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.

Q.34 Client is engaged in the business of providing the SITC of Centralised Air Conditioners. As per few AAR based on Mumbai and other states, same has been considered as Supply of Goods only as the value of goods is major in the contract value and GST rate of 28% has been applied. But as per us, considering the Works Contract Definition, it should be considered as Supply of services as we are making something which is immovable property, which is not easy to dismantle and install at other place and same is also not marketable and we are applying GST Rate of 18%. 

Ans. As per Sec2(119) of CGST Act 2017, works contract means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract.

Thus, adhering to the definition of works contract the supply and installation of centralized AC shall be covered under the definition of works contract and accordingly GST rate applicable shall be 18%