CHAPTER 2.

SUPPLY UNDER GST

1 Service by way of Grant of Alcoholic Liquor Licence by SG - Neither Supply of Goods nor Service

 ‘Service by way of grant of alcoholic liquor licence by SG in which they are engaged as public
authorities, against consideration in form of licence fee/application fee etc. [NN 25/2019].
 Other Licenses – Liable to GST: Services provided by Government to BE including by way of grant
of privileges, licences, mining rights, natural resources such as spectrum etc. against payment of
consideration in the form of fee, royalty etc. are taxable under GST. Tax is required to be paid by
BE on such services under RCM. [CN 121/40/2019].

2 Levy of GST on the service of display of name or placing of name plates of the donor in the
premises of Charitable organisations receiving donation/gifts from individual donors

 When Individual donors provide financial help or any other support in the form of donation/gift to
charitable/religious institutions, such recipient institutions place a name plate or similar such
acknowledgement in their premises to express the gratitude.
 Such activity is done to give public recognition of donor’s act of philanthropy & is not aimed at
giving publicity/advertisement/promotion to the business of the donor.
 Thus, it can be said that there is no supply of service for a consideration (in the form of donation),
there is no obligation (quid pro quo) on the part of the recipient of the donation/gift (charitable
institutions) to do anything (supply a service).
 Therefore, there is no GST liability on such consideration.

Ex. Good wishes from Mr. Rajesh printed underneath a digital blackboard donated by Mr. Rajesh to a temple.
Ex. “Donated by Smt. Malati Devi in the memory of her father” written on the door or floor of a room or any
part of a temple complex which was constructed from such donation.
Since, in such cases there is no reference or mention of any business activity of the donor which
would have got advertised.

PC Note: GST is not leviable if all the following 3 conditions are satisfied:
1. Gift/donation is made to a charitable organization
2. Payment has the character of gift/donation &
3. Purpose of gift/donation is philanthropic (i.e., it leads to no commercial gain) & not advertisement.
 CHAPTER 3. CHARGE OF GST
1 NN 2/2019 (Composition Scheme for Service Providers) incorporated in a New Section 10(2A)
 Option available to small service providers to pay tax at concessional rate [i.e 6%] was provided
vide NN 2/2019 CT (R) dated 07.03.2019.
 This option is being incorporated in the CGST Act by inserting new sub-section (2A) in section 10.

2 Manufacturer & Supplier of Aerated Water → Not Eligible for Composition Levy
Manufacturer of the following Goods Cannot Opt for Composition Scheme [Sec 10(2)(e)]
1. Ice cream & other edible ice, whether or not containing cocoa
2. Pan Masala
3. Tobacco & Manufactured Tobacco Substitutes
4. Aerated Water [AMENDMENT]

3 Amendments in RCM notifications for AUTHORS [NN 22/2019] w.e.f 1.10.2019

RCM made optional in case of supply of services by an author to a publisher (by way of
transfer/permitting the use or enjoyment of a copyright relating to original literary work)
SERVICES NOTIFIED UNDER RCM [Sec 9(3) of CGST Act & 5(3) of IGST Act]
SN Nature of Service (BY) Supplier (TO) Recipient
O Transfer/permitting use or enjoyment of Author, Publisher,
L copyright relating to original literary, Music Composer, Music company,
dramatic, musical or artistic works etc. Photographer,
D Producer etc. located
Artist etc. in TT.
N Transfer/permitting use or enjoyment of Music Composer, Music company,
E copyright relating to original literary, Photographer, Producer etc. located
dramatic, musical or artistic works etc. in TT.
W Artist etc.
NEW ENTRY (9A) HAS BEEN INSERTED FOR AUTHOR → PUBLISHERS
9A Transfer/permitting the use or enjoyment Author Publisher located in
of a copyright relating to original literary TT
works to a publisher
However, Author can choose to pay tax under forward charge if -
 he has taken registration under GST &
 filed a declaration, in prescribed form, that he
  exercises the option to pay CGST on such service under forward charge as per section 9(1)
 & to comply with all the provisions as they apply to a person liable for paying tax &
 shall not withdraw such option within a period of 1 year from date of exercising such option.
 He makes a declaration on the invoice issued by him in prescribed form to the publisher.
\

4. NEW SERVICES NOTIFIED UNDER RCM

Entry No. 15 16
Services Services of Renting of Motor Vehicle Services of Lending of Securities
Supplier Any person other than Body Corporate Lender (Person who deposits securities with
who is paying CGST @ 2.5% on renting of approved intermediary for lending under the
motor vehicles with ITC only of input Scheme of SEBI)
service in same line of business.
Recipient Any Body Corporate located in TT Borrower (person who borrows securities under
Scheme through approved intermediary of SEBI)

 Service by way of renting of any motor vehicle designed to carry passengers where the cost of fuel is
included in the consideration charged from the service recipient are taxable at the following two rates:
1. 5% (2.5% CGST + 2.5% SGST or 5% IGST) provided supplier of services has taken only the limited
ITC (of input services in the same line of business) or
2. 12% (6% CGST + 6% SGST or 12% IGST) where supplier of services opts to pay GST at said rate. In
this case, there is no restriction on availing ITC on G&S used in supplying renting of motor vehicles
service by supplier of service.

