During the implementations GST various circulars, orders and clarifications were issued by various GST authorities. This article is as attempt to summarize all these and make it readable for readers. These could be grouped into 7 categories which are -Tax Rate, Classification, Determination Of Liability, Determination of Taxability, Refunds, Process and others-
Page Contents
- TAX RATE
- 1. Railway Food
- 2. Lottery Tickets
- 3. Unstitched Salwar Suits
- 4. Processed Products
- 5. Aircraft Engines
- 6. General Insurance Policies
- 7. Custom Milling of paddy
- 8. Terracotta Idols
- 9. Movement of goods on wheels
- 10. Betting or Gambling
- 11. Hospital Room Rent
- 12. Bakery Items
- 13. Railway Foods
- 14. Accommodation service in hostels
- 15. Services by any Court or Tribunal
- 16. Elephant/ Camel Joy Rides
- 17. Rental services of self-propelled access equipment
- 18. Healthcare Services
- 19. Cost Petroleum
- 20. PSLCs
- 21. Retreaded Tyres
- 22. Tenancy Rights
- 23. RECs and PSLCs
- 24. Ambulance Service
- 25. Fertilisers
- 26. Industrial Training Institutes (ITI)
- 27. Priority Sector Lending Certificates
- 28. Charitable Trusts
- 29. Miscellaneous Tax Rate
- CLASSIFICATION
- DETERMINATION OF LIABILITY
- DETERMINATION OF TAXABILITY
- REFUNDS
- PROCESS
- OTHERS
TAX RATE
1. Railway Food
GST rate on supply of food and/or drinks by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd. or their licensees, whether in trains or at platforms (Static Units), will be 5% without ITC. (Order No. 2/2018- Central Tax)
Note: This Order overrules the decision given by AAR-Delhi in M/s Deepak & Co
2. Lottery Tickets
Classification for lottery in respective CGST, IGST, UTGST and SGST shall be “Any Chapter” of the First Schedule to the Customs Tariff Act, 1975 and tax on lottery should be 12% or 28%, as the case may be.( Circular No. 06/06/2017-CGST)
3. Unstitched Salwar Suits
Fabrics are classified under Chapter 50 or 55 of the First Schedule to the Customs Tariff Act, 1975 and attract GST at the rate of 5% with no refund of unutilized input tax credit. Mere cutting and packing of fabrics into pieces of different lengths from bundles or than, will not change the nature of these goods and such pieces of fabrics would continue to be classifiable under the heading as the fabric and attract 5% GST rate. (Circular No. 13/13/2017-GST)
4. Processed Products
GST rate on loading, unloading, packing, storage or warehousing of agricultural produce is Nil. So, processed products such as tea (i.e. black tea, white tea etc.), processed coffee beans or powder, pulses (dehusked or split), jaggery, processed spices, processed dry fruits, processed cashew nuts etc. fall outside the definition of agricultural produce and thus exemption from GST is not available to their loading, packing, warehousing etc. (Circular No. 16/16/2017-GST)
5. Aircraft Engines
Credit of GST paid on aircraft engines, parts & accessories will be available for discharging GST on inter-state supply of such aircraft engines, parts & accessories by way of inter- state stock transfers between distinct persons as specified in Section 25 of CGST Act, notwithstanding that credit of input tax charged on consumption of such goods is not allowed for supply of service of transport of passengers by air in economy class at GST rate of 5%.(Circular No. 16/16/2017-GST)
6. General Insurance Policies
Services provided to the Central Government, State Government, Union Territory under any insurance scheme for which total premium is paid by the Central Government, State Government, Union territory as well as services provided by State Government to the employees of the State Government/ Police Personnel, employees of Electricity Department or students are exempt from GST. (Circular No. 16/16/2017-GST)
7. Custom Milling of paddy
Milling of paddy into rice cannot be considered as an intermediate production process in relation to cultivation of plants for food, fibre or other similar products or agricultural produce. Hence, milling of paddy into rice on job work basis is liable to GST at the rate of 5% on the processing charges and not on the entire value of rice.(Circular No. 19/19/2017-GST)
8. Terracotta Idols
The GST rate on Idols made of clay is Nil as per S.No. 135A of Schedule notification 2/2017 dated 28.06.2017 and as terracotta is clay based, terracotta idols will be eligible for Nil Rate.(Circular No. 20/20/2017-IGST)
9. Movement of goods on wheels
