By G.G. Goyal
Chartered Accountant | C. B . Thakar
Advocate
NOTIFICATIONS
(1) Activation of Form PMT-09 for transfer of
amount within Electronic Cash Ledger – Notification No. 37/2020-Central
Tax, dated 28th April, 2020
Registered Persons
were facing a lot of difficulties in getting refund of cash amounts deposited
under a wrong head in the electronic cash ledger. For example, if a person had
deposited Rs. 50,000 in cash under the ‘Cess’ head instead of the ‘SGST’ head,
he would not be able to use the cash amount and the only option available was
to claim refund of excess cash deposited in the ‘Cess’ head.
To address
these difficulties, Sub-Rule (13) was inserted in Rule 87 vide Notification
No. 31/2019-Central Taxes, dated 28th June, 2019. The said Rule
87(13) provided that a registered person may, on the common portal, transfer
any amount of tax, interest, penalty, fee or any other amount available in the
electronic cash ledger under the Act to the electronic cash ledger for integrated
tax, Central tax, State tax or Union territory tax, or cess in FORM GST
PMT-09.
Though the
aforesaid Sub-Rule 13 was inserted on 28th June, 2019, it was not
made effective at that time. Now, this facility has been made effective from 28th
April, 2020 through Form PMT-09.
This new
facility will be useful for transferring the cash balance from one head to
another head, or from one act to another. For example, the cash balance in CGST
can be transferred to SGST or to interest / penalty, or vice versa. However,
this utility will be helpful only if the balance is reflected in the electronic
cash ledger. Once the amount from the electronic cash ledger is appropriated,
then this utility will not be useful. In other words, where the amount has been
debited from the electronic cash ledger at the time of filing of, say, refund
application, the said utility will not be helpful. The registered person may
have to pursue a refund application in such case.
(2) Companies now allowed to file GSTR3B
through EVC method and Nil returns can be filed by SMS – Notification
No. 38/2020-Central Tax, dated 5th May, 2020
The
aforesaid notification is a welcome step in the current difficult times of the
Covid-19 lockdown period. Many companies that wanted to file GSTR3B in time or
before the extended due dates were not able to file the same as the Digital
Signature Certificate (DSC) of the Authorised Person is required for
verification of the return as per the proviso to Rule 26(1). In this
period of lockdown, most companies were not able to get the DSC of the
Authorised Person because these might have been in the office or elsewhere.
Thus, filing of returns without DSC was not possible. Keeping this difficulty
in mind, the government has allowed filing of GSTR3B for companies through EVC
method by inserting a second proviso to Rule 26(1). However, this
facility will be available for companies only between 21st April,
2020 and 30th June, 2020. Thereafter, companies will have to go back
to filing of return GSTR3B through DSC.
Though the
government has allowed the filing of GSTR3B by EVC for companies, they still
feel that other applications such as Refund Applications, etc. should also be
allowed to be filed by the EVC method during the lockdown period.
The second
important welcome step in the aforesaid Notification is that a new Rule 67A has
been inserted in the CGST Rules which allows any taxpayer, who wants to file a
Nil GSTR3B, to file the same by a simple SMS method. The Nil GSTR3B return,
through SMS mode, can be filed only through the registered mobile and the
verification will be done by OTP facility. This facility has been extended
without any time limit as of now.
(3) Extension of validity of E-way bills up to
31st May, 2020 – Notification No. 40/2020-Central Tax, dated
5th May, 2020
The above
Notification seeks to amend Rule 138 to the extent that all E-way bills
generated on or before 24th March, 2020 and with their validity
expiring between 20th March, 2020 and 15th April, 2020,
will have their validity deemed to have been extended till 31st May,
2020.
(4) Extension of time limit for GST Audit of
F.Y. 2018-2019 – Notification No. 41/2020-Central Tax, dated 5th
May, 2020
The time limit for filing the Annual Return (GSTR9) and GST Audit
Reconciliation Statement (GSTR9C) for F.Y. 2018-2019 is extended up to 30th
September, 2020. Earlier, the time limit was 30th June, 2020. The
extension of time limit to 30th September, 2020 is a welcome relief
for all such registered persons, practitioners and auditors because many
compliances are clashing in the month of June, 2020.
(5) Retrospective amendment to section 140 for
prescribing time limit for filing TRAN – 1 form has been made effective
from 18th May, 2020 – Notification No. 43/2020-Central Tax,
dated 16th May, 2020
Till now
many High Courts have decided on the applicability of time limit for filing
Form TRAN – 1 for claiming the transitional credit u/s 140 of the CGST Act,
2017 read with Rule 117 of the CGST Rules, 2017. The latest such judgment was
by the Hon’ble Delhi High Court in a bunch of cases reported in Brand
Equity Treaties Limited vs. The Union of India & Ors.; 2020-VIL-196-Del.
