Sweeping of premises (Public or Residential) is not eligible for exemption as "Sanitation and similar Service: West Bengal AAR

Issue:

Can Sweeping of Premises - Public or residential be considered as "Sanitation or similar Service" and be exempt from GST as per Sr. No. 3 or 3A (supply of certain services to the government, local authority, governmental authority, or government entity. The service should be an activity in relation to any function entrusted to a Panchayat under Art 243G of the Constitution or to a Municipality under Art 243W of the Constitution) of Notification 12/2017 (CR)?

Held:

"Sanitation and similar services‟ are classified under SAC 99945. It includes sweeping and cleaning, but only with reference cleaning of a road or street. Sweeping of premises – public or residential – is not classified under "Sanitation or similar service‟, Sweeping service that the Applicant supplies to the Housing Directorate cannot, therefore, be classified as an activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution.

Sweeping Service that the Applicant supplies to the Housing Directorate of the Government of West Bengal, cannot be classified as an activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution. The exemption under Sl No. 3 or 3A, as the case may be, of Notification No 12/2017-CT (Rate) dated 28.06.2017 and WB Govt Gazette Notification-1136-FT dated 28.06.2017 is not, therefore, applicable to such supplies. So such service shall be taxable under GST.

In Advance Ruling of NIS Management Ltd. By WEST BENGAL AUTHORITY FOR ADVANCE RULING GOODS AND SERVICES TAX. 

Outcome of 33rd GST Council Meetings

GST Council has principally agreed on following during 33rd GST Council meeting:

1. GST rate for Affordable housing will be 1% Without ITC. (Currently this is being taxed at 8% with ITC)

2. GST rate for normal Housing will be 5% Without ITC (Currently this is being taxed at 12% with ITC)

3. Criteria for Affordable Housing :

In the case of Tier 1 cities: 60 meters AND Rs. 45 Lakhs
In the case of other cities: 90 meters AND Rs. 45 Lakhs:

4. The above shall be applicable from 1st April 2019.

5. A detailed explanation regarding the transition phase for applicability of above shall be worked out and issued in a notification and circular later. It will consider things such as

a. How much percentage of purchase has to be from a registered dealer in case of Number of shops in case of the housing project as ITC of the same shall not be available.
b. If Housing project consists of Some of the shops, what will be the taxability for such shops?

6. Intermediate tax on development right, such as TDS, JDA, lease premium, FSI shall be exempted only for such residential property on which GST is payable.

7. The decision regarding the GST rate on Lottery will be discussed in the following meeting. (Presently GST rate on State Run lottery is 12% and State Authourized lottery which is managed by agents is 28%)

The service provided by Man power supplier to Hospital Cum General Medical College and state university do not qualify for the NIL Rate for service received as available to educational institute: Haryana AAR

The issue:

The applicant is providing Security agency service to Hospital cum General Medical College and state university (Educational Institute). So the applicant is seeking clarification regarding whether such service would be liable at "NIL" rate according to the Sr. No. 66 of notification no. 12/2017 Central Tax (Rate) which is as follows:
Following Shall attract "NIL" rate of tax
"Service provided -
a. by an educational institute to its students, faculty and staff
b. to an educational institute - By way of
  i. transportation of students, faculty, and staff.
 ii. catering, including any mid-day meals scheme sponsored by the CG, SG or UG.
 iii. security or cleaning or housekeeping service performed in such educational institute
iv. service related to admission to, or conduct of examination by such institution, upto higher secondary.
provided nothing contained in the entry (b) shall apply to educational institute other than an institute providing services by way of preschool, education, and education upto higher secondary school or equivalent".
The Decision

The service provided by Man power supplier to Hospital - Cum - General Medical College and state university do not qualify for the exemption under Sr. No.66 of notification 12/2017- Center (Rate) dated 28.6.2017 and corresponding notification 47/ST-2 date 30.06.2017 of state tax because as per the proviso such NIL rate is applicable only to the Preschool and educational institute up to higher secondary school.

Extension of Due date of GSTR 3B for Jan 2019

CBIC has extended the due date of filing GSTR 3B for Jan 2019 to 28th Feb 2019 for the state Jammu and Kashmir and 22nd for rest of the states. Notification 09/2019 (CGST).

