Issue: August 2018 Vol. 8 No. 2 MCA Update SEBI Update RBI Update Income Tax Update

Transcription

1 Issue: August 2018 Vol. 8 No. 2 B Mathur & Co. Company Secretaries MCA Update SEBI Update RBI Update Income Tax Update IPR Update Service Tax Excise Update Custom Update GST Update DGFT Update 1

2 WEEKLY UPDATES AUGUST 06 th, AUGUST 12 th,

3 INDEX MCA UPDATE Companies (Prospectus and Allotment of Securities) Second Amendment Rules, Commencement notification 7 SEBI UPDATE Enhanced monitoring of Qualified Registrars to an Issue and Share Transfer Agents 8-12 INCOME TAX UPDATE Notification No. 37/2018 [F. No. 285/09/2018-IT (Inv.V) CBDT] / SO 3942(E) 13 CUSTOM UPDATE Seeks to prescribe effective rate of customs duty on Screw or SIM socket / other mechanical 14 items (metal) for cellular mobile phone Seeks to further amend notification No. 82/2017-customs dated 27th October 2017, to increase Ad-valorem component of BCD from 10% to 20% on 328 tariff lines of carpets, apparels and other textile products Standard operating procedures for discharge of bonds executed by nominated agencies/ banks under Notification no. 57/2000-Customs dated Simplification and rationalization of processing of AEO-T1 application GST UPDATE Seeks to lay down the special procedure for completing migration of taxpayers who received provisional IDs but could not complete the migration process Seeks to exempt payment of tax under section 9(4) of the CGST Act, 2017 till Seeks to exempt payment of tax under section 5(4) of the IGST Act, 2017 till Seeks to exempt payment of tax under section 7(4) of the UT GST Act, 2017 till Circular No. 52/26/2018-GST dated i.r.o. clarification regarding applicability of GST rates on various goods and services Circular No. 53/27/2018-GST dated i.r.o. clarification regarding applicability of GST on petroleum gases retained for the manufacture of petrochemical and chemical products Circular No. 54/28/2018-GST dated i.r.o. classification of fertilizers supplied for use 35 in the manufacture of other fertilizers at 5 % GST rate Taxability of services provided by Industrial Training Institutes (ITI) Seeks to prescribe the due dates for furnishing of FORM GSTR-1 for those taxpayers with 38 aggregate turnover of more than Rs. 1.5 crores for the months from July, 2018 to March, 2019 Seeks to prescribe the due dates for quarterly furnishing of FORM GSTR-1 for those taxpayers 39 with aggregate turnover of upto Rs.1.5 crores for the period from July, 2018 to March, 2019 Seeks to prescribe the due dates for filing FORM GSTR-3B for the months from July, 2018 to 40 March, 2019 DGFT UPDATE Amendment in Para 2.05 of Foreign Trade Policy

4 MCA UPDATES [TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB_SECTTON (i)] Governrnent of India Ministry of Corporate Affairs Notification New Delhi, the 7 th August, 2018 G SR. - (E). - In exercise of the powers conferred by section 42, read with sub sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Prospectus and Allotment of Securities) Rules, 2014, namely:- 1. (1) These rules may be called Companies (Prospectus and Allotment of Securities) Second Amendment Rules, (2) They shall come into force from the date of their publication in the Official Gazette. 2. In the Companies (Prospectus and Allotment of Securities) Rules, 2014 (hereinafter referred to as the principal rules), for rule 14, the following rule shall be substituted, namely:- "14. Private placement.- (1) For the purposes of sub-section (2) and sub-section (3) of section 42, a company shall not make an offer or invitation to subscribe to securities through private placement unless the proposal has been previously approved by the shareholders of the company, by a special resolution for each of the offers or invitations: Provided that in the explanatory statement annexed to the notice for shareholders' approval, the following disclosure shall be made:- (a) particulars of the offer including date of passing of Board resolution; (b) kinds of securities offered and the price at which security is being offered; (c) basis or justification for the price (including premium, if any) at which the offer or invitation is being made; (d) name and address of valuer who performed valuation; (e) amount which the company intends to raise by way of such securities; (f) material terms of raising such securities, proposed time schedule, purposes or objects of offer, contribution being made by the promoters or directors either as part of the offer or separately in furtherance of objects; principle terms of assets charged as securities: Provided further that this sub-rule shall not apply in case of offer or invitation for non-convertible debentures, where the proposed amount to be raised through such offer or invitation does not exceed the limit as specified in clause (c) of sub-section (1) of section 180 and in such cases relevant Board resolution under clause (c) of sub-section (3) of section 179 would be adequate: Provided also that in case of offer or invitation for non-convertible debentures, where the proposed amount to be raised through such offer or invitation exceeds the limit as specified in clause (c) of sub-section (1) of 4

5 section 180, it shall be sufficient if the company passes a previous special resolution only once in a year for all the offers or invitations for such debentures during the year. (2) For the purpose of sub-section (2) of section 42, an offer or invitation to subscribe securities under private placement shall not be made to persons more than two hundred in the aggregate in a financial year: Provided that any offer or invitation made to qualified institutional buyers, or to employees of the company under a scheme of employees stock option as per provisions of clause (b) of sub-section (1) of section 62 shall not be considered while calculating the limit of two hundred persons. Explanation.- For the purposes of this sub-rule, it is hereby clarified that the restrictions aforesaid would be reckoned individually for each kind of security that is equity share, preference share or debenfure. (3) A private placement offer cum application letter shall be in the form of an application in Form PAS-4 serially numbered and addressed specifically to the person to whom the offer is made and shall be sent to him, either in writing or in electronic mode, within thirty days of recording the name of such person pursuant to sub-section (3) of section 42: Provided that no person other than the person so addressed in the private placement offer cum application letter shall be allowed to apply through such application form and any application not conforming to this condition shall be treated as invalid (4) The company shall maintain a complete record of private placement offers in Form PAS-5. (5) The payment to be made for subscription to securities shall be made from the bank account of the person subscribing to such securities and the company shall keep the record of the bank account from where such payment for subscription has been received: Provided that monies payable on subscription to securities to be held by joint holders shall be paid from the bank account of the person whose name appears first in the application: Provided further that the provisions of this sub-rule shall not apply in case of issue of shares for consideration other than cash. (6) A return of allotment of securities under section 42 shall be filed with the Registrar within fifteen days of allotment in Form PAS-3 and with the fee as provided in the Companies (Registration offices and Fees) Rules, 2014 along with a complete list of all the allottees containing- (i) the full name, address, permanent Account Number and ID of such security holder; (ii) the class of security held; (iii) the date of allotment of securitv ; (iv) the number of securities herd, nominar varue and amount paid on such securities; and particulars of consideration received if tire securities were issued for consideration other than cash. (7) The provisions of sub-rule (2) shall not be applicable to (a) non-banking financial companies which are registered with the Reserve Bank of India under the Reserve Bank of India Act,-1934 (2 of 1934); and 5

6 (b) housing finance companies which are registered with the National Housing Bank under the National Housing Bank Act, 1987 (53 of 1987), if they are complying with regulations made by the Reserve Bank of India or the National Housing Bank in respect of offer or invitation to be issued on private placement basis: Provided that such companies shall comply with sub-rule (2) in case the Reserve Bank of India or the National Housing Bank have not specified similar regulations. (8) A company shall issue private placement offer cum application letter only after the relevant special resolution or Board resolution has been filed in the Registry: Provided that private companies shall file with the Registry copy of the Board resolution or special resolution with respect to approval under clause (c) of sub-section (3) of section In the principal rules, in the Annexure, - (i) for Form No. PAS-4, the following Form shall be substituted, namely:- For Form PAS-4, please refer below link: (ii) in Form PAS-5, for the brackets, words and figures "(Section 42(7) and Rule 14(3) of the Companies (Prospectus and Allotment of securities) Rules, 2014), the brackets, words and figures [see rule 14(a)] shall be substituted. [File No. 1/21/2013-CL-V] (K.V.R. Murty) Joint Secretary to the Government of India Note:-The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i) vide number G.S.R. 251(E), dated the 31st March, 2014 and subsequently amended vide number G.S.R. 424(E), dated the 30 th June, 2014 and number G.S.R. 430 (E), dated the 7 th May,

