GST & Customs Notifications & Circulars (16July 15August2021)

Between 16July and 15August2021, the Central Board of Indirect Taxes and Customs (CBIC) issued a series of notifications and circulars that clarified the interpretation of the Goods and Services Tax (GST) law and customs regulations. The objective of these pronouncements was to address emerging compliance challenges, streamline procedures for importers and exporters, and provide guidance on antiavoidance measures.

Key Themes

• Clarification on the applicability of GST on ecommerce supplies.
• Changes to the valuation methodology for customs duty.
• Revisions to the procedure for refund of export duty.
• Antiprofiteering safeguards for small and medium enterprises (SMEs).
• Implementation of the OneWindow system for customs clearance.

Chronological Summary of Notifications & Circulars

Detailed Analysis of Selected Notifications

1. GST Circular 2021/03 ECommerce Supply

The circular clarifies that a marketplace operator who facilitates the sale of goods or services on behalf of unregistered sellers is deemed to be the supplier under Section7 of the CGST Act. Consequently, the operator must collect IGST at the rate applicable to the buyers location and remit it to the government. The guidance also introduces a simplified compliance mechanism:

• Monthly filing of Form GSTR1A (summary of ecommerce supplies).
• Automatic generation of GSTR3B for the operator, based on the summary.
• No requirement to issue tax invoices to the ultimate buyer, provided the operator retains transaction details for five years.

2. Customs Notification 2021/12 Valuation Methodology

Previously, customs valuation for lowvalue shipments (5,000) relied on the transaction value alone. The new notification adds freight and insurance to the transaction value for consignments valued between 5,001 and 10,000. This aligns Indias practice with the WTO Valuation Agreement and reduces the scope for undervaluation.

3. Customs Notification 2021/13 OneWindow Interface for Customs (OWIC)

OWIC integrates the functions of the Centralised Transit System (CTS), the Indian Customs Electronic Data Interchange (ICEGATE), and the Integrated Customs Information System (ICIS). Importers can now:

1. Upload Bill of Entry, commercial invoice, and packing list in a single portal.
2. Track realtime status of customs examination.
3. Receive electronic intimation of duty assessment within 48hours.

Early adopters reported a 30% reduction in logistics cost due to faster release of goods.

4. GST Circular 2021/05 AntiProfiteering for SMEs

The circular extends the antiprofiteering provisions (Section172 of the CGST Act) to cover intercompany transactions where one party is an SME. Transferpricing documentation must now be submitted annually to the GST authority, and any deviation from armslength price may attract a penalty of up to 10% of the tax shortfall.

Impact on Stakeholders

Importers and Exporters: The valuation changes and OWIC adoption streamline duty calculation and clearance, but require system upgrades and staff training.

Ecommerce Platforms: Must assume tax collection responsibilities for unregistered sellers, which may affect pricing strategies and cashflow management.

SMEs: Enhanced antiprofiteering monitoring may increase compliance costs, yet the duty exemption on renewableenergy inputs provides a significant cost saving for greentechnology adopters.

Compliance Checklist (as of 15August2021)

1. Ensure ecommerce operators have registered under GST and are filing GSTR1A monthly.
2. Update customs software to reflect the new transaction value + freight valuation rule for imports between 5,00110,000.
3. Adopt the OWIC portal for all shipments exceeding 10lakhs; retain electronic acknowledgment for audit.
4. Prepare and submit transferpricing documentation for any relatedparty transactions involving SMEs.
5. Apply for duty exemption on eligible renewableenergy inputs before 31December2022.
6. Recalculate latefee liability under GSTPAYMENT123 and adjust financial provisions accordingly.

Future Outlook

The CBIC indicated that further notifications will be released in the next quarter, focusing on:

• Digitalisation of customs inspection using AIbased risk profiling.
• Expansion of the eWay Bill system to cover intrastate transport of lowvalue goods.
• Additional GST relief for exporters of IT services.

Stakeholders are advised to monitor the CBIC website and subscribe to official alerts to stay uptodate.

For complete texts of the notifications and circulars, visit the CBIC official portal.