RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

According to UNCTAD, Indian economy may grow @ 6.5% in FY 2024, which makes it one fastest growing economy in the world. IMF has also upgraded Indian growth forecast driven by continuing strength in domestic market to 6.8% for FY 2025. It is 6.6% by World Bank and 7% by Fitch and ADB. For FY 2024, IMF has projected a growth to 7.8%. Asian Development Bank (ADB) has also raised India’s growth projections to 7% for FY 2024, up from 6.7% projected earlier. Further, as per one of the member of EAC-PM, India’s economic growth performance is good and that efforts shall be needed to sustain the growth. However, the external global situations pose a challenge.

As at the end of financial year 2022-23, there was an amount of more than Rs. 29,000 crore locked up in indirect tax demands at various levels, i.e., demand raised but not realized comprising of service tax, central excise, customs duty and even CGST and IGST. This ranges from 1 year to over 10 years. The maximum amount is of service Tax followed by Central Excise, Customs and GST. These are cases with confirmed demand but assets or assessee are not traceable. Further, over Rs. 1.73 lakh crore cases are stuck-up in disputed tax liabilities.

In yet another revealing data, GST to GDP (ratio of GST collection to GDP of country) has been showing an increasing but slow trend. While it was 6.23% in 2019, it has inched upto 68.6% in financial year 2024. The gross GST collection has nearly doubled with Rs. 11.77 trillion in financial year 2019 to Rs. 20.18 trillion in financial years 2024. The total indirect tax collection including central excise and customs duty for financial year 2024 has exceeded the revised estimates of Rs. 14.84 trillion.

Vijay Kelkar, Chairman of 13^th Finance Commission has advocated for a need to introduce 12% single rate of GST in the country which can be decided by the ensuing Government. Constitutional amendments may also be required for equitable sharing of GST proceeds among the centre, states and local Governments.

E-Way bill generation has created a record in March, 2024 with an all time high figure of 10.35 crores. The trends indicate that more the number of bills, higher is the GST collection. However, year-end effect can also not be ruled out.

According to DGGI, taxpayers in the online gaming and casino sector are the top GST evades. They account for over one-third of the tax evasion at Rs. 83,588 crore out of a total evasion of Rs. 2.01 lakh crore which is about 10% of the total annual GST collections. The levy of GST on online gaming has been a contentious issue.

It is expected that the new Government may take up the tax reforms including simplification and rationalization in GST law. Infact, one of the most important reforms in India in last decade has been introduction of GST. The present decade should now witness major reforms in GST based on seven year’s experience. This should include simplification in provisions, rate rationalization and business friendly tax law. It should focus to achieve median tax close to Revenue Neutral Rate (RNR) which is the need of the day. With tax collections getting better and stabilized, aim should be expand tax base as well as increase the tax revenue by rationalizing rates as well as exemptions.

GST council is expected to meet only under the new Government post elections on June / July, 2024 wherein GST reforms including tax rate rejig may take place.

GST Tribunals are also expected to be functional towards July – September, 2024 only and not before that. The selection process for selection of members of GSTAT is on and now the short-listing / interviews will be conducted.

As the country is in election mode presently, we do not expect any major development / decision / reform on GST front.

Waiver of Interest for specified belated GSTR-3B filers

• CBIC has notified four cases for waiver of interest for delayed filing of Form GSTR-3B in specified months due to technical glitches on GSTN portal, though they had sufficient balance in respective electronic cash / credit ledgers or had deposited requisite amount by way of challan.
• These taxpayers are :

GSTN	Name	Months
19AAACI1681G1ZM	Indian Oil Corporation Ltd	June, 2018
19AAACW2192G1Z8	Wacker Metroark Chemicals Pvt. Ltd.	October, 2018
19AABCD7720L1ZF	Fresenius Kabi Oncology Ltd.	July 2017 and August 2017
19AAECS6573R1ZC	Sai Sulphonates Pvt. Ltd.	July 2017 to February 2018

• Period for which interest has been waived is from the due date of filing form GSTR-3B to the actual date of furnishing return.
• This is not a general exemption but specific to aforementioned taxpayers only.