The Court held in this case that there is no time limit prescribed under the
Act and hence restricting the period for filing the Form TRAN – 1 to 90 days
under Rule 117 is unconstitutional. The said judgment has further laid down
that since there is no time limit prescribed under the Act, the provisions of
the Limitation Act will apply; hence TRAN – 1 form can be filed up to 30th
June, 2020, i.e., within three years from 1st July, 2017. There are
various other judgments of other High Courts such as that of the Punjab &
Haryana High Court in Adfert Technologies Pvt. Ltd. vs. Union of India;
2019-VIL-537-P&H, which is held in favour of taxpayers holding that
the transitional credit is a vested right, hence no time limit is applicable
for filing the TRAN – 1 form. The
Revenue’s SLP against this judgment was rejected by the Hon’ble Supreme Court.
However, the
Central Government, on the other hand, has brought about an amendment in
section 140 of the CGST Act, 2017 by introducing power to prescribe a time
limit for filing the claim for transitional credit. The said amendment has
brought in all the sub-sections of section 140 with retrospective effect from 1st
July, 2017 by section 128 of the Finance Act, 2020 (Act No. 12 of 2020). The
said Finance Act, 2020 had received the assent of the Hon’ble President of
India on 27th March, 2020. However, the date of effect of the said
section 128 of the Finance Act, 2020 was not prescribed earlier.
Vide
the above Notification No. 43/2020, the said section 128 of the Finance Act,
2020 is now made effective from 18th May, 2020. The effect of such
Notification is that the provisions of section 140 are amended retrospectively
from 1st July, 2017 to have included the powers to prescribe a time
limit for filing claims of transitional credit. Thus, now the Act itself
provides for a power to prescribe a time limit for claiming transitional
credit.
The various
High Courts, which have held in favour of the taxpayers, have not considered
the amended provisions of section 140 of the CGST Act, 2017. In fact, the
amended section 140 was not even under challenge before the said High Courts.
Thus, the said amendment is going to have a huge impact on the judgments
delivered till now. This may lead to a second round of litigations challenging
the said retrospective amendment to section 140 of the CGST Act, 2017. But one
thing is clear, that the Central Government is determined to drive home its
point that the time limit of 90 days prescribed in Rule 117 is valid and
constitutional.
CIRCULARS
(1) Circular No. 137/07/2020-GST dated 13th
April, 2020
The CBIC has
issued the aforesaid circular clarifying the measures taken in respect of
challenges faced by taxpayers due to the Covid-19 lockdown.
(a) Time limit for obtaining registration by class
of persons considered as distinct entity of corporate debtors being managed by
IRP / RP as per Notification No. 11/2020-CT dated 21st March,
2020 is extended up to 30th June, 2020. Accordingly, the time
limit for filing the GSTR3B is also extended.
(b) Notification No. 40/2017-CT(R), dated 23rd
October, 2017 providing for 0.1% scheme for merchant exporters prescribes
condition of exporting the goods within 90 days from the date of tax invoice of
original supplier. The said time limit of 90 days is extended to 30th
June, 2020 for all transactions where the validity of such 90 days is expiring
between 20th March, 2020 and 29th June, 2020.
(c) Time limit for filing ITC-04
for quarter ending March, 2020 is extended to 30th June, 2020 from
25th April, 2020.
(2) Circular No. 22/2020-Customs dated 21st April,
2020
Under GST
there is a procedure of granting refund to exporters directly where the exports
have been made on payment of IGST. The details of exports, i.e. GST Invoice
number, Port Code, Shipping Bill No., etc. are uploaded on the GST portal by
filing return in GSTR1 and return in form GSTR3B. The data so available on the
GST portal is cross-matched with details in the shipping bill generated by the
Customs through the ICEGATE portal. If the data is matched, refund is granted.
However, often data mismatch takes place mainly due to wrong feeding of invoice
number, etc. This error is referred to as SB005 error. Refunds in numerous
cases have been held up due to such errors. Previously, instructions were
issued in respect of such an error through Circulars 8/2018-Customs, dated 23rd
August, 2018; Circular No. 15/2018-Customs, dated 6th June, 2018;
Circular No. 22/2018-Customs, dated 18th July, 2018; Circular No.
40/2018-Customs, dated 24th October, 2018; and Circular No.
26/2019-Customs, dated 27th August, 2019.
However,
considering that the country is facing challenges due to the Covid-19 pandemic,
the CBIC has re-examined the issue and issued the above Circular No.
