GST updates: Important developments in GST

  • IGST exemption on inter-state supply of services to Nepal & Bhutan against payment in INR

Earlier, in the sectoral FAQs on Exports available on CBEC portal, it was provided that export of goods to Nepal or Bhutan fulfils the condition of GST Law regarding taking goods out of India, thus, will be treated as zero rated and consequently will also qualify for all the benefits available to zero rated supplies under the GST regime. However, the definition of ‘export of services’ in the GST Law requires that the payment for such services should have been received by the supplier of services in convertible foreign exchange.

Thus, applicability of GST on services supplied to Nepal & Bhutan was being debated. Now, the Central Government vide Notification No. 42/2017-Integrated Tax (Rate) dated October 27, 2017, has amended Notification No. 9/2017 – Integrated Tax (Rate) dated June 28, 2017, to provide exemption to supply of services having place of supply in Nepal or Bhutan, against payment in Indian Rupees.

It is to be noted that supply of goods to Nepal or Bhutan qualifies as export and thus is zero rated in GST, but, in case of supply of services, the transaction, though, shall be exempted from GST, but will not qualify as export (i.e. not zero-rated). Here, the question of reversal of common credit to the extent of exempted supplies will arise.

  • Form GST TRAN-1 (with revision facility) date extended till November 30, 2017

The Government vide its tweet dated October 26, 2017 has announced that FORM GST TRAN – 1 (with revision facility) extended to November 30, 2017. Now, in this regard, two Orders viz. Order No. 07/2017-GST (under Rule 117 of the CGST Rules, 2017) and Order No. 08/2017-GST (under Rule 120A of the CGST Rules, 2017), both dated October 28, 2017, have been issued.

  • Form GST REG-26 date extended till December 31, 2017

In terms of Rule 24(2)(a) of the CGST Rules, 2017, every person who has been granted a provisional registration in GST shall submit an application electronically in FORM GST REG–26, along with the information and documents specified in the said application, within a period of 3 months or within such further period as may be extended by the Commissioner.

Vide Order No. 06/2017-GST dated October 28, 2017, the date for submission of application in Form GST REG-26 has been extended till December 31, 2017.

  • Form GST CMP-03 date extended till November 30, 2017

Vide Order No. 05/2017-GST dated October 28, 2017, the period for intimation of details of stock held on the date preceding the date from which the option to pay tax under Section 10 of the CGST Act, 2017 (i.e. Composition scheme) is exercised in FORM GST CMP-03 is extended till November 30, 2017.

  • Extension of due date to file Form ITC-04 for July – September, 2017 quarter till November 30, 2017

In terms of Rule 45(3) of the CGST Rules, 2017, details of inputs or capital goods sent and received back from job workers are to be furnished on a quarterly basis in Form ITC-04 on or before the 25th day of the month succeeding the said quarter. Excel offline facility for ITC-04 has been released on the GST portal on October 24, 2017.

Vide Notification No. 51/2017-Central Tax dated October 28, 2017, Rule 45(3) of the CGST Rules, 2017, has been amended to provide power of extension to the Commissioner.

Further, the Government vide its tweet dated October 25, 2017 has announced that the due date for filing ITC-04 is being extended. Now, in this regard, Notification No. 53/2017-Central Tax dated October 28, 2017, has been issued extending the time limit for making the declaration in FORM GST ITC-04, in respect of goods dispatched to a job worker or received from a job worker or sent from one job worker to another, during the quarter July to September, 2017, till November 30, 2017.

  • Further extension of time limit for furnishing declaration under Form GST ITC-01 to avail the benefit of ITC under Section 18(1) of CGST Act till November 30, 2017

Section 18(1) of the CGST Act, 2017 deals with availability of input tax credit on the inputs held in stock and inputs contained in semi-finished or finished goods held in stock in special circumstances like the persons applying for registration within 30 days from the date on which he become liable to registration, persons taking voluntary registration, persons ceasing to pay tax under composition scheme etc.

The Commissioner vide Notification No. 44/2017 – Central Tax dated October 13, 2017 (“Notification No. 44”), had earlier extended the time limit for furnishing a declaration in FORM GST ITC-01, by the registered persons, who have become eligible to avail the input tax credit under Section 18(1) of the CGST Act, 2017 during the months of July 2017, August 2017 and September 2017 upto October 31, 2017.

Now, the time limit has further been extended till November 30, 2017, vide Notification No. 52/2017-Central Tax dated October 28, 2017, making amendment in Notification No. 44.

Waiver of late fee for delayed filing of Form GSTR-3B for August & September, 2017

Late fees for filing GSTR-3B for the month of August and September 2017 have been waived off vide Notification No. 50/2017-Central Tax dated October 24, 2017. Late fees already paid by the taxpayer at the time of filing GSTR-3B would be credited to the taxpayer’s cash ledger on the GST portal online

Window open for cancellation of registration of migrated taxpayer and extension of date till December 31, 2017

Rule 24(4) of the CGST Rules, 2017, provides for cancellation of registration for those taxpayers who were not required to obtain registration as per GST Law provisions, but were migrated to GST as they were registered under the erstwhile tax regime. Window has now been opened for applying cancellation of registration.

Further, vide Notification No. 51/2017-Central Tax dated October 28, 2017, Rule 24(4) of the CGST Rules, 2017 has been amended to extend the date till December 31, 2017.

