GST Calendar –Compliances for the month of January’2024
| Nature of Compliances | Due Date |
| GSTR-7 (Tax Deducted at Source ‘TDS’) | February 10, 2024 |
| GSTR-8 (Tax Collected at Source ‘TCS’) | February 10, 2024 |
| GSTR-1 | February 11, 2024 |
| IFF- Invoice furnishing facility (Availing QRMP) | February 13, 2024 |
| GSTR-6 Input Service Distributor | February 13, 2024 |
| GSTR-2B (Auto-Generated Statement) | February 14, 2024 |
| GSTR-3B | February 20, 2024 |
| GSTR-5 (Non-Resident Taxable Person) | February 20, 2024 |
| GSTR-5A (OIDAR Service Provider) | February 20, 2024 |
| PMT-06 (who have opted for the QRMP scheme) | February 25, 2024 |
Madras HC- No interest liability occurs if the tax is deposited in the electronic cash ledger within the due date, even if the return is filed belatedly.
Facts
M/s. Eicher Motors Limited, involved in the manufacturing of motorcycles, faced technical glitches on the Goods and Services Tax (GST) common portal. This resulted in the unavailability of Central Value Added Tax (CENVAT) credit claimed via GST Tran-1 as Input Tax Credit (ITC) in the electronic credit ledger. Consequently, the filing of Form GSTR-3B for July 2017 was delayed.
Despite depositing the tax dues within the stipulated period in the Electronic Credit Ledger (ECL), the petitioner encountered challenges in filing GSTR-3B for subsequent months, extending until December 2017. A Recovery Notice was subsequently issued to M/s. Eicher Motors Limited due to the nonpayment of interest on GST liability arising from the delay in filing GSTR-3B.
In response to the issued notice, the petitioner initiated the present writ petition before the High Court, expressing grievances against the imposed interest on GST liability resulting from the delay in GSTR-3B filing.
Issue
Interest implications arise when GSTR-3B is submitted after the stipulated deadline for filing the return, notwithstanding the deposit of tax dues in the Electronic Credit Ledger (ECL) within the due date of the return filing.
Rulings
The petitioner argued that the tax amount transferred to the Electronic Credit Ledger (ECL) through challan constitutes a payment to the government. This is supported by the fact that the amount is remitted to the government’s account held with the Reserve Bank of India (RBI).
Furthermore, the petitioner emphasized that the funds deposited in the ECL are not subject to arbitrary withdrawal by the taxpayer. To claim a refund for any excess balance in the Electronic Credit Ledger, the petitioner asserted that a formal refund application must be submitted, in accordance with Section 54 of the Central Goods and Services Tax Act, 2017 (CGST Act).
Payment to the government of the tax amount is permissible prior to the completion of Form GSTR-3B submission.
The High Court (HC) clarified that, according to Section 39(1) of the CGST Act, a registered person must settle the tax amount before submitting GSTR-3B since payment details are integral to the return. The designated beneficiary bank for tax dues deposited via challans is the RBI, and this process is considered payment to the government, as the amount is remitted to the RBI.
The HC dismissed the relevance of the actual filing date of GSTR-3B, contradicting the judgment of the Jharkhand HC in the RSB Transmission case. It asserted that tax payment can precede the filing of GSTR-3B. As per CGST Act provisions, the crucial deadline for tax payment to the government is the due date for furnishing GSTR-3B. In the current case, since the petitioner deposited the tax within the stipulated GSTR-3B timelines, no interest liability would arise.
Paying interest on the refund of an excess amount in the Electronic Credit Ledger (ECL) signifies that the deposited amount has been remitted to the government.
The High Court (HC) observed that the government pays interest on delayed payment of a refund for an excess balance in the Electronic Credit Ledger (ECL). This suggests that the amount is held by the government, leading to interest payments to the registered person. Based on similar reasoning, the HC has approved the current writ petition, asserting that no interest is obligatory when the tax amount is deposited in the ECL, even if there is a delay in filing GSTR-3B.
Madras High Court emphasized that the taxable event for a gift voucher occurs during its issuance, specifically when it involves specified and identified goods.
Facts
M/s Kalyan Jewellers India Limited, involved in the manufacturing and trading of ornaments, implemented a sales promotion strategy by introducing pre-paid instruments (PPIs) in the form of gift vouchers/gift cards.
Seeking clarification on the tax implications and time of supply provisions related to the issuance of PPIs to customers, the petitioner requested an advance ruling from the Tamil Nadu authority.
Initially, the Tamil Nadu Authority for Advance Ruling (AAR) determined that PPIs constitute the supply of goods, with the time of supply being the date of issue if vouchers are specific to a particular good; otherwise, it is the date of redemption.
