GST & Commonality with IDT Regime

GST Calendar – May’ 2021

Nature of Compliances	Due Date
GSTR-7 April’ 2021 tax deducted at source	May 10, 2021
GSTR-6 April’ 2021 Input Service Distributor	May 13, 2021
GSTR-5 April’ 2021 Non-Resident Taxable Person	May 20, 2021
GSTR-5A April’ 2021 OIDAR Service Provider	May 20, 2021
GSTR-3B April’ 2021turnover more than 5 Cr	May 20, 2021
GSTR-1April’ 2021 turnover more than 5 cr	May 26, 2021
IFF- Invoice furnishing facility (Availing QRMP)	May 28, 2021
GSTR-4 Composition Levy for the period FY 2020-2021	May 31, 2021
ITC-04 for the period January-March 2021	May 31, 2021
GSTR-9&9C F.Y. 2020-2021	Dec 31, 2021

Note: Many relaxations including waiver of late fees and reduction in interest rate has been provided by government amid COVID-19 pandemic. Please refer details as mentioned below.

CBIC notifies various relaxations amid COVID-19

Notification	Relief Type	Description
Notification No. 7/2021 – CT dated April 27, 2021	EVC Verification	Businesses can now verify GSTR-3B, GSTR-1 and the IFF using EVC for the period 27.04.2021 to 31.05.2021 (currently this is done using Digital Signature).
Notification No. 13/2021 – CT dated May 01, 2021	Cumulative application of Rule 36(4) for the month of April’2021 & May’2021	Rule 36(4) of the CGST Rules, 2017 provides that ITC can be availed up to 105% of the eligible ITC as available to the assessee in GSTR-2A (i.e., on the basis of reporting by the supplier in their GSTR-1 return). The above condition to apply cumulatively for the period April & May 2021. Further, cumulative adjustment of the ITC of Apr & May 21 needs to be done in the return for the period May 2021.
Notification No. 14/2021-CT dated May 01, 2021	Extension of timelines for statutory & other compliances where limitation period falls during the period April 15, 2021 to May 30, 2021	 Completion of any proceeding / passing of any order / issuance of any notice, intimation, notification, sanction or approval / such other action;  Filing of any appeal, reply or application or furnishing of any report, document, return, statement or such other record Note: The above extension is not applicable to: Payment of tax; issuance of e-way bill or invoices; Registration; Return GSTR – 3B (except for ISD return, TDS return, return by Non-resident taxable person) & GSTR 1; and Section 47, 50, 69, 90, 122, 129.

Lower Interest Rate u/s 50(1) on delayed payment

Notification No. 08/2021 – CT dated May 1, 2021

Composition Taxpayers (dealers paying tax under Section 10 of CGST Act, 2017) For period Jan’21 to Mar’21	NIL for first 15 days from the due date 9% for next 15 days 18% thereafter
Taxpayers with aggregate turnover of upto Rs. 5 crores in the preceding FY. (including taxpayers who have opted for QRMP scheme) For period Mar’2021 & Apr’2021	NIL for first 15 days from the due date 9% for next 15 days 18% thereafter
Taxpayers with aggregate turnover of more than Rs. 5 crores in the preceding FY. For period Mar’2021 & Apr’2021	9% for first 15 days from due date 18% thereafter

Waiver of late fees on delayed filing of GSTR-3B returns

Notification No. 9/2021-CT dated May 01, 2021

QRMP dealers For period Jan’21 to Mar’2021	30 days from the due date of furnishing return
Taxpayers with aggregate turnover of upto Rs. 5 crores in the preceding FY. For period Mar’2021 & Apr’2021	30 days from the due date of furnishing return (Due date is 20th of following month)
Taxpayers with aggregate turnover of more than Rs. 5 crores in the preceding FY For period Mar’2021 & Apr’2021	15 days from the due date of furnishing return (Due date is 20th of following month)

Important Judgements

GST not to be paid, unless accepted as GST liability
Nandhi Dhall Mills India Pvt. Ltd. v. Senior Intelligence Officer, DGGST & Ors.– Madras High Court

Facts:                                                                                                                 

• Petitioner is a dealer in pulses, dhals and flour and manufactures food products, grain mill products and dal;
• Search & seizure investigation were conducted at Petitioner’s premises and various documents & registers were seized by the officials of the Director General of Goods and Services Tax (DGGST, hereinafter ‘Revenue’). Revenue contends that GST liability is payable as the goods supplied by the Petitioner are branded;
• A statement was recorded wherein the Petitioner accepted that GST tax liability has not been computed correctly. An undertaking to this effect was also signed by Managing Director and a scheme of payment was set out during investigation;
• Petitioner remitted a sum of Rs.1 crore in FORM GST DRC-03 inline with Section 74(5) of CGST Act,2017 on the same day of investigation and second installment of the tax amounting to Rs.1 crore was also paid subsequently;
• Managing Director of the Petitioner retracted his earlier statement and stated that there is no tax liability. Further, stated that he and his employees were forced to accept the tax liability and the admission was not voluntary rather obtained by means of coercion, threat and in a state of panic, without giving an opportunity to read the content of the Mahazar and without providing any workings of the actual determination of tax liability.
• Petitioner contends that the goods sold by them under the brand name ‘Shivam’, ‘Trishul’, ‘Cycle’ and ‘Nandhi’ are not registered marks and moreover that the petitioner voluntarily forgoes any actionable claim or enforceable right in regard to the usage of the aforesaid marks.
• Revenue contends that the amount has been paid by the Petitioner u/s 74(5) on self-determination basis. Further, the amounts have been paid voluntarily through DRC-03inlinewiththescheduleofpaymentssuggestedbythepetitioner.

