CA FINAL GST AMENDMENTS

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1 CA - Final CMA - Final CS - Professional CA FINAL AMENDMENTS Applicable for May 2019 Examination All Circulars & Noti cations upto 31st Oct 2018 All Statutory Updates of ICAI By : CA Vishal Bhattad Think Think Vishal Sir..! These Amendments already included in IDT Booster Study Mat. May 2019

2 YouTube IN Also Refer... CA Final DT Amendment Available on Youtube All Circulars & Noti cations upto 31st Oct 2018 All Statutory Updates of ICAI RTP May 19 Direct Link to New Youtube /youtube PDF Provided in Comment Box CA-Final CA-Inter Direct Tax AMENDMENT MATERIAL Direct Tax AMENDMENT MATERIAL Applicable for May 19 & Nov 19 Examination Applicable for May 19 & Nov 19 Examination BY : CA Vijay Sarda BY : CA Vijay Sarda By CA Vijay Sarda CA-FINAL IDT CA-FINAL DT +Custom Chart Revision Set Chart Revision Set Think Think Vishal Sir..! DVD OR Drive Link + Se rvi ce Ta x 2 DVD OR Drive Link CA Final DT CA VIJAY SARDA Quick Chart Rev. 7 With complimentary Charts revision video lectures With complimentary Charts revision video lectures CA Final IDT/DT Chart Revision Revise Entire Course in just few hours with the help of Quick Chart Revision

3 Chapter 2 Levy and Collection V Smart Academy 1

4 Circulars & notifications upto (Existing Amendments Applicable for Nov 18 & Onwards Exams) Definition of Goods & Services Goods :- As per Sec 2(52) of C Act, "goods" means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply; Services As per sec 2(102) of C Act, "services" means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; Clarification on certain issues related to Banking & Financial Services via Circulars Issue: Whether Priority Sector Lending Certificates (PSLCs) are outside the purview of and therefore not taxable? [Circular no. 34/8/2018 dt 01/03/2018] Clarification : In Reserve Bank of India FAQ on PSLC, it has been mentioned that PSLC may be construed to be in the nature of goods, dealing in which has been notified as a permissible activity under section 6(1) of the Banking Regulation Act, 1949 vide Government of India notification dated 4th February, PSLC are not securities. PSLC are akin to freely tradeable duty scrips, Renewable Energy Certificates, REP license or replenishment license, which attracted VAT. In there is no exemption to trading in PSLCs. Thus, PSLCs are taxable as goods at standard rate of 18% under the residuary S. No. 453 of Schedule III No. 1/2017-Central Tax(Rate). payable on the certificates would be available as ITC to the bank buying the certificates. Clarification regarding leviability of on taxable services provided by the members of the JV to the JV and vice versa and inters se between the members of the JV. [Circular No. 35/09/2018 dated ] Issue:- Whether is to be levied on taxable services provided by the members of the JV to the JV and vice versa and inter se between the members of the JV Legal Provision:- C Act Section 7 Provisions expression supply includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business, and includes activities specified in Schedule II to the C Act. is levied on intra-state and inter-state supply of goods and services. Section 2(17) Section 2(84) Schedule II business includes provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members. The term person to include an association of persons or a body of individuals, whether incorporated or not, in India or outside India. enumerates activities which are to be treated as supply of goods or as supply of services. As per para 7 of Sch II states that supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration shall be treated as supply of goods. Clarification:- A conjoint reading of the above provisions of the law implies that supply of services by an unincorporated association or body of persons (AOP) to a member thereof for cash, deferred payment or other valuable consideration shall be treated as supply of services. It is reiterated that the question whether cash calls are taxable or not will entirely depend on the facts and circumstances of each case. Cash calls in joint venture Cash Calls in nature of advance for supply of service Is merely a transaction in money and hence not a supply cash calls pooled by a JV towards taxable services received from a member or a third party is in the nature of consideration & hence attracts 'Cash calls' are raised by an operating member of the joint venture on other members in proportion to their participating interests in the joint venture (unincorporated) to meet the expenditure on the operations to be carried out as per the approved work programme and budget. Taxability of cash calls can be further explained by the following illustrations: Illustration A: There are 4 members in the JV including the operating member and each one contributes ` 100 as part of their share. A total amount of ` 400 is collected. The operating member purchases machinery for ` 400 for the JV to be used in oil production. In the above situation it will not be the subject matter of 'ST/' for the reason that the operating member is not carrying out an activity for another for consideration. In Illustration A, the money paid for purchase of machinery is merely in the nature of capital contribution and is therefore a transaction in money. Illustration B: There are 4 members in the JV including the operating member and each one contributes ` 100 as part of their share. A total amount of ` 400 is collected. The operating member thereafter uses its own machine and performs exploration and production activities on behalf of the JV. In the above situation the operating member uses its own machinery and is therefore providing 'service' within the scope of supply of C Act. This is because in this scenario, the operating member is recovering the cost appropriated towards machinery and services from the other JV members in their participating interest ratio 2 V Smart Academy

5 Clarification on Inter-state movement of rigs, tools and spares, and all goods on wheels [like cranes]- [Circular no. 21/21/2017 dt 22/11/2017 ] Deemed Distinct Person &Supply (Para 2 of schedule I) Circular No 1/1/2017- I Act, Dated 7/7/2017 Clarification on Inter-state movement of various modes of conveyance, carrying goods or passengers or for repairs and maintenance Issue: Whether inter-state movement of various modes of conveyance carrying goods or passengers or both, or for repairs and maintenance, between distinct persons as specified in section 25(4) of the C Act [except in cases where such movement is for further supply of the same conveyance], is leviable to I? Legal Provision: In the above context, the legal provisions in laws are as under: a) As per section 24(1)(i) of the C Act, persons making any inter-state taxable supply of goods shall be required to be registered under this Act. b) As per section 25(4) of the said Act a person who has obtained or is required to obtain more than one registration, whether in one State or Union territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act. c) Schedule I to the said Act specifies situations where activities are to be treated as supply even if made without consideration which also includes supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business Clarification: Against the above background, the issue of inter-state movement of goods like movement of various modes of conveyance, between distinct persons as specified in section 25(4) of the said Act, not involving further supply of such conveyance, including i.trains, ii. Buses, iii. Trucks, iv. Tankers, v. Trailers, vi. Vessels, vii. Containers, viii. Aircrafts, Situations Carrying Goods or passenger or both in conveyance Council recommendation and conclusion Between deemed distinct person shall be Treated neither as supply of goods or services & no I to be levied Repairs & Maintenance On movement between deemed distinct persons shall be treated neither as supply of conveyance of goods or services & no I to be levied Note: On repairs & maintenance charges done for such conveyances shall be payable Movement for further supply Repairing Workshop Question: Vishwas Jewellers of Tumkur (Karnataka) takes gold jewel articles to Mumbai (Maharashtra). Determine the applicability in the given case Showroom Treated as supply of goods or services & I to be levied Conclusion : In view of above, it is hereby clarified that the inter-state movement of goods like movement of various modes of conveyance, between distinct persons as specified in section 25(4) of the C Act including the ones specified at (i) to (viii) of para 3, may not be treated as supply and consequently I will not be payable on such supply. However, applicable C/S/I, as the case may be, shall be leviable on repairs and maintenance done for such conveyance. CA VISHAL BHATTAD Basis of Clarification:I exemption on inter-state movement of various modes of conveyance, between distinct persons as specified in section 25(4) of the Central Goods and Services Tax Act, 2017, carrying goods or passengers or both; or for repairs and maintenance, [except in cases where such movement is for further supply of the same conveyance] was examined and a circular 1/1/2017-I dated , was issued clarifying that such interstate movement shall be treated "neither as a supply of goods nor supply of service" and therefore would not be leviable to I. Issue & Clarification: The issue pertaining to inter-state movement of rigs, tools and spares, and all goods on wheels [like cranes] was discussed in Council's meeting held on 10th November, 2017 and the Council recommended that the circular 1/1/2017-I shall mutatis mutandis apply to inter-state movement of such goods, and except in cases where movement of such goods is for further supply of the same goods, such inter-state movement shall be treated 'neither as a supply of goods or supply of service,' and consequently no I would be applicable on such movements. Conclusion: In this context, it is also reiterated that applicable C/S/I, as the case maybe, is leviable on repairs and maintenance done for such goods. Answer As in the given case the customer is not ascertained beforehand by Vishwas Jewellers & thus the movement of jewellery from State of karnataka to Maharashtra will be under delivery challan. And on approval of jewel article by customer it will be a supply and tax invoice shall be issued, I shall be levied as an interstate supply and not is not required to be registered as casual taxable person. V Smart Academy 3

6 Clarification on issues regarding treatment of supply by an artist in various States and supply of goods by artists from galleries [Circular No. 22/22/2017 dated ] Issue:- Regarding taxation of the supply of art works by artists in different States other than the State in which they are registered as a taxable person. In such cases, if the art work is selected by the buyer, then the supplier issues a tax invoice only at the time of supply. As the artists give their work of art to galleries where it is exhibited for supply. There seems to be confusion regarding the treatment of this activity whether it is taxable in the hands of the artist when the same is given to the art gallery or at the time of actual supply by the gallery. Therefore, in exercise of the powers conferred under section 168 (1) of the Central Goods and Services Tax Act, 2017, for the purpose of uniformity in the implementation of the Act, it has been decided to clarify this matter. Legal Provision:- Same provisions as stated in above senario shall be applicable for the given issue. Clarification : What Document to be Issued? For supply on approval basis - Delivery challan along E-way Bill. On actual supply - Invoice to be issued literally as they may not have been set up directly under Article 323B of the Constitution. However, they are clothed with the characteristics of a tribunal. In view of the aforesaid, it is hereby clarified that fee paid by litigants in the Consumer Disputes Redressal Commissions are not leviable to. Any penalty imposed by or amount paid to these Commissions will also not attract. Composite & Mixed Supply As per sec 8 of C Act, The tax liability on a composite or a mixed supply shall be determined in the following manner, namely: A Composite Supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and A Mixed Supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. Composite Supply Mixed Supply When Is Leviable? Whether CTP registration is required? On Inter state - I Shall be levied Display at Gallery - applicable on actual supply No. Note :- In case of art work sent to the gallery for exhibition there is no consideration flow hence not a supply. Schedule III Clarification on certain issues regarding applicability on fees, penalty etc paid to Consumer Disputes Redressal Commission [Circular No. 32/06/2018 dated ] Issue:- Is leviable on the fee/amount charged in the following situations/cases: (1) A customer pays fees while registering complaints to Consumer Disputes Redressal Commission office and its subordinate offices. These fees are credited into State Customer Welfare Fund's bank account. (2)Consumer Disputes Redressal Commission office and its subordinate offices charge penalty in cash when it is required. (3) When a person files an appeal to Consumers Disputes Redressal Commission against order of District Forum, amount equal to 50% of total amount imposed by the District Forum or Rs 25000/- whichever is less, is required to be paid. Legal Provision:- As per sec 7 of C act read with schedule III of C Act, Services by any court or Tribunal established under any law for the time being in force is neither a supply of goods nor services Clarification:- Consumer Disputes Redressal Commissions (National/ State/ District) may not be tribunals 4 As per sec 2(30) of C Act, "composite supply" means 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 Sec 2(90) Principal Supply - means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of the composite supply is ancillary Clarification on levy of on printing - [Circular no. 27/01/2018 dt 04/01/2018 ] As per sec 2(74) of C Act, "mixed supply" means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. Issue:- To clarify whether supply in the situations listed below shall be treated as a supply of goods or supply of service: - 1. The books are printed/ published/ sold on procuring copyright from the author or his legal heir. [e.g. White Tiger Procures copyright from Ruskin Bond] 2. The books are printed/ published/ sold against a specific brand name. [e.g. Manorama Year Book] 3. The books are printed/ published/ sold on paying copyright fees to a foreign publisher for publishing Indian edition (same language) of foreign books. [e.g. Penguin (India) Ltd. pays fees to Routledge (London)] The books are printed/ published/ sold on paying copyright fees to a foreign publisher for publishing Indian language edition (translated). [e.g. Ananda Publishers Ltd. pays fees to Penguin (NY)] Clarification: The supply of books shall be treated as supply of goods as long as the supplier owns the books and has the legal rights to sell those books on his own account. V Smart Academy

