Category: GST

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Determination of Point and Place of Sale in case of Motor Vehicle

[(Tata Engineering and Locomotive (1970) 1 SCC 622] and KTC Automobile 54 PHT 1 (SC)

Manufacturer to Dealer Delivery Order is addressed by Sale office to Stock Yard in incharge

  1. Delivery of motor vehicle from stock yards of automobile manufacturer prior to the issue of allocation letter to the dealer is not appropriation to the contract of sale
  2. It  is when the stock yard incharge  appropriates the requisite number of vehicles to contract of sale out of available stock  by putting down the engine and chasis number in delivery challan, that the goods are appropriated. Till such appropriation it is always open  to the company to allot any vehicle to any dealer or to transfer the vehicle from the stock yard in one state to a stock yard in another state
  3. Dealer is exempted from requirement of registration even though he is in possession o motor vehicle, if he obtains a trade certificate from registering authority of the area. In the trade certificate only class of motor vehicle is mentioned and not the specific particulars of vehicle such as engine number or chasis number. It is permissible for dealer to use motor vehicle covered by trade certificate to use a vehicle for test, repair etc. including proceeding to and from the place of registration.
  1. If the motor vehicle duly covered by insurance and trade certificate of the dealer gets destroyed  during transit from manufacturer to consumer, the liability to pay compensation falls on insurer of buyer who had issued the cover note for insurance [Bombay High Court in Clancy Arcanjia Dias]

Dealer to Customer

  1. Clearly, mere mentioning of engine number and chassis number of motor vehicle in the invoice of sale does not entitle the intending purchaser to appropriate all the goods i.e. the motor vehicle till its possession is or can be lawfully handed over to him by the dealer without violating the statutory provisions governing the motor vehicles.
  2.  Such transfer of possession can take place only when the vehicle reaches the place where the registering authority will be obliged to inspect for the purpose of finding out whether it is roadworthy and register- able motor vehicle and whether its identification marks tally with those given in the sale invoice and Application for registration. The possession can lawfully be handed over to the purchaser at this juncture because law requires the purchaser as an ‘’owner “ to make application registration but at the same time the law prohibits the use of motor vehicle by the owner until it is duly registered by the Registering Authority. Hence, in order to satisfy the requirements of law noticed above, the dealer can deliver the possession and owner can take the possession and present the vehicle for registration only when it reaches the office of Registering Authority
  1. With the handing over of  the possession of a specific motor vehicle just prior to registration, the dealer completes the agreement of sale rendering it a perfected sale. The purchaser as an ‘’ owner’’ under the Motor Vehicles Act is thereafter obliged to obtain certificate of registration which alone entitles him to enjoy the possession of the vehicle in practical terms by enjoying the right to use the vehicle at public places, after meeting the other statutory obligations of the insurance etc.
  2. Hence, technically though the registration of motor vehicle is a post- sale event, the event of sale is closely linked in time with the event of registration.
  1.  Neither the manufacture nor the dealer of a motor vehicle can permit the intended purchaser having an agreement of sale to use the motor vehicle even for taking to it to the registration office in the purview of statutory provisions already noticed. Hence the lawful possession with the right of use is permissible to be given to the intended owner only after reaching the vehicle to the office of registering Authority. Thus seen , in practical terms though sale preceeds the event of registration, in normal circumstances and as the law stands, it is co-terminus with the registration of new motor vehicle.
  1. Article 286(2) of the constitution empowers the parliament to formulate by making law, the principles for determining when a sale or purchase of goods take place in the context of clause (1). As per section 4(2) of the Central Sales Tax Act, in the case of specific or ascertained goods the sale or purchase is deemed to having taking place inside the state where the goods happened to be at the time of making the contract of sale. However, in the case of unascertained or future goods, the sale or purchase shall be deemed to be taken place in the State where the goods happened to be at the time of their appropriation by the seller or buyer, as the case may be.
  1. There can be no difficulty in holding that motor vehicle remains in the category unascertained or future goods till its appropriation to the contract of sale is occasioned by handing over its possession at or near the office of registration authority in deliverable or registrable state.

Hence from manufacturer to dealer, sale takes place when motor vehicle’s engine and chasis number is mentioned on the delivery challan and in case of dealer to consumer sale takes place at or near the ofiice of registration authority where goods in deliverable and registrable state are handed over by dealer to consumer.

