GST Circulars and Orders Summary

The Circular provides clarification on situations where Input Tax Credit (ITC) is claimed in GSTR-3B but is not reflected in GSTR-2A for FY 2017-18 and 2018-19 due to various reasons, including:

The vendor not filing GSTR-1 but only filing GSTR-3B.

The vendor filing GSTR-1 and GSTR-3B but not showing a particular invoice in GSTR-1.

The vendor wrongly recording a B2B invoice as a B2C invoice in GSTR-1.

The vendor filing GSTR-1 and mentioning the wrong GSTIN.

The Circular highlights the following points regarding verification of filed or revised TRAN forms:

Verification will be conducted within 90 days, from 1st December 2022 to 28th February 2023, after filing the TRAN form.

The verification process commences earlier of two dates: the availability of filed or revised TRAN forms on the back office system or the receipt of a self-certified downloaded copy.

The applicant must submit a self-certified downloaded copy of the submitted or revised TRAN-1 or TRAN-2 along with the declaration in Annexure-A to the jurisdictional tax officer (Central or State).

If both CGST and SGST components are present in the TRAN form, the jurisdictional officer can refer to the state officer.

The officer may reject the TRAN application if no changes are found compared to earlier filed TRAN, if any.

Annexure-I of the guidelines is applicable to CGST Tran credit.

The jurisdictional officer who completes the verification must report it in the format provided in Annexure II of the guidelines.

The Circular includes the complete verification checklist, Annexure-I, and II for reference.

The Circular provides clarifications on the refund related to the inverted tax structure, as well as guidelines for migrated taxpayers to report their pre-GST Input Tax Credit (ITC) if they missed it earlier. The Circular also addresses specific aspects regarding GST rates and classification for various goods. The key points clarified are as follows:

The new formula under Rule 89(5) for calculating the refund amount of unutilized ITC in case of an inverted tax structure applies prospectively from 5th July 2022.

Refund restrictions for items under chapters 15 and 27 will apply prospectively from 18th July 2022.

Electrically operated vehicles are classified under HSN 8703 and charged 5% GST, even if the battery is not fitted upon sale.

HSN code 2515, which includes Caussine and other calcareous monumental or building stones, attracts a 5% concessional GST rate, including Napa stones.

Fresh mangoes fall under HSN code 0804 and are exempt from GST, while sliced and dried mangoes attract 5% GST, and other forms of dried mango and mango pulp attract 12% GST.

Treated sewage water is not considered purified and has been exempted under HSN 2201.

Nicotine Polacrilex gum, used orally to discontinue the use of tobacco, falls under tariff item 2404 91 00 with 18% GST.

The condition of 90% or more fly ash content applies only to fly ash aggregates and not to bricks and blocks, and it has been removed from 18th July 2022.

GST rate clarification is provided for various by-products of pulses and dal, such as chilka, khanda, and churi under HSN code 2302.

Aquatic and poultry feed, including husk, hay, wheat bran, and others excluding rice bran, are exempted, while bran and residues from sifting or milling of cereals, including rice bran, attract 5% GST under HSN code 2302.

The department may regularize any interpretations other than the above on a case-to-case basis for previous tax periods. However, henceforth, cattle feed ingredients attract 5% GST under HSN code 2302.

The Circular provides clarifications on various aspects related to the refund for the inverted tax structure and outlines guidelines for migrated taxpayers to report their pre-GST Input Tax Credit (ITC) if they missed it previously. Additionally, the Circular addresses specific matters concerning GST rates and the classification of certain goods. The key points clarified in the Circular are as follows:

The new formula under Rule 89(5) for calculating the refund amount of unutilized ITC in cases of an inverted tax structure applies prospectively from 5th July 2022.

Refund restrictions for items falling under chapters 15 and 27 will apply prospectively from 18th July 2022.

Electrically operated vehicles are classified under HSN 8703 and attract a 5% GST rate, even if the battery is not fitted upon sale.

HSN code 2515, covering Caussine and other calcareous monumental or building stones, is subject to a 5% concessional GST rate, including Napa stones.

Fresh mangoes are classified under HSN code 0804 and are exempt from GST, while sliced and dried mangoes attract 5% GST, and other forms of dried mango and mango pulp attract 12% GST.

