Case Studies On Reverse Charge Mechanism-GST

Transcription

1 Case Studies On Reverse Charge Mechanism-GST Event Date : 23 rd July 2017 Presented to Vasai Branch of WIRC Case Study-1 RCM Supply subject to 9(4) CGST were availed by TaxablePerson in the month of July Taxable Person has Paid applicable GST on RCM in the month of August 2017 and claimed such Credit while makinggstliabilityon20 th September2017.SuchRCMVendorwas paid in full in March 2018( after 180 days). Tax Manager is of the view that ITC Credit to be reversed as payment has not been made in 180 days. CFO is of the opinion that ITC Credit need not to be reversed for Non paymentto RCM vendors within 180 days as ITC is available based on paid Challan. Kindly advise which view is correct? Slide 24 1

2 Case Study-2 Unregistered Supplier (URS) has rendered Services / Supplied Goods in Pre GST Era. Payment against such Services / Supply of Goods are made in July 2017, whether RCM needs to be paid on such payment in July 2017? Slide 25 Case Study-3 Mr. X Unregistered is purchasing goods from Mr. Y, URS and availing Supply of Service from Mr. Z, URS, whether Mr. X is required to pay GST on RCM Basis on both these Transactions? Slide 26 2

3 Case Study-4 Mr. X Registered Supplier has availed Supply of Goods from Mr. X, URS and on the genuine belief paid 5% GST. At the time of Assessment, Officer rightfully concluded that such supply was subject to 18% GST. Mr X accepted claim of Officer and has paid GST along with applicable Interest. Mr. X now wants to claim ITC of such Additional GST payment (13%) on the Ground of actual payment of GST, kindly advise whetherclaimofmr.xisjustified? Slide 27 Case Study-5 Hospital Providing only exempted Health care service has availed Auditing Services from Mr. ABC, Chartered Accountant, not registered in GST. Hospital is of the view that since it deals only in exempted services and in any can t utilise ITC, it is not required to pay GST on RCM basis, Kindly offer your views on stand taken by Hospital? Slide 28 3

4 Case Study-6 Mr. X a Registered person, has paid Advance of Rs. 50,000 to GTA in the month of July Services were rendered by GTA in October For which month Mr. X is required to PayGSTonRCMbasis? July2017orOctober2017? assuming X is paying GST on aforesaid transaction on 20 th August 2017, when X can claim ITC on aforesaid transactions, August 17 or October 2017? Slide 29 Case Study-7 Mr. X Registered Person has purchased some goods and has received Bill of Supply from Vendor. Vendor has not charged GST on such Bill of supply, whether Mr. X is required to pay RCM on Reverse Charge basis? Slide 30 4

5 Case Study-8 Mr. X registered person went to Zaika Hotel, Unregistered in GST for Sales Team meeting. Food and Beverage bill for this event was Rs.7,500. Mr. X has paid GST on 18% on such Service and now want to claim ITC, kindly advise Mr. X onitconthisrcminvoice? Slide 31 Case Study-9 Mr. X composition dealer (Trader) has availed Services from URS, whethermr.xisrequiredtopaygstonrcmbasis? Mr. X is of the opinion that since he is paying 1% GST on forward charge basis he is also suppose to pay RCM 1% on RCM, whetherviewofmr.xiscorrect? Whether Mr. X can Claim ITC on such Reverse Charge GST payment? Slide 32 5

6 Case Study-10 Mr. X is having eligible ITC credit of Rs. 5 lakhs in CGST and SGST Account. Mr. X is required to pay GST on Reverse Charge basis of Rs CGST and Rs SGST. Mr. X has asked his accountant to adjust RCM liability against ITC. Whether views of Mr. X is correct is in consonance with GST Law? Slide 33 Case Study-11 Mr.X,aIndividualtruckowner,hasrented/givenonhirehis TruckforMumbai GoaTripto Mr.Y GTA forrs.35,000.mr. X has not issued any consignment note. With the help of this truck, Mr Y has organised movement of Goods from Mumbai GoaandhasChargedRs.50,000toABCLtd,(entity not registered in GST). who is require to pay GST on Freight charge in this case? Slide 34 6

7 Case Study-12 Continuing with same case study -11, presume M/s ABC is registered under GST, in such scenario who is require to pay GST? Slide 35 Case Study-13 MrX,CharteredAccountantisTaxManageratABLtd.AsperMr.X working, during July 2017 following Inward Supply from URS has occurred. Conveyance Expenses Rickshaw, Rs ConveyanceExpenses MeteredCab Taxi,Rs ConveyanceExpensesMumbai Metro Rs ConveyanceExpenses BusFare Rs.5000 Mr.Xisconfuseaboutwhethertoconsiderany/allofsuchsupply assubjecttorcmornot?kindlyadvisemr.x. Slide 36 7

