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News Indirect Tax-GST

  • Jan 18, 2022
  • Companies, exporters cry foul as taxman raise fresh GST demands on ocean freight even as issue is pending in SC

    The issue of Goods and Services Tax (GST) on ocean freight has come to haunt many companies as the tax department has started raising fresh queries over tax applicability on transportation of imported goods through the sea route even as the matter is pending in various courts.

    In the last month or so, the department has started issuing fresh tax demands and notices to companies over GST on ocean freight, prompting some of the companies to file writ petitions against the decision.

    In one such writ petition filed by an importer, Deoleo India, in the Bombay High Court, concerns were also raised against "coercive action".
    "Recovery of GST on ocean freight by the authorities at this stage is not a good idea when the matter is at the final stage before the apex court and one of the high courts in the country has already held these provisions to be ultra vires,” said Abhishek A Rastogi, partner at Khaitan and Co. “Any payment at the audit stage or at the investigation stage can only be made voluntarily by the taxpayer, and any coercive measure to recover without a fair process of adjudication needs to be challenged before the writ court."

    The government and many companies, mainly importers, are fighting a battle in the Supreme Court over the imposition of integrated GST (IGST) on ocean freight.

  • Jan 17, 2022
  • Bombay HC sets aside rejection of refund claims by GST authorities

    The Bombay High Court has quashed an order by the GST authorities that had rejected the refund claim of an assessee because it was filed after two years, a time limit set by the rules. This was done since the authorities have not taken into cognizance the earlier Supreme Court verdict that excluded the period from March 15, 2020 and October 02, 2021 from the time limit due to Covid.

    However, the high court did not go into the validity of the circular and the question of striking it down.

    The petitioner concerned filed the first refund application for the period July 2018 to September 2018 on August 21, 2020 online on the GST portal. The said application, however, was rejected by the assistant commissioner of CentralGST (CGST) in Mumbai on September 05, 2020 on the ground that there were certain deficiencies in the said application.

  • Jan 17, 2022
  • AAAR ruling on salary to impact head office-branch GST dynamics

    Does the chief executive of a large corporation headquartered in Mumbai work for the whole company or just the head office?

    Or, should certain common expenses such as salary, marketing, branding or legal expenses be distributed across branch offices or absorbed by head office alone?

    A recent ruling by the Appellate Authority for Advance Ruling (AAAR) says allocation of salary of a head office employee to a branch, and its recovery from there, will be "subject to GST."

    "Taxation of transactions between head office and branch office has been a contentious issue since inception of GST as the said transactions were not liable to any tax under the erstwhile regime," said Harpreet Singh, partner, indirect taxes at KPMG in India.

  • Jan 13, 2022
  • No GST on healthcare services under membership plans by multi-super speciality hospitals: AAR

    Healthcare services provided under a membership scheme run by multi-super specialty hospitals to its members and their families were not taxable and will not face goods and services tax, according to a recent tax ruling by Gujarat Authority for Advance Ruling.

    The Gujarat Authority for Advance Ruling (AAR) has held that healthcare services, where multi-super specialty hospitals take a lump-sum amount in form of membership to provide services to their family, would not attract GST.

    The ruling came in response to an application by Divyajivan Healthcare LPP. It had approached the AAR seeking clarity on levy of GST on a membership plan in its proposed multi-super specialty hospital.

    The applicant had also tied up with other hospitals in India where the members can avail health care services.

  • Jan 12, 2022
  • GST: Is recovery proceeding justified for differences in outward supply in GSTR-1 vs. GSTR 3B

    Finance Minister Nirmala Sitharaman, in Union Budget 2021-22, proposed changes vide the Finance Bill, 2021, that amends the Central Goods and Services Tax Act, 2017 with respect to recovery of self- assessed tax, which is now notified vide Notification No. 39/2021–Central Tax dated December 21, 2021, by insertion of Explanation to Section 75(12) of the CGST Act with effect from January 01, 2022.

    The Explanation reads as under
    “Section 75. General provisions relating to determination of tax (12) Notwithstanding anything contained in section 73 or section 74, where any amount of self-assessed tax in accordance with a return furnished under section 39 remains unpaid, either wholly or partly, or any amount of interest payable on such tax remains unpaid, the same shall be recovered under the provisions of section 79.

  • Jan 11, 2022
  • Now, AAAR rules ready-to-eat fryums papad to draw 18% GST

    Deciding the goods and services tax rate on fryums papad could be a messy affair with the Appellate Authority for Advance Rulings (AAAR) of Gujarat now ruling that the ready-to-eat product would draw 18 per cent rate.

    In that connection, it slightly modified the ruling of the state-based Authority for Advance Rulings (AAR). The AAR had also ordered that these products would draw 18 per cent GST but under a different classification.

    Earlier in two different cases, Gujarat AAAR had ruled that fryums would be exempt from GST.

