By G.G. Goyal
Chartered Accountant | C. B . Thakar
Advocate
NOTIFICATIONS
(1) One-time waiver of late
fees – Notification No. 52/2020-Central Tax, dated 24th June, 2020
Non-filers of GST
returns for the period July, 2017 to January, 2020 who file their returns
before 30th September, 2020 shall not be required to pay any late
fees. Further, the revised dates for filing GSTR3B for taxpayers with turnover
less than Rs. 5 crores for the months June and July, 2020 have been extended as
follows:
June, 2020 –
Group A States = 23rd
September, 2020
Group B States = 25th
September, 2020
July, 2020 –
Group A States = 27th
September, 2020
Group B States = 29th
September, 2020
(2) Capping of maximum late
fee – Notification No. 57/2020-Central Tax, dated 30th June, 2020
Notification No.
52/2020-Central Tax is amended and a new proviso is added vide
this Notification to cap the maximum amount of late fee payable by late filers
of GSTR3B for the period starting from February, 2020 and up to July, 2020. The
maximum late fee payable for the above periods shall be Rs. 500 per return, if
the returns are filed after the due date but before 30th September,
2020.
(3) SMS facility for Nil
returns – Notification No. 58/2020-Central Tax, dated 1st July, 2020
This Notification has amended the CGST rules to provide for filing of
Nil GSTR1 or GSTR3B using Short Messaging Service (SMS) directly, using OTP
authentication.
CIRCULARS
(i) Clarifications on Covid-19
– Relief measures Circular No. 141/11/2020-GST
By the above Circular, the CBIC has clarified some doubts regarding the
Covid-19 relief measures provided by the Government. It has been clarified that
the interest shall be payable as per the interest applicable across different
time periods. For example, if GSTR3B for the month of April, 2020 is filed on
28th June, 2020, where the original due date was 20th
May, the conditional extended filing date was 4th June, 2020, the
interest will be payable as follows:
No. of days
delay = 39
Interest = Nil for
15 days (up to 4th June, 2020)
9% for 20 days (up to 24th June, 2020)
18% for 4 days (up to 28th June, 2020)
ADVANCE RULINGS
(A) Rate of tax
on mehandi /
henna
Sunil Kumar Gehlot (Sunil Kumar & Co.) (Order No.
RAJ/AAR/2020-21/01, dated 6th May, 2020)
The issue regarding
rate of tax on henna was before the learned AAR, Rajasthan. The applicant
wishes to start manufacturing mehandi / henna powder.
The applicant
submitted that the classification dispute as regards mehandi / henna
powder was prevalent since the days of the Central Excise Laws and the
confusion continued to persist in the GST era. He further submitted that while
selecting the commodities at the time of filing the registration application,
the HSN Code 14041019 specifically mentions ‘Henna Powder’ and so the applicant
has mentioned the classification of the product under Chapter 14 and,
accordingly, the rate of GST applicable is 5%.
The applicant
stated that the rate on henna powder was decided at 5% since the inception of
GST. He produced the agenda list of the fitment committee for the consideration
of the GST Council. In that, it could be seen from Agenda Item No. 10 that the
rate was decided to be kept at 5%. He produced the relevant extracts and
supporting documents for the consideration of the AAR.
The AAR considered
the above arguments and heard the jurisdictional officers for their views. They
had relied on Wikipedia for the meaning / definition of the word ‘henna / mehandi’
and observed that henna and mehandi are the same product with different
names and are obtained from the mehandi tree by grinding its leaves.
They further
observed that tariff items 14041011 to 14041090 have been omitted from the
Customs Tariff Act, 1975 and hence no such tariff item is available in the said
Act. In view of the above, the question of classification of products under
discussion under 14041011 does not arise.
The learned AAR
observed that it is a well-known fact that henna / mehandi powder has a
natural property of dyeing / tanning and is generally used as hair dye.
Therefore, the product is rightly classified under Chapter Heading 3305 as
preparations for use on hair and covered under amended Notification No.