Treated sewage water is not considered purified and has been exempted under HSN 2201.

Nicotine Polacrilex gum, used orally to discontinue the use of tobacco, falls under tariff item 2404 91 00 with an 18% GST rate.

The condition of 90% or more fly ash content applies only to fly ash aggregates and not to bricks and blocks, and it has been removed from 18th July 2022.

GST rate clarification is provided for various by-products of pulses and dal, such as chilka, khanda, and churi under HSN code 2302.

Aquatic and poultry feed, including husk, hay, wheat bran, and others (excluding rice bran), are exempted, while bran and residues from sifting or milling of cereals, including rice bran, attract 5% GST under HSN code 2302.

The department may regularize any interpretations other than the above on a case-to-case basis for previous tax periods. However, from now on, cattle feed ingredients attract 5% GST under HSN code 2302.

The Circular offers clarifications regarding the refund process for the inverted tax structure and provides guidelines for migrated taxpayers to report their pre-GST Input Tax Credit (ITC) in case of any previous omissions. It also addresses specific aspects related to GST rates and classification for different goods. The main points clarified are as follows:

The new formula under Rule 89(5) for calculating the refund of unutilized ITC in cases of an inverted tax structure will be applicable from 5th July 2022 onwards.

Refund restrictions for items falling under chapters 15 and 27 will be applicable from 18th July 2022 onwards.

Electrically operated vehicles will be classified under HSN 8703 and will be charged 5% GST, irrespective of whether the battery is fitted upon sale.

HSN code 2515, which includes Caussine and other calcareous monumental or building stones, will attract a 5% concessional GST rate, including Napa stones.

Fresh mangoes will fall under HSN code 0804 and will be exempt from GST. However, sliced and dried mangoes will attract 5% GST, and other forms of dried mango and mango pulp will attract 12% GST.

Treated sewage water will be considered not purified and will be exempted under HSN 2201.

Nicotine Polacrilex gum, used orally to discontinue the use of tobacco, will fall under tariff item 2404 91 00 with 18% GST.

The condition of 90% or more fly ash content will apply only to fly ash aggregates and not to bricks and blocks, and this requirement has been removed from 18th July 2022.

GST rate clarification is provided for various by-products of pulses and dal, such as chilka, khanda, and churi under HSN code 2302.

Aquatic and poultry feed, including husk, hay, wheat bran, and others excluding rice bran, will be exempted from GST. However, bran and residues from sifting or milling of cereals, including rice bran, will attract 5% GST under HSN code 2302.

The department may regularize any interpretations other than the ones mentioned above on a case-to-case basis for previous tax periods. However, from now on, cattle feed ingredients will attract 5% GST under HSN code 2302.

Independent agreements between parties necessitate both obligation and consideration and encompass various scenarios, as listed below:

Payment of liquidated damages.

Payment of bonds or notice amounts by employees.

Collection of fines for cheque dishonor.

Collection of penalties for law contravention.

Compensation paid for canceling coal blocks.

Late payment charges for delays in bill payment.

Collection of toll charges.

Collection of fixed and variable electricity charges by power generating companies from the State Electricity Board (SEB) or DISCOMS or, in turn, from consumers.

Collection of cancellation charges for rail or airway tickets or hotel bookings from passengers or tourists.

The Circular addresses the following points:

Starting from 6th October 2021, ice cream parlors are required to pay GST at 18% on their sales, with the option to claim Input Tax Credit (ITC). If they previously paid GST at 5% without ITC, it will be considered legally acceptable and will avoid any legal disputes.

The fees charged from prospective students seeking admission or ex-students needing eligibility or migration certificates are now exempted from GST.

The exemption for storing or warehousing ginned or baled cotton is no longer applicable.

Transit services of cargo to and from Nepal and Bhutan, including empty containers, are exempt from GST.

GST exemption for sanitation and conservancy services to the Indian Army or government departments is applicable only if they are related to functions listed in the 11th and 12th Schedule meant for the general public.

A 5% GST is applicable to the sale of advertisement space in souvenir books.

Transportation of minerals from mining pits to railway sidings or beneficiation plants by vehicles with a driver’s assistance falls under HSN code 9966. It attracts 12% GST if the fuel cost is included, and 18% GST otherwise, without any exemptions.

