RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

India completes three years of GST in force. GST was introduced as a ‘good and simple tax’ on the theme of ‘one nation, one market, one tax’ which could actually never happen. The GST was introduced in a much distorted form and has suffered multiple tax slabs, multiple exemptions and multiple disputes – ranging from registration to classification to returns to tax credits. Today GST is badly hit by multiple returns and multiple dates to remember. While it may have eased the life of revenue collectors but that of taxpayers and professionals is much challenging owing to technical glitches and operational inefficiencies at GSTN level. Though there have been reforms in GST but they are not as per expectations and objectives of GST. Seamless credit and refunds are still a distant dream. 40 GST Council meetings and few hundred Notifications and Circulars also could not offer a hassle free GST regime. The silver lining is that the GST Council and Central Government have been proactive to suggestions, reforms and desired changes. However, too many and too frequent changes have also added to chaos.

GSTN, the technical backbone of GST system is to a large extent responsible for compliances as well as operational inefficiencies leading to litigation. Multiple returns and multiple rates / dates make compliances difficult. Compliance level can go up with simplified system. Advance rulings is yet another grey area of controversial rulings leading to interpretational failure.

Amid Covid-19 pandemic, for the first time in three years, GST collections have fallen to more than half of average collections leading to shortfall and delays in payment of compensation to states. Tax collections in June, 2020 have jumped to ₹ 90917 crore as against low collections in April and May, 2020 due to lockdown and slow business. This is about 90% of average collections India used to garner in pre-Covid period.

Revised due dates of GSTR-1

Monthly		Quarterly
Month	NIL Late Fee if GSTR-1 filed by	Month	NIL Late Fee if GSTR-1 filed by
March, 20	10th July, 2020	JAN-MAR, 20	17th July, 2020
April, 20	24th July, 2020	APR-JUNE, 20	3rd Aug, 20
May, 20	28th July, 2020
June, 20	5th Aug, 2020

 (Source : Notification No. 53/2020- Central Tax dated 24.06.2020)

 Revised due dates of GSTR-3B

For Aggregate Turnover of more than ₹ 5 crores (In preceding financial year)

Month	NIL Late Fee if GSTR-3B filed by	Interest
February, 20	24th June, 2020	NIL till 4th April 20, 9% till 24th June 20, thereafter 18%
March, 20	24th June, 2020	NIL till 5th May 20, 9% till 24th June 20, thereafter 18%
April, 20	24th June, 2020	NIL till 4th June 20, 9% till 24th June 20, thereafter 18%
May, 20	27th June, 2020	18% after 27th June 20
June, 20	20th July, 2020	18% after 20th July 20
July, 20	20th Aug, 2020	18% after 20th Aug 20
August, 20	20th Sep, 2020	18% after 20th Sep 20

(Source : Notification No. 51/2020, 52/2020 and 54/2020 – Central Tax dated 24.06.2020 and Notification No. 36/2020 dated 03.04.2020)

 For “States A”: Aggregate Turnover upto ₹ 5 crores (In preceding financial year)

[Chhattisgarh, Madhya Pradesh, Gujarat, Daman & Diu, Dadra & Nagar Haveli, Maharashtra, Karnataka, Goa, Lakshadweep, Kerala, Tamil Nadu, Puducherry, Andaman and Nicobar Islands, Telangana and Andhra Pradesh] 

Month	NIL Late Fee if GSTR-3B filed by	Interest
February, 2020	30th June, 2020	NIL till 30th June, 20, 9% till 30th Sep, 20
March, 2020	3rd July, 2020	NIL till 3rdJuly,20, 9% till 30thSep,20
April, 2020	6th July, 2020	NIL till 6thJuly,20, 9% till 30th Sep,20
May, 2020	12th Sep, 2020	NIL till 12th Sep, 20, 9% till 30th Sep, 20
June, 2020	23rd Sep, 2020	NIL till 23rd Sep, 20, 9% till 30th Sep,20
July, 2020	27th Sep, 2020	NIL till 27th Sep, 20, 9% till 30th Sep, 20
August, 2020	1st Oct, 2020	NIL till 1st Oct 2020,18% thereafter

