RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

On economic front, Asian Development Bank (ADB) has retained India’s economic growth rate @7% for FY 2024-25 and that it will remain robust with 7.2%, though there are weather related issues to agricultural output. However, OECD holds GDP growth in FY 2025 at 6.7% whereas RBI has projected a growth of 7.2% in same period.

CBIC has issued a notification notifying effective date for Finance (No. 2) Act, 2024 provisions relating to GST. These are 27.09.2024 and 01.11.2024 for different provisions. Also, Anti-profiteering cases under section 171 of the CGST Act, 2017 shall be dealt with by GSTAT and that Competition Commission of India (CCI) shall cease to be Authority under section 171 and shall not accept matters for examination w.e.f. 01.04.2025.

GSTN has been issuing various advisories for smooth implementation of law and procedures. These include on issuance of notices / orders without digital signature and archival & restoration of returns data older than seven years. It has also issued FAQ’s on Invoice Management System (IMS) introduced w.e.f. 01.10.2024.

GST Council is also understood to be discussing on whether the compensation cess (to end in March, 2026) would continue or not and if yes, in what form. States have been better off after GST as they have got more revenue than in pre-GST regime. However, levying a cess to raise revenue is considered as constitutionally legitimate. A GoM has been constituted for compensation cess headed by Mr. Pankaj Choudhary, Minister of State for Finance. The terms of reference of this GoM include proposal to replace compensation cess after its abolition.

Group of Ministers (GoM) on rate rationalization met at Goa and reviewed rates of over 100 items but they could not reach any consensus. GoM on real state also met but could not arrive at consensus. GoMs may meet again before next GST Council meeting.

Gross GST collection in September, 2024 have once again recorded a growing trend but the growth is only 6.5% (net collection grew by 3.9%) which is the slowest growth in current fiscal. The gross collection in September, 2024 is Rs. 1.73 trillion as compared to 1.62 trillion in September, 2023. Similarly, net GST collection stood at Rs. 1.52 trillion in September, 2024 against Rs. 1.47 trillion in same month in 2023. It is expected that with festive season ahead in October – November, 2024, GST collection may go up in next 2-3 months.

Provisions of Finance (No. 2) Act, 2024 notified

• The effective date of the amendments made through the Finance (No. 2) Act, 2024 have been notified.
• Amendments in Section 16, 109 and 171 shall come into force w.e.f. 27.09.2024, while other amendments shall come into force w.e.f. 01.11.2024.

Amendment in CGST Law effective from 27.09.2024

Section in Finance (No. 2) Act, 2024	Corresponding Section in CGST Act, 2017	Brief Description
118	16	Insertion of Sub-section (5) and (6) in section 16 of the CGST Act, 2017 to relax the time limit to avail input tax credit as per section 16(4) of the CGST Act, retrospectively from 01.07.2017, i.e., In respect of initial years of implementation of GST, i.e., financial years 2017- 18, 2018-19, 2019-20 and 2020-21 with respect to cases where returns have been filed after revocation
142	109	Amendment in Section 109 of the CGST Act so as to empower the Government to notify types of cases that shall be heard only by the Principal Bench of the Appellate Tribunal.
148	171	Amendment to Section 171, related to anti-profiteering measures under the CGST Act.
150	59	No refund pertaining to ITC reversal made owing to old section 16 of CGST Act.

 