Charges for location or Preferential Location Charges (PLC) received in addition to the lease premium for long-term land leases are exempted from GST.

Guest anchors’ services attract 18% GST if their turnover exceeds the threshold limit and they are GST-registered.

Additional toll fees collected from vehicles without Fastags, for bridge or road access, are exempt from GST.

Health care services, including Assisted Reproductive Technology (ART)/In vitro fertilization (IVF), do not attract GST.

Services related to land development, such as leveling or laying drainage lines, attract GST.

If companies hire passenger vehicles for a fixed duration at their disposal, it falls under HSN code 9966 and is subject to GST on a reverse charge basis. However, if companies use passenger transport services for specific journeys without a fixed duration, it falls under HSN code 9964 and does not attract GST under the reverse charge mechanism. The same applies to transporting employees to and from work in non-AC vehicles.

Contracts for the construction, installation, and commissioning of dairy plants are considered works contracts and attract 18% GST from 18th July 2022.

There is no GST on tickets purchased for public transportation from one place to another, irrespective of whether the ferry is publicly or privately owned or operated. However, this exemption does not apply if the transportation promotes tourism.

The main areas clarified in the Circular are as follows:

Refund process for recipients of deemed export supplies.

Explanation of ineligible Input Tax Credit (ITC) as per Section 17(5) of the CGST Act.

Treatment of perquisites provided by employers to employees under employment agreements.

Guidelines for utilizing ITC from the electronic credit ledger and electronic cash ledger for tax payment and other liabilities.

The provided clarifications are as follows:

Apply for a refund using the new GSTIN.

No deduction from the electronic credit ledger is required.

The tax officer will calculate the eligible refund amount.

For refunds other than Input Tax Credit (ITC), the taxpayer must select ‘Any other’ as the category and provide reasons with supporting documents.

Refund claims or re-credit should not be made using the old GSTIN before the merger.

The following clarifications have been provided:

E-commerce operators falling under Section 9(5) are not required to collect TCS under Section 52 or file GSTR-8. However, other operators must continue to collect TCS and file GSTR-8.

Already registered e-commerce operators do not need a separate GST registration for supplying restaurant services under Section 9(5).

E-commerce operators will be liable under Section 9(5) regardless of whether unregistered businesses are selling services through them.

The aggregate turnover for e-commerce operators will be as per Section 2(6) and will include the sale value of restaurant services made through them.

Restaurant services supplied through e-commerce operators will not be considered as inward supplies subject to Reverse Charge Mechanism (RCM).

E-commerce operators shall pay the entire GST liability in cash for restaurant services, and no Input Tax Credit (ITC) can be used for this purpose. However, they need not reverse ITC on account of restaurant services liable for GST under Section 9(5).

For supplies made on their own account, other than restaurant services, e-commerce operators will continue to charge tax at normal rates as notified, along with TCS.

Separate bills must be issued by e-commerce operators for restaurant services and other services. They will issue invoices for restaurant services supplied through them.

For reporting purposes, e-commerce operators shall report such supplies in Table 7A(1) or Table 4A of GSTR-1 and GSTR-3B. Restaurants providing services via e-commerce operators shall report these supplies in Table 8 of GSTR-1 and Table 3.1 (c) of GSTR-3B.

The standard 2-year time limit for refund applications does not apply to cases where taxpayers seek a refund of excess balance in their electronic cash ledger.

For such refund cases mentioned above, taxpayers are not required to provide a certificate stating that the tax incidence has not been passed on or a declaration of not causing unjust enrichment.

Taxpayers have the option to claim a refund of TDS/TCS credited or deposited into their electronic cash ledger, which remains unused.

When recipients claim refunds for deemed exports, the relevant date is the filing date of returns by the supplier, related to such supplies.