CGST and SGST paid instead of IGST incase of Warehouse clearance for period 1st Jul 2017 to 31st Mar 2018

CBIC has issued a circular 91/10/2019 stating that Supply of warehoused goods while deposited in custom bonded warehouses had the character of inter-State supply as per the provisions of Integrated Goods and Services tax Act, 2017. But, due to non-availability of the facility on the common portal, suppliers have reported such supplies as intra-State supplies and discharged central tax and state tax on such supplies instead of integrated tax. In view of revenue neutral position of such tax payment and that facility to correctly report the nature of transaction in FORM GSTR-1 furnished on the common portal was not available during the period July, 2017 to March, 2018, it has been decided that, as a one-time exception, suppliers who have paid central tax and state tax on such supplies, during the said period, would be deemed to have complied with the provisions of law as far as payment of tax on such supplies is concerned as long as the amount of tax paid as central tax and state tax is equal to the due amount of integrated tax on such supplies.

It is to be noted that that via circular no. 3/1/2018  it was clarified that from 1st of April, 2018 the supply of warehoused goods before their clearance from the warehouse would not be subject to the levy of integrated tax.

Compulsory to specify name of the state in Tax Invoice

CBIC via circular 90/09/2019 instructed that all registered persons making the supply of goods or services or both in the course of inter-State trade or commerce shall specify the place of supply along with the name of the State in the tax invoice. The provisions of sections 10 and 12 of the Integrated Goods and Services Tax Act, 2017 may be referred to in order to determine the place of supply in case of supply of goods and services respectively. Contravention of any of the provisions of the Act or the rules made thereunder attracts penal action under the provisions of sections 122 or 125 of the CGST Act.

CBIC makes it compulsory to fill table 3.2 in GSTR3B related to inter state supplies to un-registered person

CBIC has issued a circular 89/08/2019 dated 18th Feb 2019, stating that a registered supplier is required to mention the details of inter-State supplies made to unregistered persons, composition taxable persons and UIN holders in Table 3.2 of FORM GSTR-3B. Further, the details of all inter-State supplies made to unregistered persons where the invoice value is up to Rs 2.5 lakhs (rate-wise) are required to be reported in Table 7B of FORM GSTR-1.

In case of failure to observe the above, penal provisions u/s 125 of CGST Act.

The above clarification cum compulsion has been introduced to make sure a proper allocation of revenue to the states in case of Interstate sales.

FCRA Registration Checklist

FCRA REGISTRATION CHECK LIST

Following Documents are required for FCRA Registration.

SI. No	Document
1.	Registration Certificate of Association.
2.	Memorandum of Association/Trust Deed.
3.	Activity Report for the Last 3 Years.
4.	Audited Statement of accounts for the last three years.
5.	12A Registration Certificate

Following Information is also required.

Sr. No.	Requirement	Details
1.	Contact details of the association such as Address, e-mail ID, Website, Landline no. etc.
2.	Contact details of the Chief functionary such as mobile no. and mail id
3.	Registration details of the Organization such as date and place of registration, PAN etc.
4.	List of Main objects and definite programmes for which the contribution is to be accepted / utilised.
5.	Details of Key functionaries of the Association such as name, nationality, contact details, relationship with other key functionaries.
6.	If the association is having any parent or sister or subsidiary organisation which is registered under the FCRA then the registration number along with Ministry of Home Affairs file number should be mentioned.
7.	If the association has submitted any application earlier than its reference number should be mentioned.
8.	If the association has received any foreign contribution with or without the prior approval of the Central Government, then the detail should be given.
9.	Details of Designated Bank Account through which the foreign contribution shall be received.
10.	Details of Utilization Bank Account through which the foreign contribution would be utilized, if any. The scanned image of signature of Chief Functionary and image of Seal of the Association which are saved in JPG/JPEG format are also required to be uploaded:
11.	Pan Card,Adhar Card, Mobile Number, Email Ids and occupation of Trustees
12.	Whether any key functionary is convicted for any offence?
13.	Any History of FCRA Registration?
14.	Do you have NGO – Darpan ID? If Yes, Please provide Unique ID of the same.

Major FCRA Compliances

MAJOR FCRA COMPLIANCES

A very under rated, not widely discussed Foreign Contribution Regulation Act, 2010, though, one of very rare law which only requires compliances with respect to Foreign Contribution received. Law was first introduced in 1976 in the era of emergency. The first release of law only required the reporting of Foreign contribution received and spent. As the time passed the requirement of Registration/Prior Permission was introduced, the law became stronger and stringent. It was again the congress government of 2010 who changed FCRA 1976 to FCRA 2010.

