Goods & Service Tax: Clarification required on various issues under Business Processes on GST. Date:

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1 Goods & Service Tax: Clarification required on various issues under Business Processes on GST Date:

2 GST-Export of Goods: Obtaining non-duty paid inputs & exporting Final Product without payment of Tax: Not allowed under GST. What is the status for transitional period exemptions availed wherein inputs have been imported under Advance Authorisation/against debit in duty credit scrips?. What is the difference between the following two options:- Obtaining duty paid Inputs & claiming refund of the same at the time of export of the finished goods without payment of tax; Obtaining duty paid Inputs, availing the input tax credit thereon & exporting finished goods after payment of duty (after utilizing such input tax credit) and thereafter claiming the rebate of the duty paid on exported goods. Both options prescribe that input tax credit refund is provided, but one option provide for clearance of finished goods without payment of duty & other option provide for clearance of finished goods with payment of duty. Second option of clearance of finished goods on payment of duty-clarification required that in such cases, whether rebate is allowed both on duty paid inputs on which GST credit is availed and also on duty paid on finished goods which is cleared on payment of GST. Refer Supreme Judgement: Spentex Industries Ltd. v. Commissioner of Central Excise C.A. No. 1978/2007, , 2027 and 10534/2013, decided on

3 Linking of ICEGATE of Customs with GSTN for online verification of the exports & IGST paid on Imported Inputs: Outward Supply Invoice-wise updation of Shipping Bill/Bill of Export in GSTR1 shall not be insisted, instead GSTN shall pick up the data from ICEGATE of Customs based on common field [GST Invoice No.]; Rebate Claim is made based on actual consumption quantity of local/imported inputs used for exported finished goods (based on Input-Output Ratio) whereas Supplier s GST Invoice/Bill of Entry will cover total supplied quantity. Once GSTN & ICEGATE link is established, since GSTR-1 & GSTR-2 does not have quantitative information, exact linkage of quantity used for Rebate Claim of inputs can not be made to the quantity of GST Invoice/Bill of Entry. GSTN shall not block such Source document during the first claim since such documents may repeat in subsequent Rebate Claims till full consumption of such inputs from the supply made against a particular Vendor Invoice/Bill of Entry. GSTN can track only total Tax Amount paid with Total Tax claimed by the exporter [Rebate Claim No-wise tracking can be made so that multiple claim against the same source documents till utilization of full quantity of such receipts]. BRC shall not be made mandatory since this is not extra cash flow from the Government. BRC may be mandatory for DBK like Cash Incentives provided by Central Government. Notwithstanding the above, clarity required on applicability of Rebate of Free of Cost supply for export under Warranty, Free Trade Sample etc. 3

4 Linking of ICEGATE of Customs with GSTN for online verification of the exports & IGST paid on Imported Inputs: BRC is made mandatory for Rebate Claims & Outward Supply (GSTR-1) & Inward Supply (GSTR-2) maintained in GSTN are linked with ICEGATE for online verification of data, hence Outward Supply Invoice & Export Invoice shall be one to one. In case of Split-up consignment of huge Capital Goods which has to be despatched in multiple trucks & multiple GST Invoices, how system will take care of such one to one linkage between GSTN & ICEGATE. Date of Export shall be clearly defined for claiming export benefits as Let Export Date appearing in Shipping Bill/Bill of Export or the date on which the ship or the aircraft in which export goods are loaded, leaves India as defined in Explanation (B) under relevant date in Section 11B of the Central Excise Act, 1944; Whether Refund is only for manufactured goods in India or cover all GST suffered goods & services whether Trading Goods of bought-out or imported since the concept of manufacture will not be there under GST?. Whether Trading Goods of registered dealer [manufactured in India by any other taxpayer other than refund claiming dealer] are covered under Deemed Export under GST? Whether Trading Goods of registered dealer [imported goods either by any other taxpayer or by refund claiming dealer] are covered under Deemed Export under GST? Whether Main/Sub/Sub-Sub Contractor can claim refund under GST against Deemed Exports? At what stage refund shall be applied & by whom when there is multiple contractors & subcontractors between original manufacturer-cum-supplier of goods to end customer? 4

