RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

On a brighter note, it is a official statement that Indians economy has grown fastest in Q 1 of current fiscal due to strong comeback of manufacturing and construction sectors. GDP has grown @ 20.1% in Q1 of 2021-22 benefiting from 24.4% decline in Q1 of previous year. The manufacturing sector expanded by 49.6% and construction sector by 68.3%. Government feels that these numbers indicate recovery, that too ‘V’ shaped in GDP as well as GVA. Such recovery is likely to sustain. The full year growth is likely to be in 9% range only. India may reach pre-covid levels by next year. However, on a cautionary note, this growth may not be sustainable if private consumption loses steam. Both, private consumption and Government spending have to go up.

According to Chief Economic Advisor (CEA), India is likely to see robust growth due to reforms, capex push, rapid vaccinattion etc. India’s macroeconomic fundamentals are stronger now.

Core industries grew by 9.4% in July, 2021 on YoY basis. Almost all sectors grew except crude oil. Further, @ 21.3% fiscal deficit in April – July, 2021 is lowest in nine years with total net tax collection of ₹ 5.30 lakh crore.

Given the increase in numbers of GDP growth, another school of thought feels that the growth is lower than expected, the informal sector of economy is still suffering and reeling in recession, resultant unemployment and lack of fiscal stimulus.

GST advance rulings continue to excite us. For example, GST on other charges in construction services (other than construction) will be 18%. Amounts received as reimbursements or discounts / rebate from the principal company are taxable under GST. There will be no GST on hostel rent of less than ₹ 1000 per day per student…

CBIC has issued three Notifications Nos. 32-34, all dated 29.08.2021. The last date to avail benefit of late fee amnesty scheme for GSTR-3 B has been again extended by three months to 30.11.2021. The timelines have also been extended for filing of application for revocation of cancellation of registration to 30.09.2021, where the due date of filing of application for revocation of cancellation of registration falls between 01.03.2020 to 31.08.2021.  The filing of FORM GSTR-3B and FORM GSTR-1/ IFF by companies using electronic verification code (EVC), instead of Digital Signature certificate (DSC) has already been enabled for the period from 27.04.2021 to 31.08.2021. This has been further extended to 31st October, 2021.

 There are number new updates on GSTN portal which inter alia include, implementation of rule 59(6) for details of outward supplies, HSN Codes and GSTR-1 filing, e-way bills etc.

The gross GST revenue collected in the month of August 2021 is ₹ 1,12,020 crore of which CGST is ₹ 20,522 crore, SGST is ₹ 26,605 crore, IGST is ₹ 56,247 crore (including ₹ 26,884 crore collected on import of goods) and Cess is ₹ 8,646 crore (including ₹ 646 crore collected on import of goods).

The revenues for the month of August 2021 are 30% higher than the GST revenues in the same month last year. During the month, the revenues from domestic transaction (including import of services) are 27% higher than the revenues from these sources during the same month last year. Even as compared to the August revenues in 2019-20 of ₹ 98,202 crore, this is a growth of 14%.

GST collection, after posting above ₹ 1 lakh crore mark for nine months in a row, dropped below ₹ 1 lakh crore in June 2021 due to the second wave of covid. With the easing out of COVID restrictions, GST collection for July and August 2021 have again crossed ₹ 1 lakh crore, which clearly indicates that the economy is recovering at a fast pace. Coupled with economic growth, anti-evasion activities, especially action against fake billers have also been contributing to the enhanced GST collections. The robust GST revenues are likely to continue in the coming months too.

The 45^th meeting of GST Council is scheduled to be held on 17 September, 2021 at Lucknow (UP) which will be held in physical mode after 16 months and five virtual meetings.

GIST OF RECENT NOTIFICATIONS ISSUED BY CBIC ON GST

Central Goods and Services Tax (Seventh Amendment) Rules, 2021.

