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This circular clarifies GST rules for casual taxable persons and the recovery of excess Input Tax Credit distributed by an Input Service Distributor. A casual taxable person calculates advance tax after deducting eligible Input Tax Credit and cannot extend operations beyond 180 days under that status. Long running exhibitions require normal registration instead. For excess credit distributed by an Input Service Distributor, tax authorities recover the amount from the recipient units along with interest and penalty. Recipient units deposit the excess amount using FORM GST DRC-03 voluntarily. Authorities initiate proceedings under section 73 or 74 using FORM GST DRC-07 if recipients do not pay voluntarily. The Input Service Distributor remains liable to a general penalty.
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Circular No. 71/45/2018-GST
F. No. 349/94/2018-GST Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs GST Policy Wing
New Delhi, Dated the $26^{\text{th}}$ October, 2018
To,
The Principal Chief Commissioners/ Chief Commissioners/Principal Commissioners/ Commissioners of Central Tax (All)/
The Principal Directors General/ Directors General (All)
Madam/Sir,
Subject: Clarifications of issues under GST related to casual taxable person and recovery of excess Input Tax Credit distributed by an Input Service distributor – Reg.
Representations have been received seeking clarification on certain issues under the GST laws. The same have been examined and the clarifications on the same are as below:
| S. No | Issue | Clarification |
|---|---|---|
| 1 | Whether the amount required to be deposited as advance tax while taking registration as a casual taxable person (CTP) should be 100% of the estimated gross tax liability or the estimated tax liability payable in cash should be calculated after deducting the due eligible ITC which might be available to CTP? | 1. It has been noted that while applying for registration as a casual taxable person, the FORM GST REG-1 (S. No. 11) seeks information regarding the “estimated net tax liability” only and not the gross tax liability. |
It is accordingly clarified that the amount of advance tax which a casual taxable person is required to deposit while obtaining registration should be calculated after considering the due eligible ITC which might be available to such taxable person. | | 2 | As per section 27 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the said Act), period of operation by causal taxable person is ninety days with provision for extension of same by the proper officer for a further period not exceeding ninety days. Various representations have been received for further extension of the said period beyond the period of 180 days, as mandated in law. | 1. It is clarified that in case of long running exhibitions (for a period more than 180 days), the taxable person cannot be treated as a CTP and thus such person would be required to obtain registration as a normal taxable person.
While applying for normal registration the said person should upload a copy of the allotment letter granting him permission to use the premises for the exhibition and the allotment letter/consent letter shall be treated as the proper document as a proof for his place of business.
In such cases he would not be required to pay advance tax for the purpose of registration.
He can surrender such registration once the exhibition is over. | | 3 | Representations have been received regarding the manner of recovery of excess credit distributed by an Input Service Distributor (ISD) in contravention of the provisions contained in section 20 of the CGST Act. | 1. According to Section 21 of the CGST Act where the ISD distributes the credit in contravention of the provisions contained in section 20 of the CGST Act resulting in excess distribution of credit to one or more recipients of credit, the excess credit so distributed shall be recovered from such recipients along with interest and penalty if any.
The recipient unit(s) who have received excess credit from ISD may deposit the said excess amount voluntarily along with interest if any by using FORM GST DRC-03.
If the said recipient unit(s) does not come forward voluntarily, necessary proceedings may be initiated against the said unit(s) under the provisions of section 73 or 74 of the CGST Act as the case may be. FORM GST DRC-07 can be used by the tax authorities in such cases.
It is further clarified that the ISD would also be liable to a general penalty under the provisions contained in section 122(1)(ix) of the CGST Act. |
It is requested that suitable trade notices may be issued to publicize the contents of this Circular.
Difficulty if any, in the implementation of this Circular may be brought to the notice of the Board. Hindi version will follow.
(Upender Gupta) Commissioner (GST)
