Dec 292018
 

Annual return under GST

Legal provisions:

Section 44(1) of CGST Act read with Rule 80(1) of CGST Rules:

Every Registered person other than –

  1. An Input Service Distributor,
  2. A person paying tax under section 51 (TDS) or section 52 (TCS),
  • A casual taxable person and
  1. A non-resident taxable person,

Shall furnish an annual return for every financial year electronically in Form GSTR9 through the common portal (www.gst.gov.in) either directly or through facilitation center on or before the thirty-first day of December following the end of such financial year

Section 35(5) of CGST Act:

Every registered person whose turnover during a financial year exceeds the prescribed limit (Rs. 2 cr.) shall get his accounts audited by a chartered accountant or a cost accountant and shall submit:

  • A copy of the audited annual accounts,
  • The reconciliation statement (GSTR-9C) under sub-section (2) of section 44 and
  • Such other documents in such form and manner as may be prescribed.

Reconciliation statement – GSTR-9C is reconciliation of data as per books of accounts and data as reported in
GSTR-9.

Analysis of provision:

Who shall file annual return (GSTR 9) Who shall file GSTR 9A Who shall file GSTR 9B Who shall not file GSTR 9
–  Every registered person –  By a supplier who was under composition scheme at any time during the relevant financial year – A person paying tax under section 52 (TCS) [GSTR 9B required to be file in this case from 2018-19 and same is not applicable for 2017-18] –  An Input Service Distributor,

–  A person paying tax under section 51 (TDS) or

–  A person paying tax under section 52 (TCS) [GSTR 9B required to be file in this case from 2018-19 and same is not applicable for 2017-18]  or

–  A casual taxable person and

–  A non-resident taxable person.

Case study:

Case 1: A registered dealer was earlier registered as composition taxpayer but later he switched over from composition scheme.

He shall be required to file both the Annual Return GSTR-9A and GSTR-9.

Case 2: What is the effect of cancellation of registration under GST on filing of GSTR -9?

 GSTR 9 is required to be filed for the period for which registration is effective.

Case 3: How much annual return is required to be filed in case more than one GST registration is taken by same person?

Annual return for each GST registration is required to be filed separately.

Dec 272018
 

How to avoid penalty under GST

Section 122 of CGST act read as follows:

Section 122. (1) 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;
  • Issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder;
  • Collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
  • Collects any tax in contravention of the provisions of this Act but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
  • Fails to deduct the tax in accordance with the provisions of section 51(1), or deducts an amount which is less than the amount required to be deducted under the said sub-section, or where he fails to pay to the Government under sub-section (2) thereof, the amount deducted as tax;
  • Fails to collect tax in accordance with the provisions of of section 52(1), or collects an amount which is less than the amount required to be collected under the said sub-section or where he fails to pay to the Government the amount collected as tax under sub-section (3) of section 52;
  • Takes or utilises ITC without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder;
  • Fraudulently obtains refund of tax under this Act;
  • Takes or distributes ITC in contravention of section 20, or the rules made thereunder;
  • Falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax due under this Act;
  • Is liable to be registered under this Act but fails to obtain registration;
  • Furnishes any false information with regard to registration particulars, either at the time of applying for registration, or subsequently;
  • Obstructs or prevents any officer in discharge of his duties under this Act;
  • Transports any taxable goods without the cover of documents as may be specified in this behalf;
  • Suppresses his turnover leading to evasion of tax under this Act;
  • Fails to keep, maintain or retain books of account and other documents in accordance with the provisions of this Act or the rules made thereunder;
  • Fails to furnish information or documents called for by an officer in accordance with the provisions of this Act or the rules made thereunder or furnishes false information or documents during any proceedings under this Act;
  • Supplies, transports or stores any goods which he has reasons to believe are liable to confiscation under this Act;
  • Issues any invoice or document by using the registration number of another registered person;
  • Tampers with, or destroys any material evidence or document;
  • Disposes off or tampers with any goods that have been detained, seized, or attached under this Act,

he shall be liable to pay a penalty of:

  • Ten thousand rupees or
  • An amount equivalent to the tax evaded or the tax not deducted under section 51 or short deducted or deducted but not paid to the Government or tax not collected under section 52 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.