7 Clarifications regarding in respect of certain services [Circular No. 34/08/2018 dated ] Issue i) Whether activity of bus body building, is a supply of goods or services? ii) Whether retreading of tyres is a supply of goods or s e r v i c e s? Clarification In the case of bus body building there is supply of goods and services. Thus, classification of this composite supply, as goods or service would depend on which supply is the principal supply which may be determined on the basis of facts and circumstances of each case. The primary question that should be asked is what the essential nature of the composite supply is and which element of the supply imparts that essential nature to the composite supply. Value may be one of the guiding factors in this determination, but not the sole factor. In retreading of tyres, which is a composite supply, the pre-dominant element is the process of retreading which is a supply of service. Rubber used for retreading is an ancillary supply. Supply of retreaded tyres, where the old tyres belong to the supplier of retreaded tyres, is a supply of goods (retreaded tyres under heading 4012 of the Customs Tariff 28%) Clarification regarding applicability of on the superior kerosene oil [SKO] retained for the manufacture of Linear Alkyl Benzene [LAB] Issue: Whether is applicable on the superior kerosene oil [SKO] retained for the manufacture of Linear Alkyl Benzene [LAB]? [Circular No. 12/12/2017 dated ] Facts: In this context, LAB manufacturers have stated that they receive superior Kerosene oil (SKO) from, a refinery, say, Indian Oil Corporation (IOC). They extract n- Paraffin from SKO and return back the remaining of SKO to the refinery. In this context, the issue has arisen as to whether in this transaction would be levied on SKO sent by IOC for extracting n-paraffin or only on the n-paraffin quantity extracted by the LAB manufactures. Further, doubt have also been raised as to whether the return of remaining Kerosene by LAB manufactures would separately attract in such transaction. Clarification : The matter was examined. LAB manufacturers generally receive superior kerosene oil [SKO] from a refinery through a dedicated pipeline; on an average about 15 to 17% of the total quantity of SKO received from refinery is retained and balance quantity ranging from 83%- 85% is returned back to refinery. The retained SKO is towards extraction of Normal Paraffin, which is used in the manufacturing of LAB. In this transaction consideration is paid by LAB manufactures only on the quantity of retained SKO (n-paraffin). In this context, the Council has recommended for issuance of a clarification that in this transaction will be payable by the refinery on the value of net quantity of superior kerosene oil (SKO) retained for the manufacture of Linear Alkyl Benzene (LAB). Conclusion:- Accordingly, it is hereby clarified that, in aforesaid case, will be payable by the refinery only on the net quantity of superior kerosene oil (SKO) retained fo r the manufacture of Linear Alkyl Benzene (LAB). Though, refinery would be liable to pay on such returned quantity of SKO, when the same is supplied by it to any other person Clarification on classification of cut pieces of fabrics under (Unstitched Salwar Suits) [Circular No. 13/13/2017 dated ] Facts : It has been represented that before becoming readymade articles or an apparel, the fabric is cut from bundles or thans and sold in that unstitched state. The consumers buy these sets or pieces and get it stitched to their shape and size. Classifications : Fabrics are classifiable under chapters 50 to 55 of the First Schedule to the Customs Tariff Act, 1975 on the basis of their constituent materials. Conclusion : Mere cutting and packing of fabrics into pieces of different lengths from bundles or thans, will not change the nature of these goods and such pieces of fabrics would continue to be classifiable under the respective heading as the fabric. Charge of Clarification regarding applicability of section 16 of the I Act, 2017, relating to zero rated supply for the purpose of compensation cess on exports. [Circular No. 01/01/2017 CC dated ] Section 11(2) of the Goods and Services tax (Compensation to States) Act, 2017 provides that provisions of I Act, and the rules made thereunder, shall, mutatis mutandis, apply in relation to the levy and collection of the cess leviable under section 8 of that Act on the inter-state supply of goods and services, as they apply in relation to the levy and collection of integrated tax on such inter-state supplies under the said Act or the rules made thereunder. In view of the above, it has been clarified that provisions of section 16 of the I Act, 2017, relating to zero rated supply will apply mutatis mutandis for the purpose of compensation cess (wherever applicable), that is to say that: a) Exporter will be eligible for refund of compensation cess paid on goods exported by him [on similar lines as refund of I under section 16(3)(b) of the I, 2017]; or b) No compensation cess will be charged on goods exported by an exporter under bond and he will be eligible for refund of input tax credit of compensation cess relating to goods exported [on similar lines as refund of input taxes under section 16(3)(a) of the I, 2017]. Analysis: - A registered person engaged in export of goods on which compensation less is applicable shall avail the benefit of zero rated supply u/s 16 of I Act & thus eligible for refund of compenses V Smart Academy 5

8 1 1A Supply includes - Additional Amendments As per C Amendment Act, 2018 Section 7 - Meaning and scope of supply (a) All forms of supply of goods and/ or services or both such as Ü sale transfer, barter, exchange, licence, rental, lease or disposal Ü made or agreed to be made Ü for a consideration by a person Ü in the course or furtherance of business. (b) Importation of services, for a consideration whether or not in the course or furtherance of business and (c) The activities specified in Schedule I, made or agreed to be made without a consideration. (d) The activities to be treated as supply of goods or supply of services as referred to in Schedule IIỌmitted Where certain activities or transaction constitute a supply in accordance with the provisions of subsection (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II. Circulars & notifications between to (Applicable for May 19 Exam) Principal-agent relationship(para 3 of schedule I) Clarification on Scope of Principal-agent relationship in the context of Schedule I of the C Act regarding. (Circular No. 57/31/2018- dt 04/09/2018) Legal Provision As per para 3 of Schedule I Supply of goods (a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or (b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal. As per Sec 2(5) agent means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another. Also As per Sec 24(vii) Compulsory registration is required for person who make taxable supply of goods or services on the behalf of other taxable person whether as an agent or Otherwise. Scope of Applicability: Important Points: 1.all the activities between the principal and the agent and vice versa do not fall within the scope of the said entry. 2.the element identified in the definition of agent, i.e., supply or receipt of goods on behalf of the principal has been retained in this para It may be noted that the crucial factor is how to determine whether the agent is wearing the representative hat and is supplying or receiving goods on behalf of the principal. Applicability of para Supply of goods by Principle to Agent a Where the invoice for further supply is being issued by the agent in his name then, any provision of goods from the principal to the agent would fall within the fold of the said para Scenario1 Mr. A, an artist, appoints M/s B (auctioneer) to auction his painting. M/s B arranges for the auction and identifies the potential bidders. The highest bid is accepted and the painting is sold to the highest bidder. The invoice for the supply of the painting is issued by M/s B on the behalf of Mr. A but in his own name and the painting is delivered to the successful bidder. In this scenario, M/s B is not merely providing auctioneering services, but is also supplying the painting on behalf of Mr. A to the bidder, and has the authority to transfer the title of the painting on behalf of Mr. A. This scenario is covered under Schedule I. Scenario 2 A similar situation can exist in case of supply of goods as well where the C&F agent or commission agent takes possession of the goods from the principal and issues the invoice in his own name. In such cases, the C&F/commission agent is an agent of the principal for the supply of goods in terms of Schedule I. The disclosure or non-disclosure of the name of the principal is immaterial in such situations. Registration Requirement: in scenario 1 M/s B and Scenario 2 C & f agents hall be liable for compulsory registration in terms of the clause (vii) of section 24 of the C Act. V Smart Academy

9 b where the invoice is issued by the agent to the customer in the name of the principal Then such agent shall not fall within the ambit of Schedule I of the C Act Scenario M/s XYZ, a banking company, appoints Mr. B (auctioneer) to auction certain goods. The auctioneer arranges for the auction and identifies the potential bidders. The highest bid is accepted and the goods are sold to the highest bidder by M/s XYZ. The invoice for the supply of the goods is issued by M/s XYZ to the successful bidder. In this scenario, the auctioneer is merely providing the auctioneering services with no role played in the supply of the goods. Even in this scenario, Mr.B is not an agent of M/s XYZ for the supply of goods in terms of Schedule I. Registration Requirement: In scenario 1 and scenario 2, Mr. B shall not be liable to obtain registration in terms of clause (vii) of section 24 of the C Act. He, however, would be liable for registration if his aggregate turnover of supply of taxable services exceeds the threshold specified in sub-section (1) of section 2 Supply of goods by Agent to Principal a b where the goods being procured by the agent on behalf of the principal are invoiced in the name of the agent where the goods being procured by the agent on behalf of the principal are invoiced in the name of the principal then further provision of the said goods by the agent to the principal would be covered by said para then further provision of the said goods by the agent to the principal would not be covered by said para Scenario Mr. A appoints Mr. B to procure certain goods from the market. Mr. B identifies various suppliers who can provide the goods as desired by Mr. A, and asks the supplier (Mr. C) to send the goods and issue the invoice directly to Mr. A. In this scenario, Mr. B is only acting as the procurement agent, and has in no way involved himself in the supply or receipt of the goods. Hence, in accordance with the provisions of this Act, Mr.B is not an agent of Mr. A for supply of goods in terms of Schedule I. Special Case Study: Mr A sells agricultural produce by utilizing the services of Mr B who is a commission agent as per the Agricultural Produce Marketing Committee Act (APMC Act) of the State. Mr B identifies the buyers and sells the agricultural produce on behalf of Mr. A for which he charges a commission from Mr. A. As per the APMC Act, the commission agent is a person who buys or sells the agricultural produce on behalf of his principal, or facilitates buying and selling of agricultural produce on behalf of his principal and receives, by way of remuneration, a commission or percentage upon the amount involved in such transaction. Answer: 1. Applicability of para 3 of schedule I: In cases where the invoice is issued by Mr. B to the buyer, the former is an agent covered under Schedule I. However, in cases where the invoice is issued directly by Mr. A to the buyer, the commission agent (Mr. B) doesn t fall under the category of agent covered under Schedule I. 2. Exemption: As per notification No. 12/2017 Central Tax (Rate) dated has exempted services by any APMC or board or services provided by the commission agents for sale or purchase of agricultural produce from. 3. Registration requirement: the services provided by the commission agent for sale or purchase of agricultural produce is exempted. Such commission agents (even when they qualify as agent under Schedule I) are not liable to be registered according to sub-clause (a) of sub-section (1) of section 23 of the C Act, if the supply of the agricultural produce, and /or other goods or services supplied by them are not liable to tax or wholly exempt under. However, in cases where the supply of agricultural produce is not exempted and liable to tax, such commission agent shall be liable for compulsory registration under sub-section (vii) of section 24 of the C Act. Issue related to taxability of 'tenancy rights' under Circular no 44/2018 CT dt 02/05/2018 Facts: The transfer of tenancy rights against tenancy premium which is also known as pagadi system is prevalent in some States. In this system the tenant acquires, tenancy rights in the property against payment of tenancy premium(pagadi). The landlord may be owner of the property but the possession of the same lies with the tenant. The tenant pays periodic rent to the landlord as long as he occupies the property. The tenant also usually has the option to sell the tenancy right of the said property and in such a case has to share a percentage of the proceed with owner of land, as laid down in their tenancy agreement. Alternatively, the landlord pays to tenant the prevailing tenancy premium to get the property vacated. Such properties in Maharashtra are governed by Maharashtra Rent Control Act, Issue: (I) Whether transfer of tenancy rights to an incoming tenant, consideration for which is in form of tenancy premium, shall attract when stamp duty and registration charges is levied on the said premium? (ii) Further, in case of transfer of tenancy rights, a part of the consideration for such transfer accrues to the outgoing tenant, whether such supplies will also attract? Objection by Industry: The stamp duty and registration charges is levied on such transfers of tenancy rights, and such transaction thus should not be subjected to Legal Provision:- As per section 9(1) of the C Act there shall be levied central tax on the intra-state supplies of services. As per para 2 of Schedule II any lease, tenancy, easement, licence to occupy land is classified under supply of service. Also renting of residential dwelling for use as a residence is exempt as per Sl. No. 12 No. 12/2017-Central Tax(Rate). Observations: Merely because a transaction or a supply involves execution of documents which may require registration and payment of registration fee and stamp duty, would not preclude them from the scope of supply of goods and services and from payment of. The transfer of tenancy rights cannot be treated as sale of land or building declared as neither a supply of goods nor of services in para 5 of Schedule III to C Act, Thus a consideration for the said activity shall attract levy of. Clarification Cases Situations Clarifications Facts 1 2 Transfer of tenancy rights to a n i n c o m i n g t e n a n t, consideration for which is in form of tenancy premium Transfer of tenancy rights to a new tenant against consideration in the form of tenancy premium Taxable Taxable A is the owner of a property. B takes this property from A on rent. B pays `10,000 monthly to A as rent. In addition, B has paid `1,00,000 to A to get a right partly in A's property. This ` 1,00,000 is called Tenancy Premium and liable to A is the owner of a property. B takes this property from A on rent. B pays `10,000 monthly to A as rent. In addition, B has paid `1,00,000 to A to get a right partly in A's property.b has further transfer rights to C for premium. Such premium also Taxable. V Smart Academy 7

10 3 4 Transfer of tenancy rights to a n e w t e n a n t a g a i n s t consideration for residential property in the form of tenancy premium Services provided by outgoing tenant by way of surrendering the tenancy rights against consideration in the form of a portion of tenancy premium Exempt Taxable X is the owner of a residential property. Y takes this property from X on rent. Y pays `10,000 monthly to X as rent for residence. Before the end of the agreement, X pays `1,00,000 to Y, so that Y vacants the property. This `1,00,000 is also called Tenancy premium. Here X is paying Y so that Y surrenders his right to stay in the property. This will be exempt as the amount of tenancy premium paid is for residential purpose. X is the owner of a property. Y takes this property from X on rent. Y pays `10,000 monthly to X. Before the end of the agreement, X pays `1,00,000 to Y, so that Y vacants the property. This `1,00,000 is also called Tenancy premium and liable to. Here X is paying Y so that Y surrenders his right to stay in the property. Applicability of Clarification regarding applicability of on the petroleum gases retained for the manufacture of petrochemical and chemical products. [Circular No.53/2018 dt 09/08/2018] Facts:- Manufacturers of other petrochemical and chemical products for issue of clarification on applicability of on petroleum gases, which are supplied by oil refineries to them on a continuous basis through dedicated pipelines, while a portion of the raw material is retained by these manufacturers (recipient of supply), and the remaining quantity is returned to the oil refineries. In this regard, an issue has arisen as to whether in this transaction would be leviable Ü Ü on the whole quantity of the principal raw materials supplied by the oil refinery or on the net quantity retained by the manufacturers of petrochemical and chemical products. Clarification:- The provisions as stated in Circular 12/12/2017 dt shall mutatis mutandis apply in the above case also i.e Ü Ü will be payable by the refinery only on the net quantity of petroleum gases retained by the recipient manufacturer for the manufacture of petrochemical and chemical products Refinery would be liable to pay on such returned quantity of petroleum gases, when the same is supplied by it to any other person Clarification on Taxability of petroleum contracts (Circular no. 32/06/2018 dt 12/02/2018) Issue -Taxability of Cost Petroleum 8 Composite & Mixed Supply Clarification on Servicing of cars involving both supply of Goods & services (Circular no. 47/21/2018 dt 08/06/2018) Issue :- How is servicing of cars involving both supply of goods (spare parts) and services (labour), where the value of goods and services are shown separately, to be treated under? Clarification:- Ü The taxability of supply would have to be determined on a case to case basis looking at the facts and circumstances of each case. Ü Where a supply involves supply of both goods and services and the value of such goods and services supplied are shown separately, the goods and services would be liable to tax at the rates as applicable to such goods and services separately. Facts - As per the Production Sharing Contract(PSC) between the Government and the oil exploration & production contractors, in case of a commercial discovery of petroleum, the contractors are entitled to recover from the sale proceeds all expenses incurred in exploration, development, production and payment of royalty. Portion of the value of petroleum which the contractor is entitled to take in a year for recovery of these contract costs is called Cost Petroleum. The relationship of the oil exploration and production contractors with the Government is not that of partners but that of licensor/lessor and licensee/lessee in terms of the Petroleum and Natural Gas Rules, Having acquired the right to explore, exploit and sell petroleum in lieu of royalty and a share in profit petroleum, contractors carry out the exploration and production of petroleum for themselves and not as a service to the Government. Clarification As per Para 8.1 of the Model Production Sharing Contract (MPSC) states that subject to the provisions of the PSC, the Contractor shall have exclusive right to carry out Petroleum Operations to recover costs and expenses as provided in this Contract. The oil exploration and production contractors conduct all petroleum operations at their sole risk, cost and expense. Hence, cost petroleum is not a consideration for service to GOI and thus not taxable per se. However, cost petroleum may be an indication of the value of mining or exploration services provided by operating member to the joint venture, in a situation where the operating member is found to be supplying service to the oil exploration and production joint venture. V Smart Academy