7 [To be published in the Gazette of India, Extraordinary, part II, Section 3, Sub-section (ii)] Government of India Ministry of Corporate Affairs Notification New Delhi, the 7 th August, 2018 S.O. (E).- In exercise of the powers conferred by sub-section (2) of section 1 of the Companies (Amendment) Act, 2017 (1 of 2018), the Central Government hereby appoints the 7 th of August, 2018 as the date on which the provisions of section 10 of the said Act shall come into force. [File No. 1/21/2013-CL-V] (K.V.R. Murty) Joint Secretary to the Government of India 7

8 SEBI UPDATES CIRCULAR SEBI/HO/MIRSD/DoP/CIR/P/2018/ 119 August 10, 2018 To, All Registrars to an Issue and Share Transfer Agents registered with SEBI Dear Sir/ Madam, Subject: Enhanced monitoring of Qualified Registrars to an Issue and Share Transfer Agents 1. SEBI constituted a Committee under the Chairmanship of Shri R. Gandhi, Former Deputy Governor, Reserve Bank of India to review the regulations and relevant circulars pertaining to Market Infrastructure Institutions (MIls). The Committee also looked into the desirability of extending the extant framework of MIIs to certain market intermediaries including the Registrars to an Issue and Share Transfer Agents (RTAs) servicing more than 2 crore folios (hereinafter referred to as Qualified RTAs or QRTAs ). 2. Based on the recommendations of the Committee and the public comments received on the same, SEBI Board in its meeting held on June 21, 2018, decided that while changes in ownership structures of RTAs may not be required, the QRTAs may be required to comply with enhanced monitoring requirements, through adoption and implementation of internal policy framework; and periodic reporting on key risk areas, data security measures, business continuity, governance structures, measures for enhanced investor services, service standards, grievance redressal, insurance against risks, etc. With respect to data security and system audits, vide SEBI circular dated September 08, 2017, certain compliance requirements have already been prescribed for QRTAs. 3. The QRTAs are now advised to formulate and implement a comprehensive policy framework, approved by the Board of Directors ( BoD ) of the QRTAs, which shall include the following aspects: I. Risk Management Policy: The QRTAs are advised to establish a clear, thorough and a well-documented risk management policy, which shall include the following- a. An integrated and comprehensive view of risks to the QRTAs including those emanating from vendors, third parties to whom activities are outsourced, clients, etc.; b. List of all relevant risks, including Operational risk, Fraud risk, Technology risk, Cyber Security risk, and general business risks including Credit risk, Market risk, Legal risk, Reputation risk etc. as the BoD of QRTAs deems fit; and systems, policies and procedures to identify, assess, monitor and manage the risks that arise in or are borne by the QRTAs, including audit and reporting of the same to the BoD; c. Responsibilities and accountability for risk decisions and decision making process in crises and emergencies. II. Business Continuity Plan: QRTAs shall maintain Business Continuity Plan with a Center (BCP) situated at location other than primary processing location (off-site), which is capable to take over operations without disruption in case of any service failure at primary processing site. QRTAs shall have written policy, protocols, processes and controls for BCP. QRTAs shall ensure business continuity and no adverse impact on investor servicing resultant of any data loss. The effectiveness of BCP to be tested periodically, and the gap between two tests (mock drills, etc.) shall not be more than twelve months. 8

9 III. Manner of keeping records: Where records are kept electronically by the QRTAs, they shall ensure that the integrity of the automatic data processing systems is maintained at all times. QRTAs shall also maintain accurate up to date records for investor servicing and take all precautions necessary to ensure that the records are not lost, destroyed or tampered with; and in the event of loss or destruction, ensure that sufficient back up of records is available at all times at a different place. IV. Wind-down Plan: Every QRTA shall devise and maintain a wind-down plan. A 'wind-down plan' means a process or plan of action employed, for transfer of the entire operations of the QRTA to an alternative RTA/ QRTA registered with SEBI, that would take over the operations of the QRTA in scenarios such as erosion of net-worth of the QRTA or its insolvency or its inability to provide critical RTA operations or services. V. Data Access and Data Protection Policy: QRTAs shall extend all such co-operation to the investors, issuers, custodians of securities, depositories and other QRTAs as is necessary for effective and smooth investor servicing. Towards this purpose, QRTAs shall lay down appropriate protocols, processes and controls for its activities and also for entities who wish to connect with the database of the QRTAs electronically. QRTAs shall also have written agreements, confidentiality contracts, security protocols and such other relevant procedures for data integrity while facilitating electronic access. VI. Ensuring Integrity of Operations: QRTAs shall maintain adequate human resources, systems and processes for smooth functioning. QRTAs to also ensure that its database, servers, data storage media shall reside in India. QRTAs shall lay down the minimum standards, protocol and procedures for smooth running of operations, to protect the investor data and maintain information security. Further, the QRTAs shall have a detailed operations manual explaining all aspects of its functioning, including the interface and method of transmission of information between the depository, issuers, and others. The QRTAs shall have a mechanism in place to have periodic replication of data with the concerned Mutual Funds / Issuer Companies / Real Estate Investment Trusts (REITs)/ Infrastructure Investment Trusts (InVITs). VII. Scalable infrastructure: The BoD of QRTAs shall approve a policy framework for up-gradation of infrastructure and technology from time to time to ensure smooth functioning and scalability for delivering services to investors at all times. QRTAs shall at all times, maintain adequate technical capacity to process twice the peak transaction load encountered during past six months. VIII. Board of Directors (BoD) / Committees of BoD of QRTAs: The BoD of QRTAs shall seek reports on incidents having an impact on investor protection including data security breaches that can affect investor data, etc. QRTAs shall have Committees of the Board of Directors including Audit Committee, Nomination and Remuneration Committee and IT Strategy Committee. The Audit Committee shall assist the BoD in fulfilling its corporate governance and overseeing responsibilities in relation to an entity's financial reporting, internal control system, and risk management system including the risk parameters. The Audit Committee shall also review the internal 9

10 audit reports, compliance to SEBI Regulations, circulars and the reasonableness of the price being charged for investor services. The Nomination and Remuneration Committee shall in accordance with the rules laid down, recommend to the BoD a policy, relating to the appointment, tenure and remuneration for the directors, key managerial personnel and other employees. The IT Strategy Committee shall provide insight and advice to the BoD of QRTAs in various areas that may include developments in IT and alignments with the same from investor services perspective, scalability of operations, etc. IX. Investor Services and Service Standards: a. QRTAs, servicing Mutual Funds investors, must have Investor Service Center in at least 100 cities based on investor population pertaining to the Mutual Funds clients they service. As regards servicing of corporate, REIT, InvIT investors, QRTA shall maintain adequate investor service centers based on investor population. This shall be reviewed from time to time by SEBI. b. QRTAs shall have online capabilities for investor queries, complaints and their redressal. The complaints redressal mechanism should be investor friendly and convenient. The same should have capabilities of being retrieved easily by the complainant online through complaint reference number, e- mail id, mobile no. etc. c. QRTAs, handling corporate registry functions, shall develop facility for providing services for managing Shareholders General Meetings including shareholders voting / poll process and web streaming of all Annual General Meetings (AGMs) of all their listed client companies. QRTAs shall also look forward to providing other value added services and when required by SEBI. d. QRTAs must publish on its website, the service standards (eg: turnaround time for services rendered). e. QRTAs should also carry out stakeholder/ investor satisfaction surveys annually, and the same should also be published on the website before March 31, every year. X. Insurance against Risks: All QRTAs shall take adequate insurance for omissions and commissions, frauds by employee/s to protect the interests of the investors. 4. QRTAs shall formulate and implement the policy framework, and also comply with the additional reporting requirements within six months from the date of this circular. The first compliance with these guidelines shall be submitted within 30 days from the end of six months period. 5. The compliance report of the enhanced reporting norms shall be submitted to SEBI duly reviewed by the BoD of QRTAs, within 60 days of expiry of each calendar quarter. The format of the report is placed at Annexure This enhanced reporting would be in addition to half-yearly periodic reporting done by Registrars to an Issue and Share Transfer Agents as prescribed by SEBI vide circular dated July 05, 2012 on "Review of Regulatory Compliance and Periodic Reporting". 7. This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. 10

