RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

The Covid hit life and economy continues and all of us are becoming used to it and both co-live together. The economy is still weak and looking at various options on how to recover and move forward. Presently in India, local lockdowns are in force depending upon local situation as nationwide lockdown is not considered feasible. Indian economy has shrunk by 15-25% in first quarter of financial year 2020-21 and it is imperative for India to gain control over Covid -19 to have sustainable economic recovery.

Indian economy continues to be in a dull phase, like all other world economies. Predictions suggest that GDP could fall by 9-10 percent in the current fiscal owing to covid-2019. The Government ought to take immediate steps to revive economy by enhancing public expenditure, boosting demand and consumption, employment generation and fiscal benefits.

The 41^st meeting of GST Council was held on 27^th August, 2020 to discuss the issue of compensation cess to states. While no solution could be found out, centre has proposed two options of borrowing. It also stated that Covid is an act of God and has resulted in huge shortfall in state’s revenue and resulted compensation cess liability. The states, particularly not ruled by NDA are against the same and will not agree. There is a likely cess liability of ₹ 300 crore out of which ₹ 65000 crore may be collected of remaining ₹ 235 crore, ₹ 97 crore will be on account of GST implementation and balance due to Covid, an act of God which centre may not agree to compensate. The Central Government has offered to work with Reserve Bank of India to facilitate borrowing.  If this happens, the period of cess may go beyond five years, i.e., 2022 and / or cess rates may also go up or some more items brought under cess net.

GST compensation has becomes a burning issue for states who are now virtually protesting for their agreed share of compensation cess. Since it has been agreed between the centre and the states, that too unanimously, there can not and should not be any ground for denial. If the foundation itself was weak, this was bound to happen, i.e., promising a cess based on unrealistic growth of 14 percent per year. Infact, even the economy has not grown at such a rate, what to talk of GST revenue.

Having given two options to borrow from RBI against compensation cess shortfall, states are divided, more so politically. While the non-BJP / NDA ruled states are not agreeing, other states may opt for first option. States have two options – either to borrow the shortfall of ₹ 97000 crores on account of GST or the entire shortfall of ₹ 2.35 lakh crore. If accepted, this will end the controversy for the present. But, the ultimate hit is going to be on citizens only by way of longer cess period coupled with higher cess on some items. Moreover, it is going to set a bad precedent for ever.

As per the latest reports, 12 states have intended to opt for ₹ 97000 crore borrowing option to meet GST revenue shortfall till 14.09.2020. Manipur has opted for the second option of ₹ 2.35 lakh crore. Most of the states shall take up a stand in next few days.

Form GSTR-2B is a newly introduced form which shall be generated for all registered tax payers on the basis of information furnished by its suppliers every month. It will be available for every month on 12^th day of succeeding month and used as a ITC statement. Further, e-invoicing will become mandatory from October 1, 2020. NIC has issued highlights of e-invoice system and alongwith frequently asked questions on providing clarification on e-invoices, amendments in invoicing, QR Code etc.

The gross GST Collections in the month of August, 2020 are reported to be at ₹ 86449 crore out of which CGST is ₹ 15906 crore, SGST ₹ 21064 crore and IGST ₹ 42264 crore and compensation cess at 7215 crore. With the economy opening up gradually and festive season ahead, revenue is likely to grow in coming months.

Amendments in CGST Rules, 2017

1. Registration Application [Rule 8(4A)]

W.e.f. 01.04.2020, sub-rule (4A) has been substituted as follows in relation to registration application for person other than persons specified in section 25(6D) of CGST Act, 2017.

“Where an applicant, other than a person notified under sub-section (6D) of section 25, opts for authentication of Aadhaar number, he shall, while submitting the application under sub-rule (4), with effect from 21st August, 2020, undergo authentication of Aadhaar number and the date of submission of the application in such cases shall be the date of authentication of the Aadhaar number, or fifteen days from the submission of the application in Part B of FORM GST REG-01 under sub-rule (4), whichever is earlier.”

2. Verification of registration application (Rule 9)

W.e.f. 21.08.2020 following amendments / substitutions have been made:

1. Where a person, other than a person notified under sub-section (6D) of section 25, fails to undergo authentication of Aadhaar number as specified in sub-rule (4A) of rule 8 or does not opt for authentication of Aadhaar number, the registration shall be granted only after physical verification of the place of business in the presence of the said person, in the manner provided under rule 25.
2. The proper officer may, for reasons to be recorded in writing and with the approval of an officer not below the rank of Joint Commissioner, in lieu of the physical verification of the place of business, carry out the verification of such documents as he may deem fit.
3. Provided that where a person, other than a person notified under sub-section (6D) of section 25, fails to undergo authentication of Aadhaar number as specified in sub-rule (4A) of rule 8 or does not opt for authentication of Aadhaar number, the notice in FORM GST REG-03 may be issued not later than twenty one days from the date of submission of the application.

4. If the proper officer fails to take any action -

1. within a period of three working days from the date of submission of the application in cases where a person successfully undergoes authentication of Aadhaar number or is notified under sub-section (6D) of section 25; or

2. within the time period prescribed under the proviso to sub-rule (2), in cases where a person, other than a person notified under sub-section (6D) of section 25, fails to undergo authentication of Aadhaar number as specified in sub-rule (4A) of rule 8; or

3. within a period of twenty one days from the date of submission of the application in cases where a person does not opt for authentication of Aadhaar number; or

4. within a period of seven working days from the date of the receipt of the clarification, information or documents furnished by the applicant under sub-rule (2),

the application for grant of registration shall be deemed to have been approved.

