RECENT DEVELOPMENTS IN GST

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RECENT DEVELOPMENTS IN GST

				By: Dr. Sanjiv Agarwal
				March 16, 2022
All Articles by: Dr. Sanjiv Agarwal View Profile

Contents

Now that election results of five state assemblies which went to polls is February – March, 2022 have been announced with BJP winning four states, while one going to AAP party for the first time. These results reflects that there is going to be stability in policy making and Governance which will only be beneficial to country’s economic growth. The positive vibes of results is also reflected in stock indices and will also have positive impact in GST revenue growth.

With this win, the composition of GST Council also changes and the Government will emerge stronger to push crucial reforms including GST through GST Council. Keeping state of economy and compensation to States in mind, a hike in GST rates and pruning of exemptions looks inevitable. States too have not much of options.

In a recent review, rating agency CRISIL has retained its forecast for GDP growth @ 7.8 % for FY 2023 as risks shift from Covid to geopolitics, crude oil, interest rates etc. Morgan & Stanley have also lowered GDP forecast by 50 basis posts to 7.9 for FY 2023. According to S & P, growth for FY 2023 is projected at 7.8%, which is higher than China, US & Indonesia. India’s present concerns come from inflation, interest rates, oil crises and impact of Russia – Ukraine war. Morgan Stanly has also cut FY 2023 GDP growth forecast to 7.9% from 8.4% due to ongoing geopolitical scenario and stagflation risks.

According to media reports, GST Council may consider hiking of GST rates by merging first three rates, i.e., 5, 12 and 18 percent. However, looking at present inflationary conditions, change in rates may wait for some time as it will otherwise be like a double edged sword for taxpayers. GST Council’s next meeting is yet to be scheduled.

CBIC has issued Notification No. 2/2022-Central Tax dated 11.03.2022 for delegating powers to Additional Commissioner or Joint Commissioner of Central Tax for passing an order or decision in relation to notices issued by officers of Director General of Goods and Services Tax Intelligence (DGGSTI). On adjudication of show cause notices, it has been clarified that now on, officers of audit wing and DGGSTI can only issue notices but adjudication will be done by designated jurisdictional officers only. It would mean that power of adjudication has been taken away from audit and investigation officers.

GST compensation cess period has already been extended till March, 2026 to enable the centre to repay loans taken to compensate all states for the year 2020.

Proper Officer u/s 73 & 74 of CGST Act, 2017 and IGST Act, 2017

Vide Notification No. 02/2022-Central Tax dated 11th March, 2022, para 3A has been inserted in the Notification No. 2/2017-Central Tax dated 19th June, 2017, to empower Additional Commissioners of Central Tax/ Joint Commissioners of Central Tax of some of the specified Central Tax Commissionerates, with All India Jurisdiction for the purpose of adjudication of the show cause notices issued by the officers of the Directorate General of Goods and Services Tax Intelligence.
The Central Tax officers of DGGSTI shall exercise the powers only to issue show cause notices.
A show cause notice issued by them shall be adjudicated by the competent Central Tax officer of the executive Commissionerate in whose jurisdiction the noticee is registered when such cases pertain to jurisdiction of one executive Commissionerate of Central Tax only.
Such show cause notices may be adjudicated, irrespective of the amount involved in the show cause notice(s), by one of the Additional/Joint Commissioners of Central Tax empowered with All India jurisdiction vide Notification No. 02/2022-Central Tax dated 11th March, 2022.
Principal Commissioners/ Commissioners of the Central Tax Commissionerates specified in the notification will allocate charge of Adjudication (DGGI cases) to one of the Additional Commissioners/ Joint Commissioners posted in their Commissionerates (As per Table in Circular).
Such show cause notice(s) may, accordingly, be made answerable by the officers of DGGSTI to the concerned Additional/ Joint Commissioners of Central Tax.
In respect of a show cause notice issued by the Central Tax officers of Audit Commissionerate, where the principal place of business of noticees fall under the jurisdiction of multiple Central Tax Commissionerates, a proposal for appointment of common adjudicating authority may be sent to the Board.

(Source: Circular No. 169/01/2022-GST dated 12.03.2022 read with Notification No. 02/2022-Central Tax dated 11.03.2022)

Power to Adjudicate Notices issued by DGGSTI

CBIC has notified that specified Additional Commissioner (AC) of Central Tax or Joint Commissioner (JC) of Central Tax shall be vested with powers for passing an order or decision in respect of notices issued by the officers of Director General of Goods and Services Tax Intelligence (DGGSTI).
This amends Notification No. 2/2017-Central Tax dated 19.06.2017.
The officers (AC or JC), as the case may be, who are subordinate to the specified Principal Commissioner /Commissioner of Central Tax have been given this power to adjudicate and such power shall be exercisable throughout the territory of India.
The specified ten Commissonerates are Ahmedabad South, Bhopal, Chandigarh, Chennai South, Delhi North, Guwahati, Rangareddy, Kolkata North, Lucknow and Thane.