Following MAJOR Forms are required to be filed under The Foreign Contribution (Regulation) Act (FCRA), 2010 (All the below given forms are to be filed online only)

Form Number	Purpose	Nature	Due  date of filling
FC-1 (Part-A)	For informing the Government about receiving large gifts from relatives (Who are Foreign Citizen). This applies to all individuals and HUFs. The cut-off is Rs. one lakh in one financial year. (Person has to file this intimation for each receipt after crossing Rs. One lakh during the financial year)	Intimation	Within 30 days of receipt
FC-1 (Part-B)	Providing information about Articles received during the year	Intimation	31st December following the end of the year
FC-1 (Part-B)	Providing information about Securities received during the year	Intimation	31st December following the end of the year
FC-1 (Part-D)	If Any Election Candidate has received any Foreign Contribution during 180 days prior to being nominated. There is no minimum amount limit. (Election candidates are prohibited of taking any Foreign Contribution)	Intimation	Within 45 days of being nominated
FC-2	Persons holding public office should apply in form FC-2 before accepting foreign hospitality. There is no lower cut-off, though a dinner invitation or a lift is exempt.	Permission	14 days in advance
FC-3 (Part – A)	Persons who want to accept foreign contribution regularly should apply in form FC-3 for registration. (Generally NGOs having a proven track record of three years and have spent Rs. Ten Lakhs or more for the object of the trust)	Permission	NA (Generally takes 4 to 6 months to get registered)
FC- 3 (Part – B)	Persons who cannot get FCRA registration should apply for prior-permission. (Prior permission is linked to specific project of NGOs and for a specified sum of Foreign Contribution. Though Foreign contribution may be received in instalments)	Permission	NA (Generally takes 3 to 6 months to get Prior permission)
FC-3 (Part – C)	The FCRA registration is valid for 5 years only so need to apply for renewal in FC -3 Part C	Permission	Ideally 5-6 months before expiry
FC-4 (Includes Auditor’s report)	Form FC-6 is an annual report on how much foreign contribution has been received and used during the financial year. This includes contribution in money as well as in kind. – To be filed by FCRA registered person or having prior permission persons	Annual Return	31st December Following the end of the year.
FC-5	Any FCRA registered person who intends to transfer Foreign contribution to any unregistered person.	Permission	Before transferring such contribution
FC-6	Any FCRA registered person who wants to change Association name or Designated bank account or Utilization Bank Account or more than 50% of Key members.	Intimation	Within 15 days of change

   All FCRA Compliances are compulsory in nature and any violation thereof may lead to penalty     or Imprisonment or both as per the provisions of the act.

   From Bank’s Point of View (Can be used for BANK AUDITS – Concurrent & Statutory)

   Banks are required to report two kinds of transactions to the Government.

   The first is where a remittance has been received by someone without FCRA registration or permission. 

      The second is where a person (Having FCRA registration or not) receives more than one crore rupees in a period of thirty days. These intimations should be sent within 30 days.

IND AS 2: Inventories

Over the years Inventories have been the backbone of any organization and the recognition of the same has also been widely discussed in different statues including Income tax and recently arrived Goods and Service Tax. Amongst all the other inventories related issues, I find the valuation of inventories part being the most dilutive and subjective matter in terms of what cost to be part of inventories rather than expensed out in a particular year.

Since AS 2 is fairly known to all of us, in this Note we discuss the various aspects of the Ind AS -2 Inventories that differs from the AS – 2 Valuation of Inventories.

Differences with examples

All of us are aware about the basic paras of AS-2 which are more or less carried forwarded to the Ind AS – 2. i.e. Inventories are valued at lower of Cost or Net realizable value whichever is less. So following will be in addition to all that we know about AS-2 and the new concepts that are brought into play by the Ind AS – 2.

