GST Updates July 2023

This articles covers the latest gst updates july 2023. It contains all the Notifications and Circulars issued in July-2023 which covers all GST Updates July 2023. All these amendments have been presented hear topic wise and reference of relevant latest gst notifications and latest gst circulars have been given at bottom of each topic. As well as, I have given our own analysis wherever it is necessary

Due dates of GSTR-1, GSTR-3B & GSTR-7 extended in state of Manipur by GST Updates July 2023

The due date of returns/statements have been extended for he registered person whose principal place of business is in the state of Manipur as under.

gst notification 2023 latest pdf download

GST Amnesty to GSTR-4 non fillers (Amnesty to Composition dealer) extended by Latest GST Updates July 2023

• Earlier the Government announced amnesty to non-fillers of GSTR-4 (composition dealer). Amnesty is in form of waiver and reduction of late fees of GSTR-4 for those composition dealers who failed to furnish the return in FORM GSTR-4 for the quarters from July 2017 to March 2019 or for the financial years from 2019-20 to 2021- 22 by the due date but furnish the said return between the period from the 1st day of April 2023 to the 30th day of June 2023.
• Now the Government has extended such amnesty by 31-08-2023. Hence Non fillers can file GSTR-4 for the Quarters from July-2017 to March-2019 or financial years from 2019-20 to 2021-22 up to 31-08-2023.
• Let’s understand same with table:
• In case GSTR-4 is other than NIL

In case GSTR-4 is NIL

gst notification 2023 latest pdf download

Amnesty for application in revocation of cancellation of registration extended by latest GST Updates July 2023

• Earlier Government has announced amnesty for registered person whose registration has been cancelled under section 29(2) (b) or (c) on or before 31-12-2022 and has failed to apply for revocation of cancellation of registration within prescribed time limit u/s 30 can apply for revocation of cancellation of registration up to 30-06-2023.
• Now the government has extended this amnesty by 31-08-2023 which is effective from 30-06-2023.

GST Amnesty Scheme for deemed withdrawal of assessment orders issued under Section 62 extended by GST Updates July 2023

• Earlier Government has announced special procedure in case where GST returns (GSTR-3B, GSTR-6, GSTR-5, GSTR-7, GSTR-8, GSTR-4, and CMP-08) and or final return GSTR-10 was not filed within 30 days from the date of Assessment order issued u/s 62(1) of CGST Act, 2017. As per this procedure, said assessment order shall be deemed to have been withdrawn subject to the following conditions/procedure.
• Assessment orders issued under Section 62(1) of CGST Act 2017 on or before 28.02.2023.
• The registered person failed to furnish the valid return within a period of 30 days from the service of such assessment order.
• Return furnished by such registered persons on or before 30-06-2023 along with the payment of interest u/s 50 and Late fees u/s 47.
• Such assessment orders will be withdrawn irrespective of whether an appeal has been filed against such assessment order under section 107 of the said Act or whether the appeal, if any, filed against the said assessment order has been decided.
• Now the Government has extended the time limit to furnished return by 31-08-2023 along with payment of interest u/s 50 and late fees u/s 47 for withdrawal of such best judgment assessment orders effective from 30-06-2023.

GST Amnesty to GSTR-9, 9A, 9B non fillers extended by GST Updates July 2023

• Earlier Government has announced amnesty to non-filler of GSTR-9, 9A, 9B. Amnesty is for reduction of late fees of GSTR-9,9A and 9B who failed to furnish the return by the due date for any of the financial years 2017-18, 2018-19, 2019-20, 2020-21 or 2021-22, but furnish the said return between the period from the 1st day of April 2023 to the 30th day of June, 2023.
• Now the Government has extend the time limit to file GSTR-9 , 9A and 9B for above mentioned period by 31- 08-2023, which is effective from 30-06-2023.
• Hence Non fillers can file GSTR-9, 9A, and 9B for any of the financial years 2017-18, 2018-19, 2019-20, 2020-21 or 2021-22, can file returns within 31-08-2023 (earlier it was within 30-06-2023) to get the benefit of amnesty scheme of waiver of late fees.

Let’s understand same with table

Latest changes in GST Amnesty to GSTR-10 final return extended by latest GST Updates July 2023

• Earlier the Government had announced amnesty to non-fillers of GSTR-10(final return). Amnesty is in the form of waiver of late fees of GSTR-10 who failed to furnish the return by the due date but furnish the said return between the periods from the 1st day of April 2023 to the 30th day of June 2023.
• Now, the Government has extended the date by 31-08-2023, which effective from 30-06-2023.
• Let’s understand same with table:

Zero rated benefits for supply to SEZ only for authorised operations by Latest GST Updates 2023

• With effect from 01-10-2023 Clause (b) of Section 16(1) of IGST is being changed in the sense that supply to SEZ unit or developer must be for only authorized operations.
• That means with effect from 01.10.2023 zero rated benefit for supply to SEZ will be available only if such supply is used by SEZ for its authorized operations.

