Q) We had accumulated credit of Krishi Kalyan Cess (KKC) that we carried over to the GST input tax credit by filing TRAN-1 return. Our CA, who told us that we can do so, now says that the credit of that Cess is not admissible. What is the correct position?
The Authority for Advance Ruling in Maharashtra has ruled in the case of Kansai Nerolac Paints Ltd that accumulated credit of KKC that appeared in the Service Tax return of June 30, 2017, which is carried forward to the electronic credit ledger under the CGST Act, 2017, will not be admissible input tax credit.
Q) Our erstwhile VAT authorities have demanded arrears of tax for the period 2012-13 now and imposed a penalty also. Can we contest on the grounds of limitation?
You have not stated the State where this dispute has arisen, when the show cause notice was issued or when the matter was adjudicated. Anyway, you may take note that in the case of Malabar Gold, the Kerala High Court stayed the order of VAT authority passed in February and March this year. The party’s contention was that it was unconstitutional to issue penalty orders under a tax system that has expired. The 101st Constitutional Amendment, 2015 which subsumed all indirect taxes into a single Goods and Services tax (GST) had stripped the States of the powers to make law on taxes on sale or purchase of goods other than petroleum products and liquor. Further, Section 109 of the 101st Amendment states that VAT will expire one year from the date of the commencement of the 101st Amendment (September 16, 2016) or on June 22, 2017, the day the Kerala Goods and Services Act came into force. Malabar Gold therefore argued that the provisions of Kerala Value Added Tax Act 2003 could be enforced only till September 16, 2017, or June 22, 2017, whichever was earlier. In short, penalty Proceedings should have been completed before June 22, 2017. The GST department has sent notices only in 2018. It was further argued that protective clauses contained in Kerala GST Act, 2017, which allows for reassessment and grants power to impose penalties under the repealed Act without any time limit, is “patently inconsistent” with the provisions of section 19 of the 101st Constitution Amendment.
Q) I am a freelance information technology professional providing IT consulting services. I am registered for GST, and for my India-based clients I charge 18 per cent GST on consulting fees. I have clients in USA, whom I invoice in USD and from whom I receive payment in USD into my bank account. Am I required to charge them GST?
No. You are not required to charge GST on export of your services, which are zero rated. But, you must furnish a letter of undertaking in accordance with CBEC Circular no. 8/8/2017-GST dated October 4, 2017, as amended by Circular no. 37/11/2018-GST dated March 15, 2018 and 40/14/2018-GST, dated April 6, 2018.
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