All about the 9 GST circulars issued by CBIC

Last Updated On: Oct. 22, 2019, 8:33 p.m.
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CBIC issues 9 GST Circulars on 11th October 2019

1.Clarification regarding GST rates & classification (goods)

The leguminous vegetables which are subjected to mere heat treatment for removing moisture, or for softening and puffing or removing the skin, and not subjected to any other processing or addition of any other ingredients such as salt and oil, would be classified under HS code 0713. Such goods if branded and packed in a unit container would attract GST at the rate of 5% [S. No. 25 of notification No. 1/2017- Central Tax (Rate) dated 28.06.2017]. In all other cases, such goods would be exempted from GST [S. No. 45 of notification No. 2/2017- Central Tax (Rate) dated 28.06.2017].

However, if the above dried leguminous vegetable is mixed with other ingredients (such as oil, salt, etc) or sold as namkeens then the same would be classified under Subheading 2106 90 as namkeens, bhujia, chabena, and similar edible preparations and attract applicable GST rate. Classification and applicable GST rate on Almond Milk: Applicable GST rate on Mechanical Sprayer: Clarification regarding taxability of goods imported under lease. Applicability of GST rate on parts for the manufacture solar water heater and system and on the parts and accessories suitable for use solely or principally with a medical device.

2.Clarification on scope of support services to exploration, mining or drilling of    petroleum crude or natural gas or both [Circular No. 114/32/2019-GST dated      11th October 2019]

The scope of the entry at Sr. 24 (ii) under heading 9986 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 shall be governed by the explanatory notes to service codes 998621 and 998622 of the Scheme of Classification of Services. scope of the entry at Sr. No. 21 (a) under heading 9983 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 inserted with effect from 1st October 2019 vide Notification No. 20/2019- CT(R) dated 30.09.2019 shall be governed by the explanatory notes to service codes 998341 and 998343 of the Scheme of Classification of Services. The services which do not fall under the said entries under heading 9983 and 9986 of the said notification shall be classified in their respective headings and taxed accordingly.

 

 

 

 

 

 

3.Clarification on issue of GST on Airport levies [Circular No. 115/32/2019-GST    dated 11th October 2019]

Passenger Service Fee (PSF) and User Development Fee (UDF) being charges levied by airport operator for services provided to passengers are collected by the airlines as an agent and is not a consideration for any service provided by the airlines. Thus, the airline is not responsible for payment of ST/GST on UDF or PSF provided the airline satisfies the conditions prescribed for a pure agent under Rule 33 of the CGST Rules.

The airline acting as a pure agent of the passenger should separately indicate the actual amount of PSF and UDF and GST payable on such PSF and UDF by the airport licensee, in the invoice issued by airlines to its passengers. The airline shall not take ITC of GST payable or paid on PSF and UDF. The airline would only recover the actual PSF and UDF and GST payable on such PSF and UDF by the airline operator. The amount so recovered will be excluded from the value of supplies made by the airline to its passengers. In other words, the airline shall not be liable to pay GST on the PSF and UDF (for airport services provided by airport licensee), provided the airline satisfies the conditions prescribed for a pure agent under Rule 33 of the CGST Rules. The registered passengers, who are the ultimate recipient of the airport services, may take ITC of GST paid on PSF and UDF based on pure agent's invoice issued by the airline to them.

The collection charges paid by airport operators to airlines are a consideration for the services provided by the airlines to the airport operator (AAI, DAIL, MAIL, etc) and airlines shall be liable to pay GST on the same under forward charge. ITC of the same will be available with the airport operator.

4.Levy of GST on the service of display of name or placing of nameplates of the donor in the premises of charitable organizations receiving donation or gifts from individual donors [Circular No. 116/35/2019-GST dated 11th              October 2019 ]

Individual donors provide financial help or any other support in the form of donations or gifts to institutions such as religious institutions, charitable organizations, schools, hospitals, orphanages, old age homes, etc. The recipient institutions place a nameplate or similar such acknowledgment in their premises to express the gratitude. When the name of the donor is displayed in recipient institution premises, in such a manner, which can be said to be an expression of gratitude and  public recognition of donor's act of philanthropy and is not aimed at giving publicity to the donor in such manner that it would be an advertising or promotion of his business, then 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 part of the recipient of the donation or gift to do anything (supply a service). Circular covers the donations or gifts received by charitable organizations from Individual donors ONLY. It does talk about donations or gifts received from non-individuals/ corporate. However, it looks like the same principles would apply in case donation or gift received from non-individuals / corporates.