 

On the basis of above legal position, it was held in KTC Automobile(supra) that sale takes place in the  state where registration, temporary or permanent,  of vehicle is done and not from where the vehicles are released.

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Construction Service Present and Proposed Rates after GST Council Meeting on 06-10-2017

Notification 11/2017-CTR  as amended by Notification 20/2017- CTR dated 22-08-2017, NN 24/2017-CTR dated 21-09-2017 and further proposed to be amended by GST Council meeting recommendations dated 06-10-2017 and  is covered by heading 9954

Sl. No.3

(i) Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier.  (Provisions of paragraph 2 of this notification shall apply for valuation of this service) is taxable @ 18%

 

In case of supply of service specified in column (3) of the entry at item (i) against serial no. 3  of the Table above, involving transfer of property in land or undivided share of land, as the case may be,

Ø the value of supply of service and goods portion in such supply shall be equivalent to the total amount charged for such supply less the value of land or undivided share of land, as the case may be,

Ø and the value of land or undivided share of land, as the case may be, in such supply shall be deemed to be one third of the total amount charged for such supply.

 

Explanation .– For the purposes of paragraph 2, “total amount” means the sum total of,-

(a) consideration charged for aforesaid service; and

(b) amount charged for transfer of land or undivided share of land, as the case may be

 

Hence effective tax rate shall be 12% in case of construction of complex service.
(ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017.is taxable @ 18%

 
(iii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied  to the Government, a local authority or a Governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, – [Note: Building,fabrication , Modification, Improvement is not covered]

 

(a) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);

 

(b) canal, dam or other irrigation works;

 

(c) pipeline, conduit or plant for

(i) water supply

(ii) water treatment, or

(iii) sewerage treatment or disposal.

 

Is taxable @ 12% w.e.f. 22/08/2017. (From 01/07/2017 to 21/08/2017 It is taxable @ 18%)

 

 
(iv) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,-

 

(a) a road, bridge, tunnel, or terminal for road transportation for use by general public;

 

(a)  a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana;

 

(c) a civil structure or any other original works pertaining to the “In-situ rehabilitation of existing slum dwellers using land as a resource through private participation” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers;

 

(d) a civil structure or any other original works pertaining to the “Beneficiary led individual house construction / enhancement” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;

 

(e) a pollution control or effluent treatment plant, except located as a part of a factory; or

 

 (f) a structure meant for funeral, burial or cremation of deceased.

 

Is taxable @ 12% w.e.f. 22/08/2017 (from 01-07-2017 to 21/08/2017. It is taxable @ 18%).

 

Note:

1.     It is similar to Sl No, 13 of 25/2012

2.     However Sl No, 13 of 25/2012 provided exemption for services  by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a building owned by an entity registered under section 12 AA of the Income tax Act, 1961(43 of 1961) and meant predominantly for religious use by general public

For which concessional tax is not available and hence shall be taxed at 18%.
 
(v) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied  by way of construction, erection, commissioning, or installation of original works pertaining to,- [Note : Repair, Alteration. Modification, Renovation, Completion, fitting out not covered by Concessional taxation]

 

(a) railways, excluding monorail and metro; [Note : Cosntruction service for Air port, port, monorail and metro shall be @ 18%]

 

(b)  a single residential unit otherwise than as a part of a residential complex;

 

[Para 2 (zzb) “residential complex” means any complex comprising of a building or buildings, having more than one single residential unit;

 

[Note:

1.      Construction for Residential Complex is taxable @ 18%.

2.     Services by way of pure labour contracts of construction, erection, commissioning, or installation of original works pertaining to a single residential unit otherwise than as a part of a residential complex is exempt as per Sl. No. No. 11 of Exemption Notification 12/2017]

 

(c) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India;

 

(d) low cost houses up to a carpet area of 60 square metres per house in a housing project approved by the competent authority under-

 

(1) the “Affordable Housing in Partnership” component of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;

 

(2) any housing scheme of a State Government

 

(e) post-harvest storage infrastructure for agricultural produce including a cold storage for such purposes; or

 

(f) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages.

