CIRCULAR NO-19/2017-F. No. 354/263/2017- TRU Clarification on taxability of custom milling of paddy.

Circular No. 19/19/2017-GST

F. No. 354/263/2017-TRU
Government of India
Ministry of Finance
Department of Revenue
Tax research Unit
****

North Block, New Delhi
20th November 2017

To,
The Principal Chief Commissioners/Chief Commissioners/ Principal Commissioners/
Commissioner of Central Tax (All) /
The Principal Director Generals/ Director Generals (All)

Madam/Sir,

Subject: Clarification on taxability of custom milling of paddy – regarding.
Representations have been received seeking clarification on whether custom milling ofpaddy by Rice millers for Civil Supplies Corporation is liable to GST or is exempted under S. No55 of Notification 12/2017 – Central Tax (Rate) dated 28th June 2017.

2. The matter has been examined. S. No 55 of Notification 12/2017- Central Tax (Rate)exempts carrying out an intermediate production process as job work in relation to cultivation ofplants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel,raw material or other similar products or agricultural produce. Agricultural produce has beendefined in the notification to mean, any produce out of cultivation of plants and rearing of all lifeforms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similarproducts, on which either no further processing is done or such processing is done as is usuallydone by a cultivator or producer which does not alter its essential characteristics but makes itmarketable for primary market. Job work has been defined under section 2 (68) of the CGST Actto mean any treatment or process undertaken by a person on goods belonging to anotherregistered person. Further, under Schedule II (para 3) of the CGST Act, any treatment or processwhich is applied to another person’s goods is a supply of service.

3. Milling of paddy is not an intermediate production process in relation to cultivation ofplants. It is a process carried out after the process of cultivation is over and paddy has beenharvested. Further, processing of paddy into rice is not usually carried out by cultivators but byrice millers. Milling of paddy into rice also changes its essential characteristics. Therefore,milling of paddy into rice cannot be considered as an intermediate productionprocess in relation
to cultivation of plants for food, fibre or other similar products or agricultural produce.

Circular No. 19/19/2017-GST

4. In view of the above, it is clarified that milling of paddy into rice is not eligible forexemption under S. No 55 of Notification 12/2017 – Central Tax (Rate) dated 28th June 2017 andcorresponding notifications issued under IGST and UTGST Acts.

5. GST rate on services by way of job work in relation to all food and food products fallingunder Chapters 1 to 22 has been reduced from 18% to5% vide notification No. 31/2017-CT(R)[notification No. 11/2017-CT (Rate) dated 28.6.17, S.No. 26 refers]. Therefore, it is herebyclarified that milling of paddy into rice on job work basis, is liable to GST at the rate of 5%, onthe processing charges (and not on the entire value of rice).

6. Difficulty if any, in the implementation of the circular should be brought to the notice ofthe Board. Hindi version would follow.

Yours Faithfully,

Susanta Mishra
Technical Officer (TRU)
Email: susanta.mishra87@gov.in

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CIRCULAR NO-18/2017-F. No. 354/320/2017-TRU-Pt.1-Refund of unutilized input tax credit of GST paid on inputs in respect of exporters of fabrics.

Circular No. 18/18/2017-GST

F. No. 354/320/2017-TRU-Pt.1
Government of India
Ministry of Finance
Department of Revenue
Tax research Unit
****

North Block, New Delhi 16th November 2017

To,

The Principal Chief Commissioners/Chief Commissioners/ Principal Commissioners/ Commissioner of Central Tax (All) / The Principal Director Generals/ Director Generals (All)

Madam/Sir,

Subject: Clarification on refund of unutilized input tax credit of GST paid on inputs in respect of exporters of fabrics – regarding.

Doubts have been raised regarding the restrictions of refund of unutilized input tax credit of GST paid on inputs to manufacturer exporters of fabrics [falling under chapters 50 to 55 and 60 and headings 5608, 5801, 5806] under GST.

2.1 The matter has been examined. In this context, subsection 3 of section 54 of theCGST Act, 2017 provides as under:

“(3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period:Provided that no refund of unutilised input tax credit shall be allowed in cases other than-

(i) zero rated supplies made without payment of tax;

(ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council.

