GST: CBEC Clarifies Issues related to Job Work [Read Order

The Central Board of Excise and Customs (CBEC) last day clarified the issues related to job work under the Goods and Services Tax (GST) regime.
“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 circular clarifies that 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. 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.
It further said that the job worker, in addition to the goods received from the principal, can use his own goods for providing the services of job work. “As per the provisions of CGST Act, the job worker is expected to work on the goods sent by the principal and whether the activity is covered within the scope of job work or not would have to be determined on the basis of facts and circumstances of each case.”
It also provides norms for registration for the principal/ job worker, the movement of goods, return of goods, issue of invoice etc.
It was further clarified that the act of non-receiving the goods by principal or no supply from the part of job-worker would attract penalty under the GST laws. In such cases, the goods would be deemed to have been supplied by the principal to the job worker on the day when such inputs or capital goods were sent out to the first job worker.
With regard to the claim of input tax credit, it was clarified that the principal can avail input tax credit irrespective of the fact whether the inputs or capital goods are received by the principal and then sent to the job worker for processing, etc. or whether they are directly received at the job worker’s place of business/premises, without being brought to the premises of the principal. It is also clarified that the job worker is also eligible to avail ITC on inputs, etc. used by him in supplying the job work services if he is registered.


Stage set for E-Way Bill from April 1

Businesses, tax dept gear up; Karnataka, AP to be among the first States to adopt system

With less than a week left for the implementation of the much-delayed E-Way Bill across the country, tax officials and businesses seem to be well prepared this time around.

“The IT system is fully geared up for the E-Way Bill. It has been thoroughly checked and can handle a much higher load,” said Prakash Kumar, Chief Executive Officer, GST Network (GSTN), adding that it has also gone through multiple rounds of testing.

The software for the E-Way Bill is being developed by the National Informatics Company and is being monitored by the GSTN.

In an interview to BusinessLine, Kumar said the system has been designed to generate as many as 75 lakh E-Way Bills per day with a higher throughput between 4 pm and 9 pm, when the traffic is expected to be higher.

“We have also opened it up to GSPs and have given APIs to large transporters who have over two lakh transactions every month. This will allow them to directly create e-way bills in bulk,” he said.

However, the major challenge has been that no one has an estimate of the number of trucks and vehicles transporting cargo in the country on a daily basis. “We tried various sources and also highlighted it with the GST Council,” Kumar said.

The E-Way Bill, which is an electronic ticket for movement of goods worth over ₹50,000 for distances above 10 km as part of the Goods and Services Tax, will be rolled out for inter-State transport from April 1.

For intra-State movement of goods, the E-Way Bill system is expected to be introduced in a phased manner from April 15, according to the GST Council decision earlier this month. All States will be on board by June 1.

Karnataka and Andhra Pradesh are expected to be among the first to introduce E-Way Bill for intra-State movement. “The country has been divided into four zones and depending on the preparedness of each State, they will roll out the E-Way Bill for intra-State movement in phases,” said another official.

The CBEC is understood to be in talks with commercial tax departments of States to work on the roll-out schedule.

The E-Way Bill had started on a trial basis from January 16 and was expected to be rolled out from February 1. However, it was deferred due to technical glitches on Day 1.

Meanwhile, after raising many concerns over possible delays and harassment, businesses too seem to have now become prepared for the E-Way Bill.

To address these worries, the CBEC had earlier this month notified amendments to the E-Way Bill rules relaxing several provisions such as allowing even job workers to generate these documents and providing for longer validity.

Industry players now say that many of their concerns have been addressed. Most businesses have also tried out generating E-Way Bills.

“Everyone is geared up. But what happens on April 1 and whether the system can take the load of lakhs of E-Way Bills being generated is the question. Also, we have to see how the ground-level implementation takes place,” noted an expert.

Welcoming the launch of the E-Way Bill, Anjani Mandal, Co-Founder and CEO of Fortigo, said: “It should not be delayed, but should be implemented uniformly across the country, including the date for implementation.”

While businesses are prepared for it, he, however, noted that instead of April 1, the E-Way Bill could have started from April 10 or 12 so that there is enough time for all shipments of the previous financial year to have left the factory and reached their destination.



