EXPLANATION OF CIRCULAR/NOTIFICATION ISSUED AFTER GST COUNCIL 48 MEETING
GOODS AND SERVICES TAX
Circular No. 183/15/2022-GST
Clarification to deal with difference in Input Tax Credit (ITC) availed in FORM GSTR-3B as compared to that detailed in FORM GSTR-2A for FY 2017-18 and 2018-19
Section 16 of the Central Goods and Services Tax Act, 2017 provides for eligibility and conditions for availing Input Tax Credit . During the initial period of implementation of GST, during the financial years 2017-18 and 2018-19, in many cases, the suppliers have failed to furnish the correct details of outward supplies in their FORM GSTR-1, which has led to certain deficiencies or discrepancies in FORM GSTR-2A of their recipients.
FORM GSTR-2A could not be made available to the taxpayers on the common portal during the initial stages of implementation of GST.
These are the circumstances due to this difference occurs.
Supplier has failed to file FORM GSTR-1
supplier has filed FORM GSTR-1 as well as return in FORM GSTR-3B for a tax period, but has failed to report a particular supply
supplier has wrongly reported the said supply as B2C supply, instead of B2B supply, in his FORM GSTR-1
Supplier has filed FORM GSTR-1 as well as return in FORM GSTR-3B for a tax period, but he has declared the supply with wrong GSTIN of the recipient
Verification Process:
The proper officer shall first seek the details from the registered person regarding all the invoices on which ITC has been availed by the registered person in his FORM GSTR 3B but which are not reflecting in his FORM GSTR 2A.
He shall then ascertain fulfilment of the following conditions of Section 16 of CGST Act in respect of the input tax credit availed on such invoices by the said registered person:
i) that he is in possession of a tax invoice or debit note issued by the supplier or such other tax paying documents;
ii) that he has received the goods or services or both;
iii) that he has made payment for the amount towards the value of supply, along with tax payable thereon, to the supplier.
In order to verify the condition of clause (c) of sub-section (2) of Section 16 of CGST Act that tax on the said supply has been paid by the supplier, the following action may be taken by the proper officer:
A. In case, where difference between the ITC claimed in FORM GSTR-3B and that available in FORM GSTR 2A of the registered person in respect of a supplier for the said financial year exceeds Rs 5 lakh, the proper officer shall ask the registered person to produce a certificate for the concerned supplier from the Chartered Accountant (CA) or the Cost Accountant (CMA), certifying that supplies in respect of the said invoices of supplier have actually been made by the supplier to the said registered person and the tax on such supplies has been paid by the said supplier in his return in FORM GSTR 3B. Certificate issued by CA or CMA shall contain UDIN.
B. In cases, where difference between the ITC claimed in FORM GSTR-3B and that available in FORM GSTR 2A of the registered person in respect of a supplier for the said financial year is upto Rs 5 lakh, the proper officer shall ask the claimant to produce a certificate from the concerned supplier to the effect that said supplies have actually been made by him to the said registered person and the tax on said supplies has been paid by the said supplier in his return in FORM GSTR 3B.
In case the Supplier has filed FORM GSTR-1 as well as return in FORM GSTR-3B for a tax period, but he has declared the supply with wrong GSTIN of the recipient The verification shall be conducted through a procedure shown above In addition, the proper officer of the actual recipient shall intimate the concerned jurisdictional tax authority of the registered person, whose GSTIN has been mentioned wrongly, that ITC on those transactions is required to be disallowed, if claimed by such recipients in their FORM GSTR-3B.
However, allowance of ITC to the actual recipient shall not depend on the completion of the action by the tax authority of such registered person, whose GSTIN has been mentioned wrongly, and such action will be pursued as an independent action.
Circular No. 184/16/2022-GST
Clarification on the entitlement of input tax credit where the place of supply is determined in terms of the proviso to sub-section (8) of section 12 of the Integrated Goods and Services Tax Act, 2017(supply of service for transportation of goods outside India)
sub-section (8) of section 12 of Integrated Goods and Services Tax Act, 2017 which provides for the place of supply of services by way of transportation of goods, including by mail or courier, where location of the supplier as well as the recipient of services is in India.