11 Yours faithfully, D Rajesh Kumar General Manager Annexure- 1 A. Name of QRTA: B. Registration No: C. Date of Report Submission (in dd/mm/yy): D. Enhanced Reporting Requirement for QRTAs for Quarter Ended on Sr. Enhanced Reporting Norms Description Remarks No. 1 Risk Management Policy a) Whether Risk Management policy is adopted and implemented b) Whether responsibilities and accountabilities have been charted out 2 Business Continuity Plan Audit/Testing a) Does the QRTA have Business Continuity Plan (BCP)? b) Name of the Primary and the BCP locations c) When was the BCP tested through mock drill? d) Whether the QRTA is complying with the requirement of testing / mock drill every 12 months? e) Has corrective action been initiated on learning arising out of BCP testing? 3 Manner of keeping records a) Whether records are lost, destroyed or tampered with; b) In the event of loss or destruction, whether sufficient back-up of records is available at all times at a different place. 4 Wind-down Plan a) Does the QRTA have in place a Wind-down Plan (WDP)? 5 Data Access and Data Protection Policy a) Whether protocols, processes and controls in place for entities who wish to connect with QRTA data base electronically b) Whether QRTA has entered into confidentiality contracts, legal contracts, written agreements, security protocols, etc., while facilitating electronic access to other entities to its data? 6 Ensuring Integrity of Operations a) Whether minimum standards, protocol and procedures are in place for smooth running of operations, to protect the investor data and maintain information security b) Whether detailed operations manual explaining all aspects of its functioning has been prepared c) Whether mechanism is in place to have periodic replication of data with the concerned Mutual Funds / Issuer Companies / InvIT/ REIT? d) Does QRTA have its database, servers, data storage media, at all times, related to Indian investors / clients, present in India 7 Scalable Infrastructure a) Peak transaction volume handled by the QRTA on any business day b) Peak new folios created by QRTA on any business day 11

12 c) Was the adequacy of the capacity to handle twice the above volume reviewed and maintained by the QRTA. If no, what corrective actions taken 8 Board Committees of QRTA a) Audit Committee b) Nomination and Remuneration Committee c) IT Strategy Committee d) Whether any incidents having an impact on investor protection including data security breaches reported to the BoD of QRTA 9 Investor Services a) Number of Customer Services Centers operated by QRTA servicing Mutual Funds investors, Corporate and other investors, if any. b) Whether the QRTA has online capabilities to resolve investor queries and complaints c) If the QRTA is handling corporate registry, does it have facility for providing services for managing shareholder meetings including poll process and web streaming of AGMs of listed companies d) Whether QRTA can provide other facilities such as questions by investors during AGMs through online access as and when required by SEBI. e) Whether service standards published on website f) Date of investor satisfaction survey carried out g) Whether investor satisfaction survey outcomes published on website. 10 Insurance against Risks a) Whether adequate insurance against omissions and commissions, frauds by employee/s is in place E. Details of the review of the report by the Board of Directors Date of Review (dd/mm/yyyy) F. Observations of the BoD on i) The deficiencies and non-compliances: ii) Corrective measures initiated to avoid such instances in future: 12

13 INCOME TAX UPDATES MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) (Investigation Division-V) NOTIFICATION New Delhi, the 8th August, 2018 No. 37/2018 S.O. 3942(E). In exercise of the powers conferred by sub-section (1) of section 280A of the Income-tax Act, 1961 (43 of 1961), the Central Government, in consultation with the Chief Justice of the Gauhati High Court hereby designate the Court of Munsiff No. 3 -cum-judicial Magistrate, 1st Class, Kamrup (M), Guwahati as the Special Court for the North Eastern Region for the purposes of the said sub-section. [F. No. 285/09/2018-IT (Inv.V) CBDT] Dr. ZAKIR THOMAS, CIT (OSD)(INV), CBDT 13

14 CUSTOM UPDATES [TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB- SECTION (i)] GOVERNMENT OF INDIA MINISTRY OF FINANCE (Department of Revenue) Notification No. 57/2018-Customs New Delhi, the 7 th August, 2018 G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962) and sub-section (12) of section 3 of the Customs Tariff Act, 1975 (51 of 1975), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India, Ministry of Finance (Department of Revenue), No. 50/2017-Customs, dated the 30 th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide, number G.S.R. 785(E), dated the 30 th June, 2017, namely:- In the said notification, in the Table, after S. No. 377A and the entries relating thereto, the following serial number and entries shall be inserted, namely:- (1) (2) (3) (4) (5) (6) 377B , Screw or SIM socket / other mechanical items (metal) 15% for cellular mobile phone [F. No. 341/15/2018- TRU] (Gunjan Kumar Verma) Under Secretary to the Government of India Note: The principal notification No.50/2017-Customs, dated the 30 th June, 2017 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide, number G.S.R. 785(E), dated the 30 th June, 2017 and last amended, vide, notification No. 56/2018 -Customs, dated the 3 rd August, 2018, published, vide, number G.S.R.740 (E), dated the 3rd August,

15 [TO BE PUBLIHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB SECTION (i)] GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) Notification No. 58/2018-Customs New Delhi, the 7 th August, 2018 G.S.R. (E). - In exercise of the powers conferred by the sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 82/2017, dated the 27 th of October, 2017, published in the Gazette of India, Extraordinary vide number G.S.R.1341 (E), dated the 27 th of October, 2017, namely: - In the said notification, in the Table, - (i) for serial number 105 and the entries relating thereto, the following serial number and entries shall be substituted, namely: All goods 20% ; (ii) serial number 105A and the entries relating thereto shall be omitted; (iii) against serial numbers 106, 108, 110, 111 and 112, in column (4), for the figures 10%, the figures 20% shall be substituted; (iv) after serial number 112 and the entries relating thereto, the following serial numbers and entries shall be inserted, namely: - 112A (except ) All goods 20% 112B All goods 10% ; (v) against serial numbers 113, 114 and 119, in column (4), for the figures 10%, the figures 20% shall be substituted; (vi) after serial number 119 and the entries relating thereto, the following serial numbers and entries shall be inserted, namely: - 119A (except ) All goods 20% 119B All goods 10% ; (vii) against serial numbers 170, 171, 172, 173, 174, 175 and 176, in column (4), for the figures 10%, the figures 20% shall be substituted; (viii) for serial number 177 and the entries relating thereto, the following serial number and entries shall be substituted, namely: (except and ) All goods 20% ; (ix) for serial number 177A and the entries relating thereto, the following serial number and entries shall be substituted, namely: - 177A , All goods 10% ; 15

16 (x) against serial numbers 178, 179, 180, 181, 182, 183, 184, ,189, 190, 191, 193, 194, 195, 196, 197, 198, 199 and 200, in column (4), for the figures 10%, the figures 20% shall be substituted; (xi) for serial number 201 and the entries relating thereto, the following serial number and entries shall be substituted, namely: , , , (except ) All goods 20% ; (xii) for serial number 201A and the entries relating thereto, the following serial number and entries shall be substituted, namely: - 201A All goods 10% ; (xiii) against serial numbers 202 and 203, in column (4), for the figures 10%, the figures 20% shall be substituted; (xiv) for serial number 204 and the entries relating thereto, the following serial number and entries shall be substituted, namely: (except ) All goods 20% ; (xv) after serial number 204 and the entries relating thereto, the following serial number and entries shall be inserted, namely: - 204A All goods 10% ; (xvi) against serial numbers 207 and 209, in column (4), for the figures 10%, the figures 20% shall be substituted; (xvii) for serial number 210 and the entries relating thereto, the following serial number and entries shall be substituted, namely: ,6112(except , , ) All goods 20% ; (xviii) for serial number 210A and the entries relating thereto, the following serial number and entries shall be substituted, namely: - 210A , , All goods 10% ; (xix) for serial number 212 and the entries relating thereto, the following serial number and entries shall be substituted, namely: , 6115, 6116, 6117 All goods 20% ; (xx) serial number 212A and the entries relating thereto shall be omitted; 16

