SKP Group
SKP GST Update
14 August 2018
Indirect Tax Updates: GST migration window re-opened, Suspension of RCM on inward supplies extended, Due dates of filing returns notified
 
The fast-paced evolution of the GST law continues with the significant reforms announced in the 28th GST Council meeting held on 21 July 2018. The rulings by Authority for Advance Ruling (AAR) of various states have been providing clarity on complex issues in the GST law in a sustained manner.
 
Advance Rulings  
  • The AAR, Rajasthan has ruled that if the Liaison Office (LO) of a foreign entity in India does not render any consultancy or other services directly/indirectly, with or without any consideration and the LO does not have significant commitment powers (without prior permission of the Reserve Bank of India), except those which are required for normal functioning of the office on behalf of Head Office (HO), then the reimbursement of expenses and salary paid by HO to the LO established in India fall out of the purview of supply of service, and consequently the LO is not required to get itself registered under GST. 
  • The AAR, Karnataka has analyzed the various transactions involved in a derivative contract in diamonds entered into through a commodity derivative exchange and has ruled that:
    • The mere deposit of diamond with safe vaults which have been acknowledged by Electronic Vault Receipts (EVRs) does not constitute of supply of diamonds for the purpose of levy of GST.
    • The conversion of EVRs representing the diamonds to e-units would constitute a supply of diamonds liable to tax under GST.
    • The e-units are securities under Clause (101) of Section 2 of the CGST Act, 2017, and hence transactions in e-units would remain out of the scope of levy of tax under GST.
    • Derivative contracts in e-units and settlement thereof would be treated as transactions in securities in case it involves only e-units without any involvement of physical diamonds, and thereby would remain out of the scope of levy under GST.
    • The conversion of e-units into diamonds would constitute a supply of diamonds, liable to tax under GST.
GST migration window re-opened
The government vide Notification No. 31/2018-Central Tax dated 6 August 2018 has provided a special procedure for persons to migrate to GST if the following conditions have been fulfilled:
  • They received Provisional Identification Number (PID) on or before 31 December 2017
  • They did not file FORM GST REG-26 - Application for Enrolment of Existing Taxpayer
  • The applicant submits the details on or before 31 August 2018.
Suspension of RCM on inward supplies extended
The government vide Notification No. 22/2018-Central Tax (Rate) dated 6 August 2018 has extended the period of suspension on applicability of Reverse Charge Mechanism (RCM) on inward supplies from unregistered suppliers till 30 September 2019.
 
Due dates of filing returns notified
The government has notified the due dates for filing of GSTR-1 and GSTR-3B for the period of July 2018 to March 2019.
 
Return Periodicity Months Due date Notification No.
GSTR-1 Monthly - Taxpayers with an annual aggregate turnover of more than INR 15 million All months from July 2018 to March 2019 11th of the subsequent month 32/2018 - Central Tax dated 10 August 2018
Quarterly - Taxpayers with annual aggregate turnover up to INR 15 million July 2018 - September 2018 31 October 2018 33/2018 - Central Tax dated 10 August 2018
October 2018 to December 2018 31 January 2019
January 2019 to March 2019 30 April 2019
GSTR-3B Monthly All months from July 2018 to March 2019 20th of the subsequent month 34/2018 - Central Tax dated 10 August 2018
 
 
Relaxation of e-Way Bill provisions in Rajasthan
The Government of Rajasthan vide Notification No. F17 (131) ACCT/GST/2017/3743 dated 6 August 2018 has exempted the generation of e-Way Bill on the intra-state movement of all goods, irrespective of the consignment value if the goods are being:
  • Transported for the purpose of job work;
  • Transported from one job worker to another job worker; or
  • Returned to the principal after job work and where such transportation is not for final delivery of the finished goods.
Simplification of IEC application procedure
The Directorate General of Foreign Trade (DGFT) vide Public Notice No. 27/2015-2020 dated 8 August 2018 has simplified the procedure for application of Importer Exporter Code (IEC) with effect from 9 August 2018. The detailed guidelines regarding the same have been provided in Trade Notice No. 23/2018-19 dated 8 August 2018. Key aspects of the same are: 
  • Online application for IEC will require uploading two documents:
    • Address proof of the applicant entity;
    • A canceled cheque bearing the entity’s printed name or bank certificate.
  • Digital signature for submitting applications would not be required. 
  • On submission of complete application with fees and requisite documents, IEC will be auto-generated and intimation regarding the same will be sent to the applicant.
Simplification of processing of the AEO-T1 application
The government vide Circular No. 26/2018-Customs dated 10 August 2018 has announced the simplification and rationalization of the procedure of application for Tier-1 accreditation under the Authorized Economic Operator (AEO) programme. Key announcements in this regard are:
  • Present annexures for AEO-T1 application, i.e. Annexures A, C, D, E1, E2, E3 and E4 to be immediately replaced with the Annexure 1 and 2.
  • To implement the simplified processing and to ensure its desired effectiveness, it has been decided that the process of accreditation of AEO-T1 shall be decentralized to the zonal level.
  • The online processing of the AEO-T1 application will commence as soon as the necessary digital infrastructure is in place.
SKP's Comments
The ruling by the Rajasthan AAR has raised several questions. ’Export of services’ is zero-rated under Section 16(1) of the IGST Act, 2017. One of the essential criteria for a supply to qualify as export of services is that the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 to Section 8 of IGST Act, 2017, i.e., they should not be an establishment in India and outside India of the same person. In view of this, foreign entities having an LO in India should be cautious because if the appellate authorities take a divergent view from the ruling by the AAR, then the reimbursement of expenses recovered by the LO from the foreign HO may become leviable to GST.
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