Issues and concerns
1. There appears to be concerns over the taxability of actionable claims in form of betting, gambling and horse race as goods or services. The definition of goods specifically states that the actionable claims would qualify as goods for the purpose of GST law. When that being the case, seems appropriate to conclude that the actionable claim as goods and accordingly, the applicable rate of tax should be ascertained. This is based on the understanding that the notifications cannot overrule what is specified under the law.
2. A taxable person should be cautious in case of supply of services where the consideration is in kind by way of receipt of other services. In such cases, it may appear that the services are supplied without consideration. However, the it could result in barter which would qualify as barter. For illustration, we may refer to the recent advance ruling wherein the Kerala Authority of Advance Ruling has pronounced that the canteen services provided to employees would amount to supply and accordingly, canteen recoveries from the employees would be subject to GST. Such caution should be exercised since the payment of GST on the subsidized recovery would be incorrect. It is a supply of service by employer in exchange of employment services by employee and since, the employer and employee are termed as related parties, the valuation of such supplies should be in terms of rule 28. In other words, the employer should remit the tax at open market value. In this backdrop, a taxable person should exercise extra caution to ascertain the value of taxable supply of services.
3. The common expenses incurred by a taxable person in relation to procurement of services used by the branches located in another States, the allocation of such expenses to respective branches may qualify as supply of services. There appears to be an ambiguity on ascertaining the time of supply – whether, at the end of each month such taxable person should arrive at the cost to be allocated respective branches and remit the tax accordingly or shall arrive at the cost to be allocated at the end of the year and remit the tax on the expenses allocated to branch for the whole year.
4. The discount after effecting the taxable supplies should be issued by credit notes . Section 34(2) states that the discounts should be issued before the end of September following the end of the financial year or the date of furnishing the annual return. This necessarily means that discount can be issued to the recipient after the supplies are effected but not after the lapse of time period specified under section 34(2).