The GST rate and applicability of provisions have been clarified for the following services and items:

Services:

Cloud kitchens

Ice cream sold in parlours

Private coaching under the “Scholarships for students with Disabilities” scheme

NSIL’s satellite launch services

Toll plaza’s overloading charges

Treatment followed by the State Transport Undertakings and Local Authorities when they take vehicles on rent

Grant of mineral exploration and mining rights

Admission into amusement parks

Contractual manufacturing services related to alcoholic liquor for human consumption

Items:

Fresh fruits versus dry fruits

GST rate on tamarind seeds

Coconut versus copra

Pure henna powder and leaves

Supari and coated illaichi

Brewers’ Spent Grain (BSG) and Dried Distillers’ Grains with Soluble (DDGS)

Certain pharmaceutical products

Laboratory reagents

Issue of original/import Essentiality certificate

Sale of an external battery with UPS system

Specified Renewable Energy Projects

Corrugated or non-corrugated fiber drums

The clarification ensures a clear understanding of the GST rates and provisions for these specific services and items.

The GST rate and applicability of provisions have been clarified for the following services and items:

Services:

Cloud kitchens

Ice cream sold in parlours

Private coaching under the “Scholarships for students with Disabilities” scheme

NSIL’s satellite launch services

Toll plaza’s overloading charges

Treatment followed by the State Transport Undertakings and Local Authorities when they take vehicles on rent

Grant of mineral exploration and mining rights

Admission into amusement parks

Contractual manufacturing services related to alcoholic liquor for human consumption

Items:

Fresh fruits versus dry fruits

GST rate on tamarind seeds

Coconut versus copra

Pure henna powder and leaves

Supari and coated illaichi

Brewers’ Spent Grain (BSG) and Dried Distillers’ Grains with Soluble (DDGS)

Certain pharmaceutical products

Laboratory reagents

Issue of original/import Essentiality certificate

Sale of an external battery with UPS system

Specified Renewable Energy Projects

Corrugated or non-corrugated fiber drums

The clarification ensures a clear understanding of the GST rates and provisions for these specific services and items.

The following clarifications have been provided:

The term ‘subsequently held’ in Section 77 has been clarified, allowing taxpayers to claim refund benefits if they discover the refund eligibility themselves, not just the tax authorities.

Refunds will not be allowed if credit notes are utilized to adjust wrongful tax payments.

The relevant date for fixing the time limit for refund applications is clarified with illustrations. For payments made before the issuance of CGST Notification 35/2021 on 24th September 2021, the time limit is two years from that date. For payments made after that date, the time limit is two years from the date of paying tax under the correct tax head.

A company incorporated in India and a foreign company incorporated outside India are considered as separate and distinct legal entities.

Services provided by foreign companies in India to their establishments outside the country are not restricted by the conditions mentioned in Section 2(6)(v). These services will be classified as exports of services, as they are not considered supplies between mere establishments of distinct persons.

The following clarifications have been issued:

The date of issuance of a debit note, not the underlying invoice, is crucial for determining the time limit for reporting in a relevant financial year under Section 16(4) of the CGST Act.

Amended rules apply for claiming Input Tax Credit (ITC) on debit notes issued after 1st January 2021.

In cases where the supplier has generated an invoice with a QR code under rule 48(4) of the CGST Rules, there is no need to use a physical copy of the tax invoice.

Goods subject to export duty, excluding those with nil rates, are the only ones restricted under Section 54(3) from availing a refund of unutilized ITC due to export.

The Circular provides clarification on the following points:

The definition of an intermediary.

The exclusion of suppliers of goods, services, or securities for their own account.

Clarification that sub-contracting does not fall under the category of intermediary services.

Section 13 of the IGST Act (Export) is applicable when either the intermediary or its recipient is located outside India.

This circular provides clarity on the applicability of GST on various services supplied by Central and State Boards. As per the recommendations of the GST Council, the following points are clarified:

(i) Services provided by Central or State Boards, including conducting examinations (including entrance examinations), fall under the exemption category at S. No. 66 (aa) of Notification No. 12/2017-CT(R).

(ii) Input services related to admission or examination, such as online testing service, result publication, printing of notification for examination, admit card, and question papers, provided to such Boards, are also exempt under S. No. 66 (b) (iv) of Notification No. 12/2017-CT(R).

(iii) For other services provided by such Boards, GST at the rate of 18% is applicable.

The following clarifications have been issued:

Regarding refund claims by the recipient of deemed export supply, the modification in para 41 of Circular No. 125/2019 dated 18th Nov 2019 removes the restriction on the recipient to avail ITC on invoices under deemed export supplies for which a refund has been claimed. However, the refund application requires a debit of the same amount from the claimant’s electronic credit ledger.