2.2 Based on the recommendations of the GST Council, Notification No. 5/2017-Central Tax (Rate) dated 28.06.2017 [as amended from time to time] has been issued under clause (ii) of the proviso to sub-section (3) of section 54 of the CGST Act, 2017 restricting refund of unutilised input tax credit of GST paid on inputs in respect of certain specified goods, including input tax credit of GST paid on inputs.

2.3 However, the aforesaid notification having been issued under clause (ii) of the proviso to sub-section (3) of section 54 of the CGST Act, 2017. restriction on refund of unutilised input tax credit of GST paid on inputs will not be applicable to zero rated supplies, that is (a) exports of goods or services or both: or (b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.

2.4 Accordingly, as regards export of fabrics it is clarified that, subject to the provisions of sub-section (10) of the section 54 of the CGST Act, 2017, a manufacturer of such fabrics will be eligible for refund of unutilized input tax credit of GST paid on inputs [other than the input tax credit of GST paid on capital goods] in respect of fabrics manufactured and exported by him.

3. Difficulty, if any, in the implementation of this circular should be brought to the notice of the Board.

Yours faithfully

Rahil Gupta

Technical Officer (TRU)

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CIRCULAR NO-17/2017-F. No. 349/169/2017-GST Manual filing and processing of refund claims in respect of zero-rated supplies. Rescinded vide Circular No. 125/44/2019 – GST dated 18.11.2019.

Circular No. 17/17/2017 – GST

F. No. 349/169/2017-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
GST Policy Wing

New Delhi, Dated the 15th November, 2017

To,
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners
/ Commissioners of Central Tax (All)
The Principal Director Generals / Director Generals (All)

Madam/Sir,

Sub – Manual filing and processing of refund claims in respect of zero-rated
supplies – reg.Due to the non-availability of the refund module on the common portal, it hasbeen decided by the competent authority, on the recommendations of the Council, thatthe applications/documents/forms pertaining to refund claims on account of zero-ratedsupplies shall be filed and processed manually till further orders. Therefore, inexercise of the powers conferred by sub-section (1) of section 168 of the CentraGoods and Services Tax Act, 2017 (hereinafter referred to as ‘the CGST Act’) and forthe purpose of ensuring uniformity, the following conditions and procedure are laid down for the manual filing and processing of the refund claims:

2.1 As per sub-section (3) of section 16 of the Integrated Goods and Services TaxAct, 2017 (hereinafter referred to as ‘the IGST Act’) read with clause (i) of subsection (3) and sub-section (6) of section 54 of the CGST Act and rules 89 to 96A ofthe Central Goods and Services Tax Rules, 2017 (hereinafter referred to as ‘the CGSTRules’), a registered person may make zero-rated supplies of goods or services or bothon payment of integrated tax and claim refund of the tax so paid, or make zero-ratedsupplies of goods or services or both under bond or Letter of Undertaking withoutpayment of integrated tax and claim refund of unutilized input tax credit in relation tosuch zero rated supplies.

2.2 The refund of integrated tax paid on goods exported out of India is governed byrule 96 of the CGST Rules. The shipping bill filed by an exporter shall be deemed tobe an application for refund in such cases. The application shall be deemed to havebeen filed only when export manifest or export report is filed and the applicant hasfurnished a valid return in FORM GSTR-3 or FORM GSTR-3B, as the case may be.receipt of the information regarding furnishing of a valid return in FORMGSTR-3 or FORM GSTR-3B, as the case may be, from the common portal, thesystem designated by the Customs shall process the claim for refund and an amountequal to the integrated tax paid in respect of such export shall be electronicallycredited to the bank account of the applicant. Any order regarding withholding of suchrefund or its further sanction respectively in PART-B of FORM GST RFD-07 orFORM GST RFD-06 shall be done manually till the refund module is operational onthe common portal.

2.3 The application for refund of integrated tax paid on zero-rated supply of goodsto a Special Economic Zone developer or a Special Economic Zone unit or in case ofzero-rated supply of services (that is, except the cases covered in paragraph 2.2 aboveand para 2.4 below) is required to be filed in FORM GST RFD-01A (as notified inthe CGST Rules vide notification No. 55/2017 – Central Tax dated 15.11.2017) by thesupplier on the common portal and a print out of the said form shall be submittedbefore the jurisdictional proper officer along with all necessary documentary evidences as applicable (as per the details in statement 2 or 4 of Annexure to FORMGST RFD – 01), within the time stipulated for filing of such refund under the CGSTAct.