Following rules have been amended :

A.        Rule 26 (1)

• Providing relaxation to Companies registered under the Companies Act, 2013, the Government had extended a facility to furnish returns in FORM GSTR 1 and FORM GSTR 3B using electronic verification (‘EVC’) till 31 August 2021. The same is further extended till 31 October 2021.
• Further, from 1 November 2021 all the provisos to Rule 26 (1) of the CGST Rules, 2021 shall be omitted.

Accordingly, with effect from (‘w.e.f’) 1 November 2021, along with other taxpayers the Companies registered under the Companies Act, 2013, shall also be allowed to furnish returns, submit applications, reply to notices, file appeals or furnish any other documents using a digital signature (‘DSC’) as well as through EVC .

The same is a welcome provision for a large cross-section of taxpayers, as it reduces dependency on digital signatures.

 

 B.       Rule 138 E

• The said rule restricts a registered person to generate Part A of an e-way bill where he has not furnished returns in FORM GSTR 1, FORM GSTR 3B, or FORM GST CMP 08 for 2 consecutive tax periods.
• The Government has added a proviso stating that the above restriction shall not apply from 1 May 2021 to 18 August 2021 for the returns for the month of March 2021 to May 2021.

 

C.       FORM GST ASMT 14

• As per Section 63 of the CGST Act, 2017 read with Rule 100 of The CGST Rule, 2017 a proper officer is required to issue a notice in FORM GST ASMT 14 containing the grounds on which the best judgement assessment is made, in a case where the assessee was liable for registration but does not get himself registered or whose registration is cancelled but was liable to pay tax.
• The Government has made certain changes in the said form w.e.f  29 August 2021.

 [Source: Notification No. 32/2021-CT dated 29^th August, 2021]

Extension of Late Fees Amnesty Scheme in respect of Form GSTR 3B for the period July, 2017 to April, 2021

Government had announced Amnesty Scheme for Late Fee Waiver in respect of returns on 1^st June, 2021 in respect of below returns: –

• Form GSTR 3B (Notification 19/2021 – CT dated 1^st June, 2021)
• FORM GSTR 1 (Notification 20/2021 – CT dated 1^st June, 2021)
• Form GSTR 4 (Notification 21/2021 – CT dated 1^st June, 2021)

for the period July, 2017 to April, 2021 provided the same were filed between the period 1^st June, 2021 to 31^st August, 2021 as follows:

S.No.	Nature of Return	Late Fee Capped under Amnesty Scheme
1	Nil Return	₹ 500 per return (CGST – ₹ 250, SGST – ₹ 250)
2	Other than Nil Return	₹ 1,000 per return (CGST – ₹ 500 & SGST – ₹ 500)

Government has now extended the time-limit upto which amnesty for reduced late fee in respect of GSTR 3B (not in respect of GSTR 1 & GSTR 4) can be availed. The last date to avail the late fee Amnesty Scheme is now extended to 30^th November, 2021 instead of 31^st August, 2021.

(Nil return does not means tax payable is nil; Nil returns means no details for furnishing in returns).

It may be  noted that amnesty was provided on 1^st June, 2021 for filing of GSTR 3B, GSTR 1, & GSTR 4 however, extension till 30^th November, 2021 have been granted only for filing of form GSTR 3B.

[Source: Notification No. 33/2021-CT dated 29^th August, 2021]

 

Extension of due date to apply for Revocation of Cancellation of Registration

Where a registration has been cancelled under Section 29(2)(b) or 29(2)(c) [Non filing of returns] of CGST Act and the time limit for making an application of revocation of cancellation of registration under section 30(1) of CGST Act* falls during the period from the 1^st March, 2020 to 31^st August, 2021, the time limit for making such application shall be extended upto the 30^th September, 2021.

*As per Section 30(1) of CGST Act, any registered person, whose registration is cancelled by the proper officer on his own motion, may apply to such officer for revocation of cancellation of the registration in the prescribed manner within 30 days from the date of service of the cancellation order.

