Important Rulings under GST The purpose of this article is to analyse the certain important judgements delivered by the Judiciary and AAR under the Goods and Services Tax Act, 2017. 1. GSTR-3B is temporary and not Statutory return:- AAP AND CO (2019) 107 TAXMANN 125 (GUJRAT) As per Section 16(4) of the CGST Act, registered person shall not be entitled to take ITC of 17-18 after the due date of furnishing of the return U/s 39 for the month of September 18 following the end of financial year to which such invoice relating to or furnishing of the relevant annual return, whichever is earlier. This due date has been initially extended till the due date of March-19 return by virtue of proviso to Section 16(4). (But subject to condition that the supplier has uploaded the return U/s 37). The question before the Court is whether the return being filed in form GSTR-3B is a return U/s 39 or it is a substitution of return to be filed in form GSTR-3. Rule 61(1) provides that the return required to be filed in terms of Section 39(1) of the act is to be furnished in Form GSTR-3. So it is held by the High Court that the form 3B is not a return U/s 39 of the CGST Act. Further GSTR-3 alone is the return prescribed U/s 39 and in its absence the last date for claiming ITC as provided U/s 16(4) of the CGST Act is the due date of filling of annual return.i.e.31.08.19. This is particularly significant as the judgment holds goods only in the State of Gujarat and not the rest of India. Other High Courts might take a different view. It would also be interesting to see if the Government comes out with any amendments in the Act. The taxpayer will have to ultimately take a call whether to form a reliance on this decision or not. 2. Liability to pay interest U/s 50 of CGST Act on Gross Liability or Net Liability :- MEGHA ENGINEERING –(2019) 104 TAXMANN 393 (TELANGANA) The Hon’ble Hugh Court dismissed the writ petition filed by the petitioner regarding contention that interest is payable on net value of tax payable i.e. after adjusting of ITC. The High Court held that the liability to pay interest U/s 50(1) is self- imposed and also automatic, without any determination by any one. The ITC mechanism provided under GST Law is totally different as compare to earlier Laws.In GST Law, until a return is filed as self-assessed, no entitlement to credit and no actual entry of credit in the electronic credit ledger takes place. It is only after a credit is entered in the electronic credit ledger that payment could be made. Once payment is made from such electronic ledger, the Government gets a right over the money available in the ledger. But one point missing in this case is that ITC is actually the amount which is already paid to the Government by the tax payer through different vendors irrespective of filling of their returns. So, if it is so then Government is demanding interest on the amount which is already paid by the tax payer. In this regard, the GST Council has announced that no interest will be calculated on gross liability of a tax payer but necessary changes in the GST Law has yet not taken place. 3. Applicability of Exemption in respect of supplies from URP :- FAMOUS STUDIOS LTD- GST AAR- Maharashtra Order No.GST-ARA-73/2018-19/B-166 Dt.21.12.18 According to Section 9(4) of the CGST Act, when registered person received supplies of goods and services from unregistered person (URP) then he has to pay GST under reverse charge Mechanism w.e.f 01.07.2017. The Government has issued Notification No.8/2017 under Central Tax rate and exemption has been provided in this case if such supplies are within a limit of Rs.5,000/- per day as per the proviso of the said notification. Then after this proviso has been omitted by way of Notification No.38/2017 under Central tax Rate.So all supplies from un-registered person were exempted without any threshold limit. This provision in Notification No.38/2017 was omitted without specifying date from which it was omitted. So the applicant claimed that the omission of proviso is from 01.07.2017 and so supplies from URP were exempted from 01.07.2017.The authority has considered following two judgements in this matter- GarikpattiVeerayaVs. N.SubbiahChoudhury (1957) SCR 488 Hitendra Vishnu Thakur and others Vs. State of Maharashtra, (1994) 4 SCC 602 It is held by the authority that there is nothing to show that the amendment Notification No.38/2017 would have retrospective effect and therefore we find that the provisions of RCM U/r 9(4) are applicable, irrespective of any threshold exemption limit w.e.f 01.07.2017. It means the benefit of exemption provided in Notification No.38/2017 in respect of tax under RCM is not applicable from 01.07.2017. 