Our Analysis-:

• As per Section 2(c) of SEZ Act 2005, Authorized operations” means operations which may be authorized under sub-section (2) of section 4 and sub-section (9) of section 15;
• As per Section 4(2) of SEZ Act 2005, with effect from 01-10-2023, the Board may, authorize the Developer to undertake in a Special Economic Zone, such operations which the Central Government may authorize.
• As per Section 15(9) of SEZ Act 2005, with effect from 01-10-2023 the Development Commissioner may grant a letter of approval to the person concerned to set up a Unit and undertake such operations which the Development Commissioner may authorize and every such operation so authorized shall be mentioned in the letter of approval.
• From the above definitions we can conclude that SEZ units/developers are being established under SEZ Act for authorized operations. These operations are mentioned in letter of approval issued to SEZ Units/Developers
• Now in IGST Act, Section 16(1) is amended to mention that zero rated benefit will be available only if supply to SEZ unit/developer is for authorized operations with effect of 01-10-2023.
• Now the question is, what is the procedure to confirm whether supply is SEZ unit or developer is for authored operations or not?
• Earlier in-service tax regime there was provision to obtain form A-2 from such SEZ unit/developer to supply them and for benefit of zero rated. For A-2 was to confirm that services/goods are being used for authorized operation of SEZ developer/unit.
• In GST there is a circular 48/22/2018 GST dated 14/06/2018. In para 2 of this circular, it is mentioned that supplies to a SEZ developer or a SEZ unit shall be zero rated and the supplier shall be eligible for refund of unutilized input tax or integrated tax paid only if such supplies have been received by the SEZ developer or SEZ unit for authorized operations. Means benefit of zero-rated supply shall be available to the supplier only if supply to SEZ developer/unit is for authorized operations only. However, endorsement to this effect is issued by the specified officer of the zone.
• In old case laws of service tax in many cases benefit of zero rated have been provided appellant even if FORM A-2 could not be produced on ground of procedural laps.
• In the GST act also, the same ground can be taken in future if such an issue results in litigations.
• Now with effect from 01-10-2023 Section 16(1) of IGST itself is changed in the sense that supply to SEZ unit/developer shall be eligible for zero rated only if such supply is for authorized operations.
• As per our opinion it will be compulsory to get such endorsement from the officer of the zone that supply to SEZ unit/developers shall be used for authorized operations only.
• However, such procedure is difficult in certain services to SEZ Units/developers e.g Services of hotels, restaurants. Walking customers can be employees of such SEZ units/developers. Obtaining such endorsed copy for authored operations from employees of SEZ units/developers is a very tedious and difficult task. So, it is advisable that the government should give clarifications in this regard.

Latest changes in Deposit of refund on non -realisation of Zero Rated Supply of goods by Latest GST Updates July 2023

• Deposit of refund on non-realization of sale proceeds of Zero-Rated supply of goods without payment of Integrated Tax
• Sub Section 3 of Section 16 of IGST Act 2017 is amended in the sense that from 01-10-2023, the sales proceeds of Zero rate supply of goods without payment of taxis to be realized within the time limit prescribed under the FEMA Act, 1999. If it’s not realized within the time prescribed, then refund granted will have to be deposited with applicable interest.

Our Analysis-:

• At present in rule 96B of CGST Rules 2017, aforesaid time limit already given for export of goods without payment of tax. Refund has to be deposited with applicable interest rate if sale proceeds of export of goods is not received within the period allowed under the FEMA Act 1999.
• As per Section 9 of Foreign Exchange Management (Export of Goods & Services) Regulations, 2015 The amount representing the full export value of goods / software/ services exported shall be realized and repatriated to India within nine months or within such period as may be specified by the Reserve Bank, in consultation with the Government, from time to time, from the date of export subject to certain conditions.

GST tweaks: Zero-rated supplies to be limited from 01-10-2023 by latest GST Updates 2023

Zero rated supply on payment of tax will be only for notified persons and notified goods or services with effect from 01.10.2023.

Our Analysis-:

• At present any registered person can supply a zero rated on payment of Integrated Tax.
• But now Sub Section (3) of Section 16 of IGST Act as amended by Finance Act 2021 and new sub section(4) as inserted in Section 16 by Finance Act 2021 is being made effective from 01.10.2023.

