December 9, 2023

The Assistant Commissioner of State Tax (1),

Audit Cell, Division-12,

Gandhidham, Gujarat

Subject: Reply to Notice of intimating discrepancies found in return/ books after audit for time
period Apr-2018 to March-2019

Dear Sir,

This is in reference to your notice dated 05.12.2023, on the subject matter wherein you have asked
for the clarifications on various observations noticed during the course of audit of books/ GST returns
filed by us during the year 2018-19.

In this context, our point-wise reply is as under:

1. Mismatch of turnover shown in GSTR 3B, GSTR-1 and GSTR 9

Value in Rs.
Particulars Turnover as per Remarks
Notice
As per GSTR 3B 4467,99,23,387
As per GSTR 1 4437,31,98,006 Please refer Annexure-1, for
As per GSTR 9 4479,58,28,210 detailed reconciliation

A detailed reconciliation has been provided in Annexure-1 above, for your kind reference please.

2. Mismatch of Zero Rated Supply turnover shown in GSTR 3B, GSTR-1 and GSTR 9

Value in Rs.
Particulars Turnover as Tax Remarks
per Notice IGST

As per GSTR 3B 1735,05,26,595 2,11,605 Please refer Annexure-1, for detailed

As per GSTR 1 1744,43,25,149 24,74,39 reconciliation
2
As per GSTR 9 1743,42,90,583 2,11,605

3. Mismatch in Nil Rated Supply, Exempted and Non GST Supply.

Value in Rs.
Particulars Turnover as per Remarks
Notice
As per GSTR 3B 1,14,67,791/-
As per GSTR 1 3,83,04,343/- Please refer Annexure-2
As per GSTR 9 65,57,89,614/-
To avoid the ambiguity that why GST is not payable on such supplies of goods/ service, some of are
explained hereunder:

i. Interest Income- Fixed Deposit/ Loans and advances/ Interest from Others

We would like to submit that the Explanation 1 to Sub-Rule 5 of Rule 43 of CGST Rules, 2017,
specifically states that for the purposes of rule 42 and this rule, it is hereby clarified that the aggregate
value of exempt supplies shall exclude the value of services by way of accepting deposits, extending
loans or advances in so far as the consideration is represented by way of interest or discount, except
in case of a banking company or a financial institution including a non-banking financial company,
engaged in supplying services by way of accepting deposits, extending loans or advances.

The relevant portion of said explanation1 of Sub Rule 5 of Rule 43 (5) of CGST Rules, 2017 is
reproduced as under;

“Explanation 1:-For the purposes of rule 42 and this rule, it is hereby clarified that the
aggregate value of exempt supplies shall exclude: -
(a) [****]

(b) the value of services by way of accepting deposits, extending loans or advances in so far
as the consideration is represented by way of interest or discount, except in case of a
banking company or a financial institution including a non-banking financial company,
engaged in supplying services by way of accepting deposits, extending loans or advances;
and

(c) the value of supply of services by way of transportation of goods by a vessel from the
customs station of clearance in India to a place outside India.

(d) the value of supply of Duty Credit Scrips specified in the notification of the Government of
India, Ministry of Finance, Department of Revenue No. 35/2017-Central Tax (Rate), dated
the 13th October 2017,

published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i),
vide number GSR 1284(E), dated the 13th October, 2017.”

From the above, it is very much clear that the value of Interest income would not form part of the
exempted turnover for apportionment of credit between taxable including zero-rated supplies and
exempt supplies. Hence no reversal of common ITC is applicable.

ii. Renting of Immoveable property to employees

In this case, the company has provided residential accommodation to its employees within the factory
premises, is exempted from payment of GST, therefore, no GST is payable. However, the exempted
turnover is being used for the purpose of proportionate reversal of ITC on exempted supply.

iii. Duty Credit Scrips- Merchandise Export Incentive Scheme (MEIS)

MEIS license is covered under (Duty credit scrips) HSN4907 and exempted from 13.10.2017 under
S.No.122A, it comes under HSN 4907.

Further, the value of duty scrips cannot be

2[ 13[ Explanation 1]:-For the purposes of rule 42 and this rule, it is hereby clarified that the
aggregate value of exempt supplies shall exclude: -
(a) ….
(b) the value of services by way of accepting deposits, extending loans or advances in so far as the
consideration is represented by way of interest or discount, except in case of a banking company or a
financial institution including a non-banking financial company, engaged in supplying services by way
of accepting deposits, extending loans or advances; and
(c) the value of supply of services by way of transportation of goods by a vessel from the customs
station of clearance in India to a place outside India.]
(d) the value of supply of Duty Credit Scrips specified in the notification of the Government of
India, Ministry of Finance, Department of Revenue No. 35/2017-Central Tax (Rate), dated
the 13th October, 2017,

From the clause “d” above, it is inferred that the value of MEIS income would not form part of the
exempted turnover for apportionment of credit between taxable including zero-rated supplies and
exempt supplies. Hence no reversal of common ITC is applicable.

