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Difficulty in obtaining PAN by local bodies

Section 25(5) of CGST Act, 2017 provides that every person shall have a Permanent Account Number issued under the Income-tax Act, 1961 to be eligible for grant of registration.

Local bodies had been formed through Government order and for application of pan, copy of such Govt order is required. In many cases, these local bodies / municipalities were formed in 60s and 70 wherein Govt. order is not available, due to this finding difficulties in obtaining PAN.

Suggestion: It is suggested that appropriate mechanism be suggested to the Central Board of Direct Taxes for issuances of PAN in such cases

HSN code is required to be mention in GSTR 1 & 2

Notification No. 12/2017 - Central Tax dated 28th June 2017 provides that a registered person having annual turnover in the preceding financial year less than Rs 1.5 Crore is not required to mention the digits of HSN codes in a tax invoice issued by him. However, in GSTR 1 & 2 he must give the details of stock sold HSN code wise.

Issue: In such cases although the small trader is not required to mention HSN code in invoice but he is required to give HSN code details in his returns.

Suggestion: It is suggested that appropriate notification be issued to help the small traders and in removing the anomaly.

LAW RELATED ISSUES

Non-availability of Input Tax Credit for Capital Goods to newly incorporated companies which were not registered under VAT

Section 140(2) of CGST Act, 2017 provides that, a registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, credit of the unavailed CENVAT credit in respect of capital goods, not carried forward in a return, furnished under the existing law by him, for the period ending with the day immediately preceding the appointed day in such manner as may be prescribed:

Provided that the registered person shall not be allowed to take credit unless the said credit was admissible as CENVAT credit under the existing law and is also admissible as input tax credit under this Act.

Issue: There may arise a situation wherein a company was incorporated in May 2017 but was not given registration by the VAT department or was unable to register with VAT department till 30.06.2017. Upon purchase of Capital Goods by the said company, the credit of VAT paid on such goods would not be available as the company is unregistered as per VAT records. Due to this the company would not be able to avail the credit of VAT paid on purchase of Capital Goods under GST regime as the amount of VAT so paid would not be reflected in the returns furnished under the earlier law.

Suggestion: It is suggested that there be provided appropriate transition provision to allow credit of VAT paid on purchase of Capital Goods not reflected in returns under earlier law.

Mandatory Registration under section 9(3) for Reverse Charge purpose need not trigger the provisions of section 9(4)

Section 9(3) of the CGST Act, 2017 provides that the Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

Further section 9(4) of the CGST Act, 2017 provides that the central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

There may arise a situation wherein an assessee has obtained registration under GST for availing certain services on which tax is liable to be paid under Reverse Charge as per section 9(3) but the supply made by such an assessee is exempt under GST. Example: A hospital avails the services of an advocate for a pending litigation case needs to take registration under GST for paying tax under reverse charge even though the supplies made by hospital are exempt under GST. Now if the hospital makes any purchase from unregistered dealer the provisions of section 9(4) would be triggered and hospital would be liable to pay tax under reverse charge. This would not have been the case if the hospital had not taken registration for the purpose of section 9(3) i.e. availing advocate services. The aforesaid, situation implies that if an assessee obtains registration under section 9(3) the provisions of section 9(4) automatically applies on such assessees. This proves to be a burden on small assessees.

When an assessee is dealing in wholly exempted goods having turnover more than Rs.20 lakhs he is not required to take registration by virtue of section 23 of CGST Act, 2017. However, Section 24 mandates to obtain registration in case the liability arises under reverse charge. This situation requires clarity as provisions of section 24 overrides the provisions of section 22(1) only and not section 23.

It is therefore suggested that there be provided a suitable clarification that in cases where registration is taken only for the purpose of section 9(3) i.e. payment of tax under reverse charge the provisions of section 9(4) will not be triggered.

Reimbursements to employees for business purposes whether liable to reverse charge u/s 9(4) of CGST ACT, if the supply of goods/service is from an unregistered person.