For refund claims where zero-rated supplies have been wrongly declared in Table 3.1(a), an extension is provided until 31st March 2021 for filing the refund application in form RFD-01. This extension applies with a condition that the maximum amount of IGST refund is up to the total of IGST in tables 3.1(a), 3.1(b), and 3.1(c) of GSTR-3B for the same tax period.

The manner of calculation of Adjusted Total Turnover under sub-rule (4) of Rule 89 of CGST Rules, 2017 clarifies that the value of export/zero-rated supply of goods included while calculating “adjusted total turnover” will be the same as per the amended definition of “Turnover of zero-rated supply of goods.”

Until CGST Rule 21A(2A) can be implemented on the GST portal, a temporary arrangement has been made for tax authorities and taxpayers to adhere to the Rule. The circular’s key points are as follows:

Form REG-17 will replace form REG-31 until the rule is implemented on the GST portal.

Taxpayers receiving the notice must respond within 30 days using form REG-18.

Forms REG-20 or REG-19 may be utilized for either discontinuing the proceedings or canceling the registration, respectively.

The provided clarifications are as follows:

Interest calculation for taxpayers with an aggregate turnover above Rs 5 crore

Interest calculation for taxpayers with an aggregate turnover equal to or below Rs 5 crore

Late fee computation

The applicability of GST on the remuneration of a director depends on whether the director is considered an employee of the company or not. If the director is an employee, GST does not apply as per Schedule III of the CGST Act, and the company does not need to deposit GST with the government. However, if the director is not an employee, GST will be charged, and the company must remit it to the government.

To determine whether a director is an employee, several parameters can be considered. One of them is the section under which TDS (Tax Deducted at Source) is levied under the Income Tax Act. If TDS is under section 194J, then GST will apply on the remuneration to the director. On the other hand, if TDS is under section 192, then GST will not apply, as the director is considered an employee.

Another aspect to check is whether the activities performed by the director are classified as a ‘contract of service’ or ‘contract for service.’ In the case of the latter, GST will apply.

A three-point clarification has been issued for compliance during the COVID-19 led lockdown. The clarifications pertain to the following areas:

GST registration requirements for an Interim Resolution Professional (IRP) handling an entity under the Insolvency and Bankruptcy Code.

Extension of the ITC-04 filing deadline for the January-March 2020 quarter until 30th June 2020.

The time limit for exporting by merchant exporters has been extended up to 30th June 2020 or the expiry of the 90-day period, whichever is later, to allow suppliers to charge a concessional GST rate of 0.1% to such merchant exporters.

A six-point clarification has been issued for particular business transactions and tax compliance during the COVID-19 led lockdown. The points of clarification are as follows:

Regarding the issuance of an invoice for advance received for a future service that is later canceled.

Regarding the issuance of a receipt voucher for advance received for a future service that is later canceled.

The usage of LUT (Letter of Undertaking) reference number while submitting export documents.

Goods returned subsequent to the issuance of an invoice.

Extension of the timeline for depositing TDS (Tax Deducted at Source) under GST.

Time limit extension for the application of GST refund.

The following clarifications have been issued regarding GST refunds on various issues:

Bunching of refund claims across Financial Years.

Refund of accumulated Input Tax Credit (ITC) due to a reduction in GST Rate.

Change in the procedure for refund of tax paid on supplies other than zero-rated supplies.

Guidelines for refunds of Input Tax Credit under Section 54(3).

New requirement to mention HSN/SAC in Annexure ‘B’.

The provided clarification pertains to the apportionment and transfer of Input Tax Credit (ITC) in various scenarios such as merger, demerger, amalgamation, or changes in the constitution/ownership of a business. Here are the key points of the clarification:

A registered person can transfer the unutilized ITC from their electronic credit ledger to the sold, merged, demerged, amalgamated, leased, or transferred business by filing ITC-02 on the GST portal. This transfer request is for the transferee to receive the unutilized ITC.

In the case of demerger, the ITC should be apportioned based on the value of assets of the new units as specified in the demerger scheme.