 For “States B”: Aggregate Turnover upto ₹ 5 crores (In preceding financial year)

[Jammu and Kashmir, Ladakh, Himachal Pradesh, Punjab, Chandigarh, Uttarakhand, Haryana, Delhi, Rajasthan, Uttar Pradesh. Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand and Odisha] 

Month	NIL Late Fee if GSTR-3B filed by	Interest
February, 2020	30th June, 2020	NIL till 30th June 20, 9% till 30th Sep 20
March, 2020	5th July, 2020	NIL till 5th July 20, 9% till 30th Sep 20
April, 2020	9th July, 2020	NIL till 9th July 20, 9% till 30th Sep 20
May, 2020	15th Sep, 2020	NIL till 15th Sep 20, 9% till 30th Sep 20
June, 2020	25th Sep, 2020	NIL till 25th Sep 20, 9% till 30th Sep 20
July, 2020	29th Sep, 2020	NIL till 29th Sep 20, 9% till 30th Sep 20
August, 2020	3rd Oct, 2020	NIL till 3rd Oct 20, 18% thereafter

 (Source: Notification No. 51/2020, 52/2020 and 54/2020 – Central Tax dated 24.06.2020)

Extension in time limit for filing any appeal or completion of any actions or proceedings

Where, any time limit for completion or compliance of any action including  any proceeding or passing of any order or issuance of any notice, intimation, notification, sanction or approval or such other action, by any authority, commission or tribunal, by any authority or by any person and  filing of any appeal, reply or application or furnishing of any report, document, return, statement or such other record, has been specified in, or prescribed or notified,  which falls during the period from the 20^th day of March, 2020 to the 29^th day of June, 2020, and where completion or compliance of such action has not been made within such time, then, the time limit for completion or compliance of such action, shall be extended upto the 30^th  day of August, 2020.

(Source: Notification No. 55/2020 - Central Tax dated 30.06.2020)

Extension in time limit for issuance of Refund Order

In view of COVID pandemic, CBIC has notified time limit for issuance of order under section 54(7) of  CGST Act, 2017 in cases where a notice has been issued for rejection of refund claim, in full or in part, falls during the period from the 20^th day of March, 2020 to the 29^th day of June, 2020, the time limit for issuance of the said order shall be extended to 15 days after the receipt of reply to the notice from the registered person or the 31^st day of August, 2020, whichever is later.

(Source: Notification No. 56/2020 - Central Tax dated 30.06.2020)

Waiver of late fee for Form GSTR-3B

• The maximum late fee for Form GSTR-3B has been capped at ₹ 500 for the tax period July, 2017 to July, 2020 subject to the condition that returns are filed before 30^th September, 2020.
• Notification No. 76/2018-CT dated 31.12.2018 has been amended to provide that for the taxpayers having an aggregate turnover of more than rupees 5 crores in the preceding financial year, who fail to furnish the return in FORM GSTR-3B for the months of May, 2020 to July, 2020, by the due date but furnish the said return till the 30th day of September, 2020, the total amount of late fee under section 47, shall stand waived which is in excess of two hundred and fifty rupees and shall stand fully waived for those taxpayers where the total amount of central tax payable in the said return is nil.

(Source: Notification No. 76/2018–Central Tax, dated the 31st December, 2018 as amended by Notification No. 57/2020 - Central Tax dated 30.06.2020)

Nil GSTR-1 to be filed by SMS facility

• The Government had recently facilitated filing of NIL Form GSTR-3B through SMS w.e.f. 8 June, 2020.
• CBIC has now decided to provide the facility to file NIL Form GSTR-1 statement also through SMS facility.
• To enable this , Rule 67A which earlier provided only the manner of furnishing NIL GSTR-3B only by SMS, has been substituted to provide for furnishing NIL GSTR-1 by SMS.
• Rule 67A of CGST Rules, 2017 which prescribes manner of furnishing of return by short messaging service ('SMS') facility has been substituted to extend benefit of filing return through SMS to 'NIL' GSTR-1 w.e.f. 01.07.2020.