GST and Ecommerce Trigger 45,000Cr Investment in Storage and Warehousing Sector

In three years, different categories of warehousing will create about 200,000 jobs at different levels of specifications and specialisations: JLL India

According to JLL, a global and India’s largest real estate services firm, it is estimated that close to Rs 45,000 crores (Cr) will be invested in creating storage facilities across India from 2018 to 2020. In these three years, different categories of warehousing will also create jobs to the tune of 200,000 at different levels of specifications and specialisations. Warehousing will witness the highest investment; over Rs 35,000 crore in the next three years, mostly in creating storage facilities for retail and consumer goods. Cold Storage and agricultural warehousing will see approximately Rs 7,500 crore. These two aspects of warehousing will lead the way in the future as they contribute greatly to regular living and lifestyle. Container storage may end up attracting approximately Rs 500 crore during the same period mostly to boost India’s logistical prowess.

The report notes that the two prominent changes that have created significant growth prospects in warehousing are firstly the implementation of GST in India and creating a unified taxation, and the rapid growth of ecommerce necessitating building of large scale warehousing across various locations.

Ramesh Nair, CEO and country head, JLL India, said, “Warehouse and logistics is one of the biggest growth areas that has emerged in recent times. We have seen Rs 125,000 crore invested through private equity (PE) in warehousing space since 2014. While it made up approximately 10 percent of total PE investment in 2017, the share is expected to grow claiming larger share of investment. India’s logistics and warehousing sector is rapidly transitioning through a revolutionary phase. There have been multiple initiatives associated with large investments (both domestic and international) within this segment, clearly underscoring the upcoming trend.”

What has necessitated a sharp growth in warehousing in the country is the growth in ecommerce and a shortening turnaround time for delivery. Apart from ecommerce, the next big sectors of space are the electronic and white goods that command significant warehousing spaces in urban and semi-urban locations. These are also sectors that, despite their incremental requirements in warehousing, are averse to owning requisite space, therefore mostly reliant on third party warehousing facilities. It is estimated that Grade A and B warehousing stock will grow at a CAGR of 21 percent year-on-year taking the total tally of warehouse space in India to 247 million square feet by the end of 2020 almost doubling the current warehousing stock of 139.8 million square feet in 2017.

It is further estimated that the prime beneficiaries of the new wave of growth in warehousing will be the peripheral locations of tier 1 and tier 2 cities. This investment comes on the back of nearly Rs 10,000 crore invested in 2017 alone.

According to JLL’s analysis estimating the potential of various locations as strong warehousing centers in the future, aside from metropolitan and tier 1 locations are Surat, Kanpur/ Lucknow, Ranchi, Madurai, Coimbatore, Ludhiana/Ambala, Tiruchirapalli, Nasik, Madurai and Jaipur.

Amongst the tier 2 cities, these cities have shown potential for strong growth that will allow them to emerge as warehousing hubs in a hub and spoke model. These cities are strategically located to be in proximity to other major markets and allow transportation to happen to their feeder locations in less than six hours. These cities have the added benefit of favorable policies for setting up businesses and have high manufacturing potential.


GST: Firms fear dispute over input tax credits

Indian companies are considering setting aside funds to cover risks arising from rejection of their claims for input tax credit on raw materials



New Delhi: Indian companies fear that input tax credit claimed for GST paid on raw materials may be disputed by tax officials later and are considering setting aside funds to cover risks arising from rejection of their claims.

Experts say there is no guarantee that the input tax credit and transitional credit (accrued under the earlier tax system) claimed by the companies will be approved when it is scrutinized by tax authorities at the end of the fiscal year.

With key features of the goods and services tax (GST)—such as matching of invoices—yet to be implemented, the tax is now based on a self-declaration mechanism. Companies are availing provisional input tax credit until the GST Council brings in the invoice-matching process.

“Since provisional credit has been claimed, companies will have to review and audit credit balances, consider provisioning and make sure credit balances are appropriate, given system matching has not yet been implemented,” said Archit Gupta, chief executive officer at online tax-filing portal Cleartax.

“Also, if returns are not filed by suppliers, it may lead to credit being disallowed at the time of matching, whenever it takes place or when a new return filing procedure is in place,” said Gupta.

