Highlights of Draft Model of GST Law published

The Finance Minister of India on 14.06.2016 has published and made available on public domain the draft model of GST. In his opinion, most of the States except Tamil Nadu has expressed assent on the implementation and adoption of GST.
 

1.       GST Act applies to whole of India

Some Terminologies:

zero-rated supply” means a supply of any goods and/or services on which no
tax is payable but credit of the input tax related to that supply is admissible;
Explanation.- Exports shall be treated as zero-rated supply.

2.       Levy of GST:

The Central GST(CGST) and State GST (SGST) shall be levied on all inter-state supplies of goods/services

3.       Composition Scheme will be available to person whose turnover does not exceed Rs. 50 lacs. The tax rate for the same will be more than 1% of the Turonver during the year. Composition Scheme not applicable to persons dealing in Inter-State transactions.

4.       Taxable Person: Any person carrying on any business whose aggregate turnover exceeds Rs. 10 lacs during a financial year. An Agriculturist will not be considered as Taxable Person.

5.       Time and Value Of Supply: The liability to pay CGST/SCGST will be at the time of supply of Goods/Services.

6.       Time of Supply of GOODS explained: It will be earliest of the following:

(a) (i) the date on which the goods are removed by the supplier for supply to the
recipient, in a case where the goods are required to be removed or
(ii) the date on which the goods are made available to the recipient, in a case where the goods are not required to be removed; or

CBEC : Every Wednesday is Taxpayers day!

ICAI Indirect Tax Committee : CBEC vide Letter F. No. DGST/19/2015 dated 12.04.2016 to ICAI  has informed that every Wednesday would be taxpayers day wherein heads of all offices in the field will meet the taxpayers/ other stakeholders from 9 AM to 1 PM without any prior appointment in order to address their grievances relating to Central Excise, Service Tax, Customs etc. This step is undertaken by the government in order to live up to its idea of responsive governance and trade facilitation which would ensure ease of doing business for the taxpayers/ other stakeholders.
We request to make full use of this opportunity for one to one interaction with the CBEC officials and resolve your grievances real-time. This is indeed a welcome step by the government which lays its emphasis on taxpayer friendly tax-administration.

Rate of Service Tax – Section 67A linked with POT Rules, 2011 to prevent disputes

BACKGROUND – Section 67A and POT Rules:

The Point of Taxation Rules, 2011 (in short POT Rules) was introduced w.e.f. 01-04-2011 to define and determine the point of taxation (in short POT) i.e. point in time when a service shall be deemed to have been provided. The twin objectives was to bring certainty regarding due date for payment of service tax (on accrual basis) and to determine the applicable rate of service tax as the one prevailing on the date of POT. While issuing the draft rules, the Central Government stated as under: 

“The purpose of these rules is to introduce clarity and certainty in the matter of levy and collection of Service Tax particularly in situations of change of rate of service tax or imposition of service tax on new services. At present there is lack of clarity as to the date from which the changed rate or a new levy of service tax become payable and tax payers as well as tax officials face uncertainty in this regard as the provisions are not explicit. Similar uncertainty prevails in regard to cases of continuous supply of services. So far these issues have been addressed by CBEC through clarificatory circulars that accompany such changes. A need has been felt to put the regulatory frame work on a transparent, clear and durable basis and hence these rules”. 

Recent caselaws in Service Tax

Latest Case Laws:
 Adopt same yardstick for establishing nexus between input and output service for deciding availability of cenvat credit or refund of credit. Pipavav Shipyard Ltd v/s Commissioner of Central Excise, Bhavnagar 2016 (41) STR 151 (Tri-Ahmedabad).
 No service tax to be levied where an activity has been undertaken in India but the ultimate purpose is for rendering service outside India. International Overseas Services v/s Commissioner of Service Tax, Mumbai 2016(41) STR 230 (Tri- Mumbai).
 No Input Tax Credit available where nexus between input and output is not proved, even if the input services is received by the service provider himself. Kilburn Chemicals Ltd. v/s Commissioner of Central Excise, Tirunelveli 2016 (41) STR 131 (Tri- Chennai)
 Even if input service is received at premises other than from where output service is executed, taxpayer can claim refund of the same. Exfo Electro-Optical Engineering (P) Ltd v/s Comissioner of Central Excise, Pune 2016 (41) STR 65

GST Draft Law at a glance. Gearing up for GST implementation

GEARING UP FOR GOODS AND SERVICES TAX-Vol I

(DRAFT LAW- AT A GLANCE)

The article (Vol I) broadly covers the various specific provisions related to working and operation of Goods and Services Tax vis-à-vis the statutory requirements of Model Draft law released by Govt w.r.t. concept of Taxable event under GST i.e. Supply of goods and services.

The article also brings out the clarity on the various issues addressed in the reports of registration and refund released by the Govt.

As a part of Vol II, other provisions and pending reports will be summarised and issues will be addressed as contemplated in the reports of payment and return issued by Govt.)

                                           IMPACT AND IMPLICATIONS”

 
 CMA Rakesh Bhalla
CA Rubneet Kaur

 


Goods and Service Tax-A dual tax system, proposed in the report submitted by the Joint Working Group of the Empowered Committee of the State Finance Ministers in November 2007, was to be implemented in April 2010,one for the Centre and other for the states replacing the state VAT and Cenvat. However the final decision on the time of its implementation is still pending as it is hanging between the ruling and opposition party due to certain undecided terms and conditions.

GST is a value added tax to be levied on both goods and services, except the exempted goods and services. The tax will be levied on the value of the product or service supplied. The taxes levied at the multiple stages such as CENVAT, Central sales tax, State Sales Tax, Octroi etc will be replaced by GST to be introduced at Central and State level.

Why GST- How GST will be better than existing tax structure