Dec 242018
 

TDS procedure under GST

Legal background:

NN 50/2018 read as follows:

In exercise of the powers conferred by section 1(3) of the CGST and in supercession of the notification of the Government of India in the Ministry of Finance, Department of Revenue No. 33/2017-Central Tax, dated the 15th September, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 1163 (E), dated the 15th September, 2017, except as respects things done or omitted to be done before such supersession, the Central Government hereby appoints the 1 st day of October, 2018, as the date on which the provisions of section 51 of the said Act shall come into force with respect to persons specified under clauses (a), (b) and (c) of sub-section (1) of section 51 of the said Act and the persons specified below under clause (d) of sub-section (1) of section 51 of the said Act, namely:-

  1. an authority or a board or any other body, – (i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with fifty-one per cent. or more participation by way of equity or control, to carry out any function;
  2. Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860);
  3. public sector undertakings.

GST – TDS compliance in essence:

  • Recognize transaction on which TDS is to be deducted
  • Undertake TDS deduction under GST,
  • File GST-TDS returns,
  • Issue GST-TDS certificates and
  • Take-up all other entailing compliances

GST – TDS recognition provision:

Who will Deduct TDS:

a)           a department or establishment of the Central Government or State Government; or

b)          local authority; or

c)           Governmental agencies; or

d)          such persons or category of persons as may be notified by the Government on the recommendations of the Council.

The Central Government vide Notification No. 33/ 2017-Central Tax, dated 15th September, 2017 notified the persons under clause (d) of section 51(1) namely: –

(i)           an authority or a board or any other body, –

(a)   set up by an Act of Parliament or a State Legislature; or

(b)  established by any Government,

with 51% or more participation by way of equity or control, to carry out any function;

(ii)         society established by  the  Central  Government  or  the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860);

(iii)       public sector undertakings;

Transaction on which GST – TDS will be deducted:

GST TDS will be deducted in case contract value > Rs 250,000/-

Applicable rate of GST-TDS deduction:

Nature of Supply Rate of TDS
Intra-State supply (1% CGST + 1% SGST)
Inter-State supply 2% (IGST)

Practical issues:

Issues Solutions
Whether for the purpose of TDS deduction:

1.     Value of the whole contract is to be considered or

2.     Individual invoices even if each such invoice is raised for < Rs. 2,50,000/-

Value of the whole contract for the supply of goods or services has to be considered.
What is included in term “Value” to consider whether contact is liable for TDS deduction or not? Value of supplies excluding CGST/ SGST/ UTGST/ IGST and cess.
Whether GST – TDS shall be deducted on retention amount? GST-TDS has to be deducted on the value including any retention monies withheld.
Whether GST – TDS forms part of cash ledger of deductee? Yes. However same is being route through Part C of FORM GSTR – 2A.
GST – TDS deducted on accrual basis? Either at the time of payment or credit to the account of deductee which ever is earlier.

Dec 202018
 

Procedural aspects of E way bills

Basic procedure:

The following is the basic procedure to generate an e-Way bill

  1. Furnish information in Form GST EWB-01 (PART A and PART B) before the commencement of movement of goods (on ewaybillgst.gov.in)
  2. PART A contains the consignment details which cannot be changed later are as under.
GSTIN GSTIN of supplier and recipient of goods. (If unregistered, “URP” shall be entered)
Place of Dispatch / Delivery It shall indicate the PIN Code of the places of Dispatch / Delivery. Option available to enter the addresses of these places (not mandatory)
Document Number It shall contain reference of Invoice No., Bill of supply No., Delivery Challan No.
Document Date Date shall be based on the date of document, as specified above.
Value of Goods Value shall be determined in accordance with Section 15 and shall include CGST, SGST or UTGST, IGST and Cess, if any
HSN Code If Annual Turnover (in preceding FY) is less than Rs. 5 Cr. – 2 Digits

If Annual Turnover (in preceding FY) is more than Rs. 5 Cr. – 4 Digits

Reason for Transport Following are the available options:

(i) Supply (ii) Export / Import (iii) Job Work

(iv) SKD / CKD – i.e., Semi Knocked Down / Completely Knocked Down (v) Recipient not known (vi) Line Sales (vii) Sales Returns (viii) Exhibition or fairs (ix) For own use (x) Others

