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ASC GST Updates of the 30 th Council Meet

ASC GST Updates of the 30 th Council Meet

ASC GST Updates of the 30 th Council Meet

ASC GST UPDATES

  • Summary of Key Decisions taken on 30th GST Council Meeting held on 28th September, 2018
  • Calamity Cess

As per Article 279A of Constitution , the GST Council is empowered to impose GST in case of calamity. The proposal of the State of Kerala for imposition of Cess on SGST for rehabilitation and flood affected works was discussed in detail.  The Council decided to constitute a 7-Member Group of Ministers (GoM) to examine this issue in depth. Representative of following states will be there

  1. North east
  2. Hill States
  3. Coastal states
  • Revenue Deficit states

Finance Secretary will visit the states in which there is shortfall of GST and will find out the reasons. As per the expectation there was no decision taken on Petrol and Diesel under GST and there was no GST Rate change on any product.

  • Summary of Custom Circular issued on 28th September, 2018
Circular No. Date Description
34/2018-Customs 28.09.2018 The government through this circular has extended the date for mandatory RFID sealing in case of movement of goods from a custom bonded warehouse under warehousing bond till 1st, November 2018.
  • Summary of Advance Rulings/Rulings
Name of the Parties Ruling
  1. M/s Fermi Solar Farms Private Limited (AAAR Maharashtra)

Facts: The Applicant engaged in operation of renewable energy power plant projects. These typically include operation of solar power plants set up across India for generation and distribution of electricity generation and distribution of electricity generated. The appellant is established under Independent Power Producer category for setting up and sale of power produced from Fermi’s power plant to third party. Issues:

  • Whether in case of separate contracts for supply of goods and services for a solar power plant, there would be separate taxability of goods as 'solar power generating system' at 5% and services at 18%?
  • Whether parts supplied on standalone basis (when supplied without PV modules) would also be eligible to concessional rate of 5% as parts of solar power generation system?
  • Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contractors?

Held: .Setting up and operation of a solar photovoltaic plant and are in the nature of ‘works contract” in terms of clause (119) of Section (2) of the GST Act. Schedule II (Activities to be treated as supply of goods or supply of Services)  treats 'works contract' u/s 2 (119) as supply of services. Depending upon the nature of supply, intra-state or  inter-state the rate of tax would be governed by the entry no 3(ii) of the Notification No 8/2017- integrated Tax (rate) under the IGST Act, 2017 or the Notification no 11/2017 Central Tax/State Tax (Rate)under the CGST Act and MGST Acts.

The rate of tax would be 18% under the IGST. The Appellant has not produced any document or agreement before us incorporating such a situation. In the absence of any written agreement showing the terms and conditions, it would be both difficult as well as incorrect for us to determine the same. The situation now is the same as it was before the Advance ruling authority.

There being no change in situation, there is nothing we can add. Also, as an 'appellate authority' we can decide issues already decided and appealed against. There being no decision given by the advance ruling authority, we cannot give any decision in appeal.

The Appellant has not produced any document or agreement before us incorporating such a situation. In the absence of any written agreement showing the terms and conditions, it would be both difficult as well as incorrect for us to determine the same. The situation now is the same as it was before the Advance ruling authority. There being no decision given by the advance ruling authority, we cannot give any decision in appeal.

  • M/s GKB Lens Pvt. Ltd (AAAR of West Bengal)

Facts: The Applicant is a re-seller and importer of Sun Glasses, Frames, Lenses, Contact Lenses, etc. having its Head Office in West Bengal, transferring, inter alia, goods, namely, Optical Lenses and Frames for Spectacles and Accessories, from Head Office in West Bengal to its branches in other States.

The AAR of West Bengal vide 07/WBAAR/2018-19 dated May 30, 2018 stated that the recipient will be eligible to take full input tax credit of the amount of tax paid by the suppler as mentioned in the respective invoice or any other document valid under Section 16(2)(a) of GST Act and this Ruling is valid subject to the provisions under Section 103 until and unless declared void under Section 104(1) of the GST Acts. Issue:

  • Whether the transfer of goods (optical lenses and frames for spectacles and accessories) from Head Office in West Bengal to its branches in other states, can be done at cost price, by applying the second proviso to Rule 28 of CGST Rules, 2017 (instead of 90 % of MRP as required under the First Proviso to Rule 28 of CGST Rules, 2017, And
  • What is meant by the expression ''where the recipient is eligible for full input tax credit" as used in the second proviso to Rule 28 of CGST Rules, 2017.

Held: The Hon’ble AAAR of West Bengal clarified that no input tax credit is available to the recipient of goods/service if the value declared by the supplier in the invoice/debit note is zero. Further, as per Section 16 of the GST Act, it is clear that, inter alia, input tax credit is available only when the recipient is in possession of a tax or debit note issued by the supplier registered under the GST Act, and in case of a supply between distinct and/or related persons, as between Head Office and Branches, the value declared in the invoice shall be deemed to be the open market value of the goods or services supplied. It is therefore clear that if the value declared in such invoice is zero no input tax credit is available to the recipient.

     

The GST Council on its 30th Council Meet announced a number of instrumental changes which will help further strengthen the framework of the unified tax. Take a look at the new notifications below.

 

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