GST and roads less travelled

GST Calendar – May’ 2021

Nature of Compliances	Due Date
GSTR-7 May’ 2021 tax deducted at source	June 10, 2021
GSTR-6 May’ 2021 Input Service Distributor	June 13, 2021
GSTR-3B May’ 2021	June 20, 2021
GSTR-5 May’ 2021 Non-Resident Taxable Person	June 20, 2021
GSTR-5A May’ 2021 OIDAR Service Provider	June 20, 2021
GSTR-1 May’ 2021	June 26, 2021
IFF- Invoice furnishing facility (Availing QRMP)	June 28, 2021
ITC-04 (Quarter Jan’21 – Mar’21)	June 30, 2021
GSTR-4 Composition Levy for the period FY 2020-2021	July 31, 2021
GSTR-9 & GSTR-9C FY 2020-2021	Dec 31, 2021

Highlights of 43^rd GST Council Meet

COVID Essential Drugs:

• Full Exemption from IGST up to 31^st Aug’ 2021 w.r.t. to COVID-19 related goods (medical oxygen, oxygen concentrators / other oxygen storage and transportation equipment, certain diagnostic markers test kits & COVID-19 vaccines etc.), even if for donation.
• Full exemption from IGST on drug ‘Amphotericin B’ which is used for black fungus treatment.
• Group of Ministers (GoM) to be constituted for evaluating further need for relief related to COVID-19 individual items, GOM to give its report by 08.06.2021.

One time amnesty w.r.t. GST Returns:

Waiver / reduction in late fee for non-furnishing FORM GSTR-3B for tax period July’2017 to April’2021, provided GSTR-3B returns for the said period are furnished between 1st June’2021 to 31st Aug’2021.

Tax Payers	Late fee capping (CGST + SGST)
Nil Tax Liability	Rs. 500 per return
Other Taxpayers	Rs. 1000 per return

Note:
-No waiver in interest has been recommended by GST Council.
-No waiver w.r.t. interest / late fee for the said period have been recommended by GST Council for GSTR-1.

Rationalization of late fee imposed under Sec 47 of the CGST Act, 2017

Return Type	Taxpayers Type	Late fee capping (CGST + SGST)
GSTR-1 / GSTR-3B	Nil tax liability	Rs. 500 per Return
GSTR-1 / GSTR-3B	AATO in preceding FY up to Rs 1.5 cr	Rs. 2000 per Return
GSTR-1 / GSTR-3B	AATO in preceding FY between Rs 1.5 cr to Rs. 5cr	Rs. 5000 per Return
GSTR-1 / GSTR-3B	AATO in preceding FY above Rs. 5cr	Rs. 10000 per Return
GSTR-4	Nil tax liability	Rs. 500 per Return
GSTR-4	Others	Rs. 2000 per Return
GSTR-7		Rs. 50 per day (max of Rs. 2000 per return)

Note: All the above proposals to be made applicable for prospective tax periods. *AATO -Annual Aggregate Turnover

Interest waivers

Taxpayers	Mar’21	Apr’21	May’21
Small Taxpayers (AATO up to Rs. 5 crore)	Nil: for first 15 days from the due date of GSTR-3B/PMT-06	Nil: for first 15 days from due date of GSTR-3B/PMT-06	Nil: for first 15 days from due date of GSTR-3B/PMT-06
Small Taxpayers (AATO up to Rs. 5 crore)	9%: for further 45 days from due date of GSTR-3B/PMT-06	9%: for further 30 days from due date of GSTR-3B/PMT-06	9%: for further 15 days from due date of GSTR-3B/PMT-06
Small Taxpayers (AATO up to Rs. 5 crore)	18%: after 60 days (15 days+ 45 days) from the due date of GSTR-3B/PMT-06	18%: after 45 days (15 days+ 30 days) from the due date of GSTR-3B/PMT-06	18%: after 30 days (15 days+ 15 days) from due date of GSTR-3B/PMT-06
Large Taxpayers (AATO more than Rs. 5 crore)	–	–	9%: for first 15 days from due date of GSTR-3B
Large Taxpayers (AATO more than Rs. 5 crore)	–	–	18%: after 15 days from due date of GSTR-3B
Composite Dealers (for quarter Jan-Mar’21)	Nil: for first 15 days from the due date of CMP-08	Nil: for first 15 days from the due date of CMP-08	Nil: for first 15 days from the due date of CMP-08
Composite Dealers (for quarter Jan-Mar’21)	9%: for further 45 days from the due date of CMP-08	9%: for further 45 days from the due date of CMP-08	9%: for further 45 days from the due date of CMP-08
Composite Dealers (for quarter Jan-Mar’21)	18%: after 60 days (15 days+ 45 days) from the due date of CMP-08	18%: after 60 days (15 days+ 45 days) from the due date of CMP-08	18%: after 60 days (15 days+ 45 days) from the due date of CMP-08

