Gst adv Natarajan /NEWS UPDATE07 . 0 –7 NO.. 202 52 GST Notifications – Explained Various notifications have been issued on 5th July 2022, to give effect to various recommendations made by the GST Council, in its 47th meeting. Notification 9/2022 Central Tax Dt. 05.07.2022. This notification fixes 5th July 2022 as the date from which the amendments made to CGST Act, 2017 vide Section 110 (c) and 111 of the Finance Act, 2022 shall come into effect.
Gst adv Natarajan
NEWS UPDATE NEWS UPDATE07 . 0 –7 NO.. 202 52 GST Notifications – Explained
Various notifications have been issued on 5th July 2022, to give effect to various recommendations made by the GST Council, in its 47th meeting.
Notification 9/2022 Central Tax Dt. 05.07.2022.
This notification fixes 5th July 2022 as the date from which the amendments made to CGST Act, 2017 vide Section 110 (c) and 111 of the Finance Act, 2022 shall come into effect.
Vide clause (c) of Section 110 of the FA, 2022, a new sub section (10) has been substituted in Section 49. As per this amended sub-section, the amount lying in the electronic cash ledger of a tax payer can be transferred to another registration of the same entity, having same PAN. This would be possible, only if the transferor unit is not having any outstanding tax liability.
Vide Section 111 of the FA, 2022, a new sub-section (3) has been introduced under Section 50 of the CGST Act, with retrospective effect from 01.07.2017, which is reproduced below.
“(3) Where the input tax credit has been wrongly availed and utilised, the registered person shall pay interest on such input tax credit wrongly availed and utilised, at such rate not exceeding twentyfour per cent as may be notified by the Government, on the recommendations of the Council, and the interest shall be calculated, in such manner as may be prescribed.
With this amendment it is now made clear that in case of wrong availment of ITC, interest is payable only if the wrongly availed credit is utilised. As the erstwhile sub-section (3) of Section 50, prescribed 24 % interest in certain circumstances, there was confusion about the rate of interest applicable in case of wrong availment of ITC. Now it is clear that the rate of interest is only 18 % p.a. A new rule 88B has also been introduced in CGST Rules, with regard to interest, which shall be explained later.
Though various other amendments have also been made in CGST Act, vide FA, 2022, such amendments have not yet been notified.
Notification 10/2022 Central Tax Dt. 05.07.2022.
This notification provides from exemption from filing of annual return in form GSTR-9 and GSTR-9A (for composition tax payers) for the financial year 2021-22, if the aggregate turnover in the said year is upto Rs.2 Crores.
Notification 11/2022 Central Tax Dt. 05.07.2022.
Composition taxpayers are required to file a Quarterly return in form CMP-08, before 18th of the succeeding month. For the quarter ending 30th June 2022, the due date for filing CMP-08 by the composition tax payer has been extended till 31/07/2022.
Notification 12/2022 Central Tax Dt. 05.07.2022.
GSTR-4 is a return to be filed by composition taxpayer, for every financial year. The due date for filing the same is 30th April of the succeeding year. If not filed within the due date, late fee as applicable under Section 47 of the CGST Act is payable. Vide sixth proviso to Notification 73/2017 Central Tax Dt. 29.12.2017 (as amended) the late fee for the FY 2021-22 was waived, if the return is filed upto 30th June 2022. Now this waiver is extended upto 28th July 2022.
Notification 13/2022 Central Tax Dt. 05.07.2022.
Section 73 deals with determination of tax liabilities, where no fraud, suppression, etc. are involved. Subsection (10) of Section 73 prescribes that any order for determination of tax liability under the said section has to be passed within 3 years from the due date for filing annual return for a year. The show cause notice has to be issued at least three months before the last date for passing the order.
As the due date for filing annual return for 2017-18 was extended upto 31.01.2020, any order for the year 2017-18, under section 73 has to be passed on or before 30.01.2023 and show cause notice should be issued on or before 30.10.2022. Now the time limit for passing order under Section 73 (10) for the year 201718 has been extended upto 30.09.2023. As a consequence, any show cause notice for the year 2017-18 under Section 73 can be issued on or before 30.06.2023.
As per section 73 (10) for recovery of any erroneously sanctioned refund, the order for recovery under section 73 shall be passed within three years from the date of sanction of erroneous refund. Now it has been provided that while computing the said period, the period between 01.03.2020 to 28.02.2022 shall be excluded.