PC Note: When any service is placed under RCM, supplier shall not charge any tax from service recipient.
Thus, in this case, supplier does not issue an invoice charging GST @12% (6% CGST+ 6% SGST or 12%
IGST) from recipient. [CN 130/49/2019]
 CHAPTER 4. EXEMPTIONS FROM GST
1 Services provided by CG, SG, UT, LA to ↓
Before to BE with ATO upto 20 lacs in Preceding FY (Special Category States - Rs. 10 lacs).
Now to BE with ATO upto such amount in preceding FY as makes it eligible for exemption
from registration;
2 Legal services provided by Firm/Individual advocate (other than senior advocate) to ↓
Before  to Advocate (all) or firm of advocates providing legal services;
 to Any person other than BE;
 to BE with Aggregate TO upto Rs. 20 lacs in preceding FY. (10 lacs for SCS);
 to CG, SG, UT, LA, Governmental Authority or Government Entity.
Now  to Advocate (all) or firm of advocates providing legal services;
 to Any person other than BE;
 to BE with ATO upto such amount in preceding FY as makes it eligible for exemption
from registration;
 to CG, SG, UT, LA, Governmental Authority or Government Entity.
3 Legal Services provided by Senior Advocate OR Arbitral tribunal
Before  Any person other than BE
 BE with Aggregate TO upto Rs. 20 lacs in preceding FY. (10 lacs for SCS)
 CG, SG, UT, LA, Governmental Authority or Government Entity.
Now  Any person other than BE
 BE with ATO upto such amount in preceding FY as makes it eligible for exemption
from registration;
 CG, SG, UT, LA, Governmental Authority or Government Entity.
PC Note:

4 New Entry 9AA: Services provided by & to FIFA & its subsidiaries → Exempt
Services provided by & to Federation Internationale de Football Association (FIFA) & its subsidiaries
related to any of the events in FIFA U-17 Women’s World Cup 2020 to be hosted in India.
Condition to be fulfilled:
Director (Sports), Ministry of Youth Affairs & Sports have to certify that the services are directly or
indirectly related to any of the events under FIFA U-17 Women’s World Cup 2020.

5 Entry No. 14 Amended

Before Services by a hotel, inn, guest house, club or campsite for residential or lodging
purposes, having Value of Supply of a unit of accommodation < Rs. 1,000 per day.
Now Services by a hotel, inn, guest house, club or campsite for residential or lodging
purposes, having Value of Supply of a unit of accommodation ≤ Rs. 1,000 per day.
PC Note:
6 Entry 19A & 19B Amended
Before Services by way of transportation of goods by an aircraft/vessel from customs station of
clearance in India to a place outside India upto 30.09.2019.
Now Services by way of transportation of goods by an aircraft/vessel from customs station of
clearance in India to a place outside India upto 30.09.2020.
PC Note:

7 Entry 22 Amended: Services by way of giving on hire ↓

Before (a) Motor vehicle (carrying > 12 passengers) to state transport undertaking only.
(b) Means of transportation of Goods to GTA.
(c) Motor vehicle for transportation of SSF to a person providing transportation services
to schools.
Now (a) Motor vehicle (carrying > 12 passengers) to state transport undertaking only.
(aa) Electrically operated vehicle (carrying > 12 passengers) to Local Authority. [NEW]
(b) Means of transportation of Goods to GTA.
(c) Motor vehicle for transportation of SSF to a person providing transportation services
to schools.
PC Note:

8 New Entry 24B:

Services by way of storage/warehousing of cereals, pulses, fruits, nuts & vegetables, spices, copra,
sugarcane, jaggery, raw vegetable fibres (Ex: Cotton, flax, jute etc., indigo, unmanufactured
tobacco, betel leaves, tendu leaves, coffee & tea) → Exempt from GST.

9 New Entry 29B: Life insurance Business Services

Services of life insurance provided by Central Armed Police Forces (under Ministry of Home Affairs)
Group Insurance Funds to their members under Group Insurance Schemes.

10 Entry 35
General Insurance Business Services: A new clause ‘(r)’ has been inserted: Bangla Shasya Bima.

11 New Entry 85A: Entry Tickets to FIFA U-17 Women's World Cup 2020 → NO GST
Services by way of right to admission to the events organised under FIFA U-17 Women's World Cup 2020.

12 Services provided by intermediary when location of supplier & recipient of goods is outside TT.
Note: Prescribed documents shall be maintained for a minimum duration of 5 years.
13 Entry 41 Amended: Ownership % referred in entry 41 has been reduced from 50% to 20%.
Further, certain conditions for availing the exemption have been prescribed.
Before Upfront amount (called as premium, salami, cost, price, development charges or by any
other name) payable i.r.o service by way of granting of long term lease of 30 years, or
more) of industrial plots or plots for development of infrastructure for financial business,
provided by the State Government Industrial Development Corporations or
Undertakings or by any other entity having 50% or more ownership of CG/SG/UT
to the industrial units or the developers in any industrial or financial business area.
Amended Upfront amount (called as premium, salami, cost, price, development charges or by any
other name) payable i.r.o service by way of granting of long term lease of 30 years, or
more) of industrial plots or plots for development of infrastructure for financial business,
provided by the State Government Industrial Development Corporations or
Undertakings or by any other entity having 20% or more ownership of CG/SG/UT
to the industrial units or the developers in any industrial or financial business area.

