BUDGETARY CHANGES IN GST PROVISIONS

[Mr. M. GOVINDARAJAN]

Introduction

The Finance Bill, 2022 submitted by the Finance Minister along with her budget speech brings many changes in the Goods and Services Tax Act, 2017.  The changes have been discussed in this article.

Omission of sections

The following sections, sub sections are omitted by the Bill-

• Section 16(2) (c)  provides that no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless subject to the provisions of  section 41 or section 43A, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply – the bill proposes to omit the words ‘or section 43A’.
• Section 37(1) – Furnishing details of outward supplies – Section 37(1) provides that the details of outward supplies of goods or services or both effected during a tax period on or before the tenth day of the month succeeding the said tax period and such details shall be communicated to the recipient of the said supplies within such time and in such manner as may be prescribed. The first proviso to section 37(1) provides that the registered person shall not be allowed to furnish the details of outward supplies during the period from the eleventh day to the fifteenth day of the month succeeding the tax period.

The Bill proposes omit the first proviso to section 37(1).

• The Bill proposes to omit section 37(2) which provides that every registered shall either accept or reject the details so communicated, on or before the seventeenth day, but not before the fifteenth day, of the month succeeding the tax period and the details furnished by him shall stand amended accordingly.
• Section 37(3) provides that any registered person, who has furnished the details for any tax period and which have remained unmatched under section 42 or section 43, shall, upon discovery of any error or omission therein, rectify such error or omission in such manner as may be prescribed, and shall pay the tax and interest, if any, in case there is a short payment of tax on account of such error or omission, in the return to be furnished for such tax period.  The Bill proposes to omit the words ‘and which have remained unmatched under section 42 or section 43’, since these sections are going to be omitted.
• The Bill proposes to omit the following sections-

• Section 42 – matching, reversal and reclaim on input tax credit;
• Section 43 – Matching, reversal and reclaim of output tax liability;
• Section 43A – Procedure for furnishing return and availing input tax credit.

• Section 47(1) provides that any registered person who fails to furnish the details of outward or inward supplies required under section 37 or section 38 or returns required under section 39 or section 45 by the due date shall pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum amount of five thousand rupees.  The Bill proposes to omit the words ‘or inward’ and ‘or section 38’.
• Section 48(2) provides that a registered person may authorize an approved goods and services tax practitioner to furnish the details of outward supplies under section 37, the details of inward supplies under section 38 and the return under section 39 or section 44 or section 45 and to perform such other functions in such manner as may be prescribed.  The Bill proposes to omit the words ‘the details of inward supplies under section 38’.
• Section 49(2) provides that the input tax credit as self-assessed in the return of a registered person shall be credited to his electronic credit ledger, in accordance with section 41 or section 43A, to be maintained in such manner as may be prescribed.  The Bill proposes to omit the words ‘or section 43A’ since the section 43A itself is to be omitted.
• Section 54(10) provides that where any refund is due under sub-section (3) [unutilized input tax credit] to a registered person who has defaulted in furnishing any return or who is required to pay any tax, interest or penalty, which has not been stayed by any court, Tribunal or Appellate Authority by the specified date, the proper officer may withhold payment of refund or deduct from refund any tax, interest or penalty.  The Bill proposes to omit the words ‘under sub-section 3’.

Amendment to section 16

Section 16 provides the eligibility and conditions for taking input tax credit.  The Bill proposes to insert a new sub section 16(2)(ba) which provides that  the details of input tax credit in respect of the said supply communicated to such registered person under section 38 has not been restricted.

Amendment to section 29

Section 29(2)(b)   provides that the proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where a person paying tax under section 10 (composite scheme)  has not furnished returns for three consecutive tax periods.   After amendment the proper officer may cancel the registration of composite scheme is the registered person has not furnished the return for a financial year beyond three months from the due date of furnishing the said return.

Amendment to section 37

Section 37 provides the procedure for furnishing the outward supplies.  The Bill proposes to insert a new sub section (4) to this section.  The newly substituted section 37(4) provides that a registered person shall not be allowed to furnish the details of outward supplies under sub-section (1) for a tax period, if the details of outward supplies for any of the previous tax periods have not been furnished by him.   The Government may, on the recommendations of the Council, by notification, subject to such conditions and restrictions as may be specified therein, allow a registered person or a class of registered persons to furnish the details of outward supplies under sub-section (1), even if he has not furnished the details of outward supplies for one or more previous tax periods

Amendment to Section 38

Section 38 provides the procedure for furnishing details of inward supplies.  The said section is proposed to be substituted by a new section.  The new section 38 provides the   Communication of details of inward supplies and input tax credit.

