This newsletter is being forwarded to update you regarding the important clarifications made by CBIC under following circulars issued on 31/12/2018 & 01/01/2019 respectively. The contents of the said circular are self explanatory and the same can be downloaded from . We are highlighting some of the important issues clarified by the said circulars as under;

I). Circular No. 76/50/2018 – GST dated 31/12/2018 :- CBIC have clarified various issues regarding taxability of supplies made by government departments to unregistered person; levy of penalty under section 73(11), issue of debit notes & credit notes under section 142 and valuation in case of TCS related to GST, the same are clarified as under;

Sl. No. Issue Clarification
1 Whether sale of used vehicles, seized and confiscated goods, old and used goods, waste and scrap by governments department taxable? It clarified that the supplies made by the government department amounts to supply under section 7 of CGST Act and accordingly it is taxable under GST. However vide Notification No. 36/2017 – CT(R) dated 13/10/2017, it has been notified that in case of supplies by government department to a registered person will fall under RCM and GST has to be paid by the recipient of such supplies. It has been now clarified that in case of supplies to unregistered person, the government departments shall be liable to get registered and pay GST on such supplies.
2. Whether Penalty under section 73(11) is leviable in case of filing of GSTR-3B after the due date. As per section 73(11), penalty is payable in cases where tax has been collected and not paid within 30 days from due date of payment. It has been clarified that provisions of section 73 are generally not invoked in case of delayed filing of returns, as the GST has already been paid along with Interest after the due date, and accordingly penalty under section 73(11) is not imposable. It has been further clarified that since tax has been in contravention of provision of CGST Act, a general penalty under section 125 can be imposed. [ Remarks:- If the assessee has not paid interest on late payment of GST while filing GSTR-3B, same should be paid to avoid Show Cause Notice for imposing penalty under section 73(11) of the act.]
3. In case of Debit Note under section 142(a) and Credit Note under section 142(b) what rate of tax will be applicable. The rate in the Pre-GST regime or rate applicable under GST. Section 142(2) relates to transition provision as regards to Agreements / Contract entered by the assessee for price for supply of goods, and the said prices are revised after the appointed day i.e. 01/07/2017, the rate as per GST provisions shall be applicable for issuing Debit Notes/ Supplementary Invoice and Credit Notes under Section 142(2)(a) & 142(2)(b) respectively.
4. Applicability of Provisions of Section 51 of CGST Act i.e. TDS Provisions. The provisions of section 51 of CGST Act are applicable only to such authority or a board or any other body set by Act Of Parliament Or A State Legislature Or Established By Any Government in which 51% or more participation by way of equity or control is with the Government.
5. What is the Correct Valuation for assessment of GST on TCS under provision of Income Tax Act 1961? It is clarified with reference to section 15(2) of CGST Act 2017, that the value of supply shall include “any taxes, duties, cesses, fees and charges levied under any law for time being in force other than CGST, SGST, UTGST, IGST & GST Compensation Cess”. Accordingly the TCS collected shall be included in the assessable value for charging GST.
6. Who will be considered as the ‘owner of the goods’ for the purposes of section 129(1) of the CGST Act.   Section 129 relates to Detention, Seizure and release of goods and conveyances in transit. It is clarified that if the invoice or any other documents is accompanying the consignment, the consignor or consignee should be deemed to be the owner. In cases where there are no documents accompanying the consignment of goods, the proper officer should determined who should be declared as Owner of the Goods.

II). Circular No. 77/51/2018 – GST dated 31/12/2018:-  It lays down the procedure to be followed for opting out of Composition scheme and be registered as a Normal Tax Payer. [The Contents of the said circular are self explanatory and hence are not reproduced here and the same can be downloaded by the assessee from the CBIC website or the link which is referred above.]

III). Circular No. 78/52/2018 – GST dated 31/12/2018:- This circular clarifies the tax treatment in case of Export of Service and where in certain portion of the services are outsourced to a another person located outside India by the exporter.

  • It is clarified that in such cases there are two supplies which takes place i.e.
  • Supply of services by exporter in India to a recipient of service outside India for full contract value; &
  • Import of service by exporter located in India from the supplier of service to whom the part of the service is outsourced.

Accordingly the total value as agreed between the exporter of services located in India & the recipient of services will be considered as export of service if all the conditions under section 2(6) of the IGST Act. As regards to the outsourced part of the service, the supplier of services will be liable to pay tax under RCM for Import of the said service and the ITC of the GST paid will be allowed.