Inter-state movement of rigs, tools and spares, and all goods on wheels shall be treated ‘neither as a supply of goods or supply of service’ and consequently no IGST would be applicable on such movements. (Circular No. 21/21/2017-GST)
10. Betting or Gambling
On entry to casinos as well as on betting/gambling services being provided by casinos would attract GST at the rate of 28% on the transaction value, in addition to GST levy on any other services being provided by the casinos. GST would be levied on entire bet value i.e. total of face value of any or all bets paid into the totalisator or placed with licensed book makers. (Circular No. 27/01/2018-GST)
11. Hospital Room Rent
Room rent in hospitals provided to in-patients is exempt. (Circular No. 27/01/2018-GST)
12. Bakery Items
GST rate of composition levy for bakery items supplied where eating place is attached is 5%. (Circular No. 27/01/2018-GST)
13. Railway Foods
Supply of goods classified under Chapter 86 to the railways would attract 5% GST rate with no refund of unutilised tax credit and other goods (falling in any other chapter) would attract the general GST rates to such goods even if supplied to the railways. (Circular No. 30/4/2018-GST)
14. Accommodation service in hostels
Accommodation service in hostels including by Trusts having declared tariff below one thousand rupees per day is exempt. (Circular No. 32/06/2018-GST)
15. Services by any Court or Tribunal
Services by any Court or Tribunal established under any law for the time being in force is neither a supply of goods nor services. Hence, fees paid by litigator any penalty imposed by or amount paid to Consumer Disputes Redressal Commissions are not leviable to GST. (Circular No. 32/06/2018-GST)
16. Elephant/ Camel Joy Rides
Elephant/camel joy rides are not classified as transportation services and will attract GST @ 18% with threshold exemption being available to small service providers. (Circular No. 32/06/2018-GST)
17. Rental services of self-propelled access equipment
Rental services of self-propelled access equipment would attract GST @ 28% provided that the said goods attract GST OF 28%. IGST paid at the time of import of these goods would be available for discharging IGST on rental services. Hence, only the value added gets taxed. (Circular No. 32/06/2018-GST)
18. Healthcare Services
Healthcare services provided by senior doctors/consultants/technicians hired by the hospitals, whether employees or not are exempt. The entire amount charged by hospitals from patients including the retention money and the fees/payments made to the doctors are exempt. Food supplied to the patients is a part of composite supply and not separately taxable whereas other supplies of food by a hospital to patients (not admitted) or their visitors are taxable. (Circular No. 32/06/2018-GST)
19. Cost Petroleum
Cost petroleum is not a consideration for service to GOI and thus not taxable.(Circular No. 32/06/2018-GST)
20. PSLCs
Priority Sector Lending Certificates are taxable as goods at standard rate of 18% under the residuary S. No. 453 of Schedule III of Notification No. 1/2017- Central Tax (Rate). GST payable on the certificates would be available as ITC to the bank buying the certificates. (Circular No. 34/8/2018-GST)
21. Retreaded Tyres
Supply of retreaded tyres, where the old tyres belong to the supplier of retreaded tyres, is a supply of good under Heading 4012 of Customs Tariff attracting GST @28%. (Circular No. 34/8/2018-GST)
22. Tenancy Rights
Grant of tenancy rights in a residential dwelling for use as residential dwelling against tenancy premium or periodic rent or both is exempt. As regards services provided by outgoing tenant by way of surrendering the tenancy rights against consideration in the form of a portion of tenancy premium is liable to GST. (Circular No. 44/18/2018-GST)
23. RECs and PSLCs
Renewable Energy Certificates (RECs) and Priority Sector Lending Certificates (PSLCs) and other similar documents are classifiable under heading 4907 and attract 12% GST. The duty credit scrips attract Nil GST under S.No. 122A of Notification No. 2/2017- Central Tax (Rate). (Circular No. 46/20/2018-GST)
24. Ambulance Service
Services provided by PSPs to the State Governments by way of transportation of patients on behalf of the State Governments against consideration in the form of fee or otherwise charged from the State Government would be exempt under Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017
- SI No.3 if it is a pure service and not a composite supply involving supply of any goods
- SI No. 3A if it is a 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.