11 Chapter 3 Reverse Charge & ECO V Smart Academy 9

12 Circulars & notifications upto (Existing Amendments Applicable for Nov 18 & Onwards Exams) Legal Services 2 Service Supplied Clarification on levy of on legal services - [Circular no. 27/01/2018 dt 04/01/2018 ] Issue Whether legal services other than representational services provided by an individual advocate or a senior advocate to a business entity are liable for under reverse charge mechanism? Clarification Yes. In case of legal services including representational services provided by an advocate including a senior advocate to a business entity, is required to be paid by the recipient of the service under reverse charge mechanism, i.e. the business entity. 5A Services supplied by (Amendment via Notification issued by CBIC) By Ü Central Govt. Ü State Govt. Ü Union TerritoryÜLocal authority by way of Renting of immovable property, To Any registered person under C Act read with clause (v) of Section 20 of I Act,2017 Person liable to pay tax : Any registered person in taxable territory Explanation :- renting of immovable property means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property.'. (N/N 15/ CT (Rate) dt 26/06/2018) Circulars & notifications between to (Applicable for May 19 Exam) Sec 9(3) : Reverse Charge under notified cases 11 Services supplied Person liable to pay tax : A banking company or a non-banking financial company, located in the taxable territory. By To Individual Direct Selling Agents (DSAs) A banking company or a non-banking financial other than a body corporate, partnership company, located in the taxable territory. or limited liability partnership firm. Insurance Services 7 Service Supplied by By Insurance Agent To Any person carrying insurance business Person liable to pay tax : Any person c a r r y i n g a n y insurance business located in taxable territory e.g. LIC or GIC Insurance Agent has now been defined via N/N 13/2017 -CT(Rate) dt 25/1/2018 i.e. Insurance Agent shall have the same meaning assigned to it in sec 2(10) of Insurance Act Insurance Agent means an insurance agent licensed under section 42 who receives or agrees to receive payment by way of commission or other remuneration in consideration of his soliciting or procuring insurance business [including business relating to the continuance, renewal or revival of policies of insurance.] 10 Comment :- Many insurance companies who are selling their policies through ECO operator not being licensed as Insurance agent under sec 42 of Insurance Act, for them reverse charge shall not be applicable. V Smart Academy

13 Chapter 5 Exemption V Smart Academy 11

14 Sl.No Exemption Related to Health Care Sl. No. 73 Sl.No. 75 Health Care Services by aclinical establishment, an authorized medical practitioner or paramedics. Preservation of Stem Cell by Cord blood banks Treatment of disposal of biomedical waste of clinical establishment by operators Clarification on existing exemptions Mean any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India and (Eg. Allopathy, Yoga, Naturopathy, Ayurveda, Homeopathy, Siddha, Unani) HEALTH CARE SERVICES MEANS INCLUDES BUT SHALL NOT INCLUDE by way of transportati o n o f t h e patient to and from a c l i n i c a l establishme nt hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma. Sl.No. Health Care or Animal or 46 Birds Service by Important Comments: Veterinary Clinic Taxable Services: Hair Transplant or Cosmetic or Plastic Surgery, Clarifications on certain issue related to Health Care via Circulars Circular no. 27/01/2018 dt 04/01/2018 Subject Issues Clarifications Room Rent to patients Whether rent on rooms provided to patients is exempted? Circular no 32/06/2018 dt 12/02/2018 Hiring of senior doctors/ consultants/ technicians independently by Hospitals Circulars & notifications upto (Existing Amendments Applicable for Nov 18 & Onwards Exams) Hospitals hire senior doctors/ consultants/ technicians independently, Without any contract of such persons with the patient; and pay them consultancy charges, Without there being any employer-employee relationship. Will such consultancy charges be exempt from? Room rent in hospitals is exempted Health care services provided by a clinical establishment, an a u t h o r i s e d m e d i c a l practitioner or para-medics a r e e x e m p t. Services provided by senior doctors/ consultants/ technicians hired by the hospitals, whether employees or not, are healthcare services which are exempt. Retention money Food supplied to the patients Hospitals charge the patients, say, `10000/- and pay to the consultants/ technicians only ` 7500/- and keep the balance for providing ancillary services which include nursing care, infrastructure facilities etc food prepared by the canteens run by the hospitals outsourced by the Hospitals from outdoor caterers The entire amount charged by them from the patients including the retention money and the Fee/payments made to the doctors etc., is towards the healthcare services provided by the hospitals to the patients and is exempt. Food supplied to admitted patients: Food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of healthcare and not separately taxable Food supplied to non-admitted patients: supplies of food by a hospital to patients (not admitted) or their attendants or visitors are taxable. Supply food to the doctors and their staff: such supplies, even when not charged, may be subjected to. The suppliers shall charge tax as applicable and hospital will get no ITC. Question: Shiva Medical Centre, a Multi-speciality hospital, is a registered supplier in Mumbai. It hires senior doctors and consultants independently, without entering into any employer- employee agreement with them. These doctors and consultants provide consultancy to the in-patients - patients who are admitted to the hospital for treatment without there being any contract with such patients. In return, they are paid the consultancy charges by Shiva Medical Centre. However, the money actually charged by Shiva Medical Centre from the in-patients is higher than the consultancy charges paid to the hired doctors and consultants. The difference amount retained by the hospital, i.e. retention money, includes charges for providing ancillary services like nursing V Smart Academy

15 care, infrastructure facilities, paramedic care, emergency services, checking of temperature, weight, blood pressure, etc. Further, Shiva Medical Centre has its own canteen Annapurna Bhawan - which supplies food to the in-patients as advised by the doctor/nutritionists as also to other patients (who are not admitted) or their attendants or visitors. The Department took a stand that senior doctors and consultants are providing services to Shiva Medical Centre and not to the patients. Hence, their services are not the health care services and must be subject to. Further, is applicable on the retention money kept by Shiva Medical Centre as well as on the services provided by its canteen - Annapurna Bhawan alleging that such services are not the health care services. You are required to examine whether the stand taken by the Department is correct provided the services provided by Shiva Medical Centre are intra-state services. (RTP Nov 2018) Answer: Legal Provision:- As per Notification No. 12/2017 CT (R) dated , services by way of health care services by a clinical establishment, an authorised medical practitioner or para-medics are exempt from. Health care services have been defined to mean any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma. Circular No. 32/06/2018 dated has clarified that in view of the above definition, it can be inferred that hospitals also provide healthcare services. Charitable Activities Sl.No. 1 Charitable Activities (Chapter 99) Service by an entity registered under section 12AA of the Income tax Act, 1961 by way of charitable activities CBIC Clarifications on certain issue related to Charitable Trust via Circulars Circular no 32/06/2018 dt 12/02/2018 Subject Issues Clarification Hostel accommodation provided by Trusts to students Is hostel accommodation provided by Trusts to students covered within the definition of Charitable Activities and thus, exempt? Hostel accommodation services do not fall within the ambit of charitable activities as defined in para 2(r) No. 12/2017-CT (Rate). However, services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having Value of supply of a unit of accommodation below one thousand rupees per day or equivalent are exempt. Clarification:- On basis of the above provisions & circular the following analysis is derived On the retention money kept by Medical Centre. Senior doctors/ Consultants/ Technicians hired by the hospitals, whether employees or not Food supplied by the hospital canteen to the in - patients as advised by the doctor/nutritionists The entire amount charged by them from the patients including the retention money kept by Shiva Medical Centre and the fee/payments made to the doctors etc., is towards the healthcare services provided by the hospitals to the patients and is exempt from. Services provided by the senior doctors and consultants hired by Shiva Medical Centre, being healthcare services, are also exempt from. Is a part of composite supply of healthcare services and is not separately taxable. Thus, it is exempt from. However other supplies of food by a hospital to patients (not admitted) or their attendants or visitors are taxable. In view of the same, is not applicable on the food supplied by Annapurna Bhawan to in-patients as advised by doctors/nutritionists while other supplies of food by it to patients (not admitted) or their attendants/visitors are taxable. Agriculture Services Sl. No.54 - Exemption in Agriculture Sector Circular no 16/16/2017- dt 15/11/2017 applicable on warehousing of agricultural produce such as tea (i.e. black tea, white tea etc.), processed coffee beans or powder, pulses (de-husked or split), jaggery, processed spices, processed dry fruits, processed cashew nuts etc Subject Issues Clarification Warehousing of Tea Is applicable on w a r e h o u s i n g o f agricultural produce such as tea (i.e. black tea, white t e a e t c. ) Tea is a processed product made in tea factories after carrying out several processes, such as drying, rolling, shaping, refining, oxidation, packing etc. on green leaf and is the processed output of the same Thus, Such black tea, green tea, white tea etc. is not an agriculture produce & warehouse will be taxable V Smart Academy 13

16 Warehousing of jaggery Warehousing of Pulses Is jaggery considered as Processing of sugarcane into jaggery changes its essential an agricultural produce? characteristics Pulses commonly known as dal are obtained after dehusking or splitting or b o t h. S o a r e t h e s e products to be considered as Agricultural produce? Thus, jaggery is not an agricultural produce such activities warehousing will be taxable The process of dehusking or splitting is usually not carried out by farmers or at farm level but by the pulse millers & the product obtained is 'Dal'. Therefore pulses (dehusked or split) are also not agricultural produce & Warehousing will be taxable. However whole pulse grains such as whole gram, rajma etc. are covered in the definition of agricultural produce & Warehousing will be Exempt. Corresponding notifications issued under I and U Acts and therefore the exemption from is not available to their loading, packing, warehousing etc. Sl. No.15 Passenger Transport Service (Heading 9964 ) CBIC Clarification on classification under Passenger Transport Services Circular no 32/6/2018 dt 12/02/2018 Subject Issues Clarification Services of elephant or camel ride, rickshaw ride and boat ride Whether the services of elephant or camel ride, rickshaw ride and boat ride should be classified as passenger transport service in which case, the rate of tax on such services will be 18% or Classified as recreational, cultural and sporting services treating them as joy rides, leviable 28%? Elephant/ camel joy rides cannot be classified as transportation services. These services will 18% with threshold exemption being available to small service providers. [ Notification No. 11/2017- CT(Rate) dated as amended by Notification No. 1/2018-CT(Rate) dated ] 14 Clarification on taxability of custom milling of paddy Issue whether custom milling of paddy by Rice millers for Civil Supplies Corporation is liable to or is exempted under S. No 55 of Notification 12/ Central Tax (Rate) dated 28th June (Circular no. 19/19/2017 dt 20/11/2017) Clarification: Milling of paddy is not an intermediate production process in relation to cultivation of plants. It is a process carried out after the process of cultivation is over and paddy has been harvested. Further, processing of paddy into rice is not usually carried out by cultivators but by rice millers. Milling of paddy into rice also changes its essential characteristics. Conclusion: 1. Therefore, milling of paddy into rice cannot be considered as an intermediate production process in relation to cultivation of plants for food, fibre or other similar products or agricultural produce. 2. In view of the above, it is clarified that milling of paddy into rice is not eligible for exemption under S. No 55 of Notification 12/ Central Tax (Rate) dated 28th June 2017 and corresponding notifications issued under I and UT Acts. 3. Therefore, it is hereby clarified that milling of paddy into rice on job work basis, is liable to at the rate of 5%, on the processing charges (and not on the entire value of rice). Government Sector CBIC Clarification on certain issues related to Insurance Services provided to the Govt. Circular no. 16/16/2017 dt 15/11/2017 Subject Issues Clarification leviable on General Insurance policies provided by a State Government to employees of the State government/ Police personnel, employees of Electricity Department or students of colleges/ private schools etc. where premium is paid by State Government and Where premium is paid by employees, students etc.? Services provided to the Central Government, State Government, Union territory under any insurance scheme for which total premium is paid by the Central Government, State Government, Union territory are exempt from under Sl. No. 40 No. 12/2017-Central Tax (Rate). Services provided by State Government by way of general insurance (managed by government) to employees of the State government/ Police personnel, employees of Electricity Department or students are exempt via which Entry 6 No. 12/2017- CT(R) exempts Services by Central Government, State Government, Union territory or local authority to individuals. V Smart Academy