24/2020-Customs by which the facility of correcting SB005 errors on the
Customs EDI system is extended for all shipping bills bearing date up to 31st
December, 2019. This clarification will help to ease out the refund disposal
and give much-needed working capital to the taxpayers at the earliest.
ADVANCE RULINGS
(I) Kardex India Storage Solution Pvt. Ltd. (AR
No. Kar ADRG 13/2020, dated 13th March, 2020)
The
importers are facing a difficult situation in respect of the obligation to
obtain GST registration in the state in which the goods are imported and
disposed of from such ports or bonded warehouses after storage.
Normally,
the importer has his place of business in one state and is registered in that
state for the purposes of GST. However, due to various reasons and logistics
requirements, the goods may be imported at a port in a state other than the
state in which the importer is registered.
For example,
a registered person has his place of business in Bengaluru (Karnataka) and is
registered under Karnataka GSTIN. He has imported goods at Chennai port from
where the goods are further supplied by him. A question arises as to whether
the registered person can pay IGST on import under Karnataka GSTIN and also
issue invoice for supply of such goods from Chennai port under the Karnataka
GSTIN? If it can be done, then the registered person will not be liable for
registration in Tamil Nadu state from where the actual supply of imported goods
has taken place. This will avoid multi-state registration for importers,
thereby reducing the compliance hassles and also ensuring ease of doing
business.
Recently, the
learned Authority for Advance Ruling for Karnataka has delivered the
above-mentioned Advance Ruling (AR) clarifying the position about registration.
The facts in
the said AR are that the applicant company is registered in the state of
Karnataka. He is engaged in the import of storage solutions and vertical
storage solutions (machines) from Germany and distributes the same to
industrial consumers all over India. The applicant was finding the transport of
goods from the port of import to its registered place and then to supply it
from there as a costly affair. Therefore, the applicant company intended to
import the goods at the port nearer its respective customer, which may be in a
state other than Karnataka, and supply from there. The applicant company posed
the following questions:
(a) Whether
the applicant can take credit of IGST paid on import of goods?
(b) Whether
the applicant can issue tax invoice with IGST to the customer?
(c) Whether
the applicant needs to obtain registration in the state where the port of
clearance is located?
The
applicant company contended that it can import at different ports in different
states but pay IGST on import under Karnataka GSTIN. It also stated that for
supplies made from such ports, the GST invoice can be made under Karnataka
GSTIN and the applicable tax can be discharged in the state of Karnataka.
Accordingly, it was submitted that it need not be registered in the state in
which import is made.
In support
of the above, the applicant had also submitted that as per the IEC, the place
based on which the Bill of Entry is filed as well as in which registration
under GST is obtained, is the location of the importer. It was also submitted
that it has no permanent establishment in states where the port of import is
situated. It was pointed out that as per section 7(2) of the IGST Act, the
imported goods continue to be imported goods till they cross the customs
frontiers of India and till then the supplies of such goods are considered as
inter-state supplies. Therefore, even if goods are supplied from the port of
import to customers, they should be deemed to be received in the state of
registration and supplied from there. Therefore, it was submitted that the
place of supply for imported goods would be the registered place, in this case
Karnataka, hence there was no need to take registration in states where the
import port is situated.
The learned
AAR, concurring with the above submissions, made the following observations:
It is observed that the applicant is registered in one state, i.e.
Karnataka, which is also used as place of business for the purpose of customs
and for payment of IGST on import. The learned AAR also made reference to the
location of import in terms of section 11(a) of the IGST Act, 2017 (Karnataka
in this case). Therefore, the argument of the applicant about deemed receipt of
goods in Karnataka and supply from there to customers is acceptable. The
learned AAR held that payment of IGST and raising invoices under Karnataka
GSTIN is as per law contained in section 31 of the CGST Act. However, if the
customer is within Karnataka, then the applicant should charge CGST and SGST,
being intra-state supply. In the aforesaid background, the learned AAR also
observed that the place in Karnataka is used for import and payment of IGST and
also no provision under CGST / SGST Act provides for obtaining registration in
the state in which the importing port is located. Since the applicant has no
establishment in the state of import port, there is no need to obtain registration
in that state.
In our view, this is a beneficial AR inasmuch as it avoids registration
in multiple states. Similar ARs have also been issued by the State of
Maharashtra in Gandhar Oil Refinery (India) Limited 2019 (26) GSTL 531,
Sonkamal Enterprises Private Limited 2019 (20) GSTL 498 and Aarel
Import Export Private Limited 2019 (26) GSTL 261 holding that
registration is not required in the state in which the goods are imported.
