GST Changes Clarifications
·
LUT in Export Allowed for Rupee Payment
Cases under RBI Guidelines
·
Job Work Movement Clarified
·
Role and Liability of Principal
·
Job Worker Registration Criteria on All
India Basis Now
· Moulds and dies, jigs and fixtures or
tools may not be included in the value of job work services provided its value
has been factored in the price for the supply of such services by the job
worker
· Moulds return not required. They are
treated as supply after expiry of free period
· Allowing 14 days for owner/transporter
to pay tax/penalty for seized goods
·
Form GST MOV-08 (para 4) Reverses
·
Mistakes in Payment be paid Voluntarily
or through GST DRC-03
·
No Returns during Cancellation of
Registration Proceedings
·
Taxpayer
is freed from the routine compliances, including filing returns, under GST Act
during the pendency of the proceedings related to cancellation
[Circular No. 88/07/2019-GST dated 1
February 2019]
Subject: Changes in Circulars issued earlier under
the CGST Act, 2017.
The
CGST (Amendment) Act, 2018, SGST Amendment Acts of the respective States, IGST (Amendment)
Act, 2018, UTGST (Amendment) Act, 2018 and the GST (Compensation to States)
(Amendment) Act, 2018 (hereafter referred to as the GST Amendment Acts) have
been brought in force with effect from 01.02.2019.
2.
Consequent to the GST Amendment Acts, the following circulars issued earlier
under the CGST Act, 2017 are hereby amended with effect from 01.02.2019, to the
extent detailed in the succeeding paragraphs.
3.
Circular No. 8/8/2017 dated 04.10.2017
The
circular is revised in view of the amendment carried out in section 2(6) of the
IGST Act, 2017 vide section 2 of the IGST (Amendment) Act, 2018 allowing
realization of export proceeds in INR, wherever allowed by the RBI.
Accordingly, the original and the amended relevant para of the circular are
detailed hereunder.
3.1
Original Para 2(k)
Realization
of export proceeds in Indian Rupee: Attention is invited to para A (v)
Part- I of RBI Master Circular No. 14/2015-16 dated 01stJuly, 2015 (updated as
on 05th November, 2015), which states that “there
is no restriction on invoicing of export contracts in Indian Rupees in terms of
the Rules, Regulations, Notifications and Directions framed under the Foreign
Exchange Management Act, 1999. Further, in terms of Para 2.52 of the Foreign
Trade Policy (2015-2020), all export contracts and invoices shall be
denominated either in freely convertible currency or Indian rupees but export
proceeds shall be realized in freely convertible
currency. However, export proceeds against specific exports may also be
realized in rupees, provided it is through a freely convertible Vostro account
of a non-resident bank situated in any country other than a member country of
Asian Clearing Union (ACU) or Nepal or Bhutan”.
Accordingly,
it is clarified that the acceptance of LUT for supplies of goods to countries
outside India Nepal or Bhutan or SEZ developer or SEZ unit will be permissible
irrespective of whether the payments are made in Indian currency or convertible
foreign exchange as long as they are in accordance with the applicable RBI
guidelines. It may also be noted that the supply of services to SEZ developer
or SEZ unit under LUT will also be permissible on the same lines. The supply of
services, however, to Nepal or Bhutan will be deemed to be export of services
only if the payment for such services is received by the supplier in
convertible foreign exchange.
3.2 Amended Para 2(k)
Realization
of export proceeds in Indian Rupee: Attention is invited to para A (v)
Part- I of RBI Master Circular No. 14/2015-16 dated 01stJuly, 2015 (updated as
on 05th November, 2015), which states that “there
is no restriction on invoicing of export contracts in Indian Rupees in terms of
the Rules, Regulations, Notifications and Directions framed under the Foreign
Exchange Management Act, 1999. Further, in terms of Para 2.52 of the Foreign
Trade Policy (2015-2020), all export contracts and invoices shall be denominated
either in freely convertible currency or Indian rupees but export proceeds
shall be realized in freely convertible currency. However, export proceeds
against specific exports may also be realized
in rupees, provided it is through a
freely convertible Vostro account of a non-resident bank situated in any
country other than a member country of Asian Clearing Union (ACU) or Nepal or
Bhutan”. Further, attention is invited to the amendment to section
2(6) of the IGST Act, 2017 which allows realization of export proceeds of
services in INR, wherever allowed by the RBI.
