Budget Proposals -2023 Series: Asking Questions and Finding Answers [Part I]

Place of Supply in case of transportation of goods: Section 12(8) of IGST Act

This blog is one of a series of topic-specific FAQs concerning Budget 2023 proposals. It addresses the practical issues raised due to proposed changes.

Vivek Laddha, Manish Gupta, Pooja Patwari

FAQ 1. Where FedEx India has collected the freight from the company located in Australia in respect of transportation of goods by way of courier. Goods are exported by M/s. Madhav Pvt. Ltd. located in India. Whether section 12(8) is having the role in determining the place of supply?

Law Brothers’ View: In such a case, the service recipient is located outside India and therefore the place of supply shall be determined in accordance with section 13 of IGST Act and not as per section 12(8) of IGST Act. In such as case, the place of supply shall be outside India (i.e. location of recipient). Needless to state that amendment in section 12(8) does not have relevance in such a situation.

FAQ 2. How the place of supply is proposed to be determined in case of supply of services by way of transportation of goods where such services are provided to exporter of goods and service provider both are located in India?

Law Brothers’ View: Now the place of supply for such services u/s 12(where location of supplier and location of recipient both are in India), will be determined regardless of the destination of goods.

If it is the case of B2B supply, place of supply shall be the location of recipient and in case of B2C supply, place of supply shall be the location at which such goods are handed over for their transportation (i.e. pick up point).

FAQ 3. Whether the above proposition is applicable for services by way of transportation of goods provided by courier service provider?

Law Brothers’ View: Yes, this is equally applicable totransportation of goods by a courier agency.

FAQ 4. Whether the above proposition is applicable transportation of goods by road or by air or by water inlands?

Law Brothers’ View: Yes, this is equally applicable to transportation of goods by road, vessel or aircraft.

FAQ 5. Whether the place of supply provision of transportation of goods is applicable in case of CIF transaction?

Law Brothers’ View: No. In case of CIF transaction , it holds the colour of composite supply and transportation services being ancillary supply will partake the colour of principal supply by virtue of section 8 and section 2(30) of CGST Act.

Budget Proposals -2023 Series: Asking Questions and Finding Answers [Part IX]

OIDAR Services and Non-taxable online recipient [Section 2(16) and 2(17) of IGST Act]

This blog is one of a series of topic-specific FAQs concerning Budget 2023 proposals. It addresses the practical issues raised due to proposed changes.

Vivek Laddha, Manish Gupta, Pooja Patwari

FAQ 1. XYZ platform (OIDAR service provider) located outside India provides subscriptions to playmovies etc. to MrsRanu (an individual, subscribed for her own purpose) located in India. Who will have to pay the tax as per amendment?

Law Brothers’ View: In such a case, XYZ platform has to pay the IGST. There is no change in this position post amendment.

FAQ 2. XYZ platform (OIDAR service provider) located outside India provides E-books’ subscriptions to Mr.Gagan Jain for his business purpose (who is not registered under GST law, located in India). Who will have to pay the tax as per the amendment?

Law Brothers’ View: At present, the tax is required to be paid under RCM (being import of services) by Mr.Gagan Jain. Post amendment, XYZ platform will have to pay the IGST on the same. Mr.Gagan Jain is a non-taxable online recipient as per the amended definition u/s 2(16) of IGST Act.

Budget Proposals -2023 Series: Asking Questions and Finding Answers [Part VIII]

Sale of Custom Bonded warehoused goods and High Sea Sales [Sec 7(2)(a) read with Schedule III) and Section 17(3)

This blog is one of a series of topic-specific FAQs concerning Budget 2023 proposals. It addresses the practical issues raised due to proposed changes.

Vivek Laddha, Manish Gupta, Pooja Patwari

FAQ 1. What is the treatment of the following activities?

• Supply of warehoused goods to any person before clearance for home consumption [Para 8(a) of Sch III)]
• High Sea Sales [Para 8(b) of Sch III)]

Law Brothers’ View:

First: These are not treated as supply as per section 7(2)(a) r/w Schedule III of CGST Act.

Second: These are not required to be declared in GSTR 1 and GSTR 3B but these are declared in Table 5F of GSTR 9 under the table having the description ‘Non GST Supply (includes no supply)’.

Third: Para 8(a) is included in the value of exempt supply by virtue of amendment brought in vide Finance Bill, 2023 and consequently it becomes a reason of higher reversal of common credit.

FAQ 2.  What is the intent of the amendment brought in respect of schedule III?

Law Brothers’ View: Para 7 and Para 8(a) and 8(b) were inserted vide Finance Act, 2018 but not with retrospective effect. Now lawmakers have come up to remove this anomaly by stating that these shall be deemed to be made effective from 01 July 2017.

FAQ 3. What is not fair with this amendment?

Law Brothers’ View: This amendment is a half-hearted step because it is stated in the Finance Bill, 2023 that no refund shall be made of all the tax which has been collected, but which would not have been so collected, had subsection (1) been in force at all material times.

In our view, the validity of this amendment may be tested in Court as per article 265, article 14 and article 19 of The Constitution of India.

