NITYA|Indirect Tax Bulletin - March 2021| Week 4 April 1, 2021 - NITYA Tax Associates
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NITYA|Indirect Tax Bulletin
March 2021| Week 4
April 1, 2021
Index LEGAL PRECEDENTS.......................................................................................................................................... 3 PART A: WRIT PETITIONS................................................................................................................................... 3 1. Withholding of IGST refund due to mismatch of data on GST Portal and ICEGATE ............................. 3 2. Transition of Tax Deducted at Source under VAT regime to GST regime ................................................. 3 PART B: ADVANCE RULINGS ............................................................................................................................. 4 1. GST on recovery for car parking facility from employees .................................................................. 4 OTHER UPDATES ................................................................................................................................................. 5 PART A: RECENT NOTIFICATIONS AND CIRCULARS ..................................................................................... 5 1. Enactment of Finance Bill, 2021 .................................................................................................... 5 2. Introduction of Common Portal ...................................................................................................... 5 3. Time limit for filing Bill of Entry under Section 46 of the Customs Act ................................................. 5 4. Supplementing Bill of Lading details in BoE .................................................................................... 6 5. Foreign Trade Policy 2015-20 and Handbook of Procedures 2015-20 extended till September 30, 2021 6 6. Exemption from IGST and Compensation Cess on imports by EOU ................................................. 6 7. Extension of time limit for printing B2C QR Code ............................................................................ 6 8. Exemption from E-Way Bill for intra-state movement of goods up to value Rs. 1 Lakh in Rajasthan …. 6 2|Page
LEGAL PRECEDENTS
PART A: WRIT PETITIONS
1. Withholding of IGST refund due to mismatch of data on GST Portal and ICEGATE
The Petitioner exported goods on payment of IGST. The Petitioner committed errors while filing GSTR-
1 leading to mismatch between GST Portal data and ICEGATE. Consequently, refund of IGST could
not be processed. The Petitioner could not amend few export invoices on GST Portal due to technical
error which resulted in withholding of IGST refund.
The Petitioner challenged withholding of IGST refund on export of goods.
Revenue’s Counsel suggested that in light of Circular No. 12/2018- Customs dated May 29, 2018, the
Petitioner may approach Customs Zonal Office with copy of GSTR-1 and GSTR-3B along with
Chartered Accountant certificate certifying sanctity of IGST amount. This application will be escalated
to Customs Policy wing and GSTN will send confirmatory e-mail to exporter. Once records are
transmitted by GSTN to Customs System, refund will be sanctioned in due course.
The Court agreed with suggestion of revenue’s Counsel, directed revenue to act in the above manner
and sanction refund within 12 weeks from date of its judgment.
Rameshwar Udyog v. UOI, 2021-VIL-219-GUJ
2. Transition of Tax Deducted at Source under VAT regime to GST regime
The Petitioner accumulated Tax Deducted at Source (‘TDS’) in terms of Section 13 of the Tamil Nadu
Value Added Tax Act, 2006 (‘TNVAT Act’) and sought transition of such accumulated TDS under GST
regime under Section 140 of the Tamil Nadu Goods and Services Tax Act, 2017 (‘TNGST Act’).
The Petitioner argued that TDS is nothing but VAT credit under TNVAT Act and Section 140 of TNGST
Act allows carry forward of VAT credit. The Petitioner also relied upon settled jurisprudence that TDS is
an advance collection of tax. The revenue denied transition of TDS on the ground that it does not bear
character of tax.
The Petitioner challenged denial of carry forward of TDS.
The High Court observed that a deduction towards future tax liability assumes character of tax. Nature
of tax do not depend on whether it is held as credit or adjustment against tax liability. Purposive
interpretation of Section 140 of the TNGST Act allows carry forward of credit of VAT and Entry Tax as
defined under Section 2(48) of the said Act. As TDS amount was reported in returns filed under erstwhile
regime, it shall be transitioned to GST regime under Section 140 of the TNGST Act.
DMR Constructions v. The Assistant Commissioner, 2021-VIL-208-MAD
3|Page
PART B: ADVANCE RULINGS
1. GST on recovery for car parking facility from employees
The Appellant was engaged in business of export of software development services and rented an office
premises including car parking space. The Appellant borne part of car parking space and recovered
balance amount from its employees using such parking space.
The Appellant approached Authority for Advance Ruling (‘AAR’) on levy of GST on car parking facility
recovery from employees. AAR did not accept the Appellant’s application due to absence of requisite
documents.
The Appellant filed an appeal before the Appellate Authority for Advance Ruling (‘AAAR’). The question
before the AAAR was whether amount recovered from employees towards car parking charges would
amount to supply of service by the Appellant. If yes, what will be the value of such supply.
The AAAR observed the provisions of pure agent under GST law. The AAAR held that though the
Appellant is making supply of services to its employees, however, it satisfied all conditions relating to
pure agent as provided under Rule 33 of the Central Goods and Services Tax Rules, 2017. The AAAR
held that value of such supply shall be ‘Nil’.
