Indirect Tax Alert- August 2022

Indirect Tax News Letter

GST Calendar –Compliances for the month of August 2022

Nature of Compliances	Due Date
GSTR-7 (Tax Deducted at Source ‘TDS’)	September 10, 2022
GSTR-8 (Tax Collected at Source ‘TCS’)	September 10, 2022
GSTR-1	September 11, 2022
IFF- Invoice furnishing facility (Availing QRMP)	September 13, 2022
GSTR-6 Input Service Distributor	September 13, 2022
GSTR-2B (Auto Generated Statement)	September 14, 2022
GSTR-3B	September 20, 2022
GSTR-5 (Non-Resident Taxable Person)	September 20, 2022
GSTR-5A (OIDAR Service Provider)	September 20, 2022
PMT-06 (who have opted for QRMP scheme)	September 25, 2022

1. Clarification regarding applicability of GST rates and exemptions on certain services.   
2. With effect from October 06, 2021 ice-cream parlors are required to pay GST @18% with ITC on supply of ice-cream. Further, it has been clarified that past cases of GST on supply of ice-cream by ice-cream parlors @ 5% without ITC shall be treated as fully paid to avoid litigation and no GST refund shall be admissible. 
3. GST on application fee charged for entrance or the fee charged for issuance of eligibility certificate for admission or for issuance of migration certificate by educational institutions is exempted from GST. 
4. Storage or warehousing of cotton in baled or ginned form is exempted from GST.
5. GST on transportation of empty containers returning from Nepal and Bhutan after delivery of transit cargo, to India is exempted. It is also clarified that movement of empty containers from Nepal and Bhutan, after delivery of goods there, is a service associated with the transit cargo to Nepal and Bhutan and is therefore covered by the exemption.
6. It is clarified that if sanitation and conservancy services supplied to Army and other Central and State Government departments is procured by Army or any other Government Ministry/Department which does not perform any functions listed in the 11th and 12th Schedule to the Constitution, in the manner as a local authority does for the general public, the same are not eligible for exemption.
7. It is clarified sale of space for advertisement in souvenir book is covered under serial number (i) of entry 21 of the Notification and shall attracts GST @ 5% as ‘book’ has been defined in the Press and Registration of Books Act, 1867 in an inclusive manner with a wide ambit which would also cover souvenir book.
8. Transport of minerals from mining pit head to railway siding, beneficiation plant etc., by vehicles deployed with driver for a specific duration of time are nothing but “rental services of transport vehicles with operator” which fall under heading 9966 and attract GST @ 18%. It is clarified that such renting of trucks and other freight vehicles with driver for a period of time is a service of renting of transport vehicles with operator falling under Heading 9966 and not service of transportation of goods by road. This being so, it is not eligible for exemption as per the Notification on such rental services of goods carriages where the cost of fuel is in included in the consideration charged from the recipient of service, GST rate has been reduced from 18% to 12% with effect from 18 July, 2022.
9. It is clarified that location charges or preferential location charges (PLC) paid upfront in addition to the lease premium for long term lease of land constitute part of upfront amount charged for long term lease of land and are eligible for the same tax treatment, and thus eligible for exemption.
10. It is clarified that supply of all goods & services are taxable unless exempt or declared as ‘neither a supply of goods nor a supply of service’. Services provided by the guest anchors in lieu of honorarium attract GST liability subject to registration requirement as per the provisions of the law. However, guest anchors whose aggregate turnover in a financial year does not exceed Rs 20 lakhs (Rs 10 lakhs in case of special category states) shall not be liable to take registration and pay GST.
