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Taxpayers encouraged to quote these references against delay in processing of refunds under GST

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Over the past year, there has been an upscale in exports & the business entities are in active participation to boost the exports. The momentum of such entities is trickled by a delay in the refund under GST law. A specific reference is drawn towards the taxpayers under the state government ( TNGST) either not received their refund on time or it is paid after endless delay. Even automatic refunds under export of goods are withheld in few cases.   Refund from the goods or services exported act as a working capital for the businesses & it is the encouragement to provide to the global markets at competitive prices. Working capital is the backbone of the business & when the same is repressed for unknown factors the livelihood of the businessmen is affected which directly violates the right to life. The principle of zero rating is also defeated by loitering approval of refunds. The officer not acknowledging refund application on Form RFD 02 is evident that they sloth over the pr

Analysis of GST order served to Biocon Ltd

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Biocon Ltd. has been imposed a penalty of around ₹ 3 crores for non-compliance with GST laws. The company has received an order of adjudication imposing a penalty of Rs 3,03,78,465 dated February 22, 2024, from the office of Deputy Commissioner of Commercial Taxes, Divisional GST Office, Bangalore, Biocon Ltd said in a regulatory filing. The demand is related to input tax credit reporting error in GST monthly returns, denial of input tax credit on sales and promotional expenditures, valuation of Corporate Guarantee & denial of exemption on export of services.  Play of provisions of GST law:  Denial of ITC on Sales:  It is to be noted that the ITC on sales can be denied only upon non-compliance with the conditions prescribed in Section 16(2) of the CGST Act, 2017 & if the sale is in the form of Gift, free samples or personal consumption.  Biocon being a bio-pharmaceutical company, supply of sample medicines to the doctors/ physicians is a common practice in industry. The interpr

Last day to freeze your balance in Reversal and Reclaim Ledger- Things not to miss

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 As per GSTN advisory dated 29th Dec 2023, today is the last day to to amend declared opening balance for ITC reversal.  As per circular No.170/02/2022 para 4, credits that needs permanent reversals such as under Section 17 (5), rule 42 & 43 etc shall also be included in Table 4A. They have to be separately reversed under Table 4B (1). Earlier, blocked credit under Section 17 (5) would not form part of Table 4A and would be shown only in Table 4D (1). Now, even such blocked credits under Section 17 (5) shall be included in Table 4A and reversed through Table 4B (1). In other words, the practice of excluding blocked credit and claiming only eligible ITC in Table 4A can no longer be followed. Similarly, the Banking companies and Financial Institutions, who opt to avail 50 % ITC under Rule 38, shall show the entire ITC in Table 4A and show the 50 % reversal in Table 4B (1). In Table 4 B (2), all other temporary reversals, other than what is covered in 4B (1) have to be shown. Table 4D

Relevance of Section 16(4) thinning after the introduction of Reversal & reclaim ledger and Rule 37A?

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The changes in Table 4 of the Form GSTR 3B as per notification vide 14/2022 dated 05th July 2022 has taken a new turn when the reversal reclaim ledger was introduced inserting Rule 88D of the CGST Rules, 2017. Kindly click here for the details on the ITC reversal ledger.  The question now arises is that, when there is an ITC reversal ledger, does Section 16(4) of the CGST Act, 2017 hold its validity? In order to fetch the validity let’s dive into the provisions of Section 16(4) of the CGST Act, 2017. Section 16(4) of the Act, 2017 reads as:  “A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the thirtieth day of November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier”. If the same is read with Rule 37A of the CGST Rules 2017:  “Where input tax credit has been availed by a registered per

Classification of Services cannot be the subject matter of writ petition

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The Hon’ble Madras High Court in the case of KPR Concrete Readymix v. State Tax Officer [Writ Petition Nos. 35949, 35953 of 2023 January 08, 2024] held that the dispute which revolves around the classification of services, does not fall within the limited category of cases in which a Show Cause Notice may be assailed in proceeding under Article 226 of the Constitution of India.  The issue involved in the dispute is that KPR Concrete Readymix (“the Petitioner”) is engaged in providing transportation services to their customers. The Petitioner classified its services under the Service Accounting Code (“SAC”) 996511 - Road transport services of Goods and paid a GST rate of 12% on such services.  The State Tax Officer (“the Respondent”) issued a notice in FORM DRC-01A, alleging short payment of tax on the services provided by the Petitioner which should be classified under SAC 996601-Rental services of road vehicles including buses, coaches, cars, trucks and other motor vehicles, with or w

Time of supply for Gift Vouchers and Gift Cards being Actionable Claims, is the Date of Redemption u/s 12(4)(b) of CGST Act

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In a very important decision the Honourable Madras High Court in the case of  Kalyan Jewellers held that GST is applicable on Gift Vouchers and Cards as they fall under the category Actionable Claims. A Single Bench of the Madras High Court has held that gift vouchers and gift cards are actionable claims and Goods and Services Tax ( GST ) is applicable on the date of redemption under Section 12(4)(b) of the Central Goods and Services Tax ( CGST ) Act.  A Writ Petition was filed under Article 226 of Constitution of India, for finding that the time of supply of the gift voucher/ PPIs issued by the petitioner to its customers.  As a part of the sales promotion, the petitioner formulated a Scheme by issuing different types of Pre-Paid Instruments and/or/Gift Vouchers.  These ,“Gift Vouchers” are sold both in its retail outlets as well as through online portals by engaging the services of third party service providers.  In the same issue, the Authority for  Advance Ruling  Tamilnadu by Kaly

SEZ units are not exempt from compensation cess under GST

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The Honourable Andhra Pradesh High Court in a very important decision has held that no exemption from payment of compensation cess under the Goods and Services Tax (GST) is available on import of goods by units in Special Economic Zones (SEZs). The judgement was delivered in the case of M/s.Maithan Alloys which was engaged in the business of manufacturing ferro alloys and was established as an SEZ unit The high court in the above case observed that Sections 7, 26 and 50 of the SEZ Act, 2005, are the three main provisions which allow the SEZ units to claim the exemptions of duties, tax, cess and certain drawbacks and concessions. The SEZ Act is a self-contained law that provides exemptions from various taxes and duties, including those on goods imported and exported by developers and units in SEZs.  Therefore, the exemptions have to be looked into from the provisions of the said Act and not from elsewhere. The key requirement for Section 7 to apply is that the law which imposes the tax,