The apportionment of ITC after demerger should be done at the State level (distinct person level), not at the all-India level.

The transferor is required to file FORM GST ITC-02 only in those States where both the transferor and transferee are registered.

The formula for apportionment of ITC, as prescribed under the proviso to sub-rule (1) of rule 41 of the CGST Rules, applies to all forms of business re-organization resulting in partial transfer of business assets along with liabilities.

The ratio of the value of assets should be applied to the total amount of unutilized ITC (CGST, SGST/UTGST, and IGST credit) of the transferor. There’s no need to apply the formula separately for each head of ITC (CGST/SGST/IGST).

Several appellate authorities are delaying the appellate process, citing the absence of a constituted appellate tribunal. They argue that until the tribunal is established, there is no remedy available against their Order-in-Appeal, and hence, these appeals cannot be resolved. The following clarifications have been issued:

If the order has been passed by a Deputy or Assistant Commissioner or Superintendent, the appeal must be made to the appointed appellate authority, who should not be an officer below the rank of Joint Commissioner. Similarly, if the order has been passed by an Additional or Joint Commissioner, the appeal must be made to the Commissioner (Appeal) appointed for the same.

The appeal to the tribunal can be filed within three months (or six months in the case of appeals by the Government) from the date of communication of the order or from the date on which the President or the State President of the Appellate Tribunal assumes office, whichever is later.

It is clarified that the prescribed time limit for making an application to the appellate tribunal will be counted from the date on which the President or the State President assumes office.

As a result, it is advised that the appellate authorities should expedite the disposal of all pending appeals without waiting for the constitution of the appellate tribunal.

The Standard Operating Procedure (SOP) includes the following points:

Risk parameters-based checks are conducted using robust data analytics and artificial intelligence tools. Certain exporters are selected for further verification based on these checks.

The export consignments/shipments of the selected exporters will undergo a 100% examination at the customs port.

To expedite the verification process, exporters must provide information in Annexure ‘A’ and submit it to their jurisdictional CGST authorities for verification.

The CGST officer is required to complete the verification within 14 days.

If needed, the exporter can escalate the matter by sending an email to the Jurisdictional Principal Chief Commissioner/Chief Commissioner of Central Tax.

The Jurisdictional Principal Chief Commissioner/Chief Commissioner of Central Tax should take appropriate action to ensure the verification is completed within the next 7 working days.

The circular specifies the following timelines and actions related to GST return filings:

Three days before the due date of GST returns, a system-generated reminder message is sent to the taxpayers.

On the day after the due date, all non-filers of GST returns will receive a system-generated message.

If the GST return is still not filed, a GSTR-3A GST notice is issued five days after the due date.

Fifteen days from the issuance of the notice, the tax officer issues an assessment order demanding the tax liability to be paid, if the GST return is not filed.

After thirty days from the issuance of the assessment order, recovery proceedings will be initiated if the taxpayer still does not furnish the GST return. However, if the taxpayer responds by filing a valid GST return, the assessment order is considered to have been withdrawn.

The following decisions have been made concerning the use of DIN (Document Identification Number):

Starting from 24th December 2019, all email communications from the CBIC office to taxpayers and other concerned individuals will display the DIN of the respective proper officer.

The officers will generate DIN for every document issued to the taxpayer through the cbicddm.gov.in platform.

A committee has been formed to standardize the formats of all documents, ensuring the pre-populated use of DIN, which will be implemented from 1st January 2020 onwards.

The Tea Board of India, acting as an e-commerce operator, is responsible for collecting Tax Collected at Source (TCS) at the notified rate from:

(a) Sellers on the net value of goods supplied, and

(b) Auctioneers on the net value of supply (i.e., brokerage).

The circular provides further clarification on this matter.

Supply of goods imported into India, until they cross the customs borders, is treated as inter-state trade or commerce.

Levy point for warehoused goods is at the time of duty collection during clearance as per customs act.

Integrated tax on warehoused imported goods upon clearance for home consumption is based on the higher of transaction value or value at the time of filing the into-bond bill of entry.

Tax is imposed and collected only when warehoused goods are cleared for home consumption from customs bonded warehouse.

Circular applies to supply of warehoused goods in customs bonded warehouses on or after 1st April 2018.