• So, the combined reading of both these sub sections (3) and (4) of Section 16 of IGST Act reveal that with effect from 01-10-2023.
• only notified persons will be able for Zero Rated supply on payment of IGST.
• only notified goods or services may be exported on payment of IGST.
• Of course, there is no change in zero rated supply without payment of IGST.

gst notification pdf

Sections of Finance Act, 2023 coming in to force from 01-08-2023 & 01-10-2023 by lGST Updates July 2023

Now the Sections of Finance Act, 2023 are being made effective as under

Note: All the above sections of the Finance Act, 2023 have already been discussed in our old presentation named GST Budget 2023 as per clauses of the Finance Bill. Please click here to refer that article https://gstsafar.com/gst-budget-2023/#more-1455

Special procedure to file manual appeal by latest GST Updates 2023

• Special procedure is provided by government to file manual appeal for order passed by the officers in respect of TRAN-1 / TRAN -2 by registered person on the direction of Hon’ble Supreme Court in case of Union of India V/s Filco Trade Centre Pvt Limited.
• Following is the summary for special procedure to file manual appeal.

Special procedure provided to be followed by Registered Person engaged in Manufacturing of goods specified in Schedule in Notification.

Notification 30/2023 Central Tax dated 31.07.2023 has specified the special procedure to be followed by registered persons engaged in manufacturing of following goods:

Note: Registered person must maintain following details as per the format prescribed in the notification.

Latest changes in Aadhaar-based biometric authentication is compulsory for GST registration in Puducherry by latest GST Updates 2023.

• Notification 31/2023 CT dated 31.07.2023 has amended Notification 27/2022 Central Tax dated 26.12.2022.
• This notification 27/2022 Central Tax says that proviso to sub-rule (4A) of rule 8 of the said rules shall not apply in all the States and Union territories except the State of Gujarat.
• In simple language we can say that prat provision to sub rule (4A) of rule 8 is applicable to Gujarat only. But now with effect from 31.07.2023 the abovementioned provision shall be applicable to Puducherry also in addition to Gujarat.
• This proviso is as under

Proviso to Sub rule 4A of Rule 8, CGST Rules,2017 states that Every application made under sub-rule (4) by a person, who has opted for authentication of Aadhaar number and is identified on the common portal, based on data analysis and risk parameters, shall be followed by biometric-based Aadhaar authentication, and taking photograph of the applicant.

• In simple language we can conclude as under

Procedure of Biometric-based Aadhaar authentication and taking photograph will be applicable if following conditions are satisfied.

• Applicant has opted for Aadhar Authentication
• Applicants are identified on common portal on data analytics and risk parameters.
• Application is in Gujarat or Puducherry.

GST Exemption in filing annual return whose aggregate turnover up to 2 Crore in 2022-23 by latest GST Updates July 2023.

The Registered persons with an aggregate turnover of up to two crore rupees in the Financial Year 2022- 23 has been declared to be exempt from filing the annual return for the Financial Year 2022-23.

“Account aggregator “defined for sharing information on the portal with consent by GST Updates July 2023.

Notification 33/2023 Central Tax dated 31.07.2023 has notified “Account Aggregator” with which information of taxable person shall be shared subject to consent. This is applicable from 01-10-2023.

Our Analysis:

• Section 158A was introduced in CGST Act 2017 by Finance Act 2023 for Consent Based sharing of information by taxable person with a notified system. This section has been made effective from 01.10.2023 by notification 28/2023 Central Tax dated 31.07.2023.
• In tis section it is mentioned that information furnished in application for registration, particulars for invoice, outward supply and other details will be shared with other system with the consent of supplier or recipient.
• It was mentioned in this notification that such other system will be notified with which information is going to be shared .Now the government has issued notification 33/2023 Central Tax dated 31.07.2023 notifying “Account Aggregator” witch which information of taxable person shall be shared per section 158A of CGST Act 2017
• Meaning of “Account Aggregator” has been defined in this Notification 33/2023 Central Tax as under “Account Aggregator” means a non-financial banking company which undertakes the business of an Account Aggregator in accordance with the policy directions issued by the Reserve Bank of India under section 45JA of the Reserve Bank of India Act, 1934 (2 of 1934) and defined as such in the Non-Banking Financial Company – Account Aggregator (Reserve Bank) Directions, 2016.