(Source: Notification No. 2/2022-Central Tax dated 11.03.2022)

Unblocking of Blocked Input Tax Credit (Government of NCT of Delhi)

Rule 86A of the GST Rules, 2017 empowers the officers to block the Input Tax Credit (ITC) availed by the taxpayers wrongly or fraudulently. Sub-rule (3) stipulates that the ITC so blocked shall cease to have effect after the expiry of a period of one year from the date of blocking in case no action has been taken by the officers. Unblocking may result in such ITC becoming available to the taxpayers for utilization.
Delhi Government has issued guidelines to Proper Officers for unblocking of input tax credit (ITC) on expiry of one year from the date such ITC was blocked under rule 86A of the CGST Rules, 2017.
In order to take such cases to this logical conclusion in time bound manner, Proper Officers have been advised to immediately take steps to finalise the investigation/proceedings in all these cases. Subsequently, the proper officer should either utilize these blocked credits against the demands (DRC 07) issued against these taxpayers following the legal provisions or if during the investigation/proceedings it is found that conditions for blocking the ITC no longer exist, the ITCs should be unblocked.
There guidelines also provide the steps to be followed for utilizing the blocked ITC, after unblocking the same, against the demand created through DRC-07.

(Source: The Department of Trade & Taxes, Government of NCT of Delhi guidelines vide No. F.3(429)/GST/Policy/2022/1067-1072 dated 08.03.2022)

Note: Similar Circular has been issued by Kerala State

Enhanced Interface for Registration @ GSTN

GSTN has enhanced the user interface in respect of address fields in the registration application GST-REG-01, viz

Incorporation of a map tile along with a drag and drop facility of address pinhead on to the exact location of the applicant’s address.
Once selected, the details will automatically fill in the various address input fields given in the application.
Address fields have been linked so as to auto- fill other macro level address entry fields based on the entry in one of such fields particularly PIN Codes. For example; on entering the PIN code, the corresponding State and Districts will get auto- filled.
The user can also directly fill-up the address input fields which are now aided with suggestive address input dropdowns from which the user can select the appropriate/relevant address field(s). This action will reduce errors in the address texts and will also ease the filling up of the appropriate address input fields by the user.
The address fields have been segregated appropriately to reduce confusions while entering the relevant inputs under various address heads.
Based on the address entries given by the user, the Latitude/ Longitude of the address will get auto populated which is non-editable.

(Source: GSTN dated 10.03.2022)

Guidelines for issuance of GST DRC-07 for Detention of Vehicles (Maharashtra State)

In the Maharashtra Goods and Services Tax Department (MGSTD), the activity of interception of conveyances for verification of E-way bill is carried out by Enforcement officers as well as Non-enforcement (Nodal) officers.
With the appeal procedure becoming online, it has become mandatory for the proper officer to pass the various orders online on the GSTN Back office (BO).
For proper officer to issue of FORM GST DRC-07 online on BO, where the taxpayer is not under his jurisdiction and difficulties faced by the taxpayer while filing an appeal against the orders passed by the proper officer (PO), the guidelines have been issued.
These guidelines cover five scenarios :

Taxpayer under the jurisdiction of PO
Taxpayer Registered in Maharashtra and allocated to the State, but not under the jurisdiction of the PO
Taxpayer Registered in Maharashtra and allocated to the Centre
Taxpayer Registered out of Maharashtra
Unregistered under GST

For details, Circular may be referred.

(Source: Circular No. JC(BCP)/DRC-07/E-way bill /B-212, Mumbai dated 02.03.2022 issued by Commissioner of State Tax, Maharashtra State, Mumbai)

Internal Control for GST Refunds (Haryana State)

Haryana State Government has issued internal guidelines for enabling internal control mechanism for refunds under GST regime.
Instructions have been issued in relation to:

Processing of Refund application of tax amount of more than ₹ 2 Crore
Processing of Refund up to tax amount of ₹ 2 Crore
Role and Responsibility of Tax Inspector of the Ward in processing of Refunds under GST
Refund application under "Any Other" grounds be mandatorily processed after approval with the jurisdictional Dy. Commissioner of State Tax.

Tax inspector, ETO-cum-Proper Officer and Deputy Excise and Taxation Commissioner (DETC) shall ensure that the timelines prescribed in the Rules are adhered to.