(Source: Notification 7/2024-Central Tax dated 08.04.2024)

Special procedure for persons engaged in manufacture of specified goods

• CBIC had rescinded Notification No. 30/2023-CT dated 31.07.2023 w.e.f. 01.01.2024 which prescribed special procedure to be followed by a registered person engaged in manufacture of certain goods, i.e., tobacco and related products.
• A new Notification No. 4/2024-CT dated 05.01.2024 was issued w.e.f. 01.04.2024 for the new special procedure to be followed by a registered person engaged in manufacturing of specified goods. The procedure prescribes the details of packing machines, special monthly statement, certificate of chartered engineer, details of the machines, details of the intimation of the machines furnished to other departments, disposal of the packing machines, product details, details of the documents uploaded etc.
• CBIC has now extended the timeline for implementation of Notification No. 04/2024-CT dated 05.01.2024 from 1st April, 2024 to 15th May, 2024. This Notification shall be effective w.e.f. 01.04.2024.
• No reasons have been mentioned for such an extension. However, GSTN portal does not have necessary form on the portal as of now.

(Source: Notification No. 08/2024-Central Tax dated 10.04.2024 read with  Notification No. 04/2024-Central Tax dated 05.01.2024)

Self Enablement for E-Invoicing

GSTN has issued an advisory on self enablement for e-invoicing. Accordingly,

• If the taxpayer’s turnover exceeds INR 5 crores in the financial year 2023-2024, it is required to start e-Invoicing from the next financial year, i.e., from 1st April 2024 onwards.
• For those who meet the notification criteria but have not yet been enabled on the portal, taxpayer can self-enable for e-Invoicing by visiting: https://einvoice.gst.gov.in and start reporting through any of the following four new Invoice Registration Portals (IRPs) - from e-Invoice IRP 3 to e-Invoice IRP 6:

https://einvoice3.gst.gov.in      

https://einvoice4.gst.gov.in

https://einvoice5.gst.gov.in      

https://einvoice6.gst.gov.in

• To report e-Invoices through NIC IRP 1 & 2, taxpayers can self-enable at:

https://einvoice1.gst.gov.in         

https://einvoice2.gst.gov.in

(Source: GSTN Advisory dated 03.04.2024)

Conduct of Joint Audits by CGST / SGST Officers

• Commissioner, Central Tax and Central Excise (Audit), Kochi has issued a frame work for conducting joint audit by CGST and SGST officers.
• The CGST and SGST Audit teams would henceforth try to co-ordinate and participate in each other’s Audits.
• Each Audit Circle of CGST shall share the Audit plan for the month with their counter parts in SGST and invite officers from SGST to be included in the Audit Teams. Similarly, officers from CGST may join the Audit teams of SGST as and when possible.
• This is aimed to strengthen the capacities of SGST officers in Audit and also enable officers to exchange critical compliance-related information with each other.
• Circle AC/DCs shall co-ordinate with State GST and come up with/work out the necessary framework so that joint audit work can be initiated with immediate effect.

(Source: Letter No. GADT/PndC/APLN/4/2021-PandC dated 03.04.2024 issued by Central Tax and Central Excise (Audit), CBIC, Ministry of Finance, Department of Revenue, Kochi)

Auto population of HSN summary in GSTR-1

• GSTN has enabled auto population of HSN-wise summary of outward supplies in Form GSTR-1 in Table 12.
• This will provide an option to taxpayers to import HSN data in GSTR-1 from e-invoices where e-invoices are generated.
• Only where e-invoices are not generated, manual entry will have to be done.
• This would save time for HSN entry in case there are only B2B supplies.

