ICAI has issued suggestions for achievement of desired results of
various provisions & smooth implementation
of GST
1. Exemption to Import of Services from
GST.
Provisions under
GST Law: As per
Section 7(1)(b) of IGST Act ,import of
services, for a consideration whether or not in the course or furtherance of
business shall be covered under the
definition of supply & hence liable for GST.
Challenges
Involved:
Import of goods even for personal purposes
shall also be liable to GST under Reverse Charge Mechanism & leading to
increase in compliance costs & efforts for non business consumers.
ICAI
Suggestions:
ICAI has suggested that import of services for
personal purposes should be kept outside the purview of GST.
An exemption limit of Rs. 1 lakhs be
prescribed for such transactions.
2. Exemption from Reverse Charge on
Purchases From Unregistered Dealers.
Provisions under
GST Law: As per Section 9(4) of CGST Act, 2017, GST
shall be levied under Reverse Charge Mechanism on purchase of goods/services
from unregistered dealers.
Challenges
Involved:
This will lead to a situation where buyers
will not be willing to purchase goods from small unregistered dealers leading to loss of
revenue & customers as well for small businesses.
ICAI Suggestions:
a) Purchases of goods/ services from unregistered dealers below
threshold limit of Rs. 20,000 be exempted based on a declaration.
b) The provisions of this section be kept in abeyance for 6 months/ 1
year for smooth implementation of GST.
3. Applicability of Composition scheme to
dealers making supply of Services & Goods which are not liable to GST.
Provisions under
GST Law : As per Section 10(1) of CGST Act, a registered
person shall not be able to claim benefit of Composition scheme under GST only
if :
a) He is not engaged in the
supply of services other than supplies referred to in clause (b) of paragraph 6
of Schedule II.
b) He is not engaged in making
any supply of goods which are not leviable to tax under this Act.
c) He is not engaged in making
any inter-State outward supplies of goods.
d) He is not engaged in making
any supply of goods through an electronic commerce operator who is required to
collect tax at source under section 52; and
e) He is not a manufacturer of
such goods as may be notified by the Government on the recommendations of the
Council.
Challenges
Involved
Non-availability of composition scheme to
those taxpayers who are supplying
services or making any supply of goods
not leviable to GST seems to be a bit strict on such small Taxpayers. Such small
suppliers, service providers also shall
be required to comply with the normal provisions of GST which will prove to be
burdensome for such suppliers.
ICAI
Suggestions
Penalties in respect of cancellation of
registration under a composition scheme of a registered taxable person for
whatever reason must be limited to recovery of differential taxes after giving
adjustment to input tax otherwise available.
4. Retrospective amendments not to
Increase tax liability of taxpayers.
Provisions under
GST Law : As per Section 11 of the CGST Act Central/
State Governments have been empowered to
exempt Goods or Services or both from
whole/ part of tax leviable thereon. Further ,
section 6(3) also empowers the
Government to retrospectively make amendments in Exemption Notifications issued
u/s 6(1) or Orders u/s 6(2).
Challenges
Involved
Authority
to the Central / State government
to retrospectively change the nature of
exemption will lead to possibility of retrospective
amendment as well as the vulnerability
to introduce changes with the Council’s concurrence, this sub section may be detrimental to the
interest of the assesses.
ICAI Suggestions
It is suggested
that a proviso be added to sub-section 3 to provide that “every such insertion
/ amendment / modification that has the effect of increasing the tax payable be
effective from the date of such insertion”.
5. Increase in time period for payment of GST under Reverse
Charge Mechanism.
Provisions under
GST Law:
(i) Time of
supply for Goods under Reverse Charge Basis
shall be the earliest of the following :
a) Date of the receipt of goods; or
b) Date of payment as entered in the books of account or his Bank
Account , whichever is earlier; or
c) Date immediately following thirty days from the date of issue of
invoice.
(i) Time of
supply of Services under Reverse Charge
Basis shall be the earliest of the
following:
a) Date of payment as per books of the recipient or date of debit in bank
account, whichever is earlier;
b) Date immediately following thirty days from the date of issue of
invoice.
Challenges
Involved
The time period of 30/60 days from the date of
issue of invoice by the supplier is quite short considering the time taken for
delivery of goods with invoice and may create unnecessary interest liability if
payment is not made within 30 or 60 days.
ICAI Suggestions
It is suggested that the time limit prescribed
in both the cases be made 90 days in line with the current provision of service
tax.
6. Taxes, Duties, Cesses & Fees not
to be included in value of Supply.
Provisions under
GST Law: Section 15(2)(a) of the CGST Act, Value of Supply includes any
taxes, duties, cess, fees and charges levied under any statute, other than SGST
& CGST Act and the Goods and
Services Tax (Compensation to the States for Loss of Revenue) Act, 2016, if
charged separately by the supplier to the recipient.
