Get a comprehensive overview of the circulars issued by the Central Board of Indirect Taxes and Customs (CBIC) on 17th July 2023. These circulars, related to GST policy updates and recommendations from the recent GST Council Meeting, cover various crucial aspects. In this article, we provide an analysis and summary of each circular, offering insights that can benefit businesses and individuals.
Several Notifications and Circulars issued on 17th July 2023 by the CBIC (GST Policy wing) in context with the recommendation made by the GST Council Meeting on 11th of July 2023.
|Subject Matters||Summary of the Circular|
|Circular No. 192/04/2023-GST Dated 17.07.2023||Clarification on charging of interest under section 50(3) of the CGST Act, 2017, in cases of wrong availment of IGST credit and reversal thereof.||Under this Circular, it is clarified that
IGST credit has been wrongly availed and at the time of reversal ITC Balance in IGST Head has fallen below the amount of wrongly availed IGST, but having sufficient balance in CGST & SGST Head.
NO INTEREST LIABILITY U/s 50 (3) CGST Act if combined ITC balance (IGST+ CGST+SGST) in credit ledger has never fallen below the amount of such wrongly availed ITC during time period starting from such availment and up to such reversal.
Credit of Compensation Cess available in credit ledger cannot be taken into consideration
|Circular No. 193/05/2023-GST dated 17.07.2023||Clarification to deal with difference in Input Tax Credit (ITC) availed in FORM GSTR-3B as compared to that detailed in FORM GSTR-2A for the period 01.04.2019 to 31.12.2021.||This circular mainly deals with the Rule 36(4) of CGST Rules 2017 & its subsequent changes,
As rule 36(4) came from 09.10.2019 and provided that additional credit to the tune of 20%, 10% and 5%, as the case may be, during the period from 09.10.2019 to 31.12.2019, 01.01.2020 to 31.12.2020 and 01.01.2021 to 31.12.2021 respectively, subject to certain terms and conditions.
For 2017-18 & 2018-19, the guideline already provided by Circular No 183/15/2022-GST dated 27.12.22, which provide certain conditions & certain certification by the professionals (CA / CMA).
Now through this circular, it is clarified that the difference in ITC availed in GSTR-3B Vs GSTA-2A for period for 01.04.19 to 08.10.2019 (Before Rule 36(4) CGST Rules 17)- Circular No 183/15/2022-GST dated 27.12.22 will apply.
From 09.10.2019 to 31.12.2021 (after Rule 36(4) but before GSTR-2B)
ITC availed in FORM GSTR-3B in excess of that available in FORM GSTR-2A up to an amount of as per rule 36(4) from time to time (say 20%, 10% or 5%) can be only allowed subject to production of the requisite certificates.
From 01.01.2022 (After GSTR-2B)
No ITC shall be allowed from 01.01.2022 onwards in respect of a supply unless the same is reflected in FORM GSTR-2B.
These guidelines are clarificatory in nature and may be applied as per the actual facts and circumstances of each case and shall not be used in the interpretation of the provisions of law.
|Circular No. 194/06/2023-GST dated 17.07.2023||Clarification on TCS liability under Sec 52 of the CGST Act, 2017 in case of multiple E-commerce Operators in one transaction.||In case of multiple E-commerce Operators (ECOs) in one transaction, in the context of Open Network for Digital Commerce (ONDC), it is clarified that
· Where multiple ECOs are involved in a single transaction of supply of goods or services or both through ECO platform and where the supplier-side ECO himself is not the supplier of the said goods or services, the compliances under section 52 of CGST Act, including collection of TCS, is to be done by the supplier-side ECO, who finally releases the payment to the supplier.
· Where multiple ECOs are involved in a single transaction of supply of goods or services or both through ECO platform and the Supplier-side ECO is himself the supplier of the said supply, TCS is to be collected by the Buyer-side ECO while making payment to the supplier for the particular supply being made through it
|Circular No. 195/07/2023-GST dated 17.07.2023||Clarification on availability of ITC in respect of warranty replacement of parts
and repair services during warranty period.
|· Where the replacement of parts and/ or repair services to the customer during the warranty period, without separately charging any consideration, no further GST is chargeable during warranty period.
However, if any additional consideration is charged, then GST will be payable on such additional consideration.
· In such cases, these supplies cannot be considered as exempt supply and accordingly, who provides replacement of parts and/ or repair services to the customer during the warranty period, is not required to reverse the input tax credit in respect of the said replacement or services.
The above is also applicable for distributer also.
· Extended warranty at the time of original supply, then the consideration for such extended warranty becomes part of the value of the composite supply, the principal supply being the supply of goods, and GST would be payable accordingly. AND
· Agreement of extended warranty at any time after the original supply, then the same is a separate contract and GST would be payable by the provider depending on the nature of the contract
|Circular No. 196/08/2023-GST dated 17.07.2023||Clarification on taxability of shares held in a subsidiary company by the
|Activity of holding of shares of subsidiary company by the holding company cannot be treated as a supply of services by a holding company to the said subsidiary company and cannot be taxed under GST.|
|Circular No. 197/09/2023- GST||Clarification on refund related issues.||· Modification in earlier circular context with ITC Linked with FORM GSTR-2B 01.01.2022
Para 36 of Circular No. 125/44/2019-GST dated 18.11.2019, which was earlier modified vide Para 5 of Circular No. 135/05/2020-GST dated 31.03.2020, stands modified to this extent. Consequently, Circular No. 139/09/2020-GST dated 10.06.2020, which provides for restriction on refund of accumulated input tax credit on those invoices, the details of which are uploaded by the supplier in FORM GSTR-1 and are reflected in the FORM GSTR-2A of the applicant, also stands modified accordingly.
