E-Waybill

E – Waybill

 

Gati Kintetsu Express Pvt Ltd. v/s Commissioner, Commercial Tax of MP & others W.P.No. 12399 of 2018 07/05/2018

 

– It is mandatory to file Part-B including vehicle Number before the goods are loaded in the vehicle.

 

 

Garuda Timber Traders V/s Commissioner, State GSD Department, Kerala & Others WP(C).No. 26848 of 2018 08/09/2018

 

Incomplete e-way bill – Part-B not uploaded and carrying printout. – The petitioner shall provide the bank guarantee for the tax & penalty & bond for the value of goods and get the goods provisionally released.

 

Tvl. R K Motors Vs State Tax Officer (Madras High Court) WP (MD)No. 1287 of 2019

 

Seizure of goods as the goods delivered to a different place than specified

In the case of Tvl. R K Motors Vs State Tax Officer (Madras High Court) WP (MD)No. 1287 of 2019, the high court held that when there is no intention to evade tax, the officers should have guided the driver to take the goods to the destined location instead of being harsh and vindictive.

 

M. R. Traders vs. Assistant State Tax Officer ALEXANDER THOMAS, J. WP (C) NO. 2713 OF 2020(L) (JANUARY 31, 2020

 

Minor difference in address cannot be ground for detention and penalty.

Competent Authority had detained goods of assesse under transport as well as vehicle on ground that address shown in invoice was different from address shown in E-Way bill He further issued on assesse a notice under section 129(3) specifying amount of tax and penalty payable for release of goods and vehicle

K.P. Sugandh Ltd vs State Of Chhattisgarh 53 dated 16 March 2020, WP No. 36 of 2020

 

Seizure of goods for reasons such as undervaluation, wrong classification In the case of K.P. Sugandh Ltd vs State Of Chhattisgarh 53 dated 16 March 2020, WP No. 36 of 2020, the high court held that goods cannot be seized for the wrong valuation though the officers have the option of intimating such mistake to assessing authority.

 

Integrated Constructive Solutions v. ACST & E-Cum-Proper Officer 2020

 

Since Competent Authority had passed order in a mechanical manner and had ignored corrected and updated E-way Bill as produced by assessee within two hours of detaining goods, tax and penalty imposed under section 129(3) was unsustainable. As assessee had made procedural lapse and violated provisions of GST Act, it was liable to pay minor penalty under section 122.

 

Neva Plantation (P.) Ltd. v. ACSTE-CUM-PROPER OFFICER NORTH 2020

 

The Assessee was engaged in supply of exempted goods – It sent a machine for repair to its supplier in a vehicle and issued delivery challan – In delivery challan it was specifically mentioned that ‘not for sale’ and ‘only for repair’ – Competent Authority intercepted said machine and having found that E-way Bill had not been generated for movement of machine detained machine and imposed tax and penalty under section 129(3) upon assessee.

Held that: The assessee had transported machine without the cover of proper documents (E-way Bill was one of them). Hence the assessee had violated provisions of the CGST Act/Himachal Pradesh GST Act. For violating provisions of the Act, it would be liable to pay penalty under section 122(1). The tax and penalty imposed upon the assessee under section 129(3) deserved to be set aside.

 

 

Hemanth Motors v. State of Karnataka 2021

 

The Assessee purchased certain goods from a dealer located at Husur, Tamil Nadu under tax invoice dated 31-12-2018 – Said dealer dispatched goods to business premises of assessee situated at Bengaluru after generating e-way bill – E-way bill was valid from 31-12-2018 to 1-1-2019 – Conveyance carrying goods reached at assessee’s business premises on 1-1-2019 before expiry of validity of e-way bill but goods could not be unloaded on same day and were being unloaded on next day, i.e., on 2-1-2019 – In meanwhile Competent Authority visited business premises of assessee and taking view that e-way bill had to be valid even at time of inspection when goods were being unloaded from conveyance passed an order under section 129(3) and raised demand upon assessee – Appellate Authority dismissed appeal filed by assessee.

 

 

  

Consequences of late filing of GSTR 3B Return

 

Consequences of late filing of GSTR 3B Return

1. Late Fees under Section 47 of the CGST Act, 2017 –

Starts Immediately after due date Late fees is the first consequence you will face for non-filing of GSTR 3B. The late fees will increase every day until it hits the capping limit. The fee will automatically be added in the next month’s GSTR 3B. Moreover, you can’t edit it, or you can’t proceed to file the return until you pay the late fees.