4. Excess ITC claimed as compare to available ITC

It is submitted that there is no difference between ITC claimed in GSTR 3B during the financial year
2018-19 and amount reported in Annual return GSTR 9. It is only a presentation issue. You will
appreciate that during the financial year 2018-19, there was no mechanism available with the tax
payers to check the details of returns filed by the suppliers on Portal.

We would like to inform you that table 8B of GSTR 9, pertaining to “ITC claimed as per GSTR 3B”,
includes the ITC pertaining to 2017-18 and reported in GSTR 2A in 2017-18 itself However, in GSTR
3B it was claimed in 2018-19.

If the said amount i.e. pertaining to 2017-18 availed in 2018-19, amounting to Rs. 198,05,179/- as
IGST, Rs. 505,14,788/-each as CGST and SGST, is reduced from the table 8B of GSTR 9, there will
be no excess ITC claimed in 2018-19. The copy of final GSTR 9 for the financial year 2017-18, is
enclosed as Annexure-3. The same is tabulated as under:

As Per Notice As Per Jindal Saw

Particulars IGST CGST SGST IGST CGST SGST Remarks
ITC as per GSTR-2A 2,23,72,39,890 77,15,28,027 77,15,28,239 2,23,72,39,890 77,15,28,027 77,15,28,239 GSTR-2A
ITC claimed as per GSTR-3B 2,18,83,27,212 81,50,23,667 81,50,23,667 2,18,83,27,212 81,50,23,667 81,50,23,667 GSTR-3B
ITC on inward supplies (other than 2,89,23,102 55,54,013 55,54,013 1,98,05,179 5,05,14,788 5,05,14,788 Doc. Pertains to 2017-
imports and inward supplies liable to 18 But ITC Taken in
reverse charge but includes services 2018-19
received from SEZs) received during the
financial year but availed in the next 2,89,23,102 55,54,013 55,54,013 Doc. Pertains to 2018-
financial year up to specified period [Sec 19 But ITC Taken in
16(4)] 2019-20
Discrepancy 1,99,89,576 -4,90,49,654 -4,90,49,442 3,97,94,755 14,65,134 14,65,346

Invoice-wise detail, if required, the same will be provided at time of audit.

5. Mismatch in declaring tax liability in GSTR 1, GSTR 3B and GSTR 9

Particulars IGST CGST SGST Cess

As per GSTR-3B 551,89,59,626 115,77,22,395 115,77,22,395 1,26,91,876
As per GSTR-1 553,59,93,725 115,77,91,628 115,77,91,628 1,26,91,876
As per GSTR-9 553,36,31,588 115,77,22,329 115,77,22,329 1,26,91,876
Discrepancy -1,70,34,098 -69,233 -69,233 -

We have rightly discharged the tax liability for the financial year 2018-19, the same is tabulated as
under:

Table Reference Remarks Total IGST Total Total SGST/

CGST UTGST
9B - Credit / Debit GSTIN Portal taken positive 23,47,588
Notes (Registered) impact of Credit Notes issued in - -
the Month of April-18
10 - Amended Non considered of amendment - 60,201 60,201
B2C(Others) for calculation of tax liability
11B -Amendment of because its no value impact. - 9,036 9,036
Adjustment of Advances
9B - Credit / Debit Credit Note consider in GSTR3B 1,46,70,000 - -
Notes (Registered) March-20219 and Same is
uploaded in GSTR1 April-2019

1,70,17,588 69,237 69,237

From the above, it is inferred that there is no difference in tax liability, in GSTR 1 vs GSTR 3B vs
GSTR 9.

Further, as you are aware that during the year 2017-18 and 2018-19, while putting the Credit notes in
the respective table 9 of GSTR 1, according to accounting principles the effect of Credit Notes is in
nature reducing the tax liability but during the said period GSTN portal was taking reverse effect i.e.
 adding the tax liability instead of reducing, therefore, the credit note issued during the said period for
amounting to Rs. 11,73,794.14 to reduce the liability, it increased the liability, the effect of the same
got doubled i.e. Rs. 23,47,588/-.

Further, also, we had issued Credit Notes in the month of March, 2019, involving IGST Rs.
1,46,70,000/- for which the effect of the same was taken in GSTR 3B in the month of March, 2019
however, in GSTR 1, it was reported in April, 2019.

As regards difference of amounting to Rs. 69,237/- each as CGST and SGST, is nothing but you have
mistakenly considered the amendments made to the extent of correction of information and not on
value terms as shown in table 10 and table 11 of GSTR 1.

6. Adjustment in turnover shown in Table 5O of GSTR 9C for amounting to Rs.

193,98,60,090/-
The same is tabulated hereunder, along with our remarks against each entry

Adjustments under 5O of GSTR 9C

GL Description Amount (Rs.) Remarks

Liquidated Damages Received from Vendors 82,164 Recovery of expenses and shown in Consumption- Stores &
Spares, however, tax duly discharged. Supply considered under
GST but not considered income in Annual Financials.