(Source: Notification No. 58/2020-Central Tax dated 01.07.2020)

DGGI on Cross Empowerment of Officers

• In terms of section 6(1) of the CGST Act and section 6(1) of the respective state GST Acts respective State Tax officers and the Central Tax officers respectively are authorized to be the proper officers for the purposes of respective Acts and no separate notification is required for exercising the said powers in this case by the Central Tax Officer under the provisions of the State GST Act.
• It implies that notification would be required only if any conditions are to be imposed. For example, Notification No. 39/2017-CT dated 13.10.2017 restricts powers of the State Tax officers for the purposes of refund and they have been specified as the proper officers only under section 54 and 55 of the CGST Act and not under rule 96 of the CGST Rules, 2017 (IGST Refund on exports). If no notification is issued to impose any condition, it means that the officers of State and Centre have been appealed as proper officer for all the purposes of the CGST Act and SGST Acts.
• The registered person in GST are registered under both the CGST Act and the respective SGST / UTGST Act.
• In the absence of any such conditions, the power of Cross-empowerment under section 6(1) of the CGST Act is absolute and not conditional.

(Source: F.No. CBEC - 20/10/07/2019-GST dated 22.06.2020 issued by CBIC, GST Policy Wing )

Facility to file NIL Form GSTR-1 through SMS

• The Government has decided to provide the facility of SMS filing of NIL statement of FORM GSTR-1 from first week of July 2020.
• GST taxpayers with NIL outward supplies would not be required to log on to the GST Portal and would be able to file their NIL statement in FORM GSTR-1 through just an SMS. The status confirmation of the filed statement or return application can be tracked by them on the GST Portal by logging in to their GSTIN account and navigating to Services>Returns>Track Return Status.
• To initiate the SMS facility, the taxpayers who wish to file Nil statement in their FORM GSTR-1 are to send SMS to 14409 as NILR1GSTIN numberTax period (in MMYYYY).
• After this, they will get a six-digit code with validity up to 30 minutes and can confirm their Nil statement filing by sending: CNFR1 CODE to 14409. On successful code validation, return will be filed and taxpayers will be receiving an Acknowledgement number through SMS.

(Source: Ministry of Finance Press Release ID 1634831 dated 27.06.2020)

Transitional Credit in GST: CBICs stand – Disputes likely to continue

• There are various writ petitions filed in various high courts related to transitional credit. The issues in most of such writs are similar in nature.
• CBIC (Policy Wing) has compiled a list of issues including ITC, TRAN-I & 2 etc and CBIC’s stand thereon for uniformity
• CBIC claims that Cenvat Credits/ITC are not absolute or vested rights over and above statute and are subject to statutory provisions and rule under which they exist.
• CBIC also states that Rule 117 (Tax or duty credit carried forward under any existing law or on goods held in stock on the appointed day) or 120A (Revision of declaration in FORM GST TRAN-1) are within the rule making powers of the Central Government under the CGST Act, 2017.
• Time limit prescribed under rule 117 / 120A of CGST Act, 2017 is rational and mandatory.
• Further, Government cannot be held responsible for negligence and dereliction of duty by a responsible taxpayer.
• It appears that transitional credit will continue to be litigated in future too.

(Source: CBEC -20/10/11/2019-GST /1001 dated 22.06.2020)

GST Revenue collection for June, 2020

• The gross GST revenue collected in the month of June, 2020 is ₹ 90,917crore of which CGST is ₹ 18,980crore, SGST is ₹ 23,970crore, IGST is ₹ 40,302crore (including ₹ 15,709crore collected on import of goods) and Cess is ₹ 7,665 crore (including ₹ 607crore collected on import of goods).
• The government has settled ₹ 13,325crore to CGST and ₹ 11,117crore to SGST from IGST as regular settlement. The total revenue earned by Central Government and the State Governments after regular settlement in the month of June,2020 is ₹ 32,305 crore for CGST and ₹ 35,087 crore for the SGST.
• The revenues for the month are 91% of the GST revenues in the same month in last year (2019).

(Source: MOF Press Release  dated 01.07.2020)

As we enter into 4th year of GST, let’s hope for better times ahead in terms of simplicity, tax friendliness, better compliances and tax rationalization in terms of procedures and rates.