 

Is taxable @ 12% w.e.f. 22/08/2017 (from 01-07-2017 to 21/08/2017. It is taxable @ 18%)

 

Note: As per item no. 10 of Exemption Notification 12/2017 , Services provided by way of pure labour contracts of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works pertaining to the beneficiary-led individual house construction or enhancement under the Housing for All (Urban) Mission or Pradhan Mantri Awas Yojana is exempt

 

 

Note :

1.     Para 2(zs) of 12/2017

“original works” means- all new constructions;

(i)                all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable;

 

(ii)              erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise;

 

2.     Hence Pure labor contracts of following nature for erection, commission or installation  in single residential unit should be exempt:

a)     Air Conditioning

b)    Security Systems

c)     Electrical Installations

d)    Sanitary Installation
(vi)  

 Services provided to the Central Government, State Government, Union Territory, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of –

(a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;

(b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or

(c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of the Schedule III of the Central Goods and Services Tax Act, 2017.

 

[Notification 24/2017-CTR dated 21-09-2017]
(vii) Construction services other than (i), (ii), (iii), (iv), (v) and (vi) above is taxable @ 18%

 

Note : Construction Services shall cover pure labor service also

 

Further as per GST Council decision dated 06-10-2017

1  Works contract services involving predominantly earth works (that is, constituting more than 75% of the value of the works contract) supplied to Central Government, State Governments, Local Authority, Governmental Authority or Government Entity shall be taxed at 5%.
2 Present definition of “governmental authority”  has the same meaning as  assigned to it in the Explanation to clause (16) of section 2 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017

As per Explanation to Section 2(16) of IGST Act:

Explanation.––For the purposes of this clause, the expression “governmental authority” means an authority or a board or any other body,–

(i) set up by an Act of Parliament or a State Legislature; or

(ii) established by any Government

 

Definition of Governmental Authority expanded also to include any authority set up to carry out any functions entrusted to a Panchayat under Article 243G of the Constitution.
3 Supply of service or goods by a Government Entity to Central Government, State Government, Union Territory, Local Authority or any person specified by them against consideration received from them in the form of grants, shall be exempted.

 

“Government Entity” shall be defined as an authority or a board or any other body including a society, trust, corporation which is, –

(i) set up by an Act of Parliament or State Legislature, or

(ii) established by any government,

 

with 90% or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government or a local authority
4 The reduced rate of 12% on specified works contract services supplied to the Central Government, State Government, Union Territory, Local Authority and Governmental Authority shall be extended to a Government Entity, where such specified works contract services have been procured by the government entity in relation to the work entrusted to it by the Central Government, State Government, Union Territory or Local Authority
5 GST shall be levied @ 12% on works contract services in respect of offshore works contract relating to oil and gas exploration and production (E&P) in the offshore area beyond 12 nautical miles
6 Exemption to annuity paid by NHAI (and State authorities or State owned development corporations for construction of roads) to concessionaires for construction of public roads.

 

 

 

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Job Work present and proposed rates after GST Council 22nd Meeting on 06-10-2017

 

W.e.f. 01-07-2017 Changes W.e.f. 22-08-2017 As per 22nd GST Council meeting on 06-10-2017 (not yet effective)
Job Work for Printing of Newspaper and books, journals and newspapers

(Newspaper, journals, periodcals, printed books are exempt)

 5% Job work for printing of Newspapers and books , Journals and newspapers only was retained at 5% but where only content is provided by publisher and printer has obligation to provide paper also along with performing printing rate was pegged at 12% No Change
Printing of Brochures,

leaflets and similar

printed matter, whether

or not in single sheets, Maps, atlas, charts and globe, Judicial, Non judicial stamp

papers, Court fee stamps

when sold by the

Government Treasuries or

Vendors authorized by

The Government,

Postal items, like envelope, Post card etc.,

sold by Government, rupee notes when sold to

the Reserve Bank of India

& Cheques, lose or in book form

(Supply of these items is exempt or taxable at 5%)

 18% No Change 5% but where only content is provided by publisher and printer has obligation to provide paper also along with performing printing rate pegged at 12%
Printing of :

1.Children’s picture, drawing or colouring books,

 

2.Music, printed or in manuscript, whether or not bound or illustrated,

 

3.Plans and drawings for architectural, engineering, industrial, commercial, topographical or similar purposes, being originals drawn by hand; hand-written texts; photographic reproductions on sensitised paper and carbon copies of the foregoing

 

4. Unused postage, revenue or similar stamps of current or new issue in the country in which they have, or will have, a recognised face value; stamp impressed paper; banknotes; cheque forms; stock, share or bond certificates and similar documents of title

 

5. Transfers (decalcomanias) [The art or process of transferring pictures and designs from specially prepared paper (as to glass)]

 

6. Printed or illustrated postcards; printed cards bearing personal greetings, messages or announcements, whether or not illustrated, with or without envelopes or trimmings

 

6. Calendars of any kind, printed, including calendar blocks

 

7. Other printed matter, including printed pictures and photographs; such as Trade advertising material, Commercial catalogues and the like, printed Posters, Commercial catalogues, Printed inlay cards, Pictures, designs and photographs, Plan and drawings for architectural engineering, industrial, commercial, topographical or similar purposes reproduced with the aid of computer or any other devices.

