Dr. Sanjiv Agarwal, FCA, FCS

Sanjiv Agarwal Photo

The Finance Bill, 2019 stands passed by the Parliament. Within a month of the last meeting, GST Council meets again for 36th time on 25 July, 2019. It is likely to consider the proposals of GST rate reduction in case of electric vehicles, from 12% to 5% besides taking up similar issue for solar systems, wind mills etc. The GST rate on chargers may also be slashed. The issue on lotteries is also to be discussed subject to clarity from Government.

CBIC has clarified that out sourcing services in relation to information technology services (BPO in common parlance) would attract GST @ 18% and such services would not qualify as exports. This is likely to adversely impact BPO activities as cost would go up straight by 18% (Circular No. 17 dated 18.07.2019. Clarification has also been issued in respect of goods taken or sent out of India for exhibition or on consignment basis for export promoter. Such activities shall not constitute supply as there is no consideration involved at the point of sending / taking out (Circular No. 108 dated 18.07.2018). In yet another clarification, it has been clarified that in case of charges levied by Residential Welfare Associations exceeding Rs. 7500 pm, GST shall be levied on the entire amount (Circular No. 109 dated 22.07.2018).

Recent Developments at a Glance

Applicability of GST on goods sent out of India for Exhibition or for Export Promotion

> The activity of sending / taking the goods out of India for exhibition or on consignment basis for export promotion, except when such activity fall under Schedule I to CGST Act, 2017, do not constitute supply ,as there is no consideration at that point in time.

> Since the activity is not a supply, the same cannot be treated as Zero rated supply as per section 16 of the IGST Act, 2017.

> Such goods are required to be either sold or brought back within the stipulated period of six months from the date of removal, if not, then supply shall be deemed to have taken place, on the expiry of six months.

> The sender shall issue a tax invoice in respect of such quantity of specified goods which has been sold abroad or when goods are neither sold nor brought back into India.

> Other Compliances:

√ Maintenance of records of such goods as per the format at Annexure to the Circular by registered person.

√ Goods shall be accompanied with a delivery challan issued (Rule 55 of the CGST Rules, 2017)

√ For export of these goods, execution of a bond or LUT is not required.

[Source:  Circular 108/27/2019 Dated 18-07-2019]

IT enabled services: Clarification on Intermediary or Export of Services?

> The definition of intermediary inter alia provides specific exclusion of a person i.e. that of a person who supplies such goods or services or both or securities on his own account.

> The supplier of services would not be treated as “intermediary” even where the supplier of services qualifies to be “an agent/ broker or any other person”, if he is involved in the supply of services on his own account.

> Therefore, in case of supplier located in India supplying services on behalf of client located abroad,

> if supplier supplies IT enabled services on his own account, he will not be categorized as intermediary, where as

> if supplier arranges or facilitates the supply of goods or services or both by the client located abroad to the customers of client, he will fall under the ambit of intermediary as these services are merely for arranging or facilitating the supply of goods or services or both between two or more persons.

> But where the supplier provide both services i.e. on his own account and support services, then the nature of service shall depend on the facts and circumstances of the case.

> The supplier who is not an intermediary as per section 2(13) of the IGST Act, 2017 can avail benefits of ‘export of services’ if he satisfies the criteria as per section 2(6) of the IGST Act, 2017.

> Exports to get tax benefit whereas intermediary to pay GST @ 18%.

[Source: Circular No 107/26/2019 dated 18-07-2019]

Changes in the CGST Rules, 2017

> Electronic ticket in multiplex screens [Rule- 54(a)]

√ An electronic ticket shall be required to be issued by a registered person supplying services by way of admission to exhibition of cinematograph films in multiplex screens.

√The said electronic ticket shall be deemed to be a tax invoice for all purposes of the Act, even if such ticket does not contain the details of the recipient of service but contains the other information as mentioned under rule 46.

√ The supplier of such service in a screen other than multiplex screens may, at his option, follow the above procedure.

> Surrender of enrolment of goods and services tax practitioner [Rule- 83B]

√ A goods and services tax practitioner seeking to surrender his enrolment shall electronically submit an application in FORM GST PCT-06, at the common portal, either directly or through a facilitation centre notified by the Commissioner.

√ The Commissioner, or an officer authorised by him, may after causing such enquiry as deemed fit and by order in FORM GST PCT-07, cancel the enrolment of such practitioner.”

 [Source: Notification No. 34/2019 – Central Tax dated 18-07-2019]

Extension in due date of Form GST CMP-08

> The due date of Form GST CMP-08 for the quarter April, 2019 to June, 2019, or part thereof has been extended to 31st day of July, 2019.

[Source: Notification No. 34/2019 – Central Tax dated 18-07-2019]

GST on amounts charged by Residential Welfare Associations

> Maintenance charges paid by residents to RWA’s in a housing scheme are exempt from GST if the amount / charge / contribution does not exceed the following amounts :

    • Upto 25.01.2018  – 5000 pm
    • e.f. 25.01.2018 – Rs. 7500 pm

> CBIC has clarified that exemption is available subject to this limit per apartment / flat and not per person.

> CBIC has clarified that where the amount per month exceeds the limit of Rs. 7500 presently applicable, the entire amount shall be taxable, i.e. including the first Rs. 7500/-.

(Source: Circular No. 109/28/2019-GST dated 22.07.2019; Advance Ruling in TVH Lumbini Square Owners Association [In Re (2019) 107 taxmann.com 329 (AAR, Tamil Nadu)].

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