I. NOTIFICATIONS
(A) Changes in Rules – Notification No.38/2021 – Central Tax – dated 21st December, 2021
By
notification No. 35/2021-Central Tax dated 24th September, 2021
(Reported in BCAJ November, 2021), certain changes were made in rules to
come to effect from notified date. By the above notification, the said
rules are brought into effect from 1st January, 2022. The above changes,
which are coming into effect from 1st January, 2022, are basically in
respect of Aadhar Authentication for a registered person for carrying
out certain functions like filing of refund application, revocation
application etc.
(B) Changes in Act – Notification No.39/2021 – Central Tax – dated 21st December, 2021
By
above notification, effective date is notified for certain amendments
made by Finance Act, 13 of 2021 dated 28th March, 2021 under CGST Act.
As per the above notification, the given amendments are effective from
1st January, 2022 (discussed in detail in BCAJ, March 2021). The
indicative changes are mentioned below for ready reference:
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Sr. No.
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Section of the Finance Act, 13 of 2021
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Section of the CGST Act, 2017
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Particulars
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1.
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108
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7
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The amendment is to dilute the effect of the Mutuality Concept
in the meaning of “supply” given in section 7, especially in relation to
clubs, society etc.
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2.
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109
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16
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Matching ITC with outward details of supplier (GSTR 2B) is made
applicable.
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3.
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113
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74
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Amendment in the above section is about the conclusion of
proceedings in specified cases.
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4.
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114
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75
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Self-assessment for recovery to include details shown in GSTR-1
but not reflected in GSTR-3B.
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5.
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115
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83
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The extension of provisional attachment to the beneficiary is
brought into effect.
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6.
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116
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107
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In case of an appeal against penalty order under section 129(3),
pre-payment of 25% will be necessary.
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7.
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117
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129
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Penalty enhancement from 100% to 200% for E-way bill default
becomes applicable.
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8.
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118
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130
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Penalty of 100% specified in the section becomes applicable.
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9.
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119
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151
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About collection of statistics.
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10.
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120
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152
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About bar on disclosure of information.
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11.
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121
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168
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Procedural changes
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12.
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122
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Schedule-II, Para 7
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The said Para about the treatment of unincorporated association
is deleted. This is to be read with amendment in section 7.
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(C) Changes in Rules – Notification No.40/2021 – Central Tax – dated 29th December, 2021
By above notification, following changes are made in CGST Rules, 2017:
(C)
Government has issued Notifications No.20/2021-Central Tax (Rate) dated
28th December, 2021 and 20/2021-Integrated Tax (Rate) dated 28th
December, 2021 for effecting changes in rate schedules namely in
Notification No.21/2018-Central Tax (Rate) dated 26th July, 2018 and
Notification No.22/2018-Integrated Tax (Rate) dated 26th July, 2018
which are relating to handicraft items. By above amendments, changes are
made in said Notifications. For the sake of brevity entry wise
amendments are not mentioned here. The changes are effective from 1st
January, 2022.
(D) Government has issued Notifications
No.21/2021-Central Tax (Rate) dated 31st December, 2021 and
21/2021-Integrated Tax (Rate) dated 31st December, 2021 for superseding
Notification No.14/2021-Central Tax (Rate) dated 18th November, 2021 and
Notification No.15/2021-Integrated Tax (Rate) dated 18th November, 2021
and amend Notification No. 01/2017- Central Tax rate and
08/2017-Integrated tax (rate) respectively. By above amendments, changes
are made in said Notifications. For the sake of brevity entry wise
amendments are not mentioned here. The changes are effective from 1st
January, 2022.
(E) Government has issued Notifications
No.22/2021-Central Tax (Rate) dated 31st December, 2021 and
22/2021-Integrated Tax (Rate) dated 31st December, 2021 for superseding
Notification No.15/2021-Central Tax (Rate) dated 18th November, 2021 and
Notification No.14/2021- Integrated Tax (Rate) dated 18th November,
2021 and amending Notification No.11/2017-Central Tax rate and
01/2017-Integrated tax (rate). By above amendments, changes are made in
description in entries. For the sake of brevity item wises amendments
are not mentioned here. The changes are effective from 1st January,
2022.
III. CIRCULARS
(A) GST on services supplied by restaurants through e-commerce operators – Circular No.167/23/2021-GST dated 17th December, 2021
By
this Circular, various clarifications are given in respect of new
system of taxation of restaurants making supplies through e-commerce
operators.
(B) Mechanism for filing of refund claim by the
taxpayers registered in erstwhile Union Territory of Daman & Diu for
period prior to merger with U.T. of Dadra & Nagar Haveli – Circular
No.168/24/2021-GST dated 30th December, 2021
By this Circular, the clarifications are given about refund claims in the above Union Territory of Daman & Diu.
(C) Press Release
By
Press release dated 31st December, 2021 it is informed that vide
decision in 46th GST Council Meeting, the existing rates in Textile
sector will continue beyond 1st January, 2022 also. It means the
increase in rates for Textile sector is kept on hold.
(D) HSN Change from 1st January, 2022
The
Custom Department has informed vide D.O.F No.524/11/2021-STO(TU) dated
20th December, 2021, that there are changes in HSN codes from 1st
January, 2022 and stakeholders should take care of the same by making
reference to the changes.