3. Physical verification of business premises w.e.f. 21.08.2020 [Rule 25]

W.e.f. 21.08.2020, this rule will apply on failure of addhaar authentication or due to not opting for aadhaar authntication.

(Source: Notification No. 62/2020-Central Tax dated 20.08.2020)

Extension of due date for GSTR-4

The due date for filing FORM GSTR-4 for financial year 2019-2020 extended from 31.08.2020 to 31.10.2020.

[Source : Notification No. 64/2020-CT dated 31.08.2020]

Virtual mode hearing now mandatory

• CBIC has made conduct of personal hearings in virtual mode through video conferencing mandatory under CGST / IGST Acts, 2017, Customs Act 1962, Central Excise Act, 1944 and for Service Tax.
• In any proceedings before appellate or adjudicating authority, the authority shall mandatorily indicate that the personal hearing would take place through video conferencing facility. For this purpose he/she shall also indicate the email address for correspondence etc.
• The date and time of hearing along with link for the video conference shall be informed to the appellant/ respondent or their authorized representative and the concerned Commissioner representing revenue through the official email, giving the details of officer-in-charge who would provide assistance to the party, for conducting the virtual hearing. This link should not be shared with any other person without the approval of the adjudicating/appellate authority.
• Virtual hearing through video conference shall be held from the office of adjudicating/appellate authority or any official video conference facility set up in the office of the adjudicating/appellate authority.
• The record of personal hearing submitted in this manner shall be deemed to be a document for the purpose of the relevant statute read with Section 4 of the Information Technology Act, 2000.
• These guidelines are in compliance of the directions given by Hon'ble Supreme Court under Article 142 of the Constitution of India in Suo Moto Writ (Civil) No. 5/2020 and supersedes instructions dated 27.04.2020.

[Source: CBIC Instruction dated 21.08.2020 (F.No. 390/Misc. /3/2019-JC)]

Import data in GSTR-2A

Two new tables have been, inserted in GSTR-2A for displaying details of import of goods from overseas and inward supplies made from SEZ units / SEZ developers. Taxpayers can now view their bill of entries data which is received by the GST System (GSTN) from ICEGATE System (Customs). The present data upload has been done on a trial basis to give a feel of the functionality and to get feedback from the taxpayers on the same.

Currently, the system is displaying data up to 6^th August, 2020. Further, taxpayers may note that system is currently does not contain import information for bill of entries filed at non-computerized ports (non-EDI ports) and imports made through courier services/post office. This will be made available shortly.

It may also be noted that amendment information made in the details of bill of entries will also be provided soon.

Taxpayers are requested that they share their feedback through raising a ticket on the self-service portal (https://selfservice.gstsystem.in/)

(Source: Press Release dated 29.08.2020)

Due date extension for any compliance/action by NAPA

The time limit for completion or compliance of any action, by the National Anti-Profiteering Authority, in relation to Anti-profiteering measure which falls during the period from 20.03.2020 to 29.11.2020 and where completion or compliance of such action has not been made within such time, the time-limit for completion or compliance of such action, shall be extended up to the 30.11.2020.

(Source:  Notification No. 65/2020-Central Tax dated 01.09.2020)

Launch of GSTR-2B for the month of July, 2020

The GST Council, in its 39th meeting held on 14th March 2020, had recommended to adopt and implement  the incremental approach of linking the present system of filing of GSTR-3B and GSTR-1 and other significant changes like enhancements in GSTR-2A and its linking to GSTR-3B. One such enhancement that  the Council recommended was introduction of an auto-drafted input tax credit (ITC) statement which would aid in assisting / determining the input tax credit that is available for every taxpayer.

GSTR-2B is going to be such an auto-drafted ITC statement which will be generated for every registered person on the basis of the information furnished by his suppliers in their respective GSTR-1, 5 (non-resident taxable person) and 6 (input service distributor). It is a static statement and will be made available for each month, on the 12thday of the succeeding month. It is expected that GSTR-2B will help in reduction in time taken for preparing return, minimising errors, assist reconciliation & simplify compliance relating to filing of returns.

Key features in GSTR-2B which would assist taxpayers in return filing are as under:

1. It contains information on import of goods from the ICEGATE system including inward supplies of goods received from Special Economic Zones Units / Developers. This is not available with the release of GSTR-2B for the month of July and will be made available shortly.
2. A summary statement which shows all the ITC available and non-available under each section. The advisory given against each section clarifies the action to be taken by the taxpayers in their respective section of GSTR-3B;
3. Document level details of all invoices, credit notes, debit notes etc. is also provided both for viewing and download;

• GSTR-2B for the month of July 2020 has been made available on the common portal on trial basis.
• Since, this is the first time that the statement is being introduced, taxpayers are advised to refer to GSTR-2B for the month of July, 2020 only for feedback purposes.
• All taxpayers are requested to go through their GSTR-2B for July 2020 and after comparing the same with the credit availed by them in July 2020, provide feedback (if any) on any aspect of GSTR-2B by raising a ticket on the self-service portal (https://selfservice.gstsystem.in/).
• All taxpayers are advised to view the detailed advisory relating to GSTR-2B on the common portal before using the statement.

Taxpayers can access their GSTR-2B through: Login to GST Portal > Returns Dashboard > Select Return period >GSTR-2B.

                                   (Source: Press Release dated 29.08.2020)