Further Relaxations under Customs and GST Laws due to the COVID -19 Outbreak

The Government of India has announced various additional relaxations for taxpayers under Customs Law and Goods and Services Tax (GST) in order to overcome the unprecedented hardships caused by the COVID-19 outbreak. In order to ensure smooth facilitation of trade, some practical difficulties have also been eased by way of circulars issued under Customs and GST law. (See also our earlier posts on relaxations under the Foreign Trade Policy, Customs laws, and GST)

We have summarised key takeaways from recent circulars below.

1. Acceptance of an undertaking in lieu of bonds: Circular No. 17/2020-Customs dated 3 April 2020

  • CBIC has clarified that an undertaking can be submitted in lieu of the bonds required to be filed for various purposes (such as provisional assessment, warehousing of goods etc.) under the Customs Act, 1962 (‘Customs Act’). This relaxation will apply to Government/public sector undertakings, manufacturer/actual user importer, authorised economic operators, status holder, and importers availing warehouse facilities. The aforesaid relaxation is applicable till 30 April 2020, upon fulfilment of prescribed conditions which, inter alia, include the following:

  • The undertaking has to be on the letterhead of the Importer Exporter Code (‘IEC’) holder, duly signed and submitted vide registered email ID of the IEC holder/their authorised customs broker.

  • The IEC holder must undertake to submit the proper bond in the prescribed format on notarised stamp paper on or before 7 May 2020.

  • This undertaking will not substitute the requirement of security prescribed under Customs Act, and the authorities may require some security to be furnished in specific cases.

2. Clearance of imports under Trade Agreements without original signed copy of Certificate of Origin (‘COO’): Trade Notice No. 59/2019-20 dated 28 March 2020, 62/2019-20 dated 6 April 2020 and Circular No. 18/2020-Customs dated 11 April 2020

  • The trade notices issued by DGFT and the customs circular prescribe as follows:

  • The original signed copy of the COO will be issued retrospectively, after the concerned Indian agencies resume operations post removal of lockdown.

  • Online applications for COO will be processed and a digitally signed copy will be provided to the applicant. However, the original signed copy of the COO will only be issued after the authorised agencies resume operation.

  • Fee of INR 600 will be payable for all COOs irrespective of whether they are retrospective or not.

  • The competent authorities of the countries with whom India has a trade agreement have been requested to accept the digitally signed COOs, and to provisionally clear the consignments at the preferential rate of duty until the circumstances on account of the COVID 19 pandemic normalise. Such provisional clearance may be allowed subject to execution of an undertaking or a bond.

  • Customs authorities have also been instructed to provisionally assess and clear import consignments on the basis of digitally signed copy or an unsigned copy of COO. The assessment will attain finality upon submission of the original COO by the importer. The provisional assessment and clearance may be subject to execution of an undertaking or a bond.

3. Electronic Communication of PDF based gate pass (‘e-Gate pass’) and electronic Out of Charge copy of Bill of Entry (‘e-OoC copy of BoE’) to custom brokers/ importers: Circular No. 19/2020-Customs dated 13 April 2020

In order to facilitate and expedite customs clearance and to make it more contactless, CBIC has decided to enable electronic communication of PDF based e-OoC copy of BoE and e-Gate pass to the importers/ customs brokers w.e.f. 15 April 2020. All custodians are required to register themselves on ICEGATE to ensure that the potential benefits can be availed across the Customs ecosystem.

4. Manner of Continuation of Merchandise Exports from India Scheme (‘MEIS’) for shipments exported on or after 01 April 2020 and Introduction of the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme: Trade Notice no. 3/2020-21 dated 15 April 2020

The RoDTEP scheme has been approved by the Cabinet and will replace the existing MEIS scheme. Further, in view of the extension of FTP 2015-20 till 31 March 2021, the benefits for goods listed in MEIS schedule has been extended till 31 December 2020. It has also been clarified that as and when any goods from MEIS schedule are notified under RoDTEP, the same will no longer be eligible for benefit under MEIS. Detailed operational framework of RoDTEP will be separately notified.

5. Special refund and drawback disposal drive: Instruction No. 03/2020-Customs dated 9 April 2020

CBIC has instructed the concerned officers to expedite processing of all pending Customs refund and drawback claims. This special drive shall be effective till 30 April 2020, and shall be applicable to all refund and drawback claims pending for disposal as on 07 April 2020.

6. Clarification in respect of certain challenges faced by registered persons in the implementation of provisions of GST Law: Circular No. 137/07/2020-GST dated 13 April 2020

  • Advances received under a service contract which is cancelled subsequently: CBIC has clarified that those service contracts in respect of which advance payment was received but such contract subsequently got cancelled, and the taxpayer has issued invoice as well as deposited tax on such contracts, a credit note will have to be issued for adjustment of tax by declaring such credit note in the GST return for the month during which it was issued. However, in case there is no output liability against which a credit note can be adjusted, refund of tax paid can be claimed under “Excess payment of tax, if any”. Similarly, in cases where a receipt voucher was issued on receipt of advance, a refund voucher will have to be issued and refund application for such GST paid on advance can be filed in FORM GST RFD-01 under the category “Refund of excess payment of tax”.

  • Goods supplied under an invoice which is subsequently returned: A credit note will have to be issued for adjustment of tax by declaring the same in the return for the month during which such credit note was issued. However, in case there is no output liability against which a credit note can be adjusted, refund of tax paid can be claimed under “Excess payment of tax, if any”.

  • Time limit for filing of Letter of Undertaking (‘LUT’) for the financial year 2020-21: The time limit for filing the LUT in respect of exports to be made after 1 April 2020 has been extended till 30 June 2020. It has been further clarified that exporters may continue to export without payment of IGST under the existing LUT pertaining to financial year 2019-20.

  • Due date for furnishing FORM GSTR-7 (TDS statement): Tax deducted for period from 20 March 2020 to 29 June 2020 can be deposited till 30 June 2020. Further, no interest will be leviable if such tax deducted is deposited by 30 June 2020.

  • Due date for filing a refund claim: Application for submission of refund claims due to be filed by 31 March 2020, is extended till 30 June 2020.
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