Bipin Sapra, a partner at consulting firm EY, said there are a number of areas in which transitional credit is being disputed by the tax authorities, including credit claimed against duties such as the Krishi Kalyan Cess.

“This could be classified as contingent liability by companies. However, companies may not provide for credit that is disallowed due to procedural reasons,” he said.

The Central Board of Excise and Customs, or CBEC, had voiced concerns last year that taxpayers have availed high transitional credit, pegged at around Rs1.5 trillion.

“The GST Council is now designing an annual tax return for 2017-18 that taxpayers have to file by December 2019. That annual return can have a column for settling any outstanding tax credit claims,” said a tax official, who asked not to be named.

An official at lobby group Confederation of Indian Industry said the uncertainty is not new for the Indian industry. “Even in the earlier tax regime, tax credits were denied on audit and inspection,” the official said, adding that the worry should be more for companies that have filed exaggerated credit claims.

To simplify the compliance process under GST, which was implemented from 1 July, the GST Council has put on hold the need to file forms that would have matched the claims of the buyers and suppliers. Instead, taxpayers now only fill a simplified form known as GSTR 3B and get input tax credit without any matching of claims.


Business with nil tax liability may get to file GST returns bi-annually

The GST Council, headed by Finance Minister Arun Jaitley and comprising his state counterparts, will consider the proposal to simplify the GST return forms in next meeting.


Businesses having zero tax liability for six consecutive months under GST may soon get relief once the proposal to allow such entities to file returns only twice a year gets the GST Council’s nod.

According to recent data, as much as 40 per cent of return filers under the Goods and Services Tax (GST) regime have nil tax liability and will not have to file monthly returns once the new simplified return filing procedure is finalised.

The GST Council, headed by Finance Minister Arun Jaitley and comprising his state counterparts, will at its next meeting consider the proposal to simplify the GST return forms.

“Taxpayers whose liability is nil for six consecutive months will be required to file six-monthly return,” an official told PTI.

As per the proposal prepared by the revenue authorities, the return filing date would be spread out. Businesses having annual turnover of up to Rs 1.5 crore will have to file return by 10th of next month, while others can file return by 20th, the official added.

The number of returns filed by both small and large taxpayers would be 12 in a year.

When GST was implemented on July 1, businesses were mandated to file three returns a month, and one annual return, taking the total number of returns in a year to 37.

However, businesses complained about the complex nature of the filing process and also faced glitches on GST Network system. Following this, the GST Council set up a committee to suggest a simplified return filing process.

“The idea is to make return filing process simple and implement it in a phased manner,” the official said, adding that initially would be simple and on the basis of experience gained, more features would be added over time.

The official said after last date of filing of the return, businesses will get three months to rectify their returns by adding, modifying details or correcting the missing invoices.

Thereafter, the input tax credit would be reconciled with the suppliers’ tax paid invoice.

The official said taxpayers having annual turnover below Rs 1.5 crore would not be required to quote harmonised system of nomenclature (HSN) in their return form.

AMRG & Associates Partner Rajat Mohan said reduction in the number of returns and spreading out return filing date for businesses should solve most of the complications.

“However, anxiousness around matching the tax credit with tax payments still exists, trade and industry need to witness the extent to which credit matching mechanics would be made seamless, effortless and automated with the collective wisdom of software experts at GSTN,” Mohan said.

The GST Council at its meeting in November last year had set up a Committee for Simplification of return design under GST Network Chairman, and tasked it to come up with a simplified return form for taxpayers with nil liability.

It had also kept in abeyance matching of invoice and filing of GSTR-2 and 3.

In December, the GST Network — the company handling the IT backbone for the new indirect tax regime — came out with “one-click filing” of GSTR-3B for those taxpayers who have zero liability.

Currently, businesses file summary return GSTR-3B and final sales return GSTR-1.


Tax department issues notices to realtors for inflated credit claims under GST

About 400 real estate developers, including listed companies, have received notices from the indirect tax department for inflated credit claims under the Goods and Services Tax (GST), said two people aware of the development.

The developers have been asked to pay a fine of 100% and interest of about 18% on the wrongly claimed credit, according to the notices. Many developers, especially those with a substantial presence in commercial property and retail malls, have been served with the notices, tax officials said.