 

8. Uncoated paper and

paperboard, uncoated

kraft paper,

greaseproof paper,

glassine paper,

composite paper etc.

 

9. Aseptic packaging

Paper

 

10. Boxes, pouches,

wallets and writing

compendiums, of

paper or paperboard,

containing an

assortment of paper

stationery including

writing blocks

 

11. Cartons, boxes and

cases of corrugated

paper or paper board

 

12. Exercise book, graph

book, & laboratory

note book

 

13. Kites

 

14. Paper pulp moulded

Trays

 

15. Braille paper

 

16. Paper splints for

matches, whether or

not waxed, Asphaltic

roofing sheets

 

[ These items are taxable @ 12%]

 18% 18% 12%, whether or not paper is also provided by the printer.
Other Printing Job Work on material taxable @ 18% including printing on Cartons, boxes and

cases of non -corrugated

paper or paper board

 

 18% 18% 18%
Textile Job Work 5% for Textile yarns (other than of man-made fibres) and textile fabrics

 

 Tax rate for Job work on all textile products falling under chapter 50 to 63 was reduced to 5% including job work on man made fibres and job work on garments or made ups
Jewellery Sector Job Work 5% for

Cut and polished diamonds; precious and semi-precious stones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 in the First Schedule to the Customs Tariff Act, 1975

 

But Job work for imitation jewellery, gold smith, silver smith wares was not specified in 5% category. Hence it was taxable at 18%

 

 No Change Job Work for all Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin has been pegged at 5%
Processing of Hides skins and leathers 5% for

Processing of hides, skins and leather falling under Chapter 41 in the First Schedule to the Customs Tariff Act,

 

 No Change
Job Work in relation to food products 18% subject to exemption under Notification 12/2017  for

1 Slaughtering of Animals

 
2 pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling of fruits and vegetables

 
3 Services provided by the National Centre for Cold Chain Development under the Ministry of Agriculture, Cooperation and Farmer’s Welfare by way of cold chain knowledge dissemination

 
4 processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market;
5 loading, unloading, packing, storage or warehousing of agricultural produce
6 loading, unloading, packing, storage or warehousing of rice.

 

 

 No Change 5%. However packaging of milk processed milk into packets is not in 5% category.
Job Work in relation to residue and waste of food industry and animal fodder 18% 18% 5% except job work for

 dog and cat food put up for retail sale
 

 Job work in relation to manufacture of umbrella
18% 18% 12%
Manufacture of clay bricks 18% 18% 5%
Other Job Work 18% No Change 18%

 

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Recommendations of GST Council at 22nd meeting on 06-10-2017 (Other than Rates)

1 Services provided by GTA to unregistered persons has been exempted from tax. Since the transporter need not pay tax on these transactions, transporters should now have no difficulty in dealing with unregistered persons.

 
2 GSTR-4 for composition scheme dealer for quarter ending 30-09-2017 deferred from 18-10-2017 to 15-11-2017

 
3 Composition Scheme

a)      Threshhold limit being raised to 1 crore for non special category states and state of J&K

b)      Threshhold limit being raised to 75 lacs for special category states except J&K

c)       Increased threshold exemption limit benefit can be availed by migrated as well as new registrants

d)      Option exercised for new threshold shall be operational from first month of the month succeeding the month in which option is exercised.

e)      GSTR-4 applicable to new registrants shall applicable from the day of composition scheme being operational for them. For period prior to that, return shall be filed like normal tax payer.

f)       Persons providing wholly exempt services like earning interest income shall be entitled to avail composition scheme.

g) Also interest income and value of other exempt services shall not be taken into account to compute threshold limit for composition scheme

 
4 Interstate Taxable Supply of service exempted from registration for small service providers.

Persons providing inter state taxable supply of service but having their aggregate turnover below Rs. 20 lacs shall be entitled to exemption from compulsory registration and hence shall no longer be required to pay GST E.g. Chartered Accountant having receipts below Rs. 20 lacs shall not be required to pay GST even if he makes inter state taxable supply of services.

