Chatroom: CBIC's clarificatory circulars have retrospective effect

TNC Rajagopalan answers SME queries related to GST, export and import matters

I refer to the CBIC Circular No. 204/16/2023-GST dated October 27, 2023 on the issues pertaining to taxability of personal guarantee and corporate guarantee. I want to know whether it is applicable for such guarantees given before the date of  the circular.

That circular is clarificatory, as most circulars of CBIC are. The circulars only clarify or convey the understanding of the CBIC about the existing legal position. So, they have retrospective effect in the sense that the GST department will give effect to such circulars retrospectively. Of course, you are bound by the law only and not by the departmental circulars.   

I refer to Para C.13 of Part C of the RBI Master Direction no.16/2015-16 dated January 1, 2016 (as amended) on Export of Goods and Services. The Para C13 (i) says that  AD Category – I banks may consider the applications received from exporters and grant permission for opening/hiring warehouses abroad subject to the condition that applicant’s export outstanding does not exceed 5 percent of exports made during the previous financial year. Our export receivables outstanding are always higher than 5 per cent of previous year exports because we extend about 3 months credit and in any case, even RBI gives 9 months time for realisation of export proceeds. How to overcome this difficulty?

In my opinion, the RBI’s said condition is unrealistic. A provision saying the export outstanding beyond the period allowed for realisation of export proceeds should not exceed 5 per cent is understandable but the provision as it stands makes no sense. Anyway, since you do not meet that condition, your bank may not grant you the permission and so, you may approach RBI through your bank seeking necessary permission, giving all the relevant details.

Under the EPCG scheme, if we fail to achieve the stipulated annual average exports in one year, can we make up for it in the subsequent years?

Yes. Para 5.18 of HBP allows it and says that the stipulated annual average exports must be maintained on an overall i.e. cumulative basis.

Justice (Retd.) Surya Kumar Mishra, former Chief justice of the Jharkhand High Court was sworn in on May 6, 2024 as the first President of the GST Appellate Tribunal (GSTAT). Does it have any implications on when we should file the appeals? 

Yes.  As matters stand, the period of limitation of 3 months for filing of appeal under Section 112 of the CGST Act, 2017 read with CGST (9th Removal of Difficulties) Order, 2019, dated 3 December 2019 has now commenced on May 6, 2024 and so, the appeals to the GSTAT should be filed before August 5, 2024. However, the Judicial Members and Technical Members to the GSTAT have not yet been appointed and also there are some pending issues relating to modalities and infrastructure for filing of appeals to GSTAT. So, the government may come up with another order for removal of difficulties further extending the time period for filing the appeals.

Business Standard invites readers’ SME queries related to GST, export and import matters. You can write to us at smechat@bsmail.in