17 (xxi) against serial numbers 211, 213, 214, 215, 216, 217, 219, 220, 221, 222, 223, 224, 225, 226, 227, 228, 230, 231, 233, 235, 236, 240, 241, 242, 243, 244, 245, 247, 248, 250, 251, 252, 253, 258, 260, 261, 264 and 265, in column (4), for the figures 10%, the figures 20% shall be substituted; (xxii) for serial number 266 and the entries relating thereto, the following serial number and entries shall be substituted, namely: (except ) All goods 20% or Rs. 30 per piece, whichever is higher ; (xxiii) after serial number 266 and the entries relating thereto, the following serial number and entries shall be inserted, namely: - 266A All goods 10% or Rs. 30 per piece, whichever is higher ; (xxiv) against serial numbers 267, 268, 269, 270, 271, 272, 273, 274 and 275, in column (4), for the figures 10%, the figures 20% shall be substituted; (xxv) for serial number 276 and the entries relating thereto, the following serial number and entries shall be substituted, namely: All goods 20% or Rs. 305 per piece, whichever is higher ; (xxvi) against serial numbers 279, 280, 281, 282, 283, 284, 285 and 286, in column (4), for the figures 10%, the figures 20% shall be substituted; (xxvii) for serial number 287 and the entries relating thereto, the following serial number and entries shall be substituted, namely: (except ) All goods 20% or Rs. 390 per piece, whichever is higher ; (xxvi) against serial numbers 279, 280, 281, 282, 283, 284, 285 and 286, in column (4), for the figures 10%, the figures 20% shall be substituted; (xxvii) for serial number 287 and the entries relating thereto, the following serial number and entries shall be substituted, namely: (except ) All goods 20% or Rs. 390 per piece, whichever is higher ; (xxix) against serial numbers 288 and 289, in column (4), for the figures 10%, the figures 20% shall be substituted; (xxx) for serial number 290 and the entries relating thereto, the following serial number and entries shall be substituted, namely: (except , , , ) All goods 20% or Rs. 75 per piece, whichever is higher ; (xxxi) after serial number 290 and the entries relating thereto, the following serial number and entries shall be inserted, namely: - 290A , , , All goods 10% or Rs. 75 per piece, whichever is higher ; 17

18 (xxxii) against serial numbers 291, 292 and 293, in column (4), for the figures 10%, the figures 20% shall be substituted. [F. No. 354/123/2017-TRU (Pt.)] (Gunjan Kumar Verma) Under Secretary to the Government of India Note: The principal notification no. 82/2017-Customs, dated the 27 th October, 2017 was published vide number G.S.R.1341(E), dated the 27 th October, 2017 and last amended by notification no. 53/2018-Customs dated the 16 th July, 2018 published vide number G.S.R.651(E) dated the 16 th July,

19 Circular No. 25/2018-Customs F.No. DGEP/G&J/22/2018 Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes & Customs (Directorate General of Export Promotion) ****** New Delhi, Dated: 8 th August, 2018 To, All Pr. Chief Commissioners/ Chief Commissioners of Customs/ Customs & Central Tax/ Customs (Preventive) All Pr. Commissioners/ Commissioners of Customs/ Customs & Central Tax/ Customs (Preventive) Subject: Standard operating procedures for discharge of bonds executed by nominated agencies/ banks under Notification no. 57/2000-Customs dated Madam/ Sir, References have been received from the exporter associations that there is an inordinate delay in release of bonds executed by the nominated agencies/ banks under Notification no. 57/2000-Customs dated , while importing gold for the purpose of export of gold jewellery/ articles. Accordingly, the matter was examined and the reports received from the field formations confirm that there is indeed a large pendency of subject bonds. 2. In the aforementioned background, in the interest of trade facilitation, it has been decided that following standard operating procedure will henceforth be followed for the expeditious discharge of the said bonds. (i) Nominated agencies/ banks would electronically provide the prescribed documents as proof of exports as provided under Para 4.68 of Handbook of Procedures of the Foreign Trade Policy, ( ) (FTP) within the time period prescribed in the FTP. These documents are (i) EP copy of shipping bill, (ii) Customs attested invoice, (iii) Bank certificate of realization/ ebrc. (ii) The prescribed documents would be submitted electronically by the nominated agencies/ banks to the Assistant/ Deputy Commissioner of Customs using dedicated . For this purpose suitable Trade Notice specifying the said address shall be issued by the Commissioners. The may also be displayed in the public domain on the website of the field formation concerned. (iii) The concerned officer i.e. Assistant/ Deputy Commissioner of Customs would issue an electronic acknowledgement immediately within 24 hours of receipt of the documents. (iv) If the submitted documents are found to be incomplete or additional documents are required, a deficiency memo would be issued to the nominated agency/ banks for submission of missing/ additional documents within 5 days of receipt of the documents. (v) The additional documents, other than the prescribed documents, would be requisitioned only with the prior approval of the Additional Commissioner of Customs concerned. (vi) Nominated agencies/ banks would electronically provide the deficient/ additional documents so required within 7 days of the receipt of the deficiency memo. (vii) Within 7 days of the receipt of the prescribed documents or the receipt of the deficient/ additional documents, as the case may be, the Assistant/ Deputy Commissioner of Customs would confirm the fact of 19

20 export. This can also be done by viewing the relevant documents on the ICES application of Directorate General of Systems (invoices would be available thereon once e-sanchit is rolled out on the export side). (viii) Assistant/ Deputy Commissioner would discharge the bond of nominated agency/ banks within 7 days of confirmation of the export. 3. A concerted drive may be started for the discharge of the pending bonds as it is seen that a large number of bonds are pending release. The pendency of bonds needs to be cleared within 2 months. A report regarding the discharge of the bonds may be submitted by through at dgep-dor@nic.in 4. Difficulties, if any, may be brought to the notice of the Board. Yours faithfully, (Saroj Kumar Behera) Joint Director 20

21 Circular No. 26/ Customs F. No. D-20/DIC/AE0/16/2017 Government of India Ministry of Finance Department of Revenue Central Board of Excise & Customs Directorate of International Customs New Delhi, August 10 th 2018 All Pr. Chief Commissioner/ Chief Commissioner of Customs/Central Tax, All Principal Directors General/ Directors General, All Pr. Commissioner/ Commissioner of Customs/Central Tax, All Pr. ADG/ ADG Madam/Sir, Subject: Simplification and rationalization of processing of AEO-T1 application reg. Reference is drawn to the Circular 33/2016- Customs dated as amended. The Indian AEO Programme is governed by this circular. Multiple suggestions have been received from various field formations, wherein it has been emphasised that the compliance requirements for AEO T1 are not commensurate with the benefits allowed to AEO T1 entities. The suggestions also highlighted the fact that this has made it difficult to attract entities into the AEO fold. Consequently, a review of the aforementioned circular was done and it was felt that the processing of AEO T1 application requires simplification and rationalization. Accordingly, it has been decided that the present Annexure for AEO T1 application i.e. Annexure A, C, D, E1, E2, E3 & E4 shall be hereby replaced with the Annexure 1 and Annexure 2 (enclosed herewith). The processing by way of new annexures, annexure 1 & 2, will come in effect immediately. All the new applications for AEO T1 are to be mandatorily filed in form of the new annexures annexure 1 & 2. Alongside, to implement the simplified processing and to ensure its desired effectiveness, it is decided by the competent authority that the process of accreditation of AEO-T1 shall be decentralized to the Zonal level. In this decentralized scheme of work, the AEO- T1 application will be filed with the Zonal AEO Cell (as already been done by virtue of Circular 3/2018- Cus). The said application will be processed by the Zonal AEO cell and the final acceptance or rejection will be decided by Zonal AEO Programme Manager [designated Pr. Commissioner/Commissioner rank officer in Customs Zone nominated by Pr. Chief Commissioner/ Chief Commissioner, Customs]. The Zonal AEO cells will only intimate the decision of Zonal AEO Programme Manager to Directorate of International Customs for generation of certificate [with relevant information of the applicant Name, IEC Number & PAN] and statistics management. However, for the application that have already been received by the Customs Zones prior to the issuance of this circular, the Zonal AEO Programme Manager will have discretion to allow the processing of the application either by way of earlier annexures (Annexure A, C, D, E1, E2, E3 & E4) or by way of new annexures (annexure 1 &2) on case to case basis. Further, the digitization of processing of AEO T1 application is already underway. The online processing of AEO T1 application will commence as soon as the necessary digital infrastructure is in place. In the meantime, the processing of new AEO T1 application in form of the new annexures (annexure 1 &2) will come in effect immediately. This will ensure proper preparedness and adequate time to Customs Zones 21

