GST Update on binding nature of circulars issued by CBIC

GST Update on binding nature of circulars issued by CBIC:-

It is very necessary for the assessees to keep track of the amendments/clarifications issued by the CBIC so that effective compliance of GST Laws is being made by them. However, it is equally important for the State Governments to be responsive to the amendments/clarifications issued by CBIC. The change of name of the Board from ‘Central Board of Excise & Customs’ to the ‘Central Board of Indirect Taxes & Customs’ itself indicates that the clarifications issued by the Board are for the indirect taxation law being GST as a whole. However, the bifurcations made as ‘CGST’, ‘SGST’ and ‘IGST’ is posing great problems if the concurrent clarifications are not issued therein in SGST Laws. Say for example, recently, CBIC issued clarification vide 57/31/2018-GST dated 04.09.2018 in the CGST Section wherein the scope of principal agent relationship has been explained. It has been clarified that an agent for goods is required to take compulsory registration only if invoice is raised by agent in his own name and has the authority to pass title of goods on behalf of principal. It is pointed that although this clarification is being issued in the CGST head, but the same is equally applicable for SGST Laws also. We as assesses presume that any amendment/clarification issued in the context of CGST Laws is squarely applicable to the SGST Laws too. However, this is not the practical situation. Whether the clarification issued by CBIC in CGST Head also applicable for SGST Laws automatically? Well the answer is ‘NO’. If we observe the Rajasthan State GST website, www.rajtax.gov.in, we find that the notifications issued for extension of due date of filing GST returns have been issued but no such clarification explaining the scope of principal-agent relationship is being issued till date. Moreover, can the Rajasthan SGST officers opt not to follow the clarification issued by CBIC on the grounds that the same pertains to CGST Laws and not to Rajasthan SGST Laws?

Well, if we go back to erstwhile Central Excise Laws and Service Tax Laws, we find that there were number of decisions rendered by Supreme Court that the clarifications issued by the Board are binding on departmental officers. This view was taken in the case of BIRLA JUTE AND INDUSTRIES LTD. VERSUS ASSISTANT COLLECTOR OF C. EX. [1992 (57) E.L.T. 674 (Cal.)]which was further approved by Hon’ble Supreme Court on 2005 (179)ELT 272(Supreme Court). Consequently, whether the ratio of the decision is applicable on SGST officers in the present context will be a matter of litigation in the GST regime.
We have referred to only one circular but there are many clarifications issued by CBIC that have not been acknowledged and issued by Rajasthan State Government. Hence, we request that a proper mechanism may please be developed and should be operational to streamline all the amendments/clarifications made in the CGST Laws so as to align the SGST Laws with the provisions contained in CGST Laws.

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GST Update on binding nature of circulars issued by CBIC

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