The said restriction shall be applicable for the refund claims for the tax period of January 2022 onwards.
However, in cases where refund claims for a tax period from January 2022 onwards has already been disposed of by the proper officer before the issuance of this circular, in accordance with the extant guidelines in force, the same shall not be reopened because of the clarification being issued by this circular.
· Modification undertaking in FORM RFD 01.
Amendments in Annexure-A to the Circular No. 125/44/2019-GST dated 18.11.2019 also stands amended
· Manner of calculation of Adjusted Total Turnover
Turnover of zero-rated supply of goods”, needs to be taken into consideration while calculating “turnover in a state or a union territory”, and accordingly, in “adjusted total turnover” for the purpose of sub-rule (4) of Rule 89.
· Clarification in respect of admissibility of refund where an exporter applies for refund subsequent to compliance of the provisions of sub-rule (1) of rule 96A
Clarifications imply that as long as goods are actually exported or as the case may be, payment is realized in case of export of services, even if it is beyond the time frames as prescribed in sub-rule (1) of rule 96A, the benefit of zero-rated supplies cannot be denied to the concerned exporters. Accordingly, it is clarified that in such cases, on actual export of the goods or as the case may be, on realization of payment in case of export of services, the said exporters would be entitled to refund of unutilized input tax credit in terms of sub-section (3) of section 54 of the CGST Act, if otherwise admissible.
· It is also clarified that in such cases subsequent to export of the goods or realization of payment in case of export of services, as the case may be, the said exporters would be entitled to claim refund of the integrated tax so paid earlier on account of goods not being exported, or as the case be, the payment not being realized for export of services, within the time frame prescribed in clause (a) or (b), as the case may be, of sub-rule (1) of rule 96A. It is further being clarified that no refund of the interest paid in compliance of sub-rule (1) of rule 96A shall be admissible
· Refund application in the said scenario may be made under the category “Excess payment of tax”. However, till the time the refund application cannot be filed under the category “Excess payment of tax” due to non-availability of the facility on the portal to file refund of IGST paid in compliance with the provisions of sub-rule (1) of rule 96A of CGST Rules as” Excess payment of tax”, the applicant may file the refund application under the category “Any Other” on the portal.
|Circular No. 198/10/2023-GST dated 17.07.2023||Clarification on issue pertaining to e-invoice||Government Departments or establishments/ Government agencies/ local authorities/ PSUs, which are liable for compulsory registration in accordance with section 24(vi) of the CGST Act.
These Organisation are to be treated as registered persons under the GST law as per provisions of clause (94) of section 2 of CGST Act.
Accordingly, the registered person, whose turnover exceeds the prescribed threshold for generation of e-invoicing, is required to issue e-invoices for the supplies made to these organizations.
|Circular No. 199/11/2023-GST dated 17.07.2023||Clarification regarding taxability of services provided by an office of an organisation in one State to the office of that organisation in another State, both being distinct persons.||This circular mainly for Cross Charged between distinct persons (i.e., Head Office-HO & its Branch Office-BO)
Common input services procured by the HO from a third party but attributable to both HO and BOs or exclusively to one or more BOs, HO has an option to distribute ITC in respect of such common input services by following ISD mechanism BUT it is not mandatory for the HO to distribute such input tax credit by ISD mechanism. HO can also issue tax invoices under section 31 of CGST Act to the concerned branches
The value of supply of services made by a registered person to a distinct person needs to be determined as per rule 28 of CGST Rules, read with sub-section (4) of section 15 of CGST Act.
It is clarified that in respect of supply of services by HO to BOs, the value of the said supply of services declared in the invoice by HO shall be deemed to be open market value of such services.
If HO has not issued a tax invoice to the BO in respect of any particular services being rendered by HO to the said BO, the value of such services may be deemed to be declared as Nil by HO to BO, and may be deemed as open market value in terms of second proviso to rule 28 of CGST Rules.
· In cases where full input tax credit is not available to the concerned Bos
In respect of internally generated services provided by the HO to BOs, it is not mandatorily required to be included (cost of salary of employees of the HO, involved in providing the said services to the Bos) while computing the taxable value of the supply of such services, even in cases where full input tax credit is not available to the concerned BO.
Conclusion: Staying updated with the latest GST policy updates is crucial for businesses and individuals dealing with indirect taxes. The circulars issued by CBIC on 17th July 2023 provide valuable insights and clarifications on various aspects of GST. By understanding and following these guidelines, taxpayers can ensure compliance and avoid penalties. Stay informed and leverage the knowledge gained from this analysis to navigate the complexities of the GST regime effectively.
Your feedback is most welcome.