“About 20 developers from Mumbai, including some of the listed players, have submitted input credit claims for raw material that had already been used when GST was rolled out. These companies will now face steep fines,” said a tax official.

The companies had claimed credit on input costs such as steel, cement and sand used for under-construction buildings to offset future GST liabilities, tax officials said. However, the indirect tax department claims that some developers also claimed credit in cases where buildings were already completed when GST was rolled out on July 1, 2017.

“A developer had already constructed 10 floors of a building on July 1, 2017. But while taking credit he claimed that only two floors had been constructed and availed of additional credit for eight floors,” said another person aware of the development. In this case, the tax department has disallowed credit of Rs 100 crore and demanded penalty of an equivalent amount.

Industry experts said the rules for availing tax credits are very transparent. Eligibility of input tax credits for real estate developers depends on whether the apartments are sold before receipt of occupation certificate and the proportion of activities completed in a project before and after July 1.

GST implementation may impact IOC by Rs 4,200 crore

Indian Oil Corporation (IOC), the nation’s largest fuel retailer, may have to bear an impact of Rs 4,200 crore per annum due to non-availability of input tax credit under Good Service Tax (GST) on procurement of services and capital goods, oil minister Dharmendra Pradhan said.

Indian Oil Corporation (IOC), the nation’s largest fuel retailer, may have to bear an impact of Rs 4,200 crore per annum due to non-availability of input tax credit under Good Service Tax (GST) on procurement of services and capital goods, oil minister Dharmendra Pradhan said.

“Pursuant to various amendments notified after introduction of GST, it is estimated that there may be an impact of the order of around Rs 4,200 crore per annum towards non availability of proportionate input tax credit of GST paid on procurement of inputs, input services and capital goods, due to exclusion of major petroleum products from the purview of GST,” Pradhan said while replying to a question in Parliament on the impact of GST on IOC.

Crude Oil, Natural Gas, Petrol, Diesel and Aviation Turbine Fuel, while included under the GST Constitutional Amendment Act, are presently, outside the scope of levy of GST, forcing the oil companies to comply with both the old and new tax regime. However, the tax credit cannot be transferred between the two systems.

IOC’s Director-Finance A K Sharma had recently said the company has accumulated stranded input tax credit close to Rs 700 crore post the roll out of GST on 1 July.

Input tax credit allows an oil producer at the time of paying the tax on the final output to deduct the tax already paid on inputs including purchase of machinery and crude oil. As most of the core petroleum products have not been included in the GST ambit, the tax credit which could have been availed cannot be availed under the new tax regime.

Apart from IOC, state-run petroleum explorer Oil and Natural Gas Corp (ONGC) will have to bear a hit between Rs 6,000 crore and Rs 7,000 crore on account of GST, its former Director-Finance A K Srinivasan had last year said, adding that all upstream and downstream companies collectively will have to bear an impact of around Rs 25,000 crore.

Pradhan had said in September last year Finance Minister Arun Jaitley has raised the issue of inclusion of petroleum products in GST.

Shell India Chief Executive Officer (CEO) Nitin Prasad, too, had told ETEnergyWorld in an interview non-inclusion of petroleum products under GST will make oil and gas business expensive. Vedanta Cairn Oil and Gas CEO Sudhir Mathur had also voiced similar concerns on the negative impact of GST on the country’s upstream sector.

India: GST Update: CBEC’s ‘Refund Fortnight’ Initiative, Clarifications On Export-Related Refund Issues

Given the growing concerns in the industry due to the delay in processing of refund claims, the government has taken steps in the form of initiating a refund processing drive and issuance of circular to clarify various issues faced during the processing of refund claims.

‘Refund fortnight’ initiative by CBEC

The Central Board of Excise and Customs (CBEC) has started a nationwide drive from 15 March 2018 to 29 March 2018 to expedite processing of refund claims of exporters. Key highlights of this drive are:

  • Special refund cells with dedicated manpower and infrastructure shall be operated at all Customs formations during this time for speeding up the sanction of refunds.
  • New facilities have been provided for sanction of IGST refunds which were held up due to:
    • Mismatch in the invoice related information provided in shipping bills, vis-à-vis GSTR-1/Table 6A – Special procedure has been put in place for removal of errors.
    • Errors associated in the filing of Export General Manifest (EGM) in gateway airport – Options have been given to officers at Inland Container Depot (ICD) or at the gateway port, depending on the error to make necessary amendments.
  • A facility to check the status of the refund claims has been provided on ICEGATE – Exporters may simply log into and register to know the status of their shipping bills.

