a) Filing returns through EVC – Notification No. 07/2021-Central Tax dated 27th April, 2021
By the above Notification the Government has amended Rule 26(1) of the CGST Rules, 2017 and a fourth proviso has been added in the said Rule so as to allow the companies registered under the Companies Act, 2013 to file return in Form GSTR3B and details of outward supplies in Form GSTR1 through electronic verification code (EVC) during the period from 27th April to 31st May, 2021.
Relaxation in interest / late fees – Notification No. 08/2021-Central Tax dated 1st May, 2021 and No. 09/2021-Central Tax dated 1st May, 2021
The Government of India has issued the above Notifications under the powers conferred upon it u/s 50(1) and section 128 of the CGST Act, respectively. The said Notifications are for the grant of some relaxation in interest / late fees during the pandemic period. The effect of the above Notifications is summarised in the following table:
|
Sr. No.
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Class of registered person
|
Returns for tax periods
|
Rate of interest
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Concession in late fees
|
|
1.
|
Regular taxpayers having aggregate turnover of more than Rs. 5
crores in the preceding financial year
|
March and April, 2021
|
Delay of first 15 days
from due date – 9%;
after 15 days – 18%
|
No late fees for delay of 15 days from due date of filing return
|
|
2.
|
Regular taxpayers having aggregate turnover up to Rs. 5 crores
in the preceding financial year who are liable to furnish
|
March and April, 2021
|
Delay of first 15 days
from due date – Nil;
next 15 days – 9%;
afterwards – 18%
|
No late fees for delay of 30 days from due date of filing return
|
|
2.
|
[Continued]
the return as specified u/s 39(1), i.e., taxpayers other than ISD /
Non-resident taxpayers / Composition taxpayers and taxpayers liable to TDS /
TCS
|
|
|
|
|
3.
|
Taxpayers covered by proviso to section 39(1), i.e.,
covered by QRMP Scheme
|
March and April, 2021
|
Delay of first 15 days
from due date – Nil;
next 15 days – 9%;
afterwards – 18%
|
No late fees for delay of 30 days from due date of filing return
|
|
4.
|
Payment of tax by taxpayers under Composition scheme
|
Quarter ending March, 2021
|
Delay of first 15 days
from due date – Nil;
next 15 days – 9%;
afterwards – 18%
|
NA
|
Similar relief is extended in payment of IGST and UTGST by Notifications bearing Nos. 01/2021-Integrated Tax and 01/2021-Union Territory Tax, both dated 1st May, 2021.
b) Extension of due date for filing GSTR4 – Notification No. 10/2021-Central Tax dated 1st May, 2021
By the above Notification, the Government has extended the due date of filing returns by registered persons (under Composition scheme) for the year ended 31st March, 2021 in Form GSTR4 till 31st May, 2021.
c) Extension of due date for filing ITC-04 – Notification No. 11/2021-Central Tax dated 1st May, 2021
By the above Notification, the Government has extended the date of filing declaration in Form GST ITC-04, for the period from 1st January, 2021 to 31st March, 2021, till 31st May, 2021.
d) Extension of due date for filing GSTR1 – Notification No. 12/2021-Central Tax dated 1st May, 2021
By the above Notification, the Government has extended the date of furnishing details of outward supplies, in Form GSTR1 for the month of April, 2021, till 26th May, 2021.
e) Cumulative calculation under Rule 36(4) – Notification No. 13/2021-Central Tax dated 1st May, 2021
As per Rule 36(4), a taxpayer is permitted to take credit of ITC in the periodic return/s up to the matched amount only (further enhanced by 5%, subject to eligibility). By the above Notification, the Government has made a relaxation. The above adjustment under Rule 36(4) can be done cumulatively for April and May, 2021. In other words, the taxpayer can comply with the requirements of Rule 36(4) for April, 2021 and May, 2021 cumulatively, instead of for each month separately.
Extension for IFF
By the above Notification, Rule 59(2) is also amended so as to provide that a registered person, furnishing details of outward supplies using IFF for the month of April, 2021, can furnish the same up to 28th May, 2021.
f) Extension of time for compliance – Notification No. 14/2021-Central Tax dated 1st May, 2021
The Government has power to issue instructions and directions u/s 168 of the CGST Act. Using such power, the Government has issued the above Notification to extend the time limits for different compliances in view of the pandemic situation.
In general, the due dates falling between 15th April, 2021 and 30th May, 2021, where compliance is not completed, the time limit for completion will stand extended to 31st May, 2021. However, the above extension is not applicable to certain compliances like returns, E-way bills, etc.
In relation to compliance about registration specified under Rule 9 of the CGST Rules, the due date is extended up to 15th June, 2021 if such compliance date was falling between 1st and 31st May, 2021 and the compliance was not completed within such period.
