Background:
CBIC has clarified the manner of dealing with differences in ITC available in GSTR-3B and ITC available as per GSTR-2A vide Circular No. 183/15/2022-GST dated 27th December, 2022 for FY 2017-18 and 2018-19 in various situations.
Now the GST council has issued the similar following guidelines for the period of 01.04.2019 to 31.12.2021 vide Circular No. 193/05/2023-GST dated 17th July, 2023:
ITC available in GSTR-2A: INR 3,00,000
ITC availed in GSTR-3B: INR 5,00,000
ITC admissible under Rule 36(4) of CGST Rules: INR 3,60,000 (3,60,000 * 120%)
ITC of INR 1,40,000 has been availed in excess of ITC permitted under Rule 36(4) of CGST Rules. Therefore, such ITC shall not be allowed even if documents prescribed under Circular No. 183/15/2022 is also produced by the registered person.
Benefit of Circular Circular No. 183/15/2022 can be taken for INR 60,000.
In this circular, the CBIC clarified the Tax Collected at Source (TCS) liability under Section 52 of CGST Act for transactions involving multiple E-commerce Operators (ECOs).The ECO responsible for collecting TCS and compliance depends on whether the supplier-side ECO is also the goods/services supplier.
In case of open network for digital commerce(ONDC) agreements where multiple E-commerce operators are involved. The clarity was required to decide which ECO shall be responsible to deduct the TCS and comply with other provisions of Section 52.
In the case of the ONDC Network or similar other arrangements, there are multiple ECOs involved in a single transaction, i.e., one providing an interface to the buyer and the other providing an interface to the seller. In this setup, the buyer-side ECO could collect consideration, deduct their commission and pass on the consideration to the seller-side ECO.
a. Issue 1:
In a situation where multiple ECOs are involved in a single transaction of supply of goods or services or both through the ECO platform and where the supplier-side ECO himself is not the supplier in the said supply, who is liable for compliances under section 52 including collection of TCS ?
Buyer > Buyer Side ECO > Supplier side ECO > Supplier
Clarification :
The responsibility for compliance under section 52 of CGST Act, including collection of TCS, is to be done by the supplier-side ECO who finally releases the payment to the supplier for a particular supply made by the said supplier through him.
For Example: Buyer-side ECO collects payment from the buyer, deducts its fees/commissions and remits the balance to Seller-side ECO. Here, the Seller-side ECO will release the payment to the supplier after deduction of his fees/commissions. Therefore, supplier side ECO will be required to comply with provisions of Section 52 of CGST Act.
Issue 2:
In a situation where multiple ECOs are involved in a single transaction of supply of goods or services or both through ECO platform and the Supplier-side ECO is himself the supplier of the said supply, who is liable for compliances under section 52 including collection of TCS?
Buyer > Buyer Side ECO > Supplier (also and ECO)
Clarification :
In such a situation, TCS is to be collected by the Buyer-side ECO while making payment to the supplier for the particular supply being made through it.
For example : Buyer-side ECO, receiving payment from the buyer, deducts its fees, and sends the balance to the supplier (also an ECO per CGST Act Sec 2(45)). Here, the Buyer-side ECO must also collect and pay applicable TCS (Section 52, CGST Act) , along with other Section 52 compliances.
The Government of India’s Ministry of Finance, Department of Revenue (Tax Research Unit), has recently issue Circular No. 201/13/2023-GST, providing clarifications on the rates and classification of certain goods and services based on the recommendations of the GST Council in its 50th meeting held on 11th July 2023.These clarifications resolve doubts and ensure consistent GST application across various sectors.
Issue: 1 Whether the services supplied by director of a company in his personal capacity such as renting of immovable property to the company or body corporate are subject to Reverse Charge mechanism(RCM):
Clarification :
Entry No. 6 of notification No 13/2017 CTR dated 28.06.2017 provides that tax on services supplied by director of a company shall be paid by the company under Reverse Charge Mechanism.
Therefore, CBIC has clarified that Services provided by a director to their company in a personal capacity, like property renting, aren't taxed under Reverse Charge Mechanism (RCM). Only director services in an official capacity are taxed under RCM.
Issue 2:
Whether the supply of food or beverages in the cinema hall is taxable as restaurant service of 5%.
Clarification :
El operador del cine puede gestionar puestos de refrescos o comida dentro de las salas de cine o subcontratarlos a terceros. El cliente puede optar por utilizar los servicios ofrecidos por estos puestos o no hacerlo. Asimismo, el operador del cine puede instalar máquinas expendedoras o proporcionar cualquier otro servicio recreativo, como máquinas que funcionan con monedas, entre otros.
La CBIC ha aclarado que el suministro de alimentos o bebidas en una sala de cine tributa como «servicio de restaurante» bajo el GST a un tipo del 5 %, siempre que:
Además, la CBIC ha aclarado que, cuando la venta de la entrada de cine y el suministro de alimentos y bebidas se agrupan, y dicho suministro conjunto cumple con los criterios de suministro compuesto, la totalidad del suministro estará sujeta al GST al tipo aplicable al servicio de exhibición cinematográfica, que constituye el suministro principal.
La CBIC ha recibido diversas comunicaciones señalando que, como práctica comercial habitual, los fabricantes de equipos originales (OEM) ofrecen garantía por los bienes que suministran. Durante el periodo de garantía, los bienes o servicios de sustitución se proporcionan a los clientes de forma gratuita, por lo que no se cobra ni se recibe ninguna contraprestación adicional en el momento de la sustitución.
Por lo tanto, es necesaria una aclaración para evitar litigios innecesarios con respecto a la responsabilidad del GST, así como la obligación de revertir el ITC en relación con dichos suministros de sustitución de piezas y servicios de reparación durante la garantía.
A continuación, se resumen los puntos clave sobre la aplicabilidad del GST y la reversión del ITC:
