Goods and Service Tax – Filling the gaps

Recent Judgments

Authority for Advance Ruling- Uttar Pradesh held that the expenses incurred by the company in order to satisfy the obligation of Corporate Social Responsibility (CSR) under the Companies Act, 2013 are eligible for Input Tax Credit as being incurred in the course of business.

Elaborative:

Facts:
The Appellant is a Company incorporated under the Companies Act, 2013 and involved in the business of manufacture and sale of sugar and allied products. In order to comply Section 135 of the Companies Act, 2013 “Corporate Social Responsibility”, applicant contributed in construction of school building, laboratories etc., free supply of furniture/fittings to be used in the school, free supply of electrical goods for school use and provision of goods/services to Registered Trusts.

The queries raised before Uttar Pradesh Authority for Advance Ruling (AAR) by the applicant was-

• Whether expenses aroused in order to comply with requirements of Corporate Social Responsibility (CSR expenses) under the Companies Act, 2013 are eligible for claiming input tax credit in terms of section 16 of the CGST Act or certify as blocked credit under Section 17(5) of CGST Act.
• Whether free supply of goods under CSR activities are to be considered as ‘gifts’ and certify as blocked credit under section 17(5)(h) of CGST Act, 2017.
• Whether goods and services used for construction of school building is restricted under section 17(5) (c)/17(5) (d) of CGST Act, 2017.

Appellant Submission:
Applicant presented that Corporate Social Activities are incidental/ancillary to the business and hence regarded as “in the course of business”. It is a mandatory obligation for companies having net worth of rupees five hundred crores or more, or turnover of rupees one thousand crores or more or a net profit of rupees five crores or more during the immediately preceding financial yearto contribute towards Corporate Social Responsibility, so they become an essential part of the business process.

Considering the definition of business to claim ITC there is no perquisite to establish a direct one to one linkage, so they do not qualify under section 17(5) (Blocked Credit).

AAR’s directive:
The AAR observed that the CSR is an integrating core business strategy not only a holistic approach and it have direct bearing on manufacturing activity of company and adds to the cost of final product and therefore the assesse is entitled to avail ITC according to section 16 of the CGST Act, 2017.

Further free supply of goods/services to school/NGO does not constitute as “gifts or free samples” and therefore are not restricted under section 17(5)(h) of the CGST Act, 2017 as the former is obligatory not voluntary and occasional as gifts.

In view of the facts, tribunal found that input tax credit is not available for construction, reconstruction, renovation, addition, repair of an immovable property even if it is in course of business if the expense is capitalized in the books of account. Company can not avail ITC on construction of building to the extent of capitalization.

Points to Commemorate

• ITC is available on the expenses incurred in order to comply with CSR requirements.
• Free supply of goods is not restricted under section 17(5)(h) of CGST Act, 2017.
• ITC is not available on construction of school building to the extent of capitalization.

CBIC Notifies common custom electronic portal for facilitating various GST services:
Central Board of Indirect Taxes and Customs has notified common portal for easing various GST services which would be handy through Uniform Resource Locator (URL for aiding registration, filing of bills of entry, shipping bills, other documents and forms prescribed under the Customs Act , 1962 or under any other law for the time being in force.

The Board has further stated that payment of duty, functions specified to be accomplished through the Customs Act, 1962 or rules made under section 156 of the said Act or regulations made under section 157 of the Act and for data exchange with other systems within or outside India.

CBIC waived the penalty leviable for non-compliance of provisions of dynamic QR Code
CBIC through Notification No. 06/2021- Central Tax dated 30.03.2021 has amended notification no.89/2020- Central Tax dated   29.11.2020. Through the said notification, the Government had deferred the penalty imposed under section 125 of the CGST Act, 2017 for non-compliance of provisions of capturing of dynamic QR code in GST invoices from December 2020 to June 30, 2021 and therefore fixed time limit of obedience to July 01, 2021.

It may be said that, Government has provided relief to the taxpayers of three months and they can initiate dynamic QR code on their B2C invoices from 01.07.2021 instead of 01.04.2021.

Delhi Government: notifies granting GST refund to retail outlets in departure area of International Airport
The Governor of the National Capital Territory of Delhi, on the recommendations   of the council, specified retail outlets in the departure area of an International Airport beyond the immigration counters, making tax free supply of goods to an outgoing international tourist, as class of persons who shall be entitled to claim refund of applicable state tax paid on inward supply of such goods subject to conditions specified in Rule 95A of Delhi Goods and Service Tax Rules, 2017.

GST Calendar – April’ 2021

Nature of Compliances	Due Date
GSTR-7 March’ 2021 tax deducted at source	April 10,2021
GSTR-1 March’ 2021 turnover more than 5 cr.	April 11, 2021
IFF- Invoice furnishing facility ( Availing QRMP)	April 13, 2021
GSTR-6 March’ 2021 Input Service Distributor	April 13, 2021
GSTR-3B March’ 2021 turnover more than 5 Cr	April 20, 2021
GSTR-5 March’ 2021 Non-Resident Taxable Person	April 20, 2021
GSTR-5A March’ 2021 OIDAR Service Provider	April 20, 2021
GSTR-3B March’ 2021 under QRMP scheme	April 22,2021