31st GST Council Meeting Update

[Manav Garg]

Hi Readers,

This is to inform that the GST council in their 31st council meeting held at New Delhi on 22nd Dec 18 has recommended various changes and thereafter notified by issuance of notification under GST law and its compliance, which are summarized below: 

Central Tax Notifications

[Notification No. 67/2018 Central Tax dated 31^st December, 2018]

Extension in time limit for availing the special procedure for completing migration of taxpayers who received provisional IDs but could not complete the migration process to 31st Jan 19 and to furnish other details to migration@gstn.org.in to 28th Feb 19.

[Notification No. 68/2018, 69/2018 & 70/2018 Central Tax dated 31^st December, 2018]

Time limit for furnishing the return in FORM GSTR-3B for the newly migrated taxpayers as specified in Notification No 31/2018

Particular	Period	Due Date
Prior to change	Jul 17 to Nov 18	31st Dec 18
After Change	Jul 17 to Feb 19	31st Mar 19

[Notification No. 71/2018 & 72/2018 Central Tax dated 31^st December, 2018]

Extension in time limit for furnishing GSTR-1 for newly migrated tax payers as specified in Notification No 31/2018

Particular	Period	Due Date
Prior to change	Jul 17 to Sept 18	31st Dec 18
After Change	Jul 17 to Dec 18	31st Mar 19

[Notification No. 73/2018 Central Tax dated 31^st December, 2018]

No TDS required to be deducted under Section 51 if supply takes place between following persons:

1. Dept. of Central or State Govt.;
2. Local Authority;
3. Govt. Agencies;
4. Authority or a board or any other body, set-up by an act of Parliament or a State Legislature; or an established by any Govt., with 51% or more by way of equity or control, to carry out any function;
5. Society established by the Central Govt. or State Govt. or a local authority under the Societies Registration Act, 1860 (21 of 1860);
6. PSUs

[Notification No. 74/2018 Central Tax dated 31^st December, 2018]

Changes in GST Form-9 & 9C

GSTR-1 and GSTR-3B to be filed before filing of GSTR-9

It is mandatory for a registered person to file all GSTR-1 and GSTR-3B for the FY 2017-18 before filing of GSTR-9.

GSTR-4 to be filed before filing of GSTR-9A

It is mandatory for a registered person under composition scheme to file all GSTR-4 returns for the FY 2017-18 before filing of GSTR-9A

Additional Liability to be paid through DRC-03

Any transaction resulting in additional liability which is declared in GSTR-9 to be discharged in Cash Only by way of DRC-03 form

Input Tax Credit cannot be availed through Form 9 & 9C

Registered person cannot claim any ITC unclaimed during FY-17-18 through Form 9 & 9C return. All unclaimed ITC has to be claimed through GSTR-3B only for which Government has extended the due date till the month of filing of Return for 31^st March 2019.

Change in Heading of Form GSTR-9 & GSTR-9A

Amendment of headings in the forms to specify that the return in FORM GSTR-9 & FORM GSTR-9A would be in respect of supplies etc. ‘made during the year’ and not ‘as declared in returns filed during the year’

Non GST Supply includes “No Supply”

Value of “non-GST supply” shall also include the value of “no supply” and may be reported in Table 5D, 5E and 5F of FORM GSTR-9;

HSN Summary of Inward Supply

It is clarified that in Table 18 that HSN summary is required to be disclosed for only those supplies that independently accounts for 10% or more of total value of inward supplies for goods as well as services

Auto Population of ITC amount in Other ITC related Information

All invoices pertaining to previous FY (irrespective of month in which such invoice is reported in FORM GSTR-1) would be auto-populated in Table 8A of FORM GSTR-9

[Notification No. 75/2018 Central Tax dated 31^st December, 2018]

Complete waiver of Late fees for late filling of GSTR-1 for period of July 17 to Sept 18, if GSTR-1 filled between period from 22nd Dec 18 to 31st Mar 19

[Notification No. 76/2018 Central Tax dated 31^st December, 2018]

Complete waiver of Late fees for late filling of GSTR-3B for period of Jul 17 to Sept 18, if GSTR-3B filled between period from 22nd Dec 18 to 31st Mar 19

[Notification No. 77/2018 Central Tax dated 31^st December, 2018]

Complete waiver of late fees for late filling of GSTR-4 for the period of Jul 17 to Sept 18, if furnished between period from 22^nd Dec 18 to 31^st Mar 19

[Notification No. 78/2018 Central Tax dated 31^st December, 2018]

Extension of time limit for filling of Form GST ITC-04, in respect of goods dispatched to Job worker or received from Job worker to 31^st Mar 19 for the period Jul 17 to Dec 18

[Notification No. 79/2018 Central Tax dated 31^st December, 2018]

Amendment in Notification No.-2/2018 for insertion of proviso which provides officers for exercising power under Section 73, 74, 75 & 76 through the jurisdictional senior authority.