For example, if an erroneous refund was sanctioned on 01.07.2018, the order for recovery of the same has to be passed on or before 30.06.2021. It may be noted that as on 28.02.2020 20 months are over and further 16 months are available. If we exclude the period from 01.03.2020 to 28.02.2022, a further period of 16 months would be available from 01.03.2022, i.e. the order can be passed upto 30.06.2023.
The period between 01.03.2020 to 28.02.2022 shall be excluded while computing the time period for filing the refund claims under sections 54 and 55 also.
For example, refund of ITC for the exports made on 31st July 2018 is required to be filed. The same shall be filed within two years from the date of export, i.e. on or before 30.07.2020. It may be noted that as on 28.02.2020, 19 months are over and further 5 months are available. If we exclude the period from 01.03.2020 to 28.02.2022, a further period of 5 months would be available from 01.03.2022, i.e. the refund can be claimed upto 30.07.2022.
Notification 14/2022 Central Tax Dt. 05.07.2022.
This notification makes various amendments in CGST Rules, 2017, which are explained below.
- Rule 21 A of the CGST Rules provides for suspension of registration of the taxpayer in certain circumstances, one of which being, failure to file returns. Now, by way of introducing second proviso under sub-rule (4) of Rule 21A, it has been provided that upon filing of all returns by the taxpayer, the suspension shall be deemed to be revoked.
- Explanation under Rule 43, which is relevant for both Rule 42 and 43, lists out certain cases, which shall be treated as exempt supply for the purposes of proportionate reversal of common ITC. To such list, Sale of Duty Credit Scrips has been added. So, sale of such scrips would not be treated as exempt supply and hence there would be no requirement for reveal of any common ITC.
- Certain categories of taxpayers are exempted from the provisions relating to E-invoicing. Clause (s) has been added to Rule 46, requiring such persons to make a declaration in this regard in their invoices.
- Sub-rule (4B) has been introduced in Rule 86. As per this sub-rule, if any erroneously sanctioned refund [export refund, inverted rate structure refund or refund of IGST paid on export, sanctioned in contravention of Rule 96 (10)] is paid back in cash, equivalent amount would be credited in the Electronic Credit Ledger, as at the time of claiming he refund, the said amount would have been debited from the Electronic Credit Ledger.
- UPI and IMPS have been added as options for making deposits into Electronic Cash Ledger, by amending Rule 87 (3).
- Consequent to notifying section 49 (10), sub-rule (14) has been introduced in Rule 87, prescribing the procedures for transfer of balance in Electronic Cash Ledger from one registration to another registration of the same entity.
- A new Rule 88B has been introduced with retrospective effect from 01.07.2017, prescribing the manner of calculation of interest under Section 50.
- As per sub-rule (1), if the Tax liability declared in the return is paid belatedly, i.e. if the return is filed belatedly, interest would be payable only on the cash portion of the liability.
- As per sub-rule (2), in all other cases (such as short payment of tax, non payment of tax, etc.) interest is payable from the due date for payment of such tax, till its payment. Let us assume that instead of paying tax @ 12 %, a taxpayer has paid tax @ 5 %. When the differential tax is paid later, notwithstanding the fact that he had enough ITC to pay the differential tax at the relevant point of time, interest would be payable from the due date for payment of tax till its actual payment.
- In case of wrong availment of ITC, interest would be payable only if the wrongly availed ITC is utilised.
- The wrongly availed credit is deemed to be utilised when the balance in Electronic Credit Ledger falls below the wrongly availed credit. For example if ITC of Rs.50,000 is availed wrongly in January 2022 and the closing balance of ITC in March 2022 GSTR 3 B return is Rs.20,000, Rs.30,000 of wrongly availed ITC is deemed to have been utilised in the month of March 2022.
- The manner of determination of date of utilisation of credit is also prescribed, which is explained below.
- Continuing with the above example, the utilisation of wrong ITC of Rs.30,000 would be the date of filing of GSTR 3B return or due date or the due date for filing the said return, whichever is earlier. In other words, if the return is filed beyond the due date, the date of utilisation of credit would be the due date for filing the return and the taxpayer cannot reduce the interest liability on utilisation of wrong credit, by delaying the filing of GSTR-3B.