CONDITIONS PRESCRIBED [NOT SO IMPORTANT]

 Provided that leased plots shall be used for the purpose for which they are allotted,
that is, for industrial or financial activity in an industrial or financial business area.
 Provided that SG concerned shall monitor and enforce the above condition, as per the
order issued by the State Government in this regard.
 Provided further that in case of any violation or subsequent change of land use, due
to any reason whatsoever, the original lessor, original lessee as well as any subsequent
lessee or buyer or owner shall be jointly and severally liable to pay such amount of
integrated tax, as would have been payable on the upfront amount charged for the
long term lease of the plots but for exemption contained herein, along with the
applicable interest and penalty.
 Provided also that lease agreement entered into by original lessor with original lessee
or subsequent lessee, or sub-lessee, as well as any subsequent lease or sale
agreements, for lease or sale of such plots to subsequent lessees or buyers or owners
shall incorporate in the terms and conditions, the fact that IGST was exempted on the
long term lease of the plots by the original lessor to the original lessee subject to above
condition & that the parties to the said agreements undertake to comply with the same.

CLARIFICATIONS RELATING TO GST EXEMPTIONS:

1 Effective date of Explanation added for Newly inserted Entry
 Government may insert an explanation in any notification issued u/s 11 for clarifying its scope or
applicability [Section 11(3)].
 Such explanation may be inserted at any time within 1 year of issue of original notification.
 Every such explanation (inserted after original notification) shall have effect form the date of issue
of original notification (as if it had always been the part of original exemption notification).

Clarification: It is clarified that explanation inserted u/s 11(3) is effective from the inception of new
entry in the notification & not from the date from which the notification (that inserted said explanation)
becomes effective.

Ex: Original NN 11/2017 dated 28.06.2017 came into force w.e.f 1.07.2017. Thereafter, a new entry -
Entry no. 3(vi) is inserted w.e.f. 21.09.2017. Subsequently, an explanation is also inserted w.r.t newly
inserted entry on 26.07.2018. Although effective date mentioned in notification which inserted
explanation is 27.07.2018, said explanation will be effective from the inception of new entry in notification
i.e. 21.09.2017 & not 27.07.2018.
2 GST on Delayed payment charges in case of late payment of EMIs [Sec 15(2)(d)]
Q. Whether GST is applicable on Additional/Penal interest on overdue loan?
Answer: Value of supply shall include interest/late fee/penalty for delayed payment of any
consideration for any supply unless it is exempted u/e 27.

Q. Whether such penal interest would be exempt u/e 27 of exemption notification or it would be
taxable treating it as consideration for liquidated damages?
Answer:
 Services by way of extending deposits/loans/advances such that the consideration is represented
by way of interest/discount (other than interest involved in credit card services) is Exempt u/e 27.
 Interest means interest payable in any manner i.r.o any moneys borrowed/debt incurred (including
a deposit, claim or other similar right or obligation),
but does not include any service fee/charge i.r.o moneys borrowed/debt incurred or i.r.o any credit
facility which has not been utilised.

Ex 1. Mr. X sells a mobile phone to Mr. Y. Cost of mobile phone is Rs. 40,000. Mr. X gives Mr. Y an option to pay in
instalments of Rs. 11,000 every month before 10th day of following month, over next 4 months (Rs. 11000 × 4 = Rs. 44000).
If there is any delay in payment by Mr. Y beyond scheduled date, Mr. Y would be liable to pay additional/penal interest of
Rs. 500 per month for the delay.
◆ We all know that Services by way of Extending deposits, loans or advances consideration for which is represented by
Interest or Discount (other than interest involved in credit card services) is exempt from GST.
In this case, Mr, X is not getting interest for extending any deposit, loan or advance. Mr. X is getting interest from Mr. Y for
delayed/deferred payment of consideration (which is not exempt). Thus, GST will be levied on such interest.
Thus, Value of Mobile phone = Rs. 44,000 & GST will be levied on Rs. 44,000.
◆ As per section 15, Interest, late fee, Penalty for delayed payment of any consideration for any supply. Thus, penal
interest is to be included in the value of supply [i n terms of section 15(2)(d)].
Transaction between Mr. X & Mr. Y is for supply of taxable goods (mobile phone). Accordingly, penal interest would be
taxable as it would be included in the value of the mobile, irrespective of the manner of invoicing.

Ex 2. Mr. X sells a mobile phone to Mr. Y. Cost of mobile phone is Rs 40,000. Mr. Y has the option to avail a loan at interest
of 2.5% per month for purchasing the mobile from ABC Ltd. Terms of loan from ABC Ltd. allows Y to repay the loan in 4
months & additional/penal interest @ 1.25% PM for any delay in payment.
In this case, ABC Ltd. is getting interest for extending loan to Mr. X. Thus, GST will be levied on such interest.
Thus, Value of Mobile phone = Rs. 40,000 & GST will be levied on Rs. 40,000.
Additional/Penal interest is charged for a transaction between Mr. Y & ABC Ltd. & same is getting covered under
exemption Entry 27. Thus, 'Penal interest' charged on a transaction between Mr. Y & ABC Ltd. would not be subject to
GST as the same would be covered under said exemption entry.
Note: Any service fee/charge like processing fees (if any) are levied by ABC Ltd. i.r.o transaction related to extending
deposits, loans/advances is not exempted from GST (only interest is exempt).