Accordingly,
it is clarified that the acceptance of LUT for supplies of goods or services to
countries outside India or SEZ developer or SEZ unit will be permissible
irrespective of whether the payments are made in Indian currency or convertible
foreign exchange as long as they are in accordance with the applicable RBI
guidelines.
4
Circular No. 38/12/2018 dated 26.03.2018
This
circular is revised in view of the amendment carried out in section 143 of the
CGST Act, 2017 vide section 29 of the CGST (Amendment) Act, 2018 empowering the
Commissioner to extend the period for return of inputs and capital goods from
the job worker. Further on account of amendment carried out in section 9(4) of
the CGST Act, 2017 vide section 4 of the CGST (Amendment) Act, 2018 done in
relation to reverse charge, certain amendments to the Circular are required.
Accordingly, the original and the amended relevant para of the circular are
detailed hereunder.
4.1
Original Para 2.
As
per clause (68) of section 2 of the CGST Act, 2017………….. Subsequently, on
completion of the job work (by the last job worker), the principal shall either
bring back the goods to his place of business or supply (including export) the
same directly from the place of business/premises of the job worker within one
year in case of inputs or within three years in case of capital goods (except
moulds and dies, jigs and fixtures or tools).
4.2
Amended Para 2.
As
per clause (68) of section 2 of the CGST Act, 2017, “job work” means any
treatment or process undertaken by a person on goods belonging to another
registered person and the expression “job worker” shall be construed
accordingly. The registered person on whose goods (inputs or capital goods) job
work is performed is called the “Principal” for the purposes of section 143 of the
CGST Act. The said section which encapsulates the provisions related to job
work, provides that the registered principal may, without payment of tax, send
inputs or capital goods to a job worker for job work and, if required, from
there subsequently to another job worker and so on. Subsequently, on completion
of the job work (by the last job worker), the principal shall either bring back
the goods to his place of business or supply (including export) the same
directly from the place of business/premises of the job worker within the time
specified under section 143.
4.3
Original Para 3.
It
may be noted ………. Moreover, if the time frame of one year / three years for
bringing back or further supplying the inputs / capital goods is not adhered
to, the activity of sending the goods for job work shall be deemed to be a
supply by the principal on the day when the said inputs / capital goods were
sent out by him. Thus, essentially, sending goods for job work is not a supply
as such, but it acquires the character of supply only when the inputs/capital
goods sent for job work are neither received back by the principal nor supplied
further by the principal from the place of business / premises of the job
worker within one/three years of being sent out. …. ……cast on the principal.
4.4
Amended Para 3.
It
may be noted that the responsibility of keeping proper accounts of the inputs
and capital goods sent for job work lies with the principal. Moreover, if the
time frame specified under section 143 for bringing back or further supplying
the inputs / capital goods is not adhered to, the activity of sending the goods
for job work shall be deemed to be a supply by the principal on the day when
the said inputs / capital goods were sent out by him. Thus, essentially,
sending goods for job work is not a supply as such, but it acquires the
character of supply only when the inputs/capital goods sent for job work are
neither received back by the principal nor supplied further by the principal
from the place of business / premises of the job worker within the specified
time period (under section 143) of being sent out. It may be noted that the
responsibility for sending the goods for job work as well as bringing them back
or supplying them has been cast on the principal.
4.5
Original Para 6.1
Doubts
have been raised ………... It may be noted that the job worker is required to
obtain registration only if his aggregate turnover, to be computed on all India
basis, in a financial year exceeds the specified threshold limit (i.e. Rs 20
lakhs or Rs. 10 lakhs in case of special category States except Jammu &
Kashmir) in case both the principal and the job worker are located in the same
State. ……..…However, exemption from registration has been granted in case the
aggregate turnover of the inter-State supply of taxable services does not
exceed Rs 20 lakhs or Rs. 10 lakhs in case of special category States except
Jammu & Kashmir in a financial year vide notification No. 10/2017 – Integrated
Tax dated 13.10.2017. Therefore, ….…. States.
