T N C RAJAGOPALAN

Last Monday, the Centre issued a number of notifications giving effect to the decisions of the Goods and Services Tax (GST) Council. More notifications followed in the next few days to cope with the spread of Covid-19 and three-week countrywide lockdown that requires everyone, except those connected with essential services, to stay home.

The definition of ‘turnover of zero-rated supply of goods’ under Rule 89(4) of the Central GST (CGST) Rules has been amended. It shall be the actual transaction value of zero-rated supplies made under a legal undertaking or the value which is one and a half times the value of like goods domestically supplied by the same or similarly placed supplier, as declared by the supplier, whichever is less.

A newly added explanation to Rule 96 (10) of the said CGST Rules clarifies that the benefit of the notifications mentioned therein shall not be considered to have been availed of only where the registered person has paid Integrated GST (IGST) and has availed of exemption of only Basic Customs Duty under the said notifications.

A new Rule 96B is inserted in the CGST Rules, providing for recovery of refunds granted of unutilised input tax credit (ITC) or IGST paid on export goods, where the export proceeds are not realised within the time allowed under FEMA (Foreign Exchange Regulation Act) regulations. No recovery would be made where a writeoff is granted by the RBI, on merits. If the export proceeds are realised later, the amount recovered may be claimed back as refund.

A special procedure for compliance under the GST laws has been prescribed for a corporate debtor from the date of appointment of the Insolvency Resolution Professional till the corporate insolvency resolution process goes on. A revised mechanism has been prescribed under Rule 43 of the said CGST Rules to calculate the ITC reversal for situations wherein capital goods used exclusively for non-business purposes or for exclusively making exempted supplies or for exclusively making taxable supplies are subsequently used in making exempted, as well as taxable, supplies.

The commerce ministry has banned export of Hydroxychloroquine and its formulations, all ventilators, including any respiratory or oxygen therapy apparatus or any other breathing device/appliance, sanitisers, surgical masks and textile raw materials for masks and overalls. However, export of Hydroxychloroquine and its formulations may be made by units in special economic zones (SEZS), export oriented units and by domestic tariff area (DTA) units, in discharge of their export obligation against advance authorisations. Export of restricted active pharmaceutical ingredients (APIS) and formulations made from these may be done by SEZ units. The formulations made from restricted APIS may be exported by DTA units in discharge of export obligation against advance authorisations.

CGST rules to calculate the ITC reversal for situations wherein capital goods are used exclusively for non-business purposes