41/2017-CT(R) dated 14th November, 2017 and shall attract GST @ 18%.
(B) Sale of land
plot with basic amenities
Shri Dipesh Anilkumar Naik (Order No. GUJ/GAAR/R/11/2020, dated 19th
May, 2020)
The applicant has
submitted that he has a vacant land outside the municipal area of the town on
which he has some proposed business activity and has all the necessary
approvals for the project from the Plan Passing Authority (i.e., zilla
panchayat). The applicant has further submitted that as per the said
Authority, the seller of land is required to develop the primary amenities like
sewerage and drainage line, water line, electricity line, land levelling for
road, pipeline facilities for drinking water, street lights, telephone line,
etc. The applicant also submitted that they will sell the individual plots to
different buyers without any construction on the same but by providing the
primary amenities as mentioned above, which are the mandatory requirements of
the Plan Passing Authority.
The applicant
wished to know the applicability of GST on the proposed sale of plots with the
amenities as mandated by the Authority.
The AAR referred to
Schedule III to the GST Act. This Schedule sets out the activities or
transactions which are treated as neither a supply of goods nor as supply of
services. Therein, Entry 5 covers sale of land which is excluded from GST levy.
On the basis of this entry, the AAR observed that where the nature of activity
is that of only sale of immoveable property of a plot, it is excluded from GST
levy.
Further, the AAR
found that the plotted development is a scheme which involves forming land into
a layout after obtaining necessary plan approval from the Development
Authority, get all other permissions required to take up, commence and complete
what would be the layout, comprising of individual sites. In the activity of
plot development, the following are done – levelling the land, construction of
boundary wall, construction of roads, laying of underground cables and water
pipelines, laying of underground sewerage lines with sewage treatment plants,
development of landscaped gardens, drainage system, water harvesting system,
demarcation of individual plots, construction of overhead tanks and other
infrastructure works.
In addition, common
amenities like garden, community hall, etc. are also offered in some schemes.
The sale of such sites is done to the end customers who may construct houses /
villas on the plots.
The AAR noted that
sellers charge the rates on super built-up basis and not the actual measurement
of the plots. The super built-up area includes the area used for common amenities,
roads, water tank and other infrastructure on a proportionate basis. Thus, in
effect, the seller is collecting charges towards the land as well as the common
amenities, roads, water tank and other infrastructure on a proportionate basis.
In other words, such common amenities, roads, water tank and other
infrastructure are an intrinsic part of the plot allotted to the buyer.
The AAR held that
the above indicates that the sale of a developed plot is not equivalent to the
sale of land but is a different transaction. Sale of such plotted development
was tantamount to rendering of service. This view has also been taken by the
Supreme Court in the case of M/s Narne Construction P. Ltd. reported at
2013 (29) STR 3 (SC).
He further held
that the activity of the sale of developed plots would be covered under the
clause ‘construction of a complex intended for sale to a buyer’ as contained in
Schedule II to the CGST Act. Thus, the AAR ruled that the said activity is
covered under ‘construction services’ and GST is payable on the sale of
developed plots in terms of the CGST Act / Rules and relevant Notifications
issued from time to time.
(C)
Classification of popcorn sold in containers
Jay Jalaram Enterprises (Order No. GUJ/GAAR/R/03/2020, dated 11th
March, 2020)
The applicant was involved in the manufacture and supply of the above
item. The popcorn is sold in a sealed plastic bag bearing a registered brand
name ‘[J.J.’s] Popcorn’, under the Trade Marks Act, 1999.
The applicant submitted that their product is manufactured by using corn
/ maize grains. The raw grain is heated in an electric machine / oven @ 180/200
degrees temperature and due to the heat so given to the grains, they turn into
puffed corns / popcorns which are known in Gujarati as ‘dhani’ and are similar
to puffed rice which is known as ‘murmura’. They are then sieved so as to
remove the grains that remained unpuffed. During the process, salt, edible oil
and turmeric powder are mixed in required quantities. Thereafter, the product
is packed in plastic pouches in quantities of 15 grams.