2.4 The application for refund of unutilized input tax credit on inputs or input
services used in making such zero-rated supplies shall be filed in FORM GST RFD01A on the common portal and the amount claimed as refund shall get debited inaccordance with sub-rule (3) of rule 86 of the CGST Rules from the amount in theelectronic credit ledger to the extent of the claim. The common portal shall generate aproof of debit (ARN- Acknowledgement Receipt Number) which would be mentionedin the FORM GST RFD-01A submitted manually, along with the print out of FORMGST RFD-01A to the jurisdictional proper officer, and with all necessarydocumentary evidences as applicable (as per details in statement 3 or 5 of Annexure toFORM GST RFD-01), within the time stipulated for filing of such refund under theCGST Act.

2.5 The registered person needs to file the refund claim with the jurisdictional taxauthority to which the taxpayer has been assigned as per the administrative orderissued in this regard by the Chief Commissioner of Central Tax and the Commissionerof State Tax. In case such an order has not been issued in the State, the registeredperson is at liberty to apply for refund before the Central Tax Authority or State TaxAuthority till the administrative mechanism for assigning of taxpayers to respectiveauthority is implemented. However, in the latter case, an undertaking is required to besubmitted stating that the claim for sanction of refund has been made to only one ofthe authorities. It is reiterated that the Central Tax officers shall facilitate the
processing of the refund claims of all registered persons whether or not such personwas registered with the Central Government in the earlier regime.

2.6 Once such a refund application in FORM GST RFD-01A is received in the
office of the jurisdictional proper officer, an entry shall be made in a refund register tobe maintained for this purpose with the following details –

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CIRCULAR NO-16/2017-F.No. 354/173/2017-TRU Clarifications regarding applicability of GST and availability of ITC in respect of certain services.

Circular No. 16/16/2017-GST

F. No. 354/173/2017-TRU
Government of India
Ministry of Finance
Department of Revenue
Tax research Unit
****

North Block, New Delhi
15th November 2017

To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal
Commissioners/ Commissioner of Central Tax (All) /
The Principal Director Generals/ Director Generals (All)

Madam/Sir,
Subject: Clarifications regarding applicability of GST and availability of ITC in
respect of certain servicesI am directed to issue clarification with regard to certain issues brought to the noticeof Board as under:

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CIRCULAR NO-15/2017-F.No. 349/164/2017-GST Due date for generation of FORM GSTR-2A and FORM GSTR-1A in accordance with the extension of due date for filing FORM GSTR-1 and FORM GSTR-2 respectively

Circular No.15 /15/2017 – GST

F.No. 349/164/2017-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
GST Policy Wing

New Delhi, Dated the 6th November, 2017

To,
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners /Commissioners of Central Tax (All)
The Principal Director Generals / Director Generals (All)

Madam/Sir,

Sub –Due date for generation of FORM GSTR-2A and FORM GSTR-1A in
accordance with the extension of due date for filing FORM GSTR-1 and GSTR-2
respectively – reg.Please refer to Notification No. 30/2017-Central Tax dated 11th September 2017,and Notification 54/2017-Central Tax, dated 30th October, 2017 whereby the dates forfiling FORM GSTR-1, FORM GSTR-2 and FORM GSTR-3 for the month of July,2017 were extended. Queries have been received regarding the due dates for thegeneration of FORM GSTR-2A and FORM GSTR-1A in light of the said extension ofdates. Therefore, in exercise of the powers conferred by sub-section (1) of section 168 ofCentral Goods and Services Tax Act, 2017 (hereinafter referred to as ‘the Act’), for the purpose of uniformity in the implementation of the Act, the following is clarified:

1. Sub-section (1) of section 37 of the Act read with sub-rule (3) of rule 59 of the
CGST Rules, 2017 (hereinafter referred to as ‘the Rules’) provides that the detailsfurnished in FORM GSTR-1 by the supplier shall be made available
electronically to the registered person (hereinafter referred to as ‘the recipient’) inFORM GSTR-2A after the due date for filing of FORM GSTR-1. Sub-section