2 GST on Monthly subscription/contribution (Maintenance) charged by RWA from its members

SN Issue Clarification
(a) Maintenance charges paid by Supply of service by RWA to its own members by way of
residents to RWA in housing reimbursement of charges/share of contribution upto an
society exempt from GST & if amount of Rs. 7500 per month per member (PMPM) for
yes, is there an upper limit on providing G/&S for the common use of its members in a
the amount of such charges for housing society or a residential complex are exempt from GST.
the exemption to be available?
(b) A RWA has ATO of ≤ Rs. 20 lacs  No. If aggregate turnover of RWA ≤ Rs. 20 Lacs in a FY, it
in a FY. Is it required to take shall not be required to take registration & pay GST even if
registration & pay GST on the amount of maintenance charges > Rs. 7,500 PMPM.
 maintenance charges if amount  RWA shall be required to pay GST on monthly subscription/
of such charges > Rs. 7500 contribution from its members, only if such subscription is
PMPM? > Rs. 7,500 PMPM & Annual ATO of RWA by way of
supplying of G&S is > Rs. 20 lacs.
Annual Turnover of RWA Monthly Maintenance charge Whether exempt?
> Rs. 20 lacs > Rs. 7,500 No
≤ Rs. 7,500 Yes
≤ Rs. 20 lacs > Rs. 7,500 Yes
≤ Rs. 7,500 Yes
(c) Is RWA entitled to take ITC of RWAs are entitled to take ITC of GST paid by them on
GST paid on input services used  Capital goods (generators, water pumps, lawn furniture etc)
by it for making supplies to its  Goods (taps, pipes, other sanitary/hardware fillings etc.)
members & use such ITC for  Input services such as repair & maintenance services.
discharge of GST liability on
such supplies where amount
charged > Rs. 7,500 PMPM?
(d) If a person owns 2 or more flats, Person who owns 2 or more flats in housing society shall
whether ceiling of Rs. 7500 PMPM normally be a member of RWA for each flat owned by him
on maintenance for exemption to separately.
be available shall be applied per Ceiling of Rs. 7,500 PMPM shall be applied separately for each
apartment/per person? flat owned by him.
Ex. If a person owns 2 flats in a complex & pays Rs. 15,000 PM as maintenance charges towards maintenance of
each flat to the RWA (Rs. 7,500 PM i.r.o each flat), exemption from GST shall be available to each flat.
3 DG Shipping Approved Maritime Courses conducted by Maritime Training Institutes → Exempt
 Services provided by educational institutions to its SSF are exempt only when such institution falls
under the definition of educational institution provided under the exemption notification.
 Educational institution has been defined to mean an institution providing services by way of
education as a part of a curriculum for obtaining a qualification/degree recognized by law.
 Maritime Training Institutes & their training courses are approved by Director General of Shipping
which are duly recognised under Merchant Shipping Act, 1958. Therefore, Maritime Training
Institutes are educational institutions under GST Law & the courses conducted by them are
exempt from levy of GST subject to fulfilment of other conditions specified u/e 66.
 This clarification applies, mutatis mutandis, to corresponding entries of respective IGST, UTGST,
SGST exemption notifications.
 CHAPTER 6. INPUT TAX CREDIT
1 Restriction on availment of ITC i.r.o invoices/debit notes not uploaded by the suppliers in
their GSTR-1s [New sub-rule (4) inserted in rule 36 of the CGST Rules]
For availing ITC, taxpayer must be in possession of tax invoice to claim ITC [Section 16(2)].
Rule 36 lays down the documents & other conditions basis which RP can claim ITC.
w.e.f 09.10.2019, a new sub-rule (4) has been introduced in rule 36 to specify the quantum of ITC
that can be claimed against invoices/Debit Notes uploaded & invoices/DNs not uploaded by supplier.
w.e.f 01.01.2020, NN 75/2019 has amended the said sub-rule to reduce the percentage of ITC that
can be availed on invoices not uploaded by the suppliers in their GSTR-1s from 20% to 10%.
As per sub-rule (4) of rule 36, ITC that can be availed i.r.o invoices/DNs whose details have not been
uploaded by suppliers in GSTR-1 = Lower of: (a) or (b)
(a) 10% of eligible ITC i.r.o invoices/DNs whose details have been uploaded by suppliers in GSTR-1.
(b) ITC on invoices/DNs whose details have not been uploaded by the supplier.
Case Amount of ITC to be claimed by recipient
Where invoice/DN has been uploaded Full ITC, if all other conditions of availing ITC are fulfilled
by the supplier in his GTSR-1
Where invoice/DN has not been 10% of eligible ITC available i.r.o uploaded invoices/DNs
uploaded by supplier in his GTSR-1 reflected in GSTR-2A.
However, ITC so claimed should not exceed actual eligible
ITC available i.r.o the invoices not uploaded.
PC Note: Only Eligible ITC relflected in GSTR-2A of the recipient shall be considered.