GST E-commerce made easier for small businesses with GST registration waiver by GST Updates July 2023

With Effect from 01-10-2023 the government exempted dealers from registering under GST if their turnover does not exceed the threshold limit and they make supplies of goods through an e-commerce operator, subject to certain conditions which are as follows:

• Such persons shall not make any inter-State supply of goods.
• Such persons shall not make supply of goods through electronic commerce operator in more than one State or Union territory.
• Such persons shall be required to have a Permanent Account Number issued under the Income Tax Act, 1961 (43 of 1961)
• Such persons shall, before making any supply of goods through electronic commerce operator, declare on the common portal their Permanent Account Number issued under the Income Tax Act, 1961 (43 of 1961), address of their place of business and the State or Union territory in which such persons seek to make such supply, which shall be subjected to validation on the common portal
• Such persons have been granted an enrolment number on the common portal on successful validation of the Permanent Account Number declared as per clause.
• Such persons shall not be granted more than one enrolment number in a State or Union territory.
• No supply of goods shall be made by such persons through electronic commerce operator unless such persons have been granted an enrolment number on the common portal; and
• where such persons are subsequently granted registration under section 25 of the said Act, the enrolment number shall cease to be valid from the effective date of registration.

Latest changes in GST Appointment of Officers to discharge duties for adjudication of notices by latest GST Updates July 2023

The CBIC has appoint the officers mentioned in column (5) of the table to exercise the powers and duties conferred or imposed on officers mentioned in column (4) of the table in respect of notices mentioned in column (2) of the table for the purpose of adjudication of notices mentioned in column (3) of the table.

Explanation for GST rates on construction of apartment in ongoing project of specified schemes by GST Updates July 2023

Notification 06/2023 Central Tax dated 26.07.2023 has inserted the following explanation in Sr No 3(ie) of Notification No 11/2017 Central Tax (Rate).“This item refers to sub-items of the item (iv), (v) and (vi), against serial number 3 of the Table as they existed in the notification prior to their omission vide notification No. 03/2022- Central Tax (Rate) dated the 13th of July 2022.’

• Let’s understand the reason behind this explanation.
• Sr No 3(ie) of notification 11/2017 Central Tax (Rate) is for the construction of specified schemes as under

• These items (iv), (v) and (v)i of Sr No 3 have been deleted w.e.f. 13.07.2022 by notification 03/2022 Central Tax dated 13.07.2022 as GST rates for services mentioned in these items were increased from 12% to 18%
• Whereas item no (ie) of Sr No 3 is in relation to construction of apartment in ongoing project in relation to items (iv), (v) and (vi) of Sr No 3 where prompter has exercised option to pay tax at the rate specified against these items no.
• Now as these three items have already been deleted, the item (ie) of sr no 3 was without any reference.
• Therefore government has given clarification that item (ie) pertains to rate mentioned in item no (iv), (v) and (vi) even these items have been deleted from Sr No 3 of Notification 11/2017 Central Tax.

Changes in time limit to exercise option to pay GST on forward charge by GTA by GST Updates July 2023

GTA will now have to exercise the option to pay GST under forward charge on or after 1^st January of the preceding financial year but not later than 31^st march of the preceding financial year. Earlier GTA was to exercise such option on or before 31^st March in preceding financial year.

Example:

Suppose GTA wants to pay GST under forward charge for the Financial Year 2024-2025, then it can exercise option on or after 31.01.2024 but on or before 31.03.2024.

Now GTA will not have to exercise option to pay GST on forward charge every year by GST Updates July 2023

• Now once the option to pay GST on forward charge is exercised by GTA for any financial year, then it will be deemed that the option is exercised for next and future financial years.

• However, if GTA wants to revert to RCM, then it will have to file declarations in Annexure VI to revert under RCM on or after 01^st January of preceding financial year but not later than 31^st March of the preceding financial year.

Fumigation in warehouse of Agriculture produce will not be exempt now by latest GST Updates 2023

• Fumigation in warehouse of Agriculture produce service will not be exempt now as it will not be treated as support services for agriculture, forestry, fishing, animal husbandry.

• This is because sub clause (h) of serial no.24 of notification no.11/2017 dated 28-06-2017 has been omitted.

Exemption for Satellite Launch Service shall be available to any person by GST Updates July 2023

• With effect from 27.07.2023, the exemption for Satellite Launch Services now shall be available to any person. Earlier this exemption was available only to the following persons.

• Indian Space Research Organization (ISRO)
• Antrix Corporation Limited
• New Space India Limited.

Latest Changes in declaration by GTA on Tax Invoice in the case of GST on forward charge by latest GST Updates 2023

• In case GTA exercise option to pay GST on forward charge, then such GTA will have to give the declaration in its tax invoice.
• This declaration formation has been given in Annexure -III of Notification 13/2017 Central Tax (Rate)
• This declaration has been changed to some extent as a consequence of changes in the time limit of exercising option by GTA by notification 06/2023 Central Tax (Rate) dated 26.07.2023.

New amended declaration is as under

I/we have taken registration under the CGST Act, 2017 and have exercised the option to pay tax on services of GTA in relation to transport of goods supplied by us from the Financial Year_____under forward charge and have not reverted to reverse charge mechanism.