Discontent with this ruling, the petitioner appealed to the Tamil Nadu Appellate Authority for Advance Ruling (AAAR). The AAAR modified the AAR’s decision, asserting that a voucher serves as a method for the advance payment of consideration, categorizing it as neither a good nor a service under GST law. However, the AAAR specified that the time of supply for gift vouchers, as provided by the petitioner to customers, remains the date of issuance.
Challenged by this ruling, the petitioner subsequently filed the present writ petition before the High Court (HC).
Rulings
The High Court (HC) scrutinized the characteristics of vouchers distributed by the petitioner, observing that these vouchers remain valid for a specified duration and are subject to a refund upon expiration. It was highlighted that one of the issued vouchers is non-refundable. The HC concluded that if the payment associated with a voucher is non-refundable, the gift voucher fails to meet the criteria outlined in the Master Direction.
The High Court (HC) invoked the Supreme Court’s (SC) ruling in the Sunrise Associates case, highlighting that the definition of goods, according to the SC, explicitly excluded actionable claims under prior laws. However, the HC examined the definition of goods under the CGST Act, emphasizing that actionable claims are now encompassed within this definition.
To deepen its analysis, the HC referred to various enactments and an educational guide issued by the Central Board of Indirect Taxes. This scrutiny was conducted to gain a comprehensive understanding of the terms ‘voucher,’ ‘debt,’ ‘instrument,’ and ‘actionable claim.’
Following a comprehensive interpretation, the High Court (HC) recognizes that gift vouchers possess the characteristics of a debt instrument. These vouchers can be redeemed on a future date upon presentation and serve as a means of settling sales consideration for the acquisition of merchandise from any of the petitioner’s retail outlets.
The High Court (HC) observed that the petitioner bears an obligation to honor the amount specified in the gift voucher. In the event that the paid amount is not credited to the customer’s account after the expiration period, the customer possesses the right to recover the amount as per the Master Direction of the Reserve Bank of India (RBI). Consequently, customers retain the right to pursue legal action in a civil court for the recovery of the amount.
The High Court (HC) determined that the time of supply for gift vouchers is the date of issue when the vouchers are specifically issued for a particular item of jewelry with a specified value. This is due to the existence of a transfer or supply under GST. Notably, such transactions are taxable, regardless of whether the sale consideration is paid in advance, over a period, or at a later date.
However, in cases where the vouchers are redeemable for any unspecified goods, the time of supply is considered to be the date of redemption.
Royalty, being categorized as a tax in nature, is not subject to service tax, according to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
Facts
M/s. Oil and Natural Gas Corporation, involved in the exploration and production of crude oil and natural gas, received a show cause notice (SCN) due to the alleged non-payment of service tax under the reverse charge mechanism (RCM). The notice pertained to the consideration paid to the state government in the form of royalty for the assignment of the right to use in the exploration and production of crude oil and natural gas.
Subsequently, the adjudicating authority (AA) issued an order confirming the demand for service tax on the royalty amount. Dissatisfied with this decision, the appellant has filed the current appeal before the Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
Issue
The issue at hand is whether service tax is applicable to the consideration paid to the state government in the form of royalty for the assignment of the right to use for the exploration and production of crude oil and natural gas.
Rulings
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) based its decision on the Supreme Court’s judgment in the case of India Cements Corporation Ltd. The CESTAT concluded that royalty is considered a tax and is not regarded as a consideration for services.
The assertion is that royalty takes the form of regulatory fees, given that it is paid in accordance with the provisions outlined in the ORD Act, rather than being contingent on an agreement between the appellant and the state government. Additionally, it is argued that royalty can be considered a form of license fees, representing compensation for the right to extract crude oil and natural gas. Consequently, royalty is argued to encompass elements of both regulatory fees and license fees.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) determined that the Finance Act lacks a mechanism for imposing service tax on amounts encompassing both regulatory fees and compensatory fees. The CESTAT emphasized that royalty is predominantly characterized as regulatory fees, as it serves as a regulation to prevent the overexploitation of resources. Consequently, the payment of royalty cannot be deemed a service for the purpose of levying service tax.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) relied on the Kiran Spinning Mills case judgment, which stated that an exemption notification is not a charging provision and cannot establish a duty liability. Consequently, the CESTAT set aside the mega-exemption notification and determined that, according to Section 65B(44) of the Finance Act, the relevant activity falls within the scope of ‘renting of immovable property services.’
Additionally, the CESTAT emphasized that the department has not established that the activity of the right to use natural resources falls under ‘lease,’ and the amount paid as royalty is akin to ‘rent.’ Therefore, the CESTAT concluded that service tax cannot be imposed under the reverse charge mechanism (RCM) on the royalty paid to the state government. As a result, the appeal was allowed, and the impugned order was set aside.
Read More:
https://www.rnm.in/blog/exploring-the-pinnacle-top-ca-firms-in-india-2024/