Sub: Clarification on various issue pertaining to GST-regarding
Ref: Circular No. 172/04/2022-GST, dated 06.07.2022 issued by Ministry of Finance, Department of Revenue, Government of India, CBIC, New Delhi
In the reference cited, the CBIC, Department of Revenue, Ministry of Finance, Government of India, New Delhi, has issued Circular No. 172/04/2022-GST, dated 06.07.2022 on the recommendations of the GST Council. Hence, following pari materia circular is issued:-
Various representations have been received by GST Council seeking clarification on certain issues with respect to -
i. refund claimed by the recipients of supplies regarded as deemed export;
ii. interpretation of section 17(5) of the TNGST Act, 2017;
iii. perquisites provided by employer to the employees as per contractual agreement; and
iv. utilisation of the amounts available in the electronic credit ledger and the electronic cash ledger for payment of tax and other liabilities.
2. In order to clarify the issue and to ensure uniformity in the implementation of the provisions of law across the field formations, the Commissioner, in exercise of powers conferred by section 168 of the Tamil Nadu Goods and Services Tax Act, 2017 (hereinafter referred to as "TNGST Act"), hereby clarify the issues as under:
"Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force."
The said amendment in sub-section (5) of section 17 of the TNGST Act, 2017 was made based on the recommendations of GST Council in its 28th meeting. The intent of the said amendment in sub-section (5) of section 17, as recommended by the GST Council in its 28th meeting, was made known to the trade and industry through the Press Note on Recommendations made during the 28th meeting of the GST Council, dated 21.07.2018. It had been clarified "that scope of input tax credit is being widened, and it would now be made available in respect of Goods or services which are obligatory for an employer to provide to its employees, under any law for the time being in force."
Accordingly, it is clarified that the proviso after sub-clause (iii) of clause (b) of sub-section (5) of section 17 of the TNGST Act is applicable to the whole of clause (b) of sub-section (5) of section 17 of the TNGST Act, 2017.
"(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance:
Provided that the input tax credit in respect of such goods or services or both shall be available where an inward supply of such goods or services or both is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply"
2. It is clarified that "leasing" referred in sub-clause (i) of clause (b) of sub-section (5) of section 17 refers to leasing of motor vehicles, vessels and aircrafts only and not to leasing of any other items. Accordingly, availment of ITC is not barred under sub-clause (i) of clause (b) of sub-section (5) of section 17 of the TNGST Act, 2017 in case of leasing, other than leasing of motor vehicles, vessels and aircrafts.
2. Any perquisites provided by the employer to its employees in terms of contractual agreement entered into between the employer and the employee are in lieu of the services provided by employee to the employer in relation to his employment. It follows therefrom that perquisites provided by the employer to the employee in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST when the same are provided in terms of the contract between the employer and employee.
2. Sub-rule (2) of rule 86 of the TNGST Rules, 2017 provides for debiting of the electronic credit ledger to the extent of discharge of any liability in accordance with the provisions of section 49 or section 49A or section 49B of the TNGST Act.
3. Further, output tax in relation to a taxable person (i.e. a person who is registered or liable to be registered under section 22 or section 24 of the TNGST Act 2017) is defined in clause (82) of section 2 of the TNGST Act as the tax chargeable on taxable supply of goods or services or both but excludes tax payable on reverse charge mechanism.
4. Accordingly, it is clarified that any payment towards output tax, whether self-assessed in the return or payable as a conseguence of any proceeding instituted under the provisions of GST Laws, can be made by utilization of the amount available in the electronic credit ledger of a registered person.
5. It is further reiterated that as output tax does not include tax payable under reverse charge mechanism, implying thereby that the electronic credit ledger cannot be used for making payment of any tax which is payable under reverse charge mechanism.
7. Whether the amount available in the electronic credit ledger can be used for making payment of any liability other than tax under the GST Laws? As per sub-section (4) of section 49, the electronic credit ledger can be used for making payment of output tax only under the TNGST Act or the IGST Act, 2017. It cannot be used for making payment of any interest, penalty, fees or any other amount payable under the said acts. Similarly, electronic credit ledger cannot be used for payment of erroneous refund sanctioned to the taxpayer, where such refund was sanctioned in cash.
8. Whether the amount available in the electronic cash ledger can be used for making payment of any liability under the GST Laws? As per sub - section (3) of section 49 of the TNGST Act, 2017, the amount available in the electronic cash ledger may be used for making any payment towards tax, interest, penalty, fees or any other amount payable under the provisions of the GST Laws.
Sd/- Dheeraj Kumar
Principal Secretary/
Commissioner of State Tax