  1. PART-B contains the details of the conveyance to be entered.
  2. A unique e-Way number (EBN) will be generated on the portal after the details as mentioned above are filled.
  3. Obtain a print of the details along with the unique (EBN) generated after the details are uploaded
  4. Move the goods under the cover of the e-Way bill and the ‘tax invoice’ or such other document
  5. Acceptance / rejection of the e-Way bill to be made within 72 hours of details being available on portal (OR time of delivery of goods if earlier than 72 hours) – Else it results in deemed acceptance
  6. PART A slip is a temporary number generated after entering all the details in PART-A. This can be shared or used by the transporter or the client who can later enter the details in PART B and generate the e-Way bill. This is useful when you have prepared the invoice and when transporter details are not available. This is temporarily stored on the portal and once the transporter details are entered in PART B the e-Way bill can be generated.
  7. The details of conveyance are not required to be declared if the distance between the place of consignor and the place of transporter is less than 50 Kms. It is not required even where the distance between the place of transporter and the place of consignee is less than 50 Kms.
  8. Where the goods are transported by railways or by air or vessel, the e-Way bill shall be generated on the common portal in Part B of Form GST EWB-01. Where the goods are transported by railways, the railways shall not deliver the goods unless the e-Way bill is produced at the time of delivery. The time period for filling details in Part B shall be furnished within fifteen days of furnishing details in Part A.
  9. Where the goods are transported by the registered person using his own conveyance or public conveyance by road then Part B of Form GST EWB-01 must also be filled in addition to part A of Form GST EWB 01.
  10. Transporters not registered under GST who wish to cause the movement of goods shall enroll on the portal to get a 15-digit unique Transporter ID or TRANSIN. This can be shared by them to their clients who may enter this number while generating e-Way bills.
  11. The particulars of PART A cannot be changed even in case of entering the wrong information. The only option left to the person is to cancel the e-Way bill. However, PART-B can be updated any number of times within the overall validity of E way bills.
  12. If E way bill has been verified by a proper officer during its transit it can not be cancelled.

Practical issues:

If a person has more than one place of registered supply Create sub users for a particular place of business and generate the e-Way bill with that business location.

A maximum of 3 sub users can be created for each additional place of business.

Multiple invoice for same customer EWB have to be generated for each invoices separately
Goods are transported from one conveyance to another Details of conveyance in  the  E-Way bill in Part B should be updated

Dec 112018
 

E-way bills –detailed analysis w.r.t. generation of E – way bills

Legal background (Section 68 of CGST act and Rule 138A):

Section 68. (1) The Government may require the person in charge of a conveyance carrying any consignment of goods of value exceeding such amount as may be specified to carry with him such documents and such devices as may be prescribed.

(2) The details of documents required to be carried under sub-section (1) shall be validated in such manner as may be prescribed.

(3) Where any conveyance referred to in sub-section (1) is intercepted by the proper officer at any place, he may require the person in charge of the said conveyance to produce the documents prescribed under the said sub-section and devices for verification, and the said person shall be liable to produce the documents and devices and also allow the inspection of goods.

Objective of E – way bills:

  • Basically to avoid or curb GST evasion.

Who shall generate E way bill:

Who shall generate E way bill:
1. The persons responsible to generate the e-Way bill are:
(i) The person causing movement of goods if consignment value exceeds 50,000/-:
– Ordinarily, the consignor;
– Where the consignor is not a registered person, the Consignee;
(ii) The Transporter, where an e-Way bill has not been generated as cited supra in respect of movement of goods;

2. In case of inter-State movement of goods, irrespective of the value of goods, the following persons would be responsible for raising an e-way bill:
– Principal/job worker;
– An unregistered consignor of handicraft goods for inter-State movement, who is exempt from registration under Section 24(i) and (ii);

3. The registered person can authorize a transporter or e-commerce operator or a courier agency to furnish the information in Part A of Form GST EWB-01, on behalf of the registered person.

4. Unregistered transporter can enroll on the common portal and generate e-Way bill on behalf of its customers;

5. Any Person (unregistered recipient) can enroll & generate the e-Way bill for movement of goods for his/her own use

6. Any person desirous of generating may voluntarily generate an e-Way bill even when value of consignment is lesser than 50,000 Rupees. If the goods are moved by unregistered person and handed over to the transporter for transportation of goods then either of them can generate an e-Way bill (EWB). The unregistered person can generate EWB as an unregistered person.

Practical issues relating to generation of E way bills:

Issue Solution
Sales return Either the customer or the transporter will issue the E-way bills
High seas sales Since sales is effected through documents and hence no E way bill is required to be generated.

