Q.37 The assessee is manufacturer of synthetic yarn with input/output gst rate of 18/12 %. Additionally it trades in cloth having gst rate of 5%.

Query: While calculating Net ITC whether input gst on purchase of trading of cloth is to be included? 

Ans. As per para 54 of Circular No.125/44/2019-GST, refund of ITC of GST paid on those inputs which are procured at equal or lower rate of GST than the rate of GST on outward supply, shall also be included while calculating the maximum refund amount as specified in Rule 89(5) of the CGST Rules.

Rule 89(5) of CGST Rules defines ‘Net ITC' as input tax credit availed on inputs during the relevant period other than the input tax credit availed for which refund is claimed under sub-rule (4A) or (4B) or both.

Basis, the above, it can be concluded that as per Rule 89(5) Input Tax Credit availed on inputs of a particular registration for which refund of inverted duty structure is being applied has to be considered irrespective of the fact that such input relates to manufacturing or trading.

Q.36 Is GST applicable on cancellation charges, charged by Hotel ? 

Ans. Cancellation charges are generally collected for the recovery of administrative expenses on account of violation of agreement. These are subject to the levy of GST.

Q.35 In one my client's (Composition dealer) GSTR 4 was filed for FY 2020-2021. In liability column we forgot to enter the amount. Hence all GST paid during the year flowed in to Negative liability statement. For QTR 1 and 2,3 CMP-08 this year (2021-22) the cash has been duly deposited in cash ledger, but the liability has been set-off from this negative liabiluty statement. How to correct this issue? 

Ans. The taxpayer has not filled Table 6 of GSTR-4 due to oversight due to which liability discharged by him during the year through CMP-08 is showing in Negative Liability Statement. To deal with such issues an advisory has been issued by GSTN on 22nd July 2021 wherein it is mentioned that if Table 6 of GSTR-4 has not been filled due to oversight, a ticket may be raised on the grievance portal to nullify the amount available in negative liability statement.

Further as an alternative, the taxpayer can use Form DRC-03 to make payment towards the tax liability of the current quarter that is offset or adjusted with negative liability of the previous year. He can replicate this step for every quarter where such negative liability adjustment from the last year continues in the present financial year.