National Conference on GST

Organised by:
The Institute of Chartered
Accountants of India
Subject:
“Analysis of
GST Amendments of Year 2023
TIME
10:00 a.m. to 11.30 a.m.
S. S. GUPTA on 13.01.2024 1

CHARTERED ACCOUNTANT
 Amendments to Acts/ Rules/ Notification/ Circular under GST

• The tax on supply of goods and services is levied as per provision of CGST Act, IGST Act, SGST

Act and UTGST Act. The amendments in these Acts are normally made in the Finance Bill.

• The rate of tax on supply of goods and services, exemption from payment of tax, tax payment

under reverse charge are specified in the various notifications. The GST rules are also notified

under different notifications.

• The changes in the notification and rules are frequently made after GST council meeting.

Generally, three to four council meetings are held in year.

• The major amendments made in GST Act, GST Rules, Notifications and Clarification given vide

various circulars during the year 2023 are discussed in this presentation.
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Retrospective effect to amendment in Entries added as No Supply
Schedule III of the GST Act specifies activities or transactions which shall be treated neither
supply of goods nor services. The Entry-7 and Entry-8 of Schedule III which reads as follows were
added with effect from 01.02.2019.

7. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory
without such goods entering into India.

8.(a) Supply of warehoused goods to any person before clearance for home consumption;

(b) Supply of goods by the consignee to any other person, by endorsement of documents of title to the
goods, after the goods have been dispatched from the port of origin located outside India but before
clearance for home consumption.

Explanation 1.-For the purposes of paragraph 2, the term "court" includes District Court, High Court and
Supreme Court.

Explanation 2.- For the purposes of paragraph 8, the expression "warehoused goods" shall have the same
meaning as assigned to it in the Customs Act, 1962 (50 of 1962). 3
However, the Finance Act 2023 has given retrospective effect to addition of these entries from 1st

July 2017. Many registered persons have paid GST on such supply which was not payable.

Further, many have considered the said supply as exempt supply and reversed the credit. Many

registered persons have filed the refund claim for such reversal of credit which is now permitted

in view of the explanation below Section 17(3) which reads as follows:

Explanation.- For the purposes of this sub-section, the expression "value of exempt supply"

shall not include the value of activities or transactions specified in Schedule III, except,—

(i) the value of activities or transactions specified in paragraph 5 of the said Schedule; and

(ii) the value of such activities or transactions as may be prescribed in respect of clause (a) of

paragraph 8 of the said Schedule.

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 DAMAGES RECEIVED FOR BREACH OF CONTRACT.

Many contracts provide for payment of damages to other parties of the contract when

contact is breached. For example, supplier delays in making supply of goods to

recipient, the recipient thereby incurs loss which is compensated by supplier. The

department has been demanding GST on such damages under clause 5(e) of Schedule-II

of GST Act which reads as follows:

5(e) agreeing to the obligation to refrain from an act, or to tolerate an act or a

situation, or to do an act; and

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The Tribunal or Court has consistently in following cases has held that such damages are not
leviable to Service Tax. Reference is made to following cases:

a. Foreclosure charges. [ M/s Repo Homes Ltd. 2020 (7) TMI 472 (Tri.)]
b. Bouncing of cheque and cancellation of orders. [M/s Rohan Motors Ltd. 2020 (12) TMI 1014 –
CESTAT – NEW DEL.]
c. Capacity of job-worker not utilized fully resulting in ex-gratia receipt by job worker. [ M/s K.
N. Food Industries Pvt. Ltd. 2020 (1) TMI 6 – CESTAT (All)]
d. Cancellation charges for cancelling booking of booth in Exhibition [M/s Jaipur Jewellery
Show 2016 (12) TMI 344.]
e. Late payment charges for delay in making electricity charges
f. Amount of interest or penal interest as clarified by CBIC in Circular No. 102/21/2019-GST
dated 28/06/2019
g. Termination of Development Agreement (M.s Amit Metaliks Ltd. 2019 (11) TMI 183 (CESTAT
– KOL)
h. South Eastern Coal Fields Ltd. v. CCE Raipur [2021 (55) G.S.T.L 549 (Tri. – Del.) 6
CBIC has also vide Circular No. 178/10/2022-GST dated 03.08.2022 has clarified that amount

received for following are not taxable:

(a) Compensation for cancellation of coal blocks

(b) Cheque dishonor fine/ penalty
(c) Penalty imposed for violation of laws
(d) Forfeiture of salary or payment of bond amount in the event of the employee leaving the
employment before the minimum agreed period
(e) Compensation for not collecting toll charges
(f) Late payment surcharge or fee
(g) Fixed Capacity charges for Power

However, some confusion still prevails as it is clarified that amount paid for any facility is

chargeable to GST.
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 REVERSE CHARGE MECHANISM
Schedule III of GST Act specifies that services provided by court or tribunal will not be

considered as supply of goods or services. However, Explanation in clause (h) in Explanation

of Notification No. 13/2017-CT (Rate) has been amended and the amended clause (h) reads

as follows:

(h) provisions of this notification, in so far as they apply to the Central Government and

State Governments, shall also apply to the Parliament, State Legislatures, Courts and

Tribunals.

Thus, services like renting of premises to telecommunication companies, renting of chambers

to lawyers will be taxable and tax will be payable under reverse charge mechanism.
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Following new Entry No. 5AA has been added vide Notification No. 13/2017-CT

which reads as follows:

Sr. Category of Supply of Services Supplier of Recipient of

No. Service Service
(1) (2) (3) (4)
5AA. Service by way of renting of residential dwelling to a Any person Any registered
registered person. person

Thus, renting of residential dwelling provided to registered person attracts GST

on reverse charge. The tax is payable by registered person.

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 SETTING UP OF TRIBUNAL

Second Appellate Authority namely GST Tribunal has not been set up even after 6.5 years

of the implication of GST. The GST Act has been recently amended to change the

constitution of bench. Each bench will now consist of two judicial member and two

technical members, one from Centre, one from State. It has also been notified that judicial

member can be practicing lawyer who has good knowledge in practicing indirect taxes. It

has also been notified that principal bench will be located at Delhi. The President of

Tribunal and other members are yet to be selected.

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 COMPOSITION SCHEME
The sale of goods through electronic commerce operator wan not permitted to registered

person opting for composition scheme. Many registered persons whose turnover is below Rs.

1.5 Crores opt for payment of tax under composition scheme. As per provision of Section

10(2)(d) of GST Act, such person opting for composition scheme was not permitted to sale the

goods through electronic commerce operator. They had to sale goods physically.

The sale through electronic commerce operator is increasing day by day. Therefore, in order to

keep pace with the changing method of sale, the Government has amended Section 10(2)(d) of

GST Act. The person can sale goods through electronic commerce operator and still avail

benefit of composition scheme.

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 Person Exempt from obtaining Registration
Section 23 of GST Act specifies the person who were exempt from opting registration reads as follows:

23(1) The following persons shall not be liable to registration, namely:-

(a)any person engaged exclusively in the business of supplying goods or services or both that are not
liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax
Act;
(b)an agriculturist, to the extent of supply of produce out of cultivation of land.

(2) Notwithstanding anything to the contrary contained in sub-section (1) of section 22 or section 24, the
Government may, on the recommendations of the Council, by notification, subject to such conditions and
restrictions as may be specified therein, specify the category of persons who may be exempted from
obtaining registration under this Act.

The person specified by notification in Section 23(2) are not required to obtain registration even if they fall in

any of the category specified in Section 24 also. The Section 23(2) overrides provision of Section 22(1) and

Section-24 of GST Act. The Notification No. 34/2023-CT dated 31.07.2023 has been issued under this Section.
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 PERIOD OF REVOCATION.
Section 30 of GST Act permits person to file application for revocation for cancellation of

registration. The scheme was notified by which person who has not filed the application for

revocation within the period specified in Section 30 can apply for revocation subject to following

conditions:

(a) His registration has been cancelled on or before 31.12.2022.