25. Fertilisers
Fertilizers supplied for direct use as fertilizers or supplied for use in the manufacturing of other complex fertilisers for agricultural use will attract 5% IGST. (Circular No. 54/28/2018-GST)
26. Industrial Training Institutes (ITI)
- Vocational training provided by private ITIs in designated trades are exempt from GST whereas vocational training provided by private ITIs in respect of other than designated trade would be liable to pay GST.
- Services provided by a private ITI by way of conduct of entrance examination against consideration in the form of entrance fee in case of designated trades will be exempt from GST whereas in case of other than designated trades in private ITIs, GST shall be payable.
- Vocational training and examinations conducted by these Government ITIs is exempt as these are in the nature of services provided by the Central Government or State Government to individuals.
27. Priority Sector Lending Certificates
GST on PSLCs for the period 1.7.2017 to 27.05.2018 will be paid by the seller bank on forward charge basis and GST rate of 12% will be applicable on the supply. (Circular No.62/36/2018-GST)
28. Charitable Trusts
- The services provided by entity registered under Section 12AA of the Income Tax Act, 1961 by way of advancement of religion, spirituality or yoga are exempt.
- Fee or consideration charged in any other form from the participants for participating in a religious, Yoga or meditation programme or camp meant for advancement of religion, spirituality or yoga shall be exempt.
- Residential programmes or camps where the fee charged includes cost of lodging and boarding shall also be exempt as long as the primary and predominant activity, objective and purpose of such residential programmes or camps is advancement of religion, spirituality or yoga.
- Charitable or religious trusts merely or primarily provide accommodation or serve food and drinks against consideration in any form including donation, such activities will be taxable.
- Activities such as holding of fitness camps or classes such as those in aerobics, dance, music etc. will be taxable
(Circular No. 66/40/2018-GST)
29. Miscellaneous Tax Rate
- Fortified Toned Milk (with vitamins ‘A’ and ‘D’) attracts NIL rate of GST under HSN Code 0401.
- All kinds of beet and cane sugar falling under heading 1701 would attract GST @ 5%
- Tamarind kernel powder (modified and unmodified) fall under Chapter 13 and is liable to GST @ 5%
- Supply of drinking water for public purposes if not supplied in a sealed container is exempt from GST.
- Normal Human Plasma would attract GST at the rate of 5% and plasma products would attract 12% GST rate.
- Baby wipes impregnated with perfumes or cosmetics fall under HS code 3307 and attract GST @ 18% whereas baby wipes coated with soap or detergent fall under HS code 3401 and would attract 18% GST.
- Imitation zari thread or yarn known as “Kasab” or by any other name in trade parlance would attract GST @ 12% under tariff heading 5605.
- Supplies of marine engine for fishing vessel fall under tariff item 8408 10 93 and attracts GST @ 5% .
- A quilt filled with cotton constitutes a cotton quilt irrespective of some material of the cover of the quilt. Hence, cotton quilts attract GST@5% if the sale value of such cotton quilts does not exceed Rs. 1000 per piece whereas cotton quilts with sale value exceeding Rs. 1000 per piece attract GST @ 12%.
- In bus body building activity, if chassis is owned by the bus body builder than it would attract GST @ 28% whereas if the chassis is supplied by the principal then it attracts GST @ 18%.
- Disc Brake Pad for automobiles are classified under heading 8708 of Customs Tariff Act, 1975 and would attract 28% GST.