     Amendments in CGST Law effective from 01.11.2024

Section in Finance (No. 2) Act, 2024	Corresponding Section in CGST Act, 2017	Brief Description
114	9	Amendment to Section 9, which deals with the levy and collection of CGST, to exclude Extra Neutral Alcohol used in manufacture of alcoholic liquor for human consumption out of purview of GST.
115	10	Amendment to Section 10, which relates to the composition scheme for taxpayers under GST.
116	11A	Insertion of Section 11A to empower the government to regularize non-levy or short levy of GST due to any general practice prevalent in trade.
117	13	Amendment in Section 13(3) of CGST Act, 2017 to provide for time of supply of services where the invoice is required to be issued by the recipient of services in cases of reverse charge supplies.
119	17	Amendment in section 17(5) of the CGST Act, 2017 so as to restrict the non-availability of input tax credit in respect of tax paid under section 74 of the said Act only for demands upto Financial Year 2023-24.
120	21	Amendment to Section 21, which addresses issues regarding registration cancellation.
121	30	Insertion of a new proviso in section 30(2) of the CGST Act, 2017 so as to provide for an enabling clause to prescribe conditions and restrictions for revocation of cancellation of registration.
122	31	Amendment in Clause (f) of section 31(3) of the CGST Act so as to incorporate an enabling provision for prescribing the time period for issuance of invoice by the recipient in case of reverse charge mechanism supplies. Insertion of an explanation in section 31 (3) so as to specify that a supplier registered solely for the purposes of tax deduction at source under section 51 of the said Act shall not be considered as a registered person for the purpose of clause (f) of sub-section (3) of section 31 of the said Act.
123	35	Amendment to Section 35, pertaining to records and accounts that must be maintained by taxpayers.
124	39	Substitution of section 39(3) of the CGST Act, 2017 so as to mandate the electronic furnishing of return for each month by the registered person required to deduct tax at source, irrespective of whether any deduction has been made in the said month or not. It also empowers the Government to prescribe by rules, the form, manner and the time within which such return shall be filed.
125	49	Amendment to Section 49, concerning the manner of utilizing ITC.
126	50	Amendment to Section 50, which deals with interest on delayed payment of tax.
127	51	Amendment to Section 51, regarding tax deduction at source (TDS) under GST.
128	54	Amendment in Sub-section (3) and insertion of a new sub section (15) in section 54 of the CGST Act, so as to provide that no refund of unutilised input tax credit or integrated tax shall be allowed in cases of zero rated supply of goods where such goods are subjected to export duty.
129	61	Amendment to Section 61, which deals with scrutiny of returns.
130	62	Amendment to Section 62, related to assessment of non-filers of returns.
131	63	Amendment to Section 63, regarding assessment of unregistered persons.
132	64	Amendment to Section 64, concerning summary assessment.
133	65	Amendment to Section 65, related to audit by tax authorities.
134	66	Amendment to Section 66, concerning special audit provisions.
135	70	Insertion of section 70(1A) of the CGST Act, to enable an authorised representative to appear on behalf of the summoned person before the proper officer in compliance of summons issued by the said officer.
136	73	Insertion of section 73(12) of the CGST Act, so as to restrict the applicability of the said section for determination of tax pertaining to the period upto Financial Year 2023-24.
137	74	Insertion of section 74(12) of the CGST Act, so as to restrict the applicability of the said section for determination of tax pertaining to the period upto Financial Year 2023-24.
138	74A	Insertion of Section 74A, addressing tax determinations from FY 2024-25 onwards.
139	75	Amendment to Section 75, related to general provisions on determination of tax.
140	104	Amendment to Section 104, concerning the appeals process under the CGST Act.
141	107	Amendment in section 107(6) of the CGST Act, so as to reduce the maximum amount of pre-deposit for filing appeal before the Appellate Authority from rupees twenty five crores to rupees twenty crores in GST. It also amends sub-section (11) of the said section, so as to incorporate a reference to the proposed new section 74A in the said section.
143	112	Amendment in the section 112(8) so as to reduce the maximum amount of pre-deposit for filing appeals before the Appellate Tribunal from the existing twenty percent to ten percent of the tax in dispute and also reduce the maximum amount payable as pre-deposit from rupees fifty crores to rupees twenty crores in GST.
144	122	Amendment in section 122(1B)  of the CGST Act, 2017 so as to restrict the applicability of the said sub-section to electronic commerce operators, who are required to collect tax at source under section 52 of the said Act. The said amendment is made effective from the 1st day of October, 2023 when the said sub-section had come into force.
145	127	Amendment to Section 127, related to the imposition of penalties for certain offenses.
146	128A	Insertion of Section 128A, providing conditional waiver of interest and penalty for demand notices issued under section 73 of CGST Act, 2017.
147	140	Amendment in section 140(7) of the CGST Act so as to enable availment of the transitional credit of eligible CENVAT credit on account of input services received by an Input Services Distributor prior to the appointed day, for which invoices were also received prior to the appointed date. The said amendment is made effective from 1st day of July, 2017.
149	Schedule III	Amendment to Schedule III, dealing with activities or transactions that are neither supply of goods nor services for Insurance premiums.