Section 9(4) of CGST Act, 2017 provides that a registered person will be liable to GST on reverse charge if he receives supply of goods/services from unregistered person.

In case, an employee consumes services/goods on behalf of his company from an unregistered person and claims reimbursement from the company as it is a business expense, then, in such cases it appears that the services/goods are consumed by the Company (registered person) through its employees from an unregistered person. Therefore section 9(4) will get invoked and company will be liable to GST on reverse charge.

It is suggested that a suitable clarification be provided if tax under reverse charge is payable on following reimbursements for business purposes if taken from unregistered dealers:

  1. Conveyance expenses of Employees through their own vehicle and claim reimbursements on per/Km basis.
  2. Conveyance of Employees through local conveyances like Taxi etc.
  3. Food Expenses
  4. Expenses for other goods/services consumed by the employee on company's behalf.

Eligibility for Composition Scheme to dealers when they are receiving Interest Income.

Section 10(2)(a) of CGST Act, 2017 provides that the registered person shall be eligible to opt under sub-section (1), if he is not engaged in the supply of services other than supplies referred to in clause (b) of paragraph 6 of Schedule II.

Interest received on any amount appears to be a service and has been provided exemption under the exemption notification. Therefore, there is a doubt that in case dealer receives interest then he may not be eligible for composition scheme.

It is suggested that it be suitably clarified that in case a dealer receives interest the he would be eligible for opting Composition Scheme.

Separate consideration charged for goods and services supplied in conjunction:

Section 2(30) of the CGST Act, 2017 defines Composite supply as a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;

Issue: If separate considerations are charged for various goods and services supplied in conjunction with each other in ordinary course of business, whether the same shall also amount to composite supply.

Suggestion: It is suggested that there be provided a suitable clarification regarding same.

Ineligibility to opt for Composition Scheme if assessee has interstate purchased stock

Rule 5 of CGST Rules, 2017 provides that the person exercising the option to pay tax under section 10 shall comply with the following conditions, namely: -

  1. he is neither a casual taxable person nor a non-resident taxable person;
  2. the goods held in stock by him on the appointed day have not been purchased in the course of inter-State trade or commerce or imported from a place outside India or received from his branch situated outside the State or from his agent or principal outside the State, where the option is exercised under sub-rule (1) of rule 3;
  3. the goods held in stock by him have not been purchased from an unregistered supplier and where purchased, he pays the tax under sub-section (4) of section 9;
  4. he shall pay tax under sub-section (3) or sub-section (4) of section 9 on inward supply of goods or services or both;
  5. he was not engaged in the manufacture of goods as notified under clause (e) of sub-section (2) of section 10, during the preceding financial year;
  6. he shall mention the words 'composition taxable person, not eligible to collect tax on supplies' at the top of the bill of supply issued by him; and
  7. he shall mention the words 'composition taxable person' on every notice or signboard displayed at a prominent place at his principal place of business and at every additional place or places of business.

Issue

There may arise a situation wherein an assessee who has been granted provisional registration and wishes to opt for Composition scheme satisfies all the conditions specified in Rule 5 of CGST Rules, 2017 except that he holds the stock which has been purchased in the course of inter-State trade or commerce or imported from a place outside India or received from his branch situated outside the State or from his agent or principal outside the State.

A further a condition provides that his stock should not include goods purchased from an unregistered dealer where tax has not been paid under reverse charge. But if he pays tax under reverse charge he is eligible to opt for Composition Scheme. Such a relaxation for payment of tax and opting for Composition levy is not available in case of purchases made in the course of inter-State trade or commerce or imported from a place outside India or received from his branch situated outside the State or from his agent or principal outside the State

Suggestion: It is suggested that in case where the person wishing to opt for Composition Scheme holds such goods in stock which have been purchased in the course of inter-State trade or commerce or imported from a place outside India or received from his branch situated outside the State or from his agent or principal outside the State, he be allowed to opt for Composition Scheme upon payment of appropriate applicable tax under GST.