Latest GST Changes in the GST Rates of Goods by GST Updates July 2023

With effect from 27-07-2023, following GST rate will applicable for below mentioned goods

Changes in Exemption on supply gold/silver/platinum by Nominated agencies

• Changes in list of nominated agencies for foreign trade policy has been carried out by the government for IGST Exemptions on import of gold by RBL bank and ICBC bank.
• Notification No.26/2018 states that government has exempt the intra state supply of goods (gold, silver or platinum) falling in first schedule of custom tariff act, 1975 when its supplied by nominated agency under “Export Against Supply by Nominated Agency referred in paragraph 4.41 of Foreign Trade policy with Chapter 4 of handbook procedure to registered person with conditions prescribed.
• Now the government has made the changes in the above para with following words which is effective from 27- 07-2023:
• The word paragraph 4.41 is substituted with 4.40.
• Explanation for Foreign Trade policy is also changed with following :
  1. “Foreign Trade Policy” means the Foreign Trade Policy, 2023 notified by the Government of India in the Ministry of Commerce and Industry vide notification No.1/2023, dated the 31^st March, 2023, published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-Section (ii) vide S.O. 1565(E), dated the31st March, 2023;
• Explanation for Handbook of procedures is also change with following:
• “Handbook of Procedures” means the Handbook of Procedure, notified by the Government of India in the Ministry of Commerce and Industry vide Public Notice No.01/2023, dated the 1^st April 2023,Extraordinary, Part-I, Section 1, vide F. No. 01/75/171/00016/AM 23/FTP, cell dated the 1^st April,2023;

Clarification on calculation of interest in case of wrong availment of IGST credit and reversal thereof by GST Updates July 2023

The circular discusses the clarification on charging interest under section 50(3) of the CGST Act, 2017, for cases where IGST credit has been incorrectly taken by a registered person. The main issue was about the calculation of interest based on the available credit in the electronic credit ledger under IGST, CGST, and SGST. There was also a query about considering the credit of compensation cess for the same purpose.

Clarification to deal with difference in ITC between GSTR-3B and GSTR-2A for the period 01-04-19 to 31.12.2021

• This circular gives beautiful clarification regarding excess ITC over GSTR-2A. It talks about excess of ITC over GSTR-2B from 01.01.2022 also.
• We have tried to simplify this circular in step by step by including the certain para of circular 183/15/2022 also. So let’s understand in following manner.

A.      Concept of comparison with GSTR-2A was introduced on 9^th October, 2019

• Concept of comparison of ITC with GSTR-2A was introduced in Rule 36(4) of CGST Rules 2017 with effect from 09/10/2019

• The availment of ITC by comparison with GSTR-2A was as under from time to time

B. Circular 183/15/2022-GST dated 27.12.2022 was issued to resolve the litigations for 2017-18 & 2018-19 for differences between GSTR-3B and GSTR-2A

• When ITC claimed in GSTR-3B exceeds GSTR-2A, department always issues notices particularly during GST audit for demand of such excess credit claimed.
• Officers issue notice for ITC excess claimed ITC as compared to GSTR-2A for 2017-18 and 18-19 also particularly during GST audit. The fact was that concept of GSTR-2A was introduced in October-2019.
• In such case officers were arguing that as per clause (c ) of Section 16(2) of CGST Act 2017, tax must have been paid by supplier for taking ITC
• To resolve this dispute, government finally issued Circular 183/15/2022-GST dated 27.12.2022

Lets’ understand this circular in summary

1. Officer shall get details from taxpayer regarding all invoices on which ITC taken in GSTR-3B but not reflecting in GSTR-2A.
2. Confirm the following issues as per Section 16 of CGST Act 201
   • Such taxpayer is having tax invoice.
   • He has received goods or services or both.
   • He has made payment to supplier (value +tax)
3. In case ITC of GSTR-2A exceeds by Rs 5 lakhs over ITC of GSTR-3B officer will ask such taxpayer to product a certificate of CA or CMA certifying that tax in respect of such invoices paid by supplier.
4. In case ITC of GSTR-2A does not exceed by Rs 5 lakhs over ITC of GSTR-3B officer will ask such taxpayer to produce certificate of supplier certifying that tax in respect of such invoices paid by supplier.
5. However, officer will not grant any relaxation in this issue in following case
   • Supplier has not filed GSTR-1 of 2017-18 till due date of GSTR-1 of March 2019
   • And Recipient has claimed ITC on GSTR-3B of 2017-18 filed after due date of GSTR-3B of Sep-18 till date of GSTR-3B of March, 19

C. Finally this Circular 193/05/2023-GST dated 17.07.2023 is issued to resolve the litigations for the period 01/04/2019 to 31/12/2021