Central Tax (Rate) Notifications

[Notification No. 24/2018 & 25/2018 – Central Tax (Rate) dated 31^st December, 2018]

Change in the rate of GST applicable on supply of specified goods, detail reading refer the attached notification

[Notification No. 26/2018 – Central Tax (Rate) dated 31^st December, 2018]

Exemption on Supply of Goods under Heading 7108 of CTA, 1975 by Nominated agency under scheme for “Export Against Supply by Nominated Agency” from whole of CGST on fulfilment of following conditions:

1. the Nominated Agency and the recipient shall follow the conditions and observe the procedures as specified in the Foreign Trade Policy read with Handbook of Procedures;
2. the recipient shall export the jewellery made out of such gold within a period of 90 days from the date of supply of gold to such recipient and shall provide copy of shipping bill or bill of export containing details of GSTIN along with the invoice for exports to the Nominated Agency within a period of 120 days from the date of supply by the Nominated Agency;
3. wherever such proof of export is not produced within the period mentioned in condition (ii), the Nominated Agency shall pay the amount of central tax payable on the quantity of gold not exported, along with interest from the date when the said tax on such supply was payable, but for the exemption.

[Notification No. 27/2018 – Central Tax (Rate) dated 31^st December, 2018]

Change in Rate of tax on supply of Services

• Service by way of construction or engineering or installation or other technical services, provided in relation of setting up of Bio-gas plant, Solar power based devices, Solar power generating system, Wind mills, Wind Operated Electricity Generator (WOEG), Waste to energy plants/devices, Ocean waves/tidal waves energy devices/plants will be taxable at 18%
• Supply of Food & Beverage to School & College will be exempted.
• Transportation of passengers, with or without accompanied baggage, by air, by non-scheduled air transport service or charter operations, engaged by specified organizations in respect of religious pilgrimage facilitated by the Government of India, under bilateral arrangement are taxable at 5%. ITC on goods will not be available
• Service of third party insurance of goods carriage will be taxable at 12%
• Leasing or renting of goods will be taxable at same rate as applicable on supply of such goods
• Services by way of admission exhibition of cinematograph films where price of admission ticket
  • Below INR 100 – taxable @ 12%
  • Above INR 100 - taxable @ 18%

[Notification No. 28/2018 – Central Tax (Rate) dated 31^st December, 2018]

Exemption on supply of certain Services

• Services provided by GTA to a Department or Establishment of the Central Government or State Government or Union territory, local authority, Governmental agencies which has been registered only for purpose of making deduction under Section 51 not for making Taxable supplies has been exempted
• Services provided by a banking company to Basic Saving Bank Deposit (BSBD) account holders under Pradhan Mantri Jan Dhan Yojana
• Services provided by CG, SG, UT by way of guaranteeing the loans taken by PSUs or undertakings from Banking Companies shall be exempt
• Services provided by IIM will be qualify as educational institution thus remain exempt [Circular -84/01/2019-GST]
• Services provided by rehabilitation professionals recognized under the Rehabilitation Council of India Act, 1992 (34 of 1992) by way of rehabilitation, therapy or counselling and such other activity as covered by the said Act at medical establishments, educational institutions, rehabilitation centers established by Central Government, State Government or Union territory or an entity registered under section 12AA of the Income- tax Act, 1961 (43 of 1961).

