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GST Q&A Series – IV

Q: For dealers having turnover above ₹5 crores, it is said that 4 digits of HSN code are to be mandatorily mentioned in the invoice. Since...

Q: For dealers having turnover above ₹5 crores, it is said that 4 digits of HSN code are to be mandatorily mentioned in the invoice. Since the code is of 8 digits, could you please tell me which 4 digits are supposed to be mentioned? The first 4 or the last 4?
In order to remove any doubt regarding HSN code, let us understand the structure of the Harmonised System of Nomenclature.
At the aggregate level, the HS nomenclature consists of 21 sections (1- XXI), which contain 99 chapters. However, the effective number of chapters are only 96 as Chapter 77 is reserved for future use in the HS and the Chapters 98 and 99 are reserved for special uses by the contracting parties (WTO, 2005; GOI, 1992; Antweiler, 1995).
The basic and mandatory six-digit code (for example – 1234.56) of the HS has three parts.
  • CHAPTER – The first two digits (12) identify the chapter number in which the goods are classified.
  • HEADING – The next two digits (34) denote broad commodity groupings within that chapter.
  • SUB-HEADING – The last two digits (56) beyond this four-digit level represent more specific classification for any given commodity
Beyond this point, every country using the HS is allowed to assign its own coding system for further disaggregation (TARIFF ITEM).
Hence, when the Government asks for 4 digits of the HSN code, it wants to be led to the particular HEADING of a particular CHAPTER in which your goods fall, i.e. the FIRST 4 DIGITS.
Q: If I pay freight on behalf of consignee through a non-registered transporter, should I charge any GST from him?
In my opinion, no, you may not, since you are not registered for providing the service of transportation of goods. The GTA shall raise the invoice with you, the consignor, as the recipient, and you will be liable to pay the GST on transportation to the Government on reverse charge basis (presuming the other conditions of reverse charge w.r.t. the recipient of GTA services is fulfilled by you). This tax amount can be availed as input tax credit.
Q: If goods purchased from some other state, with invoice date being that of before July,’17, are received in July,’17, how should such purchase be presented in the return? Should this form a part of GST return or VAT return? CST was levied on the invoice.
The purchase shall be shown in the State VAT return. The goods in question shall be dealt with in the manner of goods in transit as on 01-07-2017. Since the invoices will be recorded in the month of July, 2017, a statement of all such invoices will have to be furnished.
Q: If a retailer sells a garment product to customer, the MRP of which is ₹1,049/- (inclusive of GST) then which rate of GST shall be applicable on such garment, as in the case of readymade garments with value below ₹1,000/- GST rate is 5% and that above ₹1,000/-, GST rate is 12%?
Considering that the query states MRP is inclusive of GST, I presume it is the revised MRP declared as per Notfn. No. – WM-10(31)/2017 by the Legal Metrology Division of Department of Consumer Affairs.
Now, Chapters 61 and 62 of The GST Rates schedule as per Notfn. No. 01/2017 – Central Tax (Rate), use the term “sale value” for bifurcating the goods between 5% and 12% rate. Please note that this sale value EXCLUDES the applicable GST, and hence with the application of Rule 35 of the CGST Rules, 2017 which provides the grossing up formula for determining Value of Supply inclusive of GST, 5% seems to be the appropriate rate, considering that the sale value shall then be ₹999.05.
Q: I am a trader from Bihar. I have interstate purchases @ 2% CST in the pre-GST period. The current rate of GST on such goods is 28%. What percentage of deemed credit am I eligible for in CGSTA and SGSTA? What are the conditions that need to be fulfilled in order to get the deemed credit?
As far as CST is concerned, the 3rd proviso to Section 140(1) of Bihar SGSTA, 2017, makes you eligible to claim refund under the CST Act, 1956 when such claims are substantiated with proper form.
For the excise part levied and included in such stock, since you were not registered under the excise laws, Rule 117(4) of the CGST Rules, 2017, read with proviso to Section 140(3) of the CGSTA, 2017, allows you to avail input tax credit even in the absence of any document evidencing the payment of such duty.
You shall be allowed input tax credit of 60% of the CGST, i.e. 14% X 60% = 8.4%, or 30% of the IGST, i.e. 28% X 30% = 8.4% as applicable, which will be credited to your ECrL maintained in FORM GST PMT-1 after the tax payable on such supply has been paid.