Per Day Limit of Purchase from Unregistered Dealer`

Central Government vide Notification No. 08/2017-Central Tax (Rate), dt. 28-06-2017 has w.e.f 1st July 2017 exempted supplies of goods or service or both received by a registered person from any or all such unregistered supplier(s) if the aggregate value of such supplies does not exceed Rs. 5000 in a day.

The aforesaid Notification does not clarify the situation where a registered person purchases goods or services or both from an unregistered supplier for a value more than Rs. 5000 in a day but the purchases made on any subsequent day during the same month from the same supplier is less than Rs. 5000. For Example: Mr. A (a registered dealer) purchases certain goods from Mr. B (an unregistered dealer) on 4th July 2017 for Rs. 7000 and on 5th July 2017 for Rs. 4000. The purchases made on 4th July 2017 for Rs. 7000 are not eligible for exemption as per Notification No. 08/2017-Central Tax (Rate). However, it is not clear whether the purchases made on 5th July 2017 for Rs. 4000 would be eligible for exemption under said notification.

As per section 5(4) of the IGST Act, 2017 any purchases made by a registered dealer from an unregistered dealer will make the registered dealer liable to pay tax under reverse charge. However, exemption limit of Rs. 5000 in a day as per aforesaid notification does not apply to such inter-state supplies as no such notification is provided under Integrated Tax.

It is suggested that it be suitably clarified that the exemption provided vide Notification No. 08/2017-Central Tax (Rate), dt. 28-06-2017 is for value of each day of transaction and transaction made on subsequent for a lower value will continue to remain exempted.

Further, it be suitable clarified that even under IGST Act, 2017 supplies of goods or service or both received by a registered person from any or all such unregistered supplier(s) are exempted if the aggregate value of such supplies does not exceed Rs. 5000 in a day.

Incorrect Classification of goods or services

Section 122 of the CGST Act, 2017 provides that where a taxable person who supplies any goods or services or both without issue of any invoice or issues an incorrect or false invoice with regard to any such supply he shall be liable to pay a penalty of ten thousand rupees or an amount equivalent to the tax evaded or short collected or collected but not paid to the Government or input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher.

There may arise a situation wherein a product or a service is wrongly classified by an assessee, due to lack of information, owing to which he collects & pays incorrect tax amount to the government. The amount of penalty may burden a genuine assessee who due to lack of information or incorrect guidance classified the goods or services provided by him incorrectly and becomes liable to penalty under section 122.

For Example: Mr. A (a dealer) sells goods to Mr. B (a dealer) and charges GST @12% as per the incorrect classification of goods known to him. However, while making a further sale Mr. B charges GST @18% as per the correct classification. Here the government will receive tax @18% but Mr. A would be penalized for incorrect classification and issue of incorrect invoice.

It is suggested that initially, to support assessees during transition process, for a period of 6 months or so the cases of wrong classification of goods or services be treated as tax neutral and assessee not be penalized for incorrect classification.

Reimbursement of expense for which invoice is issued in the name of employee

As per Schedule III of the CGST Act, 2017 services by an employee to the employer in the course of or in relation to his employment are treated neither as a supply of goods nor a supply of services.

Issue: There may arise many instances wherein an employee is reimbursed by his employer for expenses incurred by an employee during course of employment but for which a bill is issued in the name if the employee. For example. Mr. A hires a cab while on a tour for company work and makes the payment for the same. The bill is issued in name of Mr. A and company reimburses the amount so borne by Mr. A. This reimbursement is not a part of Mr. A's salary. The taxability of such transactions need to be clarified.

Suggestion: It is suggested that there be provided a suitable clarification regarding taxability of reimbursements made by an employer to the employee when the bill for a service etc. is issued in the name of that employee.

No Provision for availment of Credit of tax paid under earlier law

Section 140(1) of the CGST Act, 2017 provides that a registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law in such manner as may be prescribed.