*AATO -Annual Aggregate Turnover

Late Fee waiver

Taxpayers	Mar’21	Apr’21	May’21
Small Taxpayers (AATO up to Rs. 5 crore)	Late fees waived till 60 days from due date of GSTR-3B	Late fees waived till 45 days from due date of GSTR-3B	Late fees waived till 30 days from due date of GSTR-3B
Large Taxpayers (AATO more than Rs. 5 crore)	–	–	Late fees waived till 15 days from due date of GSTR-3B

*AATO -Annual Aggregate Turnover

Other Extensions

Return Type	Period	Extension
GSTR-1/ IFF	May’21	Extended by 15 days
GSTR-4	Annual	Extended till 31stJuly 2021
ITC-04	Quarter (Jan-Mar’21)	Extended till 30thJune 2021

Other Relief Measures:

• Cumulative application of Rule 36(4) for availing ITC for tax periods April, May, June’2021 in return for the period June’2021.
• EVC to continue for filing of returns by companies instead of DSC till 31st Aug’2021.
• Retrospective Amendment (w.e.f. 1st July 2017) in section 50 of the CGST Act, to provide for payment of interest on net cash basis.
• Amendments in certain provisions of CGST Act to make the present system of GSTR-1/3B return as default return filing system in GST laws.
• Time limit for completion of various actions, by any authority/any person which falls during the period from 15th April’2021 to 29th June’2021 extended up to 30th June’2021 (subject to some exceptions).

Note: Wherever the timelines for actions have been extended by the Hon’ble Supreme Court, the same would apply

Annual Return & Annual Reconciliation

• FORM GSTR-9/9A optional for taxpayers with Aggregate Annual Turnover up to RS. 2 crore.
• FORM GSTR-9C mandatory for taxpayers with Aggregate Annual Turnover above RS. 5 crore.

GST Clarifications:

• Road & Highways: Annuities which are paid for the service by way of access to a road or a bridge are exempt. However, GST will be payable on annuity payments received as deferred payment for construction of road.
• GST on MRO services in respect of ships/vessels: Recommended to be reduced to 5% (from 18%). Place of supply of MRO Services in respect of ships/ vessels for B2B supplies would be location of recipient of service.
• Real Estate: Developer Promoter allowed to pay GST relating to apartments any time before/at the time of issuance of completion certificate. Thereby, Land Owner Promoters can utilize credit of GST charged to them by Developer Promoters (in respect of such apartments that are subsequently sold by the land promoter) on which GST is paid.
• Educational Institutes: Services supplied to an Educational Institution (including anganwadi) by way of serving of food (including mid-day meals under any midday meals scheme), sponsored by Government irrespective of funding of such supplies from government grants/corporate donations shall be exempt. Input services are exempt in relation to supply of services provided by way of examination (including entrance examination), where fee is charged for such examinations, by National Board of Examination (NBE)/similar Central or State Educational Boards.
• Construction of Ropeway: Services supplied to a Government Entity by way of construction of a rope-way to attract GST at 18%.
• Government Undertakings/PSU’s: Services supplied by Govt. to its undertaking/PSU by way of guaranteeing loans taken by such entity from banks & financial institutions shall be exempt.
• Milling of agricultural produce: Service by way of milling of wheat/paddy into flour (fortified with minerals etc. by millers or otherwise) /rice to Government/ local authority etc. for distribution of such flour or rice under PDS is exempt from GST if the value of goods in such composite supply does not exceed 25%. Otherwise, such services would attract GST at the rate of 5% if supplied to any person registered in GST, including a person registered for payment of TDS.

Important Judgements

A. Voluntary Statements doesn’t constitute Pre-consultation.

M/s Omaxe New Chandigarh Developers VS Union of India and Ors. –Delhi High Court

Facts:

• Voluntary statement was been given by Petitioner before Senior Intelligence Officer.
• A show cause notice was issued by Senior Intelligence officer upon the Petitioners considering voluntary statements as pre-consultation.

