Article compiles Central Tax (Rate) Notifications (June 2021), Central Tax Notification (June 2021), Latest and Important Case laws and Monthly Compliance Calendar- July 2021.
1. Latest updates by way of Notifications issued
[Change in Rate of Tax of Diethylcarbamazine from 12% to 5%]
In the said notification, the GST rate of Diethylcarbamazine has been reduced to 5% (CGST 2.5% and SGST 2.5%) from earlier 12% (6% CGST and 6% SGST) by inserting serial number ‘231 – Diethylcarbamazine’ in the List-I after Schedule-I.
Also, in the said notification, entry ‘9503’ has been substituted in place of ‘4016’ earlier which stands for ‘Toy balloons made of natural rubber latex.
[Amendment in Notification No. 11/2017- CT(R) in regard to change in rate of tax of maintenance or repair of Ships]
In the said notification, in Sl. No.25, after item no. (ia), in column 3, 4 & 5, following shall be inserted,
|“(ib) Maintenance, repair or overhaul services in respect of ships and other vessels, their engines and other components or parts.||2.5%||“-“|
Further, one condition inserted in Sl. No. 3(i), detailed as under:
(iii) the landowner-promoter shall be eligible to utilise the credit of tax charged to him by the developer-promoter for payment of tax on apartments supplied by the landowner-promoter in such project”.
Our Views: A very welcome move by the government. Earlier, there were some doubts whether landowner-developer avail the credit or not. Now this notification cleared the doubt regarding availment of credit by the Landowner-promoter.
[Substitution / amendment in Notification No. 06/2019 dated 29.03.2019]
In this notification, in the first paragraph, following shall be substituted –
for the words “in whose case the liability to”, the words “who shall” be substituted;
for the words “shall arise on the date of issuance of completion certificate for the project, where required, by the competent authority or on its first occupation, whichever is earlier”, the words “in a tax period not later than the tax period in which the date of issuance of the completion certificate for the project, where required, by the competent authority, or the date of its first occupation, whichever is earlier, falls” shall be substituted.
[Change in rate of tax in composite supply of works contract of a structure meant for funeral, burial or crematorium]
In this notification, the Central Government, has reduced the rate of tax on composite supply of works contract by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, ‘a structure meant for funeral, burial or cremation of deceased’ from 12% [6% CGST and 6% SGST] to 5% [2.5% CGST and 2.5% SGST] during the period beginning from the 14th June 2021 and ending with 30th September 2021.
Our Views: Rate cut is necessary for these types of services in the pandemic. However, the rate cut wither may be reduced to 0% or the time-limit should be more than what has been prescribed in the said notification. Further, retrospective amendment should be made for this rate cut from the beginning of the COVID-19.
[Reduced GST Rates on various items related to used in or in relation to precaution and treatment of COVID-19]
The said notification exempts/ reduced the tax rates on various goods related to use in COVID-19 or other fungal / bacterial / viral infections, which are as under:
|Sl. No.||Chapter, Heading, Sub-heading or Tariff item||Particulars||Rate|
|3||2804||Medical Grade Oxygen||5%|
|6||3002 or 3082||Covid-19 testing kits||5%|
|7||3002 or 3822||Inflammatory Diagnostic (marker) kits, namely- IL6, DDimer, CRP (C-Reactive Protein), LDH (Lactate De-Hydrogenase), Ferritin, Pro Calcitonin (PCT) and blood gas reagents.||5%|
|9||6506 99 00||Helmets for use with non-invasive ventilation||5%|
|10||8417 or 8514||Gas/Electric/other furnaces for crematorium||5%|
|11||9018 19 or 9804||Pulse Oximeter||5%|
|12||9018||High flow nasal canula device||5%|
|13||9019 20 or 9804||Oxygen Concentrator/ generator||5%|
|14||9018 or 9019||Ventilators||5%|
|16||9019||(i) Non-invasive ventilation nasal or oronasal masks for ICU ventilators
(ii) Canula for use with ventilators
|17||9025||Temperature check equipment||5%|
|18||8702 or 8703||Ambulance||12%|
Note: Notification No. for the state tax may be different with respect to the central tax. All the tax rates include Central and State tax both equally.
[Waiver of penalty for not using Dynamic QR Code in B to C invoices till 30th September 2021]
In this notification, the Central Government, has waived the penalty for non-compliance of using Dynamic QR Code in B to C invoices issued for such registered persons whose aggregate turnover in a financial year exceeds five hundred crores rupees between the period from 1st day of December 2020 to the 30th day of September, 2021.
2. Recent case laws
Facts of the Case:
The petitioners are engaged in the manufacture of MS Billets and Ingots. MS Scrap is an input in the manufacture of MS Billets and the latter, in turn, constitutes an input for manufacture of TMT / CTD Bars. There is a loss of a small portion of the inputs, inherent to the manufacturing process. The impugned orders seek to reverse a portion of the ITC claimed by the petitioners, proportionate to the loss of the input, referring to the provisions of Section 17(5)(h) of the GST Act.
