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GST rollout – Anti-Profiteering and other rules finalised and FAQs released by the Directorate General of Foreign Trade (DGFT)

Jun 26, 2017

The GST Council in its meeting on 18 June 2017 finalised rules relating to the following:

  • Anti-Profiteering
  • Advance Ruling
  • Appeals and Revisions
  • Assessment and Audit
  • E-Waybill (Provisional till such time the final rule is approved)

Anti-profiteering Rules

The GST Council has approved the much awaited anti-profiteering rules under the GST regime. Key features of these regulations are as follows:

  • The rules extend to the whole of India except the State of Jammu and Kashmir.
  • A National Anti-profiteering Authority shall be constituted whose duties would consist of:

    a. To identify the registered person and determine whether any reduction in the tax rate on any supply of goods or services or the benefit of the input tax credit has not been passed on to the recipient by way of proportionate reduction in prices.
    b. To order:

    i. Reduction in prices.
    ii. Returning to the recipient, an amount equivalent to the amount not passed on by way of benefit on reduction in prices along with interest at the rate of eighteen percent from the date of collection of higher amount till the date of return of such amount.
    iii. Imposition of penalty as prescribed under the Act (no penalty has yet been prescribed under the Act).
    iv. Cancellation of registration under the Act.

  • The authority would formulate the methodology and procedure for the determination as to whether the benefits by way of commensurate reduction in prices have been passed on.
  • A four tier structure of the Anti-profiteering implementation machinery has been envisaged:

    a. A state level screening committee to receive the application from interested parties, Commissioner, or any other person and to forward the application to Standing Committee.

    b. Standing Committee to refer the matter to Director General (Safeguards).

    c. Director General (Safeguards) shall complete the investigation within three months.

    d. Anti-Profiteering Authority to issue orders within three months of receipt of a report from Director General (Safeguards).

Comparison of Important Revisions in Draft Rules

A comparison of important revisions made in the final rules vis-à-vis the draft rules is as follows:

Advance Ruling

GST India

Appeals and Revisions

GST India Tax

Assessment and Audit

GST India Rules and Law

E-Waybill

a. Until such time as an E-Waybill system is developed and approved by the Council, the Government may, by notification, specify the documents that the person in charge of a conveyance carrying any consignment of goods shall carry while the goods are in movement or in-transit storage.

b. It appears that if a notification detailing the way forward on E-Waybill is not issued by 1 July 2017, the existing system in some states of check-posts and Waybill will continue under the GST regime until such time as a notification is issued or the E-Waybill rules are approved.

c. It is pertinent to note that there is no provision of such check posts under GST and hence an amendment in law may be required to grant legality to such a system.

Notifications issued

  • Central Government through the Central Board of Excise and Customs has released certain notifications in view of the upcoming date of migration to the GST regime.
  • Certain key points of the said notifications are as follows:
  • Certain provisions of the CGST Act, 2017 and the IGST Act, 2017 have been brought into force w.e.f 22 June 2017.
  • Various officers have been appointed and their jurisdiction has been defined under the GST regime.
  • Rules on composition levy and registration and their respective forms have been notified.
  • The GSTN website www.gst.gov.in has been officially notified.
  • Persons who are only engaged in making supplies of taxable goods or services or both, the total tax on which is liable to be paid on reverse charge basis by the recipient of such goods or services or both, have been exempted from obtaining registration under the aforesaid Act. This is aimed at providing relief to persons such as advocates and transport agencies.
  • The Principal Commissioner of Central Tax, Bengaluru West and all the officers subordinate to him have been empowered to grant registration in case of online information and database access or retrieval services provided or agreed to be provided by a person located in non-taxable territory and received by non-taxable online recipient.

FAQs released by the Directorate General of Foreign Trade (DGFT)

Import and export-related transactions come within the purview of the Customs Act, 1962, Chapter V of the Finance Act, 1994 and Foreign Trade Policy, 2015-2020 (FTP 2015 – 2020). Considering the fact that GST is going to be implemented from 1 July 2017, the stakeholders believed that there should be some clarification that should be provided by the DGFT for aligning GST with the FTP 2015 – 2020.

To solve any doubts, the DGFT portal has released a list of FAQs providing certain clarifications which would enable the business as a whole to carry on their business (import and export related) without any business disruption.

A brief summary of the FAQs released by the DGFT is given below:
Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS) duty credit scrips would be allowed to be utilised ‘only’ towards the payment of Basic Customs Duty (BCD).
Export Oriented Units (EOUs) relatedEOUs will have to pay IGST on import of goods
No ab initio exemption available to 100% EOUs for IGST on imports
EOUs to be treated at par with the Domestic Tariff Area (DTA) for the purpose of purchases/imports

Input Tax Credit (ITC) would be available in respect of IGST paid subject to the ITC rules and refund of which can be taken as per the refund rules.

Import-Export Code (IEC) relatedThe IEC code should be updated in the GSTIN. Updation of correct PAN for a particular IEC can be done at the jurisdictional DGFT regional office
In order to claim ITC/refund, as the case may be, declaration of GSTIN would be mandatory on all the shipping bills with effect from 1 July 2017.

Only Basic Customs Duty (BCD) exemption would be available in respect of the imports made under advance authorisation. IGST to be paid for imports under advance authorisation.
In the case of a newly started export firm, only a GST registration would be required instead of VAT/CST. However, the FAQs provide that if the product to be exported is not covered under GST then VAT/CST would be required.

The DGFT has constituted a GST facilitation cell to assist and advise exporters, traders and the industry for a smooth transition from present regime to GST regime with effect from 1 July 2017. The exporters can email their queries concerning GST and FTP.

The GST Facilitation Cell is headed by Dr Sonia Sethi (Additional DGFT), K. M. Harilal (Deputy DGFT) and Prakash Kamble (Assistant DGFT) are members of the Cell. The contact details of the GST Facilitation Cell are given below:

This article was first published on LinkedIn by Prashant Dedhia

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