Query:

• Whether voluntary statements constitute pre-consultation before issuance of show cause notice as per paragraph 5 of 2017 Master Circular?

Held:

• Hon’ble Court held that ‘voluntary statements’ is a one-way dialogue made before an authority which often does not take a decision as whether or not next steps in the matter are required to be taken. Further, pre-consultation requires discussion and deliberation from both sides.
• Court directed the proper officer to issue appropriate communication to the applicant and hold a meeting for pre show cause consultation and listen Petitioner’s contentions. Thereafter, show cause notice may be issued by the proper officer.

 No Rectification in GSTR-1 post expiry of limitation period prescribed under CGST Act.

Abdul Mannan Khan vs. GST Council & Ors. | Calcutta High Court

Facts:

• Petitioner inadvertently reported an invoice as sale to unregistered party (B2C) instead sale to a registered party (B2B) of a registered customer.
• Subsequently after 1.5years, registered customer informed the Petitioner of the said error and that he is unable to avail ITC on account of the said error by Petitioner while reporting his invoice in GSTR-1.
• Petitioner made an application to the Revenue, seeking rectification of Form GSTR-1for the period of January’2018 to March’2018.
• The said request of the Petitioner was rejected by the Revenue on the ground that the period for making such an application had expired.

Query:

• Petitioner appealed before Hon’ble High Court against the said rejection by Revenue for rectification of Form GSTR-1 for the period January’2018 to March’2018.

Held:

• Hon’ble court relied upon Section 37(3) and observed that the statue provides for period of limitation for seeking any rectifications (i.e. before furnishing of the return under section 39 for the month of September following the end of the FY to which such details pertain, or furnishing of the relevant annual return, whichever is earlier).
• Furthermore, Hon’ble also observed that there is no provision to appeal or condoning such delay; condoning such delay would make the provision otiose and open the floodgates for similar cases.
• Hon’ble Court dismissed the Petitioner’s appeal on the above grounds.

GST leviable on reimbursement (intercompany) expenses

ICU Medical India LLP – AAAR Tamil Nadu

Facts:

• Appellant provides software development service to its ultimate holding company (ICU Inc) located in USA. Consideration for the said services is made on a cost plus margin method.
• ICU Inc issues credit card to the employees of the Appellant via a user card holder agreement, which is used by the employees of the Appellant for travel related expenses only. 
• ICU Inc downloads and share the monthly statement with Appellant for booking of the said expenses in Appellants books of accounts as inter-company (expenses) transactions. Further, ICU Inc settles the monthly credit card bill globally and recovers the amount from the Appellant by raising an invoice upon the Appellant. Appellant considers the said amount as reimbursements and pays to ICU Inc on actual basis without paying any GST on it to Revenue.
• Subsequently, the said credit card expenses are included in the monthly commercial invoice issued by Appellant upon ICU Inc for software development charges, as the said reimbursement also forms part of software development cost. GST is charged on the full invoice value on cost plus margin basis.

Query:

• Whether GST is leviable on the reimbursement of the subsidiary company to its ultimate holding company located in a foreign territory outside India?
• In case GST is leviable, what is the GST rate applicable to the said reimbursement of expenses?

Decision of AAR:

• AAR held that such reimbursement expenses are taxable under Reverse Charge Mechanism as notified under Serial No. 1 of Notification No. 10/2017 – IGST (Rate) dated 28th June 2017.
• AAR held the said services to be taxable at the rate of 18% and that the same will be classified under HSN ‘9971 – Financial and related services’.

Decision of AAAR:

• AAAR observed that the expenses are borne by ICU Inc and later reimbursed by the Appellant, but again included in the taxable invoice, and thus are in the nature of advance consideration. 
• It upheld the decision of AAR-Tamil Nadu to the extent that the said transaction will be taxable and leviable to GST. It also held that the provisions of Sec 13 of CGST Act, 2017 (Time of Supply) shall apply and the tax liability shall arise in accordance with the provisions of time of supply as prescribed u/s 13 of CGST Act, 2017.
• However, it modified the order of AAR-Tamil Nadu to the extent that the GST Rate shall be applicable at the same rate at which the Appellant charges for software development charges to ICU Inc., considering such expenses to be part of the taxable value of such services. Accordingly, the said service will not qualify for classification under HSN 9971, but under the HSN code being used by the Appellant for software development services.