Understanding GST Issues With DSRV India

MCQ SELF CHALLENGE # 0052 ON GST ISSUES CLARIFIED

GST issues clarified on Job Work and SEZ

Dear Professional Seniors & Friends,
Warm Greetings!

Here is the Next post of #MCQ on concept-based practical professional knowledge on certain issues under GST and their welcome clarification
by the government in a unique manner to be self-answered by participants. The detailed answers to these MCQs shall be posted the next day for the
self-assessment of the participants.

MCQ 52.1: Whether independent fabric processors (job workers) in the textile sector supplying job work services are eligible for a refund of
unutilized input tax credit on account of inverted duty structure?

A) No as the output supply is fabric which is notified as goods in respect of which refund of ITC on account of inverted duty structure shall not
be allowed.

B) Yes as the output supply is job work services which are not notified as services in respect of which refund of ITC on account of inverted duty
structure shall not be allowed.

C) No as the output supply is job work services which is notified as services in respect of which refund of ITC on account of inverted duty
structure shall not be allowed.

D) None of the above.

MCQ 52.2: X located in U.P. had provided services of short-term accommodation, conferencing, banqueting, etc. in U.P. to a Special Economic
Zone (SEZ) developer or a SEZ unit located in Haryana. The Supply shall be:

A) supply will be interstate supply & IGST will be applicable.

B) Supply will be interstate supply & CGST/SGST will be applicable.

C) Supply will be intrastate supply & IGST will be applicable.

D) Supply will be intrastate supply & CGST/SGST will be applicable.

Answer MCQ Self Challenge # 0052

This post of MCQ is on provisions relating to certain issues under GST and their welcome clarifications issued by the government vide circular No.
48/2018 dtd 14% June 2018.

Answer To MCQ 52.1:

B) Yes as the output supply is job work services which are not notified as services in respect of which refund of ITC on
account of inverted duty structure shall not be allowed.

Practical Analysis For MCQ 52.1:

1. Notification No. 5/2017-Central Tax (Rate) dated 26.06.2017 specifies the goods in respect of which refund of unutilized input tax credit
(ITC) on account of inverted duty structure under section 54(3) of the CGST Act shall not be allowed

2. Fabric is notified in that list as the goods on which a refund of ITC on account of an inverted duty structure will not be allowed.

3. However, in the case of fabric processors, the output supply is the supply of job work services and not of goods (fabrics).

4. The Central Government vide Circular No. 48 dated 14™ June 2018 has also provided clarification on the same issue.

Based on the above analysis, the correct answer MCQ 52.1: B) Yes as the output supply is job work services which is not notified as services in
respect of which refund of ITC on account of inverted duty structure shall not be allowed.

Answer To MCQ 52.2:

A) Supply will be interstate supply & IGST will be applicable.

Practical Analysis For MCQ 52.2 :

1. As per section 7(5) (b) of the IGST Act, the supply of goods or services or both to an SEZ developer or an SEZ unit shall be treated to be a
supply of goods or services or bath in the course of inter-state trade or commerce.

2. Whereas, as per section 12(3)(c) of the IGST Act. the place of supply of services by way of accommodation in any immovable property for
organizing any functions shall be the location at which the immovable property is located.

3. Thus, in such cases, if the location of the supplier and the place of supply is in the same State/ Union territory, it would be treated as an
intra-State supply.

4.1nthe instant case, section 7(5)(b) of the IGST Act is a specific provision that states that such supplies shall be treated as Inter-State
supplies.

5. Therefore it Clarified that services of short-term accommodation, conferencing, banqueting, etc., provided to an SEZ developer or an SEZ
unit shall be treated as an Inter-State supply.

6. The Central Government vide Circular No. 48 dated 14™ June 2018 has also provided clarification on the same issue.

Based on the above analysis, correct answer MCQ 52.2: A) Supply will be interstate supply & IGST will be applicable.

(Disclaimer: The objective of the MCQ post is just to discuss the concept. it may happen, by change of facts, the answer may be different.
Please do not treat this as a professional opinion; you can have your own opinion.)

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Sincere Regards!
CA Sanjay Kumar Agrawal

Mobile: 9810116321