BLOGS

ITC denial for IGST non-reflection in Form GSTR-2A challenged; Karnataka HC grants interim-relief

CA Chandrasekhar Kutty. B.Com, F.C.A.
Karnataka HC grants interim-stay of order disallowing Input Tax Credit (ITC) w.r.t. IGST on import to the tune of Rs. 3.5 crores (approx.) with interest and penalty for July 2017 to March 2020 on the sole technical ground that ITC claimed by Petitioner as per Form GSTR-3B is in excess of ITC available in terms of Form GSTR-2A; Writ petition has been filed asserting that denial of ITC for the period prior to amendment in FORM GSTR-2A vide Notification No. 79/2020, on the ground that there is no corresponding ITC of IGST reflecting in auto-populated GSTR-2A is illegal, unjust and erroneous; Being eligible to ITC on the basis of IGST paid at the time of filing the bills of entry (BoE) for the year FY 2017-18 and FY 2019-20, assessee filed GSTR-3B, however,…
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HC: No change-in-law relating to Intermediary taxation; Genpact BPO not an “Intermediary”; Applies ‘consistency principle’

CA Chandrasekhar Kutty. B.Com, F.C.A.
Genpact India Pvt. Ltd. vs. UOI & Ors. Punjab & Haryana (P&H) HC sets-aside rejection of refund claim categorically holding that Business Process Outsourcing (BPO) unit of assessee (Genpact India Pvt. Ltd.) is not an “Intermediary” in the prevailing GST regime upon finding that, Assessee is involved by a foreign entity, Genpact International (GI) for actual performance of BPO services and information technology services to the customers of GI; HC deems Revenue’s stance that assessee is in a principal-agent relationship with GI as “without any basis” and “clearly erroneous”; Assessee filed claim for refund of un-utilized ITC amounting to Rs.27 crores (approx..) on account of zero rated supplies of services without payment of IGST under Letter of Undertaking but Rs. 26 crores (approx.) got sanctioned vide order-in-original and remaining amount came to be rejected;…
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Very important Judgement from Madras HC: Lifts Educational Institutions’ ‘corporate veil’ over ‘involuntary’ capitation fee; Orders Sec.12A registration cancellation

CA Chandrasekhar Kutty. B.Com, F.C.A.
Madras HC in a 123 pager judgment allows Revenue’s appeals against various educational institutions concerning exemption under Section 11; Directs the Revenue to proceed further on the basis of assessment orders and also cancel the registration certificate issued to the various Trusts under Section 12A and not to treat them as charitable; HC also directs the Revenue to proceed to reopen the previous assessments, if permissible by law, based on tangible materials relating to collection of capitation fee; HC holds that the amounts collected in quid pro quo for allotment of seat in deviation of the Tamil Nadu Educational Institutions (Prohibition of Collection of Capitation Fee) Act, 1992 as capitation fee; On voluntary contribution, HC holds that unless a contribution is made gratuitously and without consideration, it cannot be treated as…
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GSTN advisory for implementation of mandatoy HSN codes meaning in GSTR-1

CA Chandrasekhar Kutty. B.Com, F.C.A.
GSTN in pursuance of Notification no. 78/2022 dated October 15,2020(Explore (cbic.gov.in), which mandated the taxpayers to report minimum 4 digit or 6 digit of HSN Code in table-12 of GSTR-I on the basis of their Aggregate Annual Turnover (AATO) in preceding financial year, notifies changes to be implemented for facilitation of taxpayers in a phase-wise manner; W.r.t. the taxpayers with AATO of more than 5 crores, apprises that the taxpayers are required to mandatorily report 4-digit HSN codes for goods & services, and for Part II of the Phase I, the taxpayers will now have to mandatory report 6-digit HSN code; In respect of Phase II, it shall be mandatory for the taxpayers with AATO of up to 5 crores to report HSN at 4-digits ; Specifies that Part I & Part II of…
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Breaking News: SC pronounces landmark judgment, explains “general public utility” vis-a-vis Charitable Institutions

CA Chandrasekhar Kutty. B.Com, F.C.A.
SC, in a landmark ruling, in the context of "advancement of general public utility", holds that any body which involves in "trade or commerce" and charges over and above cost, would cease to be a Charitable Institution for the purpose of Income tax Act; When services are provided at cost or nominal basis, the same will not constitute "trade or commerce" but not when charges are markedly above cost; Three judges bench, while pronouncing the verdict, remarks that they have comprehensively dealt with each category of cases involving Development Authorities, Cricket Associations, Trusts and other similarly situated assessees; In a second batch of appeals, concerning educational institutions, Apex Court holds that the object of such institutions must be "wholly, solely and exclusively" for the purpose of education; SC rules that…
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Delhi HC: Renting of dwelling by sole proprietor for use as residence and not for business ‘exempt’

CA Chandrasekhar Kutty. B.Com, F.C.A.
Delhi HC holds that “renting of a residential dwelling by a proprietor of a registered proprietorship firm, who rents it in his/her own personal capacity for use as his/her own residence as well as not for use in the course or furtherance of business of his/her proprietorship firm and such renting is on his/her own account and not that of proprietorship firm shall be exempt from GST”; Petitioner is challenging Notification No. 04/2022-Central Tax (Rate) dated  July 13, 2022 by virtue of which exemption granted for  renting of residential accommodation to tenants who are registered under GST has been withdrawn; Petitioner avers that similarly placed businesses like itself who are doing their business as a proprietary concern are affected by this amendment; Accepting Revenue’s affidavit giving clarify on this aspect,…
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Packed-frozen ‘Parathas’ not akin to Chapatti or Roti; End-use not determinative of classification

