Indirect Tax News

​GST Developments and Associated Procedures

1. The decision taken in the 40th GST Council Meeting

The following decisions, inter alia, were taken by GST Council in the 40th meeting chaired by the Hon’ble Finance Minister of India through video conferencing:

• Correction of inverted duty structure: One of the most awaited reforms i.e. correction of inverted duty structure was discussed extensively. Discussions were made to correct the inverted duty structure on various items like fertilizers, foot-wares, textiles and mobile phones. However, the final decision in this regard was postponed for the time being.
• Compensation cess: There has been delay in payment of Compensation Cess by the Central Govern-ment to the States recently. Further, as an effect of pandemic, the collection of Compensation Cess has been drastically low. This issue was discussed extensively and it is expected that the GST Council will come up with certain alternative measures and take a final decision in this regard in the next GST Council meeting.

• The Hon'ble Supreme Court, in Suo Moto Writ (Civil) No. 5 of 2020 has permitted Courts across the country to conduct legal proceedings by leveraging technology. Vide Public Notice 1 of 2020 dated 30 June 2020, the Customs, Excise and Service Tax Appellate Tribunal also endeavours to dispose cases of urgent applications through hearings via electronic mode at all its Benches by utilizing the technology to the best extent possible.
   
  The detailed procedure of e-hearing of applications by CESTAT can be accessed at: http://www.cestatnew.gov.in/notice.php

3. Supreme Court stay on Delhi High Court decision in case of Brand Equity Treaties Ltd:

The Hon’ble Supreme Court of India has on 19 June 2020 stayed the Delhi High Court decision in the case of Brand Equity Treaties Ltd. v. Union of India (decision dated 5 May 2020). The High Court had held that an assessee can avail Input Tax Credit of the accumulated CENVAT credit as on 30 June 2017 by filing GST Form TRAN-1 beyond the period of limitation prescribed under Rule 117 of Central Goods and Services Tax Rules, 2017 (“CGST Rules”) on or before 30th June 2020 by exercising the powers under General Clauses Act.

Important Notifications issued during the quarter

• Date Extension - Annual Return and Reconciliation Statement

Vide Notification No. 41/2020 dated 5 May 2020, the Government has extended the due date for conducting GST audit and for submission of Form GSTR 9 and Form GSTR 9C (Annual Return and Reconciliation Statement) for FY 2018-2019 till 30 September 2020.

• Timelines to furnish Form GSTR-3B and Form GSTR 1 and waiver of late filing fees

One time amnesty scheme is introduced by lowering/waiving of the late fees for non-furnishing of GSTR-3B for the tax period July 2017 to January 2020 by issuing Notification No. 52/2020 – Central Tax dated 24 June 2020 amending the Principal Notification 76/2018-Central Tax.

Further, by Notification 53/2020-Cen¬tral Tax dated 24 June 2020, late fees waiver is given to Normal Tax Payers if GSTR-01 is filed till specified date, given as follows: 

It shall be noted that the actual due date of filing Form GSTR-01 has not been extended. The waiver of late fees which was earlier available till 30 June 2020 is further extended for tax periods March 2020 to June 2020.

Vide Notification 54/2020-Central Tax dated 24 June 2020, due date for filing return in Form-GSTR-3B for the month of August 2020 for the taxpayers having annual turnover up to INR 5 Crore has been extended to 1 October 2020 or 3 October 2020 on basis of States in which principal place of business is located.

Vide Notification 55/2020–Central Tax dated 27 June 2020, the time limit for completion of any proceeding, passing of order, issuance of any notice/intimation etc. by an authority or filing of any appeal, reply or application or furnishing any report, document, statement which falls between 20 March 2020 to 30 August 2020 has been extended till 31 August 2020.

Other Indirect Tax Law Compliances (Customs, Services Tax, Excise): Vide Ordinance No. 2 of 2020, the time limit for completion of any proceeding, passing of order, issuance of any notice/intimation etc. by an authority or filing of any appeal, reply or application or furnishing any report, document, statement which falls between 20 March 2020 to 29 September 2020 has been extended till 30 September 2020.

Important Circulars issued during the quarter

Vide Circular No. 139/09/2020 – GST dated 10 June 2020, it was clarified that the refund of ITC availed on the invoices/documents relating to imports, ISD invoices and the inward supplies liable to Reverse Charge (RCM supplies) will not be impacted by Circular No.135/05/2020 – GST dated 31 March 2020.