4.6
Amended Para 6.1
Doubts
have been raised about the requirement of obtaining registration by job workers
when they are located in the same State where the principal is located or when
they are located in a State different from that of the principal. It may be
noted that the job worker is required to obtain registration only if his
aggregate turnover, to be computed on all India basis, in a financial year
exceeds the specified threshold limit as specified in sub-section (1) of
section 22 of the said Act, read with clause (iii) of the Explanation to the
said section in case both the principal and the job worker are located in the
same State. Where the principal and the job worker are located in different
States, the requirement for registration flows from clause (i) of section 24 of
the CGST Act which provides for compulsory registration of suppliers making any
inter-State supply of services. However, exemption from registration has been
granted in case the aggregate turnover of the inter-State supply of taxable
services does not exceed the specified threshold limit as specified in
sub-section (1) of section 22 of the said Act, read with clause (iii) of the
Explanation to the said section in a financial year vide notification No. 10/2017
– Integrated Tax dated 13.10.2017 as amended vide notification No 3/2019-
Integrated Tax, dated 29.01.19. Therefore, it is clarified that a job worker is
required to obtain registration only in cases where his aggregate turnover, to
be computed on all India basis, in a financial year exceeds the threshold limit
regardless of whether the principal and the job worker are located in the same
State or in different States.
4.7
Original Para 9.4.(i.)
(i)
Supply of job work services: The job worker, …………….not been included
in the price for such supply. Accordingly, it is clarified that the value of
such moulds and dies, jigs and fixtures or tools may not be included in the
value of job work services provided its value has been factored in the price
for the supply of such services by the job worker. It may be noted that if the
job worker is not registered, GST would be payable by the principal on reverse
charge basis in terms of the provisions contained in section 9(4) of the CGST
Act. However, the said provision has been kept in abeyance for the time being.
4.8
Amended Para: 9.4.(i)
(i.)
Supply of job work services :The job worker, as a supplier of
services, is liable to pay GST if he is liable to be registered. He shall issue
an invoice at the time of supply of the services as determined in terms of
section 13 read with section 31 of the CGST Act. The value of services would be
determined in terms of section 15 of the CGST Act and would include not only
the service charges but also the value of any goods or services used by him for
supplying the job work services, if recovered from the principal. Doubts have
been raised whether the value of moulds and dies, jigs and fixtures or tools
which have been provided by the principal to the job worker and have been used
by the latter for providing job work services would be included in the value of
job work services. In this regard, attention is invited to section 15 of the
CGST Act which lays down the principles for determining the value of any supply
under GST. Importantly, clause (b) of sub-section (2) of section 15 of the CGST
Act provides that any amount that the supplier is liable to pay in relation to
the supply but which has been incurred by the recipient will form part of the valuation
for that particular supply, provided it has not been included in the price for
such supply. Accordingly, it is clarified that the value of such moulds and
dies, jigs and fixtures or tools may not be included in the value of job work
services provided its value has been factored in the price for the supply of
such services by the job worker.
4.9
Original Para 9.6
Thus,
if the …………….. If such goods are returned by the job worker after the
stipulated time period, the same would be treated as a supply by the job worker
to the principal and the job worker would be liable to pay GST if he is liable
for registration in accordance with the provisions contained in the CGST Act
read with the rules made thereunder. It may be noted that if the job worker is
not registered, GST would be payable by the principal on reverse charge basis
in terms of the provisions contained in section 9(4) of the CGST Act. However,
the said provision has been kept in abeyance for the time being. Further, there
is no requirement of either returning back or supplying the goods from the job
worker’s place of business/premises as far as moulds and dies, jigs and
fixtures, or tools are concerned.
4.10
Amended Para 9.6
Thus,
if the inputs or capital goods are neither returned nor supplied from the job
worker’s place of business / premises within the specified time period, the
principal would issue an invoice for the same and declare such supplies in his
return for that particular month in which the time period of one year / three
years has expired. The date of supply shall be the date on which such inputs or
capital goods were initially sent to the job worker and interest for the
intervening period shall also be payable on the tax. If such goods are returned
by the job worker after the stipulated time period, the same would be treated
as a supply by the job worker to the principal and the job worker would be
liable to pay GST if he is liable for registration in accordance with the
provisions contained in the CGST Act read with the rules made thereunder.
Further, there is no requirement of either returning back or supplying the
goods from the job worker’s place of business/premises as far as moulds and
dies, jigs and fixtures, or tools are concerned.
5
Circular No. 41/15/2018 dated 13.04.2018
This
circular is revised in view of the amendment carried out in section 129 of the
CGST Act, 2017 vide section 27 of the CGST (Amendment) Act, 2018 allowing 14
days for owner/transporter to pay tax/penalty for seized goods. Accordingly,
the original and the amended relevant para of the circular are detailed
hereunder.
