RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

The latest monetary policy of RBI announced on 7^th December, 2021 is on a positive note wherein RBI has decided to continue with the accommodative stance as expected, with no change in repo and reverse repo rates. Despite Omicron threat and other risk factors evolving globally…there is no change in the growth and inflation projections of the RBI for the current fiscal despite changes in the macroeconomic scenario. That is indeed a positive sign.

Activities in various segments of economy have crossed pre-pandemic levels, but in certain key segments like private investment, private consumption and a few other sectors, which are very critical for growth of GDP, it is still lagging behind from pre-pandemic levels. The economy is facing several headwinds, emanating from mostly international market factors in terms of financial market volatility, volatility in crude prices, supply side bottlenecks like container shortages and shipping charges and shortages of key inputs like semi-conductors. It has projected a GDP growth of 9.5% for financial year 2022. RBI has focused on sustaining economic revival in the back drop of inflation.

Fitch has cut India’s GDP growth forecast for financial year 2022 to 8.4% from 8.7%. GDP growth momentum has been predicted to peak in financial year 2023 at 10.3% led by consumer demand and easing out of supply disruptions.

According to latest IIP data, industrial production growth has slowed down to 3.2% in October, 2021, lowest in last 8 months. However, mining sector grew @ 11.4% in October compared to 8.6% in September. Manufacturing grew by 2% only against 3% in September, 2021. India’s economic recovery may strengthen further in H2 of current fiscal owing to upbeat market sentiment, better exports recovery driven bank and government policies, vaccination efforts and so on. Though there is a concern of Omicron variant of corona, trends suggest that it may not be too severe.

Chairman of PM’s economic Advisory council (PM – EAC) has given an idea to set up a council like GST Council to discuss expenditure reforms at all levels – Union, States, UTs and local bodies level.

The GST Council’s next meeting is expected to be held in December, 2021 itself, last one for the current calendar. Apart from rates rationalization, taxation of goods like ice-cream and consideration of report of Group of Ministers, it may discuss issue of compensation cess and widening the scope of GST.

GST collections have shown a steady growth over time, even after Covid. In most of the cases, month-wise GST collection in 2021 has been higher than that of 2019.

On GST compensation to states / UTs, a sum of over ₹ 37000 crores is yet to be paid for financial year 2021. It is fact that economic impact of Covid has resulted in higher compensation to states / UTs due to lower GST and Cess collection.

CBIC has extended the term of National Anti-profiteering Authority by one more year till November, 2022, i.e. a total of five years so far. It also notified few changes in form GST DRC-03 vide Notification No. 37/2021-Central Tax dated 01.12.2021.

Mr. Vivek Johri, IRS has taken over as new Chairman of CBIC w.e.f. 01.12.2021. In his first communication to CBIC officers recently, he has invited suggestions, ideas and innovations on any area of work, directly with the Board. A new premises of NACIN in Andhra Pradesh is also on the anvil now. His vision for CBIC is to be one where each one is adequately equipped, empowered and eager to give their best, so as to provide an efficient and friendly tax administration driven by technology, innovation and passion.

In its commitment to trade facilitation and ease of doing business, a revamped tax information portal was launched on the 7th of December, 2021. The portal serves as a repository of updated information pertaining to Customs, GST, Central Excise and the erstwhile Service Tax Laws and is intended as a handy tool for both taxpayers as well as departmental officers.

The interesting advance rulings in GST continue to pour in, viz, baby wipes to be taxed @ 18%, notice pay taxable, canteen services to be valued under Rule 28 of CGST Rules considering employer employee as related parties, car seats taxable @28%, composite services in health care, taxability of sale of developed plots, residential societies to pay tax on whole amount if exceeds ₹ 7500 pm and so on.