2. Interest under section 50 –

Starts Immediately after due date If a taxpayer is required to pay tax within prescribed time but fails to pay, then for the delay in payment, interest @18 percent will be levied. The interest will be payable only if you use cash ledger balance to pay taxes. In other words, if you have enough input tax credit and you do not pay taxes using net banking/challan/balance already added in the cash ledger, then there won’t be any interest leviable on you. There is no concept of maximum capping in case of interest.

3. Restricting E-Waybill Generation Under Rule 138E-

Restriction will be applicable if two consecutive GSTR 3B is not filled: If a person has not furnished the returns for a consecutive period of two tax periods, then the generation of E-Way Bill will be restricted for all types of outward supply of that person. Once the GST Returns are filled, the restrictions will be lifted.

4. Penalty Under Section 122(1)(iii) –

Levy after 3 months of due date for certain specific offences, there are provisions of penalties in GST. One of such offences is not paying collected tax amount within 3 months from the due date. The Penalty will be equal to the amount of tax collected subjected to a minimum of Rs. 20,000.

5. Suspension and subsequent cancellation of GST Registration under Section 29(2) –

May be initiated after 6 Months of Due date If a regular taxpayer does not file a return for a continuous period of six months, then the GST Officer may cancel the GST registration of such person. Before cancellation, the officer will issue a Notice seeking clarification from such person and that person is required to reply in 7 working days, giving reasons to the officer for not cancelling the GST registration.

6. Recovery Proceedings under Section 79

This is the strictest step that can be taken for not filling GSTR 3B. Lots of reminders and notices are required to be served before initiation of the recovery. The flow of reminders and procedure is as under:

1. First Reminder – 3 Days before Due Date to nudge taxpayer to file Return on or before due date

2. Second Reminder – Immediately after due date to inform that return was not filled on due date

3. Notice – 5 Days after Due date, notice in Form GSTR 3A, requiring the person to file returns in 15 Days

4. Order – Any time after the lapse of 15 Days of service of notice in form GSTR 3A, provided return is not filled. Officer may proceed for assessment. Here the officer will compute the tax liability to the best of his/her judgement. The Officer may consider the details of outward supply furnished by the person, inward supply shown by his/her suppliers, e-waybill details etc. Order will be issued in ASMT – 13 and summary will be uploaded in Form DRC -07 by officer.

5. Initiation of proceedings: After 30 Days of serving of order in form ASMT -13, the Officer may initiate the recovery proceeding under section 78 and actual recovery under section 79. In the GST regime, officers are empowered to recover the tax payable from your debtors, refund dues, seized Goods, Property etc.

7. The last consequence: Restriction of Input Tax Credit of recipients: One of the main conditions for claiming Input Tax Credit is payment of tax to the Government by supplier on supplies, for which the recipient is claiming Input Tax Credit. Now, If the GSTR 3B is not filled then it can be assumed that the supplier hasn’t yet paid the taxes to the Government.

 

10 Common Mistakes made by a Taxpayer in GST

 10 Common Mistakes made by a Taxpayer in GST

10 Common Mistakes made by a Taxpayer in GST

1. Forgetting Filing of GST Returns in case of NO BUSINESS.

Many times, it had been seen that taxpayers take GST registration to start a business idea or simply to open a current account in a nationalized bank. But to save the money in fees of GST Consultant Services they avoid filing of GST Returns, if they do not have any transaction in the business. So, this is to tell you that even NIL GST returns attracts late

fees if not filed on due time.

2. Update contact information of taxpayers and not of tax professionals.

In the view of saving some time in filing of GST Returns most of the tax practitioners update Phone Number and Email ID of themselves and not of taxpayers. This may create problem as sometimes it has been seen that department of GST was not able to communicate the taxpayer due to non-availability of contact info and ultimately may result to harsh provisions for taxpayers and even for tax practitioners.

3. Booking ITC (Input Tax Credit) without following rules properly.

In GST it is clearly stated that for booking and availing ITC one has to adhere some rules and conditions, one of the important rule is that taxpayer should have possessed the Tax Invoice for the purchases on which he is booking ITC, second main rule is the invoice for which ITC is going to be booked should be visible in GSTR-2A/2B but in many cases this is found that taxpayers takes ITC on the basis of invoices only which may result in dis-allowance of credit so booked.

4. Non-Payment of GST in Reverse Charge Mechanism.

Reverse charge was imposed by GST as same as it was in VAT or Service Tax previously. There are certain supplies in GST which attracts GST on reverse charge manner, which means GST on those supplies have to be paid by the receiver or buyer of the supply and not by the supplier or seller of the supply.

