. Union of India (Madras High Court)]

5. Whether offline Form GST TRAN-1 can be accepted?


For non-filers of Form GST TRAN-1 due of technical difficulties due date has been extended upto 31.12.2019 by insertion of sub-rule 1A to Rule 117 of the CGST Rules, 2017, accordingly assessee approached HC requesting for directions to accept offline Form GST TRAN-1.


Direction to the respondent to permit the petitioner to submit offline GST TRAN-1 form, if the petitioner’s assertion is found correct and met/satisfied all the conditions stated in the amended sub-rule 1A of Rule 117 such as –

i. the assesses failed to upload his GST TRAN-1 form on account of technical glitches on the common portal;

ii. such attempt was made during the currency of transitional period i.e.,22-12-2017; and

iii. the GST council has made a recommendation for such extension, being satisfied about such failure.

 [Refer: Jodhpur Truck Pvt. Ltd. Vs UOI  (Rajasthan High Court)]

Disclaimer: This is purely for educational purpose, take the professional advise before taking any decision, etc. based on this.

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January 2021