5.1
Original Para 2(k)
In
case the proposed tax and penalty are not paid within seven days from the date
of the issue of the order of detention in FORM GST MOV-06, the action
under section 130 of the CGST Act shall be initiated by serving a notice in FORM
GST MOV-10, proposing confiscation of the goods and conveyance and
imposition of penalty.
5.2
Amended Para 2(k)
In
case the proposed tax and penalty are not paid within fourteen days from the date
of the issue of the order of detention in FORM GST MOV-06, the action
under section 130 of the CGST Act shall be initiated by serving a notice in FORM
GST MOV-10, proposing confiscation of the goods and conveyance and
imposition of penalty.
5.3 Further, FORM GST MOV-08 and FORM
GST MOV-09, annexed to the circular are revised as below:
FORM
GST MOV-08 (para 4)
And
if all taxes, interest, penalty, fine and other lawful charges demanded by the
proper officer are duly paid within fourteen days of the date of detention
being made in writing by the said proper officer, this obligation shall be
void.
FORM
GST MOV-09 (para 10)
You
are hereby directed to make the payment forthwith/not later than fourteen days
from the date of the issue of the order of detention in FORM GST MOV-06,
failing which action under section 130 of the Central/State Goods and Services
Tax Act /section 21 of the Union Territory Goods and Services Tax Act or
section 20 of the Integrated Goods and Services Act shall be initiated
6. Circular No. 58/32/2018 dated 04.09.2018
This
circular is revised in order to streamline the modes of recovery. Accordingly,
the original and the amended relevant para of the circular are detailed
hereunder.
6.1 Original Para 3.
Currently,
the functionality to record this liability in the electronic liability register
is not available on the common portal. Therefore, it is clarified that as an
alternative method, taxpayers may reverse the wrongly availed CENVAT credit
under the existing law and inadmissible transitional credit through Table
4(B)(2) of FORM GSTR-3B. The applicable interest and penalty shall apply
on all such reversals which shall be paid through entry in column 9 of
Table 6.1 of FORM GST-3B.
6.2 Amended Para 3.
It
may be noted that all such liabilities may be discharged by the taxpayers,
either voluntarily in FORM GST DRC-03 or may be recovered vide order
uploaded in FORM GST DRC-07, and payment against the said order shall be
made in FORM GST DRC-03. It is further clarified that the alternative
method of reversing the wrongly availed CENVAT credit under the existing law
and inadmissible transitional credit through Table 4(B)(2) of FORM GSTR-3B would
no longer be available to taxpayers. The applicable interest and penalty shall
apply in respect of all such amounts, which shall also be paid in FORM GST
DRC-03.
7. Circular No. 69/43/2018 dated 26.10.2018
The
circular is revised in view of the amendment carried out in section 29 of the
CGST Act, 2017 vide section 14 of the CGST (Amendment) Act, 2018 allowing
suspension of registration. Accordingly, the original and the amended relevant
para of the circular are detailed hereunder.
7.1 Original Para 11.
It
is pertinent to mention here that section 29 of the CGST Act has been amended
by the CGST (Amendment) Act, 2018 to provide for “Suspension” of registration.
The intent of the said amendment is to ensure that a taxpayer is freed from the
routine compliances, including filing returns, under GST Act during the
pendency of the proceedings related to cancellation. Although the provisions of
CGST (Amendment) Act, 2018 have not yet been brought into force, it will be
prudent for the field formations may not to issue notices for non- filing of
return for taxpayers who have already filed an application for cancellation of
registration under section 29 of the CGST Act. However, the requirement of
filing a final return, as under section 45 of the CGST Act, remains unchanged.
7.2 Amended Para 11.
It
is pertinent to mention here that section 29 of the CGST Act has been amended
by the CGST (Amendment) Act, 2018 to provide for “Suspension” of registration.
The intent of the said amendment is to ensure that a taxpayer is freed from the
routine compliances, including filing returns, under GST Act during the
pendency of the proceedings related to cancellation. Accordingly, the field
formations may not issue notices for non- filing of return for taxpayers who
have already filed an application for cancellation of registration under
section 29 of the CGST Act. Further, the requirement of filing a final return,
as under section 45 of the CGST Act, remains unchanged.
8.
It is requested that suitable trade notices may be issued to publicize the
contents of this circular.
9.
Difficulty, if any, in implementation of this Circular may please be brought to
the notice of the Board.
F. No. CBEC-20/16/04/2018 - GST