8 Case Study-14 As per clarification issued by CBEC when Jeweller is buying old Gold from user, such transaction is not subject to RCM in the Hands of Jeweller. Whether Jeweller under Composition can avail such beneficial clarification and not pay Tax on RCM? Further whether Composition dealer can avail benefit of Rs exemption from RCM? Slide 37 Case Study-15 ABC Ltd, registered in GST has availed Legal Service of Rs. 4500/- from Advocate. On that day no other RCM Goods / serviceswereavailedbyabcltd.cfoisoftheviewthatsince transaction falls in threshold limit of 5000 RCM is not payable. Tax manager is of the view that in case of Advocate Service Limit of Rs is not applicable. As a Tax Advisor kindly suggest which view is correct? Slide 38 8

9 Case Study-16 Mr. X, GTA has transported following goods during the month of July Advise Mr. X on taxability of such transaction in GST Description of Transportation Amount Agricultural produce Small Trips where value of single trip is less than Rs Small cargo movement where value of each cargo transported does not exceeds Rs milk, salt and food grain including flour, pulses and rice 5000 Organic Manure 4000 News Paper and Magazine Relief material for flood 5000 Transportation for the purpose of Indian Military Slide 39 Case Study-17 Mr X, has approached Mumbai based Transporter(Registered in GST) for carrying cargo from Mumbai to Delhi. Cargo will be Delivered to Mr. Z. Kindly advise Transporter as to who will pay GST on below mentionedtransactions andwhethercgst /SGSTorIGSTwillbepayable? GST Status of Mr. X GST Status of Mr. Z Freight Terms Registered Registered To Pay Un Registered Registered To Pay Registered Un Registered To Pay Registered Registered Prepaid Un Registered Registered Prepaid Registered Un Registered Prepaid Un Registered Un Registered To Pay / Prepaid Un Registered Un Registered To Pay / Prepaid. Slide 40 9

10 Case Study-18 Mr. ABC, an Advocate has rendered following services during the month of July 2017 ITR Filing Service Accounting and data entry Service Litigation Assistance Mr. ABC is of the view that since Advocates are out GST, he is neither require to register himself nor charge GST. Kindly advice Mr. ABC Slide 41 Case Study-19 Mr. X, LIC Agent and Mutual Fund Distributor has earned following Income in July LIC Commission 18 Lakhs MF Distribution Commission 4 Lakhs Mr. X is of the view that since LIC Commission is underreverse Charge, his actual Turnover is 4 Lakhs only and therefore he is not require to register himself in GST / Pay GST. Kindly advise Mr.X Slide 42 10

11 Case Study-20 Mr. X, Mutual Fund Distributor has earned following Income in July MF Distribution Commission 4 Lakhs Mr. X is of the view that his actual Turnover is 4 Lakhs only and therefore he is not require to register himself in GST. Kindly advisemr.x Slide 43 Case Study-21 Mr.X,MutualFundDistributorisbasedinMumbaiandisselling schemeoffundsbasedindelhi. HistotalTurnoverislessthan5 Lakhs. Kindly advise whether Mr. X is require to take GST Registration? Can he not request Delhi based AMC to deduct GST from his billing and pay to Government so as to avoid hassels of Registration, Returns etc? Slide 44 11

12 Case Study-22 M/s ABC Ltd has received following Reverse Charge invoice dated 31 st July2017forservicesrenderedbyvendorsinJuly2017 Works Contract Service Sub Contractor Supply of Manpower Security Service Tax Manager of ABC Ltd is not happy with such bills and seek your advise? Kindly help Tax Manager. Slide 45 Case Study-23 Mr. A Chartered Accountant went to Pune for Client Factory visit. Mr. A has engaged Service of Rent a Cab Operator for Travelling from his office to Pune and return. Mr. A has raised his invoice as under Professional Fees for Visit Reimbursement of Rent a Cab Operator 4000(actual) GST@18%on FurtherClient was advisedto payrcmonrentacab. Whetherthis invoice is in compliance with GST Law. Slide 46 12

13 Case Study-24 CGST Notification no. 8 /2017- Central Tax (Rate) dated 28 th June 2017, provides exemption to URS Intra State Supply up tors.5000perday.nosuchnotificationisissuedundersgst. Does this mean CGST will not be applicable but SGST will be applicable on transaction upto Rs per day? Do we have any legal backing to prove SGST also should not apply on such transaction? Slide 47 Case Study-25 CGST Notification no. 8 /2017- Central Tax (Rate) dated 28 th June 2017, provides exemption to URS Intra State Supply up to Rs per day. No Such notification is issued under IGST. Does this mean Inter State URS supply will be subject to IGST, even though less than Rs per day? Slide 48 13