[Notification No. 29/2018 – Central Tax (Rate) dated 31^st December, 2018]

Services Notified under Reverse Charge

• Services provided by business facilitator (BF) to a banking company will be liable to RCM
• Services provided by an agent of business correspondent (BC) to business correspondent (BC) will be covered under RCM
• Security services (by way of supply of security personnel) by any person other than body corporate to registered person shall be liable to RCM
• Exclusion of security services-
  1. If security services rendered to a Department or Establishment of the Central Government or State Government or Union territory, local authority, Governmental agencies
     which has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017) only for the purpose of deducting tax under section 51 of the said Act and not for making a taxable supply of goods or services
     shall not be liable for RCM.
  2. If security services rendered to composition dealer registered under Section -10 of CGST Act, 2017

Circulars on 31^st GST Council Meeting

Circular No. 76/50/2018-GST, dated 31 December 2018

The Government has given clarification on certain issues as summarized below –

• It is clarified that the Government departments (i.e. Central Government, State Government, Union territory or a local authority) shall be liable to get registered and pay GST on intra-State and inter-State supply of used vehicles, seized and confiscated goods, old and used goods, waste and scrap made by them to an unregistered person
• It is clarified that in case of revision of prices, after the appointed date, of any goods or services supplied before the appointed day thereby requiring issuance of any supplementary invoice, debit note or credit note, the rate as per the provisions of the GST Acts (both CGST and SGST or IGST) would be applicable
• The provisions of section 51 of the CGST Act are applicable only to such authority or a board or any other body set up by an Act of parliament or a State legislature or established by any Government in which fifty-one per cent. or more participation by way of equity or control is with the Government
• It is clarified that as per the above provisions, taxable value for the purposes of GST shall include the TCS amount collected under the provisions of the Income Tax Act since the value to be paid to the supplier by the buyer is inclusive of the said TCS

Circular No. 77/50/2018-GST, dated 31 December 2018

Clarification on denial of composition option by tax authorities and effective date thereof

• It is clarified that in a case where the taxpayer has sought withdrawal from the composition scheme, the effective date shall be the date indicated by him in his intimation/application filed in FORM GST CMP-04 but such date may not be prior to the commencement of the financial year in which such intimation/application for withdrawal is being filed.
• In case of denial of option by the tax authorities, the effective date of such denial shall be from a date, including any retrospective date as may be determined by tax authorities, but shall not be prior to the date of contravention of the provisions of the CGST Act or the CGST Rules.
• It is also clarified that the registered person shall be liable to pay tax under section 9 of the CGST Act from the date of issue of the order in FORM GST CMP-07.
• Provisions of section 18(1)(c) of the CGST Act shall apply for claiming credit on inputs held in stock, inputs contained in semi-finished or finished goods held in stock and on capital goods on the date immediately preceding the date of issue of the order

Circular No. 78/50/2018-GST, dated 31 December 2018

Clarification on export of services under GST

It is clarified that the supplier of services located in India would be liable to pay integrated tax on reverse charge basis on the import of services on that portion of services which has been provided by the supplier located outside India to the recipient of services located outside India. Furthermore, the said supplier of services located in India would be eligible for taking input tax credit of the integrated tax so paid

Circular No. 79/50/2018-GST, dated 31 December 2018

Calculation of refund amount for claims of refund of accumulated ITC on account of inverted duty structure

• The amount of refund eligible in case of refund on account of inverted duty structure is determined as per Rule 89(5) which provides:

Maximum refund amount = {(Turnover of inverted rated supply of goods and services) * Net ITC /Adjusted Total Turnover} – Tax payable on such inverted rated supply of goods and services

• While calculating the amount of refund as per the formula specified above, department officers contended that the amount of Net ITC should not include the ITC of GST paid on inputs procured at equal or lower rate of GST than the rate of GST on outward supply.
• In relation to above, it has been clarified that the contention taken by department officers is wrong as the amount of refund is of unutilized ITC and that eligibility of refund under sub-section (3) of section 54 is not determined on the basis of rate of tax applicable to inputs. Tax rate on output supply being less than the rate of inputs is the reason of ITC accumulation for which refund is claimed.

Refund of accumulated ITC of input services and capital goods arising on account of inverted duty structure

• As per proviso to sub-section (3) of section 54, refund of unutilized ITC shall be allowed:
• “Where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies)”
  • Inputs, as defined under clause (59) of section 2, means “any goods other than capital goods…”
  • Thus, ITC on account of input services and capital goods shall not be included in the value of “Net ITC” for the purpose of Rule 89(5) and hence the same cannot be claimed as refund under section 54(3)

Refund to be allowed on all ‘inputs’ as the meaning and scope of term ‘inputs’ is very wide

