RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

GST was introduced from 1^st July, 2017 and it enters into 7^th financial year. A lot has been done in these close to six years but yet lot of reforms are to take place.

Finance Bill, 2023 got Lok Sabha on 24.03.2023 and Rajya Sabha approved the same on 27.03.2023. The proposed new amendments pave the way for constitution of GST Appellate Tribunal  which may see the right of the day in few months now. GST Tribunal like important institution of GST. Finance Act, 2023 has since been enacted with president assent’s on 31.03.2023 as Act No. 8 of 2023. Finance Act, 2023 shall come into force from 01.04.2023, i.e. today. CBIC has issued many Notifications on 31.03.2023 to implement the provisions of Finance Act, 2023.

GST rate rationalization is due for some time now but given the elections in coming months in few states, it is unlikely to happen before general elections in 2024. While frequent rate rejig is not desirable, the Group of Ministers looking after rate changes may also require reconstitution.

CBIC has notified phased implementation of Electronic Cash Ledger (ECL) in Customs w.e.f. 01.04.2023. Full exemption has been provided from basic Customs Duty in case of all imported drugs and food for special medical purposes for personal use for treatment of rare diseases listed under the National Policy for Rare Diseases, 2021.

CBIC is also considering issuing a SOP for investigation in view of the GST Appellate Tribunals being set up in near future and there may be rush for large number of appeals.

March, 2023 has reported a gross GST collection of Rs. 1,60,122 crore which is 13% higher growth on YoY basis. For financial year 2022-23 as a whole, GST collection has crossed Rs. 18 lakh crore mark and is Rs. 18,07,679 crore (Rs. 14,83,292 crore in finance year 2021-22). March, 2023 collections is Monthly GST revenues have been more than Rs. 1.4 lakh crore for 12 months in a row, with Rs. 1.6 lakh crore crossed for the 2nd time since inception of GST. Gross revenues in 2022-23 were 22% higher than that last year.

The new financial year 2023-24 commences from today. CBIC has provided one more opportunity for various non compliances in filing of returns etc by issuing various notifications on 31.03.2023 which are effective from April 1, 2023. Taxpayers must avail the same.

Restriction in Late fee of GSTR-4

In case GSTR-4 (return by composition dealer) is not filed within the due date, late fee restricted to Rs. 500 for the quarters July 2017 to March 2019 and for the Financial year 2019-20 to 2022-23 but furnish the said return between the period from April 2023 to June 2023, provided the amount of tax payable is NIL.

(Source: Notification No. 02/2023- Central Tax dated 31.03.2023)

 

Revocation of Cancellation of Registration

In case the registration got cancelled before 31^st December 2022 and the dealer had failed to apply for revocation within the time specified, the dealer may apply the special procedure for applying the revocation of cancellation of registration as under:

1. The application for revocation must be filed before 30th June 2023.
2. The application must be filed after filing of the returns due upto the effective date of cancellation along with the due tax, interest, late fees, and penalty as due.
3. No further extension of time period will be available in such cases

This will also cover cases where appeal under section 107 has been rejected on the ground of failure to adhere to time limits.

             (Source: Notification No. 03/2023- Central Tax dated 31.03.2023)

Aadhaar / Biometric Aadhaar Based Authentication

Sub-rule 4A of rule 8 of the CGST Rules, 2017 has been substituted to explain Aadhar based authentication as well as Bio-metric based authentication.

         (Source: Notification No. 04/2023- Central Tax dated 31.03.2023)

Biometric Based Aadhaar Authentication

Change in Notification No. 27/2022-Central Tax has been made enabling as Bio-metric based Aadhar authentication in the state of Gujarat only.

(Source: Notification No. 05/2023- Central Tax dated 31.03.2023)

Combined reading of Notification No. 04/2023-Central Tax and Notification No. 05/2023-Central Tax provides that Biometric based Aadhaar authentication and taking photograph of the applicant along with the verification of the original copy of the documents to be uploaded with the application in Form GST REG-01 through one of the notified facilitation centres is applicable only to the state of Gujarat.

Special procedure for Assessment of Non-filers of Returns

The assessment of non-filers of returns shall be deemed to have been withdrawn, if the person whose assessment order was passed on or before 28th February 2023 and not filed return with 30 days from the pass of the assessment order. If the registered person follows the special procedures as under:

1. Shall furnish the return on or before 30th June 2023.
2. The return shall be filed with the due tax along with the interest and the late fees.

The above is irrespective of the fact that any appeal has been filed or the appeal has been decided.