17 Sl. No.79 A Protected Monuments under Ancient Monuments Act, 1958 (chapter 9996) Services by way of admission to a protected monument so declared under the Ancient Monuments and Archaeological Site and Remains Act 1958 or any of the State Acts, for the time being in force Sl. No.19A Sl. No.19B Transportation of Goods by an Aircraft Services by way of transportation of goods by an aircraft from customs station of clearance in India to a place outside India. Note : Nothing contained in this serial number shall apply after the 30th day of September, Transportation of Goods by a Vessels Newly inserted Exemptions Amended Sl. No.9C Service Provided by Govt. Entity Supply of service by a Government Entity to Central Government, State Government, Union territory, local authority or any person specified by Central Government, State Government, Union territory or local authority against consideration received from Central Government, State Government, Union territory or local authority, in the form of grants, has been exempted from C. Further, the term "Government Entity" has also been defined in the notification as under: "Government Entity" means an authority or a board or any other body inc luding a society, trust, corporation, (i) set up by an Act of Parliament or State Legislature; or (ii) established by any Government, with 90% or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority. [Notification No. 32/2017 CT (R) dated ]. Services by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India. Sl. No.22 Services by way of Hire by road Note : Nothing contained in this serial number shall apply after the 30th day of September, Services Provided to Government Sl. No.11A Services provided by Fair Price Shop Service provided by Fair Price Shops to Central Government by way of sale of food grains, Kerosin, Sugar, Edible Oil etc. under Public Distribution System(PDS) against consideration in the form of commission or margin. Impact of the amendment: - With effect from , the exemptions under serial nos.11a and 11B [as given in points (2) & (3)] have been merged under serial no. 11A which now exempts service provided by Fair Price Shops to Central Government, State Government or Union territory by way of sale of food grains, kerosene, sugar, edible oil, etc. under Public Distribution System against consideration in the form of commission or margin. Consequently, serial no. 11B has been omitted [Notification No. 47/2017 CT (R) dated ]. Sl. No.3 Service to Govt. of article 243G Amended Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. Services by way of giving on hire (a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or (b) to a goods transport agency, a means of transportation of goods (c) Motor vehicle for transport of students, faculty and staff, to a person providing services of transportation of students, faculty and staff to an educational institution providing services by way of pre-school education and education upto higher secondary school or equivalent. Sl. No.29A Services of Life Insurance Business Services of life insurance provided or agreed to provided by the Naval Group Insurance Fund to the personnel of Coast Guard under the Group Insurance Schemes of the Central Government. V Smart Academy 15

18 Central Government's share of profit petroleum exempted from C [Notification No. 5/2018 CT (R) dated ] & Notification No. 5/2018 IT (R) dated The intra-state supply of services by way of grant of license or lease to explore or mine petroleum crude or natural gas or both, has been exempted from so much of C as is leviable on the consideration paid to the Central Government in the form of Central Government's share of profit petroleum as defined in the contract entered into by the Central Government in this behalf. Royalty and license fee exempted from I to the extent it is paid on the consideration attributable to royalty and license fee included in transaction value under Rule 10(1)(c) of Customs Valuation (Determination of value of imported Goods) Rules, [Notification No. 6/2018 IT (R) dated ] I leviable on import of services in relation to temporary transfer or permitting the use or enjoyment of any intellectual property right has been exempted to the extent of the aggregate of the duties of customs leviable under section 3(7) of the Customs Tariff Act, 1975, on the consideration declared under section 14(1) of the Customs Act, 1962 towards royalties and license fees included in the transaction value as specified under rule 10 (1)(c) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 on which the appropriate duties of customs have been paid Amendments in Existing Exemption Exemption in Government Sector Sl. No.16 Transport by Air to Central Government Services provided to the Central Government, by way of transport of passengers with or without accompanied belongings, by air, embarking from or terminating at a regional connectivity scheme airport, against consideration in the form of viability gap funding, are exempt from C. The exemption was not available on or after the expiry of a period of one year ( 3 Years) from the date of commencement of operations of the regional connectivity scheme airport as Amendment notified by the Ministry of Civil Aviation. Sl. No.66 Education and Training (Heading 9992) Clarification on certain issues related to Education Services via Circular No. 28/02/ dated 18/01/2018 [N/N ] Issue If catering Services provided by educational institution to its students, faculty & Staff, whether these are exempt? Clarification Yes, it shall be exempt provided the said education institution is covered by the definition given under the para 2(y) no CT Issue If catering services are provided by a mess or canteen other than the education institution, then also will it be exempted? Clarification NO, it will be treated as supply service chargeable to 5% provided no input tax credit has been taken on supply of such services 16 Sl. No.35 Specified General Insurance Scheme (Heading 9971 OR 9991) Services of general insurance business provided under following schemes (a) Hut Insurance Scheme; (b) Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna (earlier known as Integrated Rural Development Programme); (c) Scheme for Insurance of Tribals; (d) Janata Personal Accident Policy and Gramin Accident Policy; V Smart Academy

19 (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) (o) (p) (q) Group Personal Accident Policy for Self-Employed Women; Agricultural Pumpset and Failed Well Insurance; premia collected on export credit insurance; Restructured Weather based Crop Insurance Scheme (RWCIS) Amendment Jan Arogya Bima Policy; Pradhan Mantri Fasal Bima Yojana (PMFBY) Amendment Pilot Scheme on Seed Crop Insurance; Central Sector Scheme on Cattle Insurance; Universal Health Insurance Scheme; Rashtriya Swasthya Bima Yojana; Coconut Palm Insurance Scheme; Pradhan Mantri Suraksha BimaYojna; Niramaya Health Insurance Scheme implemented by the Trust constituted under the provisions of the National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999). Sl. No.36 of notification Circulars & notifications between to (Applicable for May 19 Exam) Clarification on existing exemptions Sl.No. 74 Circular no 51/25/2018 dated Facts: - Many states are operating the ambulance service on an outsourced model and these services are funded under the NHM and provided free of cost to all the patients. In this connection the Ministry of Health & family welfare, has requested for a clarification of following issues Ambulance Service Service provided by Government or Public Service provider (PSPs) by way of Exempted from transportation of patients in an Ambulance Exempt in Following Cases 1.If it a pure service and not a composite Government by way of transportation of on supply involving supply of any goods the behalf of State Govt. against the or(refer S. no 3 of N/N 12/2017) Consideration by way fees or otherwise from 2. If it is a composite supply of goods and Government services in which the value of supply of goods constitutes not more than 25% of value of said composite supply (refer S. no 3A of N/N 12/2017) Service provided by PSPs to the State Life Insurance Services (Heading 9971 OR 9991) Services of life insurance business provided under following schemesa) Janashree Bima Yojana; b) Aam Aadmi Bima Yojana; c) Life micro-insurance product as approved by the Insurance Regulatory and Development Authority, having maximum amount of cover of ` 2 Lacs; Amendment (d) Varishtha Pension BimaYojana; (e) Pradhan Mantri Jeevan JyotiBimaYojana; (f) Pradhan Mantri Jan DhanYogana; (g) Pradhan Mantri Vaya Vandan Yojana. Health Care Services (Heading 9993) of notification Sl.No. 1 of notification Charitable Activities (Chapter 99) Circular no 66/40/2018- dt 26/09/2018 Exemptions: Fee or consideration charged in any other form from the participants for participating in a religious, Yoga or meditation programme or camp meant for advancement of religion, spirituality or yoga shall be exempt Subject lodging and boarding provided by Charitable Trust Issues Clarification Residential programmes or camps meant Exempt: Residential programmes or camps for advancement of religion, spirituality or where the fee charged includes cost of lodging yoga, where the fee charged includes cost and boarding shall also be exempt as long as the primary and predominant activity, of lodging and boarding objective and purpose of such residential programmes or camps is advancement of religion, spirituality or yoga. if charitable or religious trusts merely or such activities will be taxable primarily provide accommodation or serve food and drinks against consideration in any form including donation fitness camps or classes activities such as holding of fitness camps such activities will be taxable provided by Charitable or classes such as those in aerobics, Trust dance, music etc CA VISHAL BHATTAD V Smart Academy 17

20 Sl. No.66 a) b) c) Education and Training (Heading 9992) CBIC Clarification related to Educational Services Circular No. 55/29/ dated 10/08/2018: Taxability of services provided by Industrial training Institute Whether is payable on vocational training provided by private ITIs in designated trades and in other than designated trades Clarification: Private ITIs qualify as an educational institution as covered in approved vocational educational course. Therefore, services provided by a private ITI in respect of designated trades notified under Apprenticeship Act, 1961 are exempt from As corollary, services provided by a private Ill in respect of other than designated trades would be liable to pay and will be taxable Whether is payable on the service, provided by a private Industrial Training Institute for conduct of examination against consideration in the form of entrance fee and also on the services relating to admission to or conduct of examination. Clarification: i) Service provided by a private Industrial Training Institute for conduct of examination for entrance fees: As per the above provisions, it is clarified that in case of designated trades, services provided by a private ITI by way of conduct of entrance examination against consideration in the form of entrance fee will also be exempt from. ii) Service provided by a private ITI relating to admission to or conduct of examination: services provided to an educational institution, by way of services relating to admission to or conduct of examination by a private ITI will also be exempt. Note: Other than designated trades in private ITI's, shall be payable on the aforesaid services as these services are not covered by the exemption. Service provided by Government ITI: For services provided to individual trainees/ students in relation to vocational training & examination conducted by these Government ITI is exempt Sl. No.24A Exemptions Warehousing of minor forest produce (Heading 9967 OR 9985) Services by way of warehousing of minor forest produce Sl. No.55A Exemption Related to Agriculture Sector Services by Way of Artificial insemination (Heading 9986) Services by way of artificial insemination of livestock (other than horses). Sl. No.9A Services provided by and to FIFA (chapter 99) Services provided by and to Fédération Internationale de Football Association (FIFA) and its subsidiaries directly or indirectly related to any of the events under FIFA U-17 World Cup 2017 to be hosted in India. Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 World Cup 2017." Sl. No.47A Services supplied by Food Safety & Standard Authority of India (FSSAI) (Heading 9983 or 9991) Services by way of licensing, registration and analysis or testing of food samples supplied by the Food Safety and Standards Authority of India (FSSAI) to Food Business Operators Sl. No.9D Service Provided by an old age home run by Government (Chapter 99 ) Services by an old age home run by Central Government, State Government or by an entity registered under section 12AA of the Income-tax Act, 1961 (43 of 1961) to its residents (aged 60 years or more) against consideration upto ` 25,000 per month per member, provided that the consideration charged is inclusive of charges for boarding, lodging and maintenance. Sl. No.65B Services Supplied by a State Government to Excess Royalty Collection Contractor (ERCC) (Heading 9991) 18 Services supplied by a State Government to Excess Royalty Collection Contractor (ERCC) by way of assigning the right to collect royalty on behalf of the State Government on the mineral dispatched by the mining lease holders. V Smart Academy

21 Explanation.- mining lease holder means a person who has been granted mining lease, quarry lease or license or other mineral concession under the Mines and Minerals (Development and Regulation) Act, 1957, the rules made thereunder or the rules made by a State Government under sub-section (1) of section 15 of the Mines and Minerals (Development and Regulation) Act, 1957 Condition : - Provided that at the end of the contract period, ERCC shall submit an account to the State Government and certify that the amount of goods and services tax deposited by mining lease holders on royalty is more than the exempted on the service provided by State Government to the ERCC of assignment of right to collect royalty and where such amount of paid by mining lease holders is less than the amount of exempted, the exemption shall be restricted to such amount as is equal to the amount of paid by the mining lease holders and the ERCC shall pay the difference between exempted on the service provided by State Government to the ERCC of assignment of right to collect royalty and paid by the mining lease holders on royalty. Sl. No.34 A Service supplied by way of Guaranteeing the loans (Heading 9971) Services supplied by Central Government, State Government, Union territory to their undertakings or Public Sector Undertakings(PSUs) by way of guaranteeing the loans taken by such undertakings or PSUs from the financial institutions. Sl. No.31A Services provided by Coal Mines Provident Fund Organisation (Heading 9971 or 9991) Services by Coal Mines Provident Fund Organisation to persons governed by the Coal Mines Provident Fund and Miscellaneous Provisions Act, Sl. No.31B Services provided by National Pension System (NPS) (Heading 9971 or 9991) Services by National Pension System (NPS) Trust to its members against consideration in the form of administrative fee. Sl. No.10A Services Supplied by Electricity Distribution Utilities (Heading 9954) Services supplied by electricity distribution utilities by way of construction, erection, commissioning, or installation of infrastructure for extending electricity distribution network upto the tube well of the farmer or agriculturalist for agricultural use. Sl. No.29A Services of Life Insurance Business (Heading 9971 OR 9991) Services of life insurance provided or agreed to provided by the Naval Group Insurance Fund to the personnel of Coast Guard under the Group Insurance Schemes of the Central Government. Sl. No.77A Service by an unincorporated Body or a Non-Profit Entity (Heading 9995) Services provided by an unincorporated body or a non-profit entity registered under any law for the time being in force, engaged in,- (i) activities relating to the welfare of industrial or agricultural labour or farmers; or (ii) promotion of trade, commerce, industry, agriculture, art, science, literature, culture, sports, education, social welfare, charitable activities and protection of environment, to its own members against consideration in the form of membership fee upto an amount of one thousand rupees (Rs 1000/-) per member per year Sl. No.10F Service supplied to an Establishment outside India Services supplied by an establishment of a person in India to any establishment of that person outside India, which are treated as establishments of distinct persons in accordance with Explanation 1 in section 8 of the Integrated Goods and Services Tax Act, 2017 Proviso Provided the place of supply of the service is outside India in accordance with section 13 of Integrated Goods and Services Tax Act, 2017 Sl. No.10G Service supplied by an United Nations Import of services by United Nations or a specified international organisation for official use of the United Nations or the specified international organisation. Explanation. - For the purposes of this entry, unless the context otherwise requires, specified international organisation means an international organisation declared by the Central Government in pursuance of section 3 of the United Nations (Privileges and Immunities Act) 1947, to which the provisions of the Schedule to the said Act apply V Smart Academy 19