However, as per the scheme of the CGST Act, ARs issued in one state are not
binding on the authorities of other states. Further, we have seen that the
issue is recurring before various AARs. Therefore, it will be better if the
issue is clarified by CBIC itself so as to avoid any surprises in future.
(II) M/s T&D Electricals,
Advance Ruling No. Kar ADRG 18/2020, dated 31st March, 2020
In the above ruling, the question was again regarding the obligation to
obtain registration in the other state; however, this time the question was
raised for works contract service and not for imported goods.
The applicant, M/s T&D Electricals, has its place of business in
Jaipur and is registered under Rajasthan GSTIN. The applicant is a contractor
and had received an order from a customer in Karnataka (contractee) for
electrical installation and an IT job, which is a works contract, i.e. supply
of service. The applicant had to use both goods and services to complete the
contract.
Initially, the applicant applied to Rajasthan AAR for determining the
issue of registration in Karnataka. The learned Rajasthan AAR refused to
determine on the ground that he had no jurisdiction to decide the question of
registration in the state of Karnataka. Hence, a new application was filed as
an unregistered person before the Karnataka AAR. In this application, the
applicant submitted that it had no place of business or premises in Karnataka.
Though the contractee has provided a small space for office and stores on its
premises, it is without any written documents. Based on the above facts, the
applicant posed the following questions before the learned AAR.
‘1. Whether separate registration is required in Karnataka state? If yes,
whether agreement would suffice as address proof since nothing else is with the
assessee and service recipient will not provide any other proof?
2. If registration is not required in Karnataka state and if we purchase
goods from the dealer of Rajasthan and want to ship goods directly from the
premises of the dealer of Rajasthan to the township at Karnataka, then whether
CGST and SGST would be charged from us or IGST by the dealer of Rajasthan?
If registration is not required in Karnataka state and if we purchase
goods from a dealer of Karnataka to use the goods at the township in Karnataka,
then whether IGST would be charged from us or CGST and SGST by the dealer of
Karnataka?
3. What documents would be required with transporter to transit / ship
material at Karnataka site from dealer / supplier of Rajasthan and in case the
dealer / supplier is of Karnataka, advance ruling may kindly be issued whether
registration is required or not required in both the situations?’
In support of the application, the applicant submitted in writing that as
per section 22 of the CGST Act, the registration is required to be obtained in
the state from where the supply of service is made. Section 2(71) defines
location of supplier and as per the said section, in the present case the
location is in the state of Rajasthan as it is the principal place of business
and the applicant has no establishment in Karnataka. It was submitted that, in
light of section 12(3)(a) of the CGST Act, the place of supply is Karnataka as
it is a supply of service resulting in immovable property. Therefore, it was
contended that there is no need to obtain registration in Karnataka, more
particularly when there are no documents for registration in Karnataka such as
documents of legal ownership, electricity bills, etc.
In respect of goods procured for the contract in Rajasthan, it was
submitted that the supplier in Rajasthan will charge CGST and SGST as per
section 10(1)(b) of the IGST Act and goods will be directly shipped by the Rajasthan
supplier to the Karnataka site. In respect of purchases in Karnataka for the
given contract, it was submitted that the supplier in Karnataka should charge
IGST as per section 10(1)(b).
The learned AAR concurred with the applicant’s contentions in respect of
the first two issues. He observed that in the present case the applicant has
only one principal place of business situated in Rajasthan and has no other
establishment. Therefore, the location of supplier is Rajasthan and there is no
need to obtain registration in Karnataka.
In respect of goods purchased in Rajasthan and shipped to the site in
Karnataka, the learned AAR observed that since both the supplier of goods and
the recipient, i.e. the applicant, are in the same state, the charging of CGST
/ SGST by suppliers in Rajasthan is correct. The applicant correspondingly charging
IGST to the contractee is also correct.
In relation to goods procured locally in Karnataka, the learned AAR
observed that the supplier is in Karnataka and the applicant, i.e., recipient
is in Rajasthan, so it is inter-state supply. Therefore, the Karnataka supplier
shall charge IGST to the applicant and, in turn, the applicant should charge
IGST to its Karnataka contractee. The learned AAR held the above set of transactions
as covered by section 10(1)(b), i.e. bill to ship to model. He declined to
decide the third issue about documents to be carried for transportation on the
ground that he has no power to decide such an issue as per the scope of advance
ruling in section 97(2) of the CGST Act.
The above AAR
is again beneficial for taxpayers, especially for service providers. The said
AAR is also beneficial from the point of non-availability of any documents for
registration in the other states. In the above AR, not having an establishment
or relevant documents for obtaining registration in the other State is held,
amongst other things, as a relevant factor for determining the state of
registration.