Q1. Mr. Vijay, a registered supplier, receives 100 invoices (for inward supply of G/S) involving GST of Rs. 10 lacs, from
various suppliers during the month of October 2020.
Out of 100 invoices, 80 invoices involving GST of Rs. 6 lacs have been uploaded by the suppliers (all suppliers) in their
respective GSTR-1 filed on the prescribed due date therefor.
Compute the ITC that can be claimed by Mr. Vijay in his GSTR-3B for the month of October 2020 to be filed by 20th
November 2020 assuming that GST of Rs. 10 lacs is otherwise eligible for ITC:
Answer:
ITC to be claimed by Mr. Vijay in his GSTR-3B for Oct 2020 to be filed by 20th Nov 2020 to be computed as:
Invoices ITC involved in invoices ITC that can be availed
In respect of 80 invoices uploaded in GSTR-1 Rs. 6 lacs Rs. 6 lacs [Note 1]
In respect of 20 invoices not uploaded in GSTR-1 Rs. 4 lacs Rs. 0.6 lakh Note 2]
Total Rs. 10 lacs Rs. 6.6 lacs
Note:
(i) ITC i.r.o invoices uploaded by the suppliers in their GSTR-1, full ITC can be availed.
(ii) As per rule 36(4), ITC i.r.o invoices not uploaded by the supplier in their GSTR-1 has to be restricted to 10% of
eligible ITC iro invoices uploaded in GSTR-1. Thus, ITC i.r.o 20 invoices not uploaded in GSTR-1, ITC has been
restricted to Rs. 0.6 lacs [10% of Rs. 6 lacs].

Q2. Mr. Ajay, a registered supplier, receives 100 invoices (for inward supply of G/S) involving GST of Rs. 10 lacs,
from various suppliers during the month of October 2020. Out of 100 invoices, 85 invoices involving GST of Rs. 9.5
Lacs have been uploaded by the suppliers (all suppliers) in their respective GSTR-1 filed on the prescribed due date
therefor. Compute the ITC that can be claimed by Mr. Ajay in his GSTR-3B for the month of October 2020 to be filed
by 20th November 2020 assuming that GST of Rs. 10 lacs is otherwise eligible for ITC:
Answer: ITC to be claimed by Mr. Ajay in GSTR-3B for Oct. 20XX to be filed by 20th Nov 20XX is to be computed as:
Invoices ITC involved in invoices ITC that can be availed
In respect of 85 invoices uploaded in GSTR-1 Rs. 9.5 lacs Rs. 9.5 lacs [Note 1]
 In respect of 15 invoices not uploaded in GSTR-1 Rs. 0.5 lacs Rs. 0.5 lacs [Note 2]
Total Rs. 10 lacs 10 lacs
Note:
(i) ITC i.r.o. invoices uploaded by the suppliers in their GSTR-1, full ITC can be availed.
(ii) ITC i.r.o. invoices not uploaded has to be restricted to 10% of eligible ITC i.r.o. invoices uploaded in GSTR-1.
However, in this case, 10% of eligible ITC i.r.o invoices uploaded in GSTR-1 [Rs. 0.95 lacs (10% of Rs. 9.5 lakh)]
exceeds actual ITC [Rs. 0.5 lacs] i.r.o 15 invoices not uploaded in GSTR-1, ITC availed should be limited to actual
amount of ITC.

 Amount of ITC i.r.o. invoice/debit note whose details have not been uploaded shall not exceed 10%
of eligible ITC i.r.o. invoice/debit note which have been uploaded by supplier u/s 37(1) as on due
date of filing Form GSTR-1 by the supplier for said tax period. The same can be ascertained as per
GSTR 2A showing ITC on the due date of filing GSTR-1.
Ex: Due date for filing GSTR-1 for the month of January, 2020 is 11.02.2020. Now, ITC i.r.o.
invoice/debit note which have not been uploaded by supplier shall be maximum of 10% of total
ITC reflected in GSTR 2A as on 11.02.2020.
 ITC u/r 36(4) shall be calculated on total eligible ITC from all suppliers against all supplies
whose details have been uploaded by the supplier. Therefore, restriction is not on supplier basis.
 Calculation would be based only on those invoices on which ITC is available & therefore,
invoices on which ITC is not available [say Blocked Credit u/s 17(5)] would not be considered for
calculation of 10% of eligible ITC available.
 Restriction is not imposed through common portal & it is the responsibility of the taxpayer claiming
credit to avail ITC on self-assessment basis.
 Restriction shall be applied only on the invoices/debit note, details of which are required by
supplier to be uploaded u/s 37(1) of the CGST Act. Therefore, taxpayer may avail full ITC i.r.o.
IGST paid on imports, documents issued under RCM, credit received from ISD etc. which are
outside the ambit of section 37(1).

2 RESTRICTIONS ON UTILISATION OF ITC [RULE 86A] [NN 75/2019 CT dated 26.12.2019]

 A new rule 86A has been inserted to empower Commissioner/officer (not below the rank of an
Assistant Commissioner) authorised by him, to impose restrictions on utilization of ITC
available in ECL if he has reasons to believe that ITC has been fraudulently availed or is ineligible.
 Restrictions can be imposed in the following circumstances:
1. ITC has been availed on the basis of tax invoices/valid documents:
 issued by a non-existent supplier or by a person not conducting any business from the
registered place of business; or
 without receipt of goods or services or both; or
 the tax in relation to which has not been paid to the Government.
2. Registered person availing ITC has been found non-existent or not to be conducting any
business from the registered place of business; or
3. Registered person availing ITC is not in possession of tax invoice/valid document.
 If ITC is so availed, restrictions can be imposed by not allowing such ITC to be used for discharging
any liability u/s 49 or not allowing refund of any unutilised amount of such ITC.
 Such restrictions can be imposed for a period upto 1 year from date of imposing such restrictions.
 However, Commissioner/officer authorised by him, can withdraw such restriction if he is satisfied
that conditions for imposing the restrictions no longer exist.
3 Amendment in Rule 43 - Manner of Determination of ITC i.r.o Capital goods & reversal thereof

