GST on Khadi products – Only Khadi yarn is exempted at present

GST on Khadi products – only Khadi yarn is exempted. Details of products of the Village Industries sector under pre-GST & post-GST
GST on Khadi products
Press Information Bureau 
Government of India
Ministry of Micro,Small & Medium Enterprises
10-August-2017 17:56 IST

GST on Khadi products  

Ministry of Micro, Small and Medium Enterprises (MSME) welcomes the introduction of GST. The entire Khadi & Village Industries (KVI) sector has been enjoying the benefit of tax exemption even under the pre-independence era. With the exemption to the SSI sector being drastically reduced from the existing Rs.150 lakh to Rs.20 lakh, the exemption cover enjoyed by many of the Khadi Institutions (KIs) has been removed. KIs are now mandated to obtain registration under GST and also pay GST on various Khadi products which is 5%.  The products of the Village Industries sector were either taxed @ 0-14.30% before-GST and post-GST the same products attracts tax @ 12-28%, and the details of the same is given below:   

Details of products of the Village Industries sector under pre-GST & post-GST 

Items

Before (GST)

After (GST)

Dona plate

5%

18%

PVC Scrap

5%

18%

Ayurvedic Medicine

0%

12%

Sanitary Hardware & Paint

14%

28%

Marble & Granite

5-14%

28%

Electronic Weighing Scale

5.5%

28%

Lock

5%

18%

Mentha

5%

18%

Solar Plate

0%

18%

Textile sector

0 to 5%

18%

Gobar Gas/Bio Fuel Generator

0%

18%

Agriculture Diesel Engine (upto 12 B.H.P.)

5%

28%

Plywood

14.30%

28%

Sewing Machine parts

5%

12%

Detergents

5%

28%

Glassware boll (Kancha)

0%

18%

Tractor attachments

14%

28%

Weighing machines

14%

28%

Wet grinders

14%

28%

Compressors

14%

28%

Packing Machines

14%

28%

Auto-parts

14%

28%

Garage Equipment

14%

28%

Hand-made soap (3401)

0%

18%

Hand-made paper (4802)

0-4%

12%

Herbal Shampoo (3305)

5-12%

28%

Leather Products (suit-case/brief-case/other articles)

5-12%

28%

Agricultural, Horticultural or Forestry Machinery for Soil preparation

5%

12%

Harvesting or threshing machinery

0%

12%

All food mixes, sharbat, ready to eat packaged food

5%

18%

Hand operated mechanical appliances, weighing 10 kg or less, used in the preparation, conditioning or serving of food or drink

5%

18%

At present only Khadi yarn produced in Khadi sector is exempted, while other Khadi products attracts 5% GST.  Ministry of MSME has approached Ministry of Finance to consider the sector for exemption from GST or to ensure a seamless flow of input tax credit in order for Khadi Institutions to claim input tax credit.     

This Press Release is based on information given by the Minister of State for MSME Shri Giriraj Singh in a written reply to a question in Rajya Sabha on 10.08.2017 (Wednesday). 

********

AK/RM

Reverse charge mechanism under GST for supply of goods/services – CBEC Paper

Reverse charge mechanism under GST. Supply of Goods under RCM and description of nine supply of services covered under RCM-CBEC Paper

Reverse charge mechanism under GST

Generally, the supplier of goods or services is liable to pay GST. However, in specified cases like imports and other notified supplies, the liability may be cast on the recipient under the reverse charge mechanism. Reverse charge means the liability to pay tax is on the recipient of supply of goods or services instead of the supplier of such goods or services in respect of notified categories of supply.

There are two type of reverse charge scenarios provided in law. First is dependent on the nature of supply and/or nature of supplier. This scenario is covered by section 9 (3) of the CGST/ SGST (UTGST) Act and section 5 (3) of the IGST Act. Second scenario is covered by section 9 (4) of the CGST/SGST (UTGST) Act and section 5 (4) of the IGST Act where taxable supplies by any unregistered person to a registered person is covered.

As per the provisions of section 9(3) of CGST/SGST (UTGST) Act, 2017/section 5(3)of IGST Act, 2017, the Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. Similarly, section 9(4) of CGST/SGST (UTGST) Act, 2017/section 5(4) of IGST Act, 2017 provides that the tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. Accordingly, whenever a registered person procures supplies from an unregistered supplier, he needs to pay GST on reverse charge basis. However, supplies where the aggregate value of such supplies of goods or services or both received by a registered person from any or all the unregistered suppliers is less than five thousand rupees in a day are exempted.

Registration
A person who is required to pay tax under reverse charge has to compulsorily register under GST and the threshold limit of Rs. 20 lakhs (Rs. 10 lakhs for special category states except J & K) is not applicable to him.