(2) of Section 38 read with sub-rule (1) of rule 60 of the said Rules provides for
furnishing of details in FORM- GSTR-2 after the 10th but before the 15th of the
month succeeding the tax period. Further, sub-section (1) of section 38 read withsub-rule (1) of rule 60 provides that on the basis of the details contained in FORMGSTR-2A, the recipient shall prepare and furnish the details of inward supply inFORM GSTR-2 after verifying, validating, modifying or deleting, the details, ifrequired. Since the due dates for furnishing the details in FORM GSTR-1 andFORM GSTR-2 have been extended, it is hereby clarified that the due date ofFORM GSTR-2A is also extended.The details furnished in FORM GSTR-1 are
available to the recipient in FORM GSTR-2A from 11th of October, 2017. These
details are also available in FORM GSTR-2 and can be verified,validated,
modified or deleted to prepare details in FORM GSTR-2 which is required to be
furnished not later than the 30th November, 2017. It is further clarified that the
details in FORM GSTR-2A are also available in his FORM GSTR-2 and the
recipient may take necessary action on the same, prior to furnishing the details inhis FORM GSTR-2. FORM GSTR-2A is a read-only document made available
to the recipient electronically so that he has a record of all the invoices receivedfrom various suppliers during a given tax period.

2. Sub-section (3) of section 38 of the Act read with sub-rule (4) of rule 59 of theRules provides that the details of inward supplies added, corrected or deleted bythe recipient in FORM GSTR-2 shall be made available to the concerned supplierelectronically in FORM GSTR-1A. Further, sub-section (2) of section 37 of theAct read with sub-rule (4) of rule 59 of the Rules provides that once these detailsare made available electronically through the common portal to the supplier inFORM GSTR-1A, the supplier shall either accept or reject the modificationsmade by the recipient on or before the 17th day of the month succeeding the taxperiod but not before the 15th day, and accordingly, FORM GSTR-1 shall standamended to the extent of modifications accepted by the supplier. In this regard, itis hereby clarified that as the dates for furnishing the details in FORM GSTR-1and FORM GSTR-2 have been extended, the due date for furnishing of FORMGSTR-1A for July 2017 is also extended. Therefore,the details in FORM GSTR1A shall be made available to the supplier from the 1st of December to the 6th ofDecember, 2017 for the month of July 2017.

3. It is requested that suitable trade notices may be issued to publicize the contents ofthis circular.
4. Difficulty, if any, in implementation of the above instructions may please be
brought to the notice of the Board. Hindi version would follow.

(Upender Gupta)
Commissioner (GST)

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CIRCULAR NO-14/2017-F. No. 349/21/2016 GST Procedure regarding procurement of supplies of goods from DTA by (EOU)/(EHTP Unit /STP Unit/BTP Unit .

Circular No. 14/14 /2017 – GST

F. No. 349/21/2016 GST (Policy Wing)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
GST Policy Wing

New Delhi, dated the 6th November, 2017

To,
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners /
Commissioners of Central Tax (All)
The Principal Director Generals / Director Generals (All)

Madam/Sir,

Sub – Procedure regarding procurement of supplies of goods from DTA by ExportOriented Unit (EOU) / Electronic Hardware Technology Park (EHTP) Unit / SoftwareTechnology Park (STP) Unit / Bio-Technology Parks (BTP) Unit under deemed exportbenefits under section 147 of CGST Act, 2017 – reg.
accordance with the decisions taken by the GST Council in its 22nd meeting heldon 06.10.2017 at New Delhi to resolve certain difficulties being faced by exporters postGST, it has been decided that supplies of goods by a registered person to EOUs etc. wouldbe treated as deemed exports under Section 147 of the CGST Act, 2017 (hereinafter referredto as ‘the Act’) and refund of tax paid on such supplies can be claimed either by therecipient or supplier of such supplies. Accordingly, Notification No. 48/2017-Central Taxdated 18.10.2017 has been issued to treat such supplies to EOU / EHTP / STP / BTP units as
deemed exports. Further, rule 89 of the CGST Rules, 2017 (hereinafter referred to as ‘theRules’) has been amended vide Notification No. 47/2017- Central Tax dated 18.10.2017 toallow either the recipient or supplier of such supplies to claim refund of tax paid thereon.