(Source: GSTN Portal)

GSTN Advisory on Reset & Re-filing of GSTR-3B

• GSTN has issued an Advisory on Reset and Re-filing of GSTR-3B for some taxpayers.
• In the facility for re-filing of GSTR-3B for some of the taxpayers, it  has been noticed that there were discrepancies in the returns of some taxpayers during the filing process between the saved data in the GST system and actually filed data in the fields of ITC availment and payment of tax liabilities.
• As a facilitation measure, the Grievance Redressal Committee has decided that such returns shall be reset, in order to give opportunity to such taxpayers to correct the discrepancy.
• Accordingly, the affected taxpayers have been advised on registered email-ids and the affected returns are visible on their respective dashboards for the purpose of re-filing with the correct data.
• The taxpayers who have received such communication, are requested to visit their dashboard and re-file their GSTR-3B within 15 days of receipt of such communication.
• Taxpayers may reach out to jurisdictional tax officer or may raise ticket of GST grievance redressal portal, in case you face any difficulty in re-filing of such GSTR-3B.

 

(Source: GSTN Advisory dated 09.04.2024)

Due date of GSTR-1 for March, 2024 extended by one day

• Taxpayers reported difficulties in filing GSTR-1 intermittently on last two days due to technical issues leading to slow response on the portal.
• GSTN had to recommend to CBIC that the due date for filing of GSTR-1 for the monthly taxpayers be extended by a day i.e. till 12^th April, 2024.
• Accordingly, CBIC has extended the time limit for furnishing the details of outward supplies in FORM GSTR-1 for the registered persons required to furnish return under section 39(1) of CGST Act, other than the registered persons who are required to furnish return under proviso of the section 39(1) of CGST Act, for the tax period March, 2024, till the twelfth day of April, 2024.”
• This shall come into force w.e.f. 11.04.2024.

(Source: Notification No. 09/2024-Central Tax dated 12.04.2024)

Non-issuance of notices u/s 73 & 74 in case of voluntary compliance- Kerala Government

• Kerala State have issued instructions for issuing notices under section 73 & 74 in voluntary compliance cases.
• Taxpayers have the option to voluntarily comply with their tax obligations before any formal notice is issued.
• If a taxpayer, upon his own ascertainment or based on the proper officer’s ascertainment, discovers that they have any additional tax liability, they can choose to pay such tax dues along with the applicable interest under section 50
• In case of own ascertainment, it is crucial for the person chargeable  with tax to provide a detailed breakup of the amounts paid, including the tax, interest, and penalty.
• The persons chargeable with tax may inform the manner of computation of such tax dues under the respective heads of IGST, CGST, KSGST and Compensation Cess and the tax period it is attributable to, as per their ascertainment.
• In case of wrong availment or wrong utilization of Input Tax Credit, the persons chargeable with tax may inform the details of such Input Tax Credit wrongly availed or utilized under the respective heads of IGST, CGST, KSGST and Compensation Cess, and the tax periods.
• In case of an erroneous refund, the persons chargeable with tax may inform the details of such erroneous refund received including the tax period to which such refund pertains.
• These can be made by the person chargeable with tax in the FORM GST DRC-03 itself through the common portal.
• If such details are not available in the FORM GST DRC-03, the proper officer can request the same from the persons chargeable with tax through a letter.
• The proper officer on receipt of the written communication/ information in FORM GST DRC-03 of payment, shall not issue any notice for the tax amount already paid with interest; or with interest and penalty as applicable in view of the provisions contained in sub-section (6) of Section 73, and sub-section (6) of Section 74.
• Where it appears to the proper officer that the amount of tax paid with interest as per Section 73(5) or the amount of tax paid with interest and applicable penalty as per Section 74(5) by the person chargeable with tax falls short of the amount actually payable, the proper officer shall issue notice only for the amount which falls short of the actual amount payable.
• In all cases falling under Section 73 of the KGST Act, 2017, the provisions of section 73 (11) shall be adhered to wherever applicable.

(Source: Circular No. 6/2024 dated 06.04.204 issued by Commissioner,

State Goods and Services Tax Department, Thiruvananthapuram)