IV. ADVANCE RULINGS
(A) Export of services vis-à-vis Intermediary Services
M/s. DKV Enterprises Pvt. Ltd. (AAR No. 02/AP/GST/2021 dated 11th January, 2021)
The
applicant is an authorized non-exclusive consultant for Grace Products
(Singapore) Pte Limited situated in Singapore to sell fluid cracking
catalysts and additives.
The applicant is expected to be a
consultant for the sale of products of Singapore Company to the HPCL
Vishaka Refinery and other such refineries. The applicant claimed that
he is rendering marketing consultant services to Singapore Company, and
they are billing directly to Singapore Company. It is also stated that
money is received in foreign currency. It was further clarified that the
applicant is not giving any services to Indian clients nor any payment
is received from them.
In this case, earlier advance ruling order
was passed dated 24th February, 2020. In the said order, the above
services were held as intermediary services and not export of services.
Applicant then filed appeal to the Appellate Authority for advance
ruling. Before the Appellate authority, applicant made request to remand
back the case to original authority in light of the judgment in case of
IBM India Pvt Ltd. vs. Commissioner of Central Excise and Service Tax reported in 2020 (34) G.S.T.L. 436. Consequent
to above request the matter was remanded back to original authority
i.e., AAR. Therefore, fresh hearing was done, and this advance ruling
order dated 11th January, 2021 is passed. In the order, the learned AAR
has held that the judgment cited by applicant i.e., in case of IBM India
Pvt. Ltd. is under service tax regime and not applicable in the present
situation. The learned AAR held that applicant is covered and fits into
the definition of intermediary as defined in the section 2(13) of the
IGST Act, 2017 and therefore, “Place of Supply” is required to be
decided as per section 13(8) of IGST Act, 2017. The learned AAR held
that, the transaction is not about export of services but it is liable
under IGST Act at 18% as per section 7(5)(c). The fresh ruling is passed
accordingly.
(B) Nature of service as “Going concern”
M/s SCV Sky Vision (AAR No. 04/AP/GST/2021 dated 12th January, 2021)
The
applicant is engaged in the cable operation business in Andhra Pradesh.
Applicant is Multi System Operator (MSO), whereby it purchases digital
signals from broadcasters, E-TV etc. The applicant transmits the said
signal to Local Cable Operators (LCO), who supplies the same to
individual home and customers premises. In relation to above business,
the applicant has assets and subscribers/customers linked LCO etc. The
applicant has entered into Business Transfer Agreement (BTA) with one
M/s ACN Cable Pvt. Ltd. In terms of BTA, ACN has agreed to purchase the
entire cable operation business of the applicant. All rights, title and
interest in and to the business, assets, subscribers/ customers, linked
LCOs will get transferred from the applicant to ACN as a going concern.
However, liabilities that have presently arisen or will arise for the
past business relationship/ earlier period and the employees are not
transferred. Based on the above facts, the applicant was contesting that
it has transferred business as a going concern and hence it is exempt
in light of entry at Sr. No.2 of the Notification No. 12/2017 – Central
Tax (Rate) dated 28th June, 2017 (‘Service Exemption Notification’).
The entry is also reproduced in the advanced ruling as under:
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Sr. No.
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Chapter,
Section, Heading, Group or Service Code (Tariff)
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Description
of Services
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Rate
(per cent.)
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Condition
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1
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Chapter 99
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Services by way of transfer of a going concern, as a whole or an
independent part thereof.
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NIL
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NIL
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In support of the above claim, the applicant has given its
lengthy submission and has relied upon certain judgments, including the
definition of going concern as per dictionary and clarifications given
by CBIC under service tax.
The learned AAR examined the claim and
observed that there would be a transfer of assets but not liabilities.
The learned AAR observed as under about nature of transfer as going
concern:
‘Going concern is not included in the GAAP (Generally
Accepted Accounting Principles) but included in the GAAS (Generally
Accepted Auditing Standards). Accounting standards determine what a
company disclose on its financial statements if there are doubts about
it’s ability to continue as a going concern. Conditions that lead to
substantial doubt about going concern include the following like
negative trends in operating results, continuous losses from one period
to next, loan defaults, lawsuit against a company, and denial of credit
by suppliers. Moreover, transfer of a going concern means transfer of a
running business which is capable of being carried on by the purchaser
as an independent business. Such transfer of business as a whole will
comprise comprehensive transfer of immovable property, goods and
transfer of unexecuted orders, employees, goodwill etc.,
The
concept of transferring a company as a ‘going concern’ was examined by
the Delhi High Court in the landmark judgement of Inre Indo Rama Textile
Limited (2013) 4 Comp LJ 141 (Del). In this case the Delhi High Court
held that a company is said to be transferred as a ‘going concern’ when
the assets and liabilities being transferred constitute a business
activity capable of being run independently for a foreseeable future.
The Supreme Court in Allahabad Bank vs. ARC Holding AIR 2000 SC 3098
(Allahabad Bank case) held that if the company is sold off as a ‘going
concern’, then along with the assets of the company, if there are any
liabilities relevant to the business or undertaking, the liabilities too
are transferred.’
In light of the above judicial precedents and
legal position, the learned AAR held that the applicant’s transaction
could not fit into the exemption entry cited above. The learned AAR held
the transaction is taxable.