Carry forward of credit/ tax paid might lead to certain issues. The transitional provisions provide no clarification regarding the credit of advance service tax paid by an assessee under earlier law. Also, if an assessee makes payment of service tax under reverse charge on 6th July 2017 he would not be eligible to take the credit of the same as the same will not be carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law   It appears that this amount will lapse as there is no Transition Provision in the GST law to take credit of the service tax paid again GST.

It is suggested to suitably clarify as to whether the taxes paid under earlier law like advance payment of service tax or tax amount paid after the appointed date would be eligible for Input Tax Credit under GST.

Contradiction between Notification No. 11/2017-Central Tax (Rate), dt. 28-06-2017 and CBEC Booklet for GST Rates on Services

Sr. No. 3 of Notification No. 11/2017-Central Tax (Rate), dt. 28-06-2017 provides as follows:


Sl. No.

Chapter, Section or Heading

Description of Service

   
1.

Heading 9954 Construction

(i) Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where  required, by the competent authority or after its first occupation, whichever is earlier.

(Provisions of paragraph 2 of this notification shall apply for valuation of this service)

   

Further as per Service Rates Booklets available on (http://www.cbec.gov.in/resources//htdocs-cbec/gst/services-booklet-03July2017.pdf) Page 23 providing List of Services at 12% rate Sl. No. 7 provides as follows:


Sl. No.

Description of Service

 
  1.  

Construction of a complex, building, civil structure or a part thereof, intended for sale to a buyer, wholly or partly (the value of land is deemed to be one-third of the total amount charged for such supplies)

12% with no refund of accumulated ITC


There exists a contraction regarding the rate of GST as well as value of land as per the aforesaid notification and Service Rates booklet available on CBEC website. This creates a confusion as to which is the correct classification.

It is suggested that to clarify the aforesaid contradiction appropriate clarification be provided.

Transition provision for tax paid on receipt basis

Rule 6 of Service Tax Rules, 1994 provides that in case of such individuals, partnership firms and one person companies whose aggregate value of taxable services provided from one or more premises is Rs. 50 lakhs or less in the previous financial year, the service provider shall have the option to pay tax on taxable services provided or agreed to be provided by him up to a total of rupees fifty lakhs in the current financial year, by the dates specified in this sub-rule with respect to the month or quarter, as the case may be, in which payment is received.

Section 140(5) of CGST Act, 2017 provides that a registered person shall be entitled to take, in his electronic credit ledger, credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed day but the duty or tax in respect of which has been paid by the supplier under the existing law, subject to the condition that the invoice or any other duty or tax paying document of the same was recorded in the books of account of such person within a period of thirty days from the appointed day.

Section 142(11)(b) of CGST Act, 2017 provides that notwithstanding anything contained in section 13, no tax shall be payable on services under this Act to the extent the tax was leviable on the said services under Chapter V of the Finance Act, 1994.

Section 174(2) of CGST Act 2017 provides that the repeal of the Finance Act, 1994 as amended to the extent mentioned in the sub-section (1) or section 173 shall not affect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repealed Acts or orders under such repealed or amended Acts.

In cases where services were provided in the earlier law and option of payment of service tax was exercised on receipt basis. Now if invoice for a service was raised and service was provided on 31.10.2016 but payment is expected to be received in November 2017, then owing to aforesaid provisions assessee is required to pay tax on receipt basis i.e. service tax.

It is suggested that suitable clarification be provided in the law for such transition situations

Transitional Issue on progressive supply of service

Section 142(11) (b) of the CGST Act, 2017  provides that notwithstanding anything contained in section 13, no tax shall be payable on services under this Act to the extent the tax was leviable on the said services under Chapter V of the Finance Act, 1994

Rule 7 of Point of Taxation Rules, 2011 provides that notwithstanding anything contained in rules 3,4, or 8, the point of taxation in respect of the persons required to pay tax as recipients of service under the rules made in this regard in respect of services notified under sub-section (2) of section 68 of the Act, shall be the date on which payment is made:

Issue: In cases, where the vendor who has raised the invoice for the services ( such as manpower or works contract service on which reverse charge is applicable) rendered in the month of June, 2017 and the payment is made in the month of September, 2017. Whether to pay service tax or GST in the instant case.