Most common supply in RCM is supply of services by goods transport agencies, hence one should take care for the payment of GST under reverse charge mechanism. On the other hand, supplier of such services has to be cautious that he needs not to pay GST on his supplies otherwise it will be counted as double payment of tax.

5. Non-Filing of Final Return GSTR-10.

Person takes GST registration in view of starting a business but not everyone gets successful in having a good business. So, they finally decide to surrender the GST number they have taken but, in this case, they don’t know, or they forget to file Final Return, i.e., GSTR-10.

GSTR-10 has to be filed within stipulated time after cancellation of GST number otherwise it will attract late fees at rate of Rs.100 per day in CGST and Rs.100 per day in SGST (maximum to Rs.10000). So be careful that you need to file Final Return GSTR- 10 if you get your GST number cancelled.

6. Wrong understanding of LUT.

LUT (Letter of Undertaking) is a document which is required to be filed by the exporters if they are opting for the export of goods or services without payment of tax. On many websites and many blogs, we can read that LUT is valid for 1 year, but that’s not completely true. As per the rules LUT filed during the year is valid till the end of the particular Financial Year. For Ex- LUT filed on 01st April 2019 will be valid till 31st march 2020 and LUT filed on 01st January 2020 will also be valid till 31st March 2020. So please update your LUTs on time.

7. Non Updation of Additional Place of Business (APOB).

Taxpayers may have more than one business premise in the same state, but they show only their main office in the GST Registration. Although non updation of additional place of business does not affect GST revenue nor taxabilities but still this is a violation of GST law which can ultimately result in impose of penalties on the taxpayer.

8. Not mentioning Exempted Turnover in GST Returns.

Exempted supplies or zero-rated supplies does not have any effect on the GST liability to be paid, this fact makes taxpayers lenient for the reporting rules for this sale.

Every business has to show its exempted or nil rated or zero-rated sales in its GST returns 3B and GST Return 1. Otherwise, it will be considered as concealment of facts.

9. Enjoying benefits of Composition Scheme without being eligible.

Composition Scheme was launched to provide benefits or relaxations to the small taxpayers of the industry, but all benefits have its own conditions. For taking benefits of Composition Scheme, one has to adhere with some conditions otherwise he will be considered as ineligible and may result in unplanned GST liability.

10. Not mentioning HSN summary in GSTR-1.

Yes, it is important to mention HSN wise summary in the GST Return-1, though it’s not mandatory for all but everyone seems to take this condition as an option which is not good and will take you on the wrong side at the end.

Pure Agent under GST

 Pure Agent under GST

Pure agent

• Agent works as a mediator. 

• Takes supply of goods or services on behalf of principal.

• Incurs and receives expenditure on behalf of principal.  

CGST Rule 33 says that a “Pure agent” means: - 

• A person who enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both 

• Neither intends to hold or holds any title to the goods or services or both so procured or supplied as pure agent of the recipient of supply.

• Does not use for his own interest such goods or services so procured as pure agent. 

• Receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account. 

Conditions 

• The supplier acts as a pure agent of the recipient of the supply when he makes the payment to the third party on authorization by such recipient. 

• The payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service and 

• The supplies in the form of goods or services procured by the pure agent from the third party are in addition to the services he supplies on his own account. 

Interest under GST

 Interest Under GST

Section 50(1) 

i) where tax is liable to be paid and 

ii) such person has failed to pay either full or part thereof. 

iii) Interest shall be paid for the default period i.e for the period for which the tax or any part thereof remains unpaid.

Notification no. 13/2017 CT dated 28.06.2017

APPLICABILITY OF NORMAL RATE OF INTEREST

Section 50(1) and 50(2) – Normal rate – 18%

APPLICABILITY OF HIGHER RATE OF INTEREST

It emanates from the foregoing provision that section 50(3) is applicable only in following two situations namely:

(a) undue or excess claim of ITC u/s 42 (10), or

(b) undue or excess reduction in output tax liability u/s 43 (10)

Therefore, since the mechanism as required for the applicability of interest under the enabling provision section 42 has not been implemented till date, there cannot be applicability of interest section 50(3) read with section 42.

Taxability of any transaction there are two provisions, 

one is charging provisions which provides the conditions for taxability of any event and 

other is machinery provision which takes care of computation of tax. 

It is now a settled legal position that in the absence of machinery provision, charging provisions cannot be applied on isolation. Reliance is place on the decision of Hon’ble Supreme Court in the case of Govind Saran Ganga Saran Vs. CST AIR reported at 1985 SC 1041.

