RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

The International Monetary Fund (IMF) has retained India’s economic growth rate at 7% for the current fiscal 2024-25. For 2026, IMF’s forecast is of 6.5%. On the other had RBI’s forecast for 2025 is 7.2%. RBI has expressed that Indian economy is sailing through smoothly with stable macroeconomic indicators. It remains resilient and external factors are robust. For 2025, growth projections for China is 4.5%, US is 2.2% and World is 3.2%. Indian economy is likely to grow @ 6.7% in FY 2024-25 due to weaker Q2, as per Morgan Stanley. It had earlier project a growth of 7%.

The Budget 2025 exercise will kick off in December, 2024 with Finance Minister meeting the State Finance Ministers in Rajasthan on 21-22 December, 2024 for pre-budget consultation. The 55^th GST Council meeting is also to be held on 22 December, 2024 at Jaisalmer (Rajasthan). It is expected that Council may finalise its recommendation on levy of GST on life and health insurance and other issues ahead of Union Budget 2025.

Justice D.Y. Chandrachud demitted the office of Chief Justice of India and India has now a new Chief Jusitce of Supreme Court of India, 51^st Chief Justice, Mr. Justice Sanjiv Khanna who has been administered the oath.

GST Tribunal (GSTAT) may start functioning towards the end of FY 2025 which is now in final stages of operationalisation. Presently, the work of appointment of members and other staff and acquisition of infrastructure is going on.

CBIC has got two new members, Mr. Mohan Kumar Singh and Mr. Yogendra Garg, who shall assume charge soon.

CBIC has issued instructions specifying that there will be mandatory virtual hearing (e-hearing) of all cases of appeal and adjudication across all indirect taxes, viz, CGST, IGST, Customs duty Central Excise and Service Tax. However, taxpayer can seek physical hearing citing reasons and the concerned authority may allow the same by recording the reasons in writing. GSTN has issued few advisories in relation to GST returns and invoice management system.

Kerala Government has issued a guidelines on adjudication of multiple Show Cause Notices (SCN’s) issued to same taxpayer or otherwise under different situations.

GSTN advisory regarding IMS during initial phase of its implementation

• Invoice Management System (IMS) is an optional facility introduced from October 2024 on GST Portal, on which the invoices/records saved/furnished by the supplier in GSTR-1/1A/IFF, can be accepted, rejected or kept pending by recipients .Based on the action taken by the recipient on the IMS, system will generate the GSTR 2B of the recipient on 14th of subsequent month.
• The Taxpayer can accept/reject/keep pending the invoice/record on IMS after due verification from his accounts. The ITC for the rejected record will not be available to the recipient in the GSTR 2B . Further, the liability and input tax credit is being auto -populated in GSTR-3B of the taxpayer on the portal based on his liability declared in GSTR 1/1A and input tax credit made available in his GSTR 2B. However, the taxpayer can presently edit the said auto-populated details in GSTR-3B before filing the same.
• IMS, being a new functionality introduced on the portal, there may be cases where in the initial phase of implementation of IMS, the recipient may make error/mistake while taking action (like acceptance/rejection/keeping pending) on the IMS in respect of an invoice/record. As GSTR 2B of the recipient will be generated on the portal based on the actions taken by the recipient on the IMS, any mistake in the action taken by the recipient on the IMS could result in incorrect details of available/eligible input tax credit to the recipient being shown in his GSTR 2B, which will also be auto-populated in his GSTR-3B on the portal. In such cases, the recipient can change the action on the IMS in respect of an invoice/record ( e.g. from rejected to accepted or vice versa) and can recompute his GSTR 2B at any time till the filing of GSTR-3B for the corresponding tax period, so that correct ITC is auto-populated in his GSTR-3B.
• Despite this, there may still be some cases, where the recipient is not able to correct the action taken on the IMS, resulting in wrong auto-population of ITC in GSTR-3B of the recipient or wrong auto-population of liability in GSTR-3B of the corresponding supplier. Therefore, during this initial phase of implementation of IMS, the taxpayers are advised that in such cases, where due to any inadvertent mistake in the action taken on the IMS, if incorrect details of ITC/ liability are auto-populated in GSTR-3B on the portal, the taxpayer may before filing their GSTR-3B return, edit such wrongly populated ITC/liability in their GSTR-3B, to correctly avail ITC or pay correct tax liability based on the factual position as per the documents/records available with him.