• Definition of inputs under clause (59) of section 2 reads as follows:
• “Any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business”
  • For the purpose of calculating the amount of Net ITC in the inverted duty, department rejected ITC on account of following claiming the same not directly consumed in the manufacturing process:
• Stores and spares
• Packing materials
• Materials purchased for machinery repairs
• Printing and stationery items
  • Thus, it has been clarified that since there is no restriction on the manner of use of inputs for making an outward supplies unless the same is used or intended to be used in the course or furtherance of business, ITC on items mentioned in point (b) above cannot be restricted and be included in the calculation of “Net ITC” for the purposes of section 54

Issues related to refund of accumulated ITC of Compensation Cess

• Whether refund of compensation cess paid on inputs used for making zero rated supplies under LUT during the period July 2017 – May 2018 allowed in July 2018? What is the amount of compensation cess to be refunded?
• Clarification:
  • Circular 45/2018-CGST clarifies that a registered person making export of goods under LUT shall be eligible for claiming the refund of compensation cess paid on inputs used for making such supplies.
  • A registered person, being eligible to claim refund of compensation cess paid during the period July 2017 – May 2018, shall calculate the refund amount for each month as per the formula specified in Rule 89(4), i.e.

Refund amount = (Turnover of zero rated supply of goods + Turnover of zero-rated supply of services)*Net ITC/Adjusted Total Turnover

• The sum of the eligible amount calculated above for the period July 2017 – May 2018 should be less than or equal to the amount actually claimed as refund in the month of July 2018.

• Whether refund of compensation cess paid on purchase of coal used for captive generation of electricity which is in turn used for manufacture of goods exported under LUT allowed?
• Clarification:

Yes, refund shall be allowed even if input is not directly used for making zero-rated supplies.

• Whether ITC reversed to be taken into consideration for calculating the amount of “Net ITC” under Rule 89?
• Clarification:
  • The meaning of Net ITC given in Rule 89(4) reads as follows:

“Input tax credit availed on inputs and input services during the relevant period other than…”

• It has been clarified that the amount of ITC reversed as per the relevant provisions of the Act shall not be considered as ITC availed and thus not to be included while calculating the amount of Net ITC.
• Hence, if there is reversal of ITC under Rule 42 of the CGST Rules, the refund shall be computed only on the amount claimed as credit net of reversal made under Rule 42

Non consideration of ITC of GST paid on invoices of earlier tax period availed in subsequent tax period

• Department has noticed that the field officers are excluding the invoices issued by the supplier in previous month but filed in GSTR-3B of current tax period for the purpose of calculation of refund of unutilized ITC filed for the current tax period.
  • It contends that the definition of relevant period mentioned in Rule 89(4) restricts the inclusion of the same, which reads as follows:
• “The period for which the claim has been filed”
  • Thus, it has been clarified that refund claim filed for the relevant period is for the amount of Net ITC availed and not restricted only to the purchases made during the period. Moreover, section 16(4) also allows the registered person to claim ITC on or before the due date of filing of return for the month of September following the financial year to which the invoice pertains or the date of filing of annual return, whichever is earlier.
  • Hence, if the invoice pertaining to the month of September on which ITC has been availed in the GSTR-3B of the month of October, the ITC for refund computation purpose would be considered for the month of October irrespective of the date of invoice or appearance in GSTR-2A.

Circular No. 80/50/2018-GST, dated 31 December 2018

Clarification regarding GST rates & classification (goods)

• It is being clarified that LPG supplied in bulk, whether by a refiner/fractionator to an OMC or by one OMC to another for bottling and further supply for domestic use will fall under the S. No. 165A of the notification No. 1/2017- Central Tax (Rate) dated 28.06.2017 and shall, accordingly, attract a GST rate of 5%, with effect from 25.1.2018.

Circular No. 84/50/2018-GST, dated 1 January 2019

Clarification on issue of classification of service of printing of pictures

• Supply of services by way of “Printing of pictures” shall be classified under the SAC 998386 - Photographic and videographic processing services (18%) as the explanatory notes to the scheme of classification of services specifically includes the phrase “colour printing of images from film or digital media”.
• It would be incorrect to classify services of printing of pictures under SAC 998912 as the notes to SAC 998912 - Printing and reproduction services of recorded media, on a fee or contract basis specifically excludes such services

Circular No. 85/50/2018-GST, dated 1 January 2019

Whether supply of food and drinks by an educational institution to its students is eligible for exemption

• Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, Sl. No. 7(i) prescribes GST rate of 5% on supply of food and beverages services. Explanation 1 to the said entry states that such supply can take place at canteen, mess, cafeteria of an institution such as school, college, hospitals etc.
• On the other hand, Notification No. 12/2017-Central Tax (Rate), Sl. No. 66 (a) exempts services provided by an educational institution to its students, faculty and staff.
• A supply which is specifically covered by any entry of Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017 is exempt from GST notwithstanding the fact that GST rate has been prescribed for the same under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017
• Accordingly, it is clarified that supply of food and beverages by an educational institution to its students, faculty and staff, where such supply is made by the educational institution itself, is exempt under Notification No. 12/2017-Central Tax (Rate)
• However, such supply of food and beverages by any person other than the educational institutions based on a contractual arrangement with such institution is leviable to GST@ 5%.

Circular No. 87/50/2018-GST, dated 1 January 2019

Clarification regarding section 140(1) of the CGST Act, 2017-reg

• Whether the expression “eligible duties” would include CENVAT credit of Service Tax within its scope or not
  • The CENVAT credit of service tax paid under section 66B of the Finance Act, 1994 was available as transitional credit under section 140(1) of the CGST Act and that legal position has not changed due to amendment of section 140(1)
  • the transition of credit of taxes paid under section 66B of the Finance Act, 1994 was never intended to be disallowed under section 140(1)
  • Under tax statutes, the word “duties" is used interchangeably with the word “taxes” and in the present context, the two words should not be read in a disharmonious manner
• No transition of credit of cesses, including cess which is collected as additional duty of customs under sub-section (1) of section 3 of the Customs Tariff Act, 1975, would be allowed in terms of Explanation 3 to section 140, which shall become effective from the date the same is notified giving it retrospective effect

Order No 2/2018 – Central Tax dated 31 December 2018

• The said order has extended the time period relating to availment of Input tax credit pertaining to FY 17-18 and amendments in the details furnished in form GSTR-1 for FY 17-18 which are briefed below:

Extension of the due date for availing ITC on the invoices or debit notes relating FY 2017-18.

• Section 16(4) of the CGST Act specifies the time limit for availment of input tax credit in respect of FY 17-18 which was due date of filing of Annual return or due date of filing of return for the month of September,2018.
• The said order has inserted an proviso after Section 16(4) to extend the time period to avail ITC in respect of invoices relating to FY 17-18 till the due date of filing of March,2019 return.  
• However, it is impertinent to note that the credit may be availed only for such invoices which have been uploaded by the supplier in their Form GSTR-1 which is till the due date of furnishing Form GSTR-1 for March 2019. Thus, the recipient cannot avail credit in case the supplier has not declared the invoice in form GSTR-1.
• The relevant extract of the proviso has been reproduced below for your ready reference.

“Provided that the registered person shall be entitled to take input tax credit after the due date of furnishing of the return under section 39 for the month of September, 2018 till the due date of furnishing of the return under the said section for the month of March,2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under sub-section (1) of section 37 till the due date for furnishing the details under sub-section (1) of said section for the month of March, 2019.”

Extending the time period to make amendments in details furnished in form GSTR-1 pertaining to FY 17-18

• Section 37(3) of the CGST Act allows rectification of any error or omission, if any in respect of return already filed. Proviso of the said section specifies that the rectification can be made till the filing of Annual return or due date of filing of September return following the financial year, whichever is earlier.
• Second proviso has been inserted via this order to extend the time period to allow rectification of the due date of filing of March’19 return or for the quarter Jan’19 to Mar’19.
• The relevant extract of the said proviso has been reproduced below:

“Provided further that the rectification of error or omission in respect of the details furnished under sub-section (1) shall be allowed after furnishing of the return under section 39 for the month of September, 2018 till the due date for furnishing the details under subsection (1) for the month of March, 2019 or for the quarter January, 2019 to March, 2019.”

Order No 3/2018 – Central Tax dated 31 December 2018

• The said order has extended the due date for furnishing of Annual Returns in FORM GSTR-9, FORM GSTR-9A and reconciliation statement in FORM GSTR-9C for the FY 2017-2018 till 30 June,2019.

Order No 4/2018 – Central Tax dated 31 December 2018

• The due date for furnishing the statement in FORM GSTR-8 by E-commerce companies for the months of October’18 to December’2018 has been extended till 31 January, 2019