If the due date for order rejecting refund u/s 54(7) of the CGST Act falls between 15th April, 2021 and 30th May, 2021, the time is extended till 31st May, 2021, or 15 days from the receipt of reply to the notice, whichever is later.
g) Amendments in GST Rules – Notification No. 15/2021-Central Tax dated 18th May, 2021
By the above Notification, certain changes are made in the CGST Rules. A gist of the same is as under:
(i) Rule 23-Revocation
Rule 23 provides for filing of application for revocation of cancellation of registration within 30 days from the date of service of the order. Now, there is an amendment by which a person can apply in the extended time as may be granted by the Additional Commissioner, Joint Commissioner or Commissioner under the powers granted to them u/s 30(1) of the CGST Act. As per section 30(1), the Additional Commissioner or Joint Commissioner can extend time for 30 days after the expiry of the first 30 days and the Commissioner can grant further extension up to 30 days after the expiry of 60 days as above. The Form GST REG-21 is also suitably amended by substituting the same.
(ii) Rule 90(3)-time limit for rectified refund application
Rule 90 is amended by which a proviso is added. The amendment seeks to exclude time from filing of refund claim in Form GST RFD-01 till the date of communication of deficiencies in Form GST RFD-03, from the period of two years for filing fresh refund claim after rectification of deficiencies. This is a beneficial amendment.
(iii) Rule 90(5)/(6)-Withdrawal of refund application and re-credit
By these newly-inserted sub-rules, a facility to withdraw a refund application is provided. A registered person can now withdraw refund application/s by filing a request in Form GST RFD-01W. This application can be filed before issuance of provisional refund sanction order (GST RFD-04) or final refund sanction order (GST RFD-06), or payment order (GST RFD-05), or refund withhold order (GST RFD-07), or show cause notice (GST RFD-08).
As per rule 90(6), the amount debited to credit / cash electronic ledger at the time of filing the application in GST RFD-01 will get re-credited to the ledger from which debit was made upon submission of GST RFD-01W. This is also a beneficial amendment.
(iv) Rule 92(1)/(2)-Release of withheld refund
There are procedural changes in the rules. However, the good part is that when the authorities are satisfied that refund is no longer required to be withheld, they will pass an order for release of withheld refund in Part B of GST RFD-07.
(v) Rule 96-Procedural changes in refund of IGST
Procedural changes are effected in the refund of IGST in sub-Rules (6) and (7) of Rule 96.
(vi) Rule 138E-E-way bill
As per rule 138E, when the taxpayer is in default of filing returns for two consecutive tax periods / months, as the case may be, he is not allowed to generate information in Part-A of GST EWB-01. This was preventing the said defaulter from generating Part-A of GST EWB-01 for both outward as well as inward supplies. Now, by an amendment the restriction for non-generation of Part-A of GST EWB-01 is limited to outward supply; hence to the extent of inward supply he can generate Part-A of GST EWB-01. This is also a welcome amendment.
CIRCULARS
Standard Operating Procedure (SOP) for implementation of extended time limit for filing application for Revocation – Circular No. 148/04/2021-GST dated 18th May, 2021
By amendments in section 30 of the CGST Act and relevant Rules under the CGST Rules, a facility to extend time beyond 30 days for filing an application for revocation of cancellation of registration is granted. As per the amended position, the Additional Commissioner or Joint Commissioner can extend time for 30 days after the expiry of the first 30 days. The Commissioner can further extend the time limit for 30 days after the expiry of the above 60 days. The above Circular has given SOP about the implementation of the above extended time limits.
ADVANCE RULINGS
1. Classification-flavoured milk
Vadilal Industries Ltd. (AR No. GUJ/GAAR / R/05/2021 dated 20th January, 2021)
In this advance ruling before the Learned Gujarat AAR, the issue was whether flavoured milk is covered by Heading 0402 and Sub-heading 0402 9990 of the GST Tariff.
The applicant has given the process of making flavoured milk. It includes standardisation of fresh milk according to fat content, heating at certain temperature followed by filtration, pasteurisation and homogenisation, mixing of sugar and various flavours and finally bottling.
The arguments of the applicant are as under:
- The process does not change the essential character of milk.
- Flavoured milk is a substitute for milk.
- It is a simple preparation of milk.
- No manufacturing process involved and composition of milk not changed.
- Since milk / milk products enumerated in Chapter 4, hence tariff item 0402 9990 is the correct sub-heading for the above product.
- Chapter 4 of HSN covers milk and other milk products.
- It was also pointed out that 0402 covers milk containing added sugar.
- It was argued that the product is covered by sub-heading 0402 9990 as ‘other milk’.
- The addition of sugar and permitted flavours is to improve the shelf-life and also the taste.
- Position under Prevention of Food Adulteration Rules, 1955 cited.
- No other specific entry for milk, so considering same under Heading 4 is to be upheld.
- The favourable AR in case of Karnataka Co-op. Milk Products Federation (30 GSTC 350) (KAR AAR) was cited wherein the same product is held as covered by 0402 9990.