    In the present case, Alisha Gruh Udyog, engaged in selling ready-to-eat fryums, had submitted in its petition that it is a settled legal case that fryums would not attract any GST.

  • Jan 10, 2022
  • Taxmen to give ‘reasonable time’ to biz to explain reasons for mismatch in GSTR-1, 3B before recovery action

    Taxmen to give ‘reasonable time’ to biz to explain reasons for mismatch in GSTR-1, 3B before recovery action
    As per the changes in the GST law effective January 1, GST officers were allowed to directly initiate recovery action against those errant businesses which showed higher sales in monthly return GSTR-1 but under-report it while tax payment in GSTR-3B.

    The move was aimed at curbing the menace of fake billing whereby sellers would show higher sales in GSTR-1 to enable a purchaser to claim an input tax credit (ITC) but report suppressed sales in GSTR-3B to lower GST liability.

    So far, under the goods and services tax law, show-cause notices were first issued and then a recovery process was initiated in such cases of mismatch in GSTR-1 and GSTR-3B.

  • Jan 10, 2022
  • Interest calculator soon in GSTR-3B for delayed monthly tax payment

    GST Network, which provides technology backbone for the indirect tax regime, will shortly release interest calculator functionality in monthly tax payment form GSTR-3B to help taxpayers in calculating interest for delayed tax payment.

    This new functionality will compute the minimum interest applicable on the basis of the values declared by the taxpayers in GSTR-3B for a particular tax period, GSTN said in an advisory.

    “To facilitate taxpayers in doing self-assessment, the new functionality of interest calculator is being released in GSTR-3B. This functionality will assist taxpayers in calculating the interest applicable for delayed filing of returns.

  • Jan 07, 2022
  • Bring back provision for audit of GST annual returns: ICAI to govt

    Accounting rule maker Institute of Chartered Accountants of India (ICAI) has asked the government to bring back the audit and certification provisions relating to Goods and Services Tax (GST) annual returns, saying that doing away with audit will disrupt compliance.
    GST authorities last August dropped the provision for mandatory audit of annual returns for businesses with sales of ?2 crore and above, and introduced self-certification of a reconciliation statement for those with ?5 crore sales and more, replacing the certification needed by a chartered or cost accountant.

  • Jan 04, 2022
  • Implementation of Rule-59(6), as amended, on GST Portal

    As per Notification No. 35/2021 – Central Tax dated 24th September 2021, clause (a) of the sub-rule (6) of Rule 59 of CGST Rules, 2017 was amended. By way of this amendment, for the words “for preceding two months”, the words “for the preceding month” were substituted with effect from 1st January 2022. This means that from 1st January 2022 onwards, if a monthly filer has not filed the GSTR-3B for the preceding month, then such taxpayer will not be allowed to file the GSTR-1 for the subsequent month, till the GSTR-3B for the preceding month is filed.

  • Jan 04, 2022
  • Reporting of supplies notified under section 9(5) / 5(5) by E-commerce Operator in GSTR-3B

    As per the GST Council decision to notify “Restaurant Service” under section 9(5) of the CGST Act, 2017 along with other services notified earlier such as motor cabs, accommodation and housekeeping services wherein the tax on such supplies would be paid by electronic commerce operator if such supplies made through it, Notification No. 17/2021-Central Tax (Rate) and 17/2021-Integrated Tax (Rate) dated 18.11.2021 have been issued. Accordingly, the tax on supplies of restaurant service supplied through e-commerce operators, shall be paid by the e-commerce operator with effect from the 1st January, 2022.

  • Jan 04, 2022
  • GST probe may set precedent for crypto taxation

    Even as the indirect tax department initiated investigations against several crypto exchanges for escaping Good and Services Tax (GST) liability, it may have also set a precedent around the categorisation of crypto assets for taxation.

    Legal experts have long debated on the categorization - and tax treatment - of cryptocurrencies. They are yet to converge on whether a cryptocurrency is indeed a currency, a commodity, a service, or something else.

    The Directorate General of GST Intelligence (DGGI) conducted searches and raids on several crypto exchanges and asked them to pay GST on their transaction fees or margins.

  • Jan 03, 2022
  • GST collection at Rs 1.29 lakh crore in Dec, 2021

    GST revenue collected in December 2021 was over Rs 1.29 lakh crore, 13 percent higher than the same month last year, the Finance Ministry said on Saturday. Though the collection was lower than Rs 1.31 lakh crore mopped up in November, December is the sixth month in a row when revenue from goods sold and services rendered stood at over Rs 1 lakh crore.

    The gross GST revenue collected in the month of December 2021 is Rs 1,29,780 crore, of which CGST is Rs 22,578 crore, SGST is Rs 28,658 crore, IGST is Rs 69,155 crore (including Rs 37,527 crore collected on import of goods) and cess is Rs 9,389 crore (including Rs 614 crore collected on import of goods),” the Finance Ministry said in a statement.