Clarifications on export-related refund issues

The government vide Circular No. 37/11/2018-GST dated 15 March 2018 has issued certain clarifications in relation to the difficulties being faced by the exporters in obtaining refunds. Certain key clarifications are:

  • ITC in cases of drawback
    Input Tax Credit (ITC) is not available in cases where the exporter claims drawback in respect of central tax. In this regard, certain clarifications have been issued which are:
Drawback claimed for Whether ITC for GST is available
Basic customs duty Yes
Central GST Yes, but only in respect of state GST
  • Delay in executing Letter of Undertaking (LUT)
    It has been clarified to the field officers that in cases where zero-rated supplies have been made before filing LUT and the LUT is filed later, substantive benefits of zero rating should not be denied. In such cases, delay in filing LUT should be allowed and the facility for export under LUT can be allowed on a retrospective basis, taking into account the facts and circumstances of the case.
  • Fresh filing of application in case of a deficiency memo
    Once a deficiency memo has been issued in respect of a refund application, the applicant will have to file a fresh refund application manually in Form GST RFD-01A. This fresh application should be accompanied by the original Application Reference Number (ARN), debit entry number generated originally and a hard copy of the refund application filed online.
  • Self-declaration in case of refund application
    It has been clarified that a self-declaration form stating that the claimant of refund has not been prosecuted for any offense under the CGST Act or the IGST Act is not required to be filed with every refund claim. For this purpose, the self-declaration filed at the time of submission of LUT should suffice.
  • Refund of transitional credit
    Transitional credit pertains to duties and taxes paid under the erstwhile central excise and service tax laws. Therefore, it cannot be treated as part of ‘net ITC’ for calculation of amount eligible for a refund in accordance with sub-rule (4) and (5) of Rule 89 of the Central Goods and Services Tax Rules, 2017.
  • Discrepancy between values of GST invoice and shipping bill/bill of export
    In certain cases, a discrepancy between the value of GST invoice and shipping bill/bill of export has been observed. This has resulted in refund claims not being processed. In such cases, the refund should be sanctioned at the lower of the two values.
  • Refund of taxes paid under the erstwhile laws
    • Any claim of refund of tax/duty paid under the erstwhile indirect tax laws has to be made in accordance with the procedures laid down under such laws. Any claim in this regard made in Form GST RFD-01A under GST will be rejected.
    • If any claim for refund of CENVAT credit is partially or fully rejected, the amount so rejected will lapse and therefore it cannot be transitioned into GST.
  • Frequency of filing of refund claims
    The exporter at his convenience may file a refund claim for one calendar month/quarter or by clubbing successive calendar months/quarters. However, such clubbed months/quarters should not be spread across different financial years.
  • BRC/FIRC for export of goods
    It has been clarified that proof of realization of export proceeds for processing of refund claims related to the export of goods has not been envisaged in the law and therefore, Bank Realization Certificate (BRC)/Forward Inward Remittance Certificate (FIRC) should not be insisted upon by officers for processing of such refund claims.
  • Supplies to merchant exporters
    • Supplies to merchant exporters are taxable at a concessional rate of 0.1% in accordance with Notification No. 40/2017-Central Tax (Rate) dated 23 October 2017 and Notification No. 41/2017-Central Tax (Rate) dated 23 October 2017 respectively. It has been clarified that such benefit is optional.
    • Furthermore, the exporter will be eligible to take credit of tax paid at such concessional rate. The supplier of such goods is also eligible to claim a refund on account of inverted tax structure.
  • Documentation required for processing of refunds
    Given that due to delays in operationalizing the requisite modules on the GST portal, the refund claims are being filed in a semi-electronic environment, and a list of documents have been specified for processing of refund claims. The same has been encapsulated in the table below.
Type of refund Document
Export of services with payment of tax (refund of IGST paid on export of services)
  • Copy of Form RFD-01A filed on the common portal
  • Copy of Statement 2 of Form RFD-01A
  • Invoices with reference to input, input services, and capital goods
  • BRC/FIRC for export of services
  • Undertaking/Declaration in Form RFD-01A
Export (goods or services) without payment of tax (refund of accumulated ITC of IGST/CGST/SGST/UTGST/Cess)
  • Copy of Form RFD-01A filed on the common portal
  • Copy of Statement 3A of Form RFD-01A generated on the common portal
  • Copy of Statement 3 of Form RFD-01A
  • Invoices with reference to input and input services
  • BRC/FIRC for export of services
  • Undertaking/declaration in Form RFD-01A.
  • These clarifications will apply to all exports made on or after 1 July 2017.