5 Whether Job Worker can discharge export obligation against deemed export done by Principal Manufacturer for use of Job Worker s own Capital Goods in the process of job work in his factory? Self Declaration shall be accepted instead of prescribing CA Certificate irrespective of refund amount since all the documents & tax payments can be verified online from the system including credit availment by the recipient due to the requirement of upload of Outward & Inward Supplies details in GSTRN-1 & GSTR-2. Requirement of CA Certificate will increase the Business & operational Cost. IGST is applicable in case of exports by treating the same as Inter-State supplies. If manufacturer despatches from one State & his customer who is a Merchant Exporter located in different Sate of manufacturer, what type of Taxes shall be paid by manufacturer to Merchant Exporter & Merchant Exporter to Foreign Customer & the documentation procedure?. Eg. (a) Manufacturer A is in Karnataka, Merchant Exporter B is in Maharashtra & Foreign Customer C is in USA. What type of taxes are applicable to A & B & the compliance requirement by A & B. (b) Manufacturer A is in Karnataka, Merchant Exporter B is in Karnataka & Foreign Customer C is in USA. What type of taxes are applicable to A & B & the compliance requirement by A & B. 5

6 Inputs (Item-wise Quantity) cannot be fully utilized for a particular export invoice/shipment, but will spread over to several exports, hence can not be closed/blocked immediately upon completion of first export. GST to keep track on GST Amount paid on Inputs with individual export invoice-wise Refund Claims. Principles of Unjust enrichment shall be provided under GST law. Self-Certification instead of Chartered Accountant's Certificate for satisfying the requirement of unjust enrichment against finalization of Provisional Assessment shall be provide since all the data is available in GSTN. Refund of Pre-Deposit for filing appeal including refund arising in pursuance of an appellate authority s order (when the appeal is decided in favour of the appellant): In such cases, Self certification instead of CA Certificate shall be allowed. Payment of duty/tax during investigation but no/less liability arises at the time of finalization of investigation/adjudication: In such cases, Self certification instead of CA Certificate shall be allowed. Credit accumulation due to supply of exempted/ nil rated/ non-gst goods or services: In case of partial use of such inputs, capital goods & input services for providing both taxable & exempted supply of goods & services, there shall not be any restriction to avail ITC. Cumbersome procedure prescribed under Rule 6 of Cenvat Credit Rules, 2004 should not be prescribed; 6

7 Year-end or volume based incentives provided by the supplier through credit notes: In such cases, Self certification instead of CA Certificate shall be allowed since Credit Note shall be declared both by Supplier as well as recipient in Sales & Purchase Statement along with GST Return. Documents should be pre-defined & prescribed clearly under GST Law & shall not be at the discretionary/option of the Officers. Deficiency Memo for refund applications shall be provided at once & not in piecemeal. A receipt/acknowledgement number generated by GSTN on filing of an electronic application and communicated to the applicant via SMS and an shall be considered as a Relevant Date for the purpose of time limit prescribed for sanctioning of refund and interest. ANNEXURE-IV: Refund Claim Form under Refund Process Report of August 2015: Option Button shall be provided for selection as GSTIN or Non-GSTIN Registrants. In case of GSTIN registrants, automated information available in GST Portal shall be populated. Sl. No. 4: Amount of Refund Claimed: Columns for refund of Additional Tax & Other Claims (excess payment of Interest, Penalty, Fine etc.) shall be included. Sl. No. 6: Tax Period for which refund claimed: This may not be relevant since claims will be made for the same period for part amounts also based on proof of export receipts or there should not be any restriction for filing multiple part claims for the same period. 7