22 to take up necessary outreach to the trade, informing them about the relevant changes as well as imminent automation of AEO T1 application processing, before the process of transition to digitization is initiated. The Board Circular No. 33/2015- Customs dated 22/7/2016 as amended stands modified to above extent Wide publicity may please be given to this Circular by way of issuance of Trade/Public Notice. Difficulties faced, if any, in the implementation of this Circular may be brought to the notice of this office. Yours Faithfully, (Manish Kumar) Joint Commissioner, DIC For Annexure, please refer below mentioned link: /Circular_No_ Customs-updated.PDF 22

23 GST UPDATES [To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)] Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs Notification No. 31/2018 Central Tax New Delhi, the 6 th August, 2018 G.S.R (E).- In exercise of the powers conferred by section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby specifies the persons who did not file the complete FORM GST REG-26 of the Central Goods and Services Tax Rules, 2017 but received only a Provisional Identification Number (PID) (hereinafter referred to as such taxpayers ) till the 31 st December, 2017 may now apply for Goods and Services Tax Identification Number (GSTIN). 2. The special procedure to be followed for registration of such taxpayers is as detailed below:- (i) The details as per the Table below should be furnished by such taxpayers to the jurisdictional nodal officer of the Central Government or State Government on or before the 31 st August, Table 1 Provisional ID 2 Registration Number under the earlier law (Taxpayer Identification Number (TIN)/Central Excise/Service Tax Registration number) 3 Date on which token was shared for the first time 4 Whether activated part A of the aforesaid FORM GST REG-26 Yes/No 5 Contact details of the taxpayer 5a id 5b Mobile 6 Reason for not migrating in the system 7 Jurisdiction of Officer who is sending the request (ii) On receipt of an from the Goods and Services Tax Network (GSTN), such taxpayers should apply for registration by logging onto in the Services tab and filling up the application in FORM GST REG-01 of the Central Goods and Services Tax Rules, (iii) After due approval of the application by the proper officer, such taxpayers will receive an from GSTN mentioning the Application Reference Number (ARN), a new GSTIN and a new access token. (iv) Upon receipt, such taxpayers are required to furnish the following details to GSTN by , on or before the 30th September, 2018, to migration@gstn.org.in: (a) New GSTIN; (b) Access Token for new GSTIN; (c) ARN of new application; (d) Old GSTIN (PID). (v) Upon receipt of the above information from such taxpayers, GSTN shall complete the process of mapping the new GSTIN to the old GSTIN and inform such taxpayers. (vi) Such taxpayers are required to log onto the common portal using the old GSTIN as First Time Login for generation of the Registration Certificate. 23

24 3. Such taxpayers shall be deemed to have been registered with effect from the 1 st July, [F. No.349/58/2017-GST(Pt.)] (Dr. Sreeparvathy S.L.) Under Secretary to the Government of India 24

25 [To be published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i)] Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs Notification No. 22/2018 Central Tax (Rate) New Delhi, the 6 th August, 2018 G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby makes the following further amendment in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 8/2017 Central Tax (Rate), dated the 28 th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 680 (E), dated the 28 th June, 2017, and last amended vide notification No. 12/2018-Central Tax (Rate), dated the 29 th June, 2018, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 594 (E), dated the 29 th June, 2018, namely:- In the said notification, for the figures, letters and words 30 th day of September, 2018, the figures, letters and words 30 th day of September, 2019 shall be substituted. [F. No.349/58/2017-GST (Pt.)] (Dr. Sreeparvathy S.L) Under Secretary to the Government of India Note: - The principal notification No. 8/2017-Central Tax (Rate), dated the 28 th June, 2017 was published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i) vide number G.S.R. 680 (E), dated the 28 th June, 2017 and last amended vide notification No. 12/2018-Central Tax (Rate), dated the 29 th June, 2018, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 594 (E), dated the 29 th June,

26 [To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)] Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs Notification No. 23/2018 Integrated Tax (Rate) New Delhi, the 6 th August, 2018 G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 6 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby makes the following amendment in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 32/2017- Integrated Tax (Rate), dated the 13 th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R (E), dated the 13 th October, 2017, and last amended vide notification No. 13/2018-Integrated Tax (Rate), dated the 29 th June, 2018, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 595 (E), dated the 29 th June, 2018, namely:- In the said notification, in paragraph 2, for the figures, letters and words 30th day of September, 2018, the figures, letters and words 30th day of September, 2019 shall be substituted. [F. No.349/58/2017-GST (Pt.)] (Dr. Sreeparvathy S.L) Under Secretary to the Government of India Note: - The principal notification No. 32/2017- Integrated Tax (Rate), dated the 13 th October, 2017 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R (E), dated the 13 th October, 2017 and last amended vide notification No. 11/2018-Integrated Tax (Rate), dated the 29 th June, 2018, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 595 (E), dated the 29 th June,

27 [To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)] Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs Notification No. 22/2018 Union Territory Tax (Rate) New Delhi, the 6 th August, 2018 G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 8 of the Union Territory Goods and Services Tax Act, 2017 (14 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby makes the following amendment in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 8/2017 Union Territory Tax (Rate), dated the 28 th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 717 (E), dated the 28 th June, 2017, and last amended vide notification No. 12/2018- Union Territory Tax (Rate), dated the 29 th June, 2018, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 596 (E), dated the 29 th June, 2018, namely:- In the said notification, for the figures, letters and words 30 th day of September, 2018, the figures, letters and words 30 th day of September, 2019 shall be substituted. [F. No.349/58/2017-GST (Pt.)] (Dr. Sreeparvathy S.L) Under Secretary to the Government of India Note: - The principal notification No. 8/2017-Union Territory Tax (Rate), dated the 28 th June, 2017 was published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i) vide number G.S.R. 717 (E), dated the 28 th June, 2017 and last amended vide 10/2018- Union Territory Tax (Rate), dated the 29 th June, 2018, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 596 (E), dated the 29 th June,

28 F.No.354/255/2018-TRU (Part-2) Government of India Ministry of Finance Department of Revenue (Tax Research Unit) ***** Circular No.52/26/2018-GST North Block, New Delhi Dated, 9 th August, 2018 To Principal Chief Commissioners/ Principal Directors General, Chief Commissioners/ Directors General, Principal Commissioners/ Commissioners of Central Excise and Central Tax (All), All under CBEC. Madam/ Sir, Subject: Clarification regarding applicability of GST on various goods and services reg. Representations have been received seeking clarification in respect of applicable GST rates on the following items: (i) Fortified Toned Milk (ii) Refined beet and cane sugar (iii) Tamarind Kernel Powder (Modified & Un Modified form) (iv) Drinking water (v) Plasma products (vi) Wipes using spun lace non-woven fabric (vii) Real Zari Kasab (Thread) (viii) Marine Engine (ix) Quilt and comforter (x) Bus body building as supply of motor vehicle or job work (xi) Disc Brake Pad 2. The matter has been examined. The issue-wise clarifications are discussed below: 3.1 Applicability of GST on Fortified Toned Milk: Representations have been received seeking clarification regarding applicability of GST on Fortified Toned Milk. 3.2 Milk is classified under heading 0401 and as per S.No. 25 of notification No. 2/2017- Central Tax (Rate) dated , fresh milk and pasteurised milk, including separated milk, milk and cream, not concentrated nor containing added sugar or other sweetening matter, excluding Ultra High Temperature (UHT) milk falling under tariff head 0401 attracts NIL rate of GST. Further, as per HSN Explanatory Notes, milk enriched with vitamins and minerals is classifiable under HSN code Thus, it is clarified that toned milk fortified (with vitamins A and D ) attracts NIL rate of GST under HSN Code Applicable GST rate on refined beet and cane sugar: Doubts have been raised regarding GST rate applicable on refined beet and cane sugar. Vide S. No. 91 of schedule I of notification No. 1/2017-Central Tax (Rate) dated , 5% GST rate has been prescribed on all kinds of beet and cane sugar falling under heading Doubts seem to have arisen in view of S. No. 32 A of the Schedule II of notification No. 1/2017-Central Tax (Rate) dated , which prescribes 12% GST rate on All goods, falling under tariff items and including refined sugar containing added flavouring or colouring matter, sugar cubes (other than those which attract 5% or Nil GST). 28