  • Further it is clarified that, even if the full consideration for the services as per the contract is not received in Convertible Foreign Exchange it will still be considered as export of service provided that;
  • IGST has been paid by the Supplier located in India on the Outsourced Portion of services which has been directly provided by the supplier located outside India to recipient outside India; &
  • RBI by general Instruction or by specific approval has allowed that a part of the consideration for such exports can be retained Outside India.

IV). Circular No. 79/53/2018 – GST dated 31/12/2018:-   It clarifies various refund related issues faced by the assessee which are as under;

  1. Allows option to Taxpayer to submit refund Claim in Form GST RFD – 01A electronically along with supporting documents;
  2. For Calculating the refund amount for claims of accumulated ITC on account of Inverted Duty Structure, only those inputs were considered in the formula where the rate was higher than output supply goods. It is clarified that for calculation all goods should be taken irrespective of rate being higher or lower. It is explained by way of example which should be referred in the circular;
  3. It is clarified that the Refund should be disbursed within 60 days of its application i.e. ARN date, failing which interest @6% shall be paid to the taxpayer;
  4. Lays down procedure to be adopted for Refund application that have been generated online but not physically received in the Jurisdiction Office;
  5. Issues various clarification in relation to refund of accumulated ITC of Compensation Cess on account of Zero rated Supplies made under Bond/ LUT;
  6. For calculation of refund, officers were removing the credit availed during the month for the invoices issued in the prior months. The said practice was clarified to be incorrect, especially when inputs are received in the subsequent months. It clarifies with example;
  7. While granting refund the officers were restricting the ITC so availed only on inputs used directly in manufacturing of the finished goods and were denying on the usage of printing and stationery, stores, packing material etc. It is clarified that the practice was incorrect leading to misinterpretation of meaning of Term “Inputs”. It further clarified that the ITC of all the inputs if they are used for business of the assessee it shall be considered for quantification of the refund of unutilised ITC; &
  8. Clarified the restriction on refund of accumulated ITC on Input Services and Capital Goods on account of Inverted Duty Structure.

V). Circular No. 80/54/2018 – GST dated 31/12/2018:-  It clarifies the queries raised for correct classification of certain products and the link of the said circular is separately provided by us.

VI). Circular No. 81/55/2018 – GST dated 31/12/2018:- It clarifies GST Tax Rate for sprinkler and Drip Irrigation Systems including laterals @ 6% and the link of the said circular is separately provided by us.

VII). Circular No. 82/01/2019 – GST dated 01/01/2019:- Clarifies the issue of Taxability of various courses conducted by the Indian Institutes of Managements (IIMs), by exempting certain courses as specified in the said circular and the link of the said circular is separately provided by us. 

VIII). Circular No. 83/02/2019 – GST dated 01/01/2019:- It clarifies that services provided by Asian Development Bank (ADB) and International Finance Corporation (IFC) are exempt from GST in terms of provision of IFC Act and ADB Act. The exemption will be available only to the services provided by ADB and IFC and not to the entity appointed or working on behalf of ADB and IFC and the link of the said circular is separately provided by us. 

IX) Circular No. 84/03/2019 – GST dated 01/01/2019:- It clarifies that Service of Printing pictures are classified under 998386 & not under 998912 and would attract GST @ 18% falling under item (ii) against Sr. No. 21 of Notification No. 11/2017 – CT(R) dated 28/06/2017.

X) Circular No. 85/04/2019 – GST dated 01/01/2019:- It clarifies that the supply of food and beverage services by Educational Institution to its students, staff, & faculty where such supply is made by the educational Institution itself is exempt under Notification No. 12/2017 – CT(R) dated 28/06/2017 vide Sr. No. 66. However if the supply of food and beverage by any other person under contractual agreement with Educational Institutions is chargeable to GST @ 5%.

XI) Circular No. 86/05/2019 – GST dated 01/01/2019:- It clarifies the scope of services and value of services on which GST is to be levied on services of Business Facilitator (BF) or a Business Correspondent (BC) to Banking Company.

XII) Circular No. 87/06/2019 – GST dated 02/01/2019:-  Clarifies that the Cenvat Credit of Service Tax can be carried forward under transitional provisions and putting rest to doubts and speculation raised due to section 28(a) of CGST (Amendment) Act 2018.

In case of any queries you are requested to contact our office.


Vinay S. Sejpal


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