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CBIC vide Notification No. 26/2022 dated 26 December 2022, has notified various provisions under the CGST Rules, which had been proposed in the 48th GST Council Meeting:
CGST Rule No.
Reversal of ITC in case of non-payment of tax by the supplier and re-availment thereof
Where ITC has been availed in FORM GSTR-3B in respect of invoices, which has been reported by the vendor in GSTR-1 but not in GSTR-3B till the 30th September, the said ITC shall be reversed while furnishing FORM GSTR-3B on or before the 30th November following the end of such financial year;
Where the ITC is not reversed in FORM GSTR-3B on or before the 30th day of November following the end of such financial year, such amount shall be payable by the said person along with interest thereon u/s. 50 of the CGST Act;
Further, where the supplier subsequently reports the invoice in FORM GSTR-3B for the said tax period, the said registered person may re-avail such credit in FORM GSTR-3B for a tax period thereafter.
Manner of dealing with difference in liability reported in statement of outward supplies and that reported in return
The registered person shall now receive intimation, in respect of mismatch between GSTR 1 vs. GSTR 3B, in FORM GST DRC-01B Part A to either (a) pay the differential liability fully or partially, along with interest u/s. 50 of the CGST Act, through FORM GST DRC-03 and furnish the details thereof in Part B of FORM GST DRC-01B; or (b) furnish a reply on common portal, incorporating reasons in respect of that part of the differential tax liability that has remained unpaid, if any, in Part B of FORM GST DRC-01B.
Procedure for filing application of refund by the unregistered buyers
Refund application shall be accompanied by a statement containing the details of invoices, along with copy of such invoices, proof of making such payment to the supplier, the copy of agreement, the letter issued by the supplier for cancellation or termination of agreement for supply of service, details of payment received from the supplier against cancellation of such agreement along with proof thereof, in a case where the refund is claimed by an unregistered person where the agreement for supply of service has been cancelled or terminated.
Refund application shall be accompanied by a certificate issued by the supplier to the effect that he has paid tax in respect of the invoices on which refund is being claimed by the applicant; and other such prescribed declarations.
A proviso has been inserted in Rule 89(2)(m) to provide that certificate is not required to be furnished in cases where refund is claimed by an unregistered person who has borne the incidence of tax.
Application to the Appellate Authority
An application to the Appellate Authority shall be filed in FORM GST APL-03, and a provisional acknowledgment shall be issued to the Appellant immediately.
Where the decision or order appealed against is uploaded on the common portal, a final acknowledgment, indicating appeal number, shall be issued in FORM GST APL-02 by the Appellate Authority and the date of Appeal will be the date of the provisional acknowledgment.
Where the decision or order appealed against is not uploaded on the common portal, the Appellant shall submit a self-certified copy of the said decision or order within a period of seven days from the date of filing of FORM GST APL-03 on the portal and thereafter a final acknowledgment, indicating appeal number, shall be issued in FORM GST APL-02 by the Appellate Authority.
The CBIC vide Notification No. 31/2022 - Customs (ADD) dated 20 December 2022 has imposed Anti-Dumping Duty on Stainless-Steel Seamless Tubes and Pipes classifiable under CTH 7304 that are originating in or exported from China PR for a period of 5 years in order to remove material injury suffered by the domestic industry.
The 48th GST Council meeting has concluded on 17 December 2022 under the chairmanship of the Smt. Nirmala Sitharaman. While not all the points in the agenda could be discussed during the meeting, a number of key recommendations have been made. Following are key highlights of the recommendations made in the Meeting:
Currently, Section 16(2) of the CGST Act as well as Rule 37 of the CGST Rules does not mention the word 'proptionate' in respect of reversal of ITC in case of non-payment of dues to suppliers within 180 days. This amendment therefore would be welcome by the Trade and Industry. Nonetheless, the validity of such provision u/s. 16(2) of the CGST Act is still under judicial review. Accordingly, the fate if this provision is still unclear.
Further, the facility for withdrawal of Appeal would also ensure that no unnecessary litigation would burden the appellate authorities. However, what the Trade and Industry awaited from this meeting was clarifications in respect of formation of GSTAT and tax applicability on online gamings. It is understood that on account of paucity of time, the same could not be discussed. It is expected that these discussions woud be taken up in the next meeting.
The Petitioner had hired a transporter for transporting goods and generated E-Way Bill for such transportation. However, due to the non-motorable condition of the vehicle, the goods could not be delivered on time. During inspection, the authorities found that the E-Way Bill had been expired before the time of inception. Accordingly, the vehicle was detained and demand was raised u/s 129 of the CGST Act. Aggrieved , the Petitioner filed a Special Civil Application before the Gujarat HC challenging the detention of the vehicle and the demand.