    The revenues for December 2021 are 13 percent higher than the GST revenues in the same month last year (Rs 1.15 lakh crore) and 26 percent higher than December 2019.

  • Jan 03, 2022
  • Food aggregators to collect 5% GST beginning Jan 1

    Food aggregators like Swiggy and Zomato will have to collect and deposit tax at 5 per cent rate beginning Saturday, a move which will widen the tax base as food vendors who are currently outside the GST threshold will become liable to GST when provided through these online platforms. Currently, restaurants registered under GST are collecting and depositing the tax.

    Also, cab aggregators like Uber and Ola will have to collect 5 per cent Goods and Services Tax (GST) for booking 2 and 3 wheeler vehicles effective January 1. Also, footwear irrespective of prices will attract 12 per cent tax from Saturday. These are among the many changes in the GST regime that have come into effect in this new year 2022.

  • Jan 01, 2022
  • Sharing of powers of direct taxation and indirect taxation is unfair: Tamil Nadu govt

    The Tamil Nadu government on Friday termed the present sharing of powers of direct taxation and indirect taxation as unfair in the contest of limiting the direct powers of the States and said this has been exacerbated after the implementation of the Goods and Services Tax (GST), when even the bulk of indirect taxation powers have been curtailed.

    Tamil Nadu, according to the Finance Minister P T R Palanivel Thiagarajan, is one of the major States producing handloom, power loom textiles and hosiery goods in the country and this sector is next only to agriculture in terms of employment generation.

    Speaking at the 46th meeting of the GST Council held in the national capital under the chairmanship of Union Finance Minister Nirmala Sitharaman, Thiagarajan said the hike on the fabrics including handloom manufactured from the natural fibre will dampen demand and thereby the farmers and MSMEs will be indirectly affected.

  • Dec 31, 2021
  • GST Council defers hike in GST on textiles from 5% to 12%

    GST Council has unanimously decided to defer hike in GST on textiles from 5 percent to 12 percent, sources told Sources to CNBC-TV18. The matter will be discussed again in the next Council meet for future roadmap.

    The GST rate hike on textiles from 5 percent to 12 percent was to come into effect from January 1.

    On December 30, several states flagged higher tax rate on textile products from January 1 and demanded that the rate hike be put on hold. In the pre-budget meeting chaired by Union Finance Minister Nirmala Sitharaman, states like Gujarat, West Bengal, Delhi, Rajasthan and Tamil Nadu said that they are not in favour of a hike in Goods and Services Tax (GST) rate on textiles to 12 per cent, from 5 percent currently, with effect from January 1, 2022.

  • Dec 31, 2021
  • GST evasion of 40,000 crore detected from fake invoicing, fraud claims

    Tax authorities have detected goods and services tax evasion of 40,000 crore in over a year, largely on account of fake invoices and fraud input tax credit claims.

    A host of measures aimed at plugging loopholes and preventing such frauds are set to kick in from January 1, but a senior government official told ET that adequate care was being taken to ensure these did not compromise with the government's ease of doing business initiative. The Central Board of Indirect Taxes and Customs had launched an All-India Enforcement Drive from November 9, 2020 through the Directorate General of GST Intelligence and various Central GST formations. "More than 5,700 cases, involving an amount of about Rs 40,000 crore, have been detected," the official said.

  • Dec 31, 2021
  • Changes in GST: Here's what to expect from Jan 1

    The purpose behind the introduction of the GST regime was to eliminate the cascading impact of taxes that existed under the erstwhile regime and to allow free movement of credit. With the completion of four years of GST, the million-dollar question is whether the goal of seamless flow of Input Tax Credit (ITC) has been achieved by the implementation of GST laws.

    It is safe to say that it is still a work in progress, marred with technical glitches. The government must combat bogus invoicing but while doing so it is pertinent to take care of taxpayers and compliance burden of the businesses.

  • Dec 30, 2021
  • GST Council may defer hike in rates on textiles; slab recast may be delayed

    The Goods and Service Tax (GST) Council, which will meet in New Delhi on Friday, may discuss deferment of hike on GST rates on textiles and footwear from 5% to 12% and give more time to the group of ministers on rationalisation of tax rates and slabs to submit its report.

    Textile and footwear industries have been up in arms against the GST Council’s decision in September to correct the inverted duty structure by increasing the GST rates on textiles and footwear with effect from January 1.

    At present, tax rate on manmade fibre, yarn and fabrics is 18%, 12% and 5%, respectively. Apparel and clothing up to Rs 1,000 per piece currently attracts 5% GST. Synthetic and artificial yarn have been changed to 12% but natural yarn like cotton, silk, wool yarn are still in 5% slab.