Concessional rate of 0.1% on supplies to merchant exporter, subject to prescribed conditions

The Central Government vide Notification No. 40/2017-Central Tax (Rate) dated October 23, 2017 has provided for a concessional rate of 0.1% on supply of taxable goods to merchant exporters. However, the concessional rate would be applicable on fulfilment of specified conditions therein like:

  • Supplier shall supply the goods to the registered recipient on a tax invoice;
  • Recipient shall export the said goods within a period of 90 days from the date of issue of a tax invoice by the supplier;
  • Recipient shall indicate the GSTIN of the supplier and the tax invoice number issued by the supplier in respect of the said goods in the shipping bill or bill of export;
  • Recipient shall be registered with an Export Promotion Council or a Commodity Board recognized by the Department of Commerce;
  • Recipient shall place an order on supplier for procuring goods at concessional rate and a copy of the same shall also be provided to the jurisdictional tax officer of the supplier etc.

It has been specifically provided that the supplier shall not be eligible for the above-mentioned exemption if the registered recipient fails to export the said goods within a period of 90 days from the date of issue of tax invoice.

Note: Similar notification has been brought under UTGST Act, 2017 vide Notification No. 40/2017-Union Territory Tax (Rate) dated October 23, 2017 and under IGST Act, 2017 vide Notification No. 41/2017-Integrated Tax (Rate) dated October 23, 2017

Certain supplies of goods notified as deemed exports in terms of Sec 147 of the CGST Act, 2017

The Central Government vide Notification No. 48/2017 – Central Tax dated October 18, 2017, has notified the following supplies of goods as deemed exports:

  • Supply of goods by a registered person against Advance Authorisation.
  • Supply of capital goods by a registered person against Export Promotion Capital Goods (“EPCG”) Authorisation.
  • Supply of goods by a registered person to Export Oriented Unit (“EOU”).
  • Supply of gold by a bank or Public Sector Undertaking specified in the notification No. 50/2017-Customs, dated the 30th June, 2017 (as amended) against Advance Authorisation.

In terms of Explanation (1) to Section 54 of the CGST Act, 2017 (dealing with refunds in GST), ‘refund’ under GST, inter alia, includes  refund of tax on the supply of goods regarded as deemed exports.

List of evidences prescribed for claiming refund under deemed export

The Central Government vide Notification No. 49/2017 – Central Tax dated October 18, 2017, has prescribed the evidences which are required to be produced by the supplier of deemed export supplies for claiming refund. The list includes the following evidences:

  • Acknowledgment by the jurisdictional Tax officer of the Advance Authorisation holder/EPCG Authorisation holder,that the said deemed export supplies have been received by the said holder, or a copy of the tax invoice under which such supplies have been made by the supplier, duly signed by the recipient EOU that said deemed export supplies have been received by it.
  • An undertaking by the recipient that no input tax credit on such supplies has been availed of by him.
  • An undertaking by the recipient that he shall not claim the refund in respect of such supplies and the supplier may claim the refund.

    Amendment in the CGST Rules, 2017

The Central Government vide Notification No. 47/2017 – Central Tax dated October 18, 2017 has made following amendments in the CGST Rules, 2017:

  • Supplier of deemed export supplies can also file refund application: 3rd proviso to Rule 89(1) of the CGST Rules, 2017 has been amended to allow supplier of deemed export supplies to file application for claiming refund in cases where the recipient does not avail of input tax credit on such supplies and furnishes an undertaking to the effect that the supplier may claim the refund. Earlier, only recipient was eligible to file the application for claiming refund in case of deemed exports supplies.
  • In clause (a) to Rule 96A(1) of the CGST Rules, 2017 (prescribing time period for payment of tax due along with interest to be furnished in the bond or letter of undertaking in case of export of goods without payment of IGST), after the words “after the expiry of three months”, the words “, or such further period as may be allowed by the Commissioner,” shall be inserted.
  • In FORM GST RFD-01, Cess column has been added appropriately.

Further, certain more amendments have been made in the CGST Rules, 2017 vide Notification No. 51/2017-Central Tax dated October 28, 2017:

  • Amendment in Rule 24(4) as discussed supra;
  • Amendment in Rule 45(3) as discussed supra;
  • Insertion of provisos in Rule 96(2) and 96A(2):While Rule 96 of the CGST Rules, 2017 deals with refund of IGST paid on goods exported out of India, Rule 96A covers refund of IGST paid on export of goods/services under bond or letter of undertaking.

In terms of sub-rule (2) of both these Rules, the details of the export invoices furnished in FORM GSTR-1 shall be electronically transmitted to the system designated by Customs and a confirmation that the goods covered by the said invoices have been exported out of India shall be electronically transmitted to the common portal from the said system.

Now, a proviso has been inserted to state that where the date of GSTR-1 is extended, the supplier shall furnish the information relating to exports as specified in Table 6A of FORM GSTR-1 after the return in FORM GSTR-3B has been furnished and the same shall be transmitted electronically by the common portal to the system designated by the Customs. Information in Table 6A so furnished shall be auto-drafted in FORM GSTR-1 for the said tax period.

Clarification on movement of goods on approval basis

The GST Policy Wing of Central Board of Excise & Customs vide Circular No. F. No. 10/10/2017-GST dated October 18, 2017,has clarified that goods which are taken for supply on approval basis can be moved from the place of business of the registered supplier to another place within the same State or to a place outside the State on a delivery challan along with the e-way bill wherever applicable and the invoice may be issued at the time of delivery of goods. For this purpose, the person carrying the goods for such supply can carry the invoice book with him so that he can issue the invoice once the supply is fructified.

It is further clarified that all such supplies, where the supplier carries goods from one State to another and supplies them in a different State, will be inter-state supplies and attract IGST in terms of Section 5 of the IGST Act, 2017.

It is also clarified that this clarification would be applicable to all goods supplied under similar situations.

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