(Source: Notification No. 06/2023- Central Tax dated 31.03.2023)

Relaxation in Late fee for delay in filing of GSTR-9

In case GSTR-9 had not been filed for the financial year 2017-18 to 2021-22, the registered person may file the same from 1st April 2023 to 30th June 2023. The total late fee as calculated in Section 47 in respect of the said return shall waived in excess of Rs. 20,000/-. (Rs. 20,000 includes CGST+SGST)

Late fee for the financial year 2022-23 and onwards is as under:

Aggregate Turnover	Late Fee (CGST+SGST)
Upto Rs. 5.00 Crores	Rs. 50 per day subject to 0.04 percent of the turnover
More than Rs. 5.00 Crores to Rs. 20.00 Crores	Rs. 100 per day subject to 0.04 percent of the turnover
More than Rs. 20.00 Crores	Rs. 200 per day subject to 0.50 percent of the turnover

(Source: Notification No. 07/2023- Central Tax dated 31.03.2023)

Restriction in Late fee of GSTR-10

In case GSTR-10 (Final return) had not been filed within the due date and the same is filed between 01^st April, 2023 to 30^th June, 2023, the late fee will be restricted to Rs. 1,000/- (CGST+SGST).

(Source: Notification No. 08/2023- Central Tax dated 31.03.2023)

Extension of Time Limit for passing the order

The Government has extended the time period for issue of order under Section 73(9) as under:

Financial Year	Last date of issue of order
2017-18	31st December, 2023
2018-19	31st  March, 2024
2019-20	30th  June, 2024

 

(Source: Notification No. 09/2023- Central Tax dated 31.03.2023)

Specific-tax linked Compensation Cess on tobacco products

• The Compensation Cess rate on pan masala, tobacco, and tobacco products have been converted from current ad-valorem to specific-tax linked to the Retail Sale Price (RSP).
• The changes have been carried out through amendment in the Schedule to the Goods and Service Tax (Compensation to States) Act, 2017. (Section 163 of the Finance Act, 2023 refers).
• This amendment is effective from 1st April, 2023

(Source: Notification No. 01/2023- Compensation Cess dated 31.03.2023)

 

Effective date for Compensation Cess on tobacco products

• Amendments made in sub-section (2) of section 8 of the GST (Compensation to States) Act, 2017 have been notified for the effective rates on pan masala, tobacco & tobacco products as per the recommendations made by GST Council w.e.f 1st April, 2023.
• The CBIC has brought in amendments in the Finance Bill to cap the maximum rate of GST compensation cess on pan masala, cigarettes and other forms of tobacco and linked the highest rate to their retail sale price. The maximum GST compensation cess rate for pan masala will be 51 per cent of the retail sale price per unit compared with 135 per cent ad valorem at present. The cess rate for tobacco has been fixed at Rs 4,170 per thousand stick plus 290 per cent ad valorem or 100 per cent of the retail sale price per unit.  So far, the highest rate was Rs 4,170 per thousand stick plus 290 per cent ad valorem. The cess is levied over and above the highest GST rate of 28 per cent.
• The notified date is w.e.f. 01.04.2023

(Source: Notification No. 02/2023- Compensation Cess (Rate) dated 31.03.2023)

Applicability of GST rate and classification of Rab

• The CBIC has issued notification based on the recommendation of the GST council in its 49th meeting which was held on 18th February, 2023 to provide that 5% GST rate shall be applicable on Rab, when sold in pre-packaged and labelled, and Nil GST, when sold in other than pre-packaged and labelled with effect from the 1st March, 2023.

• Now, CBIC has issued clarification that in view of the prevailing divergent interpretation and genuine doubts regarding the applicability of GST rate on Rab, the issue for past period is regularized on “as is” basis.

(Source: Circular No. 191/03/2023-GST dated 27.03.2023)

 

15% increase in GST Collection

There has been an increase of 15% in GST Collection in the month of December (FY 2022-23) as compared to the month of December (FY 2021-22). The monthly GST revenue is more than 1.4 lakh crore for 11 consecutive months in the FY 2022-23.

(Source: Press Release ID1911272 dated 27.03.2023)

 

March, 2023 GST collection

• Total gross collection for 2022-23 stands at Rs.18.10 lakh crore; average gross monthly collection for the full year is Rs.1.51 lakh crore. Gross revenues in 2022-23 were 22% higher than that last year
• The gross GST revenue collected in the month of March 2023 is Rs.1,60,122 crore of which CGST is Rs.29,546 crore, SGST is Rs.37,314 crore, IGST is Rs.82,907 crore (including Rs.42,503 crore collected on import of goods) and cess is Rs.10,355 crore (including Rs.960 crore collected on import of goods). It is for the fourth time, in the current financial year that the gross GST collection has crossed Rs.1.5 lakh crore mark registering second highest collection since implementation of GST. This month witnessed the highest IGST collection ever.
• The revenues for the month of March 2023 are 13% higher than the GST revenues in the same month last year. During the month, revenues from import of goods was 8% higher and the revenues from domestic transaction (including import of services) are 14% higher than the revenues from these sources during the same month last year. The return filing during March 2023 has been highest ever. 93.2% of statement of invoices (in GSTR-1) and 91.4% of returns (in GSTR-3B) of February were filed till March 2023 as compared to 83.1% and 84.7%, respectively same month last year.

(Source: PIB Release ID1912850 dated 01.04.2023)