Suggestion: It is suggested that same needs to be clarified.

Taxes paid under earlier laws but bill has been received after appointed day.

Input or Input Services received before appointed day, but bill dated on or before June 30, 2016 has been received after appointed day and taxes on same has been paid as per earlier laws.

Section 140(5) of CGST Act, 2017 provides that a registered person shall be entitled to take, in his electronic credit ledger, credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed day but the duty or tax in respect of which has been paid by the supplier under the existing law, subject to the condition that the invoice or any other duty or tax paying document of the same was recorded in the books of account of such person within a period of thirty days from the appointed day.

In the law, it is stated that input or input services received on or after appointed day but the duty or tax in respect of which has been paid by the supplier under the existing law, hence by reading this it seems that it cover only the advance payments made on which taxes are paid under earlier laws.

Issue: In case , goods or services are delivered or received before the appointed date and the assessee received the invoices after appointed day i.e. supplier has raised the invoice on or before the appointed date but the recipient has received the invoice only after the appointed date in case services was provided earlier or in case of goods if goods were sent on approval basis as the same leads to drafting anomaly.

Suggestion: It is suggested that aforesaid issue be resolved suitably with introduction of specified format of getting input credit.

Credit of Transition stocks held with Branch

Under CGST Act, Section 140(3) allows registered importers to avail the credit of eligible duties in respect of inputs held in Stock and inputs contained in semi-finished or finished goods held in stock on the appointed day subject to certain conditions. One of the condition being possession of invoices or other prescribed documents evidencing payment of duty under the existing law in respect of such inputs.

Issue: Suppose, ABC Ltd is a registered importer having its head office at Haryana and a branch at Odisha. The head office had sent goods to branch office prior to the appointed day through F form. Now while filing the TRAN 1, for the stocks lying with the branch, whether the branch shall be eligible to get the credit of all the taxes paid at the time of import on the basis of documents possessed by the Head office and the form F or branch shall be eligible for deemed credit on such transaction on the account of non-possession of documents?

Suggestion: It is suggested that aforesaid issues of transition be provided with its mechanism.

Reclaiming of credit which was earlier reversed due to non-payment of consideration within 3 months

Section 140 (9) of CGST Act, 2017  provides that where any CENVAT credit availed for the input services provided under the existing law has been reversed due to non-payment of the consideration within a period of three months, such credit can be reclaimed subject to the condition that the registered person has made the payment of the consideration for that supply of services within a period of three months from the appointed day.

Issue: In case where an assessee  received a service on which tax was chargeable under reverse charge and failed to make payment within the period of  three months due to which he reversed the CENVAT credit  under the service \tax .Now after the appointed date if he makes a payment to vendor  within 3 months, how credit of service tax paid be added to electronic credit ledger and  also GSTR 2 does not mention about such input tax credit.

Suggestion: It is suggested that appropriate notification be issued in this regard with its mechanism.

Credit in respect of capital goods (of which no credit was admissible under the earlier law) as on 30/06/2017

As per Section 140(2) of CGST Act, 2017 A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, credit of the unavailed CENVAT credit in respect of capital goods, not carried forward in a return, furnished under the existing law by him, for the period ending with the day immediately preceding the appointed day in such manner as may be prescribed:

Provided that the registered person shall not be allowed to take credit unless the said credit was admissible as CENVAT credit under the existing law and is also admissible as input tax credit under this Act.

Explanation.––For the purposes of this sub-section, the expression 'unavailed CENVAT credit' means the amount that remains after subtracting the amount of CENVAT credit already availed in respect of capital goods by the taxable person under the existing law from the aggregate amount of CENVAT credit to which the said person was entitled in respect of the said capital goods under the existing law.