–  Ultimate buyer will be required to generate an e-Way bill to move goods from the port to the place of business

Customer moving goods himself E-Way bill can be generated by:

–  The taxpayer or

–  Supplier based on the invoice issued to him.

–  The customer may also enrol as a citizen and generate the e-Way bill himself

The consignee or recipient refuse to take the delivery of goods Transporter can get one more e-Way bill generated with the help of the supplier/ recipient
Individual bills are less than Rs. 50,000/- but the total value of goods in a conveyance exceed Rs. 50,000/ The transporter shall be responsible / liable to raise an e-Way bill

.

Dec 102018
 

Return of time expired goods under GST

Meaning of “Expiry of time”:

For layman:

The drugs or medicines are sold by the manufacturer to the wholesaler and by the wholesaler to the retailer on the basis of an invoice/bill of supply as case may be. They have a defined life term which is referred to as the date of expiry and on crossing the date of expiry these are returned back to the manufacturer through supply chain.

Under GST:

Section 34(1) and (2) is reproduced as below:

  • Where a tax invoice has been issued for supply of any goods or services or both and
    1. The taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or
    2. Where the goods supplied are returned by the recipient, or
    3. Where goods or services or both supplied are found to be deficient,

The registered person, who has supplied such goods or services or both, may issue to the recipient a credit note containing such particulars as may be prescribed.

  • Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than September following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed: Provided that no reduction in output tax liability of the supplier shall be permitted, if the incidence of tax and interest on such supply has been passed on to any other person.

Implication:

There could be two cases while returning time expired goods in general trade practices:

Case 1:

Goods being return before furnishing annual return of taxable person who have supplied the goods:

  • In this case goods can be returned against credit note issued by supplier. Thus, goods will be return on the basis of delivery challan and in case value of return goods being more than Rs 50000/- E way bill shall be generated accordingly.
  • In this case full ITC needs to be reversed attributable to such goods.

Case 2: Goods being return after the expiry of above period:

  • In this case such return would be treated as fresh supply.
  • Such goods shall be accompanied by tax invoice and E way bill if required.
  • Full ITC attributable to it need not to reversed
  • GST liable to be paid based on value at the time of return.

Procedure to be followed:

Case 1:

  1. As per section 34(1) of the CGST Act, the manufacturer or the wholesaler who has supplied the goods to the wholesaler or retailer, as the case may be, has the option to issue a credit note in relation to the time expired goods returned by the wholesaler or retailer, as the case may be.
  2. If the credit note is issued within the time limit specified in section 34(2) of the CGST Act, the tax liability may be adjusted by the supplier, provided the person  returning the time expired goods has either not availed the ITC or if availed has reversed the ITC so availed against the goods being returned. However, if the time limit has expired, a credit note may still be issued but the tax liability cannot be adjusted by him in his hands
  3. Further, in case they are returned beyond the time period specified and a credit note is issued, there is no requirement to declare such credit note on the common portal by the supplier as tax liability cannot be adjusted in this case.

Case 2:

  1. Person returning the time expired goods is a registered person
    • Return of goods to be treated as fresh supply
    • Value of the said goods as shown in the invoice on the basis of which the goods were supplied earlier may be taken as the value of such return supply
    • Recipient is eligible to avail Input Tax Credit on said return supply subject to section 16 of the CGST Act.
  2. Person returning the time expired goods is a composition taxpayer
    • Return the said goods by issuing a bill of supply and pay tax at the rate applicable
    • Recipient is not eligible to avail ITC of said return supply
  3. Person returning the time expired goods is an unregistered person: Recipient may return the said goods by issuing any commercial document without charging any tax.

Where the time expired goods which have been returned by the retailer/wholesaler are destroyed by the manufacturer, he/she is required to reverse the ITC availed on the return supply in terms of section 17(5) (h) of the CGST Act. However, ITC which is required to be reversed in such scenario is the ITC availed on the return supply and not the ITC that is attributable to the manufacture of such time expired goods.

Dec 052018
 

Del-credere agent (DCA) under GST

Meaning of Del-credere agent:

It is a type of principal-agent relationship wherein the agent acts not only as a salesperson or broker for the principal, but also as a guarantor of credit extended to the buyer.