   Amendments in IGST / UTGST/ Compensation Cess Laws effective from 01.11.2024

Section in Finance (No. 2) Act, 2024	Corresponding Section in IGST, UTGST and Compensation Cess Act, 2017	Brief Description
151	5	Amendment to section 5 of IGST Act, 2017 to exclude Extra Neutral Alcohol used in manufacture of alcoholic liquor for human consumption out of purview of GST.
152	6A	Insertion of new section 6A in IGST Act, 2017 to empower the government to regularize non-levy or short levy of GST due to any general practice prevalent in trade.
153	16	Amendment of section 16 of IGST Act, 2017 in relation to refund under section 54 of CGST Act, 2017
154	20	Amendment to section 20 of IGST Act, 2017
155	7	Amendment to section 7 of UTGST Act, 2017 to exclude Extra Neutral Alcohol used in manufacture of alcoholic liquor for human consumption out of purview of GST.
156	8A	Insertion of new section 8A in UTGST Act, 2017 to empower the government to regularize non-levy or short levy of GST due to any general practice prevalent in trade.
157	8A	Insertion of new section 8A in GST (Compensation to States) Act, 2017 to empower the government to regularize non-levy or short levy of GST due to any general practice prevalent in trade.

(Source: Notification No. 17/2024-Central Tax dated 27.09.2024)

GSTAT empowered to examine Anti-profiteering cases

• Central Government has empowered the Principal Bench of the Appellate Tribunal, constituted under section 109(3) of the CGST Act, 2017 (GSTAT) to examine anti-profiteering cases.
• Accordingly, GSTAT shall decide on matters on whether input tax credit availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by that registered person.
• This is in terms of section 171(2) and second proviso to section 109(5) of CGST Act, 2017.
• This shall come into force w.e.f. 01.10.2024.

(Source: Notification No. 18/2024-Central Tax dated 30.09.2024)

Competition Commission of India to Accept Anti-profiteering matters upto 31.03.2025

• Competition Commission of India (CCI) presently adjudicates matters under section 171(2) of the CGST Act, 2017
• Central Government has appointed 1^st April, 2025, as the date from which the Authority referred to in section 171 shall not accept any request for examination as to whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by that registered person.
• Thus w.e.f. 01.04.2025, CCI shall stop accepting any new matters for examination under section 171 of the CGST Act, 2017.

 

(Source: Notification No. 19/2024-Central Tax dated 30.09.2024)

Draft Manual on Invoice Management System

• The GSTN has issued an update to inform that a new communication process called the Invoice Management System (IMS) is being brought up at portal to enable taxpayers to efficiently address invoice corrections/amendments with their suppliers through the portal.
• This will also facilitate taxpayer in matching of their records/invoices vis a vis issued by their suppliers for availing the correct Input Tax Credit (ITC) and shall allow the recipient taxpayers to either accept or reject an invoice or to keep it pending in the system, which can be availed later. This facility shall be available to the taxpayer from 1st October onwards on the GST portal.
• Team GSTIN has recently issued 34 FAQ’s on Invoice Management System (IMS) for better understanding. We are attaching herewith the same for your reference.