 With effect from 1.04.2020, Rule 43 has been amended as under:

(i) Clause (c) of sub-rule (1) of rule 43 has been substituted.
(ii) Clause (d) of sub-rule (1) of rule 43 has been substituted.
(iii) An explanation has been inserted in clause (e) of sub-rule (1).
(iv) Clause (f) has been omitted.
 Implications of the above amendments can be understood as under-
1. Input tax on capital goods used/intended to be used commonly for making taxable and/or zero
rated supplies as well as exempt supplies and/or non-business purposes shall be denoted as
‘A’. Such amount (as reflected on the invoice) will be credited to electronic credit ledger. The
useful life of such capital goods will be taken as 5 years from the date of invoice.
2. When capital goods which were initially used only for non-business purpose/exempt supplies
are subsequently used commonly for exempt supplies and/or non-business purposes as well as
taxable and/or zero rated supplies, input tax in respect of the same should be denoted as ‘A’
and credited in the electronic credit ledger.
Ineligible ITC attributable to the period during which such capital goods were used for non-
business purpose/making exempt supplies shall be computed @ 5% per quarter or part thereof
and be denoted as ‘Tie’. Such ‘Tie’ shall be added to the output tax liability of the tax period in
which credit on such capital goods is claimed.
3. The amounts of ‘A’ credited to electronic credit ledger in respect of common capital goods whose
useful life remains during the tax period shall be added together to arrive at common credit ‘Tc’.
4. When capital goods which were initially used only for taxable and/or zero rated supplies are
subsequently used commonly for taxable and/or zero rated supplies as well as exempt supplies
and/or non-business purposes, input tax claimed in respect of the same shall be added to the
aggregate value of ‘Tc’.
5. ‘Tm’ which is the common credit for a tax period [Tc/60] is to be computed during the useful life
of capital goods which is five years from the date of invoice.
6. Clause (g) provides the formula for determining ‘Te’, i.e. amount of common credit attributable
to exempt supplies, as Te = (E/F) x Tr. The term ‘Tr’ which is used in the said formula was defined
in clause (f). Omission of clause (f) has thus, rendered the formula given in clause (g) otiose as
now the term (‘Tr’) which is used in the formula is nowhere defined in the rule.
[NN 16/2020 CT dated 23.03.2020]
 CHAPTER 7. REGISTRATION
1 Bank A/c details may be furnished after obtaining registration certificate
[Rule 10A inserted & Rule 21 amended] (NN 31/2019)
 While applying for registration on GST portal, a person is required to furnish details of his bank A/c.
 This requirement has now been relaxed to a limited extent, by inserting a new rule 10A.
 Now, RP is allowed to furnish information w.r.t details of bank A/c on the common portal within
 45 days from the date of grant of registration or
Whichever is Earlier
 Due date of furnishing return u/s 39.
 This relaxation is not available for those who have been granted registration as TDS deductor/TCS
collector u/r 124 or who have obtained suo-motu registration u/r 16.
Note: Person violates the provisions of rule 10A, his GST registration is liable to be cancelled [Rule 21].

2 Meaning of “not making taxable supply” during suspension of registration Clarified.

RP required to issue revised tax invoice & file first return for supplies during suspension period
[Rule 21A] [NN 49/2019]
 Rule 21A provides that once a registered person has applied for cancellation of registration or the
PO seeks to cancel his registration, his registration shall remain suspended during pendency of the
proceedings relating to cancellation of registration filed.
 Such person shall not make any taxable supply (i.e. shall not issue tax invoice & shall not charge
tax on supplies) during the period of suspension.
 Such person shall not be required to file any return [Rule 21A (3)].
An explanation has been inserted to this sub-rule (3) to rule 21A clarifying that the expression
“shall not make any taxable supply”
 RP shall not issue tax invoice & not charge tax on supplies made by him during suspension period.
 Further, a new sub-rule (5) has been inserted in said rule to provide that where any order having
the effect of revocation of suspension of registration has been passed, the provisions of Sec 31(3)(a)
[revised tax invoices] & Sec 40 [first return] iro the supplies made during the period of suspension
& the procedure specified therein shall apply.

3 Aadhaar Authentication Mandatory for New Registrants for grant of registration

 There is a simplified registration procedure under GST. However, in an endeavor to curb fly-by-night
operators & to increase compliance, aadhaar e-KYC based registration has been introduced.
 w.e.f 1.04.2020, aadhaar authentication has been made mandatory for new applicants (whether an
individual applicant or an applicant other than individual) in order to be eligible for grant of
registration. Subsequently, existing registrants will also be required to undergo aadhaar
authentication otherwise their registration shall be deemed to be invalid.
 Sub-sections (6A), (6B), (6C) & (6D) were inserted in section 25 vide the FA (2) 2019, to make aadhaar
authentication mandatory for specified class of new taxpayers & to prescribe the manner in which
certain class of registered taxpayers are required to undergo aadhaar authentication.
 Section 25(6A) requires every registered person to undergo authentication/furnish proof of
possession of aadhaar number, in prescribed form & manner and within prescribed time.
 Section 25(6B) & (6C) require every individual & Karta, Managing Director, Whole Time Director,
partners of firm etc. respectively, to undergo authentication/furnish proof of possession of aadhaar
number in prescribed manner. Such authentication is mandatory to be eligible for grant of
registration. It shall be from a date to be notified.
 Section 25(6D) provides that the provisions of section 25(6A)/(6B)/(6C) shall not apply to notified
person/class of persons/any notified State/UT/part thereof.
In pursuance to sub-sections (6B), (6C) & (6D) of section 25, following amendments have been made:

Rule 8 provides the procedure for application of registration. A new sub-rule (4A) has been inserted
after sub-rule (4) to rule 8. It provides that, with effect from 01.04.2020, the applicant shall, while
submitting an application under sub-rule (4), undergo authentication of Aadhaar number for grant
of registration. In exercise of powers conferred by section 25(6B) & (6C), an individual, authorised
signatory of all types, Managing and Authorised partners of a partnership firm, Karta of Hindu
undivided family, shall undergo authentication, of Aadhaar number, as specified in this rule, in
order to be eligible for registration, with effect from 01.04.2020. However, if Aadhaar number is not
assigned to the said persons, they shall be offered alternate and viable means of identification in the
manner specified in rule 9 of the said rules.
Proviso inserted to rule 9(1) provides that where a person, other than those notified u/s 25(6D), fails
to undergo authentication of Aadhaar number as specified in rule 8(4A) above, then the registration
shall be granted only after physical verification of the principal place of business in the presence of
the said person, not later than 60 days from the date of application. A site survey (Physical
verification) will be done and identification documents will be verified. In such cases, deemed
approval of registration application [as provided in rule 9(5)] will not be applicable.
Rule 25 providing for physical verification of business premises has also been suitably amended to
provide that where the proper officer is satisfied that the physical verification of the place of business
of a person is required due to failure of aadhaar authentication before the grant of registration, or
due to any other reason after the grant of registration, he may get such verification of the place of
business, in the presence of the said person, done. The verification report along with the other
documents, including photographs, shall be uploaded in prescribed form on the common portal
within a period of 15 working days following the date of such verification.
In exercise of the powers conferred by section 25(6D), with effect from 01.04.2020, the provisions of
section 25(6B) and (6C) shall not apply to a person who is not citizen of India or to a class of person
other than the following class of persons, namely;
(a) Individual;
(b) Authorised signatory of all types;
(c) Managing and Authorised partners and
(d) Karta of HUF
[NN 16, 17, 18 & 19/2020 CT all dated 23.03.2020]
CHAPTER 8. TAX INVOICES, DEBIT NOTE & CREDIT NOTE
1 Tax invoice for services by way of admission to exhibition of Cinematograph Films in Multiplex
Screens [Rule 46 & 54] [NN 33/2019]
 Registered person has an option to issue consolidated tax invoice for supplies at the close of each
day where value of G/S supplied is < Rs. 200, recipients is unregistered & does not require tax
invoice.

 From 1.9.2019, 4th proviso to rule 46 has been amended to disallow this option to supplier engaged
in supply of services by way of admission to exhibition of cinematograph films in multiplex screens.
 Further, w.e.f 1.9.2019, a new sub-rule (4A) has been inserted in rule 54.
RP supplying services by way of admission to exhibition of cinematograph films in multiplex
screens shall be required to issue an electronic ticket mandatorily.
 Electronic ticket is deemed to be a tax invoice, even if such ticket does not contain the details
of the recipient of service but contains the other information as mentioned under rule 46.

 Supplier of such services in a screen other than multiplex screens also has been given an option
to follow above procedure.