14 Case Study-26 Mr. X is a Driver of Ola (Radio Taxi Operator or cab Aggregator). Sometime Mr X collects Fare from Passenger (Cash receipts) and in few cases where Ola Money is involved, Ola collects fare from passengers. In both the case Who is requiredtogst?whatwillberateofgst? Slide 49 Case Study-27 M/s AB is supplying exempted as well as taxable service. Turnover of outward supply of July 17 is as under : Taxable Supply Exempt Supply Rs. 1 Crore Rs. 40 Lakhs Legal Fees (Common Credits) of Rs. 5 Lakh availed and paid in July % paid on RCM basis paid on 20 th August, Advise M/s AB on eligibility or otherwise of ITS and its Quantum Slide 50 14

15 Case Study-28 M/s AB is supplying exempted as well as taxable service. Turnover of outward supply of July 17 is as under : Outward Taxable Supply Rs. 1 Crore Outward Exempt Supply Rs. 40 Lakhs Outward Supply subject to RCM in the hands of Recipient Rs. 10 Lakhs Total Input Tax in respect of Common Credits for July 17 GST is 6 Lakhs. Advise M/s AB on Quantum of ITC eligible. Slide 51 Case Study-29 Mr. X has availed Rent a Cab Services from Velocity-Rent-a- Cab Private Limited. Velocity is other than Electronic Commerce Operators. Velocity is of the opinion that like Service Tax Mr. X is liable to pay GST on RCM basis. Whether stand taken by Velocity is legally correct? Slide 52 15

16 Case Study-30 Mr. X has availed Rent a Cab Services from Velocity-Rent-a- Cab Private Limited. As per Terms agreed between Mr. X and Velocity, Fuel will be supplied by Mr. X and velocity will not charge for such Fuel while raising final bill on Mr. X. Advise Velocity on Rate of GST on such Transaction. Slide 53 Case Study-31 Mr. X an Author has Transferred Copy Rights / Permitted use of Copy Rights of his book GST for Dummies in favour of Publisher for lumpsum price of Rs. 50 Lakhs. Publisher is of the opinion that like Service Tax Mega Exemption Notification entry no. 15, such Transfer / usage is also exempt in GST. Kindly advise Publisher on Impact of GST on such Transfer and who will pay GST, if at all payable? Slide 54 16

17 Case Study-32 R Universal Private Limited has received following vouchers from employees a) Hotel Bills where vendor has charged GST, Name and GSTIN of R Universal mentioned in Invoice b) HotelBillswherenoGSTisCharged,TariffValuelessthanRs.1000 per day c) Hotel Bills where Tariff is more than Rs. 1000, No GST is Charged, Invoice in the name of Employee Slide 55 Case Study-32 d) Hotel Bills where Tariff is more than Rs. 1000, No GST is Charged, InvoiceinthenameofRUniversal e) Restaurant bills of Rs /- in the name of Company, without GST f) Restaurant bills of Rs /- in the name of employee, without GST As per Terms of employment, Employees will be reimbursed actual expenses incurred during performance of his/ her duties. Slide 56 17

18 Case Study-33 XYZ a individual transporter has provided Cargo Handling Services (Loading, Unloading, Storing and Warehousing) of Cargo in addition to Transportation of such Cargo to PR Ltd, an entity Registered in GST. For Entire Services of Cargo and Transportation, XYZ has spitted his bills as under: Cargo Handling Rs. 1 Lakh Transportation Rs GST on Forward 18% was charged on Cargo Handling. However Transportation was treated as RCM and liability shifted to PR Ltd. Comment whether practice adopted by XYZ is correct Slide 57 Case Study-34 EFGisaGTAcumCargoHandler.EFG haspurchasedtrucks/vehicleinjuly17. EFG is of the view that since Transportation Services though under RCM is not exempt from GST and furthermore he is also providing Cargo Handling Services which is very much taxable and as such it is one business, therefore he is eligibletoclaimitcofgstpaidontrucks.adviseefgonthisissue. WhetherEFGcanclaimITCoffollowing? GSTpaidonTyre/Sparesetc.forTrucksusedforprovidingGTAservices ITC charged on Services availed for Providing Cargo Handling Services. Slide 58 18

19 Case Study-35 A Mart is buying following produce directly from Agriculturist, not having GSTIN. Wheat,Rice,Maize Cashew Nuts, Tendu Leaves and Tobbaco Leaves Advise A mart on applicability of Reverse charge of such purchase. What documents A Mart should collect from Agriculturist? Slide 59 And More, if Time permits. Slide 60 19