However, the proviso to the aforesaid sub-section which was inserted vide the Integrated Goods and Services Tax (Amendment) Act, 2018 w.e.f. 01.02.2019 provides that where the transportation of goods is to a place outside India, the place of supply of the said service shall be the place of destination of such goods. In such cases, as the place of supply of services is the concerned foreign destination and not the State where the recipient is registered under GST, doubts are being raised regarding the availability of input tax credit of the said services to the recipient located in India.
CLARIFICATIONS:
1. In case of supply of services by way of transportation of goods where the transportation of goods is to a place outside India, and where the supplier and recipient of the said supply of services are located in India, what would be the place of supply of the said services?
In such cases the place of supply is the concerned foreign destination.
2. Whether the supply of services will be treated as inter-State supply or intra-State supply?
It will be treated as inter-state supply
3. Whether the recipient of service of transportation of goods would be eligible to avail input tax credit in respect of the said input service of transportation of goods?
The recipient of service of transportation of goods shall be eligible to avail input tax credit in respect of the IGST charged by the supplier, subject to the fulfilment of other conditions laid down in section 16 and 17 of the CGST Act.
4. what state code has to be mentioned by the supplier of the said service of transportation of goods, where the transportation of goods is to a place outside India, while reporting the said supply in FORM GSTR-1?
Supplier shall select service code as ‘96-Foreign Country’ from the list of codes in the dropdown menu available on the portal in FORM GSTR-1.
Circular No. 185/17/2022-GST
Clarification with regard to applicability of provisions of section 75(2) of Central Goods and Services Tax Act, 2017 and its effect on limitation
sub-section (2) of section 75 of Central Goods and Services Tax Act, 2017 which provides that in cases where the appellate authority or appellate tribunal or court concludes that the notice issued by proper officer under sub-section (1) of section 74 is not sustainable for reason that the charges of fraud or any willful-misstatement or suppression of facts to evade tax have not been established against the person to whom such notice was issued, then the proper officer shall determine the tax payable by the noticee, deeming as if the notice was issued under sub-section (1) of section 73.
Doubts have been raised by the field formations seeking clarification regarding the time limit within which the proper officer is required to re-determine the amount of tax payable considering notice to be issued under sub-section (1) of section 73, specially in cases where
Time limit for issuance of order as per sub-section (10) of section 73 has already been over.
Regarding the methodology for computation of such amount payable by the noticee, deeming the notice to be issued under sub-section (1) of section 73.
What would be the time period for re-determination of the tax, interest and penalty payable by the noticee in such cases?
According to sub-section (2) of section 75 of the said Act, the proper officer is required to issue the order of redetermination of tax, interest and penalty payable within the time limit as specified in under sub-section (3) of section 75 of the said Act, i.e. within a period of two years from the date of communication of the said direction by appellate authority or appellate tribunal or the court, as the case may be.
How the amount payable by the noticee?
Where the notice u/s 74 was issued within 2 years and 9 months from the due date of furnishing of annual return for the respective financial year, the amount shall be determined as amount of tax short paid or not paid, or input tax credit wrongly availed or utilized, along with interest and penalty payable, in terms of section 73 of CGST Act relating to such financial years can be re-determined.
In case, where the show cause notice under sub-section (1) of section 74 was issued for beyond a period of 2 years and 9 months from the due date of furnishing of the annual return for the financial year to which such demand relates to, the entire proceeding shall have to be dropped, being hit by the limitation of time as specified in section 73.
Where the show cause notice under subsection (1) of section 74 was issued for multiple financial years, and where notice had been issued before the expiry of the time period as per sub-section (2) of section 73 for one financial year but after the expiry of the said due date for the other financial years, then the amount payable in terms of section 73 shall be re-determined only in respect of that financial year for which show cause notice was issued before the expiry of the time period as specified in sub-section (2) of section 73.