- Apart from utilising the ITC for payment of tax through GSTR-3B, the ITC may be used for some other purposes also, such as reversal of ineligible credit, debiting of Electronic credit Ledger for claiming refund, etc. If the balance in Electronic credit ledger falls before the wrongly availed credit, as a result of utilisation of credit for such purposes, the date on which such debit is made, leading to the balance in Electronic Credit Ledger falling short of the amount of the wrongly availed ITC, such date of debit would be the date of utilisation of credit.
- As per second proviso to Rule 89 (1), in case of refund of ITC against supplies made to SEZ unit / SEZ developer, the “specified officer” of the SEZ zone shall certify the receipt of goods and services by SEZ unit / developer. Now, the term “specified officer” would also include “authorised officer” of the SEZ zone, who would be lower in rank than the “specified officer” and would be available in all SEZ.
- Though electricity is “goods” it is intangible and some of the conditions applicable for export of goods cannot be applied to electricity and hence certain special provisions have made for export of electricity.
- In sub-rule (4) of Rule 89 an Explanation has been added to the effect that the refund entitlement (refund of ITC on account of zero rated supplies), shall be calculated with reference to the FOB value of exports only. The legality of this Explanation is in doubt. The valuation of export goods is to be made only as per Section 15 of the CGST Act and in case of CIF exports, the CIF value would be the value as per Section 15. It is doubtful as to how FOB value can be considered as the value for exports.
- The Hon’ble Supreme Court, in its judgement in the case of UOI Vs VKC Footsteps, in the matter of refund on account of inverted rate structure, has directed the GST Council to look into the anomaly in the formula prescribed under Rule 89 (5) for computation of the refund entitlement. This argument was raised by G. Natarajan, Advocate of G N Law Associates. Now, GST Council
has accepted that there is an anomaly in the formula and amended the same. It may be noted that earlier, the formula was retrospectively amended from 01.07.2017 to restrict the refund only for inputs. It would have bene better if the present beneficial amendment was also made retrospective. The effect of this amendment is explained in the below table.
| S.No. | Description | As per old formula | As per new formula | ||
| (i) | (ii) | (iii) | (iv) | ||
| 1 | Value of supply of goods, attracting 5 % GST
(Turnover having inverted rate structure) |
Rs.50,00,000 | Rs.50,00,000 | ||
| 2 | Value of supply of goods, not having inverted rate structure (18 %) | Rs.50,00,000 | Rs.50,00,000 | ||
| 3 | Adjusted Total Turnover
(1)+(2) |
Rs.1,00,00,000 | Rs.1,00,00,000 | ||
| 4 | GST payable @ 5 % on turnover having inverted rate structure 5 % on (1) | Rs.2,50,000 | Rs.2,50,000 | ||
| 5 | GST payable @ 18 % on turnover not having
inverted rate structure |
Rs.9,00,000 | Rs.9,00,000 | ||
| 5 | ITC on inputs availed
during the tax period |
Rs.6,00,000 | Rs.6,00,000 | ||
| 6 | ITC on input services availed during the tax period | Rs.2,00,000 | Rs.2,00,000 | ||
| 7 | Net ITC | Rs.6,00,000 | Rs.6,00,000 | ||
| 8 | Refund entitlement as per the formula | Rs.6,00,000 X [Rs.50,00,000 /
Rs.1,00,00,000] minus Rs.2,50,000 Rs.50,000 |
Rs.6,00,000 X [Rs.50,00,000 /
Rs.1,00,00,000] minus [Rs.2,50,000 X 6,00,000 / Rs.8,00,000] = Rs.1,12,500 |
||
- Clause (b) of sub-rule (1) of Rule 96 is being substituted with retrospective effect from 01.07.2017. As per this provision, when there is a mismatch between the details furnished in GSTR-1 and in the shipping bills, the date of rectification of such mismatch would be considered as the date of filing refund claim. This will impact the refund entitlement on the ground of time bar.
- Clause (c) has been introduced in sub-rule (4) of Rule 96 whereby sanction of refund can be withheld by the department in case of “risky exporters”. Provisions are also made for transfer of the refund claim from the Customs Department to the jurisdictional GST authorities where any further verification is required. It has been provided that the date of such transmission shall be considered as the date of filing of the claim and this stipulation should only for computation the time limit for sanction.
- Certain changes made relating to the forms GSTR 3 B / GSTR 9 / GSTR 9C are not explained here.
For any doubts or clarifications on the above, reach out to us.
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