Q. 199 Wether the benefit of the reduced amount of penalty 50% available under section 74(11) in case taxpayer have lost the case in appellate authority and ready to deposit tax within one month of appellate order for tax amount mentioned in original order issued under section 74 by assessing officer. Assessee is preferring not for further appeal ?

Ans. As per section 74(11), where the person served with order u/s 74(9) pays tax along with interest and a penalty equivalent to 50% of tax determined within 30 days of communication of order, all proceedings in respect of the said notice shall be deemed to be concluded. In the above-mentioned case, if the tax is to be deposited within 30 days of the communication of adjudication order, then the penalty amount equivalent to 50% of tax amount could have been opted. Moreover, the limit of 30 days might have elapsed from the served adjudication order. Therefore, 50% of the tax amount payable as penalty cannot be opted now.

Q. 198 Can you give me a detailed analysis on reading new GST food item rate notifcation ? 

Ans. The notification no. 6/2022 -CTR is the recent amendment reflecting changes in food items. The same notification seeks to amend notification no. 1/2017- CTR. Therefore, it is to be read along with base notification of rates. Please go through the link. It contains notification No.1/2017-Central Tax (Rate), dated 28th June 2017, as amended from time to time. https://taxo.online/wp-content/uploads/2021/10/GST-Rate-of-GOODS.pdf 

Q. 197 The department wants to charge the GST on 2.50% of the total loan exposure as a guarantee commission to directors. We want to execute an agreement for director remuneration where we want to bifurcate the director remuneration into two parts, one is director remuneration and another is a commission for guarantee. Can you have some draft agreement for the same?

Ans. As per para 2 of schedule I the supply of goods or services or both between two or more related persons without consideration made in the course of furtherance of business would be treated as supply. In the above case, directors are related persons and the service of providing personal guarantee would fall under the term ‘supply’, hence GST is to be leviable under reverse charge. If a personal guarantee is provided as per the terms of employment then it would be qualified under para 1 of schedule III and not be treated as supply then GST would not be leviable. Any supply other than business and commerce, not falling in the definition of business as defined in the CGST Act does not come under the ambit of GST. Hence, GST would not be levied on those supplies. This is a very subjective matter of litigation. It is also advised to take a detailed opinion to have better clarity.