Sale of Fixed Assets 7,02,741 Tax duly discharged. Supply considered under GST but not
considered income in Annual Financials. - Sale of Fixed Assets

Export Sales 1,61,78,42428 There are certain transactions which are in the nature of merely
related to financial transactions does not form part of GSTR 1,
such as export made outside India to Outside India merchant
trading, FOC sale (sample).
Discount & Rebate - Volume/ Trade W/O Cost 4,20,09,279 Trade Discount, not form part of GST turnover, therefore, not
Element shown in GSTR 1.
Sundry Balance Write off 68,19,319 Merely book entry.
Domestic Sales - Manual Posting 20,00,37,745 Provision reversed in books

MEIS in Hand- Mumbai Port 1,069.00 Turnover considered as "Exempted Supply" under GST but not
considered as income in the Annual Financial Statements

MEIS In Hand-Mundra Port 91,14,260.30 Turnover considered as "Exempted Supply" under GST but not
considered as income in the Annual Financial Statements

Sale of Fixed Assets 1,52,119.00 Turnover considered as "Exempted Supply" under GST but not
considered as income in the Annual Financial Statements

Canteen Recovery 6,30,98,147.71 Turnover considered as "Supply" under GST but not considered
as income in the Annual Financial Statements

Difference in turnover due to rounding off 816.56

Total 1,93,98,60,089.62

7. Details of inward supplies where tax is paid under Reverse Charge Mechanism (RCM)
We have discharged the GST liability under RCM as the details enclosed as Annexure-p4, on the
value of services received under RCM during the financial year 2018-19, on which GST liability under
RCM.

8. Verification of ITC availed on Input Service Distributor (ISD)

In this context, it is submitted that our corporate office at Delhi, receives various centralized input
services pertaining to branches/ factories such as processing charges related to loans from Banks,
Insurances services goods/ capital goods/ plant& machinery/ stocks/ transit insurance etc., for which
Head Office takes the ITC and transfer the ITC under ISD mechanism.

Detailed working of transfer of ITC through ISD invoices, is enclosed as Annexure-5, for your ready
reference please. Working methodology and the sample copy of invoices, are enclosed as Annexure-
6.

9. Verification of Import of services

It is submitted that during the financial year 2018-19, we have discharged GST liability amounting to
Rs. 19,96,90,132/- under reverse charge mechanism on import of service. However, we have
inadvertently reported amounting to Rs. 17,76,69,914/- in GSTR 3B as well as in GSTR 9 as import of
service and balance Rs. 2,20,20,218/- has been shown in normal RCM. Details of the same is
enclosed as Annexure- 7 & Annexure-8 respectively, for your ready reference please.

10. Input Tax Credit claimed on cancelled dealers

In this context, it is submitted we have checked and found that in some of the cases we have claimed
ITC wherein the suppliers have not filed their GSTR 3B returns and their GSTIN has also been
cancelled. The same are tabulated as under:
GSTIN of supplier Name of supplier Total Remarks GSTIN Status
Date of cancellation
24AAACO9798G1ZZ OPAL ASIA ( INDIA) PVT LTD 32,882 GSTR-3B NOT FILED BY VENDOR Cancelled 01/01/2018
24AANFA5354Q2ZW INTEGRATION ENGINEER & SAFETECH 3,783 GSTR-3B NOT FILED BY VENDOR Cancelled 01/01/2019
27AAECA0842R1ZD ALTAIR INDUSTRIAL TECHNOLOGIES PVT LTD 13,300 GSTR-3B NOT FILED BY VENDOR Cancelled 28/02/2018

Total 49,965

We have checked and found that in some of the cases we have claimed ITC wherein the suppliers
have filed their GSTR 3B returns and their GSTIN have been cancelled subsequently. However, in all
such cases we are entitled to claim the ITC, as we have fulfilled all the conditions of Section 16 of
CGST Act, 2017. The same is tabulated as under:
GSTIN of supplier Name of supplier Total Remarks GSTIN Status
Date of cancellation
24ADZPS9722P1ZA SHAH ENGINEERING WORKS 1,37,705 GSTR-3B FILED BY VENDOR Cancelled 01/08/2017
24AFSPC8520J1ZB BMC ENTERPRISE 3,449 GSTR-3B FILED BY VENDOR Cancelled 01/08/2018
Total 1,41,154
In one case, GST liability has been discharged under reverse charge mechanism, the same
is as under:

GSTIN of supplier Name of supplier Total Remarks GSTIN Status

Date of cancellation
24AAAFL2431J1ZP LALJI MULJI TRANSPORT CO 3,107 GST PAID ON RCM Cancelled 31/03/2018
Total 3,107

11 Clarification on ITC claimed on certain invoices issued by the suppliers’

We have check and a detailed statement has been prepared and against each supplier we have
specifically marked the ITC claimed, ITC not claimed and ITC partially claimed. The same is enclosed
as Annexure-9, for your kind reference please.

We are also enclosing the following information for your ready reference.

i. Copy of Balance Sheet

ii. Copy of Trail Balance
iii. Reconciliation of turnover
iv. Tax Audit Report in form 3CD

Hope the above is in order.

Thanking you,

Yours faithfully,
For Jindal Saw Limited

Authorized Signatory