However, such period may, on sufficient cause being shown, and for reasons to be recorded in writing, be extended by the:

(a) Additional Commissioner or the Joint Commissioner, as the case may be, for a period not exceeding thirty days;

(b) Commissioner, for a further period not exceeding thirty days, beyond the period specified in clause (a). (Extension time is notified w.e.f. 1^st January, 2021)

[Note: If appeal is already filed before appellate authority against cancellation order (due to lapse of time-limit to apply for revocation of cancellation order), the same cannot be withdrawn (even if application of revocation time-limit is extended) as GST portal does not allow to withdraw appeal unlike withdrawal of refund application functionality]

[Source: Notification No. 34/2021-CT dated 29^th August, 2021]

Implementation of Rule 59(6) on GSTN Portal

• Rule-59(6) of CGST Rules, 2017; inserted vide Notification No. 1/2021 dated 1st January 2021, provides for restriction in filing of GSTR 1 in certain cases.
• Rule 59(6) will be implemented on GST Portal from 1st September, 2021. On implementation of the said Rule, the system will check that whether before the filing of GSTR 1/IFF of a tax-period, the following has been filed or not:

              a) GSTR-3B for the previous two monthly tax-periods (for monthly filers),

                                                            OR

b) GSTR-3B for the previous quarterly tax period (for quarterly filers), as the case may be. The system will restrict filing of GSTR 1/IFF till Rule-59(6) is complied with.

• It will operate on clicking the SUBMIT button of FORM GSTR 1 and the system will give an error message if the condition of Rule-59(6) is not met.
• Implementation of Rule-59(6) on the GST Portal will be completely automated, similar to the blocking & un-blocking of e-way bill as per Rule-138E and facility for filing of GSTR 1 will be restored immediately after filing of relevant GSTR-3B. No separate approval would be needed from the tax-officer to restore the facility for filing of FORM GSTR 1.
• To ensure no disruption in filing FORM GSTR 1/IFF, taxpayers who have not filed their pending GSTR-3B, especially from period November, 2020 and afterwards may do so at the earliest.

[Source: GSTN (//www.gst.gov.in/) dated 26.08.2021]

Advisory on HSN and GSTR-1 filing

• As per Notification No. 78/2020-CT dated 15.10.2020, taxpayers need to declare and report in GSTR-1, Harmonised System of Nomenclature (HSN) Code of Goods and Services supplied by them on raising of tax invoices, with effect from 1st April, 2021 as follows:
  • ATO upto ₹ 5 crore in previous year     4 digits
  • ATO above ₹ 5 crore in previous year   6 digits
• However, following errors are being reported :
  •   HSN used by them for reporting in FORM GSTR 1 is not available in the table 12 HSN drop-down.
  • Facing issues in adding the required HSN details in table -12 and filing of statement of outward supplies in FORM GSTR 1 of July 2021.
  • In some JSON files, the HSN field is coming as blank from the offline tool, along with other errors like processed with Error, In Progress or Received but pending and  Duplicate Invoice Number found in payload please correct
• Detailed advisory on the action to be taken by the taxpayers to resolve above issues has been available at click on: https://tutorial.gst.gov.in/downloads/news/advisoryonhsnandgstr1.pdf (not reproduced / extracted).

[Source: GSTN (//www.gst.gov.in/) dated 26.08.2021]

 GST Collection in August, 2021

The gross GST revenue collected in the month of August 2021 is ₹ 1,12,020 crore of which CGST is ₹ 20,522 crore, SGST is ₹ 26,605 crore, IGST is ₹ 56,247 crore (including ₹ 26,884 crore collected on import of goods) and Cess is ₹ 8,646 crore (including ₹ 646 crore collected on import of goods).

[Source: PIB Press Release ID 1751048  dated 01.09.2021]

Discussions to this article

[OmPrakash jain]

Whether the rule 59(6) putting restrictions on filing outward supply in GSTR-1, for non filers of GSTR-3B for the prescribed period is constitutionally valid.

 

[Dr. Sanjiv Agarwal]

Let the courts interpret this.