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Semblance of Stability

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What CBIC circular on GST for job work means

In the nine months since GST went live, the Central Board of Indirect Tax and Customs (CBIC) has issued 310 notifications, 68 circulars and 13 orders on different aspects of the tax law. That’s an average of 43 a month, or more than one a day.

Recently, the CBIC issued a circular (No 38/12/2018 dated March 26, 2018) clarifying six important issues relating to ‘job work’ (that’s work on raw materials or semi-finished goods supplied by a principal manufacturer). The circular clarifies that, in addition to the goods received from the ‘principal’, the ‘job worker’ can use his own goods for providing the services of job work.

It goes on to clarify that a job worker is required to obtain registration only in cases where his aggregate turnover, to be computed on all India basis, in a financial year exceeds the threshold limit regardless of whether the principal and the job worker are located in the same State or in different States. It also clarifies that the supply of goods by the principal from the place of business / premises of the job worker to the principal’s customer will be regarded as supply by the principal and not by the job worker.

The circular uses a lot of words to clarify six instances of movement of goods from the principal to the job worker and the documents and intimation required in those instances — where goods are sent by principal to only one job worker; where goods are sent from one job worker to another; where the goods are returned to the principal by the job worker; where the goods are sent directly by the supplier to the job worker; and where goods are returned in piecemeal by the job worker.

The circular also provides useful clarifications on the liability to issue invoice, determination of place of supply and payment of GST.

The circular ends rather timidly by clarifying that input tax credit would be available to the principal, irrespective of the fact that whether the inputs or capital goods are received by the principal and then sent to the job worker for processing or whether they are directly received at the job worker’s place of business/premises, without being brought to the premises of the principal.

It is also clarified that the job worker is also eligible to avail input tax credit on inputs, etc. used by him in supplying the job work services if he is registered. Though fairly comprehensive, the circular would have been complete had it clarified on the treatment of goods damaged at the premises of the job worker and when the job worker decides to purchase the goods himself.

Though the magical concept of matching of invoices through taxpayers’ returns hasn’t been implemented yet, the GST laws appear to be getting some semblance of stability. Circulars that provide some clarity such as the one related to job work will only add to the stabilisation of the laws.

CBIC should take a cue from the RBI and issue Master Circulars on important aspects of the GST law —namely, invoices, e-way bills, returns, job work, input tax credit and taxation of e-commerce operators.

These Master Circulars would be reviewed annually and would be amended only if there are significant changes to the law; this could also restrict the number of notifications being issued.

GST & Nirav Modi

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PNB can easily be booked for GST violations:

The first few days after a major scam has been exposed are interesting — facts change, amounts invariably increase, all the regulators want to imprison the same scamsters, and similar scams by others show up furtively.
A similar pattern is playing out in the PNB-Nirav Modi scam as well. Many arrests have been made and the tentacles of regulators are spreading to anyone related to the scam in any manner, including employees and auditors. That said, the one department that hasn’t made much noise about the scam is the Central Board of Indirect Tax and Customs (CBIC), which may have lost quite a substantial amount of GST on the fraudulent LUTs (Letters of Undertaking aka LoU).
As ₹11,300 crore is the most popular number that is doing the rounds, we can calculate GST revenues lost using this number. Assuming LUT fees of 2.5 per cent, the GST revenues lost is in excess of ₹50 crore (18 per cent GST on ₹282 crore, which is 2.5 per cent of ₹11,300 crore). If the inevitable interest and penalties are included, the amount could well exceed ₹100 crore from a single taxpayer — an amount that the CBIC would certainly welcome.

Penalties & More..

One of the most frequently used words in the CGST Act are interest and penalty — both have been mentioned around 140 times in an Act with 174 sections. Imprisonment has been mentioned seven times. Without batting an eyelid, the CBIC can invoke Section 132 of the CGST Act on Punjab National Bank and book them for committing the offences of supplying any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made thereunder with the intention to evade tax and falsifying or substituting financial records or producing fake accounts or documents or furnishes any false information with an intention to evade payment of tax due under this Act.
Section 132 offers an eclectic variety of imprisonment periods commencing from six months and going up to five years depending on the amount of tax that has been evaded.
However, history teaches us that in scams of such magnitude, the agency that arrests a person first gets to keep him during the investigation period. CBIC would probably be happy to let other agencies do the arresting while they focus on getting their pound of flesh in the form of taxes.
GST laws do not disappoint in terms of provisions for levy of interest, penalty and imprisonment. Unwittingly, the period from July to March is turning out to be a gestation period for the CBIC, which has led them into a situation wherein provisions regarding interest and penalty couldn’t be liberally slapped on the taxpayer.
Taxpayers can expect interest and penalty notices from April 2018 onwards by which time it is expected that most of the glitches in the portal would have been plugged. The news doing the rounds is that yet another simplified monthly return form is being invented and will be implemented from April 2018 along with details of sales and purchases in an annexure — an extremely diluted version of the concept of matching of invoices.
It is to be expected that the form would mandate payment of interest while the penalty can still be negotiated. CBIC should probably think of mandating payment of penalty too online in instances where GST has been evaded by fraudulent means.
The writer is a chartered accountant