ITC
A supplier cannot take ITC of GST paid on goods or services used to make supplies on which the recipient is liable to pay tax

Time of Supply
The time of supply is the point when the supply is liable to GST. One of the factor relevant for determining time of supply is the person who is liable to pay tax. In reverse charge, the recipient is liable to pay GST. Thus, time of supply for supplies under reverse charge is different from the supplies which are under forward charge. In case of supply of goods, time of supply is earliest of: –

(a) date of receipt of goods; or

(b) date of payment as per books of account or date of debit in bank account, whichever is earlier; or

(c) the date immediately following thirty days from the date of issue of invoice or similar other document.

In case of supply of services, time of supply is earliest of: –

(a) date of payment as per books of account or date of debit in bank account, whichever is earlier; or

(b) the date immediately following sixty days from the date of issue of invoice or similar other document.

Where it is not possible to determine time of supply using above methods, the time of supply would be the date of entry in the books of account of the recipient.

Compliances in respect of supplies under reverse charge mechanism:

1. As per section 31 of the CGST Act, 2017 read with Rule 46 of the CGST Rules, 2017, every tax invoice has to mention whether the tax in respect of supply in the invoice is payable on reverse charge. Similarly, this also needs to be mentioned in receipt voucher as well as refund voucher, if tax is payable on reverse charge.

2. Maintenance of accounts by registered persons: Every registered person is required to keep and maintain records of all supplies attracting payment of tax on reverse charge

3. Any amount payable under reverse charge shall be paid by debiting the electronic cash ledger. In other words, reverse charge liability cannot be discharged by using input tax credit. However, after discharging reverse charge liability, credit of the same can be taken by the recipient, if he is otherwise eligible.

4. Invoice level information in respect of all supplies attracting reverse charge, rate wise, are to be furnished separately in the table 4B of GSTR-1.

5. Advance paid for reverse charge supplies is also leviable to GST. The person making advance payment has to pay tax on reverse charge basis.

Supplies of goods under reverse charge mechanism:

S. No. Description of supply of goods Supplier of goods Recipient of goods
1. Cashew nuts, not shelled or peeled  Agriculturist  Any registered person
2. Bidi wrapper leaves (tendu)  Agriculturist Any registered person 
3. Tobacco leaves  Agriculturist Any registered person 
4. Supply of lottery State Government, Union Territory or any local authority Lottery distributor or selling agent
5. Silk yarn Any person who manufactures silk yarn from raw silk or silk worm cocoons for supply of silk yarn Any registered person

Supplies of services under reverse charge mechanism:

S. No.  Description of supply of service Supplier of service Recipient of service
1. GTA Services Goods Transport Agency (GTA) Any factory, society, co-operative society, registered person, body corporate, partnership firm, casual taxable person; located in the taxable territory
2. Legal Services by advocate An individual advocate, including a senior advocate or a firm of advocates Any business entity located in the taxable territory
3. Services supplied by an arbitral tribunal to a business entity An arbitral tribunal Any business entity located in the taxable territory
4. Services provided by way of sponsorship to any body corporate or partnership firm Any person Any body corporate or partnership firm located in the taxable territory
5. Services supplied by the Central Government, State Government, Union territory or local authority to a business entity excluding: –

(1) renting of immovable property, and
(2) services specified below: –

(i) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Central Government, State Government or Union territory or local authority;
(ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
(iii) transport of goods or passengers

Central Government, State Government, Union territory or local authority Any business entity located in the taxable territory
6. Services supplied by a director of a company or a body corporate to the said company or the body corporate A director of a company or a body corporate The company or a body corporate located in the taxable territor
7. Services supplied by an insurance agent to any person carrying on insurance business An insurance agent Any person carrying on insurance business, located in the taxable territor
8. Services supplied by a recovery agent to a banking company or a financial institution or a non-banking financial company A recovery agent A banking company or a financial institution or a nonbanking financial company, located in the taxable territory
9. Supply of services by an author, music composer, photographer, artist or the like by way of transfer or permitting the use or enjoyment of a copyright covered under section 13(1)(a) of the Copyright Act, 1957 relating to original literary, dramatic, musical or artistic works to a publisher, music company, producer or the like Author or music composer, photograph her, artist, or the like Publisher, music company, producer or the like, located in the taxable territory

Prepared by: National Academy of Customs, Indirect Taxes & Narcotics

ROC Gwalior show cause notice to 70 LLP for striking off name

ROC Gwalior show cause notice to 70 LLP for striking off name for not filing any financial statements for the last two preceding financial years.

ROC Gwalior show cause notice

PUBLIC NITICE
(pursuant to Rule 37(2) of LLP Rules, 2009)

GOVERNMENR OF INDIA
MINISTRY OF CORPORATE AFFAIRS
Office ofthe Registrar ofCompanies
Sanjay Complex, 3rd Floor, A Block, Jayclldraganj,
Gwalior, (MP) – 474009

Public Notice No. RoC/Gwalior/LLP/Sec.75/4286·                                                                     Date: 31.07.2017

Reference: In the matter of striking off of LLPs under Section 75 of LLP Act, 2008 read with Rule 37 of LLP Rules, 2009.