D. This Circular 193/05/20232-GST dated 17.07.2023 says that ITC more than GSTR-2B will not be available from 01.01.2022

• Clause (aa) to sub-section (2) of section 16 of the CGST Act has been inserted from 01.01.2022 This Clause (aa) is as under

“ the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37”

• By the same time Rule 36(4) of CGST has also been amended from 01.01.2022 mentioning that outward details of supplier shall communicated in GSTR-2B and ITC will not be available if it is not communicated in GSTR-2B
• That means now comparison of GSTR-3B with GSTR-2B has complete legal background from clause (aa) of Section 16 of CGST Act 2017
• Therefore this circular says that ITC will not be allowed more than GSTR-2B from 01.01.2022. Therefore there is no question of applicability of circular 183/15/2022 for the period commencing from 01.01.2022

E.   Applicability of this circular

Instructions given in this circular will apply only to the ongoing proceedings in scrutiny/ audit/ investigation, etc. for the period 01.04.2019 to 31.12.2021 and not to the completed proceedings. However, these instructions will apply in those cases during the period 01.04.2019 to 31.12.2021 where any adjudication or appeal proceedings are still pending.

TCS Compliance in the Age of Multiple E-commerce Operators- Clarification|

• The Central Goods and Services Tax Act, 2017 (CGST Act) under Section 52 mandates Tax Collected at Source (TCS) on E-commerce Operators (ECOs). The present query stems from situations where multiple ECOs are involved in a single transaction, especially in light of platforms like Open Network for Digital Commerce (ONDC).

Current-Centric Model of E-commerce:

• A single ECO manages both the buyer and seller interfaces.
  • This ECO collects payment, deducts TCS as per Sec 52, credits the TCS to the seller’s GST cash ledger, and passes the remaining amount to the seller post deducting their service charges.

ONDC Mode of E-commerce or similar models

• ONDC stands for Open Network for Digital Commerce
  • There can be two distinct ECOs in a transaction – one catering to the buyer and the other to the seller.

• The buyer-side ECO collects the payment, deducts its commission, and transfers the balance to the seller-side ECO.

Which ECO should handle the TCS deduction in ONDC model or similar model?

• There can be multiple ECOs in a single transaction
• Buyer side SEO and Seller Side ECO
• Buyer side SEO is one who provides an interface to the buyer
• Seller side SEO is one who provides an interface to the seller
• Both ECOs (buyer-side and seller-side) are categorized as ECOs under Sec 2(45) of the CGST Act.
• Now the main issue is that who will be responsible for TCS and other related compliances as mentioned in section 52 of CGST Act 2017?
• So that matter has been clarified by this circular 194/06/2023-GST
• To understand in easy manner, we have presented this clarification in table form as under

Understanding GST Implications: Warranty Replacements & Repair Services Explained” -Clarification

This GST Updates July 2023 give clarity in this issue as under

• During the warranty period, these replacements and services are given free of charge without any separate consideration.
• Due to differing interpretations by investigative bodies and field formations, there’s confusion about GST liability and the need for Input Tax Credit (ITC) reversal for such services.
• The industry seeks clear guidance on this matter to prevent unnecessary litigation.
• Therefore this circular 195/07/2023-GST has been issued to deal with GST in different scenario.
• The clarification of this circular has been presented here in table form with examples to understand it in very easy manner.

Clarification on taxability of shares held in a subsidiary company by the holding company.

• The circular clarifies that holding shares in a subsidiary company by a holding company is not considered a supply of service under GST.
• Shares are not classified as goods or services, and the act of holding shares alone does not constitute a taxable transaction.
• For instance, if Company A owns shares in Company B, this shareholding activity is not subject to GST.

Use FORM GSTR-2B for refund from 01.01.2022 – Clarification

• Earlier before Insertation of sub rule (4) in rule 36 of CGST Rules, 2017, refund of accumulated ITC was available even not reflected in GSTR-2A as per clarification in Para 36 of Circular No 125/44/2019-GST dated 18.11.2019
• But due to Insertation of sub-rule (4) in Rule 36 of CGST Rules, 2017, this para 36 of Circular 125/44/2019- GST was modified by circular 135/05/2020-GST dated 31.03.2023.
• The modified para 36 of circular 125/44/2019 –GST says that that refunds are limited to ITC from invoices found in the supplier’s GSTR-1 and recipient’s GSTR-2A.