Point of Difference	As per AS – 2	As per Ind AS - 2
Scope	a.      There is no scope exemption in AS 2 for any inventories held by Commodity traders.	a.   ONLY Measurement requirement of Ind AS 2 do not apply to inventories held by commodity brokers – traders who measure their inventories at fair market value less Cost to sell.
	b.      AS 2 excludes from its FULL SCOPE the producer’s inventories of livestock, agriculture and forest products, and mineral oil, Ores and gases to the extent that they are measured at net realizable value in accordance with well-established practices in those industries.	b. ONLY Measurement requirement of Ind AS 2 do not apply to inventories of forests products, agriculture produce after harvest and minerals and mineral products to the extent they are measured at net realizable value in accordance with well-established practices in those industries.      In other words, the other requirements laid down in the Standard are applicable. For example, disclosure requirements of this Standard are applicable to these types of inventories, say, disclosure of accounting policies adopted in measuring inventories
Inventories – Delayed payment terms	AS – 2 do not explicitly deal with any inventories purchased on deferred payment terms. The cost of inventories generally will be purchase price for deferred credit terms unless the contract states the interest payable for deferred terms.	Difference between the purchase price of inventories for normal credit terms and the amount paid for deferred settlement terms is recognized as interest expense.
Example e.g. If Mr. A gives a normal credit terms of 10 days to all the customer and sales his product XYZ for Rs. 100 per piece. Now if ABC Ltd. buys product XYZ from Mr. A for Rs. 102 for delayed payment terms of 60 days.	As per AS – 2, For the given example ABC Ltd. Would show the inventories at Rs. 102.	As per Ind AS – 2, for the given example ABC Ltd. Would show inventories at Rs. 100 and Rs. 2 should be booked as interest cost.
Cost Formula	It is not expressly mandated to use the same cost formula consistently for all inventories that have similar nature and use to the entity. The only requirement is formula used should reflect (a subjective term) the fairest possible approximation to the cost incurred in bringing the items of inventory to their present location and condition. It may defer for items having similar nature and use to the entity.	Irrespective of any other fact, Ind AS -2 requires an entity to use the SAME cost formula for all the inventories HAVING SIMMILAR NATURE and USE to the entity. For the inventories with different nature or use, different cost formulas may be justified.
Example Whether an entity can use different cost formulae for inventories held at different geographical locations having similar nature and use to it	Not expressly Denied	Since the inventories held at different geographical location are of similar nature and use to the entity, different cost formula cannot be used for inventory valuation purposes.
Inventories – Reversal of write down of Inventory	No specific Guidance in AS 2 for reversal of write down of inventories. May be covered by AS 5.	Write down of inventory may be reversed if circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in NRV because of change in economic circumstances. The amount of reversal is limited to the amount of the original write down.
Example In 2017-18 Product A which costed Rs. 1000 has been written down to 800 due to adverse government policies. In 2018-19 due to favorable change in the government policy the inventory value has increased.	No Specific Guidance in AS 2.	As mentioned, Ind AS do provide for reversal of write down in inventory. In the given example due to favorable government policy change the earlier write-down of the inventory may be reversed to the extent reversed.
Inventories (WIP) Of Service Provider	No Specific Guidance in AS 2	In the case of a service provider, inventories include the costs of the service for which the entity has not yet recognized the related revenue. To the extent that service providers have inventories, they measure them at the costs of their production. These costs consist primarily of the labour and other costs of personnel directly engaged in providing the service, including supervisory personnel, and attributable overheads.
Example:	Not Applicable	In an IT Company where the project is completed only after a Golive of the system at client’s end. So generally there are multiple projects going on at the end of the financial year for which the company would have incurred a personnel cost, overhead cost etc. With the help of IND AS – 2 provisions, the IT company would be able to recognize the same as Work In progress Inventories considering all other aspects are fully met.
Inventories – Classification	As per the requirements of Schedule III, inventories need to be classified as: ·         Raw materials, ·         WIP ·         Finished Goods ·         Stock in trade ·         Stores and spares ·         Loose tools ·         Others	No specific classification requirements. Classification should be appropriate to the entity.

In addition to the differences following are certain issues which are also worth considering viz-a-viz Ind AS -2 :

1.      Packing material:

As per paragraph 8 of Ind AS 2, inventories include ‘materials and supplies awaiting use in the production process.

While the primary packing material may be included within the scope of the term ‘materials and supplies awaiting use in the production process’ but the secondary packing material and publicity material cannot be so included, as these are selling costs which are required to be excluded as per Ind AS 2.

For this purpose, the primary packing material is one which is essential to bring an item of inventory to its saleable condition, for example, bottles, cans etc., in case of food and beverages industry. Other packing material required for transporting and forwarding the material will normally be in the nature of secondary packing material.

2.      Treatment of trade discount and Cash discount while determining the NRV

Trade discount is allowed either expressly through an agreement or through prevalent commercial practices in the terms of the trade and the same is adjusted in arriving at the selling price. Accordingly, the trade discount expected to be allowed should be deducted to determine the estimated selling price.

The Guidance Note on Terms Used in Financial Statements defines Cash Discount as “A reduction granted by a supplier from the invoiced price in consideration of immediate payment or payment within a stipulated period.” These type of costs are incurred to recover the sale proceeds immediately or before the end of the specified period or credit period allowed to the customer. In other words, these costs are not incurred to make the sale, therefore, the same should not be considered while determining NRV