While many existing indirect tax payers have got provisional GST numbers, there are a few who haven’t. Well, asks them not to worry. Because, the tax department says:-


Your present registration position under GST What action should you take?
If you are a Taxpayer having received Acknowledgement Reference No You should be able to download the Provisional Registration Certificate from “Download Certificates” at GST website from 27th June 2017.
If you are a Taxpayer, who has saved the enrolment form with all details but has not submitted the same with DSC, E-Sign or EVC You will receive the ARN at your registered email ID, if the data given are successfully validated after 27th June 2017.In case of validation failure (data like PAN not matching), you should be able to login at the same portal from 27th June 2017 onwards and correct the errors. You can refer the registered email for details of the errors.
 If you are a Taxpayer, who has partially completed the enrolment form You can login at the portal on the above mentioned date and complete the rest of the form
If you are not an existing Taxpayer and wish to register newly under GST You would be able to apply for new registration at the GST portal from 25th June 2017. also states that enrolment window will reopen on 25th June 2017 and continue for 3 months as per Rule. We are not sure what Rule this is but should take comfort in the fact that the enrolment window is going to be open for three months. Another terse clarification from the portal is

“Also note that your provisional ID will be your GST Identification Number (GSTIN)”

The above clarifications force us to seek more clarifications. A few are listed below:


  1. If my provisional ID is my GSTIN, will I ever get a GST REG-03 and GST REG-06?
  2. Assume that I register on 10th August 2017 though I am supposed to register prior to the appointed day, what happens? Should I file my returns for June and July? Will I be penalized for late registration?
  3. Can we assume that there will be no window open for registration three months after 25th June 2017? What if I cross the magic number of Rs 20 lakhs on 20th December 2017?
  4. I have registered but my vendor has not been able to register because he is a small trader and has had difficulties in registering. Is there a way out for me to avoid paying tax on reverse charge?
  5. More clarity is needed on registering as a casual taxable person? Would anyone who carries on business in another State apart from the one in which he is registered need to register as a CTP?
  6. What is the process of correcting errors in my Registration Certificate?


It is apparent that there are no definite answers to any of these questions right now. We can expect some Notifications and Clarifications soon. Keep watching this space for all the latest!


As a law, GST has been structured on the fundamental principle of matching of invoices. The GST portal will do the matching and intimate both the parties with mismatch reports. One of the harshest provisions in the GST law is the one which states that if the mismatch that has not intimated is not rectified in the return for the next month, it will be added to the output tax liability. As a concept, when matching has not worked very well even for exciting areas like matrimony, one wonders how it would work with unexciting areas such as invoices. It is too early to slap the taxpayer with a tax liability within a month for the mistake of his counterparty. The GST Council would do well to retain the provisions for matching of invoices but defer the provision to add the mismatch to the tax liability of the supplier in the next month.

One look at the Mismatch report which form a part of the Rules is bound to put off anyone. This is how the complete form looks:

However, if we take a closer look at the form, we notice that it is broken up into four areas:

  • Finally Accepted Input Tax Credit
  • Mismatches/Duplicates that have led to increase of liability in the return for September filed by 20th October
  • Mismatches duplicates that will lead to increase of liability in the return for October filed by 20th November
  • Mismatches/Duplicates that may lead to increase of liability in the return for November to be filed by 20th December

The best part? It appears that all the columns will be autopopulated! Apart from this critical piece of information, everything else is mentioned in the format!
Considering the fact that GST is heavily dependent on forms, the CBEC should start providing detailed instructions on how to fill forms.

With the appointed day for GST nearing, all taxpayers should be preparing themselves to transition to the new regime. How is life going to be under GST?

While we still do not know the most important part of GST, the rates of GST that would be applicable to individual goods and services, we have a broad idea about the possible rates.





Being a tax that is based on technology, life in the GST era would be spent in front computer screens than in tax offices. There appears to be no limit to the number of forms that a taxpayer has to file under GST- there is a form prescribed for every conceivable act under GST. Filing of all these forms would require an enormous amount of patience. There will be problems in technology too- the portal could hang, there can be difficulties in filling particular columns in forms and such like. Many of such compliance issues can be tackled through a GST garage.