11. Additional toll fees collected in the form of higher toll charges from vehicles not having fastag is exempt from GST. Further, service by way of access to a road or a bridge on payment of toll charges is exempted vide a notification. Further, vide a circular it is clarified that additional fee collected in the form of higher toll charges from vehicles not having fastag is essentially payment of toll for allowing access to roads or bridges to such vehicles and may be given the same treatment as given to toll charges.
12. GST on services in form of Assisted Reproductive Technology (ART)/ In vitro fertilization (IVF) is covered under notification wherein under health care services provided by a clinical establishment, an authorized medical practitioner or para-medics are exempt. 
13. Sale of land after levelling, laying down of drainage lines etc., is taxable under GST. It is to be noted that land may be sold either as it is or after some development such as levelling, laying down of drainage lines, water lines, electricity lines, etc. It is clarified that sale of such developed land is also sale of land and is covered by Sr. No. 5 of Schedule III of the Central Goods and Services Tax Act, 2017 and accordingly does not attract GST. However, it may be noted that any service provided for development of land, like levelling, laying of drainage lines (as may be received by developers) shall attract GST at applicable rate for such services.
14. It has been clarified that where the body corporate hires the motor vehicle (for transport of employees etc.) for a period of time, during which the motor vehicle shall be at the disposal of the body corporate, the service would fall under Heading 9966, and the body corporate shall be liable to pay GST on the same under RCM. However, where the body corporate avails the passenger transport service for specific journeys or voyages and does not take vehicle on rent for any particular period of time, the service would fall under Heading 9964 and the body corporate shall not be liable to pay GST on the same under RCM.
15. Hiring of vehicles by firms for transportation of their employees to and from work is exempt wherein transport of passengers by non-air conditioned contract carriage. However, the exemption shall not be applicable where contract carriage is hired for a period of time, during which the contract carriage is at the disposal of the service recipient and the recipient is thus free to decide the manner of usage (route and schedule) subject to conditions of agreement entered into with the service provider.
16. Supply of service of construction, supply, installation and commissioning of dairy plant on turn-key basis constitutes a composite supply of works contract service.  W.e.f 18 June, 2022, such works contract services would attract GST at the rate of 18% in view of amendment carried out in notification No. 11/2017- Central Tax (Rate) vide Notification No. 03/2022- Central Tax (Rate).
17. “Transportation of passengers by public transport, other than predominantly for tourism purpose, in a vessel between places located in India” is exempted. It is further clarified that, the expression ‘public transport’ used in the exemption notification only means that the transport should be open to public. It can be privately or publicly owned. Only exclusion is on transportation which is predominantly for tourism, such as services which may combine with transportation, sightseeing, food and beverages, music, accommodation such as in shikara, cruise etc.
18. Clarification regarding applicability of GST on liquidated damages, compensation and penalty arising out of breach of contract or other provisions of law. 
19. It has been clarified that a contract to do something or to abstain from doing something cannot be said to have taken place unless there are two parties, one of which expressly or impliedly agrees to do or abstain from doing something and the other agrees to pay consideration to the first party for doing or abstaining from such an act. There must be a necessary and sufficient nexus between the supply (i.e. agreement to do or to abstain from doing something) and the consideration.
20. The amount paid for preventing breach of contract or non-performance of contract are constituted as events in a contract and not a part of the consideration. Here is the detail of taxable and non-taxable components as given in the said Circular-