2. For supplies to EOU / EHTP / STP / BTP units in terms of Notification No. 48/2017-Central Tax dated 18.10.2017, the following procedure and safeguards are prescribed –

(i) The recipient EOU / EHTP / STP / BTP unit shall give prior intimation in a prescribedproforma in “Form–A” (appended herewith) bearing a running serial number containing thegoods to be procured, as pre-approved by the Development Commissioner and the details ofthe supplier before such deemed export supplies are made. The said intimation shall begiven to –

(a) the registered supplier;
(b) the jurisdictional GST officer in charge of such registered supplier; and
(c) its jurisdictional GST officer.
(ii) The registered supplier thereafter will supply goods under tax invoice to the recipientEOU / EHTP / STP / BTP unit.

(iii) On receipt of such supplies, the EOU / EHTP / STP / BTP unit shall endorse the taxinvoice and send a copy of the endorsed tax invoice to –

(a) the registered supplier;
(b) the jurisdictional GST officer in charge of such registered supplier; and
(c) its jurisdictional GST officer.
(iv) The endorsed tax invoice will be considered as proof of deemed export supplies bythe registered person to EOU / EHTP / STP / BTP unit.

(v) The recipient EOU / EHTP / STP / BTP unit shall maintain records of such deemedexport supplies in digital form, based upon data elements contained in “Form-B” (appendedherewith). The software for maintenance of digital records shall incorporate the feature ofaudit trail. While the data elements contained in the Form-B are mandatory, the recipientunits will be free to add or continue with any additional data fields, as per their commercialrequirements. All recipient units are required to enter data accurately and immediately upon
the goods being received in, utilized by or removed from the said unit. The digital recordsshould be kept updated, accurate, complete and available at thesaid unit at all times forverification by the proper officer, whenever required. A digital copy of Form – B containingtransactions for the month, shall be provided to the jurisdictional GST officer, each month(by the 10th of month) in a CD or Pen drive, as convenient to the said unit.

3. The above procedure and safeguards are in addition to the terms and conditions to beadhered to by a EOU / EHTP / STP / BTP unit in terms of the Foreign Trade Policy, 2015-20 and the duty exemption notification being availed by such unit.

4. It is requested that suitable trade notices may be issued to publicize the contents ofthis circular.

5. Difficulty, if any, in implementation of the above instructions may please be broughtto the notice of the Board. Hindi version would follow.

(Upender Gupta)
Commissioner (GST)

Form – A

(Intimation for procurement of supplies from the registered person by Export
Oriented Unit (EOU)/Electronic Hardware Technology Park (EHTP) Unit/ SoftwareTechnology Park (STP) unit/ Bio-Technology Parks (BTP) Unit under deemedexport benefits under section 147 of CGST Act,2017 read with Notification No.48/2017-Central Tax dated 18.10.2017)

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CIRCULAR N0-13/2017-F. No. 354/129/2017-TRU-Clarification of classification of cut pieces of fabric under GST

Circular No.13/13/2017-GST

F. No. 354/129/2017-TRU
Government of India
Ministry of Finance
Department of Revenue
Tax research Unit
****

North Block, New Delhi27th October 2017

To,

The Principal Chief Commissioners/Chief Commissioners/ Principal
Commissioners/ Commissioner of Central Tax (All) /
The Principal Director Generals/ Director Generals (All)

Madam/Sir,

Subject: Clarification on Unstitched Salwar Suits – regarding.
Doubts have been raised regarding the classification of Cut pieces of Fabrics under GST.

2. It has been represented that before becoming readymade articles or an apparel, thefabric is cut from bundles or thans and sold in that unstitched state. The consumersbuy these sets or pieces and get it stitched to their shape and size.

3. Fabrics are classifiable under chapters 50 to 55 of the First Schedule to the
Customs Tariff Act, 1975 on the basis of their constituent materials and attract auniform GST rate of 5% with no refund of the unutilized input tax credit.

4. Mere cutting and packing of fabrics into pieces of different lengths from bundles orthans, will not change the nature of these goods and such pieces of fabrics wouldcontinue to be classifiable under the respective heading as the fabric and attract the5% GST rate.

5. It is requested that suitable trade notices may be issued to publicize the
contents of this circular.

6. Difficulty if any, in the implementation of the circular should be brought to thenotice of the Board. Hindi version would follow.