This credit can be availed for 6 tax periods from the date GST is enforced. The conditions for availing this scheme are as follows:
  1. Such goods shall not be unconditionally exempt or nil rated under the Excise Laws
  2. The documents for procurement of such goods is available with the registered person
  3. Submit the details in FORM GST TRAN-1 within 90 days of the date of enforcement of GST laws, and a statement in FORM GST TRAN-2 at the end of each of the 6 tax periods as mentioned above.
  4. The stock of goods on which such credit is availed should be so stored that it is easily identifiable by the registered person.
Q: What is the applicability of GST on employees in a showroom or institution?
The services by an employee to his employer in the course of or in relation to his employment has been explicitly mentioned not to be treated as supply, in Schedule-III of the GST Acts.
Q: I have input tax credit of ₹1,00,000 as at 01-07-2017 under the previous laws. I understand that if I get myself registered directly under the composition scheme, I won’t be eligible to utilize this credit. However, if I get switched to regular provisions after, say, 4 months due to exceeding the composition limit, will I be eligible to get such credit on the balance stock left as on that date?
Unfortunately, since you would not have filled FORM GST TRAN-1, the input tax under existing laws will not get credited to your ECrL. When you cease to satisfy the conditions under composition scheme, you would be required to furnish FORM GST ITC-01 containing the details of stock on the date of such cessation, and only the credit of GST and cesses levied under GST regime on such stock shall be allowed.
Hence, no input tax credit of taxes paid under existing laws shall be allowed then.
Q: What is the applicability of GST on civil work including steel and cement by contractor
In my opinion, it will fall under the definition of works contract as given in Section 2(119) of the CGSTA, 2017, and accordingly 18% tax shall be levied, treating the same as a composite supply of service (Schedule II).
As per Rule 56 (14) of the CGST Rules, 2017, every registered person executing works contract shall keep separate accounts for works contract showing –
  • the names and addresses of the persons on whose behalf the works contract is executed;
  • description, value and quantity (wherever applicable) of goods or services received for the execution of works contract;
  • description, value and quantity (wherever applicable) of goods or services utilized in the execution of works contract;
  • the details of payment received in respect of each works contract; and
  • the names and addresses of suppliers from whom he received goods or services.
Q: What is the limit upto which I am not required to mention the details of customer on retail invoices?
Since there is no concept of retail invoices in GST, I presume you mean sale to an un-registered recipient. In that case, where the value of the taxable supply is less than ₹50,000, the name and address of the recipient and the address of delivery, along with the name of the State and its code, shall be mentioned in the invoice only if the recipient requests for the same.
Q: How and by when are we supposed to upload our opening stock details to get the benefit of input credit?
FORM GST TRAN-1 has been prescribed for this purpose. This declaration needs to be submitted electronically on the common portal (www.gst.gov.in) within 90 days of the enforcement of GST laws.
Q: Will a manufacturer get ITC on purchase of a new machine?
Yes, Section 16(1) of the CGSTA, 2017 allows every registered person to take credit of input tax charged on any supply of goods and services or both to him which are intended to be used for his business purposes, subject to certain conditions and restrictions.
However, as per Section 16(3) of the CGSTA, 2017, where the registered person has claimed depreciation on the tax component of the cost of plant and machinery under the provisions of the Income-Tax Act, 1961, the input tax credit on the said tax component shall not be allowed.
Q: For import of goods, are we required to generate invoice on ourselves after getting it cleared from customs?
No, you need not issue any such invoice. Tax invoices being issued by the recipient under Section 31(3)(f) of the CGSTA, 2017, is explicitly in case of supplies being covered under the reverse charge mechanism only.

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GST India Gst.Gov.in: GST Q&A Series – IV
GST Q&A Series – IV
GST India Gst.Gov.in
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