Issue: In case an assessee purchased a capital good in April 2017 to be used for exempted services and therefore no credit was available in respect of such capital goods. However, with effect from 01/07/2017, such services have become taxable and such capital goods are now being used for providing such taxable services. In view of above section, credit in respect of such capital goods is not available as such credit was inadmissible under old law.  In certain cases, there might be huge amount of credit in respect of such capital goods.

Suggestion: It is suggested that appropriate provision be provided to avail such credit in respect of capital goods which are used for supply of goods and services which become taxable with effect from 01/07/2017.

Type of tax liability of person liable to pay tax under reverse charge scheme

Under CGST Act, Section 9(3) / 5(3) of IGST Act, 2017 requires tax to be paid by recipient in case of receipt of supply notified by the government and Section 9(4) / 5(4)  requires tax to be paid by registered person on receipt of supply of goods or services from an unregistered person.

Issue: Suppose, a person having registration at Delhi receives supply from an unregistered person who is based at Haryana where the recipient (registered at Delhi) has got no registration. Supposing, the place of supply being Haryana as per the GST laws and the Location of supplier is at Haryana, the transaction is an intra state supply within Haryana, and hence H-SGST & H-CGST shall be charged on such transaction. But how the person registered at Delhi shall deposit the Haryana GST since he has no registration in the Haryana state?

Suggestion: It is suggested that suitable clarification be provided in the law for such transactions else it would create hardship for the recipient to get themselves registered in the States from where the supply is procured.

Where Composition dealer deals in exempt as well as taxable supplies.

Issue: Composition Dealers is dealing in taxable as well as exempted goods, since the composition dealer has to pay tax at 1% on all commodities he deals into. Whether he will have to pay tax on exempted goods also. This would be undue burden on the assessees dealing into both types of goods.

Suggestion: Suitable clarification be provided.

PROCEDURE RELATED ISSUES

GSTR 3B - Non availability of credits of earlier period

In GSTR - 3B there is no column to claim past input tax credit of earlier law (VAT, service tax, Excise Duty)

There is a mechanism for claiming credit from the previous regime but that has not been integrated with the GST filing process. This transitional credit will be available only after filing of GSTR TRAN-1 on the GSTN common portal. Even if a taxpayer files TRAN-1 prior to August 20 (that is, prior to filing GSTR 3B for July), the credits would not be allowed to be migrated in GST as there is no specific table for disclosing opening credit in GSTR 3B. TRAN-1 and TRAN-2 are the forms for transition of input tax credit while GSTR 3B is the form in which actual GST payable is filed. To be sure, input tax credit can be availed of after September in all instances

Suggestion: Any entity can claim credit of service tax or VAT paid in the previous regime against GST liability. If it does not have proof of payment of tax, it can take advantage of the deemed benefit norm. Therefore, it cannot be the intention of the government to deny the benefit of input tax credit of earlier laws. This need to be clarified and specific inclusion in the GSTR 3B is requisite to avoid tax cascading effect and outflow of working capital.

Blockage of working capital of exporters in refund process

As per section 16 of IGST Act, 2017 a registered person making zero rated supply shall be eligible to claim refund of tax paid on supply of goods or services or both subject to such condition, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both.

When an exporter buys products from local supplier against payment of GST there would be blockage of that Tax amount for at least 90-120 days as minimum time of executing any order for export is 45--60 days and then shipping the order, filling of return in next month, waiting for the system to generate refund assessment and release of refund which takes 10-14 days. In all the entire process of making an export upon payment of tax and claiming the refund of taxes so paid will cause working capital of exporters to get blocked in an unproductive process.

It is suggested that there be provided a provision for early refund of taxes paid by an exporter to refrain working capital from being blocked in the process.

Difficulty in keeping quantitative record of stock.

Retails traders are worried about stock keeping, as they have wide range of different products. It is very tough to keep quantitative details of all products.

Reason of Validation error not provided during registration

At the time of Registration if there is a validation error, the reason for error is not provided through the email. It is difficult to guess which field is entered incorrectly which has generated the validation error.