 
5 Returns reshuffled

a)      GSTR-3B up to December 2017 to be filed by all taxpayer whether turnover is above or below Rs. 1.5 cr.

b)      Monthly GSTR-1,2,3, for July, August and September separately  to be filed by all taxpayers whether turnover is above or below Rs. 1.5 cr.

c)       Business having turnover up to 1.5 crore shall file GSTR-1,2,3 quarterly only starting from quarter for  October to December

d)      Business having turnover up to 1.5 crore shall pay tax quarterly only starting from quarter for  October to December

 
6 Reverse Charge:

Deferred

Reverse Charge Mechanism for supplies received by registered person from unregistered person has been suspended till 31-03-2018. However reverse charge mechanism for supply of specified goods and services like GTA, legal services, import of service shall continue.

 

Expanded

Sale by way of auction etc. of used vehicles, seized and confiscated goods, scrap etc by Central Government, State Government, Union Territory or a local authority, to any person, to be subjected to GST under reverse charge under section 9 (3) of the CGST Act
TDS and TCS provisions deferred till 31-03-2018

 
8 E-Way bill to be implemented from 01-01-2018 in phased manner and shall be nationwide rolled out w.e.f. 01-04-2018

 
9 Taxpayers having annual aggregate turnover up to Rs. 1.5 crores shall not be required to pay GST at the time of receipt of advances on account of supply of goods but shall pay tax at the time of supply of goods only.

 
10 IGST on imports of bonafide gifts up to CIF value of Rs. 5000 imported through post or air has been exempted

 

 

 

 

 

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What are the offences that cannot be compounded under GST

The following offences may not be compounded:
(a) A person who has been allowed to compound earlier in respect of any offences described as follows:
(i) Making a supply without issue of any invoice or grossly mis-declares the
description of the supply on invoice, in contravention of this Act, to intentionally evade tax
(ii) Issues any invoice or bill without supply in violation of the provisions of this
Act/rules made thereunder leading to wrongful availment or utilization of input tax credit or refund of tax
(iii) Collects any amount as tax but fails to pay the same to the credit of the
appropriate Government beyond a period of 3 months from the date on
which such payment becomes due
(iv) Collects any tax in contravention of the provisions of this Act but fails to
pay the same to the credit of the appropriate government from the date on
which such payment becomes due
(v) Availing/utilizing input tax credit without actual receipt of goods and/or
services either fully or partially in violation of the provisions of this Act or
the rules made thereunder
(vi) Fraudulently avails input tax credit or evades tax or obtains refund
(vii) Falsification or substitution of financial records or producing fake accounts, documents or furnishes any false information with an intention to evade payment of tax
(viii) Attempts to commit or abets the commission of any of the offences
mentioned above
(b) A person who has been allowed to compound earlier in respect of any offences described as above in clause (A) under this Act or under any provisions of any other SGST Act or IGST Act in relation to supplies of value exceeding one crore rupees
(c) Any offence which is also an offence under any other law for time being in force
(d) A person who has been convicted for an offence under this act by a court
(e) A person who has been accused of committing an offence as under:
(i) Obstruct or prevents any officer in the discharge of his duties
(ii) Tampers with or destroys any material evidence or documents
(iii) Fails to supply any information which he is required to supply under this
Act or the rules made thereunder or (unless with a reasonable belief, the
burden of proving which shall be upon him, that the information supplied by
him is true) supplies false information.

(ICAI FAQ PUBLICATIONS 06-09-2017 COMPOUNDING OF OFFENCES: FAQ NO. 43)

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Can offences under GST law be compounded

Any offence under this Act may, either before or after the institution of prosecution, be compounded by the Commissioner on payment, by the person accused of the offence to the Central Government or the State Government, of such compounding amount in such manner as may be prescribed. As per Rule 162 of the CGST Rules,2017 [Chapter-XIX – Offences and Penalties of the CGST Rules,2017], the application of compounding shall be filed in FORM GST-CPD-01.

(ICAI FAQ PUBLICATIONS 06-09-2017 COMPOUNDING OF OFFENCES: FAQ NO. 42)