National Anti-profiteering Authority – Term extended

• CBIC has extended the tenure of National Anti-profiteering (NAA) by one more year, i.e. for fifth year
• Necessary amendments have been made in Rule 137 of CGST Rules, 2017 to the effect that tenure of NAA shall be for a period of five years as per amendment made w.e.f. 30.11.2021 vide CGST (9^th Amendment) Rules, 2021.
• This, NAA shall be functional for one more year w.e.f. 30.11.2021

(Source: Notification No. 37/2021-Central Tax dated 01.12.2021)

Changes made in GST DRC-03

Following changes have been made in GST-DRC-03 form vide CGST Rules (9^th Amendment) Rules, 2021:

• In the heading, after the words “or statement”, the words, letters and figures “or intimation of tax ascertained through FORM GST DRC-01A” has been inserted.
• Against item 3, in column (3), for the word and letters “Audit, investigation, voluntary, SCN, annual return, reconciliation statement, others (specify)”, the words, letters, figures and brackets “Audit, inspection or investigation, voluntary, SCN, annual return, reconciliation statement, scrutiny, intimation of tax ascertained through FORM GST DRC- 01A, Mismatch (Form GSTR-1 and Form GSTR-3B), Mismatch (Form GSTR-2B and Form GSTR-3B), others (specify)” has been substituted.
• Against item 5, in column (1), after the word and figures “within 30 days of its issue”, the words, letters, figures and brackets “, scrutiny, intimation of tax ascertained through Form GST DRC-01A, audit, inspection or investigation, others (specify)” have been inserted.
• These amendments are effective from 1^st December, 2021

(Source: Notification No. 37/2021-Central Tax dated 01.12.2021)

New functionalities on GST portal

GSTN has made new functionalities available on the portal in November, 2021, which relate to registration, return, refund, appeal etc. Following are some of them:

1. Registration

• Facility to withdraw their application for cancellation of registration, filed in Form REG-16, provided no action has been initiated by the tax officer against their application.
• Now the effective date of suspension of a taxpayer is also displayed on the Portal when his/her profile is accessed using "Search Taxpayer" functionality.

2. EVC facility

• Earlier all taxpayers registered as Companies were mandatorily required to use DSC for all online processes on the GST Portal. Now, the facility of using EVC, in addition to DSC, has been extended to such taxpayers.

3. Refunds

• The text in the undertaking form to be submitted by the taxpayer for issuance of From PMT 03 by proper officer has been amended to include both, credit and cash ledgers for enabling re-credit of inadmissible ITC to respective ledgers.

4. Appeals

• Applicant is now allowed to file Appeal for interest on delayed grant of refund
• The earlier validation on value of the Interest and Penalty amounts to not exceed the claimed amount/amount in the original order, has been removed from the Appeal Form APL-01.

5. Enforcement

• In case an order/ rectification order is issued in Form GST MOV09/11, the description in the liability ledger has now been updated to indicate the Demand Type.
• For cases where the Tax Officer rectifies the demand order (Form GST DRC-07) or issues Rectification/ Withdrawal order (Form GST DRC-08) in transit cases, following functionality has been enabled for the Tax-payers:

• Orders in Forms MOV09/11 have been provided with a hyperlink "Request for rectification", by clicking which, the details of relevant order will get auto populated and the taxpayer will be able to choose the reason for rectification and also enter explanatory text against each selected reason, upload attachments, if needed, verify and submit the same.

6. Recovery

•  In view of Notification No. 03/2019-CT (Rate), dated 29.03.2019, which, inter alia, provides for the registered person to file an application in FORM GST DRC-20, seeking extension of time for the payment of taxes or any amount due or for allowing payment of such taxes or amount in instalments in accordance with the provisions of section 80.
• Notification No. 3/2019-CT also empowers the Commissioner to issue an order in FORM GST DRC- 21, allowing the taxable person further time to make payment and/or to pay the amount in monthly instalments, not exceeding twenty-four, as he may deem fit.
• The taxpayers will now be able to file an application seeking extension of time for payment or request for allowing payment in instalments provided the demand is not less than ₹ 25,000.

(Source: GSTN dated 01.12.2021)

Import of Sajji Khar/ Pappad Khar

CBIC has clarified that imported consignments of Sajji Khar/Papad Khar does not require product approval under FSS (Approval of non-specified food and food ingredients) Regulations, 2017 and these may be considered as “food not specified” till standards are notified by FSSAI. The imported consignments shall be tested as per the standards for “food not specified” including the standards for heavy metals prescribed under FSS (Contaminants, Toxins and residues) Regulations, 2011.

(Source: Customs Order / Instruction No. 26/2021-Customs dated 01.12.2021 issued by CBIC, Ministry of Finance)