• Thereafter, changes were made through notifications: Section 16(2)(aa) of the CGST Act and Rule 36(4) of the CGST Rules, effective from 01.01.2022. This led to confusion about whether refund eligibility should be based on FORM GSTR-2A or GSTR-2B?
• Therefore the para 36 of circular 125/44/2019-GST dated 18.11.2019 is modified again by this circular 197/06/2023-GST dated 17.07.2023
• No this modified para 36 of circular 125/44/2019 says that refund of accumulated ITC will be restricted to ITC as per GSTR-2B for the period commencing from 01.01.2022 as availment of ITC has been linked with GSTR-2B w.e.f. 01.01.2022
• In short, the refund process changed based on FORM GSTR-2B data from January 2022 onward.
• Existing refund claims processed before this circular won’t be reevaluated

Latest Changes in undertaking under FORM GST RFD-01 – Clarification by latest GST Updates 2023

Para 7 of circular 125/44/2019-GST dated 18.11.2019 is modified by this circular 125/44/2019-GST dated 18.11.2019 and wordings of undertaking in FORM GST-RFD-01 is also modified.

I. Reason for changes in para 7 of Circular No 125/44/2019

Para 7 of circular No 125/44/2019-GST dated 18.11.2019 is modified by this circular 197/09/2023- GST dated 17.07.02023 due to the following reasons

• Section 42 of CGST Act 2017 omitted w.e.f. 01/10/2022.
• Section 41 of CGST Act 2017 is amended by removing concept of provisionally accepted ITC w.e.f 01.10.2022 by Finance Act 2022
• Form GSTR-2 and FORM GSTR-3 have also been omitted from CGST Rules

II. Modified para 7 of Circular No 125/44/2019

The modified para 7 of Circular No 125/44/2019 GST dated 18.11.2019 is as under

“The applicants applying for refund must give an undertaking to the effect that the amount of refund sanctioned would be paid back to the Government with interest in case it is found subsequently that the requirements of clause (c) of subsection (2) of section 16 of the CGST Act have not been complied with in respect of the amount refunded. This undertaking should be submitted electronically along with the refund claim.”

Undertaking in FORM GST RFD 01:- “I hereby undertake to pay back to the Government the amount of refund sanctioned along with interest in case it is found subsequently that the requirements of clause (c) of subsection (2) of section 16 of the CGST/ SGST Act have not been complied with in respect of the amount refunded.”

III. Changes to Annexure –A in Circular 125/44/2019

The modifications made to Annexure-A of Circular No. 125/44/2019-GST involve streamlining the declaration related to sections 16(2)(c) and section 42(2), now focusing solely on sections 16(2)(c). Additionally, the need for uploading “Copy of GSTR-2A” and “Self-certified copies of invoices in Annexure-B” is eliminated. This update simplifies and refines the documentation process for refund claims.

Adjusted Total Turnover will be as per Explanation of Rule 89(4) while calculating refund of ITC for Zero Rates supply. – Clarification

• This circular 197/09/2023 –GST dated 17.07.2023 has been issued to clarify that while calculating Adjusted Total Turnover, value of goods exported out India to be included as per Explanation inserted in sub rule 4 of Rule 89 of CGST Rules, 2017
• Let’s understand this circular and logic behind this in simple and step by step manner as under

a) Rule 89(4) of CGST Rules 2017

This rule is for calculation of refund for ITC in the case of Zero Rated Supply without payment of tax

b) Formula for refund of ITC in the case of zero rated supply

• Rule 89(4) of CGST Rules 2017 gives formula for refund calculation as under.
• Formula for refund of accumulated ITC in the case of zero rated supply of goods without payment of Integrated Tax is as under

Refund Amount = Net ITC x Turnover of Zero-Rated supply of goods + Turnover if zero rated supply of Services

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Adjusted Total Turnover

a) Definition of Turnover of Zero-Rated supply of goods was amended

• This definition of Turnover of Zero-Rated supply of goods itself given in sub rule 4 of Rule 89
• This definition of Turnover of Zero-Rated supply of goods was amended by Notification 16/2020 Central Tax dated 23.03.2020-GST dated 23.03.2020 was amended as under

• So we can say that here export value of goods cannot be taken more than 150% of similar supply in Domestic market of similar place or supplier. So while calculating refund on accumulated ITC, this Domestic supply is also needs to be compared.

b) Amended definition of Zero Rated supply of goods to be taken in Adjusted Total Turnover also

• Definition of Adjusted Total Turnover also given in sub rule 4 of Rule 89.
• Now the circular 147/03/2021 dated 12.03.2021 was issued clarifying that Adjusted Total Turnover will include Zero Rated Supply of goods as amended
• That means in Adjusted Total Turnover also, Zero-Rated Supply of goods cannot be taken more than 150% of similar supply in Domestic market of similar place or supplier
• In other words the restriction of 150% of the value of like goods domestically supplied, as applied in “turnover of zero-rated supply of goods”, would also apply to the value of “Adjusted Total Turnover” in Rule 89 (4) of the CGST Rules, 2017.