CA Chandrasekhar Kutty. B.Com, F.C.A.
Gujarat AAAR rules that ‘Parathas’ are different from Plain Chapatti or Roti, appropriately classifiable under Chapter heading 2106 (i.e. Food preparations not elsewhere specified or included), upholds AAR order; Notes that, Appellant (Vadilal Industries) sells different types of packed and frozen ‘Parathas’ such as Malabar Paratha, Mixed Veg Paratha. Onion Paratha, Methi Paratha, Alu Paratha. Laccha Paratha, Mooli Paratha and Plain Paratha, which requires to be cooked on pan or griddle for-3-4 minutes; AAAR clarifies that HSN 1905 covers items which are completely cooked and ready for consumption whereas the Appellant's product requires 3-4 minutes of cooking on a pan or griddle before consumption', hence, on this ground, Parathas do not merit classification under CH 1905; On the contention that ‘parathas’ are similar to Plain Chapatti or Roti,  AAAR unwraps…
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AAR: ITC ineligible on installation of Solar Power Panel as supply of electricity is exempt

CA Chandrasekhar Kutty. B.Com, F.C.A.
Tamil Nadu AAR rules that Applicant is not entitled to claim ITC on the goods/services used in installation of Solar Power Panels for generation of electricity; AAR notes that, Applicant procured, erected and commissioned Solar Power Panels for generation of electricity at their additional place of business and executed an “Energy Wheeling Agreement for Solar power plant” agreement with Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) for wheeling the Solar energy generated from its solar plant through TANGEDCO’s transmission and distribution network; Applicant procured electricity from TNEB which includes electricity generated by solar power panels installed at additional place of business and wheeled by TNEB for captive use at the principal place of business; AAR observes that, Lease Deed between Owners as Lessor and Tenants as Lessee, provides that,…
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Clarifications issued by CBIC on 4th October 2022 regarding the compliances in respect of a particular financial year which has been extended and fixed on 30th November of the next financial year

CA Chandrasekhar Kutty. B.Com, F.C.A.
The following compliances in respect of a particular financial year has been extended and fixed as 30th November of the next financial year or furnishing of relevant annual return, whichever is earlier Corresponding provision of the CGST Act, 2017Corresponding compliance requirementsSection 16(4)Claiming of ITC in respect of any invoice or debit note in the returnSection 34(2)Declaration of the details of credit notes in the returnProviso to Section 37(3)Rectification of particulars in details of outward suppliesProviso to Section 39(9)Rectification of particulars furnished in a ReturnProviso to Section 52(6)Rectification of particulars in the statement furnished by a TCS operator Doubts have been raised whether the said extended timelines are applicable in respect of compliances for FY 2022-23 onwards or whether the same are also applicable to the compliances for FY 2021-22. Doubts…
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Important changes in GST w.e.f 01.10.2022

CA Chandrasekhar Kutty. B.Com, F.C.A.
Registration liable to be cancelled in additional two situations Registered person required to file monthly returns fails to furnish returns for a continuous period of six monthsRegistered person required to file quarterly returns has not furnished returns for a continuous period of two tax periods Time limit to avail input tax credit extended Section 16(4) of the CGST Act is amended to give time to avail input tax credit in respect of any invoice or debit note for the previous financial year upto 30th November following the end of financial year (Previously it was allowed till September returns following the end of financial year)Time limit to issue credit notes has been extended till 30th November following the end of financial year ((Previously it was allowed till September returns following the…
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GST Breaking News: Online gaming co. slapped with Rs. 21,000 cr SCN

Mohan & Chandrasekhar
Online gaming co. based out of Bengaluru learnt to have been served a show cause notice by GST Intelligence Wing, to the tune of approximately Rs. 21,000 cr for allegedly indulging in 'betting' & 'gambling'; Intelligence Wing show cause claims that the same is liable to GST at 28% on the 'face value' of collections made; According to Dept. sources, this is one of the largest ever indirect tax claims; This may lead to more show cause notices on other gaming cos to the tune of several thousands of crores: Sources
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No GST on conversion/development of land into residential sites/plots for sale

CA Chandrasekhar Kutty. B.Com, F.C.A.
Karnataka AAR rules that GST is inapplicable on consideration and advance received for sale of residential plots/sites proposed to be converted by Applicant from own land; Further, GST is also not applicable on said sale even when the plots/sites are sold after completion of works related to basic necessities; Applicant submits that they develop the land as per regulations of District Town and Country Planning Act which includes formation of roads, formation of rain water drains, laying of electricity cables, water pipes, sewerage lines, drilling of borewells, construction of water tanks, setting up of power substation, without which the concerned authorities will not grant permission to sell plots to individuals for construction of houses; Derives that, sale of land is listed under entry no. 5 of Schedule III of CGST…
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KINGFISHER RADLER’, NOT ‘NON-ALCOHOLIC BEER’ BUT ‘CARBONATED FRUIT-DRINK BEVERAGE’, ATTRACTS 28% GST, 12% CESS

CA Chandrasekhar Kutty. B.Com, F.C.A.
Karnataka AAR holds that ‘Kingfisher Radler’ having different variants merits classification as carbonated beverages of fruit drink, all covered under tariff heading 2202 99 90 attracting GST @ 28% along with applicable Compensation Cess of 12% in terms of Sl. No. 12B of Schedule IV to the Notification No. 1/2017- Central Tax (Rate) dated June 28, 2017, as amended; The Applicant sought clarification of their product “Kingfisher Radler”, manufactured & made available in three flavours i.e. Ginger lime, Mint lime and lemon; In this context, referring to the Section Notes and Chapter Notes of the relevant Chapters of the Customs Tariff and also the corresponding Harmonised Commodity Description and Coding System Explanatory Notes of World Customs Organisation (WCO), AAR observes that “…the impugned product is neither a beer initially nor…
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