Challenges
Involved:
a)
Cascading Effect of Taxes: Inclusion of any
type of taxes, duties, cesses, fee and charges levied under any other statute i.e.
IGST would lead to cascading effect of taxes & may lead to numerous litigations
at a later date.
b)
Charges of Airports Authority of India : The charges such as Passenger Service Fee (PSF), User Development
Fee (UDF), and other alike charges are levied by Airport Authority of India,
under Airport Authority of India Act, 1994, and collected by Airlines on the
tickets issued to passengers shall also be covered under definition of charges
& GST shall be levied on them.
ICAI Suggestions:
a)
Inclusion of word "IGST"
under GST Laws: It has been suggested by ICAI that in
section 15(2)(a ) after the words “other than the (SGST Act/the CGST Act)”, the
word “IGST Act” be inserted.
b)
Exclusion of Taxes, Duties, Fees & Charges under GST: Any taxes, duties, cesses, fee and charges levied under any other
statute be excluded from the transaction value so as to avoid cascading of
taxes. Charges levied by Airport Authority of
India being simply in the nature of statutory levies, never form part of the
taxable value. So, it shall be deemed that no supply is rendered by
airlines in respect of such charges.
7. Reversal of CENVAT Credit Claimed
where payment to supplier is not made within 180 days.
Provisions under
GST Law : As per Second Proviso to Section 16(2) of CGST
Act, where a recipient fails to make
payment to supplier towards the value of
services including tax payable thereon within a period of 180 days from date of
issue of invoice by the supplier, the amount of Input Tax Credit availed by the
recipient shall be added to his Output Tax Liability, along with interest
thereon.
ICAI Suggestions
The need to collect interest on such ITC
availed by the recipient may be omitted as a supplier does not compensated.
8. Supplies under Reverse Charge
Mechanism to form part of Exempt
Supplies for pro rata apportionment of Input Tax Credit between Taxable &
Exempt supplies.
Provisions under
GST Law : Supplies under Reverse Mechanism are basically taxable supplies in case of
which tax is paid by the recipient of supply. Inclusion of supplies covered
under RCM basis shall lead to a situation where ITC in relation to taxable
services id being denied to the taxpayer.
Challenges
Involved
This situation is just similar to the one
where a supply is being taxed twice , Firstly under Reverse Charge Mechanism
& Secondly when ITC in relation to such supply is denied to the supplier.
ICAI Suggestions
It is therefore suggested that supplies
covered under Reverse Charge Mechanism being taxable supplies should be kept
outside the purview of exempt supplies for pro rata apportionment of ITC under
GST.
9. Reversal of Input Tax Credit on
Renting of Capital Goods.
Provisions under
GST Law : As per Section 18(6) of CGST Act, In case of
supply of capital goods or plant and machinery, on which ITC has been taken,
the registered person shall pay an amount equal to the ITC taken on the said
Capital Goods or Plant & Machinery as reduced by such percentage points as
may be prescribed.
However, where Capital Goods are sold as
scrap, then ITC need not be reversed & Tax can be paid on transaction value
of such scrap or actual amount realized.
Challenges
Involved
The Section mentioned above uses the term
supply which also includes renting of Capital
Goods. So, If capital goods are leased out, then Sec 18(6) will lead to reversal of ITC already claimed by the
supplier. Further the above section includes the words " Plant &
Machinery along with the Capital Goods. However, Capital Goods already includes
Plant & Machinery & addition of words "Plant &
Machinery" to the above section is
not necessary.
ICAI Suggestions
It is therefore suggested that steps be taken
by the government for non reversal of CENVAT on renting of capital goods.
Further the words " Plant & Machinery " be omitted in the above
section so that the intention of provision is being fulfilled & those
transactions which are not intended are not hit.
10. Extension of Time Period for Issuance of Order of Assessment by Proper
Officer under GST.
Provisions under
GST Law:
Extension of time period in case of Pending Appeals: Where an Order has been passed by First
Appellate Authority or Appellate Tribunal or High Court on a matter & such
decision is prejudicial to the interest of Revenue in proceedings of other
cases with it & an appeal has been pending against such prejudicial order
in the Appellate Tribunal or High Court , the following periods of time shall
be excluded in calculating the time limit for issuance of order by a proper officer.
a)
between the date of the decision of First Appellate Authority and
date of decision of Appellate Tribunal or ;
b)
Date of decision of Appellate Tribunal and date of the decision of
the High Court or as the case may be
c) Date of the decision of the High Court
and the date of the decision of the Supreme Court.
Challenges Involved
As per the section enumerated above, If a
decision is passed by First Appellate Authority or Appellate
Tribunal or High Court in respect to a particular assesse in a particular state
, the limit for passing of order by the proper officer shall stand increased
for all assesses whether belonging to same state or other.
ICAI Suggestions
ICAI has suggested that such extension of time limit for passing of
order by proper officer shall be applied
with reference to particular assessee & state.
