Government has come up with various clarifications to address the issues and confusions being faced by the industry at large. This article deals with clarifications issued in relation to various matters.
In Relation to Special Economic Zone
- Requirement of E-way bill is on the basis of movement of goods rather than the place of supply of goods. Movement of goods from DTA unit to SEZ unit or vice versa in the same State is exempt from the generation of e-way bill if notified by the respective State or Union Territory2 . Thus, e-way bill is required in the absence of any exemption from generation of e-way bill notified by the State, with respect to intra-state movement of goods.
- There is a conflict in law in relation to immovable property related services when provided to a SEZ unit or SEZ developer by DTA located in the same State or Union Territory. The place of supply of services such as accommodation, as per the provisions of Act is the location of immovable property3 . However, the Act also states that any services to SEZ unit or SEZ developer shall be deemed as inter-state supply4 . Thus, to avoid conflict it was clarified that the in case of an apparent conflict between two provisions, the specific provision shall prevail over the general provision. Being specific provision relating to supplies to SEZ unit shall be considered inter-state.
- Supplies of goods or services or both to a SEZ developer or a SEZ unit are considered as zero rated supply5 . The registered person making zero rated supplies under bond/LUT or on payment of integrated tax, are eligible for refund subject to such conditions, safeguards and procedure as may be prescribed6 . However, it has been clarified that the supplier is eligible to claim the refund of unutilized input tax credit or integrated tax paid, as the case may be, only if such supplies have been received by the SEZ developer or SEZ unit for authorized operations, as endorsed by the specified officer of the zone. This is in light of Rule 89(1) of Central GST Rules which authorise the supplier of goods/services to file refund claim only after such goods/services have been admitted in full in the SEZ for authorised operations.
- In case of transportation of goods by railways, the goods shall be delivered only when the e-way bill is produced at the time of delivery7.
- The e-way bill generation is not depended on whether the supply is inter-state or not but on whether the movement of goods is inter-State or not. Thus e-way bill is required when goods transit from one state to another state even if the supply is intra-state as per the provisions of the Act.
- The value of free moulds and dies supplied to the component manufacturer by the original equipment manufacturer (OEM) is not required to be included in the value of supply by component manufacturer. The same has been clarified on the basis of the supply being devoid of consideration and also since the component manufacturer is not obliged to incur the cost. Also the input tax credit availed by OEM is not required to be reversed since the same has been supplied in the course or furtherance of business. However, if the contract between the parties requires the cost of moulds and dies to be borne by the component manufacturer then, such free supply by the OEM shall be included in the value of supply and also the credit of input tax on same has to be reversed by the OEM.
- Where a supply involves supply of both goods and services and the value of such goods and services supplied are shown separately, the goods and services would be liable to tax at the rates as applicable to such goods and services separately.
- The Act allows refund of unutilised input tax credit on account of inverted duty structure8 . However, supply of certain goods including fabrics have been notified as exempt from availment of such refund9 . It has been clarified that the fabric processors shall be eligible to claim the benefit of refund since the actual output supply is the supply of job work services rather than the supply of fabrics.
In Relation to E-Way Bill
In Relation to Other Matters
1Circular No. 47/21/2018-GST dated 8thJune, 2018
Circular No. 48/22/2018-GST dated 14th June, 2018
2Rule 138(14)(d) of Central GST Rules, 2017
3 Section 12(3)(c) of Integrated GST Act
4 Section 7(5)(b) of Integrated GST Act
5Section 16(1) of Integrated GST Act
6Section 16(3) of Integrated GST Act
7Proviso to rule 138(2A) of the Central GST Rules, 2017
8Section 54(3) of Central GST Act
9Notification No. 5/2017-Central Tax (Rate) dated 28th June, 2017
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