Circular No. 186/18/2022-GST
Clarification with respect to GST levy on No-Claim Bonus and Clarification on applicability of E-invoicing
1. Whether the deduction on account of No Claim Bonus allowed by the insurance company from the insurance premium payable by the insured, can be considered as consideration for the supply provided by the insured to the insurance company, for agreeing to the obligation to refrain from the act of lodging insurance claim during the previous year(s)?
It is, therefore, clarified that No Claim Bonus (NCB) is a permissible deduction under clause (a) of sub-section (3) of section 15 of the CGST Act for the purpose of calculation of value of supply of the insurance services provided by the insurance company to the insured.
Accordingly, where the deduction on account of No claim bonus is provided in the invoice issued by the insurer to the insured, GST shall be leviable on actual insurance premium amount, payable by the policy holders to the insurer, after deduction of No Claim Bonus mentioned on the invoice.
2. Whether the exemption from mandatory generation of einvoices in terms of Notification No. 13/2020- Central Tax, is available for the entity as whole, or whether the same is available only in respect of certain supplies made by the said entity?
In terms of Notification No. 13/2020-Central Tax dated 21st March, 2020, as amended, certain entities/sectors have been exempted from mandatory generation of e-invoices as per subrule (4) of rule 48 of Central Goods and Services Tax Rules, 2017. It is hereby clarified that the said exemption from generation of e-invoices is for the entity as a whole and is not restricted by the nature of supply being made by the said entity.
Circular No. 187/19/2022-GST
Clarification regarding the treatment of statutory dues under GST law in respect of the taxpayers for whom the proceedings have been finalised under Insolvency and Bankruptcy Code, 2016.
Representations have been received from the trade as well as tax authorities, seeking clarification regarding the modalities for implementation of the order of the adjudicating authority under Insolvency and Bankruptcy Code, 2016 with respect to demand for recovery against such corporate debtor under Central Goods and Services Tax Act, 2017 as well under the existing laws and the treatment of such statutory dues under CGST Act and existing laws, after finalization of the proceedings under IBC.
As per Section 84 of CGST Act, if the government dues against any person under CGST Act are reduced as a result of any appeal, revision or other proceedings in respect of such government dues, then an intimation for such reduction of government dues has to be given by the Commissioner (FORM GST DRC-25) to such person and to the appropriate authority with whom the recovery proceedings are pending. Further, recovery proceedings can be continued in relation to such reduced amount of government dues.
The word ‘other proceedings’ is not defined in CGST Act. It is to be mentioned that the adjudicating authorities and appellate authorities under IBC are quasi-judicial authorities constituted to deal with civil disputes pertaining to insolvency and bankruptcy. For instance, under IBC, NCLT serves as an adjudicating authority for insolvency proceedings which are initiated on application from any stakeholder of the entity like the firm, creditors, debtors, employees etc. and passes an order approving the resolution plan. As the proceedings conducted under IBC also adjudicate the government dues pending under the CGST Act or under existing laws against the corporate debtor, the same appear to be covered under the term ‘other proceedings’ in Section 84 of CGST Act.
Circular No. 188/20/2022-GST
Prescribing manner of filing an application for refund by unregistered persons
Instances have been brought to the notice where the unregistered buyers, who had entered into an agreement/ contract with a builder for supply of services of construction of flats/ building, etc. and had paid the amount towards consideration for such service, either fully or partially, along with applicable tax, had to get the said contract/ agreement cancelled subsequently due to non-completion or delay in construction activity in time or any other reasons. In a number of such cases, the period for issuance of credit note on account of such cancellation of service under the provisions of section 34 of the Central Goods and Service Tax Act, 2017 may already have got expired by that time. In such cases, the supplier may refund the amount to the buyer, after deducting the amount of tax collected by him from the buyer.
Similar situation may arise in cases of long-term insurance policies where premium for the entire period of term of policy is paid upfront along with applicable GST and the policy is subsequently required to be terminated prematurely due to some reasons.
