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Clarification on GST related Issues

CBIC has issued circulars giving effect to the 45th GST council meeting wherein the board has clarified definition of Intermediary, conditions of export of services, clarification related to reporting of debit Note and refund of Input Tax credit related issues, an epitome of the those are stated below:

Subsidiary/Sister Concern/ Group Companies of foreign company incorporated in India under the Companies Act,2013 are not merely establishment of distinct person of Foreign Company, services qualify as exports. (Circular no 161/17/2021 – GST, dated 20th September 2021)

  • It is duly clarified that supply of services by a subsidiary/ sister concern/ group concern, etc. of a foreign company, which is incorporated in India under the Companies Act, 2013 (and thus qualifies as a ‘company’ in India as per Companies Act), to the establishments of the said foreign company located outside India (incorporated outside India), would not be barred by the condition (v) of the sub-section (6) of the section 2 of the IGST Act 2017 for being considered as export of services, as it would not be treated as supply between merely establishments of distinct persons under Explanation 1 of section 8 of IGST Act 2017 and vice versa. Such supplies, therefore, would qualify as ‘export of services’, subject to fulfilment of other conditions as provided under sub-section (6) of section 2 of IGST Act.

Requirement of reporting of debit note after delinking from Original Invoice w.e.f. 01-01-2021 will be determined from the financial year in which it is issued. (Circular no 160/17/2021 – GST, dated 20th September 2021)

  • For the purpose of section 16(4) of the CGST Act, A debit note dated 07.07.2021 is issued in respect of the original invoice dated 16.03.2021. As the invoice pertains to F.Y. 2020- 21, the relevant financial year for availment of ITC in respect of the said invoice in terms of section 16(4) of the CGST shall be 2020-21. However, as the debit note has been issued in FY 2021-22, the relevant financial year for availment of ITC in respect of the said debit note shall be 2021-22 in terms of amended provision of section 16(4) of the CGST Act.

 

Possession of physical copy of Invoice while movement of goods is not compulsory. (Circular no 160/17/2021 – GST, dated 20th September 2021)

  • It is clarified that there is no need to carry the physical copy of tax invoice in cases where invoice has been generated by the supplier in the manner prescribed under rule 48(4) of the CGST Rules and production of the Quick Response (QR) code having an embedded Invoice Reference Number (IRN) electronically, for verification by the proper officer, would suffice.

 

Refund of unutilised ITC is eligible in case of exports of goods which are having Nil rate or exempted from Export duty. (Circular no 160/17/2021 – GST, dated 20th September 2021)September 2022.

  • It is clarified that only those goods which are actually subjected to export duty i.e., on which some export duty has to be paid at the time of export, will be covered under the restriction imposed under section 54(3) from availment of refund of accumulated ITC. Goods, which are not subject to any export duty and in respect of which either NIL rate is specified in Second Schedule to the Customs Tariff Act, 1975 or which are fully exempted from payment of export duty by virtue of any customs notification or which are not covered under Second Schedule to the Customs Tariff Act, 1975, would not be covered by the restriction imposed under the first proviso to section 54(3) of the CGST Act for the purpose of availment of refund of accumulated ITC.

Clarification on Inherent requirements to determine Intermediary services, Sub Contracting is not Intermediary: (Circular no 159/17/2021 – GST, dated 20th September 2021)

  • Minimum of Three parties
  • Two distinct supplies
  • Intermediary service provider to have the character of an agent, broker or any other similar person
  • Does not include a person who supplies such goods or services or both or securities on his own account
  • Sub-contracting for a service is not an intermediary service

 

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