Issue:

• Whether Revenue can further demand amounts from the Petitioner except by following due process of law i.e. conclusion of proceedings;
• Whether the Petitioner is entitled for refund of amount deposited by him during investigation proceedings (i.e.Rs.2 crores) along with interest?

Held:

• Sec74(5) provides for payment of tax along with interest and penalty even prior to the issuance of a show cause notice and such acceptance will have to be in the form of either self-ascertainment or an as certainment by the proper officer, inwriting. In case, the same cannot be concluded between the assessee and proper officer, then the proceedings cannot be said to be concluded u/s74(5);
• Mere signing of statement and making payment of tax (under stress of investigation) does not constitute self-assesse mentor self-ascertainment, as the Managing director of the Petitioner has retracted his statements and claimed the same to besought by way of coercion, threat and in a state of panic. Petitioner has consistently and vehemently contested the liability to tax with Revenue;
• Sec 74(5) is not a statutory sanction for advance tax payment, pending final determination in assessment and is contrary to the scheme of assessment set out under Section 74 of the CGST Act. Further, Revenue has not carried out any ascertainment of tax liability;
• No collection cannot be insisted upon prior to a final determination of liability being made;
• Amount collected by Petitioner during search and seizure (i.e. Rs. 2crores) needs to be refunded back and no further amount cannot be demanded till the conclusion of proceedings.

Substantial benefit cannot be denied due to procedural lapse
Kribhco Infrastructure Ltd. vs Appellate Joint Commissioner (ST), Vijayawada – Andhra Pradesh High Court

Facts:

• Petitioner is engaged in the business of transportation of goods through rail including ancillary road transportation;
• Petitioner was transporting certain goods via road (on behalf of its clients). The goods were intercepted and seized due to deficiency in E-way Bill. An order was issued by proper officer demanding tax, interest and penalty;
• Petitioner deposited tax in form of CGST & SGST at the directions of the order issued by proper officer by taking a temporary registration in the state of Andhra Pradesh;
• Aggrieved by the order issued by proper officer, Petitioner wanted to file an appeal before Appellate Authority, however was unable to do so in electronic form as the order issued was not uploaded/appearing on the GST web portal;
• In view of above technical restriction, Petitioner filed an appeal manually before Appellate Authority;
• Manual appeal filed was rejected at the admission stage itself for the reasons of not being filed via electronic mode in terms of Section 107 of APGST Act, 2017, and Rule 108 of APGST Rules, 2017;

Issue:  

• A writ in the nature of mandamus was filed by the Petitioner directing the Appellate Authority to admit the Appeal.

Held:

• Section 107 of CGST Act, 2017 read with Rule 108 of CGST Rules, 2017 provides that the appeal shall be filed in the required form, along with the relevant documents either electronically or otherwise;
• In the instant case, requirement of uploading order has not been fulfilled by Department. Further, there was no notification issued by the Commissioner prescribing procedure for manual filing of appeal under Rule 108 of CGST Rules, 2017;
• Hon’ble High Court observed that when substantial justice is pitted against technical considerations, it is always necessary to prefer the ends of justice, and thus the request of Petitioner merits consideration.
• Rejection order passed by the office of Appellate Authority rejecting the Appeal at the admission stage was set aside and directions were issued to Appellate Authority for admitting Petitioner’s appeal and pass appropriate orders in accordance with the procedure established by law.

No ITC on Promotional (POP) materials
Page Industries Ltd.– AAAR Karnataka

Facts:

• Appellant is engaged in manufacturing, distribution and marketing of knitted and woven garments under the brand name ‘Jockey’ swim wears and swimming equipment’s under the brand name of ‘Speedo’. Appellant also gets the said garments manufactured from its job workers. They market product through their own outlets as well as through distributors & retailers.
• Appellant procures promotion and marketing materials (POP materials like danglers, hangings, posters, carry bags, wooden pens, uniforms for sales personnel etc.) for displaying its products at their own outlets & outlets of its distributors & retailers.
• GST is discharged on procurement of such POP materials by the Appellant. Appellant without transferring the title of such POP goods, shifts the goods to its own outlets & its distributors/ retailers outlets under Delivery Challan without any consideration.
• Appellant contends that since POP goods qualify as ‘inputs’, are being used in the course or furtherance of business and thatsuchpromotionandmarketingformsanintegralpartofitsbusiness,theyareeligibletoavailITC.Further,wherethegoodsare given on FOC (Free of cost), such distribution is not free but with the obligation to promote its brand. Thus, it cannot be considered as ‘gift’ and made applicable to Sec 17(5) of CGST Act, 2017, there by restricting its ITC.
• Appellant, aggrieved by the decision of AAR filed an appeal before Appellate Authority of Advance Rulings (AAAR) – Karnataka for determination that whether the POP materials used by Appellant in promoting its brand and marketing their products can be considered as ‘inputs’ and GST paid on the same can be availed as ITC in terms of Section 16 of the CGST Act,2017.