INTEREST ON GROSS OR NET TAX LIABILITY

GST Council in its 39th meeting held on 14.03.2020 had decided that interest shall be payable on net tax liability after adjusting ITC and the provisions to be made retrospective effect from 01.07.2017.

LIABILITY TO PAY INTEREST – WHETHER AUTOMATIC?

Hon’ble Madras HC in the case of AC CGT Vrs Daejung Moparts P Ltd WA 2127 of 2019 in Para 29 of the order has held as below:

i) Liability fastened on the assessee to pay Interest is an automatic liability.

ii) The term Automatic does not mean or to be construed as excluding ‘the arithmetic exercise’

iii) In other words though liability is automatic, quantification of such liability shall have to be made by doing arithmetical exercise

CAN INTEREST BE DEMANDED WITHOUT ADJUDICATION?

Hon’ble Jharkhand HC in the case of Mahadeo Construction Co. WP 3571 of 2019, after considering the judgment of Hon’ble Madras HC in the case of AC CGT Vrs Daejung Moparts P Ltd and its own judgement in the case of Godavari Commodities Ltd WP 1786 of 2019, has held in Para 22 that the department has to mandatorily go through the process of adjudication u/s 73 or 74 in the event assessee disputes the computation of very liveability of interest. Without completing such adjudication process interest amount cannot be termed as ‘amount payable under the Act’.

Mixed Supply

 MIXED SUPPLY

MIXED SUPPLY

• A single price is paid for the whole package. and

• The products or services can be sold individually.

MEANING

• Mixed supply means two or more individual supplies of goods or services,

• made in conjunction with each other 

• by a taxable person for a single price 

• supply of which supply attracts the highest rate of tax

• not constitute a composite supply

EXAMPLES

• supply of stationery pack containing crayons, paints, brushes, drawing book etc. 

• boarding school – Education with residence and food.

• UPS supplied with external storage battery 

TIME OF SUPPLY

• supply of service is taxed at higher rate amongst others 

• accordingly relevant provisions related to time of supply of services shall be considered into account. 

How to break the deadlock

Value of the constituent

Often people want to decide on the basis of the value of each constituent. This, however, could be treading on a slippery surface. Should a vendor say that just because a constituent item has a value of 51 percent, it should be considered a principal supply? Moreover, it is often difficult to find out the value of constituent supplies and may be much more difficult to substantiate to a tax officer.

Intention of the supplier and recipient

This could be a better test as it would reveal what the supplier intended to supply, and what the buyer intended to buy. This would also explain the economic rationale behind the supply. A supply should not be artificially split or combined if the economic rationale does not warrant that.

Description on the invoice

The invoice may throw some light on the nature of the transaction. A mixed supply will always have a single value, while a composite supply may or may not. Segregated supply will always have a separate value for each constituent.

Industry practice

One may also look at different practices followed in the industry to reach a conclusion: One airline may include the cost of food in the price of the ticket (composite supply with air transport as a principal supply). The other may charge separately for the food (segregated supply of air transport and food).

Break open a transaction

It may also make sense to imagine splitting the transaction into separate parts to see if it offers any clues. Let’s take an example of an artisan making jewellery out of gold provided by the jeweller on job-work-charges basis. This is simply a service. However, in the course of making the jewellery, the artisan required some additional gold that he selected from his own inventory. While the principal supply appears to be that of service, the value of gold would always be substantially higher than the value of service. Would this make gold the principal supply? To find an answer, we can split the transaction into two parts: 1. The artisan first sells the additional gold to the jeweller. 2. The artisan then takes that gold back and works on the same so that it then looks like a segregated supply of goods and of service.

Composite Supply

 COMPOSITE SUPPLY

COMPOSITE SUPPLY

Composite supply means 

• consisting of two or more taxable supplies 

• naturally bundled

• in conjunction with each other

• in the ordinary course of business, 

• one of which is a principal supply.

For e.g. Machinery (supply of goods) provided along with warranty and maintenance contract.

Principal supply – as per Section 2(90) of CGST Act means supply of goods or services which constitutes the predominant element of a composite supply 

“Whether services are bundled in the ordinary course of business 

• Perception of the consumer or the service receiver

• Majority of service providers in the in a particular area of business provide similar bundle of services

• The nature of various services

• Advertised as a single package

• Single Price

• different elements aren’t available separately

• different elements are integral to one overall supply

No straight jacket formula can be laid down to determine whether a service is naturally bundled in the ordinary course of business.

Each case has to be individually examined in the backdrop of several factors.