Issues under GSTDiscussion with UP GST Department, Agra.(On 05 May 2018)

Issue-1: Applicability of GST on ‘transferor’ ?

(In case of ‘transfer of business’ as a ‘going concern’)

• Death of Proprietor.

• Proprietorship to Partnership.

• Partnership to Private Limited Company.

• Other Change in constitution

2ISSUES PREPARED BY CA.SAURABH AGARWAL FOR DISCUSSION ON 05 MAY 2018

Issue-1

Section 29: Cancellation of Registration

3ISSUES PREPARED BY CA.SAURABH AGARWAL FOR DISCUSSION ON 05 MAY 2018

• u/s 29(5) :

• Every Registered person

• Whose registration is cancelled

• Shall ‘pay an amount’

• Higher of (a) or (b) :-

• (a) ITC in respect of

• (‘inputs held in stock’ + ‘inputs in semi-finished goods’ + ‘finished goods held in stock’ + ‘capital goods’ + ‘Plant & Machinery’)

• Or

• (b) output tax payable on such goods.

Issue-1

Section 7 : Scope of supply

• u/s 7(1)

• Supply includes ------

• (a)…………………………..

• (b)……………………………..

• (c)………………………………..

• (d) The activities referred to in schedule II4ISSUES PREPARED BY CA.SAURABH AGARWAL FOR DISCUSSION ON 05 MAY 2018

Issue-1

Schedule- II

Para 4(c):

where any person ceases to be a taxable person,

any goods

forming part of the assets of any business carried on by him

shall be deemed to be supplied by him in the course or furtherance of his

business immediately before he ceases to be a taxable person,

unless—

(i) ‘the business is transferred as a ‘going concern’ to another person’;

or

(ii) the business is carried on by a personal representative who is deemed

to be a taxable person.

5ISSUES PREPARED BY CA.SAURABH AGARWAL FOR DISCUSSION ON 05 MAY 2018

Issue-1

• GSTR-10 has been prescribed to be as “Final Return”

• To be filed on “cancellation of registration”

• Whether ‘ITC is to be reversed’ or ‘tax is to be paid’

• on stock of raw material, finished goods, capital goods, plant and machinery.

ISSUES PREPARED BY CA.SAURABH AGARWAL FOR DISCUSSION ON 05 MAY 2018 6

Issue-1

Issue-2 : Can a Circular override any Act ? ‘NO’

u/s 129(3)

•Applicable Tax

• Penalty = Applicable tax

----------vs--------

Vide UPGST Circular No. 1718046 dt. 07 Nov 2017

• Penalty = 2 x Applicable Tax (??)

• B.N. Nagrajan v. State of Mysore, AIR 1966 SC 1942

• P.D. Agrawal and Ors. v. State of U.P. and Ors., (1987) 3 SCC 622;

• C. Rangaswamaeah and Ors. v. Karnataka Lokayuktaand Ors., AIR 1998 SC 96

7ISSUES PREPARED BY CA.SAURABH AGARWAL FOR DISCUSSION ON 05 MAY 2018

Supreme Court Cases

(circulars cannot override law)

Issue-2

Issue-3 : Seizure of ‘Inter-state supply’ of goods .

u/s 129(3) CGST/UPGST

Officer asks to deposit

CGST & UP GST ? ?

For state revenue purpose ? ?

How will the Ex-UP supplier

deposit UPGST ?

8ISSUES PREPARED BY CA.SAURABH AGARWAL FOR DISCUSSION ON 05 MAY 2018

u/s 20(xxi) of IGST

•Applicable Tax is IGST

•Penalty = Applicable tax (i.e IGST)

Ex-UP supplier can deposit IGST only

M/s Seth Prasad Agro (P) Ltd. (ALL HC)

M/s Agro Industries (ALL HC)

Issue-3

Invoice Matching ?

Issue-4

How Invoice matching shall be done under GST ?

Invoice matching ? ? ? Issue-4 :

• u/s 16 : Eligibility & condition for taking ITC by recipient, Clause (c) says “tax should be paid by supplier”.

• Is proposed new one page GST Returncapable of invoice matching.

• Delhi High court in the case of M/s On Quest Merchandising India vs Govt. of NCT of delhi [2018 NTN(Vol.66)-5]-Buyer cannot be penalised for default in payment of tax by seller. (VAT Regime)

• Are we inviting same old VAT disputes in GST regime as well ?

10ISSUES PREPARED BY CA.SAURABH AGARWAL FOR DISCUSSION ON 05 MAY 2018

Issue-4

How Invoice matching shall be done under GST ?