The applicant contended that its product, which is popularly known as
popcorn, is nothing but corn / maize, which is a cereal, falling under Chapter
10. They placed reliance on a judgment delivered by the Apex Court in M/s
Alladi Venkateshwaralu and others vs. Government of A.P. (1978) 41 STC 394 (SC),
wherein it was held that the term ‘atukulu’ (parched rice) and ‘muramaralu’
(puffed rice) are ‘rice’. Applying the same ratio, the applicant further
submitted that the term used in the above entry as maize (corn) also includes
puffed maize / popcorn as being a cereal within its meaning and therefore
[J.J.’s] Popcorn is covered in Entry No. 50 in the above tariff item 1005 of
Schedule I and is taxable accordingly. The applicant also submitted that though
this judgment is under the provisions of the Central Sales Tax Act, 1956, it is
still relevant as it used to be in earlier times for determining the
classification of commodities. The principle laid down therein is that a cereal
grain, even after applying the process of heating, does not lose its basic
characteristics and thus it remains the same grain and this principle is also
applicable squarely to maize as popcorn.
The AAR relied on the classification notes to Notification No.
1/2017-CT(R) which provides as follows:
‘Explanation – For the purposes of this
notification, –
(i) ……………
(ii) ………….…
(iii) “Tariff item”, “sub-heading”, “heading” and
“Chapter” shall mean, respectively, a tariff item, sub-heading, heading and
chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51
of 1975).
(iv) The rules for the interpretation of the First
Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section
and Chapter Notes and the General Explanatory Notes of the First Schedule
shall, so far as may be, apply to the interpretation of this notification.’
The AAR further relied on the decision of the Hon’ble Supreme Court in
the case of L.M.L. Ltd. vs. Commissioner of Customs [Civil Appeal No.
3764 of 2003, decided on 21st September, 2010 reported at 2010 (258)
ELT 321 (S.C.)]. It held as follows:
‘12. In Collector of Central Excise, Shillong vs.
Woodcrafts Products Ltd. reported in (1995) 3 SCC 454, it was held by this Court that as expressly
stated in the statements of objects and reasons of the Central Excise Tariff
Act, 1985, the Central Excise Tariffs are based on the Harmonious System of
Nomenclature (HSN) and the internationally accepted nomenclature was taken into
account to reduce disputes on account of tariff classification. Accordingly,
for resolving any dispute relating to tariff classification, a safe guide is
the internationally accepted nomenclature emerging from the Harmonious System
of Nomenclature (HSN). Although the decision in the case of Woodcraft Products
(Supra) dealt with the interpretation of the provisions of the Central
Excise Tariff, there can be no doubt that the HSN Explanatory Notes are a
dependable guide even while interpreting the Customs Tariff.’
Relying on the above interpretation rules, the AAR observed that the
goods in question is ready-to-eat prepared food and fits the description as
‘Prepared foods obtained by the roasting of cereal’. This description attracts
classification under Chapter Sub-Heading 1904 10 of the First Schedule to the
Customs Tariff Act, 1975.
The AAR mentioned that there is no specific entry for the product
‘popcorn’ in Notification No. 1/2017-Central Tax (Rate) dated 28th
June, 2017. But there is an entry most akin to the product and process (Chapter
heading 1904) at Sr. No. 15 of Schedule III of Notification No. 1/2017-CT(R)
dated 28th June, 2017 and attracts 9% CGST and 9% SGST, or 18% IGST.
As against the applicant’s contention that the product be classified as
maize, the AAR held that Note 1(A) to Chapter 10 clearly mentions that ‘the
products specified in the headings of this Chapter are to be classified in
those headings only if grains are present, whether or not in the ear or on the
stalk’. The applicant’s product loses the presence of grain in it, so it does
not deserve to be classified in that heading.
The applicant had also clarified that to make the
heated maize more palatable, salt, turmeric and some oil was added to it; this
makes it clear that the product is not grain but processed food.