2 Manner of issuing E-invoice

 Sub-rule (4) has been inserted to rule 48 to provide that the e-invoice shall be prepared by notified
class of registered persons, on the recommendations of the Council, by including such particulars
contained in Form GST INV-01 after obtaining an IRN (Invoice Reference Number) by uploading
information contained therein on the Common GST Electronic Portal* in prescribed manner and
subject to prescribed conditions and restrictions. Every invoice, issued by said persons, in any
manner other than the manner specified in the rule 48(4) shall not be treated as an invoice. The
requirement of preparing the invoices in duplicate and triplicate in case of supply of services and
goods respectively does not apply to such e-invoices.
 Following Invoice Registration Portals (IRPs) has been notified as Common GST Electronic Portal
for the purpose of preparation of e-invoices:
 www.einvoice1.gst.gov.in
 www.einvoice2.gst.gov.in
 www.einvoice3.gst.gov.in
 www.einvoice4.gst.gov.in
 www.einvoice5.gst.gov.in
 www.einvoice6.gst.gov.in
 www.einvoice7.gst.gov.in
 www.einvoice8.gst.gov.in
 www.einvoice9.gst.gov.in
 www.einvoice10.gst.gov.in
 Rules 46 & 49 have been amended to provide that Government may, by notification, on the
recommendations of the Council, & subject to such conditions & restrictions as mentioned therein,
specify that the tax invoice/bill of supply shall have Quick Response (QR) code.
[NN 31/2019 CT dated 28.06.2019 r/w N 68, 69 and 71/2019 CT all dated 13.12.2019]
 8B. E-WAY BILL
1 Validity of EWB in case of Multimodal Shipment in which at least one leg involves transport by
ship [Rule 138(10) of the CGST Rules]
Rule 138(10) provides validity period of EWB. This rule has been amended to also provide the validity
period of EWB for multimodal shipment in which at least one leg involves transport by ship.
Amended Rule 138(10) lays down as under:
Type of Conveyance Distance within country Validity from Relevant
Date
(i) Over dimensional cargo Upto 20 Kms 1 Day
(ii) Multimodal shipment in which For every additional 20 Kms or Additional 1 Day
at least one leg involves part
transport by ship
Normal Cargo [If not covered Upto 100 Kms 1 Day
above]
For every additional 100 Kms Additional 1 Day
(i.e Other than Over dimensional or part
cargo or multimodal shipment in
which at least one leg involves
transport by ship)
Sub-rule (10) has been further amended to lay down that validity of the e-way bill can be extended
within 8 hours from the time of its expiry.
2 Restriction on furnishing of information in Part A of Form GST EWB-01
 No person (including a consignor, consignee, transporter, an e-commerce operator or a courier
agency) shall not be allowed to furnish the information in Part A of Form GST EWB-01 i.r.o. following
registered persons, whether as a supplier or a recipient:
(i) Person paying tax under composition scheme or under NN 2/2019 CT (R) dated 07.03.2019 has
not furnished the statement for payment of self-assessed tax for 2 consecutive quarters, or
(ii) Person paying tax under regular scheme has not furnished returns for 2 consecutive months or
(iii) Person paying tax under regular scheme has not furnished GSTR-1 (Statement of outward
supplies) for any 2 months or quarters, as the case may be.
 However, Commissioner (jurisdictional commissioner) may, on receipt of an application from a
registered person in prescribed form, on sufficient cause being shown and for reasons to be recorded
in writing, by order, in prescribed form allow furnishing of the said information in Part A of Form
GST EWB-01, subject to prescribed conditions and restrictions. An order rejecting said request
shall not be passed without giving the said person a reasonable opportunity of being heard. The
permission granted or rejected by the Commissioner of State tax or Commissioner of Union territory
tax shall be deemed to be granted or, as the case may be, rejected by the Commissioner.
NN 74/2018 CT dated 31.12.2018 r/w NN 36/2019 CT dated 20.08.2019 & NN 75/2019.
 9. PAYMENT OF TAX
1 Rule 87 prescribing provisions relating to Electronic Cash Ledger Amended [NN 31/2019]

 2nd proviso to sub-rule (2) which gave an option to a person supplying OIDAR services from a
place outside India to a non-taxable online recipient, to generate challan through the Board’s
payment system namely, Electronic Accounting System in Excise & Service Tax has been omitted.
 Sub-rule (9) provided that any amount deducted u/s 51 or u/s 52 & claimed in Form GSTR-02 by
registered taxable person from whom said amount was deducted or, as the case may be, collected
shall be credited to his electronic cash ledger in accordance with the provisions of rule 87.
The words, letters and figures “in Form GSTR-02” and words and figures “in accordance with the
provisions of rule 87” have been omitted from sub-rule (9).

2 Refund of tax that has been paid wrongly or in excess by utilising ITC [Rule 86]

A new sub rule (4A) has been inserted in rule 86 to provide that where a registered person has claimed
refund of any tax that has been paid wrongly or in excess through ECL, the said refund, if found
admissible, will be credited to ECL [NN 16/2020]

10. RETURNS UNDER GST

1 Form GSTR-3B to be treated as a return furnished u/s 39 [Rule 61(5)] [NN 49/2019]
 Form GSTR-3B to be treated as a return furnished u/s 39 [Rule 61(5)].
 Sec 39(1) of CGST Act prescribes a monthly return in Form GSTR-3 for every registered person,
other than ISD, NRTP, composition taxpayer, person deducting tax at source, person collecting tax
at source i.e. an ECO & supplier of OIDAR services.
 However, filing of GSTR-3 has been deferred by the GST Council.
Rule 61(5) of CGST Rules provided that where time limit for furnishing of details in Form GSTR-1 u/s
37 has been extended & the circumstances so warrant, Commissioner may, by notification, specify
the manner & conditions subject to which the return shall be furnished in Form GSTR-3B. The said
rule has been amended retrospectively with effect from 01.07.2017, to specify that return in Form
GSTR-3B is the return u/s 39(1) & that where a return in GSTR-3B is furnished by a person then
such person shall not be required to furnish the return in Form GSTR-3.
2 Filing of Annual Return u/s 44(1) for FY 2017-18 & 2018-19 made optional for small taxpayers
whose aggregate turnover is < Rs 2 Cr & who have not filed the said return before due date.
 Filing of annual return (GSTR- 9) u/s 44(1) of CGST Act r/w rule 80(1) i.r.t FY 2017-18 & 2018-
19, has been made voluntary for RPs whose turnover is < Rs. 2 Cr & who have not furnished the
said annual return before due date.
 Annual return shall be deemed to be furnished on due date if it has not been furnished before DD.

 Section 44(1) of the CGST Act r/w rule 80(1) requires every registered person, other than an Input
Service Distributor, a person paying tax u/s 51 or u/s 52, CTP & NRTP to furnish an annual return.
 Government has notified that the persons compulsorily registered u/s 24(xi) supplying OIDAR
services from a place outside India to a person in India (other than registered person) as class of
registered persons who shall not be required to furnish annual return u/s 44(1) r/w rule 80(1).