(Source: GSTN Advisory dated 12.11.2024)

GSTN Advisory on Invoice Management System (IMS)

• GSTN has issued an advisory regarding IMS during initial phase of its implementation.
• GSTN recongnises that :

• IMS, being a new functionality introduced on the portal, there may be cases where in the initial phase of implementation of IMS, the recipient may make error/mistake while taking action (like acceptance/rejection/keeping pending) on the IMS in respect of an invoice/record.
• As GSTR-2B of the recipient will be generated on the portal based on the actions taken by the recipient on the IMS, any mistake in the action taken by the recipient on the IMS could result in incorrect details of available/eligible input tax credit to the recipient being shown in his GSTR-2B, which will also be auto-populated in his GSTR-3B on the portal.
• In such cases, the recipient can change the action on the IMS in respect of an invoice/record (e.g. from rejected to accepted or vice versa) and can recompute his GSTR-2B at any time till the filing of GSTR-3B for the corresponding tax period, so that correct ITC is auto-populated in his GSTR-3B.

• However, there may still be some cases, where the recipient is not able to correct the action taken on the IMS, resulting in wrong auto-population of ITC in GSTR-3B of the recipient or wrong auto-population of liability in GSTR-3B of the corresponding supplier.
• Thus, during this initial phase of implementation of IMS, the taxpayers are advised that in such cases, where due to any inadvertent mistake in the action taken on the IMS, if incorrect details of ITC/ liability are auto-populated in GSTR-3B on the portal, the taxpayer may before filing their GSTR-3B return, edit such wrongly populated ITC/liability in their GSTR-3B, to correctly avail ITC or pay correct tax liability based on the factual position as per the documents/records available with him.

(Source: GSTN Advisory dated 12.11.2024)

GSTN Advisory on IMS on Supplier View

• Invoice Management System (IMS) was made available on the GST Portal from 14th October, 2024 wherein the recipient taxpayer can accept, reject or keep the invoices pending which are saved/filed by their suppliers in their respective GSTR-1/1A/IFF.
• The Supplier View of IMS has also now been made available where the action taken by their recipients on the records/invoices reported in GSTR-1/1A/IFF, will be visible to the suppliers in ‘Supplier View’ functionality. This will help a supplier taxpayer to see the action taken on their reported outwards supplies and will help to avoid any wrong action taken by the recipient taxpayer.
• It may be noted that the following records/invoices are not available in IMS for taking any kind of actions by the recipient but are visible in supplier view with the status as ‘No Action Taken’:

• Documents where ITC is not eligible either due to Place of Supply (POS) rule or Section 16(4) of the CGST Act,
• Records attracting Reverse Charge Mechanism (RCM) Supplies

• Further, any action taken on records can be changed by the recipient taxpayer till the filing of GSTR-3B of the return period. In case the taxpayer changes any action after the generation of GSTR-2B, they need to click the GSTR-2B re-compute button to re-compute their GSTR-2B based on the new actions taken.

(Source: GSTN Advisory dated 13.11.2024)

GSTN Advisory on GSTR -2B and IMS

• GSTN has advised that as per the design of IMS, GSTR-2B will not be generated by the system in below scenarios:

1. In case the taxpayer has opted for QRMP scheme (Quarterly filers), GSTR-2B will not be generated for first and second month of the quarter. Ex. For quarter Oct-Dec, 2024, the quarterly taxpayer will get GSTR-2B for December-2024 period only and not for October-2024 & November-2024.
2. In case the taxpayer has not filed their previous period GSTR-3B, GSTR-2B will not be generated by the system. Such taxpayers need to file their pending GSTR-3B in order to generate GSTR-2B on demand.

For example, if the taxpayer has not filed GSTR-3B for September-2024, their GSTR-2B for October-2024 will not be generated. Once the taxpayer files their GSTR-3B for September-2024, they will be able to generate their GSTR-2B for October-2024 by clicking the "Compute GSTR-2B (OCT 2024)" button on the IMS dashboard.

(Source: GSTN Advisory dated 16.11.2024)