The Government has issued a flurry of circulars on 17.06.2017 covering various subjects. Basing on the recommendations of the GST council the below listed Seven Circulars all dated 17.06.2021 were issued. The gist of the circulars is tabulated in the below given table for easy reference and to have the information at a glance.
|Circular No. & Date||Subject||
Gist of Circulars
|1||155/11/2021-GST dated 17.06.2021||GST rate on laterals/parts of Sprinklers or Drip Irrigation System at 12% (6%+6%)||The intention of entry at Sl. No. 195B of Notification No. 1/2017- Central Tax (Rate) has been to cover laterals (pipes to be used solely with sprinklers/drip irrigation system) and such parts that are suitable for use solely or principally with ‘sprinklers or drip irrigation system’, as classifiable under heading 8424 as per Note 2 (b) to Section XVI to the HSN.
Hence, laterals/parts to be used solely or principally with sprinklers or drip irrigation system, which is classifiable under heading 8424, would attract a GST of 12%, even if supplied separately. However, any part of general use, which gets classified in a heading other than 8424, in terms of Section Note and Chapter Notes to HSN, shall attract GST as applicable to the respective heading.
|2||154/10/2021-GST dated 17.06.2021||Standing of guarantee for loans by Central or State Government for their undertaking or PSU is specifically exempt.||Entry No. 34A of Notification no. 12/2017-Central Tax (Rate) dated June 28, 2017 exempts “Services supplied by Central Government, 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.”
Accordingly, it is re-iterated that guaranteeing of loans by Central or State Government for their undertaking or PSU is specifically exempt under Entry No. 34A of Notification no. 12/2017-Central Tax (Rate) dated June 28, 2017.
|3||153/09/2021-GST dated 17.06.2021||GST on Composite supply of service by way of milling of wheat into flour along with fortification, or paddy into rice for distribution by State Governments under PDS is eligible for exemption subject value addition condition.||Entry at Sl. No. 3A of Notification no. 12/2017-Central Tax (Rate) dated June 28, 2017 exempts “composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent of the value of the said composite supply provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution”.
In case the value of goods supply in such a composite supply exceeds 25%, then for supply of service by way of milling of wheat into flour or of paddy into rice, is not eligible for exemption under Sl. No. 3 A of Notification no. 12/2017-Central Tax (Rate) dated June 28, 2017 . The applicable GST rate would be 5% if such composite supply is provided to a registered person, being a job work service (entry No. 26 of notification No. 11/2017- Central Tax (Rate) dated June 28, 2017).
|4||152/08/2021 GST dated 17.06.2021||Clarification regarding GST rate on construction services provided to a Government Entity w.r.t. construction of a Ropeway on turnkey basis||The entry No 3 (vi) of notification No. 11/2017- Central Tax (Rate) dated June 28, 2017). does not apply to any works contract that is meant for the purposes of commerce, industry, business of profession, even if such service is provided to the Central Government, State Government, Union Territory, a local authority a Governmental Authority or a Government Entity. The doubt seems to have arisen in the instant cases as Explanation to the said entry states, the term ‘business’ shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities.
It is clarified that while road, bridge, terminal, or railways are covered by entry No. 3(iv) and 3(v) of said notification, structures like ropeway are not covered by these entries and therefore service provided by way of construction of rope way shall fall under entry at Sl. No. 3(xii) of notification No. 11/2017- Central Tax (Rate) dated June 28, 2017)-(CTR) attracting 18% rate.
|5||151/08/2021GST dated 17.06.2021||Clarification regarding GST rate applicable on supply of various services by Central and State Board (such as National Board of Examination)||It is clarified that
(i) GST is exempt on services provided by Central or State Boards (including the boards such as NBE) by way of conduct of examination for the students, including conduct of entrance examination for admission to educational institution [under S. No. 66 (aa) of Notification no. 12/2017-Central Tax (Rate) dated June 28, 2017 ]. Therefore, GST shall not apply to any fee or any amount charged by such Boards for conduct of such examinations including entrance examinations.
(ii) GST is also exempt on input services relating to admission to, or conduct of examination, such as online testing service, result publication, printing of notification for examination, admit card and questions papers etc, when provided to such Boards [under S. No. 66 (b) (iv) of Notification no. 12/2017-Central Tax (Rate) dated June 28, 2017 ].
(iii) GST at the rate of 18% applies to other services provided by such Boards, namely of providing accreditation to an institution or to a professional (accreditation fee or registration fee such as fee for FMGE screening test) so as to authorise them to provide their respective services.
|6||150/08/2021GST dated 17.06.2021||Clarification regarding applicability of GST on the activity of construction of road where certain portion of consideration is received upfront and remaining payment received in deferred payment (annuity) spread over years||It is clarified that entry at Sl. No 23A of Notification no. 12/2017-Central Tax (Rate) dated June 28, 2017 is applicable to service by way of access to a road or a bridge on payment of annuity falling under SAC No. 9967. Whereas the Services by way of construction of road fall under SAC No.9954 and in the subject case consideration for construction of road service is (may be) paid partially upfront and partially in deferred annual payments (annuity).
The entry at Sl.No. 23A does not apply to services falling under heading 9954 as said entry specifically covers heading 9967 only. Therefore, plain reading of entry 23A makes it clear that it does not cover construction of road services (falling under heading 9954), even if deferred payment is made by way of instalments (annuities). Therefore, plain reading of entry 23A makes it clear that it does not cover construction of road services falling under heading 9954, even if deferred payment is made by way of instalments (annuities).
It is hereby clarified that Entry 23A of Notification no. 12/2017-Central Tax (Rate) dated June 28, 2017 does not exempt GST on the annuity (deferred payments) paid for construction of roads.
|5||149/08/2021GST dated 17.06.2021||Entry 66 clause (b)(ii) of Notification no. 12/2017-Central Tax (Rate) dated June 28, 2017 , exempts Services provided to an educational institution, by way of catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory. This entry applies to pre-school and schools.
The scope of this entry is thus wide enough to cover any serving of any food to a school, including pre-school. Further, an Anganwadi interalia provides pre-school non-formal education. Hence, anganwadi is covered by the definition of educational institution (as pre-school).
Accordingly it is clarified that services provided to an educational institution by way of serving of food ( catering including mid- day meals) is exempt from levy of GST irrespective of its funding from government grants or corporate donations [under said entry 66 (b)(ii)].