29 4.3 It is clarified that by virtue of specific exclusion in S. No. 32 A, any sugar that falls under 5% category [at the said S. No. 91 of schedule I of notification No.1/2017-Central Tax (Rate) dated ] gets excluded from the S. No. 32 A of Schedule II. As all kinds of beet and cane sugar falling under heading 1701 are covered by the said entry at S. No. 91 of Schedule I, these would get excluded from S. No. 32 A of Schedule II, and thus would attract 5%. 4.4 Accordingly, it is clarified that beet and cane sugar, including refined beet and cane sugar, will fall under heading 1701 and attract 5% GST rate. 5.1 Applicable GST rate on treated (modified) tamarind kernel powder and plain (unmodified) tamarind kernel powder: Representation have been received seeking clarification regarding GST rate applicable on treated (modified) tamarind kernel powder and plain (unmodified) tamarind kernel powder. 5.2 There are two grades of Tamarind Kernel Powder (TKP):- Plain (unmodified) form (hot, water soluble) and chemically treated (modified) form (cold, water soluble). 5.3 As per S. No. 76 A of schedule I of notification No. 1/2017-Central Tax (Rate) dated , 5% GST rate was prescribed on Tamarind Kernel powder falling under chapter 13. However, certain doubts have been expressed regarding GST rate on Tamarind kernel powder, as the said notification does not specifically mention the word modified. 5.4 As both plain (unmodified) tamarind kernel powder and treated (modified) tamarind kernel powder fall under chapter 13, it is hereby clarified that both attract 5% GST in terms of the said notification. 6.1 Applicability of GST on supply of safe drinking water for public purpose: Representations have been received seeking clarification regarding applicability of GST on supply of safe drinking water for public purpose. 6.2 Attention is drawn to the entry at S. No. 99 of notification No. 2/2017-Central Tax (Rate) dated , by virtue of which water [other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container] falling under HS code 2201 attracts NIL rate of GST. 6.3 Accordingly, supply of water, other than those excluded from S. No. 99 of notification No. 2/2017- Central Tax (Rate) dated , would attract GST at NIL rate. Therefore, it is clarified that supply of drinking water for public purposes, if it is not supplied in a sealed container, is exempt from GST. 7.1 GST rate on Human Blood Plasma: References have been received about the varying practices being followed in different parts of the country regarding the GST rates on human blood plasma. 7.2 Plasma is the clear, straw coloured liquid portion of blood that remains after red blood cells, white blood cells, platelets and other cellular components have been removed. As per the explanatory notes to the Harmonized System of Nomenclature (HSN), plasma would fall under the description antisera and other blood fractions, whether or not modified or obtained by means of biotechnological processes and would fall under HS code Normal human plasma is specifically mentioned at S. No. 186 of List I under S. No. 180 of Schedule I of the notification No. 1/2017-Central Tax (Rate) dated 28th June, 2017, and attracts 5% GST. Other items falling under HS Code 3002 (including plasma products) would attract 12% GST under S. No. 61 of Schedule II of the said notification, not specifically covered in the said List I. 7.4 Thus, a harmonious reading of the two entries would mean that normal human plasma would attract 5% GST rate under List I (S. No. 186), whereas plasma products would attract 12% GST rate, if otherwise not specifically covered under the said List. 29

30 8.1 Appropriate classification of baby wipes, facial tissues and other similar products: Varied practices are being followed regarding the classification of baby wipes, facial tissues and other similar products, and references have been received requesting for correct classification of these products. As per the references, these products are currently being classified under different HS codes namely 3307, 3401 and 5603 by the industry. 8.2 Commercially, wipes are categorized into various types such as baby wipes, facial wipes, disinfectant wipes, make-up remover wipes etc. These products are generally made by using non-woven fabrics of viscose and polyviscous blend and are sprinkled with demineralized water and various chemicals and fragrances, which impart the essential character to the product. The base raw materials are moisturising and cleansing agents, preservatives, aqua base, cooling agents, perfumes etc. The textile material is present as a carrying medium of these cleaning/wiping components. 8.3 According to the General Rules for Interpretation [GRI- 3(b)] of the First Schedule to the Customs Tariff Act (CTA), 1975, Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3 (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. Since primary function of the article should be taken into consideration while deciding the classification, it is clear that the essential character of the wipes in the instant case is imparted by the components which are to be mixed with the textile material. 8.4 As per the explanatory notes to the HSN, the HS code 5603 clearly excludes nonwoven, impregnated, coated or covered with substances or preparations such as perfumes or cosmetics, soaps or detergents, polishes, creams or similar preparations. The HSN is reproduced as follows : The heading also excludes: Nonwoven, impregnated, coated or covered with substances or preparations [i.e. perfumes or cosmetics (Chapter 33), soaps or detergents (heading 3401), polishes, creams, or similar preparations (heading 3405), fabric, softeners (heading 3809)] where the textile material is present merely as a carrying medium. Further, HS code 3307 covers wadding, felt and non-woven, impregnated, coated or covered with perfumes or cosmetics. The HS code 3401, would cover paper, wadding, felt and non-woven impregnated, coated or covered with soap or detergent whether or not perfumed. 8.5 Further, as per the explanatory notes to the HSN, the heading 3307 includes wadding, felt and nonwovens impregnated, coated or covered with perfume or cosmetics. Similarly, as per explanatory notes to the HSN, the heading 3401 includes wipes made of paper, wadding, felt and nonwovens, impregnated, coated or covered with soap or detergent, whether or not perfumed or put up for retail sale. 8.6 Thus, the wipes of various kinds (as stated above) are classifiable under heading 3307or 3401 depending upon their constituents as discussed above. Therefore, if the baby wipes are impregnated with perfumes or cosmetics, then the same would fall under HS code 3307 and would attract 18% GST rate. Similarly, if they are coated with soap or detergent, then it would fall under HS code 3401 and would attract 18% GST. 9.1 Classification and applicable GST rate on real zari Kasab (thread): Certain doubts have been raised regarding the classification and applicable GST rate on Kasab thread (a metallised yarn) as yarn falling under heading 5605 attracts 12% GST, as per entry 137 of the Schedule-II-12% of the notification No.01/2017- Central Tax (rate) dated , while specified embroidery product falling under 5809 and 5810 attracts 5%, as per entry no. 220 of the Schedule-I-5% of the above-mentioned notification. 9.2 The heading 5809 and 5810 cover embroidery and zari articles. These heading do not cover yarn of any kinds. Hence, while these headings apply to embroidery articles, embroidery in piece, in strips, or in motifs, they do not apply to yarn, including Kasab yarn. 9.3 Further all types of metallised yarns or threads are classifiable under tariff heading Kasab (yarn) falls under this heading. Under heading 5605, real zari manufactured with silver wire gimped (vitai) on core yarn namely pure silk and cotton and finally gilted with gold would attract 5% GST under tariff item , as specified at entry no. 218A of Schedule- I-5% of the GST rate schedule. Other goods falling under this heading attract 12% GST. Accordingly, kasab (yarn) would attract 12% GST along with other metallised yarn, whether or not gimped, being textile yarn, combined with metal in the form of thread, strip or powder or covered with metal including imitation zari thread (S. No. 137 of the Schedule-II-12%). Therefore, it is 30

