QUESTION
a) a export based company is claimimg cenvat credit as refund. If it is having
exempt income ie sale of securities , sale of land etc, drawback whether it will
then have to apply reverse credit as per section 17 for common credit.
Accordingly refund to be proportionately reduced. whether auditor fees etc is to
be considered compulsorily as common credit and what other services to be
considered as common credit for rule 42.
b) Similarily to other companies having taxable income, do we have to reverse
input credit for exempted income even though the services have no link with
exempted income gst say gst professional charges, advocate fees etc.
receipt from compulsory acquisition of land is to be shown as exempt income.
Amount written off to be shown as non gst income. c) Refund for the period ended
on 31.3.18 filed with department after 31st march 18 has to be reported in
annual return for year ending 31.3.18 or not . d) Sampling exenses shown and it
relates to CFO comes under related persons, whether gst to be applied as per
schedule I.
ANSWER
Law Applicable:
SECTION 17 OF CGST ACT
(3) The value of exempt supply under sub-section (2) shall be such as may be
prescribed, and shall include supplies on which the recipient is liable to pay
tax on reverse charge basis, transactions in securities, sale of land and,
subject to clause (b) of paragraph 5 of Schedule II, sale of building.
Conclusion:
(a) In your case if ITC claimed is related to exempt income then as per section
17(3) it is required to be reversed and hence refund claimed will be reduced
proportionately.
So far as ITC related to auditor fees is concerned, if it is related to taxable
as well as exempt income then it will be considered as common credit and
proportionate reversal will be required as per Rule 42.
Other inputs to be considered as common credit will vary from case to case.
(b) If the input services have no link with exempt income and it is solely
related to taxable income, then there is no need to reverse such credit.
(c) In Annual return of 17-18 only those refunds need to be reported which have
filed till 31-3-2018. As in your case refund is filed after 31-3-2018, there is
no need to declare the same in GSTR-9 of 17-18.
(d) You are requested to kindly redraft your query.