5.Clarification on applicability of GST exemption to the DG Shipping approved      maritime courses conducted by Maritime Training Institutes of India [Circular No. 117/36/2019-GST dated 11th October 2019]

The Maritime Training Institutes and their training courses are approved by the Director-General of Shipping which are duly recognized under the provisions of the Merchant Shipping Act, 1958 read with the Merchant Shipping (standards of training, certification and watch-keeping for Seafarers) Rules, 2014. Therefore, the Maritime Institutes are educational institutions under GST Law and the courses conducted by them are exempt from levy of GST. The exemption is subject to meeting the conditions specified at Sl. No. 66 of the notification No. 12/ 2017- Central Tax (Rate) dated 28.06.2017.

The Maritime Training Institutes and their training courses are approved by the Director-General of Shipping which are duly recognized under the provisions of the Merchant Shipping Act, 1958 read with the Merchant Shipping (standards of training, certification and watch-keeping for Seafarers) Rules, 2014. Therefore, the Maritime Institutes are educational institutions under GST Law and the courses conducted by them are exempt from levy of GST. The exemption is subject to meeting the conditions specified at Sl. No. 66 of the notification No. 12/ 2017- Central Tax (Rate) dated 28.06.2017.

6.Clarification regarding determination of place of supply in case of                software/design services related to Electronics Semi-conductor and Design Manufacturing (ESDM) industry [Circular No. 118/37/2019-GST dated 11th October 2019

Various representations have been received from trade and industry seeking clarification on the determination of place of supply in case of supply of software/design services by a supplier located in taxable territory to a service recipient located in nontaxable territory by using the sample hardware kits provided by the service recipient.

It is stated that several companies that are part of the growing Electronics Semiconductor and Design Manufacturing (ESDM) industry in India are engaged in the process of developing software and designing integrated circuits electronically for customers located overseas. The client/customer electronically provides Indian development and design companies with design requirements and Intellectual Property blocks ("IP blocks", reusable units of software logic and design layouts that can be combined to form newer designs). Based on these, the Indian company digitally integrates the various IP blocks to develop the software and the silicon or hardware design. These designs are communicated abroad (in industry-standard electronic formats) either to the customer or (on behest of the customer) a manufacturing facility for the manufacture of hardware based on such designs.

7.Clarification regarding taxability of supply of securities under Securities Lending Scheme, 1997 [Circular No.119/38/2019-GST dated 11th October 2019]

Securities and Exchange Board of India (SEBI) has prescribed the Securities Lending Scheme, 1997 to facilitate lending and borrowing of securities. Under the Scheme, a lender of securities lends to a borrower through an approved intermediary to a borrower under an agreement for a specified period with the condition that the borrower will return equivalent securities of the same type or class at the end of the specified period along with the corporate benefits accruing on the securities borrowed. The transaction takes place through an electronic screen-based order matching mechanism provided by the recognized stock exchange in India. There is anonymity between the lender and borrower since there is no direct agreement between them.

8.Clarification on the effective date of explanation inserted in notification No. 11/2017- CTR dated 28.06.2017, Sr. No. 3(vi) [Circular No. 120/39/2019-GST dated 11th October 2019

GST Rate Notification 11/2017 dated 28-06-17, Composite supply of works contract as defined in clause (119) of section 2 of the CGST Act, 2017, provided to the Central Government, State Government, Union Territory, a local authority, a Governmental Authority or a Government Entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession is taxable @ 12%.

The clarificatory notification 17/2018-CTR dated 26-07-18 was issued u/s 11(3) to clarify that the term ‘business' shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities.

It has now been clarified that clause 3(vi) was inserted in CGST rate notification w.e.f. 21-09-2017 although the clarificatory notification dated 26-07-18 mentions 27-07-2018 as the effective date of applicability.

9.GST on license fee charged by the States for grant of Liquor licenses to vendors [Circular No. 121/40/2019-GST dated 11th October 2019

The service by way of grant of alcoholic liquor license, against consideration in the form of license fee or application fee or by whatever name it is called, by State Government as neither a supply of goods nor a supply.

It is now clarified that this special dispensation applies only to supply of service by way of grant of liquor licenses by the State Governments as an agreement between the Centre and States and has no applicability or precedence value in relation to grant of other licenses and privileges for a fee in other situations, where GST is payable.

 

 



 

 

   

  

 

 

 

 

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