(Circular No. 52/26/2018-GST)
CLASSIFICATION
1. Books
Exercise Books are classified under heading 4820 of erstwhile CETA, 1985 as printing which is incidental to their primary use is the guiding principle for such classification whereas printing in case of Printed Workbooks is not merely incidental to the primary use of the goods, such goods are classifiable under Chapter 49, in terms of Chapter Note 12 to chapter 48 of erstwhile CETA, 1985. Children’s Drawing Books which are in harmony with said HSN Chapter note (6) and HSN Explanatory Note to heading 4903 would fall under Chapter 49 (Circular No. 1057/06/2017-CX)
1. Printing Contracts
- Printing of books, pamphlets, brochures, annual reports, and the like, where only content is supplied by the publisher or the person who owns usage rights to the intangible inputs while the physical inputs including paper used for printing belong to the printer, then such supply of service would fall under Heading 9899 as supply of printing is the principal supply
- Supply of printed envelopes, letter cards, printed boxes, tissues, napkins, wall paper etc, falling under Chapter 48 or 49, printed with design, logo etc supplied by the recipient of goods but made using physical inputs including paper belonging to the printer, then such supply of goods would fall under Chapter 48 or 49 of the Customs Tariff as predominant supply is that of goods and supply of printing the content is the ancillary to the principal supply of goods
2. Supply of books
The supply of books shall be treated as supply of goods as long as the supplier owns the books and has the legal rights to sell those books on his own account. (Circular No. 27/01/2018-GST)
3. Bus Body Building
Bus body building is a composite supply and classification of this as goods or service would depend on which supply is the principal supply. (Circular No. 34/8/2018-GST)
DETERMINATION OF LIABILITY
1. Superior Kerosene Oil
Superior Kerosene Oil (SKO) is supplied by refinery to Linear Alkyl Benzene (LAB) manufacturers for extraction of n-Paraffin from SKO and return back the remaining SKO to the refinery. Hence, GST will be payable by the refinery on the net quantity of SKO retained for manufacturer of LAB. Though, refinery would be liable to pay GST on such returned quantity of SKO, when the same is supplied by it to the other person. (Circular No. 12/12/2017-GST)
2. Legal Services
Legal services including representational services provided by an individual advocate or senior advocate to a business entity, GST is required to be paid by business entity under reverse charge mechanism (Circular No. 27/01/2018-GST)
3. Polybutylene feedstock and Liquefied Petroleum Gas
Raw materials for manufacturers of Propylene or Di- butyl para Cresol and Poly Iso Butylene are Liquified Petroleum Gas and Poly butylene feed stock which are supplied by oil refineries to them and a portion of them is retained by the manufacturers and the rest is returned to the oil refineries. Hence, GST will be payable by the refinery only on the net quantity of Polybutylene feedstock and Liquified Petroleum Gas retained by the manufacturer. Though, refinery would be liable to pay GST on such returned quantity when the same is supplied by it to other person. (Circular No. 29/3/2018-GST)
4. Petroleum Gases
GST will be payable by the refinery on the net quantity of petroleum gases retained by the recipient manufacturer for the manufacture of petrochemical and chemical products and refinery would be liable to pay GST on such returned quantity only when the same is supplied by it to other person. (Circular No. 53/27/2018-GST)
DETERMINATION OF TAXABILITY
1. Homestays
Homestays providing accommodation through an ECO, below threshold are not required to take registration under Section 22(1) of CGST Act. (Circular No. 27/01/2018-GST)
2. Accommodation Service
For accommodation services, GST will be payable on actual amount charged and declared or published tariff is relevant only for determination of the tax rate slab. (Circular No. 27/01/2018-GST)
3. DISCOMS
The activities carried by DISCOMS against recovery of charges from consumers under State Electricity Act are taxable in GST (Circular No. 34/8/2018-GST)
4. Guaranteeing of loans
The service provided by CG/SG to any business entity including PSUs by way of guaranteeing the loans taken by them from financial institutions against consideration in any form including Guarantee Commission is taxable. (Circular No. 34/8/2018-GST)
5. Cash Calls
Cash calls merely transaction in money are excluded from the definition of service provided in Section 65B (44) of the Finance Act, 1994. Whether a cash call is merely a transaction in money and hence not in the nature of consideration for taxable service, would depend on the terms of the Joint Venture Agreement, which may vary from case to case. The Circular clarified that cash calls, sometimes, could be in the nature of advance payments made by members towards taxable services received from joint venture (JV); and that payments made out of cash calls pooled by a JV towards taxable services received from a member or a third party is in the nature of consideration and hence attracts Service Tax. Therefore, the law with regard to levy of GST essentially remains the same as it was under service tax law. Whether cash calls are taxable or not will entirely depend on the facts and circumstances of each case (Circular No. 35/9/2018-GST)
