RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

According to RBI study, the state of economy is overall strong with upbeat consumer and business confidence and upticks in several indicators – GST collection, export growth etc. However, the rising inflation is a reason to worry.  Even the Indian corporate sector is also optimistic and positive on economic growth in medium to long term. The Government expects GDP growth in the current fiscal to be 9.2%.

Economists of the country have voiced that any sharp fiscal correction should be avoided and focus should be on public investment in infrastructure to boost consumption and demand besides striving for consistency and stability in tax policies. According to RBI’s Financial Stability report, there appears to be a disconnect between the real economy and equity market.

States have asked from the Union Government that centre should increase its share of expenditure in centrally sponsored schemes, make higher borrowing limits for states unconditional, give direct income support in certain sectors etc. States have also demanded for further extension of compensation cess for five years 2027. The FM is in the process of holding pre-budget talks with State Finance Ministers.

The Ministry of Finance (MoF) has eased the spending norms for current quarter of 2021-22 to boost spending and expenditure but within the limits of revised estimates. MoF has also released advance installment of tax devolution to State Governments amounting to over ₹ 47500 crore. Presently, 41% of the taxes collected is devolved in 14 installments amount states during a year.

While there are no new Notifications or Circulars on GST issued by CBIC, recently, Maharashtra Government has issued guidelines on scrutiny parameters system or data related issues faced during the return scrutiny under GST.

All field formations have now initiated GST audits, seeking host of information and data. The audits may be mix of desk review and physical onsite audit.

The audit date already been extended, and Union Budget round the corner, there has been not much of activity from MOF. The Union Budget on 1st February, 2021 will be an event to watch for though not much of changes in GST are expected except some amendments which may be proposed in relation to tax credits, tax evasion etc.

Deactivation of non-updated IECs after 01.07.2020

• The DGFT has issued a Trade Notice to provide that all IECs which have not been updated after 01.07.2020 shall be de-activated with effect from 01.02.2022.
•  The concerned IEC holders are provided an opportunity to update their IEC in this interim period till 31.01.2022, failing which the given IECs shall be de-activated from 01.02.2022.
• Any IEC where an online updation application has been submitted but is pending with the DGFT RA for approval shall be excluded from the de-activation list. For IEC re-activation after 31.01.2022, the said IEC holder may navigate to the DGFT website and update their IEC online.
• The list of such IECs may be seen at DGFT Portal (https://www.dgft.gov.in/CP/?opt =IECDL).

[Source: DGFT Trade Notice 31/2021-22 dated 14.01.2022]

Chronology of Covid Limitation Developments

Following is the chronology of events in relation to Covid limitation:

• 23.03.2020 (Commencement of COVID pandemic) : SC extended limitation period w.e.f 15.03.2020 till further orders.  [IN RE : COGNIZANCE FOR EXTENSION OF LIMITATION - 2020 (5) TMI 418 - SC ORDER]
• 06.05.2020 : SC extended the limitation period for statutory provisions under Section 138 of the Negotiable Instruments Act & the Arbitration & Conciliation Act with effect from March 15, 2020 until further orders.  [IN RE : COGNIZANCE FOR EXTENSION OF LIMITATION - 2020 (5) TMI 671 - SC ORDER]
• 14.07.2020 : SC applied limitation extension to Section 29A and 23(4) of the Arbitration and Conciliation Act, 1996 and Section 12A of the Commercial Courts Act, 2015.
• 08.03.2021 (COVID wave reduced) : SC recalled limitation extension w.e.f 15.03.2021; excludes period from 15.03.2020 till 14.03.2021 from limitation.  [IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION - 2021 (3) TMI 497 - SC ORDER]
• 27.04.2021 (Surge of COVID second wave) : SC revived limitation extension by restoring order dated 23.03.2020; period from 14.03.2021 excluded from limitation until further orders [IN RE COGNIZANCE FOR EXTENSION OF LIMITATION - 2021 (5) TMI 564 - SC ORDER]
• 23.09.2021 (Covid cases reduced) : SC recalled limitation extension w.e.f 02.10.2021; period from 15.03.2020 till 02.10.2021 excluded from Covid limitation.  [IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION - 2021 (11) TMI 387 - SC ORDER]
• 10.01.2022 (Commencement of COVID third wave) : SC restored limitation extension; excludes period from 15.03.2020 till 28.02.2022 from limitation. [IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION - 2022 (1) TMI 385 - SC ORDER]

Recovery of Arrears in GST

• CBIC has issued consolidated guidelines for recovery and write-off of arrears in indirect taxes and customs
• There guidelines cover arrears under Customs Act, 1962, Central Excise Act, 1944, Service Tax (Finance Act, 1994) and CGST Act, 2017.
• It covers various categories of arrears- in litigation, recoverable, untraceable defaulters, settlement cases etc
• It prescribes detailed procedure for recovery of arrears.
• Arrears are the overdue payment of the amount of tax, interest, fine or penalty that is confirmed against a person who is liable to pay the same to the exchequer. It arises as a result of Order-in-Original, Order of Appellate forum, like the Commissioner Appeals / ADC/JC Appeals or the CESTAT and the Courts of law.
• The amount in the case under investigation, unconfirmed demands (i.e. Show Cause Notice, including those in Call Book), the Order-in-Original that has been set aside or remanded for de-novo adjudication by Appellate authority do not fall under the category of ‘arrears’.
• For recovery, the comprehensive provisions as provided in Chapter XV and XVI under CGST Act read with Chapter 18 of the CGST Rules, 2017 along with relevant circulars shall be referred to and followed.
• Accordingly, recovery of arrears under GST law shall be governed by sections 73 to  94 of CGST Act, 2017 and Rules 142 to 161 of CGST Rules, 2017.
• The responsibility to affect actual recovery will continue to vest with Jurisdictional Pr. Commissioners/Commissioners where the cause of arrears took place.

(Source: Circular No. 1081/02/2022-CX, F.No. 296/63/2020-CX9 dated 19.01.2022)

No GST on Sale of Plots by Developer – Advance Ruling

• Selling of plots of land with electricity poles, drains and approach roads etc are noting but sale of land only, more so when no buildings or structures are constructed.
• Roads, drains, poles etc developed by the seller are not transferred to the buyer of the sub-divided plots but used by all plot buyers and later transferred to local authority.
• This ruling is however, contrary to ruling given by AAR, Gujarat in Dipesh Anil Kumar Naik in 2020.

[Source: IN RE: M/S. SHANTILAL REAL ESTATE SERVICES - 2022 (1) TMI 659 - AUTHORITY FOR ADVANCE RULING, GOA]

Discussions to this article

[OmPrakash jain]

Sir,

What should be the actual correct position of GST on sale of Plots, in view of contradictory Advance Rulings.