c) Explanation inserted in Sub rule 4 of Rule 89 of CGST Rules 2017

• Now the following explanation was inserted in sub rule 4 of Rule 89 of CGST Rules 2017

For the purposes of this sub-rule, the value of goods exported out of India shall be taken as –

1. the Free on Board (FOB) value declared in the Shipping Bill or Bill of Export form, as the case may be, as per the Shipping Bill and Bill of Export (Forms) Regulations, 2017; or
2. The value declared in tax invoice or bill of supply,

• So one can observe that, restriction of 150% of the value of like goods domestically supplied, is not mentioned in this explanation.
• Now the doubt is raised, whether this explanation will be applicable while calculating Adjusted Total Turnover?

• In other words, whether zero rates supply of goods to be taken with restriction of 150% of the value of like goods domestically supplier or not while calculating Adjusted Total Turnover?

d) Clarification of this circular 197/09/2023-GST

• In order to resolve the doubt as mentioned, this circular 197/09/2023 –GST dated 17.07.2023 has been issued.
• This circular has clarified that while calculating Adjusted Total Turnover, the value of goods exported out of India to be calculated as per explanation inserted in sub-rule (4) of sub rule 89 of CGST Rules, 2017.
• Goods exported out of Indian is part of zero rates supply.
• So now the doubt has been resolved and it is clear that while calculating Adjusted Total Turnover, Zero Rated supply of goods (for export) will be without any restriction of 150% of the value of like goods domestically supplied.

Refund of TAX paid on export of goods/ receipt for export of service after specified period -Clarification

Example in the case of export of goods

• A Ltd issued export invoice for goods on 01/01/2023.
• Export invoice is without payment of IGST.
• A Ltd claims refund for January -2023 for accumulated ITC for such export.
• A Ltd could not export this goods even up to 31/03/2023.
• Therefore A Ltd pays IGST with interest on 14/04/2023 on this export invoice issued on 01/01/2023
• Now A Ltd actually exports goods on 28/05/2023.
• A Ltd claims refund for January -2023 for accumulated ITC for such export.
• Here A ltd will be entitled for refund of IGST paid on 14/04/2023 also as above mentioned.
• However refund of Interest paid with this IGST will not be received
• Means in this example it is clear that exporter is entitled for refund of both ITC and payment of export in this kind of situation

Example in the case of export of services

• B Ltd issued export invoice for service on 01/01/2022.
• Export invoice is without payment of IGST.
• B Ltd could not receive payment in foreign currency within 31.12.2022
• Therefore B Ltd pays IGST with interest on 14/01/2023 on this export invoice issued on 01/01/2022
• Now B Ltd actually received payment in foreign currency on 25/02/2023.
• B Ltd claims refund for January -2022 for accumulated ITC for such export.
• Here B ltd will be entitled for refund of IGST paid on 14/01/2023 also as above mentioned.
• However refund of Interest paid with this IGST will not be received.
• Means in this example it is clear that exporter is entitled for refund of both ITC and payment of export in this kind of situation

Refund in category of “Excess Payment of tax”

• It has been clarified in this circular that such refund of IGST paid as mentioned above will be filed under the category “Excess payment of tax”
• Till the time availability of category “Excess payment of tax” in refund application form, it could be filed in “Any other” category on portal

E-Invoice applicable for supply made to Government etc. registered for TDS purpose – Clarification

The circular clarifies that registered individuals whose turnover exceeds the prescribed threshold for e- invoicing must issue e-invoices for supplies to Government Departments, establishments, agencies, local authorities, and PSUs that are registered solely for tax deduction at source under section 51 of the CGST Act. Such entities are considered registered persons under GST law and are subject to compulsory e- invoicing as per rule 48(4) of CGST Rules.

Tax Treatment of Services between Head Office and Branch Offices – Clarification

This circular gives clarification on the taxability of activities performed by an office of an organization in one state to the office of that organization in another state, which are registered as distinct persons under section 25 of CGST Act 2017

This entire issue is to be understood based on the following situation.

HO-Stands for Head Office

BO-Stands for Branch office

Situation:

One Business entity is having HO in State-1, and Branch Office in other states. Issue -1 HO procures input services (security) from third party.

Issue- 1 HO provides internally generated services to BOs.

Issues clarified regarding services between distinct persons under CGST Act:

Questions:

Question-1 HO can distribute ITC for common input services to BOs directly or via ISD mechanism? Question-2 For internally generated services, what will be the value of service if full ITC is available to BO?

Question-2 For internally generated services, what will be the value of service if full ITC is not available to BO?

This circular has clarified the matter. Here we have presented it table form as below

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