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MCQ Self Challenge # 0052 on GST issues clarified

 

GST issues clarified on Job Work and SEZ

 

Dear Professional Seniors & Friends,

Warm Greetings!

Here is the Next post of #MCQ on concept based practical professional knowledge on certain issue under GST and their welcome clarification by government in a unique manner to be self answered by participants. The detailed answer of these MCQs shall be posted next day for the self assessment of the participants.

MCQ 52.1: Whether independent fabric processors (job workers) in the textile sector supplying job work services are eligible for refund of unutilized input tax credit on account of inverted duty structure?
A) No as the output supply is fabric which is notified as goods in respect of which refund of ITC on account of inverted duty structure shall not be allowed.
B) Yes as the output supply is job work services which is not notified as services in respect of which refund of ITC on account of inverted duty structure shall not be allowed.
C) No as the output supply is job work services which is notified as services in respect of which refund of ITC on account of inverted duty structure shall not be allowed.
D) None of the above.

MCQ 52.2: X located in U.P. had provided services of short-term accommodation, conferencing, banqueting etc. in U.P. to a Special Economic Zone (SEZ) developer or a SEZ unit located in Haryana. The Supply shall be:
A) Supply will be interstate supply & IGST will be applicable.
B) Supply will be interstate supply & CGST/SGST will be applicable.
C) Supply will be intrastate supply & IGST will be applicable.
D) Supply will be intrastate supply & CGST/SGST will be applicable.

Sincere Regards
CA Sanjay Kumar Agrawal
Mobile: 9810116321

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—————Answer MCQ Self Challenge # 0052—————-

 

Dear Professional Seniors & Friends,

Warm Greetings!

 

This post of MCQ is on provisions relating to certain issues under GST and their welcome clarifications issued by government vide circular No. 48/2018 dtd 14th June 2018.

 

Answer to MCQ 52.1: B) Yes as the output supply is job work services which is not notified as services in respect of which refund of ITC on account of inverted duty structure shall not be allowed.

 

Answer to MCQ 52.2: A) Supply will be interstate supply & IGST will be applicable.

Practical Analysis for MCQ 52.1 :-

  1. Notification No. 5/2017-Central Tax (Rate) dated 28.06.2017 specifies the goods in respect of which refund of unutilized input tax credit (ITC) on account of inverted duty structure under section 54(3) of the CGST Act shall not be allowed.
  2. Fabric is notified in that list as the goods on which refund of ITC on account of inverted duty structure will not be allowed.
  3. However, in case of fabric processors, the output supply is the supply of job work services and not of goods (fabrics).
  4. The Central Government vide Circular No. 48 dated 14th June, 2018 has also provided clarification on the same issue.

 

Based on the above analysis, correct answer MCQ 52.1: B) Yes as the output supply is job work services which is not notified as services in respect of which refund of ITC on account of inverted duty structure shall not be allowed.

 

Practical Analysis for MCQ 52.2 :-

  1. As per section 7(5) (b) of the IGST Act, the supply of goods or services or both to a SEZ developer or a SEZ unit shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce.
  2. Whereas, as per section 12(3)(c) of the IGST Act, the place of supply of services by way of accommodation in any immovable property for organising any functions shall be the location at which the immovable property is located.
  3. Thus, in such cases, if the location of the supplier and the place of supply is in the same State/ Union territory, it would be treated as an intra-State supply.
  4. In the instant case, section 7(5)(b) of the IGST Act is a specific provision which states that such supplies shall be treated as inter-State supplies.
  5. Therefore it is clarified that services of short term accommodation, conferencing, banqueting etc., provided to a SEZ developer or a SEZ unit shall be treated as an inter-State supply.
  6. The Central Government vide Circular No. 48 dtd 14th June,2018 has also provided clarification on the same issue.

 

Based on the above analysis, correct answer MCQ 52.2: A) Supply will be interstate supply & IGST will be applicable.

 

(Disclaimer: The objective of the MCQ post is just to discuss the concept, it may happen, by change of facts, the answer may be different. Please do not treat this as professional opinion; you can definitely have your own opinion.)

 

Sincere Regards!

CA Sanjay Kumar Agrawal

Mobile: 9810116321

 

To access MCQ posts regularly, please Join Telegram Channel:

https://t.me/caSanjayKumarAgrawal

 

For All MCQ post please click on:

Webpage: http://www.casanjay.me/

Facebook: https://www.facebook.com/CA.Sanjay.K.Agrawal/

Linkedin: https://www.linkedin.com/in/ca-sanjay-kumar-agrawal/

 

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