To iron out the practical hindrances and issues being faced by the Industry Inc since the implementation of GST, the GST Council on July 9, 2018 had unveiled the draft of 46 proposed changes in GST law as a major step towards facilitating trade and ease of doing business.
After detailed analysis of various amendments, following suggestions were compiled by Mr. Bimal Jain, Chairman, Indirect Tax Committee, PHD Chamber of Commerce which have been submitted to the Government for their kind consideration:
I Definition of ‘supply’
The term ‘supply’ is proposed to be amended to exclude activities/ transactions listed in Schedule II to ensure that the activities/ transactions as per Schedule II is to decide only whether the same is supply of goods or services. Hence, activities/ transactions listed in Schedule II (as supply of service or supply of goods) shall be taxed only when they constitute ‘supply’ in accordance with provisions of Section 7(1)(a), (b) and (c) of the CGST Act, 2017 (“the CGST Act”)
Suggestion(s):
- The definition of term “Supply” starts with “Supply includes” is too wider a definition and with subjectivity, followed by inclusive definition. As this is taxable event in GST, it must be defined concretely so as to avoid any disputes & litigation, as we have past history for the term “Manufacture’ for the chargeability of Central Excise Duty.
- Composite vs. Mixed Supply: Including activities relating to repairs, maintenance, installation etc. as supply of services in Schedule II – Lot of divergent views and interpretations are revolving around the contracts for repairs and maintenance of goods which sometimes involve substantial supply of parts and consumables. Ideally such supplies are composite supplies, but identifying principal supply therein is becoming a vexed issue. Things are also made unsettled vide recent Circular No. 47/21/2018 – GST dated 08.06.2018 wherein while discussing servicing of car issue, it was clarified that where a supply involves supply of both goods and services, values of which are shown separately, the goods and services would be liable to tax at their respective rates. Hence, it is suggested that the concept of composite and mixed supply should be dealt and clarified as legislator intended while framing the section 8 of the CGST Act and should be more emphasized and explained by way of an example in the respective section of the CGST Act and dominant/ principal supply concept would be determining factor for arriving at the composite supply irrespective of the fact of portion of material & services involved in the contract.
- Clarifying the meaning of term ‘immovable property’ under Para 6(a) of Schedule II – Meaning of term ‘immovable property’ must be clarified to avoid disputes whether particular activity is ‘works contract’ or not.
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