GST Issue Archives - Tax Heal

GST #Issue18 -Time to Issue GST Registration Certificate not specified

CA Satbir Singh — Wed, 11 Jan 2017 13:37:41 +0000

Time to Issue GST Registration Certificate

Section 23 (9) of Revised Model GST Law relating to Registration

9) A certificate of registration shall be issued in the prescribed form, with effective date as may be prescribed.

Issue

No Time Limit has been specified within which Certificate of Registration will be issued to the person under GST Regime

Suggestion

It is suggested that a time limit to fix the effective date be provided in the Model GST law itself to provide better transparency

GST #Issue17 – Change in rate of tax in respect of supply of goods or services

CA Satbir Singh — Tue, 10 Jan 2017 11:26:52 +0000

Change in rate of tax in respect of supply of goods or services

Provisions in Revised Model GST Law regarding Change in rate of tax in respect of supply of goods or services

Section 14 of Revised Model GST Law provides as follow :-

14. Change in rate of tax in respect of supply of goods or services

Goods or Service supplied	Payment received	Invoice Issued	Time of Supply
Prior to Rate Change	After Rate Change	After Rate Change	Date of receipt of payment or the date of issue of invoice, whichever is earlier
Prior to Rate Change	After Rate Change	Prior to Rate Change	Date of issue of invoice,
Prior to Rate Change	Prior to Rate Change	After Rate Change	Date of receipt of payment
After Rate Change	Prior to Rate Change	After Rate Change	Date of issue of invoice
After Rate Change	After Rate Change	Prior to Rate Change	Date of receipt of payment
After Rate Change	Prior to Rate Change	Prior to Rate Change	Date of receipt of payment or the date of issue of invoice, whichever is earlier

Issue regarding Change in rate of tax in respect of supply of goods or services

The time of supply in cases of supply of Goods service has been provided before change in rate of tax
the time of supply is determined on the basis on date of payment or invoice. This contradicts with charging section 8 where levy is on supply. This is diametrically opposite to the law laid down by the Hon’ble Supreme Court in the case of Vazir Sultan Tobacco which says that Excise duty was on manufacture only only its collection was deferred at the time of removal of Goods.

Suggestions regarding Change in rate of tax in respect of supply of goods or services

If the supply of goods or services has been done before the change in the rate of Tax, then GST Tax should be collected at rate in force before the change in rates.

Taxation of Advance Payments received for goods/ services under GST Regime

Provisions in GST relating to Taxation of Advance Payments for Goods or Services

[ Read GST on Advance Payments of Goods & Services – Analysis after CGST Act 2017 and IGST Act 2017)

In terms of section 12 (Time of Supply of Goods) & Section 13 (Time of Supply of Services) of the Revised Model GST Law, , time of supply of goods or services shall be earliest of

date of issue of invoice or
receipt of payment.

Thus, in situations where the recipient of goods/ services makes an advance payment as per payment terms to the supplier, the tax is liable to be paid on such advance payment.

As per Section 16 (3) (Eligibility and conditions for taking input tax credit ) of Revised Model GST Law, person will not be able to claim Input Tax Credit until receipt of the Invoice and Goods :-

No registered taxable person shall be entitled to the credit of any input tax in respect of any supply of goods and/or services to him unless,-

(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other taxpaying document(s) as may be prescribed;

(b) he has received the goods and/or services;

(c) the tax charged in respect of such supply has been actually paid to the account of the appropriate Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and

(d) he has furnished the return under section 34:

Issue relating to Taxation of Advance Payments for Goods or Services under GST

This contradicts with charging section 8 where levy is on supply. Suppose after Advance Payment supply does not happen for any reason like dispute , natural calamity etc , than what will happen to the GST already Paid on advance payment ?

Charging GST on Advance payment is also diametrically opposite to the law laid down by the Hon’ble Supreme Court in the case of Collector of Central Excise, Hyderabad v. Vazir Sultan Tobacco Company Ltd., Hyderabad CIVIL APPEAL NO. 3199 OF 1986

Further, Levy of GST on advance payments will disproportionately increase the cost of compliance without any substantial benefit to revenue as tax on total payment has to be made once it is received. The GST would be levied on the
supply and to keep track of advance received or invoices issued will create administrative / accounting hassles to the tax payers. Government will not earn any extra revenue by this measure except receiving some small part of revenue in advance; but it entails lot of extra documentation on the part of supplier. Even today the taxability of excise or VAT/CST is on either removal of goods or Invoicing to customer.

Suggestions relating to Taxation of Advance Payments for Goods or Services under GST

Only the date of receipt of payment (final consideration) would be taken into account and not the date of receipt of advance payment for GST, or
Input tax credit of tax paid on such advances received by the supplier should be available to the recipient without being the condition of Receipt of Goods/Services.

Remission of Tax in case of deficiency in Quantity supplied under GST Regime

Provision in GST relating to Remission of Tax in case of deficiency in Quantity supplied

Govt of India has deleted the Section 11 from Revised Model GST law which was found in the Old Model GST Law , dealing with remission of Tax on Supplies in case of deficiency in quantity due to natural causes. Section 11 was read as follow in Old Model GST Law

11. Remission of tax on supplies found deficient in quantity
(1) The Central or a State Government may, by rules made under this sub-section, provide for remission of tax on such supplies which are found to be deficient in quantity due to any natural causes. (2) Any rules made under sub-section (1) may, having regard to the nature of the supply, fix the limit or limits of percentage beyond which no such remission shall be allowed.

Issue

There is no provisions in GST Law for quantifying deficiency in supply of Goods due to any natural causes.

Suggestion

It is suggested that following provision be inserted in GST Law :

” The Central or a State Government may as prescribed, provide for remission of tax on supplies of goods which are found to be deficient due to natural causes”

Power of Govt to retrospectively Change Exemption from GST

Facts as per Section 11(3) of Revised Model GST Law

Section 11 of Revised Model GST Law empowers Central/ State Governments to exempt …………………. Goods and/or services from whole or any part of the tax leviable thereon. But Section 11(3) provides as follow :-

11. Power to grant exemption from tax

(3) The Central or a State Government may, if it considers necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or order, as the case may be, by notification at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be.

Issue on Power to grant exemption from tax

This provision empowers the Central / State government to retrospectively change / amend / alter / modify the nature of exemption. This leads to a situation, where the benefit of exemptions intended to be granted to supplies under this section with the concurrence of the council could stand denied to supplies of such goods/services. In the possibility of retrospectivity as well as the vulnerability to introduce changes with the Council’s concurrence,
this sub section may be detrimental to the interest of the assessees.

Suggestion on Power to grant exemption from tax

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”