31 clarified that imitation zari thread or yarn known as Kasab or by any other name in trade parlance, would attract a uniform GST rate of 12% under tariff heading Applicability of GST on marine engine: Reference has been received seeking clarification regarding GST rates on Marine Engine. The fishing vessels are classifiable under heading 8902, and attract 5%, as per S. No. 247 of Schedule I of the notification No.01/2017-Central Tax (rate) dated Further, parts of goods of heading 8902, falling under any chapter also attracts GST rate of 5%, vide S. No. 252 of Schedule I of the said notification. The Marine engine for fishing vessel falling under Tariff item of thecustoms Tariff Act, 1975 would attract a GST rate of 5% by virtue of S. No. 252 of Schedule I of the notification No. 01/2017-Central Tax (rate) dated Therefore, it is clarified that the supplies of marine engine for fishing vessel (being a part of the fishing vessel), falling under tariff item attracts 5% GST Applicable GST rate on cotton quilts under tariff heading 9404-Scope of the term Cotton Quilt Cotton quilts falling under tariff heading 9404 attract a GST rate of 5% if the sale value of such cotton quilts does not exceed Rs per piece [as per S. No. 257 A of Schedule I of the notification No. 01/2017- Central Tax (rate) dated ]. However, such cotton quilts, with sale value exceeding Rs.1000 per piece attract a GST rate of 12% (as per S. No. 224A of Schedule II of the said notification). Doubts have been raised as to what constitutes cotton quilt, i.e. whether a quilt filled with cotton with cover of cotton, or filled with cotton but cover made of some other material, or filled with material other than cotton The matter has been examined. The essential character of the cotton quilt is imparted by the filling material. Therefore, a quilt filled with cotton constitutes a cotton quilt, irrespective of the material of the cover of the quilt. The GST rate would accordingly apply Applicable GST rate for bus body building activity: Representations have been received seeking clarifications on GST rates on the activity of bus body building. The doubts have arisen on account of the fact that while GST applicable on job work services is 18%, the supply of motor vehicles attracts 28% Buses [motor vehicles for the transport of ten or more persons, including the driver] fall under headings 8702 and attract 28% GST. Further, chassis fitted with engines [8705] and whole bodies (including cabs) for buses [8707] also attract 28% GST. In this context, it is mentioned that the services of bus body fabrication on job work basis attracts 18% GST on such service. Thus, fabrication of buses may involve the following two situations: a) Bus body builder builds a bus, working on the chassis owned by him and supplies the built-up bus to the customer, and charges the customer for the value of the bus. b) Bus body builder builds body on chassis provided by the principal for body building, and charges fabrication charges (including certain material that was consumed during the process of job-work) In the above context, it is hereby clarified that in case as mentioned at Para 12.2(a) above, the supply made is that of bus, and accordingly supply would attract In the case as mentioned at Para 12.2(b) above, fabrication of body on chassis provided by the principal (not on account of body builder), the supply would merit classification as service, and 18% GST as applicable will be charged accordingly Applicable GST rate on Disc Brake Pad: Representations have been received seeking clarification on disc brake pad for automobiles. It is stated that divergent practices of classifying these products, in Chapter 68 or heading 8708 are being followed. Chapter 68 attracts a GST rate of 18%, while heading 8708 attracts a GST rate of 28% Parts and accessories of motor vehicles of headings 8701 to 8705 are classified under heading 8708 and attract 28% GST. Further, friction material and articles thereof (for example, sheets, rolls, strips, segments, discs, washers, pads), not mounted, for brakes, for clutches or the like, with a basis of asbestos, of other mineral substances or of cellulose, whether or not combined with textiles or other mineral substances or of cellulose, whether or not combined with textiles or other materials are classifiable under heading 6813 and attract 18% GST. 31

32 13.3 In the above context, it is mentioned that as per HSN Explanatory Notes, heading 8708 covers Brakes (shoe, segment, disc, etc.) and parts thereof (plates, drums, cylinders, mounted linings, oil reservoirs for hydraulic brakes, etc.); servo-brakes and parts thereof, while Chapter 68 covers articles of Stone, Plaster, Cement, Asbestos, Mica or similar materials. Further, HSN Explanatory Notes to the heading 6813 specifically excludes: i) Friction materials not containing mineral materials or cellulose fibre (e.g., those of cork); ii) Mounted brake linings (including friction material fixed to a metal plate provided with circular cavities, perforated tongues or similar fittings, for disc brakes) which are classified as parts of the machines or vehicles for which they are designed (e.g. heading 8708) Thus, it is clear, in view of the HSN Explanatory Notes that the said goods, namely Disc Brake pad for automobiles, are appropriately classifiable under heading 8708 of the Customs Tariff Act, 1975 and would attract 28% GST. 14. Difficulty, if any, may be brought to the notice of the Board immediately. Yours faithfully Dr. Ajay K. Chikara Technical Officer (TRU) 32

33 Circular No.53/27/2018-GST To F.No. 354/255/2018-TRU (Part-2) Government of India Ministry of Finance Department of Revenue (Tax Research Unit) ***** Principal Chief Commissioners/Principal Directors General, Chief Commissioners/Directors General, Principal Commissioners/Commissioners, All under CBIC. North Block, New Delhi Dated, 9 th August, 2018 Madam/Sir, Subject: Clarification regarding applicability of GST on the petroleum gases retained for the manufacture of petrochemical and chemical products regarding. References have been received regarding the applicability of GST on the petroleum gases retained for the manufacture of petrochemical and chemical products during the course of continuous supply, such as Methyl Ethyl Ketone (MEK) feedstock, petroleum gases etc. 2. In this context, it may be recalled that clarifications on similar issues for specific products have already been issued vide circular Nos. 12/12/2017-GST dated 26 th October, 2017 and 29/3/2018- GST dated 25 th January, These circulars apply mutatis mutandis to other cases involving same manner of supply as mentioned in these circulars. However, references have again been received from some of the manufacturers of other petrochemical and chemical products for issue of clarification on applicability of GST 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 GST would be leviable 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. 3. The GST Council in its 28 th meeting held on discussed this issue and recommended for issuance of a general clarification for petroleum sector that in such transactions, GST will be payable by the refinery on the value of net quantity of petroleum gases retained for the manufacture of petrochemical and chemical products. 4. Accordingly, it is hereby clarified that, in the aforesaid cases, GST 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. Though, the refinery would be liable to pay GST on such returned quantity of petroleum gases, when the same is supplied by it to any other person. It is reiterated that this clarification would be applicable mutatis mutandis on other cases involving supply of goods, where feed stock is retained by the recipient and remaining residual material is returned back to the supplier. The net billing is done on the amount retained by the recipient. 33

34 5. This clarification is issued in the context of the Goods and Service Tax (GST) law only and past issues, if any, will be dealt in accordance with the law prevailing at the material time. Yours faithfully, Dr. Ajay K. Chikara Technical Officer (TRU) 34

35 Circular No. 54/28/2018-GST F. No. 354/255/2018-TRU (Part-2) Government of India Ministry of Finance Department of Revenue (Tax Research Unit) North Block, New Delhi Dated, 9th August, 2018 To Principal Chief Commissioners/Principal Directors General, Chief Commissioners/Directors General, Principal Commissioners/Commissioners, All under CBIC. Madam/Sir, Subject: Classification of fertilizers supplied for use in the manufacture of other fertilizers at 5% GST rate- reg. References have been received regarding a clarification as to whether simple fertilizers, such as MOP (Murate of Potash) classified under Chapter 31,and supplied for use in manufacturing of a complex fertilizer, are entitled to the concessional GST rate of 5%, as applicable in general to fertilizers (i.e. fertilizers which are cleared to be used as fertilizers). 2.1 The matter has been examined. Chapter 31 of the Customs Tariff Act, 1975 covers Fertilizers. The fertilizers are mostly used for increasing soil and land fertility, either directly, or by use in manufacturing of complex fertilizers. However, certain fertilizers and similar goods falling under this Chapter may be used for individual purposes like use of molten urea for manufacture of melamine and urea used in manufacturing of urea-formaldehyde resins or organic synthesis. 2.2 In the pre-gst regime, the concessional duty rate was prescribed for fertilizers falling under Chapter 31 of the Tariff (notification No. 12/2012-Central Excise). This concessional rate was applied to goods falling under Chapter 31 which are clearly to be used directly as fertilizers or in the manufacture of other fertilizers, whether directly or through the stage of an intermediate product. 3. In the GST regime, tax structure on fertilizers has been prescribed on the lines of pre-gst tax incidence. The wording of the GST notification is similar to the central excise notification except certain changes to meet the requirements of GST. These changes were necessitated as GST is applicable on the supply of goods while central excise duty was applicable on manufacture of goods. Accordingly, fertilizers falling under heading 3102, 3103, 3104 and 3105, other than those which are clearly not to be used as fertilizers, attract 5% GST [S. No. 182A to 182D of the First schedule to the notification No.1/2017-Central Tax (Rate) dated ]. However, the fertilizers items falling under the above mentioned headings, which are clearly not to be used as fertilizer attract 18% GST [S. No. 42 to 45 of the III schedule to the notification No. 1/2017 Central Tax (Rate)]. The intention has been to provide concessional rate of GST to the fertilizers which are used directly as fertilizers or which are used in the manufacturing of complex fertilizers which are further used as soil or crop fertilizers. The phrase other than clearly to be used as fertilizers would not cover such fertilizers that are used for making complex fertilizers for use as soil or crop fertilizers. 4. Thus, it is clarified that the fertilizers supplied for direct use as fertilizers, or supplied for use in the manufacturing of other complex fertilizers for agricultural use (soil or crop fertilizers), will attract 5% IGST. 35 Yours faithfully, Dr. Ajay K. Chikara Technical Officer (TRU)