(b) All the returns up to effective date of cancellation of registration shall be filed after

payment of tax, interest, penalty, late fee, etc.

(c) No further extension will be available for making application for revocation.

(d) Application shall be filed on or before 30.06.2023.

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 Disallowance of Cenvat Credit for expenses incurred
under Corporate Social Responsibility (CSR).

Sub-clause (fa) have been added wide Notification No. 28/2023-CT dated 31.07.2023 in

Section 17(5) to disallow the credit of GST paid on various input and input services

availed on various projects under CSR with effect from 01.10.2023. Thus, dispute

regarding availment of credit have been settled. The clause (fa) reads as follows:

(fa) goods or services or both received by a taxable person, which are used or intended to

be used for activities relating to his obligations under corporate social responsibility

referred to in section 135 of the Companies Act, 2013

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 ONLINE GAMING
New Rule 31B and 31C has been added to provide for valuation of online gaming. The same

reads as follows:

31B. Value of supply in case of online gaming including online money gaming.–

Notwithstanding anything contained in this chapter, the value of supply of online gaming,
including supply of actionable claims involved in online money gaming, shall be the total
amount paid or payable to or deposited with the supplier by way of money or money’s
worth, including virtual digital assets, by or on behalf of the player:

Provided that any amount returned or refunded by the supplier to the player for any
reasons whatsoever, including player not using the amount paid or deposited with the
supplier for participating in any event, shall not be deductible from the value of supply of
online money gaming.
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31C. Value of supply of actionable claims in case of casino.–

Notwithstanding anything contained in this chapter, the value of supply of actionable claims in casino
shall be the total amount paid or payable by or on behalf of the player for –

(i) purchase of the tokens, chips, coins or tickets, by whatever name called, for use in casino; or
(ii) participating in any event, including game, scheme, competition or any other activity or process, in
the casino, in cases where the token, chips, coins or tickets, by whatever name called, are not
required:
Provided that any amount returned or refunded by the casino to the player on return of token, coins,
chips, or tickets, as the case may be, or otherwise, shall not be deductible from the value of the supply of
actionable claims in casino.
Explanation.- For the purpose of rule 31B and rule 31C, any amount received by the player by winning
any event, including game, scheme, competition or any other activity or process, which is used for playing
by the said player in a further event without withdrawing, shall not be considered as the amount paid to
or deposited with the supplier by or on behalf of the said player.
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 VALUE OF GUARANTEE COMMISSION

❑ Sub-rule (2) has been added in Rule 28 vide Notification No. 52/2023-CT which reads as

follows:

(2) Notwithstanding anything contained in sub-rule (1), the value of supply of services by

a supplier to a recipient who is a related person, by way of providing corporate

guarantee to any banking company or financial institution on behalf of the said

recipient, shall be deemed to be one per cent of the amount of such guarantee offered,

or the actual consideration, whichever is higher.

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 CROSS CHARGING AND DISTRIBUTION OF CREDIT
There have been lot of disputes on distribution of credit through ISD mechanism or cross charge for

internally generated services. It has been clarified vide Circular No. 199/11/2023-GST that distribution of

credit through ISD mechanism is not mandatory as long as invoice under Section 31 of GST Act is issued

to business unit for common input services procured from third party by head office but attributable to

branch office. If the person wants to distribute credit, he should mandatorily require to register as ISD. It

has been further clarified that as per provision of second proviso to Rule-28, any value declared in the

invoice shall be considered as open market value as long as the recipient unit is entitled to full credit.

Thus, even if Nil value is declared, the same can be considered as open market value.

It is also clarified that cost of employees will not be includable in determination of value of services for

cross charging purposes.

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 THANK YOU
BALANCED VIEW

PRESENTED BY
S. S. GUPTA
CHARTERED ACCOUNTANT

E-MAIL : ssg@ssgupta.in