Taxable Supplies	Non taxable transaction
Compensation for not collecting toll charges	Liquidated Damages
Late payment surcharge or fee	Compensation for cancellation of coal blocks
Cancellation charges	Cheque dishonor fine/ penalty
	Penalty imposed for violation of laws
	Forfeiture of salary or payment of bond amount in the event of the employee leaving the employment
	Fixed Capacity charges for Power

• CBIC has clarified regarding GST rates & classification (goods) based on the recommendations of the GST Council in its 47th meeting held on 28 – 29 June, 2022 at Chandigarh.
• Electric vehicles whether or not fitted with a battery pack will attract 5% GST.
• Stones otherwise covered in S. No. 123 of Schedule- I, which are not mirror polished, are eligible for concessional rate under said entry.
• Mangoes under CTH 0804 including mango pulp, but other than fresh mangoes and sliced, dried mangoes, attracts 12% GST.
• Treated sewage water attracts NIL GST rate.
• Nicotine Polacrilex Gum attracts 18% GST.
• Fly ash bricks and aggregate- condition of 90% fly ash content applied only to fly ash aggregate, and not fly ash brick is omitted w.e.f 18 July, 2022 and 12% GST is attracted.
• The by-products of milling of pulses/ dal such as chilka, khanda and churi are appropriately classifiable under heading 2302 that consists of goods having description as bran, sharps and other residues, whether or not in the form of pellets, derived from the shifting, milling or other working of cereal or of leguminous plants. It is clarified that the subject goods which inter alia is used as cattle feed ingredient are appropriately classifiable under heading 2302 and attract 5% GST vide Serial No. 103A of Schedule-I of Notification No. 1/2017 – Central Tax (Rate), dated 28 June, 2017.
• CBIC has issued guidelines on the issuance of summons under section 70 of the Central Goods & Services Tax Act, 2017 (“the CGST Act”) 
• As per Section 70 (1) of the CGST Act, summons can be issued by the proper officer to any person whose attendance is considered necessary either for giving evidence or producing a document or any other thing in an inquiry in the same manner
• In certain cases, summons are being issued by the field formations to the top senior officials of the companies in a routine manner to call for-
• Material evidence/ documents. 
• Statutory records viz. GSTR-3B, GSTR-1 etc., which are available online in the GST portal.
• To ensure that the power to summon is exercised judicially and with due consideration, Board has issued the following guidelines for matters related to investigation under CGST –
  • Power to issue summons are generally exercised by Superintendents, though higher officers may also issue summons. Summons by Superintendents should be issued after obtaining prior written permission from an officer not below the rank of Deputy/ Assistant Commissioner with the reasons for issuance of summons to be recorded in writing.
  • Where for operational reasons it is not possible to obtain such prior written permission, oral/telephonic permission from such officer must be obtained and the same should be reduced to writing and intimated to the officer according such permission at the earliest opportunity.
  • In all cases, where summons are issued, the officer issuing summons should record in file about appearance/ non-appearance of the summoned person and place a copy of statement recorded in file.
  • Summons should normally indicate the name of the offender(s) against whom the case is being investigated unless revelation of the name of the offender is detrimental to the cause of investigation, so that the recipient of summons has prima-facie understanding as whether he has been summoned as an accused, co accused or as witness.
  • Issuance of summons may be avoided to call upon statutory documents which are digitally/ online available in the GST portal.
  • Senior management officials such as CMD/ MD/ CEO/ CFO/ similar officers of any company or a PSU should not generally be issued summons in the first instance. They should be summoned when there are clear indications in the investigation of their involvement in the decision making process which led to loss of revenue.
  • Attention is also invited to Board’s Circular No. 122/41/2019-GST dated November 05, 2019 which makes generation and quoting of Document Identification Number (DIN) mandatory on communication issued by officers of CBIC to tax payers and other concerned persons for the purpose of investigation. Format of summons has been prescribed under Board’s Circular No. 128/47/2019-GST dated December 23, 2019.
  • The summoning officer must be present at the time and date for which summons is issued. In case of any exigency, the summoned person must be informed in advance in writing or orally.
  • All persons summoned are bound to appear before the officers concerned, the only exception being women who do not by tradition appear in public or privileged persons. The exemption so available to these persons under Section 132 and 133 of CPC, may be kept in consideration while investigating the case.
  • Issuance of repeated summons without ensuring service of the summons must be avoided. Sometimes it may so happen that summoned person does not join investigations even after being repeatedly summoned. In such cases, after giving reasonable opportunity, generally three summons at reasonable intervals, a complaint should be filed with the jurisdictional magistrate alleging that the accused has committed offence under Sections 172 of Indian Penal Code (absconding to avoid service of summons or other proceedings) and/or 174 of Indian Penal Code (non-attendance in obedience to an order from public servant), as inquiry under Section 70 of CGST Act has been deemed to be a “judicial proceedings” within the meaning of Section 193 and Section 228 of the Indian Penal Code. Before filing such complaints, it must be ensured that summons have adequately been served upon the intended person in accordance with Section 169 of the CGST Act. However, this does not bar to issue further summons to the said person under Section 70 of the Act.