It is suggested that the reason for validation error be communicated to the assessee desirous of registration through email etc. so that he may provide the correct particulars and correct the errors promptly.

Multiple Details required to be provided in an invoice

Rule 46 of CGST Rules, 2017 provides that a tax invoice referred to in section 31 shall be issued by the registered person containing the specified particulars. The requirement of providing multiple fields in an invoice takes up a lot of time. Mandating the mention of all the fields makes invoicing process cumbersome.

It is suggested that till an appropriate system is in place, GSTIN and product general details with some identification marks to correlate with Invoice or delivery challan be sufficient for invoicing. Place, HSN and other mandatory details be implemented when GST system is set to run smoothly.

Option of having multiple Trade Names with single GSTIN

Under earlier law, in case of Proprietorship there was a provision of having multiple trade names while having single Registration No as an assessee may want to have multiple trade names for running his business. However, under GST there is no such option available of having multiple trade names against single GSTIN.

It is suggested that option of having a multiple trade names in case of proprietor against one GSTIN be provided to facilitate ease of doing business.

Wrong format of Principle and Agent details in TRAN 1

Under CGST Act, Section 142(11) requires the details of goods held in stock as agent on behalf of the principal to be furnished in point no. 10 of TRAN 1.

Issue: Point 10(a) of TRAN 1 shall be filled by Principal which allows furnishing the details of goods of his own stock held by agent. However, the format asks for the GSTIN of principal to be furnished.

Suggestion: It is suggested that 10(a) of TRAN 1 should actually ask for the GSTIN of the agent which shall be furnished by Principal on the basis of which the agent can avail the credit of the goods lying with him on furnishing of TRAN 1.

REGISTRATION ISSUES

Registration related issues under GST

GST law came into force with effect from July 1, 2017, however for most interfaces between department and tax payer GSTN has been taken as common portal w.e.f 22nd June 2017. It is backbone for implementation of GST. After one month of implementation of GST still there are many areas whereby requisite functionality is not available or not properly working. Some of the issues faced are as follows:


S. No.

Relevant Law

Particulars

Issue/ Comment

1

Sec. 10

Rule 3(1)

Form GST CMP-01

As per Rule 3(1), Intimation to for opting composition scheme has to be filed by persons migrated from existing regime to GST within 30 days from the appointed day (i.e. by 21st July). However, the date has been extended till August 16, 2017.

Existing registrants are not able to file intimation for opting to pay tax under composition scheme in form GST CMP-01. Most of times system shows some error. Out of them common are:

  • 'Unable to Submit form'
  • 'Please fill the jurisdiction' whereas tab of jurisdiction is blocked.
  • 'You cannot opt for the composition as you are an ISD registrant.' (Whereas, applicant is not the ISD registrant.)

2

Sec. 10

Rule 3(4)

Form GST CMP-03

As per Rule 3(4), Stock details are to be furnished within 60 days, in case Composition Scheme is opted by a person migrated from existing regime to GST.

Functionalities are not operational.

3

Sec. 22(2)

Rule 24

Form GST REG-26

As per Sec. 22(2), all persons registered under the existing law, were supposed to get themselves registered under the GST. For which Form REG-26 is to be filed.

Most of Taxable persons who have been enrolled on the GST portal have not been allotted the GST REG-06 (Permanent Registration), even if they have filed GST REG 26 (Part B).

4

Sec. 24, 51 & 52

Rule 12

Form GST REG-07

Certain persons are required to deduct or collect tax at source under the GST law.

(However, it may be noted that both the sections i.e. Sec. 51 & 52 are not notified for the time being).

Application for registration for TDS Deductor or TCS Collector are not available on GSTN portal.

5

Sec. 24

Rule 13

Form GST REG-09

Every Non-Resident Taxable Person has to take registration at least five days prior to making supplies.

Application of registration by Non-resident taxable person not available.

6

Sec. 24

Rule 14

Form GST REG-10

Registration by Taxable Person proving OIDAR Services

Registration functionalities not in operations as of now.