4. Availability of Input tax credit on Demo Car :- M/s. A.M. MOTORS 2018(10) TMI 514, AAR-KERALA Very interesting question come before the authority that whether input tax credit on the motor car purchased for demonstration purpose of the customer can be availed as credit on capital goods in case of motor car dealer? The Car is a capital goods and used in the course or furtherance of business. After a limited period of use as demo car, the vehicle is sold at the written down book value subject to provisions (Availability of ITC) of Section 18(6) of the CGST Act. It is held by the authority that ITC paid by a vehicle dealer on the purchase of Motor car used for demonstration purpose of the customer can be availed as ITC under GST. 5. Availability of Input tax credit on Cash carry Vans :- CMS INFO SYSTEMS LTD (2018) 8 TMI 977-AAR MAHARASHTRA The issue involved in the case is whether ITC is available for purchase of motor vehicles (Cash carry vans)- cash management network pan India and whether the money being transported by the applicant in the cash carry vans is “Goods” or otherwise for the purpose of availing ITC under GST Act ? It is held by the authority that if ‘money’ is not covered as “Goods” in the definition of “Goods” for everyone and it cannot be said that it is not “Goods” for general perception and it is “goods’ for the appellant. These vans are purchased and used for cash management business and supplied post usage as scrap. Input tax credit is not available to applicant on purchase of motor vehicle i.e. Cash carry Vans, which are purchased and used for cash management business and supplied post usage as scrap. 6. Adjustment of ITC paid in one State with another State :- IMF COGNITIVE TECHNOLOGY P LTD-ARN NO.RAJ/AAR/2018-19/30 Dt.09.01.19. The appellant is a engaged in software development business and registered under the Rajasthan GST Act. The appellant procures some services from Haryana for the purpose of business. In Haryana, the supplier has charges CGST and SGST of that state due to the reason of place of supply being in the State of supplier. Appellant desires to utilise ITC paid in the state of Haryana while discharging tax liability in the state of Rajasthan. It was observed by the AAR that under GST tax is finally payable where goods and services are consumed. As the place of supply and supplier of the service both are outside the State of Rajasthan, hence input tax credit of CGST tax paid in Haryana is not available to the applicant. 7. Taxability of Sale of business on going concern under GST :- RAJASTHAN FOODS PVT LTD –[2018] 93 417 (AAR - KARNATAKA) The applicant, having three manufacturing units situated at Ramanagara, Hiriyur and Bengaluru intended to sell the unit situated at Hiriyur along with all its fixed assets namely land, building, plant & machinery etc., current assets namely stock & trade receivables etc., and liabilities namely Bank term loans, bank working capital loans, creditors for supplies etc., for a lump sum consideration. The applicant sought Advance Ruling on the following questions/issues: 1. 'Whether the transaction would amount to supply of goods or supply of services or supply of goods & services?' 2. 'Whether the transaction would be covered under S. No. 2 of the Notification No. 12/2017- Central Tax (Rate), dated 28-6-2017'? As the unit is said to be functional and is desired to be transferred as a whole to a new owner it amounts to transfer of a going concern as a whole. The transfer of a going concern, either as a whole or an independent part thereof, for a lump sum consideration does not constitute an activity taking place in the course of business or for furtherance of business. Further in part 4(c) of Schedule II it is provided that when the business is transferred as a going concern then it does not amount to supply of goods. It, therefore, becomes clear that such transfer of business does not constitute a supply of goods. The Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017 itself speaks that the activity of transfer of a going concern, as a whole or independent part thereof, is exempt from payment of so much Central Tax leviable under sub-section (1) of section (9) of the CGST Act, 2017. ----------------------------------------------------------------------------------------------------- Disclaimer : This article contains information for our member’s guidance only. It is not intended to address the circumstances of any particular individual or entity. We do not accept any responsibility for loss incurred by any person for acting or refraining to act as a result of any matter in this article. -----------------------------------------------------------------------------------------------------