Observations of the Court:
The impugned assessment orders reject a portion of ITC claimed, invoking the provisions of clause (h) which relates to goods lost, stolen, destroyed, written off or disposed by way of gift or free samples. In my considered view, the loss is occasioned by the process of manufacture cannot be equated to any of the instances set out in clause (h) above.
The situations as set out in clause (h) indicate loss of inputs that are quantifiable, and involve external factors or compulsions. A loss that is occasioned by consumption in the process of manufacture is one which is inherent to the process of manufacture itself.
In the case of ‘Rupa & Co. Ltd. V. CESTAT, Chennai [2015 (324) ELT 295], a Division bench of this court decided a question of law in regard to the entitlement to Cenvat credit involving the measure of inputs used in the manufacturing process, in terms of the provisions of Section 9A and 2(g) of the CENVAT Credit Rules, 2002.
In that case, a certain amount of input had been utilised by the assessee, whereas the input in the finished product was marginally less. The department proceeded to reverse the cenvat credit on the difference between the original quantity of input and the input in the finished product.
The Bench, noticing at Paragraph 13 that some amount of consumption of the input was inevitable in the manufacturing process, held that cenvat credit should be granted on the original amount of input used notwithstanding that the entire amount of input would not figure in the finished product.
Hence, it was held that the reversal of ITC involving Section 17(5)(h) by the revenue, in cases of loss by consumption of input which is inherent to manufacturing loss is misconceived, as such loss is not contemplated or covered by the situations adumbrated under Section 17(5)(h) of the GST Act.
A very welcome decision by the Hon’ble High Court of Chennai. It is quite clear now that those losses which are incurred due to manufacturing process, ITC can’t be denied on the same. These judgements have opened the eyes of the professionals as well as taxpayers that the provisions of the Act to be understood and interpreted in a very simple yet different way.
Facts of the Case:
The notice was served on the appellant wherein an Input Tax Credit as claimed by the petitioner was Rs. 95464.59 lakhs and in GSTR-2A, ITC was of Rs. 86606.67 lakhs, which if the seller declares. The notice asked for the payment of difference of Rs. 8857.91 lakhs which has been claimed by the petitioner along with interest.
It was submitted by the petitioner that as per press release of GST Council dated 04.05.2018, there shall not be automatic reversal of Input Tax Credit of buyer or on non-payment of tax by the seller. It is submitted that in case the seller has not paid the taxes, recovery has to be made from the seller. Further, it is stated that for the recovery of like nature from the buyer, the action can only be available in the exceptional circumstances. The petitioner relied upon the preposition as laid down by the Madras High Court in the case of “M/s. D. Y. Beathel Enterprises Vs. State Tax Officer [W.P. (MD) No. 2127 of 2021]” and would submit that in case, it has been held if the default is made by non-payment of tax by the seller, the recovery shall be made from the seller and only in exceptional circumstances, it can be from the recipient. Therefore, the input tax credit which was claimed by the petitioner cannot be denied for the reason that the seller has not uploaded their invoices on time.
It was directed that on petitioner’s depositing 5% amount of Rs. 14,93,79,211/-demanded vide the order issued, no coercive action / steps shall be taken pursuant to the said order.
It is quite evident from the above judgement that in case where payment of tax has not been made by the seller, recovery proceedings to be made from the seller only. It may be collected from the recipient only in the exceptional circumstances. Hence, in our view, even if there is a difference between GSTR-2A and ITC as per the books, ITC should be taken and availed in return as per books since for the default of the seller, ITC cannot be denied to the buyer which also defeats the very purpose of GST i.e. seamless flow of credit.
3. Monthly Compliance Calendar- July 2021
|GSTR-7 (TDS Deductor) for the month of June 2021||10.07.2021|
|GSTR-8 (TCS Collector) for the month of June 2021||10.07.2021|
|GSTR-1 (Other than QRMP) for June 2021||11.07.2021|
|GSTR-1 (Who opted for QRMP) for April to June 2021||13.07.2021|
|GSTR-6 by Input Service Distributors for the month of June 2021||13.07.2021|
|CMP-08 for April to June 2021||18.07.2021|
|GSTR-3B (Other than QRMP) for June 2021||20.07.2021|
|GSTR-5A (OIDAR Service provider) for the month of June 2021||20.07.2021|
|GSTR-5 (Non-Resident Taxable Person) for the month of June 2021||20.07.2021|
|GSTR-3B (Who Opted QRMP) for April to June 2021 for State Category-I||22.07.2021|
|GSTR-3B (Who Opted QRMP) for April to June 2021 for State Category-II||24.07.2021|
|GSTR-4 for F.Y 2020-21 (Composition taxpayers)||31.07.2021|
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