SKP’s Comments

  • The ‘refund fortnight’ drive is an excellent initiative for exporters to understand their errors during the filing of returns and enables them to process returns quickly.
  • The clarifications issued by way of the circular are comprehensive in nature and should speed up the processing of refund claims by minimizing the errors made by exporters and reducing the demand for avoidable procedural compliances from the GST field officers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

CBEC member holds meeting with exporters on GST refunds

At least ten export promotion councils and industry chambers on Friday discussed with the government solutions for expediting the process to clear pending dues to exporters on account of Goods and Services Tax (GST).

In a bid to expedite GST refund clearances to exporters, the Central Board of Excise and Customs (CBEC) took up issues like invoice mismatch and procedure to expedite shipments at Integrated Container Depots and asked the councils to share their issues.

“They want everyone to speak to members and know their issues,” said an industry representative who was present at the meeting.

The Centre and states have sanctioned more than Rs 10,000 crore as GST refunds to exporters.

Export promotion councils from engineering, chemical, pharmaceutical and leather sectors, among items took part in the meeting where initiatives under the ‘GST refund fortnight’ were discussed.

The CBEC field formations have launched ‘GST refund fortnight’ beginning March 15 in which tax officers are guiding exporters with their stuck refund.
GST was rolled out from July 1, 2017 but refunds to exporters have been delayed for over eight months. While exporters complain that delay in GST refunds has blocked their working capital, the revenue department has argued that there are discrepancies in forms submitted by exporters with the customs department and those with the GST Network (GSTN).

Over 68,000 companies registered in 8 months post GST: Union minister

NEW DELHI: More than 68,000 companies have been registered in eight months following the implementation of the Goods and Services Tax (GST) regime, Union Minister P P Chaudhary said today.

GST –the biggest tax reform– was rolled out from July 1, 2017.

“The total number of companies registered during the period from July 2017 to February 2018 (post GST) is 68,299,” the minister of state for corporate affairs said in a written reply to the Lok Sabha.

In comparison, the number of such entities was 63,106 between July 2016 and February 2017. Thus increasing trend in the number of companies’ registrations has been maintained post GST, the minister added.

In a separate reply, Chaudhary said that over 17 lakh companies had been registered in India till last year, out of which only 7,270 entities were active.

“There were only 7,270 active listed companies out of 17.21 lakh registered companies as on December 2017 whereas in December 2014 there were 7,261 active listed companies out of 14.39 lakh registered companies in India,” he added.

Besides, the ministry has filed prosecution against 780 listed companies due to non-filing of financial statements and annual returns.

He further said that the names of over 2.26 lakh companies have been struck off from Registrar of Companies for failing to comply with regulatory requirements as on December 2017, with Maharashtra accounting for most of these firms.
ROCs identified 2.97 lakh companies during 2017-18 which were not filing their financial statements or annual returns for a continuous period of two or more fiscals and, prima facie, were not conducting any business in operation

Out of the total deregistered firms, as many as 59,849 companies are from Maharashtra, followed by Delhi (43,925), Tamil Nadu (24,723), Karnataka (18,165), Telangana (16,817) and Gujarat (11,389).
The minister, in a separate reply, said that as many as 48,886 prosecutions against the firms for violation of Companies Act, were pending as on January 2017 with the various courts. These have been filed by ROCs.

In 2016-17 (till November 2017), 4,775 fresh prosecution cases were filed. Thus, out of total 51,661 cases, a total of 4,703 prosecutions were disposed of and 46,958 prosecutions were pending.