22 Sl. No.10H of notification Import services by Foreign diplomatic mission Sl. No.14 Import of services by Foreign diplomatic mission or consular post in India, or diplomatic agents or career consular officers posted therein Conditions :- Renting of Hotel, Inn, etc. (Heading 9963 ) of notification Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff Value of Supply(substituted) of a unit of accommodation below `1000 per day or equivalent. Extra amenities provided by Hotel Impact due to change in valuation Foreign diplomatic mission or consular post in India, or diplomatic agents or career consular officers posted therein shall be entitled to exemption from integrated tax leviable on the import of services subject to the conditions, (i) that the foreign diplomatic mission or consular post in India, or diplomatic agents or career consular officers posted therein, are entitled to exemption from integrated tax, as stipulated in the certificate issued by the Protocol Division of the Ministry of External Affairs, based on the principle of reciprocity; (ii) that the services imported are for official purpose of the said foreign diplomatic mission or consular post; or for personal use of the said diplomatic agent or career consular officer or members of his or her family. (iii) that in case the Protocol Division of the Ministry of External Affairs, after having issued a certificate to any foreign diplomatic mission or consular post in India, decides to withdraw the same subsequently, it shall communicate the withdrawal of such certificate to the foreign diplomatic mission or consular post; (iv) that the exemption from the whole of the integrated tax granted to the foreign diplomatic mission or consular post in India for official purpose or for the personal use or use of their family members shall not be available from the date of withdrawal of such certificate. Particulars Declared Tariff Upto 26th July After 26th July Discount Transaction value Gst liability Yes Reason No(Exempt) Exemp on based Exemp on based on Declared tariff on Value of Supply Particulars Amount (`) Room Rent 700 A/c Charges 200 Extra Furniture 200 Value of Supply 1100 Note The Value of Supply as per sec 15 (2)(c) includes all incidental expenses charged by the supplier & thus no exemption shall be available as the value of supply exceeds ` 1000 & thus liable to. Amendments in existing exemptions Sl. No.41 of notification on ati n pla Ex Service by State Government Industrial Development Corporations (Heading 9972) For the purpose of this exemption, the Central Government, State Government, or Union territory shall have 50 per cent. or more ownership in the entity directly or through an entity which is wholly owned by the Central Government or union territory. Sl. No.5 of notification Sl. No.4 of notification Service to Govt. of article 243W (chapter 99) Services provided to the Central Government, State Government or Union territory or local authority or Omitted a Governmental authority by way of any activity in relation to any function entrusted to a Municipality under article 243W of the Constitution. 20 V Smart Academy Service to Govt. of article 243W (chapter 99) Services by a Central Government, State Government, Union Territory, Local Authority Omitted or Governmental Authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution. Note : 1. As per entry 2(zf) Governmental authority has the same meaning as assigned to it in the Explanation to clause (16) of section 2 of the Integrated Goods and Services Tax Act, 2017 CA VISHAL BHATTAD

23 Chapter 6 Time of Supply Circulars & notifications upto (Existing Amendments Applicable for Nov 18 & Onwards Exams) Liability to pay in case of TDR in lieu of construction service and on construction service in lieu of TDR has been deferred till possession/ right in the property is transferred to the land owner by entering into a conveyance deed/ similar instrument [Notification No. 4/2018 CT (R) dated ] & Notification No. 4/2018 IT (R) dated Accordingly, in exercise of the powers conferred by section 148, the Central Government, on the recommendations of the Council, hereby notifies the following classes of registered persons, namely- (a) registered persons who supply development rights to a developer, builder, construction company or any other registered person against consideration, wholly or partly, in the form of construction service of complex, building or civil structure; and (b) registered persons who supply construction service of complex, building or civil structure to supplier of development rights against consideration, wholly or partly, in the form of transfer of development rights, Clarification:- Sr. No Classes of Registered Person Time of supply a) b) registered persons who supply development rights to a developer, builder, construction company or any other registered person against consideration, wholly or partly, in the form of construction service of complex, building or civil structure; and Time when the possession or right in the property is transferred to the land owner by entering into a c o n v e y a n c e d e e d o r similar instrument (eg. allotment letter). V Smart Academy 21

24 Chapter 7 Value of Supply Circulars & notifications upto (Applicable for May 19 Exam) CBIC Clarification (Circular No. 47/21/2018 dt 08/06/2018) Issue 1: i) Whether moulds and dies owned by Original Equipment Manufacturers (OEM) that are sent free of cost (FOC) to a component manufacturer is leviable to tax and whether OEMs are required to reverse input tax credit in this case? Clarification : Whether a Supply? : - Moulds and dies owned by the original equipment manufacturer (OEM) which are provided to a component manufacturer (the two not being related persons or distinct persons) on FOC basis does not constitute a supply as there is no consideration involved. Input Tax Credit : - the moulds and dies are provided on FOC basis by the OEM to the component manufacturer in the course or furtherance of his business, there is no requirement for reversal of input tax credit availed on such moulds and dies by the OEM. Value of Supply - the value of the supply made by the component manufacturer, the value of moulds and dies provided by the OEM to the component manufacturer on FOC basis shall not be added to the value of such supply because the cost of moulds/dies was not to be incurred by the component manufacturer and thus, does not merit inclusion in the value of supply in terms of section 15(2)(b) of the C Act. Issue 2: ii) If there is a contract between OEM and component manufacturer for supply of components made by using the moulds/dies belonging to the component manufacturer, but the same have been supplied by the OEM to the component manufacturer on FOC basis? Clarification :- Value of Supply: - the amortized cost of such moulds/dies shall be added to the value of the components. Input Tax Credit :- the OEM will be required to reverse the credit availed on such moulds/ dies, as the same will not be considered to be provided by OEM to the component manufacturer in the course or furtherance of the former's business. 22 V Smart Academy

25 Chapter 8 Input Tax Credit V Smart Academy 23

26 Circulars & notifications upto (Existing Amendments Applicable for Nov 18 & Onwards Exams) Commissioner empowered to extend the time period for submission of declaration under rule 40(1)(b) of C Rules Existing Amended As per rule 40(1)(b) of the C Rules, the registered person claiming input tax credit under section 18(1) of C Act is required to electronically make a declaration that he is eligible to avail such credit, within 30 days from the date of becoming eligible to avail the said credit. Rule 40(1)(b) has been amended with effect from to empower C/I Commissioner to extend the time period for submission of such declaration. Further, any extension of the time limit notified by the S Commissioner or UT Commissioner shall be deemed to be notified by the C/I Commissioner.[Notification No. 22/2017 CT dated ] Commissioner empowered to extend the time period for submission of quarterly details of challans relating to job work under rule 45(3) of C Rules. [Notification No. 51/2017 CT dated ] Existing Amended Rule 45(3) of the C Rules lays down that the details of challans in respect of goods dispatched to a job worker or received from a job worker or sent from one job worker to another during a quarter shall be furnished for that period on or before the 25th day of the month succeeding the said quarter. Rule 45(3) has been amended to empower the C Commissioner or S/UT Commissioner to grant extension of time period for furnishing of the said details. Impact of amendment:- Thus, now the said details may be furnished on or before the 25th day of the month succeeding the said quarter or within such further period as may be extended by the Commissioner by a notification in this behalf. Explanation inserted to Rule 42 & Rule 43 of C rules 2017 via N/N 55/2017 CT dt 15/11/2017 N/n 3/2018 C.T. dated (vide N/n 55/2017 dated substituted via N/n 3/2018 C.T. dated ) Explanation : For the purposes of rule 42 and 43, it is hereby clarified that the aggregate value of exempt supplies shall exclude : (a) The value of supply of services specified in the notification of the Government of India in the Ministry of Finance, Department of Revenue No. 42/2017-Integrated Tax (Rate), dated the 27th October, 2017 published in the Gazette of India, Extraordinary, Part II, Section 3(i), vide number GSR 1338 (E) dated the 27th October, i.e. supply of services having place of supply in Nepal or Bhutan against payment in Indian Rs. is exempted from payment of I. (b) The value of services by way of accepting deposits, extending loans or advances in so far as the consideration is represented by way of interest or discount, except in case of a banking company or a financial institution including a non-banking financial company, engaged in supplying services by way of accepting deposits, extending loans or advances; and (c) The value of supply of services by way of transportation of goods by a vessel from the customs station of clearance in India to a place outside India. Rule 45 : - Conditions and restrictions in respect of inputs and capital goods sent to the job worker Amendment Removal under the cover of Challan : The inputs, semi-finished goods or capital goods shall be sent to the job worker under the cover of a challan issued by the principal, including where such goods are sent directly to a job-worker and where the goods are sent from one job worker to another job worker, the challan may be issued either by the principal or the job worker sending the goods to another job worker. Provided that the challan issued by the principal may be endorsed by the job worker, indicated therein the quantity and description of goods where the goods are sent by one job worker to another or are returned to the principal Provided further that the challan endorsed by the job worker, indicating therein the quantity and description of goods where the goods are sent by one job worker to another or are returned to the principal (inserted via N/n 14/ C.T dated ) 24 Circulars & notifications between to (Applicable for May 19 Exam) Rule 36. Documentary requirements and conditions for claiming input tax credit.- (1) The input tax credit shall be availed by a registered person, including the Input Service Distributor, on the basis of any of the following documents, namely,- (a) an invoice issued by the supplier of goods or services or both. (b) an invoice issued by recipient (receiving goods and/or services from unregistered supplier) along with proof of payment of tax (in case of reverse charge) (c) a debit note issued by a supplier (d) a bill of entry or any similar document prescribed under the Customs Act, 1962 for the assessment of integrated tax on imports; (e) Revised invoice (f) Documents issued by input service distributor. (2) Input tax credit shall be availed by a registered person only if all the applicable particulars as specified in the provisions of Chapter VI are contained in the said document, and the relevant information, as contained in the said document, is furnished in FORM R-2 by such person. Provided that if the said document does not contain all the specified particulars but contains the details of the amount of tax charged, description of goods or services, total value of supply of goods or services or both, IN of the supplier and recipient and place of supply in case of inter-state supply, input tax credit may be availed by such registered person (Inserted via N/N 39/2018 dt 04/09/2018) V Smart Academy

27 Rule 37. Reversal of input tax credit in the case of non-payment of consideration.- (1) A registered person, who has availed of input tax credit on any inward supply of goods or services or both, but fails to pay to the supplier thereof, the value of such supply along with the tax payable thereon, within the time limit specified in the second proviso to sub-section (2) of section 16, shall furnish the details of such supply, the amount of value not paid and the amount of input tax credit availed of proportionate to such amount not paid to the supplier in FORM R-2 for the month immediately following the period of one hundred and eighty days from the date of the issue of the invoice: Provided that the value of supplies made without consideration as specified in Schedule I of the said Act shall be deemed to have been paid for the purposes of the second proviso to subsection (2) of section 16. Provided further that the value of supplies on account of any amount added in accordance with the provisions of clause (b) of sub-section (2) of section 15 shall be deemed to have been paid for the purposes of the second proviso to sub-section (2) of section 16 (Inserted via N/N 26/2018- CT dt 13/06/2018 ) Clarification regarding recovery of excess credit by an Input Service Distributor Circular No. 71/45/2018 dt 26/10/2018 Issue:- the manner of recovery of excess credit distributed by an Input Service Distributor (ISD) in contravention of the provisions contained in section 20 of the C Act. Clarification:- 1. According to Section 21 of the C Act where the ISD distributes the credit in contravention of the provisions contained in section 20 of the C Act resulting in excess distribution of credit to one or more recipients of credit, the excess credit so distributed shall be recovered from such recipients along with interest and penalty if any. 2. The recipient unit(s) who have received excess credit from ISD may deposit the said excess amount voluntarily along with interest if any by using FORM DRC If the said recipient unit(s) does not come forward voluntarily, necessary proceedings may be initiated against the said unit(s) under the provisions of section 73 or 74 of the C Act as the case may be. FORM DRC-07 can be used by the tax authorities in such cases. 4. It is further clarified that the ISD would also be liable to a general penalty under the provisions contained in section 122(1)(ix) of the C Act. V Smart Academy 25

28 Chapter 9 Place of Supply 26 V Smart Academy

29 Sl. No Circulars & notifications upto (Existing Amendments Applicable for Nov 18 & Onwards Exams) I Rules Provisions introduced for computing proportionate value of advertisement services attributable to different States or Union territories in the absence of any contract between the supplier of service and recipient of services [Notification No. 12/2017 IT dated ] Place of Supply of Advertisement service to Government(I Rules) Type of advertisement Advertisements in newspapers and publications Advertisements through printed material like pamphlets, leaflets, diaries, calendars, T-shirts, etc. Advertisements in hoardings (other than those on trains) Advertisements on trains Advertisements on the back of utility bills of oil and gas companies, etc. Advertisements on railway tickets Advertisements on radio stations Factor which determines the proportionate value of service attributable to the dissemination in each State/Union territory Amount payable for publishing an advertisement in all the editions of a newspaper or publication, which are published in each State/Union territory Amount payable for the distribution of a specific number of such material in each State/Union territory Amount payable for the hoardings located in each State/ Union territory Length of the railway track in each State/Union Territory, for that train Amount payable for the advertisements on bills pertaining to consumers having billing addresses in each State/Union territory Number of Railway Stations in each State/Union territory Amount payable to such radio station, which by virtue of its name is part of each State/Union territory Advertisements on internet Advertisements through SMS Number of internet subscribers in each State/Union Territory Internet subscribers can be ascertained from the internet subscriber figures published by the Telecom Regulatory Authority of India (TRAI). Figures for the last quarter of a given financial year will be used for calculating the number of internet subscribers for the succeeding financial year. Where the internet subscriber figures relate to a region comprising of more than one State/Union territory, the subscriber figures for a State/Union territory of that region shall be calculated in the ratio of the populations of that State/Union territory, as determined in the latest census. Number of telecom subscribers in each State/Union Territory Telecom subscribers in a telecom circle can be ascertained from the telecom subscribers figures published by the TRAI. Figures for a given quarter will be used for calculating the subscribers for the succeeding quarter. Where such figures relate to a telecom circle comprising of more than one State/Union territory, the subscriber figures for that State/Union territory shall be calculated in the ratio of the populations of that State/Union territory, as determined in the latest census. Clarification on Taxability of satellite launch services via Circular No. 2/1/2017 I dated It has been clarified that place ofsupply of satellite launch services supplied by ANTRIX Corporation Limited, a wholly owned Government of India Company, to international customers would be outside India in terms of section 13(9) and such supply which meets the requirements of section 2(6), will constitute export of service and shall be zero rated in accordance with section 16. Where satellite launch service is provided to a person located in India, the place of supply of satellite launch service would be governed by section 12(8) and would be taxable under C Act, UT Act or I Act, as the case may be. 8 9 Advertisement on television channels Advertisements in cinema halls Number of viewers of such channel in each State/ union Territory. Viewership can be ascertained from the channel viewership figures published by the Broadcast Audience Research Council. Figures for the last week of a given quarter will be used for calculating viewership for the succeeding quarter. Where the channel viewership figures relate to a region comprising of more than one State/Union territory, the viewership figures for a State/ Union territory of that region, will be calculated in ratio of the populations of that State/Union territory, as determined in the latest Census. Amount payable to a cinema hall or screens in a multiplex in each State/ Union territory. V Smart Academy 27