36 F.No. 354/159/2018-TRU Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs CIRCULAR NO. 55/29/2018-GST New Delhi, the 10 th August, 2018 To The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioner of Central Tax (All)/ The Principal Director Generals/ Director Generals (All). Madam/ Sir, Subject: Taxability of services provided by Industrial Training Institutes (ITI)- reg. Representations have been received requesting to clarify the following: (a) Whether GST is payable on vocational training provided by private it is in designated trades and in other than designated trades. (b) Whether GST 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. 2. With regard to the first issue, [Para 1(a) above], it is clarified that Private it is qualify as an educational institution as defined under para 2(y) of notification No. 12/2017- CT (Rate) if the education provided by these it is is approved as vocational educational course. The approved vocational educational course has been defined in para 2(h) of notification ibid to mean a course rum by an ITI or an Industrial Training Centre affiliated to NCVT (National Council of Vocational Training) or SCVT (State Council of Vocational Training) offering courses in designated trade notified under the Apprenticeship Act, 1961; or a modular employable skill course, approved by NCVT, run by a person registered with DG Training in Ministry of Skill Development. Therefore, services provided by a provide ITI in respect of designated trades notified under Apprenticeship Act, 1961 are exempt from GST under Sr. No. 66 of notification no. 12/2017- CT (Rate). As corollary, services provided by a private ITI in respect of other than designated trades would be liable to pay GST and are not exempt. 3. With regard to the second issue,[para 1(b) above], 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 GST [Entry (aa) under Sr. No. 66 of notification No. 12/2017- CT (Rate) refers]. Further, in respect of such designated trades, 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 [Entry (b(iv)) under Sr. No. 66 of notification NO. 12/2017- CT(Rate) refers.]. It is further clarified in case of other than designated trades in private it is, GST shall be payable on the service relating to admission to or conduct of examination by such institutions, as these services are not covered by the exemption ibid. 4. As far as Government it is are concerned, services provided by a Government ITI to individual trainees/students, is exempt under SI. No. 6 of 12/2017- CT(R) dated as these are in the nature of services provided by the Central or State Government to individuals. Such exemption in relation to the 36

37 services provided by Government ITI would cover both- vocational training and examinations conducted by these Government ITIs. 5. Difficulty If any, in the implementation, of this circular may be brought to the notice of the Board. Yours Sincerely, (Parmod Kumar) OSD (TRU II) Tele No

38 [To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)] Government of India Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes and Customs Notification No. 32 /2018 Central Tax New Delhi, the 10 th August, 2018 G.S.R (E). - In exercise of the powers conferred by the second proviso to sub-section (1) of section 37 read with section 168 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereafter in this notification referred to as the said Act), the Commissioner, on the recommendations of the Council, hereby extends the time limit for furnishing the details of outward supplies in FORM GSTR-1 of the Central Goods and Services Tax Rules, 2017, by such class of registered persons having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year, for each of the months from July, 2018 to March, 2019 till the eleventh day of the month succeeding such month. 2. The time limit for furnishing the details or return, as the case may be, under subsection (2) of section 38 and sub-section (1) of section 39 of the said Act, for the months of July, 2018 to March, 2019 shall be subsequently notified in the Official Gazette. [F. No. 349/58/2017-GST (Pt.)] (Dr. Sreeparvathy S.L) Under Secretary to the Government of India 38

39 [To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)] Government of India Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes and Customs Notification No. 33/2018 Central Tax New Delhi, the 10 th August, 2018 G.S.R (E). In exercise of the powers conferred by section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereafter in this notification referred to as the said Act), the Central Government, on the recommendations of the Council, hereby notifies the registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year, as the class of registered persons who shall follow the special procedure as mentioned below for furnishing the details of outward supply of goods or services or both. 2. The said persons may furnish the details of outward supply of goods or services or both in FORM GSTR- 1 of the Central Goods and Services Tax Rules, 2017, effected during the quarter as specified in column (2) of the Table below till the time period as specified in the corresponding entry in column (3) of the said Table, namely:- Table Sl. No. Quarter for which details in FORM GSTR-1 are furnished Time period for furnishing details in FORM GSTR-1 (1) (2) (3) 1 July - September, st October, October - December, st January, January - March, th April, The time limit for furnishing the details or return, as the case may be, under subsection (2) of section 38 and sub-section (1) of section 39 of the said Act, for the months of July, 2018 to March, 2019 shall be subsequently notified in the Official Gazette. [F. No. 349/58/2017-GST (Pt.)] (Dr. Sreeparvathy S.L) Under Secretary to the Government of India 39

40 [To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)] Government of India Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes and Customs Notification No. 34/2018 Central Tax New Delhi, the 10 th August, 2018 G.S.R (E).- In exercise of the powers conferred by section 168 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereafter in this notification referred to as the said Act) read with sub-rule (5) of rule 61 of the Central Goods and Services Tax Rules, 2017 (hereafter in this notification referred to as the said rules), the Commissioner, on the recommendations of the Council, hereby specifies that the return in FORM GSTR-3B of the said rules for each of the months from July, 2018 to March, 2019 shall be furnished electronically through the common portal, on or before the twentieth day of the month succeeding such month. 2. Payment of taxes for discharge of tax liability as per FORM GSTR-3B. Every registered person furnishing the return in FORM GSTR-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. [F. No. 349/58/2017-GST (Pt.)] (Dr. Sreeparvathy S.L.) Under Secretary to the Government of India 40

41 DGFT UPDATES To be published in the Gazette of India Extraordinary Part- II, Section- 3, Sub- Section (II) Government of India Ministry of Commerce & Industry Department of Commerce Directorate General of Foreign Trade Notification No. 24/ New Delhi, Dated: 08 August, 2018 Subject: Amendment in Para 2.05 of Foreign trade Policy S.O. (E): In exercise of powers conferred by Section 3 of FT (D&R) Act, 1992, read with paragraph 1.02 and 2.01 of the Foreign Trade Policy, , as amended from time to time, the Central Government hereby amends and revises the provisions in Para 2.05 of the Foreign Trade policy ( ) on Importer-Exporter Code (IEC) as under: 2.05 Importer- Exporter Code (IEC) Existing Para (I) (a) Application for obtaining IEC may be filed online in ANF 2A with applicable fees and submitted with digital signature. (b) When an e-iec is approved by the competent authority, applicant is informed through e- mail that a computer generated e-iec is available on the DGFT website. By clicking on Application status after having filled and submitted the requisite details in Online IEC Application webpage, applicant can view and print his e-iec. (c) The applicant may submit online application with the following details/documents (scanned copies to be submitted/ uploaded) along with the IEC application: (i) Digital photograph of the signatory applicant; (ii) Copy of the Pan card of the business entity in whose name Import/ Export would be done (Applicant individual in case of Proprietorship firms); (iii) Cancelled cheque bearing entity s pre-printed name or Bank certificate in prescribed format ANF- 2A(I) Revised Para (a) No export or import shall be made by any person without obtaining an IEC number unless specifically exempted. For services exports, IEC shall be necessary as per the provisions in Chapter 3 only when the service provider is taking benefits under the Foreign Trade Policy. (b) Exempt categories and corresponding permanent IEC numbers are given in Para 2.07 of Handbook of Procedures. (c) Application process for IEC is completely online and IEC can be generated by the applicant as per the procedure detailed in the Handbook of Procedure. (d) For modification in IEC, applicants may submit online application through digital signature (Class- II or Class-III), by paying applicable fees and uploading requisite documents, corresponding to the changes sought. 41

42 (e) Detailed guidelines for applying for e-iec is available at (II) No Export/ Import without IEC: (i) No export or import shall be made by any person without obtaining an IEC number specifically exempted. (iii) Exempt categories and corresponding permanent IEC numbers are given in Para 2.07 of Handbook of Procedures. Effect of the Notification: Para 2.05 on IEC is revised and details on the procedure is shifted to para 2.08 of Handbook of Procedures. (Alok Vardhan Chaturvedi) Director General of Foreign Trade F. No.: 01/93/180/20/AM-13/PC-2(B)/e

43 Company Secretaries Delhi I Mumbai I Hyderabad I Kanpur Corporate Office: 63/12, First Floor, Main Rama Road, New Delhi Ph: /17, Mob: brijesh@bmathurco.in, brijesh@brijeshmathur.com Website: 43