Issue:

• Whether AAR-Karnataka was right in denying ITC on promotional materials? Whether the promotional materials can be accounted as ‘inputs’ and ITC be availed there of in terms of Section 16 of the CGST Act, 2017?
• Whether AAR-Karnataka was right in qualifying promotional materials as ‘Capital goods’?

Decision of AAR- Karnataka:

• Non-distributable goods (which are delivered to the distributors, franchisees and retailers and used in their premises however the ownership remains with Appellant): They qualify as ‘Capital Goods’ and not ‘inputs’ since the ownership remains with the Appellant and they are not direct cost to the Appellant. Further, where the said goods after its usage are written off/lost/destroyed– ITC needs to be reversed on the same.
• Distributable goods (which are delivered on FOC basis to franchisees, distributors and retailers for further distribution to its employees or customers): These may be further divided in two categories
  • Franchisees (Exclusive outlets): Supply to exclusive outlets shall qualify as transactions between related party and thus taxable under Schedule–I of the CGST Act, 2017. ITC is allowed on such transactions.
  • Distributors / Retailers (Non-exclusive outlets): Such transactions do not qualify as ‘supply’ under GST law, as these are transactions between distinct persons. ITC cannot be availed on such transactions.

Decision of AAAR Karnataka:                                                                        

• Non-distributable goods do not qualify as ‘capital goods’ as Appellant does not capitalize said goods in his books of accounts. It can be considered as ‘inputs’ and that these are being used in the course or furtherance of Appellants business.
• Franchisee (Exclusive outlets) and the Appellant are not related person but distinct persons. Further, there is no employee-employer relationship between them. Thus, the transaction between Franchisees and Appellant do not qualify as ‘supply’ in terms of Section 7 or Schedule I of CGSTAct,2017. Therefore, ITC cannot be availed even on such transactions.
• Activity of providing promotional materials qualify as ‘Non-taxable supply’ and thereby falls under the ambit of ‘Exempt Supplies’. Further, Section 17(2) restricts ITC to the extent of exempt supplies, hence ITC cannot be availed in the said transaction. Further, the said promotional materials acquires the character of gifts and therefore, are barred from being eligible for ITC in terms of Section 17(5)(h), even if they are used in the course or furtherance of business.

Vouchers are mere instrument of consideration (non-monetary) for future supply – AAAR – Tamil Nadu

Elaborative:

Facts
The appellant is engaged in manufacturing and trading of jewellery products. The appellant introduced different types of pre paid instruments through its retail outlets as a sales promotion tactic, third party PPI issuers and online portals to their customers, that they called “gift vouchers”.

Query raised before Tamil Nadu AAAR by the applicant :

• Whether gift vouchers are goods or services, its time of supply and relevant rate of tax, if applicable.

Judgement
Vouchers issued by Appellant are in the nature of actionable claim and hence cannot be treated either as supply of goods or supply of services. Therefore, vouchers issued by the applicant are not subject to tax under the CGST Act.

Vouchers issued by the Appellant can be redeemed against only gold jewellery and at a known tax rate, it will be taxable at the time of issue of the voucher. Supply is deemed to have been done at the time of issue of voucher itself.

Voucher being an instrument of consideration in a non-monetary form for future supply and not classifiable either as goods or services, it cannot be classified separately but only associated with the main supply against which the said voucher will be exchanged.

Points to contemplate:

• Voucher to be taxable at the time of issuance.
• Vouchers to be taxable at the rate of main supply of goods or services against which they shall be redeemed.

Advisory issued by CBIC for implementation of PMT-03 to re-credit the ITC sanctioned as refund
(Advisory No. 8/2021- Refunds dated April 20, 2021)

At present PMT-03 functionality in the online refund module is only for re-crediting of the rejected amount that has been debited at the time of filing of refunds.

For operationalization of re-crediting of ITC sanctioned as refund towards tax wrongly paid or paid in excess by debiting the credit ledger, a new enhanced PMT-03 functionality has been developed and deployed in the system. This new functionality is applicable to 4 types of refund:

• Refund of excess payment of tax;
• Refund of tax paid on intra state supply which is subsequently held to be inter-state supply and vice versa;
• Refund on account of assessment/provisional assessment/appeal/any other order; and
• Refund on “any other” ground or reason.