MM TAX CLUB

In 49th GST council meeting, conducted on 18th February 2023, the council had recommended to extend the dispensation available to Central Government, State Governments, Parliament and State Legislatures with regard to payment of GST under reverse charge mechanism (RCM) to the Courts and Tribunals also in respect of taxable services supplied by them such as renting of premises to telecommunication companies for installation of towers, renting of chamber to lawyers etc.

Now vide notification no. 02/2023 -Central Tax (Rate) dated 28th February, 2023 CBI has notified the said provision, the extract of notification can be read as under;

Notification No. 02/2023-CentralTax (Rate)

            E).—In exercise of the powers conferred by sub-section (3) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No.13/2017-Central Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 692(E), dated the 28^th June, 2017, namely: -

            In the said notification, in the Explanation, in clause (h), for the words “and State Legislatures” the words “, State Legislatures, Courts and Tribunals” shall be substituted.

This notification shall come into force with effect from the 01^st March, 2023.

Corresponding notification have been issued under Integrated Tax and Union Territory Tax to effect the same under respective act.

In 49th GST council meeting, conducted on 18^th February 2023, the council had recommended to extend the exemption available to educational institutions and Central and State educational boards for conduct of entrance examination to any authority, board or a body set up by the Central Government or State Government including National Testing Agency for conduct of entrance examination for admission to educational institutions.

Now vide notification no. 01/2023 -Central Tax (Rate) dated 28th February, 2023 CBI has notified the said provision, the extract of notification can be read as under;

Notification No. 01/2023 -Central Tax (Rate)

­- In exercise of the powers conferred by sub-sections (3) and (4) of section 9, sub-section (1) of section 11, sub-section (5) of section 15 and section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby makes the following amendment further to amend the notification of the Government of India, Ministry of Finance (Department of Revenue), No.12/2017-Central Tax (Rate), dated the 28^th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 691(E), dated the 28th June, 2017, namely:—

In the said notification, in paragraph 3, in the Explanation, after clause (iv), the following clause shall be inserted, namely: -

“(iva) For removal of doubts, it is clarified that any authority, board or body set up by the Central Government or State Government including National Testing Agency for conduct of entrance examination for admission to educational institutions shall be treated as educational institution for the limited purpose of providing services by way of conduct of entrance examination for admission to educational institutions.”.

This notification shall come into force with effect from the 01st March, 2023.

Corresponding notification have been issued under Integrated Tax and Union Territory Tax to effect the same under respective act.

Restaurants that have offset input tax credit (ITC) in respect of liquor sales will be impacted by a recent goods and services tax (GST) advance ruling given by the West Bengal bench. In this regard, the GST-Authority for Advance Rulings (GST-AAR) has held that the applicant would have to reverse the ITC. While advance rulings do not set a judicial precedent, they do influence tax assessments.

Karnani FNB Specialities, the applicant, operated a lounge bar called 'The Grid'. It also provided catering services as well as banquet renting services. It submitted to the AAR that as sale of liquor (aka, alcohol meant for human consumption) was outside the ambit of the GST, it is not liable to reverse the ITC. The AAR bench did not agree with this view.

The AAR bench held that section 17 (2) of the GST Act, read with rule 42, allows a GST-registered taxpayer to utilise ITC to the extent of input tax paid on inputs and input services that are used for making taxable supplies including zero-rated supplies. However, credit of input tax attributable to exempt supplies is to be reversed according to the prescribed formula. As the AAR bench held the sale of liquor to be an exempt supply, it ruled that the applicant would have to reverse the ITC attributed to the exempt supply.

A late businessman was doing business for 11 months in Partaval of Maharajganj. Purchased Rs 11.73 lakh from his firm through 13 e-way bill. The GST team has detected tax evasion and mismanagement in the investigation. Not only this but the firm was also being run in the name of the deceased’s wife. A fine of five lakh rupees has been imposed for finding disturbances in its stock.

The Goods and Services Tax SIB team had received information that large-scale tax evasion was going on in a garment shop at Paratawal in Maharajganj. In the last six months, the GST team was collecting evidence at the said shop on festivals and other occasions.

When the shop was inspected on Monday under the leadership of Deputy Commissioner Sunil Verma, it was found that the registration of the shop was in the name of the proprietor Shamshul Haque. Haq died in March 2022, but no legal action was taken by the family in this regard.

For example, the name of the firm, name of the proprietor, account number, etc., have not been changed. The business continued under the old name and address and account number. The firm has issued e-way bills by booking garments in bulk from traders in Lucknow and Kanpur, apart from Gorakhpur.

At the same time, another establishment was also found in the same place. Another firm was being operated in the name of Shamshul Haq’s wife Najra Khatoon. During the investigation in this firm, there was no physical evidence of stock being kept in the shop along with the sale. GST has imposed a fine of Rs 5 lakh on this firm.

The help from district administration had to be taken at the time of action

Additional Commissioner Grade-I Vimal Kumar Rai said that two firms in Maharajganj were being monitored. A firm was carrying on business in the name of the deceased proprietor. In the second firm, the business was going on in the name of the wife of the deceased. Action has been taken as per the rules.

When the GST team reached the businessman’s premises in Partaval for action, a crowd gathered. The team had gone to investigate on behalf of GST in six vehicles. Suddenly seeing themselves surrounded, the GST team sought cooperation from the district administration. DM and SDM supported the GST team by sending teams.

It is wrong to do business in the name of the deceased

Doing business in the name of a deceased person is wrong. A GST official told that if the business is being done in the name of the deceased, then it comes under the category of economic offense along with another businessman. For example, bought and sold lakhs of rupees from another trader in the name of the firm. In return, the firm can refuse while recovering that amount from the deceased. After this, the matter may come to fraud and forgery.