ION Trading India, 2021-VIL-16-AAAR (UP)
NITYA Comments: The above ruling is incorrect as the Appellant did not satisfy all conditions of Pure
Agent. Some Advance Rulings have also taken similar view that such employee recoveries do not
attract GST.
It is industry practice to recover amount from employees for providing facilities like canteen,
transportation, insurance, parking etc. In such cases, employer makes supply to its employees and is
liable to pay GST.
It is high time for Government to bring out clarity on the issue of employee recovery to remove
confusion and future litigation.
4|PageOTHER UPDATES
PART A: RECENT NOTIFICATIONS AND CIRCULARS
1. Enactment of Finance Bill, 2021
The Finance Bill 2021 has received Presidential assent on March 28, 2021, and several amendments
proposed in Customs law have come into force. Please refer our update ‘NITYA Insight I Issue 214 I Budget
2021 – Key Indirect Tax Proposals dated February 2, 2021’ discussing all Indirect Tax amendments in
detail. Notably, amendments relating to GST law shall come into force on their notification in Official Gazette.
2. Introduction of Common Portal
Common Customs Electronic Portal under newly inserted Section 2(7B) of the Customs Act, 1962
(‘Customs Act’), has been notified. The same can be accessed at https://www.icegate.gov.in and will be
used for following functions:
i. Registration
ii. Filing Bills of Entry, Shipping Bills, other Forms and Documents
iii. Payment of duty
iv. Exchange of data with other systems (within or outside India)
v. Any other function as specified in Customs Act or Rules
Notification No. 33/2021-Customs dated March 29, 2021
3. Time limit for filing Bill of Entry under Section 46 of the Customs Act
Government has notified time limit of filing advance Bill of Entry (‘BoE’) as before end of day (including
holidays) preceding day of arrival of vessel / aircraft / vehicle in case of imports. Further, exception
has been prescribed in following cases wherein BoE needs to be filed before end of day of arrival of
vessel / aircraft / vehicle:
S. No. Customs Station Particulars
1 Sea Port Import from Bangladesh, Maldives, Myanmar, Pakistan,
Sri Lanka
2 Airport Import from any country
3 Land Customs Station (‘LCS’) Import from any country
Notably, aforesaid exception will not apply on import through Inland Container Depot.
Notification No. 34/2021-Customs, Notification No. 35/2021-Customs and Circular No. 8/2021-
Customs dated March 29, 2021
5|Page4. Supplementing Bill of Lading details in BoE
An importer can supplement Bill of Lading details in BoE on Common Customs Electronic Portal.
Notification No. 36/2021-Customs dated March 29, 2021
5. Foreign Trade Policy 2015-20 and Handbook of Procedures 2015-20 extended till September 30, 2021
• Government has extended applicability of Foreign Trade Policy 2015-20 (‘FTP’) and Handbook of
Procedures 2015-20 (‘HBP’) till September 30, 2021.
• Exemption of IGST and Compensation Cess has been extended on imports made under Advance
Authorization (‘AA’) Scheme and Export Promotion Capital Goods (‘EPCG’) Scheme for physical
exports till September 30, 2021.
• Validity of all status certificates (like Star Export House certificate) has been extended till
September 30, 2021.
Notification No.60/2015-2020-DGFT and Public Notice No.48/2015-2020 dated March 31, 2021
6. Exemption from IGST and Compensation Cess on imports by EOU
Government has extended exemption of IGST and Compensation Cess for imports made by Export
Oriented Units (‘EOU’) till March 31, 2022.
Notification No. 19/2021- Customs dated March 30, 2021
7. Extension of time limit for printing B2C QR Code
Government has granted extension of 3 months (till June 30, 2021) for complying with QR Code
requirement on B2C invoices. CBIC issued Circular No. 146/02/2021-GST dated February 23, 2021
clarifying several issues relating to printing QR Code.
Notification No.6/2021-Central Tax dated March 30, 2021
8. Exemption from E-Way Bill for intra-state movement of goods up to value Rs. 1 Lakh in Rajasthan
Rajasthan Government has increased monetary limit to generate E-Way Bill for intra-state movement of
goods to Rs.1 Lakh. This enhanced limit shall not apply to products covered under Chapter 24 (tobacco
and manufactured tobacco substitutes) and Pan Masala (falling under Heading 2106).
Notification No. F.17(131) ACCT/GST/2017/6672 dated March 30, 2021
……………….
Disclaimer:
This Insight has been prepared for clients and firm’s personnel only. It is solely for the purpose of general information
and does not represent any opinion of NITYA Tax Associates. We are not responsible for the loss arising to any person
for acting or refraining from acting on the basis of material contained in this Insight. It is recommended that professional
advice be sought based on specific facts and circumstances.
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