CLARIFICATIONS:
In order to enable such unregistered person to file application for refund under subsection (1) of section 54 a new functionality has been made available on the common portal which allows unregistered persons to take a temporary registration and apply for refund under the category ‘Refund for Unregistered person’.
1. The unregistered person, who wants to file an application for refund under sub-section (1) of section 54 of CGST Act shall obtain a temporary registration on the common portal using his Permanent Account Number (PAN). While doing so, the unregistered person shall select the same state/UT where his/her supplier, in respect of whose invoice refund is to be claimed, is registered. Thereafter, the unregistered person would be required to undergo Aadhaar authentication in terms of provisions of rule 10B of the CGST Rules. Further, the unregistered person would be required to enter his bank account details in which he seeks to obtain the refund of the amount claimed. The applicant shall provide the details of the bank account which is in his name and has been obtained on his PAN.
2. The application for refund shall be filed in FORM GST RFD-01 on the common portal under the category ‘Refund for unregistered person’. The applicant shall upload statement 8 (in pdf format) and all the requisite documents as per the provisions of sub-rule (2) of rule 89 of the CGST Rules. The refund amount claimed shall not exceed the total amount of tax declared on the invoices in respect of which refund is being claimed. Further, the applicant shall also upload the certificate issued by the supplier in terms of clause (kb) of sub-rule (2) of rule 89 of the CGST Rules along with the refund application. The applicant shall also upload any other document(s) to support his claim that he has paid and borne the incidence of tax and that the said amount is refundable to him.
3. Separate applications for refund have to be filed in respect of invoices issued by different suppliers. Further, where the suppliers, in respect of whose invoices refund is to be claimed, are registered in different States/UTs, the applicant shall obtain temporary registration in the each of the concerned States/UTs where the said supplier are registered.
4. Relevant date for filing of refund: date of issuance of letter of cancellation of the contract/ agreement for supply by the supplier will be considered as the date of receipt of the services by the applicant.
5. Minimum refund amount: No refund shall be claimed if the amount is less than one thousand rupees.(Sec. 54(14))
6. The proper officer shall process the refund claim filed by the unregistered person in a manner similar to other RFD-01 claims. The proper officer shall scrutinize the application with respect to completeness and eligibility of the refund claim to his satisfaction and issue the refund sanction order in FORM GST RFD-06 accordingly. The proper officer shall also upload a detailed speaking order along with the refund sanction order in FORM GST RFD-06.
7. In cases where the amount paid back by the supplier to the unregistered person on cancellation/termination of agreement/contract for supply of services is less than amount paid by such unregistered person to the supplier, only the proportionate amount of tax involved in such amount paid back shall be refunded to the unregistered person.
Via Notification no. 26/2022 Central Tax dated 26 December, 2022. two clauses have been inserted in rule 89(2) of the CGST Rules, 2017
Clause (ka): that the person applying for refund shall furnish the following;
i. Details of Invoice
ii. Details of payment
iii. Proof of making such payment to the supplier
iv. The copy of agreement or contract
v. The letter issued by the supplier for cancellation or termination of such agreement or contract along with proof
Clause (kb): A certificate is required to be issued by the supplier which certifies the following;
i. That the tax has been paid in respect of such invoice on which refund is being claimed by the applicant
ii. That he has not adjusted the tax amount involved in these invoices against his tax liability by issuing credit note
iii. That he has not claimed and will not claim refund of the amount of tax involved in respect of the said invoice
Also, a proviso has been inserted in clause (m) of Rule 89(2):
Clause (m) requires the certificate from a chartered accountant or a cost accountant where the amount of refund claim exceeds Rs 2 lakhs.
However, the proviso has been inserted providing that the certificate will not be required where the refund has been claimed by the unregistered person who has borne the incidence of tax.
NOTIFICATION NO. 26/2022 - Central Tax
Amendments in Rule 8 – Application for Registration based on PAN Linked phone number and email id.
To stop the misuse of PAN number of any other person using for taking registration.