6. Tenancy Rights
Grant of tenancy rights in a residential dwelling for use as residential dwelling against tenancy premium or periodic rent or both is exempt. As regards services provided by outgoing tenant by way of surrendering the tenancy rights against consideration in the form of a portion of tenancy premium is liable to GST. (Circular No. 44/18/2018-GST)
REFUNDS
1. Exporters of fabrics
On export of fabrics, manufacturer of such fabrics will be eligible for refund of unutilized input tax credit of GST paid on inputs (other than the input tax credit of GST paid on capital goods) in respect of fabrics manufactured and exported by him. (Circular No. 18/18/2017-GST)
2. Accumulated ITC on Fabrics- Refund
Refund of accumulated ITC on account of inverted duty structure on fabrics on the inputs shall not be allowed. But this does not put any restriction in relation to the ITC on the input services and capital goods. The ITC on account of inverted duty structure lying in balance after payment of GST for the month of July (on purchases made on or before the 31st July, 2018) shall lapse. Verification of accumulated ITC amount so lapsed may be done at the time of filing of first refund (on account of inverted duty structure on fabrics) by such person. Therefore, a detailed calculation sheet in respect of accumulated ITC lased shall be prepared by the taxable person and furnished at the time of filing of first refund claim on account of inverted duty structure. (Circular No. 56/30/2018-GST)
3. Compensation Cess- Refund
UN and specified international organizations, foreign diplomatic missions or consular posts in India, or diplomatic agents or career consular officers posted therein are entitled to refund of Compensation Cess payable on intra-State and inter-State supply of goods or services or both received by them subject to the same conditions and restrictions as prescribed in Notification No. 16/2017-Central Tax(Rate) dated 28.06.2017. (Circular No. 68/42/2018- GST).
PROCESS
1. Non- Transition of CENVAT Credit -Directions/ Process
If the disputed credit or blocked credit is higher than Rs. 10 Lakhs, then the taxpayers shall submit an undertaking to the jurisdictional officer of the Central Government that such credit shall not be utilized or not has been availed as transitional credit or if it is less than Rs. 10 Lakhs then such disputed credit or blocked credit, credited to the electronic ledger shall not be utilized by a registered taxable person to discharge his tax liability under CGST Act, 2017 or under IGST Act, 2017 and shall be recovered from the taxpayer with interest and penalty as per the provision of the Act and the need to submit the undertaking shall not apply.(Circular No. 33/07/2018-GST)
2. IT- Grievance Redressal Mechanism- Process
IT- Grievance Redressal Mechanism has been put in place to address the grievances of taxpayers due to technical glitches on GST Portal. (Circular No. 39/13/2018-GST)
3. Tax Deduction at Source (TDS)- Process
For payment process of Tax Deduction at Source under GST two options can be followed, which are as under:
Option I: Generation of challan for every payment made during the month
In this option, the DDO will have to deduct as well as deposit the GST TDS for each bill individually by generating a CPIN (Challan) and mentioning it in the Bill itself
Option II: Bunching of TDS deducted from the bills on weekly, monthly or any periodic manner
Option-I may not be suitable for DDOs who make large number of payments in a month as it would require them to make large number of challans during the month. Such DDOs may exercise this option wherein the DDO will have to deduct the TDS from each bill, for keeping it under the Suspense Head. However, deposit of this bunched amount from the Suspense Head can be made on a weekly, monthly or any other periodic basis.
(Circular No. 65/39/2018-DOR)
OTHERS
1. Withdrawal of Circular
Circular No. 28/02/2018-GST dated 08.01.2018 is withdrawn vide Corrigendum dated 18.01.2018 and Order No. 02/2018- Central Tax dated 31.03.2018. (Circular No. 50/24/2018-GST)
2. Modification in Guidelines of TDS
Modification to the Guidelines for Deductions and Deposits of TDS by the DDO under GST by opening 08-GST TDS sub-head below the Head 8658.00.101-PAO Suspense (Circular No. 67/41/2018-DOR)
Disclaimer
This article is for information purposes. It should not be considered as Legal Advice or Opinion. Please contact your legal advisor before taking any action based on this article. Author is not responsible for any sort of loss due to any action or non-action based on this article.
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Excellent article thank you