Observations by the AAR
The AAR observed that Classification is to be done as per the Customs Tariff. He referred to chapter notes to heading 0402 and 0404. The chapter heads 0402 and 0404 are reproduced in AR as under:
0402 – ‘Milk and creams concentrated or containing added sugar or other sweetening matter.’
0404 – ‘Whether or not concentrated or containing added sugar or other sweetening matter, products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included.’
The AAR made further reference to the Explanatory Notes on the above headings in the HSN. And also to heading 22.02 which covers beverages consisting of milk flavoured with cocoa or other substances.
He observed on the facts that the applicant’s product consists of 92% milk, around 8% of sugar, colour and flavour of kesar and badam, rose and elaichi for sweetening and flavour. It is supplied in tetra packs / bottles. The product is marketed as ‘Power Sip’, ready for consumption.
Keeping the above facts in view, the AAR held that the given product is not covered by 0402 or 0404 but by 2202 9990 being a beverage with milk as the basis. The meaning of ‘beverages’ was also discussed with the help of precedents. The citations given by the applicant are distinguished by the AAR. The reliance on the PFA Rules also held as not correct.
In this respect the AAR also made reference to the Agenda of the 31st GST Council Meeting dated 22nd December, 2018 in which a discussion is recorded on the classification of flavoured milk. In the said note, the item is classified in HSN Code 2202. The Advance Rulings in case of M/s Britannia Industries Limited (AR No. 08/AAR/2020 dated 25th February, 2020) (Tamil Nadu-AAR), M/s Tirumala Milk Products Pvt. Ltd. [ELT 2020 (32) GSTL 558] (Andhra Pradesh-AAR) and M/s Sri Chakra Milk Products LLP [ELT 2020 (32) GSTL 206] (Andhra Pradesh-AAR) were referred to, wherein a similar view has been taken.
Thus, the AAR held the Classification under Heading 2202 9930 and therefore held the product liable to tax at 12% GST as per Entry 50 in Rate Schedule II of Notification 1/2017.
2. Rate of tax on ‘Gift vouchers / Gift cards’
M/s Kalyan Jewellers India Limited (AR Appeal No. 01/2020/AAAR dated 30th March, 2021) – TN AAAR
The issue before the Appellate Authority for Advance Ruling (AAAR) was from an Advance Ruling (AR) by the Authority for Advance Ruling (AAR) dated 25th November, 2019. (The above AR is discussed in the BCAJ issue of July, 2020.)
The appellant was in the business of jewellery products. It introduced sales promotion schemes by offering different types of pre-paid instruments (PPI) like closed system PPI, semi-closed system PPI, open system PPI, etc. Generally, the above PPI are called ‘gift vouchers / gift cards’. The appellant had posed questions about the taxability of the above vouchers before the AAR who had decided the issues as under in the AR dated 25th November, 2019:
- The own closed PPIs issued by the applicant are ‘Vouchers’ as defined under the CGST / TNGST Act, 2017 and are a supply of goods under the CGST / TNGST Act, 2017.
- The time of supply of such gift vouchers / gift cards by the applicant to the customers shall be the date of issue of the vouchers if the vouchers are specific to any particular goods specified against the voucher. If the gift vouchers / gift cards are redeemable against any goods bought, the time of supply is the date of redemption of the voucher.
- The AAR classified paper-based gift vouchers under Sl. No. 132 of Schedule II of the Notification No. 1/2017-C.T (Rate) dated 28th June, 2017 taxable at 12% GST and classified plastic-based card under Sl. No. 382 of Schedule III of the Notification No. 1/2017-CT (Rate) dated 28th June, 2017 taxable at 18%.
In its appeal, the appellant submitted that the above vouchers have redeemable face value and have no intrinsic value. They are not marketable items for levy of GST. It was also explained that when the vouchers are issued to the customers they are treated as ‘other current liabilities’ in the books. Further, when the vouchers are actually redeemed, the sales are booked of the goods supplied against the vouchers. It was also argued that it is in the nature of an actionable claim. It was also pointed out that if tax is levied on vouchers then it will be double taxation as tax will be collected at the time of issue of the voucher and also at the time of redemption as tax will be collected on the items supplied against the vouchers.
The AAAR observed that the question about actionable claim may not be examined, as the voucher is neither goods nor services. About the nature of the vouchers, he observed that it is a means for advance payment of consideration for future supply of goods or services. The AAAR further observed that the voucher is a type of money and though not actual money within the definition of ‘money’ as per the RBI, it will still be money as a means of payment of consideration. No GST can be levied on supply of vouchers but GST on items supplied against vouchers can be levied at the time of supply.
Regarding the time of supply, the AAAR held that the supply of the underlying goods or services for which the voucher has been issued will be the date of issue of the voucher if the supply is identifiable at that point of time. If there is no such identification, then the date of redemption of the voucher will be the time of supply. Thus, the Learned AAAR has resolved the complicated issue and it will be useful to trade.
