Page 50 - GSTL_21st May 2020_Vol 36_Part 3

J76 GST LAW TIMES [ Vol. 36
started issuing notices to companies asking them to provide details of the GST
paid through reverse charge on such remunerations.
One of the notices seen by FE has been issued by the GST administration
in Chhattisgarh to a company asking it to disclose the GST paid on the remunera-
tion received by Directors of the company since July 1, 2017. It fails to make any
distinction between Executive or Non-Executive Directors.
The notice follows despite the Karnataka Bench of AAR Ruling that came
earlier this month, saying an Executive Director provides services to a company
as an employee does to the employer, and the same can’t be treated as supply of
services according to the GST Act. However, it said that a Non-Executive Direc-
tor, who doesn’t receive remuneration from the company as an employee and
only gets fees for attending board meetings would be required to pay the GST on
such fees through the Reverse Charge Mechanism.
In April, the Rajasthan Bench of AAR had ruled that remuneration paid
to Directors of a company would be subject to the GST. The Ruling was contra-
dicted by the Karnataka AAR a month later.
Although AAR ruling is applicable only to applicants who seek clarity
on interpretation of laws, experts said GST Authorities are taking cognizance of
such ruling while issuing notices in similar matters.
“Divergent views on taxation of Director salary by two State Advance
Ruling Authorities were already enough of a nuisance for taxpayers. Adding to
the woes of taxpayers, officers under other jurisdiction have already initiated
issuing notices to taxpayers on the same issue,” Rajat Mohan, Senior Partner,
AMRG & Associates, said.
He added that ruling by an AAR should not form the basis for issuing
tax notices in other tax jurisdictions, but tax officials are indulging in it without
‘application of mind’, causing anguish to the ailing industry already suffering
from the pandemic.
To deal with conflicting ruling by two State AARs, the GST Council in
December, 2018 had approved setting up of a centralised Appellate Authority for
Advance Ruling. This was ratified by the Cabinet a month later.
[Source : The Financial Express, New Delhi, dated 15-5-2020]

GST boost to MSMEs
The growth of the Micro, Small and Medium Enterprises (MSMEs) has
been an integral part of our growth story. The Indian economy grew at an aver-
age rate of over 6.5 per cent during the period 1980-2010. The growth story has
spluttered in recent times with two important engines of growth - private in-
vestments and exports - not firing.
The MSME sector plays a critical role in boosting both these engines and
MSMEs’ relatively poor performance has contributed to tepid private invest-
ments. Outstanding bank credit to MSMEs remained constant for three fiscal
years from 2015-16 to 2018-19. Consequently, lending from NBFCs has become
an important source for credit to MSMEs. NBFC credit to MSMEs grew from 8
per cent to 13 per cent of their lending to MSMEs between 2015 and 2018. The
MSME sector contribution to exports declined from nearly 50 per cent in 2015-16
to 48.6 per cent in 2017-18. The collapse of the Infrastructure Leasing & Financial
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