Earlier, by issuing Circular No. 135/05/2020 – GST dated 31 March 2020, the refund of accumulated ITC was restricted to the ITC available on those invoices, the details of which are uploaded by the supplier in FORM GSTR-1 and are reflected in the FORM GSTR-2A of the applicant. The intent of the circular was to apply the restriction only to third party local invoices. However, this was misinterpreted by the refund sanctioning authorities who rejected the refund of accumulated ITC in respect of ITC availed on Imports, ISD invoices, RCM etc. citing the above-mentioned Circular and on the basis that the details of the said invoices/documents are not reflected in FORM GSTR-2A of the applicant.

Vide Circular No. 140/10/2020 – GST dated 10 June 2020, it was clarified that remuneration paid by companies to the independent directors or those directors who are not the employee of the said company would be taxable and the Company would be liable to pay GST under reverse charge basis.

In case of remuneration paid by companies to the directors, who are also employees of the said company, remuneration which is declared as ‘Salaries’ in the books of accounts of the company and subjected to TDS under Section 192 of the Income Tax Act, 1961, is not liable to GST as the same is consideration for services by an employee to the employer in the course of or in relation to his employment in terms of Schedule III of the CGST Act, 2017. The part of employee Director’s remuneration which is declared separately other than ‘Salaries’ in the Company’s accounts and is subjected to TDS under Section 194J of the Income Tax Act as fees for professional or technical services shall be treated as consideration for providing services which are outside the scope of Schedule III of the CGST Act, and therefore, the Company would be liable to pay GST under reverse charge mechanism on such expenses.

Vide Circular No. 141/11/2020 – GST dated 24 June 2020, CBIC clarified that the concessional rate of interest rate announced vide Notification No. 31/2020-Central Tax dated 3 April 2020 would applicable for the period of delay as specified under the notification even if the actual date of payment of GST is after the end of specified period.

Customs, SEZ and Foreign trade policy related developments

1. Customs Updates:

Vide Circular No. 28/2020 dated 5 June 2020, with the objectives of speedy clearance, transparency in decision making, and ease of doing business, 1st Phase of Faceless Assessment was introduced at Bengaluru and Chennai from 8 June 2020. Respective notification in this regard have been issued which enables an assessing officer, who is physically located at a particular jurisdiction to assess a Bill of Entry pertaining to imports made at a different Customs station, whenever such a Bill of Entry has been assigned to him in the Customs Automated system.

Vide Circular No. 30/2020 dated 22 June 2020, in order to promote ‘Faceless, Contactless, Paperless Customs’, Board has decided that w.e.f. 22 June 2020 only the digital copy of the Shipping Bill bearing the Final LEO would be electronically transmitted to the exporter and the present practice of printing copies of the said document for the exporters and also for maintaining a docket in the Customs House would stand discontinued.

Vide Circular No. 31/2020 dated 30 June 2020, all the AEO certificates expired/expiring between 1 March 2020 and 30 September 2020 has been extended to 30 September 2020.

2. SEZ Updates:

• Extension of Work From Home

Vide letter no SEEPZ SEZ/ADMN/GI/588/2020-21/07272 dated 30 June 2020, in order to facilitate IT/ITES/SEZ units working under SEEPZ-SEZ, all the permissions granted for temporary removal of laptop, computer are further extended up to 31 July 2020.

3. MEIS/SEIS application and duration:

Duty scrips issued between 1 March 2018 to 30 June 2018 shall be valid till 30 September 2020.
 
MEIS application which attracted late cut charges as on 1 March 2020, the period between 1 March 2020 & 30 June 2020 shall not be counted and the last date of submission for various categories shall be

re-determined.

SEIS application:

4. Launch of new DGFT platform and digital delivery of IEC:

New digital platform of DGFT is scheduled to Go-Live on 13 July 2020. The platform will become accessible through the existing website.

The website will be catering to the services related to the IEC issuance, modification, amendments etc. processes along with a Chatbot (a virtual assistant) catering to queries of users. Other online modules relating to Advance Au¬thorisation, EPCG, and Exports Obligation Discharge which are part of next phase will be rolled out subsequently after the first phase stabilizes.

For the purposes of go-live of first phase and the required systems configurations, the IEC applications and modification process would be suspended from 3:00 pm on 10 July 2020 till 13 July 2020.