RNM: Indirect Tax Alert April 2024
GST Calendar –Compliances for the month of April’2024
| Nature of Compliances | Due Date |
| GSTR-7 (Tax Deducted at Source ‘TDS’) | May 10, 2024 |
| GSTR-8 (Tax Collected at Source ‘TCS’) | May 10, 2024 |
| GSTR-1 | May 11, 2024 |
| IFF- Invoice furnishing facility (Availing QRMP) | May 13, 2024 |
| GSTR-6 Input Service Distributor | May 13, 2024 |
| GSTR-2B (Auto-Generated Statement) | May 14, 2024 |
| GSTR-3B | May 20, 2024 |
| GSTR-5 (Non-Resident Taxable Person) | May 20, 2024 |
| GSTR-5A (OIDAR Service Provider) | May 20, 2024 |
| PMT-06 (who have opted for the QRMP scheme) | May 25, 2024 |
Madras HC rules that GST demand cannot be imposed solely due to the absence of state-wise trial balance.
Facts
TMF Business Services Limited, engaged in providing non-banking financial services, challenged an order confirming the demand, citing the absence of a trial balance for the state of Tamil Nadu as the sole basis for their objection.
Background
The authority assessed the taxable turnover by aggregating the total trade receivables across India, attributing them to sundry creditors, and levied tax liability based on this assessment. Furthermore, they determined the taxable turnover as INR 180,64,88,000/- from the financial statement’s “income received,” applying a tax rate of 36%. The petitioner countered this assessment, presenting Form GSTR-9C to assert that the actual annual turnover under the relevant registration amounted to only INR 8,82,352.
Rulings
The High Court highlighted that the assessing authority erroneously calculated the tax demand by using the petitioner’s ‘trade receivables’ from the financials instead of ‘trade payables’, which is logically flawed. Additionally, the High Court emphasized that no demand can be imposed solely due to the failure to produce a state-wise trial balance. The High Court noted that the assessing authority inaccurately computed the demand based on ‘income received’, applying a 36% tax rate derived from the financial statement. The High Court referenced the reconciliation statement provided by the petitioner to assert the correct turnover figure. Notably, the High Court observed that the authority confirmed the demand solely due to the absence of the trial balance. Consequently, the High Court annulled the order and directed a fresh consideration of the matter.
Gujarat AAR ruled that SEZ units receiving services from DTA are not liable for Reverse Charge Mechanism (RCM) obligations.
FACTS
M/s. Waaree Energies Limited, a SEZ unit specializing in manufacturing solar modules, engages in various services such as goods transport agency, legal services from an advocate, security services, and bus hiring services from the Domestic Tariff Area (DTA).
Background
As per the RCM notification, a recipient is obligated to remit GST under the RCM. However, concerning SEZ rules, DTA units can provide services to SEZ units without remitting IGST under a bond or a Letter of Undertaking (LUT). The applicant referenced a CBIC circular, which clarified that SEZ units can procure services without tax payment, provided they furnish an LUT in lieu of a bond. Given that the SEZ Act’s provisions supersede those of any other laws, the RCM notification is deemed inapplicable in this scenario..
Rulings
The AAR underscored that SEZ units are not liable for Reverse Charge Mechanism (RCM) on services received from DTA, contingent upon furnishing a Letter of Undertaking (LUT). While the FAQs on GST imply SEZ units as deemed suppliers under RCM and thus subject to GST payment, Notification No. 37/2017-CT permits DTA to provide services to SEZ units without tax payment, provided an LUT or bond is furnished. The AAR referenced CBIC’s clarification to a specific SEZ unit and concluded that SEZ units are exempt from RCM GST payment for specified services upon submission of an LUT or bond.
The Patna HC ruled that interest liability arises from delayed filing of returns regardless of the payment mode.
FACTS
M/s. Sincon Infrastructure Pvt. Ltd. (the petitioner) delayed submitting the Form GSTR-3B return for FY 2017-18 and FY 2018-19. Despite this delay, the petitioner settled the output tax liability during this period using DRC-03, utilizing the balance available in Electronic Cash Ledger (ECrL) and through Electronic Credit Ledger (ECL). Subsequently, a demand notice was issued to the petitioner, imposing interest for the delay in remitting the tax to the government owing to the delay in submitting the return.
Background
The proviso to Section 50(1) specifies that interest liability arises only when a payment is debited in the Electronic Credit Ledger (ECL). The Input Tax Credit (ITC) signifies the tax amount that the recipient pays to the supplier for the procurement of inward supplies from said supplier.
The tax amount in question has already been remitted to the government by the supplier. Hence, there should be no interest liability since there is no delay in transferring the tax amount to the government.
Rulings
The High Court clarified that Input Tax Credit (ITC) becomes available in the Electronic Credit Ledger (ECrL) only upon the filing of the return by the purchaser. Despite the supplier remitting the tax to the government, the amount is credited to the ECrL only when the purchaser avails eligible ITC in the return. The offset of ITC against the output tax liability is also contingent upon the filing of the return. Therefore, interest becomes payable in case of a delay in furnishing the return, even if the output tax liability has been settled using the balance available in the ECrL, as the ITC offset has not occurred until the return is filed.
The High Court further emphasized that the proviso to Section 50(1) does not prohibit the levy of interest when the output tax liability has been discharged using the balance available in the ECrL. It clarified that the proviso only indicates that depositing the tax amount in the ECL does not constitute payment of tax to the government, and interest liability arises in case of a delay in filing the return. Based on these grounds, the High Court rejected the petitioner’s claim that interest liability does not occur when the output tax liability is settled using the balance available in the ECrL.