Invoice matching ? ? ? Issue-4 :

Allahabad High court in the case of M/s Suresh Chand Agarwal & Sons Vs CCT [2018 NTN (VOL 66)-4]

The mere fact that a sale is not shown by seller in Return cannot be a ground for disallowance of ITC. (VAT Regime)

Are we inviting same old vat disputes in GST regime as well ?

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Issue-4

Issue-5:Is ‘enforcement’ being used as a ‘harsh

tool’ for revenue collection ? ?

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YEARSource Hindustan

Times

(18 April 2018)

TARGET

(UP-GST)

COLLECTION

(UP-GST)

SHORTFALL Achievement

2017-18 65,000 Cr. 58,726 Cr. -6,274 Cr. 90% only

2018-19 71,000 Cr. --

Issue-5

Issue-5

(1) Penalty u/s 129(3) even for clerical errors to meet revenue targets ?

13ISSUES PREPARED BY CA.SAURABH AGARWAL FOR DISCUSSION ON 05 MAY 2018

“Around 60% of the total

state revenue comes from

GST alone. Therefore not

getting GST Revenue on

the expected lines is being

viewed with concern”

Principal Secretary, Finance, Uttar PradeshSource Hindustan Times

(18 April 2018)

Issue-5

Facts: No E-Way bill, all other necessary documents present.

Allahabad High court says - -

“Where the E-way bill is downloaded before date of detention and all

necessary information is provided in accompanied papers, the seizure orderand penalty notice issued u/s 129 as well as consequential proceedings are

set aside.”14ISSUES PREPARED BY CA.SAURABH AGARWAL FOR DISCUSSION ON 05 MAY 2018

Issue-5

2018 NTN (VOL.66)-245 (ALL HC)

M/S AXPRESS LOGISTICS INDIA PRIVATE LIMITED(09 APRIL 2018)

Question arises ?

What is the use of ‘Enforcement tool’.

• Enforcement should be used for :-

• 1- Counter Tax evaders.(√)

Or

• 2-Increase tax revenue ?

ISSUES PREPARED BY CA.SAURABH AGARWAL FOR DISCUSSION ON 05 MAY 2018 15

Exporter’s Refund(Manual Procedure GST RFD-01A)

Issue-6

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Provisional refund = 7 days (Rule-91)

Circular no. 1819003 dt. 16/04/2018

(1)-Requirement to Submit invoices w.r.tinput/ input services. (para 14.2)

(2)-BRC is being asked, even though not required in case of export of goods

(para 12)

Refund of ITC to Exporters Issue-6

Exporter’s Invoice-vs-E-way BillIssue-7

Confidentiality of Export Invoices (during movement of goods.)

ISSUES PREPARED BY CA.SAURABH AGARWAL FOR DISCUSSION ON 05 MAY 2018 19

Issue-7

From When ? ?

Exemption to Handicrafts (as Promised in 25th GST Council meeting)

Issue-8

EXEMPTION TO HANDICRAFTS

PRESS RELEASE AFTER 25th GST COUNCIL MEETING ON 18 JAN 2018.

ISSUES PREPARED BY CA.SAURABH AGARWAL FOR DISCUSSION ON 05 MAY 2018 21

Issue-8

“ The Report and

Recommendations

submitted by the

Committee on

Handicrafts were also

accepted by the GST

council ”

Issue-9

Billing by Job worker

• Ref: Circular No. 38/12/2018 dt. 26th March, 2018(CGST)

• Ref: Circular No. 1819001/64 dt. 16th April 2018(UPGST)

• Para 5 says :

• “Further, it is clarified that the job worker, in addition to the

goods received from principal, can use his own goods for

providing the services of job-work”

ISSUES PREPARED BY CA.SAURABH AGARWAL FOR DISCUSSION ON 05 MAY 2018 23

Issue-9

Billing by Job worker ?

• Q : A Job worker doing job work in relation to jewellery uses own

material say some precious or semi-precious stones.

Option-1:

Labour charges………………………….10,000/- @ 5%= GST Rs.500/-

Semi-precious stones…………………..10,000/-@ 0.25%= GST Rs. 25/-

Or

Option-2: (Composite supply)

Labour charges…………………………20,000/- @ 5%= GST Rs.1,000/-

(including semi-precious stones)

ISSUES PREPARED BY CA.SAURABH AGARWAL FOR DISCUSSION ON 05 MAY 2018 24

Issue-9

Registration –vs- Non Filers ?

•Pre-GST = 65 L

•Post GST = 1 cr. (approx)Registrations

• Required = 87.12 L

• Filed=60.47 L

•Compliance= 70%3B

• Required = 19.31 L

• Filed= 11.47 L

•Compliance= 60%

GSTR-4

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Issue-10

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