30 Circulars & notifications between to (Applicable for May 19 Exam) CBIC Clarification via Circular no 48/22/2018 dt 14/06/2018 Issue: Whether the benefit of zero rated supply can be allowed to all procurements by a SEZ developer or a SEZ unit such as event management services, hotel and accommodation services, consumables etc? Clarification: i) As per section 16(1) of the I Act, zero rated supplies means supplies of goods or services or both to a SEZ developer or a SEZ unit. Whereas, section 16(3) of the I Act provides for refund to a registered person making zero rated supplies under bond/lut or on payment of integrated tax, subject to such conditions, safeguards and procedure as may be prescribed. Further, as per the second proviso to rule 89(1) of the Central Goods and Services Tax Rules, 2017 (C Rules in short), in respect of supplies to a SEZ developer or a SEZ unit, the application for refund shall be filed by the: (a) supplier of goods after such goods have been admitted in full in the SEZ for authorised operations, as endorsed by the specified officer of the Zone; (b) supplier of services along with such evidences regarding receipt of services for authorised operations as endorsed by the specified officer of the Zone. ii) A conjoint reading of the above legal provisions reveals that the supplies to a SEZ developer or a SEZ unit shall be zero rated and the supplier shall be eligible for refund of unutilized input tax credit or integrated tax paid, as the case may be, only if such supplies have been received by the SEZ developer or SEZ unit for authorized operations. An endorsement to this effect shall have to be issued by the specified officer of the Zone. iii) Therefore, subject to the provisions of section 17(5) of the C Act, if event management services, hotel, accommodation services, consumables etc. are received by a SEZ developer or a SEZ unit for authorised operations, as endorsed by the specified officer of the Zone, the benefit of zero rated supply shall be available in such cases to the supplier. Whereas, as per section 12(3)(c) of the I Act, the place of supply of services by way of accommodation in any immovable property for organising any functions shall be the location at which the immovable property is located. Thus, in such cases, if the location of the supplier and the place of supply is in the same State/ Union territory, it would be treated as an intra-state supply ii) It is an established principle of interpretation of statutes that in case of an apparent conflict between two provisions, the specific provision shall prevail over the general provision. iii) In the instant case, section 7(5)(b) of the I Act is a specific provision relating to supplies of goods or services or both made to a SEZ developer or a SEZ unit, which states that such supplies shall be treated as inter-state supplies. iv) It is therefore, clarified that services of short term accommodation, conferencing, banqueting etc., provided to a SEZ developer or a SEZ unit shall be treated as an inter-state supply CBIC Clarification via Circular no 48/22/2018 dt 14/06/2018 Issue Whether services of short-term accommodation, conferencing, banqueting etc. provided to a Special Economic Zone (SEZ) developer or a SEZ unit should be treated as an interstate supply (under section 7(5)(b) of the I Act, 2017) or an intra-state supply (under section 12(3)(c) of the I Act, 2017)? Clarification: i) As per section 7(5) (b) of the Integrated Goods and Services Tax Act, 2017 (I Act in short), the supply of goods or services or both to a SEZ developer or a SEZ unit shall be treated to be a supply of goods or services or both in the course of inter-state trade or commerce. 28 V Smart Academy

31 Chapter 10 Registration V Smart Academy 29

32 Circulars & notifications upto (Existing Amendments Applicable for Nov 18 & Onwards Exams) Sec 23(2) of C Act:- Exempt suppliers of services through an e-commerce platform from obtaining compulsory registration [Notification No. 65/2017 dt 15/11/2017 CT] Person making supplies of services other than supplies specified u/s 9(5) of C Act through an ECO who is required to collect tax at source u/s 52 of C Act & has an aggregate T/O, to be computed on all India not exceeding `20 lakhs F.Y. (`10 lakh in special category state except state of J & K) are notified as category of exempted persons from registration. Impact of this amendment:- Earlier as per section 24 of C Act, compulsory registration requires to supplier of service through e- commerce operator, who is required to collect tax at source under section 52 of C Act. A major relief to the small scale service providers who are providing services through ecommerce operator, as they need not register themselves if their turnover is below the threshold limit. Note: This benefit is only given to Supplier of Service and not for supplier of goods. If supplier of goods supply any goods through ECO then liable to register compulsory u/s 24. Clarification regarding levy of on homestays [Circular No. 27/01/2018 dt 04/01/2018] Issue : Whether homestays providing accommodation through an Electronic Commerce Operator, below threshold limit are exempt from taking registration? Clarification: Notification No. 17/2017-Central Tax (Rate), has been issued making ECOs liable for payment of in case of accommodation services provided in hotels, inns guest houses or other commercial places meant for residential or lodging purposes provided by a person having turnover below Rs. 20 lakhs (Rs. 10 lakhs in special category states) per annum and thus not required to take registration under section 22(1) of C Act. Such persons, even though they provide services through ECO, are not required to take registration in view of section 24(ix) of C Act, Rule 20 Application for cancellation of registration Existing proviso deleted : Provided that no application for the cancellation of registration shall be considered in case of a taxable person, who has registered voluntarily, before the expiry of a period of one year from the effective date of registration. Impact of above amendment The above proviso given in the aforesaid rule has been removed & thus by this exclusion its clarified that a person who has voluntarily registered can now apply for cancellation of registration without any prescribed time limit. Foreign Diplomatic Mission / UN Organization to be granted centralized UIN [Notification No. 75/2017 CT dated ] Rule 17 of the C Rules has been amended to provide that the Unique Identity Number granted to any specialised agency of the UN or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign countries shall be applicable to the territory of India. Such centralized UIN will lessen the compliance burden on Foreign Diplomatic Missions / UN Organizations. Effective date of amendment in registration details can be earlier than the date of submission of the application for amendment only when the Commissioner orders the same for reasons to be recorded in writing [Notification No. 75/2017 CT dated ] Rule 19 of the C Rules,2017 prescribes the provisions for amendment of particulars furnished in application for registration..the said rule has been amended to provide that any particular of the application for registration shall not stand amended with effect from a date earlier than the date of submission of the application for amendment on the common portal except with the order of the Commissioner for reasons to be recorded in writing and subject to such conditions as the Commissioner may, in the said order, specify. Rule 17 Assignment of UIN to certain Special entities sub rule as given below is inserted via N/N 75/2017 CT dt (1A) The Unique Identity Number granted under sub-rule (1) to a person under sec 25(9)(a) of C Act shall be applicable to the territory of India. Impact of above amendment Option of centralized registration given to entities having UIN & the Central Government will be responsible for all compliance in respect of such entities. 30 V Smart Academy

33 Circulars & notifications between to (Applicable for May 19 Exam) Clarification on Advance tax to be deposited by a casual taxable person (Circular No. 71/45/2018 dt 26/10/2018) Issue:-Whether the amount required to be deposited as advance tax while taking registration as a casual taxable person (CTP) should be 100% of the estimated gross tax liability or the estimated tax liability payable in cash should be calculated after deducting the due eligible ITC which might be available to CTP? Clarification in case of long run exhibition by a casual taxable person (Circular No. 71/45/2018 dt 26/10/2018) Issue:- As per section 27 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the said Act), period of operation by causal taxable person is ninety days with provision for extension of same by the proper officer for a further period not exceeding ninety days. Various representations have been received for further extension of the said period beyond the period of 180 days, as mandated in law. Clarification:- 1. It has been noted that while applying for registration as a casual taxable person, the FORM REG-1 seeks information regarding the estimated net tax liability only and not the gross tax liability. 2. It is accordingly clarified that the amount of advance tax which a casual taxable person is required to deposit while obtaining registration should be calculated after considering the due eligible ITC which might be available to such taxable person. Clarification:- 1. It is clarified that in case of long running exhibitions (for a period more than 180 days), the taxable person cannot be treated as a CTP and thus such person would be required to obtain registration as a normal taxable person. 2. While applying for normal registration the said person should upload a copy of the allotment letter granting him permission to use the premises for the exhibition and the allotment letter/consent letter shall be treated as the proper document as a proof for his place of business. 3. In such cases he would not be required to pay advance tax for the purpose of registration. 4. He can surrender such registration once the exhibition is over. An explanation added stating definition of handicraft goods via N/N 21/2018 -CT(R) dt 26 /07/2018 & N/N 3/2018 -IT(R) dt 22/10/2018 Explanation - For the purpose of this notification, the expression handicraft goods means ÜGoods predominantly made by hand even though some tools or machinery may also have been used in the process; Üsuch goods are graced with visual appeal in the nature of ornamentation or in-lay work or some similar work of a substantial nature; Üpossess distinctive features, which can be aesthetic, artistic, ethnic or culturally attached and are amply different from mechanically produced goods of similar utility. Note:- After this new notification issued wrt sec 24 only a person if satisfying the above definition of handicraft goods and engaged in inter state supply of such goods will be exempted from registration requirement. In N/N 21/2018 -CT (R)39 entries are covered & in N/N 3/ IT (R) 28 entries are covered V Smart Academy 31