  • Where the buyer fails to make payment to the principal by the due date, DCA makes the payment to the principal on behalf of the buyer and
  • The commission paid to the DCA may be higher than that paid to a normal agent.
  • DCA in turn charges small amount of interest from the buyer with the amount of supply from supplier.
  • In some cases DCA enters into a separate agreement for extending transactional based loan to buyer.

Issue involved:

Whether valuation of supply would include amount of interest being paid by the buyer to agent for supplies made by principle?

Examination of Relevant law:

Section 7 of CGST Act read with para 3 of schedule 1: ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION:

Supply of goods—

  1. by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or
  2. by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.

Thus, if agent is working on behalf of principal then supply of goods is different from interest charged by agent from buyer and

if both agent and principal are working independently than supply of goods be agent to buyer and interest charged by him are against for one and same transaction and thus, GST would charged on combine value of amount against supplies and interest charged thereon.

Analysis of facts:

Here two scenarios are possible:

Scenario 1 Scenario 2
Where the invoice for supply of goods is issued by the supplier to the buyer:

1.     Invoice may directly issued by supplier to buyer

2.     Invoice may be passed through agent but issued by supplier

Where the invoice for supply of goods is issued by the DCA in his own name
Result of scenario
Agent is not working as DCA agent. Agent is DCA agent.
Implication on GST:
The value of interest charged by agent would be a separate transaction and GST would not be applicable on that amount as same in exempted supply. The value of the interest charged for such credit would be required to be included in the value of supply of goods by DCA to the recipient as per section 15(2)(d) of the CGST Act

Dec 042018
 

GST paid under wrong heads – IGST instead of CGST / SGST

Relevant provision of GST laws:

IGST Act

CGST / SGST / UTGST

Section 19 (1) A registered person who has paid integrated tax on a supply considered by him to be an inter-State supply,

–  but which is subsequently held to be an intra-State supply,

shall be granted refund of the amount of integrated tax so paid in such manner and subject to such conditions as may be prescribed.

(2) A registered person who has paid central tax and State tax or Union territory tax, as the case may be, on a transaction considered by him to be an intra-State supply,

–  but which is subsequently held to be an inter-State supply,

shall not be required to pay any interest on the amount of integrated tax payable.

Section 77. (1) A registered person who has paid the Central tax and State tax or, as the case may be, the Central tax and the Union territory tax on a transaction considered by him to be an intra-State supply,

–  but which is subsequently held to be an inter-State supply,

shall be refunded the amount of taxes so paid in such manner and subject to such conditions as may be prescribed.

(2) A registered person who has paid integrated tax on a transaction considered by him to be an inter-State supply,

–  but which is subsequently held to be an intra-State supply,

shall not be required to pay any interest on the amount of central tax and State tax or, as the case may be, the Central tax and the Union territory tax payable.

Implications of Section 77 of the CGST Act read with Section 19 of the IGST Act

It is possible for taxable person to come across situations where he has paid the wrong nature of tax viz, CGST and SGST / UTGST in lieu of IGST and vice versa. Therefore, such incorrect payment of tax, if any, should be identified and ought to be considered appropriately.

A plain reading of Section 77 of CGST Act and Section 19 of IGST Act, 2017 (which are pari- material as reproduced above), a reasonable inference can be drawn that the provisions of the said sections shall apply only in a situation where an adjudicating authority holds an interstate transaction as intra-state transaction or visa versa.

A situation where parties themselves decides that wrong tax has been charged and paid would not fall within these two provisions, whereas the effect of it must be given through table 9A of GSTR 1 read with GSTR 3B.

Section 77 of the CGST Act provides for the adjustment of taxes paid incorrectly. Where a registered person has considered a transaction to be an intra-State supply and paid CGST and SGST/UTGST, but it is subsequently held to be an inter-State supply and IGST is liable to be paid, the registered person, is required to pay IGST on such transaction. The registered person is entitled to claim refund of CGST and SGST/UTGST paid on the transaction.

In such situations interest is not payable by virtue of Section 77(2) of the CGST Act and 19(2) of the IGST Act, 2017.

Similarly, where the registered person has considered a transaction to be an inter- State supply and paid CGST and SGST/UTGST, but it is subsequently held to be an intra-State supply and CGST and SGST/UTGST is liable to be paid, the registered person is required to pay the applicable CGST and SGST/UTGST on such transaction.

In this situation also, it is to be noted that interest is not liable to be paid when the correct tax is paid.