Section 38(1) provides that the details of outward supplies furnished by the registered persons under sub-section (1) of section 37 and of such other supplies as may be prescribed, and an auto generated statement containing the details of input tax credit shall be made available electronically to the recipients of such supplies in such form and manner, within such time, and subject to such conditions and restrictions as may be prescribed.

Section 38(2) provides that the auto-generated statement under sub-section (1) shall consist of––

1. details of inward supplies in respect of which credit of input tax may be available to the recipient; and
2. details of supplies in respect of which such credit cannot be availed, whether wholly or partly, by the recipient, on account of the details of the said supplies being furnished under sub-section (1) of section 37,–

1. by any registered person within such period of taking registration as may be prescribed; or
2. by any registered person, who has defaulted in payment of tax and where such default has continued for such period as may be prescribed; or
3. by any registered person, the output tax payable by whom in accordance with the statement of outward supplies furnished by him under the said subsection during such period, as may be prescribed, exceeds the output tax paid by him during the said period by such limit as may be prescribed; or
4. by any registered person who, during such period as may be prescribed, has availed credit of input tax of an amount that exceeds the credit that can be availed by him in accordance with clause (a), by such limit as may be prescribed; or
5. by any registered person, who has defaulted in discharging his tax liability in accordance with the provisions of sub-section (12) of section 49 subject to such conditions and restrictions as may be prescribed; or
6. by such other class of persons as may be prescribed.

Amendment to section 39

Section 39 provides the procedure for filing of returns.  Section 39(5) provides that every registered non-resident taxable person shall, for every calendar month or part thereof, furnish, in such form and manner as may be prescribed, a return, electronically, within twenty days after the end of a calendar month or within seven days after the last day of the period of registration specified under sub-section (1) of section 27, whichever is earlier.  The Bill proposes to reduce the due date of twenty days to thirteen days.

The first proviso to section 39(7) provides that every registered person furnishing return shall pay to the Government, the tax due taking into account inward and outward supplies of goods or services or both, input tax credit availed, tax payable and such other particulars during a month, in such form and manner, and within such time, as may be prescribed.  The Bill proposes to substitute a new proviso for the existing one.  The newly substituted proviso to section 39(7) provides that every registered person furnishing return shall pay to the Government, in such form and manner, and within such time, as may be prescribed,–

• an amount equal to the tax due taking into account inward and outward supplies of goods or services or both, input tax credit availed, tax payable and such other particulars during a month; or
• in lieu of the amount referred to in clause (a), an amount determined in such manner and subject to such conditions and restrictions as may be prescribed.

The proviso to Section 37(9) provides that no rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of return for the month of September or second quarter following the end of the financial year to which such details pertain, or the actual date of furnishing of relevant annual return, whichever is earlier.  The Bill proposes to substitute the words ‘the thirtieth day of November’ for the due date for furnishing of return for the month of September.

Section 37(10) provides that a registered person shall not be allowed to furnish a return for a tax period if the return for any of the previous tax periods has not been furnished by him.  The Bill proposes to substitute the words for ‘has not been furnished by him’.  By means of this substitution section 37(10) provides that a registered person shall not be allowed to furnish a return for a tax period if the return for any of the previous tax periods or the details of outward supplies under sub-section (1) of section 37 for the said tax period has not been furnished by him:

Provided that the Government may, on the recommendations of the Council, by notification, subject to such conditions and restrictions as may be specified therein, allow a registered person or a class of registered persons to furnish the return, even if he has not furnished the returns for one or more previous tax periods or has not furnished the details of outward supplies under sub-section (1) of section 37 for the said tax period.”.

Amendment to Section 41

Section 41 deals with the claim of input tax credit and provisional acceptance.  The Bill proposes to substitute a new section for section 41.

The newly substituted section 41(1) provides that every registered person shall, subject to such conditions and restrictions as may be prescribed, be entitled to avail the credit of eligible input tax, as self-assessed, in his return and such amount shall be credited to his electronic credit ledger.

Section 41(2) provides that the credit of input tax availed by a registered person under sub-section (1) in respect of such supplies of goods or services or both, the tax payable whereon has not been paid by the supplier, shall be reversed along with applicable interest, by the said person in such manner as may be prescribed.

The proviso provides that where the said supplier makes payment of the tax payable in respect of the aforesaid supplies, the said registered person may re-avail the amount of credit reversed by him in such manner as may be prescribed.