34 Chapter 11 Tax Invoice, Credit & Debit Notes 32 V Smart Academy

35 Circulars & notifications upto (Existing Amendments Applicable for Nov 18 & Onwards Exams) Rule 46A inserted via N/N 45/2017 Central Tax dt Rule 46A - Invoice-cum-bill of supply- Notwithstanding anything contained in rule 46 or rule 49 or rule 54, where a registered person is supplying taxable as well as exempted goods or services or both to an unregistered person, a single invoice-cum-bill of supply may be issued for all such supplies. Question : - Jai, a registered supplier, runs a general store in Ludhiana, Punjab. Some of the goods sold by him are exempt whereas some are taxable. You are required to advise him on the following issues: (I) Whether Jai is required to issue a tax invoices in all cases, even if he is selling the goods to the end consumers? (ii) Jai sells some exempted as well as taxable goods valuing ` 5,000 to a school student. Is he mandatorily required to issue two separate documents? Answer (a) As per section 31(1) of the C Act, 2017, every registered person supplying taxable goods is required to issue a tax invoice. Section 31(3)(c) of the C Act, 2017 stipulates that every registered person supplying exempted goods is required to issue a bill of supply instead of tax invoice Further, as per section 31(3)(b) of the C Act, 2017 read with rule 46 of the C Rules, 2017, a registered person may not issue a tax invoice if: (I) value of the goods supplied < ` 200, (ii) the recipient is unregistered; and (iii) the recipient does not require such invoice. Instead such registered person shall issue a Consolidated Tax Invoice for such supplies at the close of each day in respect of all such supplies. (b) As per rule 46A of the C Rules, 2017, where a registered person is supplying taxable as well as exempted goods or services or both to an unregistered person, a single invoice-cum-bill of supply may be issued for all such supplies. Thus, there is no need to issue a tax invoice and a bill of supply separately to the school student in respect of supply of the taxable and exempted goods respectively. Rule 54 Tax invoice in special cases - changes made for invoice issue pertaining to banking, insurance & NBFCs Where the supplier of taxable service is an insurer or a banking company or a financial institution, including a non-banking financial company, the said supplier [may] issue a [consolidated] tax invoice or any other document in lieu thereof, by whatever name called [for the supply of services made during a month at the end of the month], whether issued or made available, physically or electronically whether or not serially numbered, and whether or not containing the address of the recipient of taxable service but containing other information as mentioned under rule 46. Effect of amendment:- Specific changes and relaxation for issuance of invoice on consolidated basis for this sector. Question 1:- A customer may avail numerous services from the Bank / insurer in a given taxable period. Is it mandatory for Banks to issue a tax invoice for each transaction or can the Bank issue a consolidated invoice for the service rendered during the tax period? Answer : As per the provisions contained in the first proviso to Rule 47 of the C Rules, 2017 an insurer, a banking company or a financial institution, including a NBFC may issue invoices within 45 days from the date of supply of service. Further, sub-rule (2) of rule 54 of C Rules, 2017 provides that such entities may issue any other document in lieu of the tax invoice. Accordingly, such entities may issue a consolidated statement/ invoice/ advice to the customer at the end of the month, with the details of all the charges levied during such month and payable thereon. Question 2:- When a banking company is not required to serially number its invoices / document for supply of its services, how will the service recipient get credit for on the services provided by the bank? Answer : Under Rule 54(2) of the C Rules, 2017 a banking company or a financial institution including a NBFC or an insurer can issue an invoice or any other document in lieu thereof whether or not serially numbered and whether or not containing the address of the recipient but containing other information as mentioned under Rule 46. There is no restriction on the invoice/document being a consolidated invoice/document but it must bear an identification number, which need not necessarily be serially numbered. The recipient of service will get the credit for so long as the bank, etc. uploads the details of the invoice / document under that number with IN of the recipient in its statement if FORM R-1. Question 3:- Whether commission paid to insurance agents shall be construed as supplies received under Section 9(3) of C Act, 2017? If yes, whether the Life Insurance Company can raise a consolidated invoice for such commission payments? Answer:- Sr. No. 7 No. 13/2017-Central Tax (Rate), dated 28th June, 2017 as amended covers supplies received from Insurance Agents and provides for the Insurance Company to pay on such supplies under Section 9(3) of the C Act, In such cases, the insurance company may issue agentwise consolidated invoice at the end of the month for the supply of services received during the month. Rule 55A inserted via N/N 45/2017 Central Tax dt Rule 55A. Tax Invoice or bill of supply to accompany transport of goods. The person-incharge of the conveyance shall carry a copy of the tax invoice or the bill of supply issued in accordance with the provisions of rules 46, 46A or 49 in a case where such person is not required to carry an e- way bill under these rules. 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36 34 Rule 54 (1A) (a) A registered person, having the same PAN and State code as an Input Service Distributor, may issue an invoice or, as the case may be, a credit or debit note to transfer the credit of common input Newly inserted services to the Input Services Distributor, which shall contain the following details : (i) name, address and Goods and Services Tax Identification Number of the registered person having the same PAN and same State code as the Input Service Distributor (ii) a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters - hyphen or dash and slash symbolised as _ and / respectively, and any combination thereof, unique for a financial year; (iii) date of its issue (iv) Goods and Services Tax Identification Number of supplier of common services and original invoice number whose credit is sought to be transferred to the Input Service Distributor (v) INPUT SERVICE DISTRIBUTOR Name, address and Goods and Services Tax Identification Number of the Input Service Distributor. (vi) taxable value, rate and amount of the credit to be transferred and (vii) Signature or digital signature of the registered person or his authorised representative. Circulars & notifications between to (Applicable for May 19 Exam) Procedure to be followed in respect of return of time expired drugs or medicines (Circular No. 72/46/2018 dt ) Issue - The common trade practice in the pharmaceutical sector is that the drugs or medicines (hereinafter referred to as goods ) 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. It is significant to mention here that such goods have a defined life term which is normally referred to as the date of expiry. Such goods which have crossed their date of expiry are colloquially referred to as time expired goods and are returned back to the manufacturer, on account of expiry, through the supply chain. Clarification SI.No. If return of goods by category of person 1 Registered person Ü Issue a fresh tax invoice for the returned expired goods Ü Value of supply shall be the value of the said goods as shown in the invoice on basis of which they were supplied earlier Ü ITC shall be available to wholesaler / manufacturer as per sec 16 2 Composition Supplier Ü Issue of bill of supply and pay tax at the rate applicable to composition taxpayer Ü Value of supply shall be same as it was in original invoice No ITC to the recipient 3 Unregistered Supplier Tax Compliance Ü Any commercial document without charging taxes Note:- On receipt of such time expired medicines if destroyed by manufacturer, The ITC on such goods will be reversed as per sec 17(5)(h) 1) If return of goods against a 'Credit Note' Ü As per Section 34(1) of the C Act the supplier can issue a credit note where the goods are returned back by the recipient. Thus, 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, Ü In such a scenario, the retailer or wholesaler may return the time expired goods by issuing a delivery challan. It may be noted that there is no time limit for the issuance of a credit note in the law except with regard to the adjustment of the tax liability in case of the credit notes issued prior to the month of September following the end of the financial year and those issued after it. Ü As per sec 34(2) the tax liability may be adjusted by the supplier, subject to the condition that 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. Ü if the time limit specified section 34(2) of the C Act has lapsed, a credit note may still be issued by the supplier for such return of goods but the tax liability cannot be adjusted by him in his hands. Ü In case time expired goods are returned beyond the time period specified in the 34(2) of the C Act and a credit note is issued consequently, there is no requirement to declare such credit note on the common portal by the supplier (i.e. by the person who has issued the credit note) as tax liability cannot be adjusted in this case. Illustration:- SI.No. Case 1 Case 2 Date of Supply of goods from manufacturer/ wholesaler to wholesaler/ retailer 1st July, st July, 2017 Date of return of time expired goods from retailer /wholesaler to wholesaler / manufacturer 20th September, th October, 2018 Treatment in terms of tax liability & credit note Credit note will be issued by the supplier (manufacturer / wholesaler) and the same to be uploaded by him on the common portal. Subsequently, tax liability can be adjusted by such supplier provided the recipient (wholesaler / retailer) has either not availed the ITC or if availed has reversed the ITC. Credit note will be issued by the supplier (manufacturer / wholesaler) but there is no requirement to upload the same on the common portal. Subsequently tax liability cannot be adjusted by such supplier V Smart Academy

37 Chapter 12 E-Way Bill, Accounts & Records Circulars & notifications upto (Existing Amendments Applicable for Nov 18 & Onwards Exams) Clarification regarding E-way Bill via Press release dt 31/03/2018 Situation 1 :- Consider a situation where a consignor is required to move goods from City X to City Z. He appoints Transporter A for movement of his goods. Transporter A moves the goods from City X to City Y. For completing the movement of goods i.e., from City Y to City Z, Transporter A now hands over the goods to Transporter B. Thereafter, the goods are moved to the destination i.e. from City Y to City Z by Transporter B. How would the e-way bill be generated in such situations? Clarification :- It is clarified that in such a scenario, only one e-way bill would be required. Part A can be filled by the consignor and then the e-way bill will be assigned by the consignor to Transporter A. Transporter A will fill the vehicle details, etc. in Part B and will move the goods from City X to City Y. On reaching City Y, Transporter A will assign the said e-way bill to the Transporter B. Thereafter, Transporter B will be able to update the details of Part B. Transporter B will fill the details of his vehicle and move the goods from City Y to City Z. Situation 2: - Consider a situation where a consignor hands over his goods for transportation on Friday to transporter. However, the assigned transporter starts the movement of goods on Monday. How would the validity of e-way bill be calculated in such situations? Clarification : - It is clarified that the validity period of e-way bill starts only after the details in Part B are updated by the transporter for the first time. In the given situation, Consignor can fill the details in Part A on Friday and handover his goods to the transporter. When the transporter is ready to move the goods, he can fill the Part B i.e. the assigned transporter can fill the details in Part B on Monday and the validity period of the e-way bill will start from Monday. Accounts and Records Clarification on issues in respect of maintenance of books of accounts relating to additional place of business by a principal or an auctioneer for the purpose of auction of tea, coffee, rubber etc. [Circular No. 23/23/2017 dated ] Issue: As per the first proviso of section 35(1) of the C Act both the principal and the auctioneer are required to maintain the books of accounts relating to their additional place(s) of business in such places. However, principal and auctioneer face difficulties in relation to maintaining books of accounts at each and every additional place of business related to stock of goods like tea, coffee, rubber, etc. meant for supply through an auction. Whether both the principal as well as the auctioneer can be allowed to maintain the books of accounts relating to the additional place(s) of business at their principal place of business itself? Clarification: (a) The principal and the auctioneer of tea, coffee, rubber etc. are required to declare warehouses where such goods are stored as their additional place of business. The buyer is also required to disclose such warehouse as his additional place of business if he wants to store the goods purchased through auction in such warehouses. (b) Both the principal and the auctioneer are required to maintain the books of accounts relating to each and every place of business in that place itself as per the first proviso to sub-section (1) of section 35 of the C Act. However, in case difficulties are faced in maintaining the books of accounts, it is clarified that they may maintain the books of accounts relating to the additional place(s) of business at their principal place of business instead of such additional place(s). (c) Such principal or auctioneer shall intimate their jurisdictional proper officer in writing about the maintenance of books of accounts relating to additional place(s) of business at their principal place of business. (d) Further, the principal or the auctioneer shall be eligible to avail input tax credit (ITC) subject to the fulfilment of other provisions of the Act and the rules made thereunder. It is further clarified that this Circular is applicable to the supply of tea, coffee, rubber, etc. where the auctioneer claims ITC in respect of the supply made to him by the principal before the auction of such goods and the said goods are supplied only through auction. V Smart Academy 35

38 36 Circulars & notifications between to (Applicable for May 19 Exam) Rule 138 (13) :- Cases where E-way is not required to be generated o) where empty cylinders for packing of liquefied petroleum gas are being moved for reasons other than supply. Note:- The above clause has been added to rule 138(13) via N/N 26/2018 CT dt 13/06/18 Rule 138A:- Documents shall be carried by a person-in-charge of a conveyance Proviso:- Provided further that in case of imported goods, the person in charge of a conveyance shall also carry a copy of the bill of entry filed by the importer of such goods and shall indicate the number and date of the bill of entry in Part A of FORM EWB-01. Note:- The above proviso is added to rule 138A via N/N 39/2018 CT dt 04/09/18 Rule 138 C:- Report pertaining to inspection be uploaded by the Department Provided that where the circumstances so warrant, the Commissioner, or any other officer Proviso authorised by him, may, on sufficient cause being shown, extend the time for recording of the final report in Part B of FORM EWB-03, for a further period not exceeding three days. Explanation The period of twenty four hours or, as the case may be, three days shall be counted from the midnight of the date on which the vehicle was intercepted. Note:- The above proviso is inserted to rule 138C via N/N 28/2018-CT, dt Clarification on E-way bill in case of storing of goods in godown of transporter [Circular No. 61/35/2018 CT dt 04/09/2018] Issue:- Whether E-way bill is required in case of transportation of goods from transporters godown to any other place of recipient taxpayer Facts:- Textile traders use transporters' godown for storage of their goods due to their weak financial conditions. The transporters providing such warehousing facility will have to get themselves registered under and maintain detailed records in cases where the transporter takes delivery of the goods and temporarily stores them in his warehouse for further transportation of the goods till the consignee/recipient taxpayer's premises. The transport industry is facing difficulties due to the same and a request has been made to treat these godowns as transit godowns. Clarification:- As per the above stated provisions it is hereby clarified that E-way Bill:- Ü Goods are to be accompanied by E- way bill when stored in warehouse prior to delivery in transporters godown Ü The transporters godown to be declared as an Additional place of business of recipient Ü The transportation under the e-way bill shall be deemed to be concluded once the goods have reached the transporter's godown. Hence, no need to extend e-way bill in such cases. Ü whenever the goods are transported from the transporter's godown to the recipient taxpayer's premises, the relevant provision of E-way bill rules shall apply. Books of accounts:- Ü in relation to goods stored at the transporter's godown by the recipient taxpayer may be maintained by him at his principal place of business. Ü It may be noted that the facility of declaring additional place of business by the recipient taxpayer is in no way putting any additional compliance requirement on the transporters. CBIC CLARIFICATION [Circular No. 47/21/2018 dated ] Transportation of goods by Railway Issue Clarification In case of transportation of goods by railways, whether goods can be delivered even if the e- way bill is not produced at the time of delivery? Transportation of goods to another State Issue Where goods transit through another State while moving from one area in a State to another area in the same State. Movement of goods from DTA unit to SEZ unit Issue Where goods move from a DTA unit to a SEZ unit or vice versa located in the same State As per proviso to rule 138(2A) of the C Rules, 2017, the railways shall not deliver the goods unless the e-way bill is produced at the time of delivery. Clarification It may be noted that e-way bill generation is not dependent on whether a supply is inter State or not, but on whether the movement of goods is inter-state or not. Therefore, if the goods transit through a second State while moving from one place in a State to another place in the same State, an e-way bill is required to be generated. Clarification Where goods move from a DTA unit to a SEZ unit or vice versa located in the same State, there is no requirement to generate an eway bill, if the same has been exempted under rule 138(14)(d) of the C Rules V Smart Academy

39 Accounts and Records Section 35(2) read with rule 58:- Records to be maintained by owner or operator of godown or warehouse and transporters For the purposes of E-Way Bill rules, a transporter who is registered in more than one State or Union Territory having the same Permanent Account Number, he may apply for a unique common enrolment number by submitting the details in FORM ENR-02 using any one of his Goods and Services Tax Identification Numbers, and upon validation of the details furnished, a unique common enrolment number shall be generated and communicated to the said transporter: Provided that where the said transporter has obtained a unique common enrolment number, he shall not be eligible to use any of the Goods and Services Tax Identification Numbers for the purposes of the said E-way Bill Rules. [N/N 28/2018 CT dt 19/06/18] V Smart Academy 37

40 Chapter 13 Returns 38 V Smart Academy

41 Circulars & notifications upto (Existing Amendments Applicable for Nov 18 & Onwards Exams) Form R 3B extended further and Form R 2 has been postponed R 1 Quarterly returns for persons having aggregate turnover of less than 1.5 cr ( N/N 71 /2017 dt 29/12/2017) As per powers exercised by sec 148 of C Act, 2017, the Central Govt has notified the registered persons having aggregate turnover of upto 1.5 crore rupees in the preceding financial year or the current financial year, as the class of registered person who shall follow the procedure of filing Quarterly return of R -1 for furnishing the details of outward supply of goods or services. Clarification issued via Circular no. 26/26/2017 CT dt 29/12/2017 The above mentioned class of registered person has the option to choose whether to file return R 1 quarterly or monthly. Hence, once he opts to file any of the option he cannot change the return filing periodicity for the entire financial year thereafter. Also if he wrongly reports his aggregate turnover and opts to file return quarterly, he may be liable for punitive action under C Act, Circulars & notifications between to (Applicable for May 19 Exam) Notified category of person for quarterly filing of return R-1 [N/N 32/2018 CT dt 10/08/18 & N/N 43/2018 CT dt 10/09/18] As a measure of easing the compliance requirement for small tax payers, R-1 has been allowed to be filed quarterly return having aggregate turnover of upto 1.5 Cr in preceding or current financial year. As of now this facility has been given till January - March Notified category of person for monthly filing of return R-1 [N/N 33/2018 CT dt 10/08/18 & N/N 44/2018 CT dt 10/09/18] Tax payers with an aggregate turnover of more than 1.5 Cr will however continue to file R -1 on monthly basis. Payment of taxes for discharge of tax liability as per FORM R-3B. (N/N 34/2018-CT dt 10/08/2018) Every registered person furnishing the return in FORM R-3B of the said rules shall, subject to the provisions of section 49 of the said Act, discharge his liability towards tax, interest, penalty, fees or any other amount payable under the said Act by debiting the electronic cash ledger or electronic credit ledger, as the case may be, not later than the last date, as specified in the first paragraph, on which he is required to furnish the said return. Q.55 : What is the procedure for enrolment as P? Ans.: The procedure for enrolment of P has been depicted in the following : (i) (ii) (iii) (iv) (v) (vi) An application in prescribed form may be made electronically through the common portal for enrolment as P. The application shall be scrutinised and practitioner certificate shall be granted in the prescribed form. In case, the application is rejected, proper reasons shall have to be given. The enrolment once done remains valid till it is cancelled. No person enrolled as a P shall be eligible to remain enrolled unless he passes such examination conducted at such periods and by such authority as may be notified by the Commissioner on the recommendations of the Council. As notified by CBIC via N/N 24/2018 CT - dt 28/05/2018 the National Academy of Customs, Indirect Taxes and Narcotics, Department of Revenue, Ministry of Finance, Government of India, as the authority to conduct the examination as per the said sub-rule. Any person who has been enrolled as P by virtue of him being enrolled as a Sales Tax Practitioner or Tax Return Preparer under the earlier Indirect Tax law shall remain enrolled only for a period of 18 months from the appointed date unless he passes the said examination within the said period of 18 months. Amended V Smart Academy 39