Till now, sub-rule 1 of rule 8 required a person to mention the PAN number, phone number and email id of the applicant in the registration form REG-01 (Part A)
As per sub-rule 2, clause (a) requires for verification of PAN with the CBDT database and clause (b) and (c ) require verification of phone number and email id respectively through One-Time Password.
Now, after the amendment in sub-rule 1, REG 01 will not ask for phone number and email id. Phone number and email id shall be auto-populated from the CBDT database.
Substitution of sub-rule 4A And rule 9 is for Biometric Aadhaar Based Authentication and Risk Based Physical Verification.
Insertion of Sub rule 4B is for Central Govt. by notification specify the States or Union territories wherein the provisions of sub-rule (4A) shall not apply.
Amendment in Rule 12(3) – For cancellation of registration taken for the purpose of deduction tax under section 51 or collection tax under section 52.
At present the department can cancel the registration now the taxpayer is also eligible to make cancel the registration.
Amendment in Rule 37(1) – Reversal of ITC in case where the payment is not made to the supplier within 180 days.
Rule 37A is inserted under the CGST Rules to provide for the mechanism and time limit of reversal of ITC by the recipient where tax is not paid by the supplier to the Government.
Rule 46 Requirement in Tax Invoice related to supplies made through ECO and OIDAR
Insertion of proviso in Rule 46A : Provided that the said single "invoice-cum-bill of supply" shall contain the particulars as specified under rule 46 or rule 54, as the case may be, and rule 49.Details under invoice cum Bill of Supply.
Insertion of proviso to Rule 87(8) - Up-dation of CIN in case where bank fails to communicate it to the common portal
New Rule 88C and Form GST DRC-01B in the CGST Rules for issuing intimation to the taxpayer for the differences between liability reported in Form GSTR-1 and in Form GSTR-3B, where such difference exceeds a specified amount and/ or percentage
Rule 108 and Rule 109 of the CGST Rules are amended to provide clarity on the requirement of submission of the certified copy of the order appealed against and the issuance of final acknowledgement by the appellate authority
New Rule 109C and new Form GST APL-01/03W to provide the facility for withdrawal of an application of appeal up to a certain specified stage.
E Way Bill is required for the person supplying Imitation Jewellery.
GST RATE NOTIFICATIONS:
NOTIFICATION No. 12/2022-Central Tax (Rate)
| |
|
| Ethyl alcohol supplied to Oil Marketing Companies or Petroleum refineries for blending with motor spirit (petrol)”; |
5% |
| “Bran, sharps and other residues, whether or not in the form of pellets, derived from the sifting, milling or other working of cereals or of leguminous plants [other than aquatic feed including shrimp feed and prawn feed, poultry feed and cattle feed, including grass, hay and straw, supplement and additives, husk of pulses including chilka, concentrates including chuni or churi, khanda, wheat bran, de-oiled cake]” |
5% |
| Fruit pulp or fruit juice based drinks [other than Carbonated Beverages of Fruit Drink or Carbonated Beverages with Fruit Juice]”; |
12% |
| Mathematical boxes, geometry boxes and colour boxes” |
12% |
| “Ethyl alcohol and other spirits, denatured, of any strength [other than ethyl alcohol supplied to Oil Marketing Companies or Petroleum refineries for blending with motor spirit (petrol)]”. |
18% |
NOTIFICATION No. 13/2022-Central Tax (Rate)
| “Aquatic feed including shrimp feed and prawn feed, poultry feed and cattle feed, including grass, hay and straw, supplement and additives, wheat bran and de-oiled cake [other than rice bran]”; |
0% |
| Husk of pulses including Chilka, Concentrates including chuni or churi, Khanda”. |
0% |
Notification No. 14/2022-Central Tax (Rate)
Mentha Oil was under the RCM. Mentha arvensis also included under the RCM.
Notification No. 15/2022-Central Tax (Rate)
No GST is payable where the residential dwelling is rented to a registered person in its personal capacity (not for the business use) for the use of his or her own residence.
