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GST Compendium - November 2020

The recent GST collection numbers reflect an uptick in the economy. It is, however, yet to be seen whether this is purely due to pent up demand and festive season, or this trend will continue in the coming months. Nevertheless, the GST collection of INR 1.05 lakh crore in October is a positive sign, as for the first time in this financial year, the collections have crossed INR 1 lakh crore mark.

The government has further extended the timeline for submission of annual returns and GST audit report for FY 2018-19 until 31 December 2020. This provides additional time for businesses to meet their compliance requirements.

On the judicial front, the division bench of the Madras High Court has reversed its earlier judgment of single bench, thereby disallowing the transitional credit of cesses, such as Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess, stating it to be a dead claim and not a vested right. This could have a major impact on the positions taken by businesses, therefore, the matter is likely to be litigated further.

In another ruling by the Karnataka Authority of Advance Ruling (AAR), it has been held that the services provided by liaison office in India to its foreign head office constitute ‘supply’ as both liaison office and head office are ‘distinct persons’ under the GST law. Interestingly, there are contrary rulings on this matter and clarity is required to avoid unnecessary disputes and litigation on this subject.

This edition also covers an interesting topic of cross-charges vs. input service distributor (ISD) under the GST regime, with a focus on the taxability of services provided by head office to branch office and also touches upon the valuation aspect along with the requirement of ISD registration.

We hope you will find this edition informative and interesting to read.