42 Chapter 14 Payment of Tax 40 V Smart Academy

43 Sec 51: Tax deduction at source 1 Notwithstanding anything to the contrary contained in this Act, the Government may mandate, a a department or establishment of the Central Government or State Government; or b local authority; or c Governmental agencies; or Proviso:- Provided that no deduction shall be made if the location of the supplier and the place of supply is in a State or Union territory which is different from the State or as the case may be, Union territory of registration of the recipient d such persons or category of persons as may be notified by the Government on the recommendations of the Council (hereafter in this section referred to as the deductor ), to deduct tax Explanation TDS Rate Ü at the rate of 1% (same provision under S Act as C 1% + S 1%) Ü from the payment made or credited to the supplier (hereafter in this section referred to as the deductee ) of taxable goods or services or both, where the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees For the purpose of deduction of tax specified above, the value of supply shall be taken as the amount excluding the central tax, State tax, Union territory tax, integrated tax and cess indicated in the invoice CSGT 1% N/N 50/2018-CT dt 13/09/2018 S 1% Sec 51 has been made effective from 01st Oct 2018, I 2% Where value of supply under a contract exceeds 2,50,000 In exercise of the powers conferred by Section 1(3) of the C Act, 2017 & in supercession of N/N 33/2017 -CT dt 15/09/2017 the CG hereby appoints the 01st Oct 2018 as the date on which the provisions of Section 51 of the said Act shall come into force with respect to Ü persons specified under clause (a) (b) & (c) of 51(1) of the said Act and Ü the persons specified below under clause (d) of 51(1) of the said Act, namely: (a) 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 51% or more participation by way of equity or control, to carry out any function (b) Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (c) PSU (Public sector undertakings) Supplier PoS Supply Recipient Mr.P (MH) Mr.Q (MH) Mr.R (Punjab) As per Section 2(69): local authority means a) Panchayat as defined in clause (d) of article 243 of the Constitution; b) a Municipality as defined in clause (e) of article 243P of the Constitution; c) a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled to, or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund; d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006; e) a Regional Council or a District Council constituted under the Sixth Schedule to the Constitution; f) a Development Board constituted under article 371 & article 371J of the Constitution; or g) a Regional Council constituted under article 371A of the Constitution MH Punjab Punjab Intra- State Inter- State Intra- State MH Govt. (MH) PSU Punjab MH Govt. TDS Remark V Smart Academy 41

44 Provisions related to deductor Default in TDS Payment to Govt. 2 3 Due date of payment of TDS : The amount deducted as tax under this section shall be paid to the Government by the deductor within ten days after the end of the month in which such deduction is made, in such manner as may be prescribed TDS Certificate : The deductor shall furnish to the deductee a certificate mentioning therein the Ü contract value, Ü rate of deduction, Ü amount deducted, Ü amount paid to the Government and such other particulars in such manner as may be prescribed 6 7 If any deductor fails to pay to the Government the amount deducted as tax under sub-section (1), he shall pay interest in accordance with the provisions of section 50(1) (18% P.A.), in addition to the amount of tax deducted The determination of the amount in default under this section shall be made in the manner specified in section 73 or section 74 Erroneous Deduction of TDS 4 5 Failure to give TDS Certificate : If any deductor fails to furnish to the deductee the certificate, after deducting the tax at source, within five days of crediting the amount so deducted to the Government, the deductor shall pay, by way of a late fee, a sum of `100 per day from the day after the expiry of such five days period until the failure is rectified, subject to a maximum amount of five thousand rupees Sec. 39 : Form and manner of submission of return by a person required to deduct tax at source.- (1) Every registered person required to deduct tax at source under section 51 (hereafter in this rule referred to as deductor) shall furnish a return in FORM R-7 electronically through the common portal either directly or from a Facilitation Centre notified by the Commissioner. (2) The details furnished by the deductor under sub-rule (1) shall be made available electronically to each of the suppliers in Part C of FORM R-2A and FORM-R- 4A on the common portal after the due date of filing of FORM R-7. (3) The certificate referred to in sub-section (3) of section 51 shall be made available electronically to the deductee on the common portal in FORM R-7A on the basis of the return furnished under sub-rule (1). Provisions related to deductee Credit to E-cash ledger of deductee : The deductee shall claim credit, in his electronic cash ledger, of the tax deducted and reflected in the return of the deductor furnished under section 39(3), in such manner as may be prescribed Rule 87(9) : E-cash Ledger Any amount deducted under section 51 or collected under section 52 and claimed in FORM R-02 by the registered taxable person from whom the said amount was deducted or, as the case may be, collected shall be credited to his electronic cash ledger in accordance with the provisions of rule 87 8 The refund to the deductor or the deductee arising on account of excess or erroneous deduction shall be dealt with in accordance with the provisions of section 54 Proviso:- Provided that no refund to the deductor shall be granted, if the amount deducted has been credited to the electronic cash ledger of the deductee Standard Operating Procedure CBIC Tax deduction is not required in following situations:- 1. Total value of taxable supply ` 2.5 Lakh under a contract Finance Department of Pune Mahanagar Palika is making a payment of ` 2 Lakh to a supplier for a contract of 'printing & stationery'. Whether TDS is required to be deducted? Ans:- 2. Contract value > ` 2.5 Lakh for both taxable supply and exempted supply, but the value of taxable supply under the said contract ` 2.5 Lakh. Education Department is making payment of ` 5 Lakh to a supplier of 'printed books and printed or illustrated post cards' where payment for books is ` 2 Lakh and ` 3 Lakh is for other printed or illustrated post cards. Whether required to deduct TDS? Ans:- 3. Receipt of services which are exempted. For example services exempted under notification No. 12/2017 Central Tax (Rate) dated as amended from time to time. Fisheries Department is making a payment of ` 10 Lakh to a contractor for supplying labour for digging a pond for the purpose of Fisheries. Whether required to deduct TDS? Ans:- 42 V Smart Academy

45 4. Receipt of goods which are exempted. For example goods exempted under notification No. 2/2017 Central Tax (Rate) dated as amended from time to time. Health Department is making payment of `10 Lakh to a supplier for supply of Hearing Aids. Whether required to deduct TDS on such supply of goods? Ans:- 8. All activities or transactions specified in Schedule III of the C/S Acts 2017, irrespective of the value. Supplier Y of Mumbai enters into an agreement for sale of land worth `12,00,000/- to Finance Deptt. of Govt of Goa. Is TDS applicable for the given activity? Ans:- 5. Goods on which is not leviable. For example petrol, diesel, petroleum crude, natural gas, aviation turbine fuel (ATF) and alcohol for human consumption Hindustan Aeronautics Limited (public sector undertaking) enters into a contract with Hindustan Petroleum for procurement of ATF and makes a payment of is `15 lacs for such supply. Determine the applicability of TDS Ans:- 9. Where the payment relates to a tax invoice that has been issued before Eg. :- Supplier Ajay is a person registered under the in Jharkhand who makes taxable supply worth `10,000/- to a Local Authority of Jharkhand where value of taxable supply under the contract is for `2, 75,000/- the tax invoice for which was issued on Where any amount was paid in advance prior to and the tax invoice has been issued on or after , to the extent of advance payment made before Where a supplier had issued an invoice for any sale of goods in respect of which tax was required to be deducted at source under the VAT Law before , but where payment for such sale is made on or after [Section 142(13) refers] National Institute of Technology (N.I.T) have entered into a contract worth ` 10 Lakh with a supplier XYZ prior to N.I.T made a payment of ` 7 Lakhs to him prior to Should TDS be applicable on ` 10 Lakh? Ans:- 7. Where the location of the supplier and place of supply is in a State(s)/UT(s) which is different from the State / UT where the deductor is registered Govt. of Punjab engages a contractor M/s Nirmitee pvt ltd of Delhi for renovation of Bangla Bhawan in Delhi. Determine the applicability of TDS Ans:- 11. Where the tax is to be paid on reverse charge by the recipient i.e. the deductee National Sports authority of India a society controlled by Govt located in Delhi hires a GTA M/s Raj transports ltd for transport of sports equipments from Delhi to Ghaziabad for which freight charges of ` 2,85,000 is paid by National Sports authority of India. Determine the applicability of TDS? Ans:- V Smart Academy 43

46 12. Where the payment is made to an unregistered supplier Health Department of Karnataka receives a taxable service worth ` 2,66,000 from Mansi & co of Maharashtra being an unregistered person under. Is TDS applicable in the given case? Ans:- Important Definitions Electronic Commerce Operator Sec 2(44) Electronic Commerce : Electronic Commerce means the supply of goods or services or both, including digital products over digital or electronic network Sec 2(45) Electronic Commerce Operator : Electronic Commerce Operator means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce 13. Where the payment relates to Cess component M/s ABC Ltd. a Government agency located at Bengaluru purchases BMW car worth `15,00,000 including cess was charged on the same from Bhandari showroom, Mumbai. Is TDS applicable in the given case? Ans:- 44 Practical Illustrations Supplier is registered and contract value is inclusive of : Illustration 1:- Supplier Y of Mumbai makes taxable supply worth ` 10,000/- & exempted supply worth ` 20,000/- in an invoice/bill of supply to Finance Deptt. of GoI located in New Delhi where contract for supply is for ` 6,00,000/- (`.2,60,000 for taxable supply including and ` 3,40,000 for exempted supply). The rate of is 18%. Following payment is being made by GoI to Y: `10,000/- (value of taxable Supply) + ` 1,800 (Integrated Tax) + ` 20, 000/- (value of exempted Supply). Whether any deduction of tax is required? Ans :- Value of taxable supply in the contract =`2,60, 000/- (including ) Value of such contract excluding tax = x100/118= ` /- Since, the value of taxable supply in the contract does not exceed ` 2.5 Lakh, deduction of tax is not required Illustration 2 :- Three separate contracts for supply are given to M/S ABC by the Health Department of the Government of West Bengal and the value of taxable supply is below ` 2.5 Lakh in case of each contract though their combined value is more than ` 2.5 Lakh Ans:- In given case above no deduction is required to be made since value of taxable supply in neither of the contract exceeds ` 2.5 Lakh. Sec 9 (5) - C liability of E-commerce operator The Government may, on the recommendations of the Council, Ü by notification, specify categories of services Ü the tax on intra-state supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and Ü all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services: Proviso Proviso Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, Provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also he does not have a representative in the said territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax. V Smart Academy

47 Notified ECO It has notified the following categories of services supplied through ECO for this purpose - (a) Services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle. E-Commerce Operator SP A person Payment of GPS System N/N 17/ CT (Rate)- 28th June, 2017 involving an aggregator in anymanner SR Any person (b) Services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, except where the person supplying such service through electronic commerce operator is liable for registration under section 22(1) of the C Act. E-Commerce Operator Payment of Sec 52: Collection of tax at source involving an aggregator in anymanner Any person 1 Notwithstanding anything to the contrary contained in this Act, every electronic commerce operator (hereafter in this section referred to as the operator ), not being an agent, shall collect an amount calculated at such rate not exceeding 1%, as may be notified by the Government on the recommendations of the Council, of the net value of taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the operator N/N 51/2018 -CT dt 13/09/2018 Sec 52 has been made effective from 1/10/2018 N/N 52/2018 -CT dt 20/09/2018 The rate of TCS as notified by the CBIC on recommendation of council is 0.5% under C Act Seller Payment of Buyer Analysis No. Cases TCS Remark 1. VSmart selling his P.D. from own website Vsmart Academy.com 2. VSmart selling his P.D. from Vsmart Stores.com where consideration directly received to Vsmart 3. VSmart selling his P.D. from Amazon.com where first Amazon collect the payment and then makes remittance to Vsmart Explanation The expression net value of taxable supplies shall mean the aggregate value of taxable supplies of goods or services or both, other than services notified under sec 9(5), made during any month by all registered persons through the operator reduced by the aggregate value of taxable supplies returned to the suppliers during the said month Example : ABC Ltd is an Electronic Commerce Operator. It provides the following information Particulars ` Aggregate value of taxable supplies of goods by all 13,24,000 registered taxable persons through ABC Ltd during the month of December, 2017 (Less) Value of supplies under section 9 (5) 1,00,000 (Less) The aggregate value of taxable supplies returned 1,07,000 to the suppliers during the said month of December, 2017 Net Value of Taxable Supplies of ABC Ltd for the 11,17,000 month of December, 2017 Amount to be collected by ABC Ltd for the month of 11,170 December, 2017 in terms of Section 52 (1) i.e. 1% V Smart Academy 45