Yours faithfully,

Rahil Gupta
Technical Officer (TRU)

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CIRCULAR NO- 12/2017-F.No.354/117/2017-TRU (Pt-III)-Seeks to clarify the applicability of GST on the superior kerosene oil [SKO] retained for the manufacture of Linear Alkyl Benzene [LAB].

Circular No. 12/12/2017-GST

F.No.354/117/2017-TRU (Pt-III)
Government of India
Ministry of Finance
Department of Revenue
(Tax Research Unit)
*****

North Block, New DelhiDated 26th October, 2017

To

Principal Chief Commissioners/Principal Directors General,
Chief Commissioners/Directors General,
Principal Commissioners/Commissioners,
All under CBEC.

Madam/Sir,

Subject: Clarification regarding applicability of GST on the superior kerosene oil [SKO]retained for the manufacture of Linear Alkyl Benzene [LAB]– Regarding.

Briefly stated, references have been received related to applicability of GST on thesuperior kerosene oil [SKO] retained for the manufacture of Linear Alkyl Benzene [LAB].

2. In this context, LAB manufacturers have stated that they receive superior Kerosene oil(SKO) from, a refinery, say, Indian Oil Corporation (IOC). They extract n-Paraffin (C9-C13hydrocarbons) from SKO and return back the remaining of SKO to the refinery. In this context,the issue has arisen as to whether in this transaction GST would be levied on SKO sent by IOC
for extracting n-paraffin or only on the n-paraffin quantity extracted by the LAB manufactures.Further, doubt have also been raised as to whether the return of remaining Kerosene by LABmanufactures would separately attract GST in such transaction.

3. The matter was examined. LAB manufacturers generally receive superior kerosene oil[SKO] from a refinery through a dedicated pipeline; on an average about 15 to 17% of the totalquantity of SKO received from refinery is retained and balance quantity ranging from 83%-85% is returned back to refinery. The retained SKO is towards extraction of Normal Paraffin,is used in the manufacturing of LAB. In this transaction consideration is paid by LAB
manufactures only on the quantity of retained SKO (n-paraffin).

4. In this context, the GST Council in its 22nd meeting held on 06.10.2017 discussed theissue and recommended for issuance of a clarification that in this transaction GST will bepayable by the refinery on the value of net quantity of superior kerosene oil (SKO) retained forthe manufacture of Linear Alkyl Benzene (LAB).

5. Accordingly, it is here by clarified that, in aforesaid case, GST will be payable by therefinery only on the net quantity of superior kerosene oil (SKO) retained for the manufacture

Circular No. 12/12/2017-GST

of Linear Alkyl Benzene (LAB). Though, refinery would be liable to pay GST on such returnedquantity of SKO, when the same is supplied by it to any other person.

6. This clarification is issued in the context of Goods & Service Tax (GST) law only andpast issues, if any, will be dealt in accordance with the law prevailing at the material time.

Yours faithfully,

(Amit Kumar Singh)

Technical Officer (TRU)
Email: amitsingh.1289@gov.in

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CIRCULAR NO-11/2017-F. No. 354/263/2017-TRU

Circular No. 11/11/2017-GST

F. No. 354/263/2017-TRU
Government of India
Ministry of Finance
Department of Revenue
Tax research Unit
****

North Block, New Delhi20th October 2017

To,

The Principal Chief Commissioners/Chief Commissioners/ Principal Commissioners/Commissioner of Central Tax (All) /

The Principal Director Generals/ Director Generals (All)

Madam/Sir,

Subject: Clarification on taxability of printing contracts

Requests have been received to clarify whether supply of books, pamphlets,brochures,envelopes, annual reports, leaflets, cartons, boxes etc., printed with design, logo, name, addressor other contents supplied by the recipient of such supplies, would constitute supply of goods
falling under Chapter 48 or 49 of the First Schedule to the Customs Tariff Act,1975 (51of 1975)or supply of services falling under heading 9989 of the scheme of classification of servicesannexed to notification No. 11/2017-CT(R).

2. In the above context, it is clarified that supply of books, pamphlets, brochures, envelopes,annual reports, leaflets, cartons, boxes etc. printed with logo, design, name, address or othercontents supplied by the recipient of such printed goods, are composite supplies and the question,whether such supplies constitute supply of goods or services would be determined on the basis of
what constitutes the principal supply.

3. Principal supply has been defined in Section 2(90) of the Central Goods and Services TaxAct as supply of goods or services which constitutes thepredominant element of a compositesupply and to which any other supply forming part of that composite supply is ancillary.