(Source: GSTN Advisory dated 17.09.2024)

Archival of GST Returns data on GST portal

• Section 39 (11) of the CGST Act, 2017 , implemented w.e.f 01-10-2023 vide Notification No. 28/2023 – Central Tax dated 31th July, 2023, provides that the taxpayers shall not be allowed file their GST returns after the expiry of a period of three years from the due date of furnishing the said return.
• As per the data policy, GST return data for viewing by taxpayers is to be retained at the portal only for 7 years as implemented w.e.f. 01.10.2023. Thus, GSTN has decided that the return data will not be available to view beyond 7 years for taxpayers.
• Accordingly, on 01st August 2024 return filed for July 2017 has been archived and on 01st September 2024, data for August 2017 has been archived. Further, this data archival is going to be a monthly activity hence on 01st October, 2024 data of September 2017 shall be taken down from the GST portal and so on so forth.
• Hence, the taxpayers have been advised to download their relevant data from the GST portal for any future reference, if required.
• This has, however, been restored w.e.f. 29.09.2024, for the time being.

(Source: GSTN Advisory dated 24.09.2024 and 29.09.2024)

 Issuance of Notices / Orders without Digital Signatures of the issuing Authorities

• The GSTN has issued an Advisory regarding the validity of documents issued by the tax officers on the common portal viz. SCN / Assessment Orders / Refund Orders etc. without the digital signatures on the pdf document downloaded from the common portal.
• It is advised that such documents are generated on the common portal from the login of the officer, who logs in through Digital Signatures.
• These documents being computer generated on the command of the officer, may not require physical signatures of the officer as these documents can be issued by the officer only after logging into the common portal using Digital Signature.
• All these documents in JSON format containing the order details along with the issuing officer details are stored in the GST system with the digital signature of the issuing officer.
• The validity of the document in question vis-à-vis who and for what purpose these documents have been issued can also be verified by the taxpayer pre-login as well as after login from the GST common portal by navigating to the path: https://www.gst.gov.in-->Dashboard-->Services-->User Services-->Verify RFN.

(Source: GSTN Advisory dated 25.09.2024)

Restoration of GST Returns Data on Portal

• GSTN has decided to restore the archival process of GST returns data, as advised by Advisory dated 24.09.2024.
• GST has now advised that in view of the requests received from the trade due to the difficulties faced, data has been restored back on the portal.
• It has also been recommended to download and save the data if needed, as the archival policy shall be implemented again after giving advance information.

(Source: GSTN Advisory dated 29.09.2024)

Launch of new e-Services App by GSTN

• GSTN has issued an Advisory informing that GSTN e-Services App shall replace the old e-invoice QR Code verifier App shortly.
• This app offers the following features:

• Verify e-Invoices: Scan the QR code to verify the B2B e-Invoices QR code and check the live status of the Invoice Reference Number (IRN).
• GSTIN Search: Search for GSTIN details using the GSTIN or PAN.
• Return Filing History: View the return filing history for a GSTIN.
• Multiple Input Methods: Input search details using text, voice, or scan functions.
• Result Sharing: Share search results via the app.

• Further, no login is required to use the app.

(Source: GSTN Advisory dated 01.10.2024)

GST Collection in September, 2024

• Gross GST collection in September, 2024 stood at Rs. 1.73 trillion (Rs. 1,73,240 crore) with growth of 6.5% on YoY basis (September, 2023 - Rs. 1.62 trillion)
• Net GST collection stood at Rs. 1.52 trillion (Rs. 1,52,782 crore) as against Rs. 1.47 trillion in September 2023, recording a growth of 3.9%.
• This is the slowest monthly growth in the current fiscal. However, GST collection is slightly less than August, 2024 (Rs. 1.75 trillion).
• Refunds grew at a faster rate in September, 2024 (domestic refunds – 24%); export refunds 39%)
• States with more than 20% growth include Haryana, Delhi (UT), Andaman & Nicobar and Ladakh.
• States with negative growth include Chandigarh (UT), Manipur, Nagaland, Mizoram, Meghalaya, Chhattisgarh, Madhya Pradesh, Lakshadweep and Andhra Pradesh.

(Source: GSTN Revenue Collections Update dated 01.10.2024)

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