Budget Proposals -2023 Series: Asking Questions and Finding Answers [Part VII]

Interest on delayed Refunds [Section 56]

This blog is one of a series of topic-specific FAQs concerning Budget 2023 proposals. It addresses the practical issues raised due to proposed changes.

Vivek Laddha, Manish Gupta, Pooja Patwari

FAQ 1. What is the background of proposed amendment in section 56?

Law Brothers’ View: There is an explicit provision of granting the 6% interest in case of delay in giving the refund to the applicant of refund. Still, the department has not taken steps in many cases in the application of the provision.

Further in cases where the deficiency memo is issued by the department in RFD-03, the computation of the time limit has been debated as to whether it is to be started fromthe date of filing of the application or the date of the resolution of deficiency. It appears that the amendment is brought to consider this situation.

FAQ 2. What is the new in the amended provision?

Law Brothers’ View:

What is not changed?

• Event of triggering the interest liability on account of exchequer: Delay in refund (i.e. giving the refund after 60 days from the date of application)
• Computation of days for the interest: We do not notice any change in this i.e. Refund shall be computed for the delay period (to be reckoned from 61^st day till the date of the refund)

What is the change?

• In our view, the proposed amendment contemplates to provide the manner of computation (What can be the way of computation of interest other than I= P×T×R, where every variable is clear)!!, conditions and restriction in respect of such interest payable.
• For operationalize this provision, the rules will be issued by the government.

Budget Proposals -2023 Series: Asking Questions and Finding Answers [Part VI]

Refund of Tax – Provisional basis [Section 54(6)]

This blog is one of a series of topic-specific FAQs concerning Budget 2023 proposals. It addresses the practical issues raised due to proposed changes.

Vivek Laddha, Manish Gupta, Pooja Patwari

FAQ 1. What is the background of proposed amendment in section 54(6)?

Law Brothers’ View: In the case of any claim for refund on account of zero-rated supply of goods or services or both made by registered persons, law provides the refund on a provisional basis, 90% of the total amount so claimed, excluding the amount of input tax credit provisionally accepted.

It is noticeable that the concept of provisional ITC is done away w.e.f. 01 Oct 2022 vide Finance Act, 2022.

With this the reading has been redundant and thereby it is proposed to omit the wordings ‘excluding the amount of input tax credit provisionally accepted’.

FAQ 2. What is the practical implication of the amendment?

Law Brothers’ View: It is just to align the context and to make a feasible reading of connected provisions.

FAQ 3. What is the practical implication of the amendment?

Law Brothers’ View: It is just to align the context and to make a feasible reading of connected provisions. It is also worth to note that in majority of the cases, 100% amount is being refunded in one go by the department for their administration convenience.

Budget Proposals -2023 Series: Asking Questions and Finding Answers [Part V]: GSTR 1, GSTR 3B, GSTR 8, GSTR 9 & 9C:

This blog is one of a series of topic-specific FAQs concerning Budget 2023 proposals. It addresses the practical issues raised due to proposed changes.

Vivek Laddha, Manish Gupta, Pooja Patwari

FAQ 1. What is the background of proposed amendment in section 37, 39, 44 and 54?

Law Brothers’ View: At present, the law provides a time limit to furnish the form GSTR 1, GSTR 3B, GSTR 8, GSTR 9 & 9C.

But law has not provided the time bar within which the same can be furnished. Now the proposed amendments provide that it shall not be allowed to furnish the form GSTR 1, GSTR 3B, GSTR 8, GSTR 9 & 9C after the expiry of a period of 3 years from the due date of furnishing the said form.

E.g. Where the due date of GSTR 9 and GSTR 9C of FY 2022-23 is 31 Dec 2023 (assuming it is not extended),with this proposal, it can be construed that it will not allow to furnish GSTR 9 and GSTR 9C post 31 Dec 2026.

FAQ 2. Amendments seek to tighten the screw in line with other provisions, isn’t it?

Law Brothers’ View: Law has already provided the various provisions intending to adhere with the time lines, such as

• Late fee,
• Notice u/s 46,
• Assessment of non-filer of returns,
• Penalty provisions
• Cancellation of registration,
• Disabling the generation of e-way bill and
• Disabling the subsequent filing of the forms etc.

Now one more feather, sorry, one more restriction is imposed here !!

FAQ 3. What types of practical problems can be foreseen from this amendment?

Law Brothers’ View: In appeal cases of revocation of cancellation of registration after the expiry of the 3 years from the due date, this provision may be a bar.  Let’s see, how the law plays with such a situation.

FAQ 4. Is there any ray of hope of relaxation in this?

Law Brothers’ View: Amendments provide that the Government may, on the recommendations of the Council, by notification, subject to such conditions and restrictions as may be specified therein, allow a registered person or a class of registered persons to furnish the Form GSTR 1, GSTR 3B, GSTR 8, GSTR 9 & 9C, even after the expiry of the said period of three years from the due date of furnishing such form.

Once the provisions are made effective, government may come up with the notification to cater to the situations of practical difficulties.