7

Sec. 25

Validation Errors

Many a times validation errors are there, in case of fresh registrations, but reason has not been communicated by GSTN.

8

Sec. 25

Rule 10

Form GST REG-06

Registration Certificate are not digitally signed.

REG-06 issued to the registered person is not digitally signed by the proper officer and section under which registration has been granted is not mentioned on the form.

9

Sec. 25(9)

Rule 17

Form GST REG-13

Assignment of UIN to special entities

Registration functionalities not in operations as of now.

10

Sec. 28

Rule 19

Form GST REG-14

In case of change in any information given in application of registration or UIN, the same has to be intimated to the department within 15 days from such change.

Functionalities are not operational.

11

Sec. 29

Rule 24(4)

Form GST REG-29

Any person who migrated into GST, but not liable to get himself registered under the GST Law had to file application for cancellation of his registration within 30 days from the Appointed Day.

(However, it may be noted that now rule has been amended to provide that such application can be filed upto September 30, 2017)

Functionalities are not operational.

12

Sec. 49

Ledger summary of cash paid and utilization thereof.

Registered persons are able to make payment of tax online on the GST portal, but the balance of the same is not been shown in ledger summary.

Further, utilization of cash payment has not been enabled on the common portal.


Suggestion: It is suggested that aforesaid issues of registration be provided for and resolved appropriately.

OTHER ISSUES

GST Helpdesk

GST helpdesks have been a boon for resolving transitions, registration etc. issues/ queries and is helping one and all with smooth transition to GST regime. Considering the bulk of enquiries made to the help desks, it results in minimum waiting time for each call to shoot up beyond 30 minutes, delay in revert by emails being more than 15 days which may or may not cater to the issue/ query so raised. Owing to these concerns, it is suggested that additional manpower be deployed for resolving queries/ issues, reduce call/ email revert time to help keep up the good work undertaken by GST helpdesk. An assistance provided by properly trained officials will add to the smooth functioning of the GST helpdesk and providing specific answers to the queries/ issues as against being referred to GST Acts, Rules, FAQs etc.

Stage wise deduction for an Immovable property

The present provision for taxation of supply of under construction flat / premises do not take into consideration the status of the construction at the time of execution of the contract.  Thus, if the flat is booked, say when 60% of the construction is completed; attracts same levy of tax as it would attract when construction is yet to begin or where the construction is 90% complete. During the course of the construction, by virtue/nature of the activity, by laying each brick it acquires the status of immovable property even while the building is getting constructed in the process. Therefore, such 'immovable property' cannot be subjected to levy of GST. Therefore, an appropriate deduction should be provided to ascertain value to the extent of such 'immovable property' at the time of entering into contract with the buyer of the flat. This is popularly referred to as 'stage wise deduction' under the Maharashtra VAT Act,2002.  Rule 58(1B) of the Maharashtra Value Added Tax Rules, 2005 is reproduced herein under.

(a) Where the dealer undertakes the construction of flats, dwellings, buildings or premises and transfers them in pursuance of an agreement along with the land or interest underlying the land then, after deductions under sub-rules (1) and (1A) from the total contract price, the value of the goods involved in the works contract shall be determined after applying the percentage provided in column (3) of the following TABLE depending upon the state at which the purchaser entered into contract.

TABLE


Sr. No.

Stage during which the developer enters into a contract with the purchaser.

Amount to be determined as value of goods involved in works contract.

(1)

(2)

(3)

(a)

Before issue of the Commencement Certificate.

100%

(b)

From the Commencement Certificate to the completion of plinth level.

95%

(c)

After the completion of plinth level to the completion of 100% of RCC framework.

85%

(d)

After the completion of 100% RCC framework to the Occupancy Certificate.

55%

(e)

After the Occupancy Certificate.

Nil%


Suggestion: A provision similar to the above may please be brought in under the GST.


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Category GST, Other Articles by - Madhukar N Hiregange 



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