1. Notice is hereby given that the Registrar has a reasonable cause to believe that

“That the following LLPs in List’A “(List of 70 Nos. of LLP) have not been carrying on any business or operation for a period of two immediately preceding financial years.”

And.Therefore proposes to remove/Strike off the names of the above mentioned LLPs from the Register and dissolve them unless a cause is shown to the contrary, within one month from the date of this notice.

2. Any person objecting to the proposed removal/striking off of name of the LLPs from the Register of LLPs may send his/her objection to the office address mentioned hereinabove within one month of the date of publication of this notice.

(Harihara Sahoo)
Registrar of Companies
Madhya Pradesh, Gwalior

Supplying back ground sound audio to film is manufacture u/s 80-IB of Income Tax Act – High Court

Supplying back ground sound audio to film is manufacture u/s 80-IB of the Income Tax Act. Providing audio Software to Video already shot amounts to manufacture– High Court

Supplying back ground sound audio

ABCAUS Case Law Citation:
ABCAUS 2024 (2017) (08) HC

The Issue:
Whether the activity of the assessee in editing of supplying the audio of the back ground sound to the film already shot by the customers would amount to manufacture of processing of goods in terms of Section 80-IB of the Income Tax Act, 1961?

Important Case Laws Cited/relied upon by the parties:
The Gramophone Co. of India Ltd. Vs. The Collector of Customs, Calcutta, (2000) 1 SCC 54

Commissioner of the Income Tax Vs. Oracle Software India Ltd, (2010) 320 ITR 0546

Brief Facts of the Case:
The appellant was involved in the activity of the Video Software Generation. He was engaged in the editing of supplying of audio of the back ground sound to the film already shot by the customers.

The Assessing Officer (AO) inter alia held that the assessee was bringing into an existence a video film and his role being limited to that of editing of supplying the audio/back ground sound. It was further held that there was no article or thing having been manufactured by the assessee as required by the provision of 80-IB of the Act. The claim of the assessee was, thus, disallowed.

Being aggrieved, the assessee preferred an appeal before the Commissioner Income Tax appeals who affirmed the order passed by the Assessing Officer. Being aggrieved the assessee preferred an appeal before the Income Tax Appellate Tribunal (ITAT). The Tribunal by taking into account the fact that similar issue has been decided in the assessee’s case in respect of earlier assessment year by the Tribunal itself, dismissed the appeal preferred by the appellant.

Aggrieved by the order of the ITAT, the assessee had filed the appeal in the High Court.

Contention of the Appellant Assessee:
It was submitted that the ITAT grossly erred in dismissing the appeal merely by placing the reliance on an order of assessment passed in respect of the assessee. It is further submitted that it ought to have been appreciated that the order for the earlier assessment year was passed on the ground that assessee was not able to explain that scope of activity undertaken by it and, therefore, the claim of the assessee was disallowed.

Observations made by the High Court:

The Hon’ble High Court observed that the issue involved in this appeal was no longer res-integra and had already been dealt by the Supreme Court in the case of Oracle Software.

The Hon’ble High Court noted the following passage from the the aforesaid decision of the Apex Court which was relevant for the controversy involved in the appeal:

In our view, if one examines the above process in the light of the details given hereinabove, commercial duplication cannot be compared to home duplication. Complex technical nuances are required to be kept in mind while deciding issues of the present nature. The term “manufacture” implies a change, but, every change is not a manufacture, despite the fact that every change in an article is the result of a treatment of labour and manipulation.

However, this test of manufacture needs to be seen in the context of the above process. If an operation/process renders a commodity or article fit for use for which it is otherwise not fit, the operation/process falls within the meaning of the word “manufacture”. Applying the above test to the facts of the present case, we are of the view that, in the present case, the assessee has undertaken an operation which renders a blank CD fit for use for which it was otherwise not fit. The blank CD is an input. By the duplicating process undertaken by the assessee, the recordable media which is unfit for any specific use gets converted into the programme which is embedded in the master media and, thus, blank CD gets converted into the programme which is embedded in the master media, and, thus, blank CD gets converted into recorded CD by the afore-stated intricate process. The duplicating process changes the basic character of a blank CD, dedicating it to a specific use. Without such processing, blank CDs would be unfit for their intended purpose. Therefore, processing of blank CDs, dedicating them to a specific use, constitutes a manufacture in terms of s. 80- IA(12)(b) r/w s. 33B of the IT Act.

Apart from the above enunciation of Law, the Hon’ble High Court  also observed that the activity of Video Software Generation had been recognized as Small Scale Industries by Government of India, Ministry of Industry vide order dated 04.03.1993, as well as 03.11.1993.

The Hon’ble High Court  opined that by providing the Audio Software to the Video already shot makes an article fit for use which in turn amounts to manufacture, in view of the Law laid down by the Supreme Court in the case of Oracle Software.

Held:
It was held that the activity of the petitioner in supplying the audio of the back ground sound to the film already shot by the customers, amounts to manufacture within the meaning of Section 80-IB of the Income Tax Act.

Supplying back ground sound audio
Download Full Judgment