4. In the case of printing of books, pamphlets, brochures, annual reports, and the like, whereonly content is supplied by the publisher or the person who owns the usage rights to theintangible inputs while the physical inputs including paper used for printing belong to the printer,supply of printing [of the content supplied by the recipient of supply] is the principal supply andtherefore such supplies would constitute supply of service falling under heading 9989 of the
scheme of classification of services.

Circular No. 11/11/2017-GST

5. In case of supply of printed envelopes, letter cards, printed boxes, tissues, napkins, wallpaper etc. falling under Chapter 48 or 49, printed with design, logo etc. supplied by the recipientof goods but made using physical inputsincluding paper belonging to the printer, predominantsupply is that of goods and the supply of printing of the content [supplied by the recipient of
supply] is ancillary to the principal supply of goods and therefore such supplies would constitutesupply of goods falling under respective headings of Chapter 48 or 49 of the Customs Tariff.

4. Difficulty if any, in the implementation of the circular should be brought to the notice ofthe Board. Hindi version would follow.

Yours Faithfully,

Rachna
Technical Officer (TRU)

Email: rachna.irs@gov.in

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IN PDF:-https://www.cbic.gov.in/resources//htdocs-cbec/gst/circularno-11-gst.pdf

CIRCULAR NO-10/2017-CBEC – 20/16/03/2017-GST-Clarification on movement of goods on approval basis

Circular No. 10/10/2017-GST

CBEC – 20/16/03/2017-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
GST Policy Wing

New Delhi, dated 18th October, 2017

To,

The Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/Commissioners of Central Tax (All)

The Principal Director Generals/ Director Generals (All)

Madam/Sir,

Subject: Clarification on issues wherein the goods are moved within the State or fromthe State of registration to another State for supply on approval basis –Reg.

Various communications have been received particularly from the suppliers of
jewellery etc. who are registered in one State but may have to visit other States (other thantheir State of registration) and need to carry the goods (such as jewellery) along for approval.In such cases if jewellery etc. is approved by the buyer, then the supplier issues a tax invoiceonly at the time of supply. Since the suppliers are not able to ascertain their actual suppliesbeforehand and while ascertainment of tax liability in advance is a mandatory requirement for
registration as a casual taxable person, the supplier is not able to register as a casual taxableperson. It has also been represented that such goods are also carried within the same State forthe purposes of supply. Therefore, in exercise of the powers conferred under section 168 (1)of the Central Goods and Services Tax Act, 2017, for the purpose of uniformity in theimplementation of the Act, it has been decided to clarify this matter as follows –

2. It is seen that clause (c) of sub-rule (1) of rule 55 of the Central Goods and ServicesTax Rules, 2017 (hereafter referred as “the said Rules”) provides that the supplier shall issuea delivery challan for the initial transportation of goods where such transportation is forreasons other than by way of supply. Further, sub-rule (3) of the said rule also provides thatthe said delivery challan shall be declared as specified in rule 138 of the said Rules. It is alsoseen that sub-rule (4) of rule 55 of the said Rules provides that “Where the goods being
transported are for the purpose of supply to the recipient but the tax invoice could not beissued at the time of removal of goods for the purpose of supply, the supplier shall issue a taxinvoice after delivery of goods”.

3. A combined reading of the above provisions indicates that the goods which are takenfor supply on approval basis can be moved from the place of business of the registeredsupplier to another place within the same State or to a place outside the State on a deliverychallan along with the e-way bill wherever applicable and the invoice may be issued at thetime of delivery of goods. For this purpose, the person carrying the goods for such supply can
carry the invoice book with him so that he can issue the invoice once the supply is fructified.

4. It is further clarified that all such supplies, where the supplier carries goods from oneState to another and supplies them in a different State, will be inter-state supplies and attractintegrated tax in terms of Section 5 of the Integrated Goods and Services Tax Act, 2017.

5. It is also clarified that this clarification would be applicable to all goods suppliedunder similar situations.

6. It is requested that suitable trade notices may be issued to publicize the contents ofthis circular.

7. Difficulty, if any, in the implementation of the above instructions may please bebrought to the notice of the Board. Hindi version would follow.

(Upender Gupta)
Commissioner (GST)

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