The HC observed that the Department could not establish any element of tax evasion with fraudulent intent or negligence on the part of the Petitioner. Further, the HC relied on the judgment in RE: Govind Tobacco Manufacturing Co [2022-VIL-347-ALH] wherein it had been held that the seizure of vehicle and the goods is not permissible under the law, if the EWay Bill expires on transit. Consequently, the detention order was quashed and set aside.
Govind Alloys Private Limited [TS-653-HC(GUJ)-2022-GST]
It would be pertinent to note that as a settled principle of law, coercive actions against assessees is not permissible in case of procedural lapses. The CBIC vide Circular No. 64/38/2018 - GST dated 14 September 2018, had clarified that proceedings u/s. 129 of the CGST Act shall not be initiated in case of specified lapses in E-Way Bills. While the circular does not specifically cover cases where the E-Way Bills have expired during transit, the Board's intention seems to be clear that invokation of penal provision u/s. 129 is unwarranted in case of minor lapses.
The Revenue had alleged that the Petitioner had not paid the dues to its suppliers, within 180 days. Thus, contravening the provision of Section 16 of the CGST Act. Basis the said allegation, the Revenue had blocked u/r. 86A of the CGST Rules.
The HC observed that in terms of Rule 86A, ITC can be restricted only where the ITC available in the credit ledger has been ‘fraudulently availed’ or is ‘ineligible.’ It was further observed that invocation of Rule 86A is a drastic measure and therefore, can be taken only when the conditions for taking such measures are met. It is trite law that statutory provisions empowering harsh measures such as freezing the assets of a person, have to be strictly construed.
Basis the above observations, the HC directed the Respondent to unblock the ITC of the Petitioner.
Sunny Jain vs. Union of India [W.P.(C) 6444/2022, CM Nos.19502/2022 and 33763/2022]
Last year, the CBIC had issued Guidelines dated 02 November 2021, whereby, it had been clarified the power u/r. 86A can only be exercised upon fulfillment of the conditions. Namely, (i) credit availed without receipt of goods/services, (ii) credit availed on invoices issued by supplier who is non-existent, (iii) credit availed on invoices, in respect of which tax is not paid, (iv) credit availed on invalid documents, and (v) person claiming credit is found to be non-existent.
Given the defined conditions in the rule itself, which has also been clarified vide Guidelines, exists, the Revenue authorities are expected to observe the same in the interest of justice. Such arbitrary actions by the Department cause unnecessary hardships to the taxpayers, which compels them to knock the doors of the judicial forums. This, in-turn adds burden on the already over-burdened judiciary.
The Petitioner’s refund of GST paid on the notice pay received from the erstwhile employee was rejected. Aggrieved the Petitioner preferred a Writ before the Kerala HC for seeking refund of GST paid on notice pay recovery.
The HC observed that Circular No. 178/10/2022-GST dated 03, July 2022, had expressly clarified that the notice pay from employees is not a taxable transaction. Further, the HC also noted that while the Circular was issued after the issuance of impugned order, the Revenue cannot deny the benefits entitled to the Petitioner, since the provisions of a Circular have to be deemed to apply retrospectively. Furthermore, as the Circular are binding on the Department, no officer can take a view contrary to stipulations contained in such Circulars. Accordingly, the impugned order was quashed.
Manappuram Finance Limited [2022-VIL-807-KER]
Vide the Circular dated 03 July 2022, the position had become amply clear that GST is not leviable on notice pay recovery. Moreover, it is a settled legal principle that the circulars are clarificatory in nature and therefore, such clarifications apply retrospectively. Thus, the Revenue ought to have granted the refund to the Petitioner in the instant case. Nonetheless, now that the HC has expressly held so, the taxpayers, who have paid GST on notice pay recoveries, may apply for refunds.
Coming to the end of the year 2022, we must take a moment to look at appreciate how far we have come. Given that the year had started as a ‘recovery year’, in the midst of the Russo-Ukraine war, which had slowed down the global economy, what we have collectively achieved this year, is rather commendable.
From domestic economic standpoint, the GST collections have continued its streak of increasing trend. Since January 2022 till November 2022 the GST collections have consistently been above INR 1,00,000 Crore per month with highest ever GST collection of INR 1,67,540 Crore in April 2022. The trends also show a consistently increasing year on year growth in the GST collection.
Apart from the growing revenue, there have also been ample judicial and legislative growth in the past month. The CBIC has now replaced the CCI as the national anti-profiteering watchdog, dissolving the NAA. In addition thereto, true to our view of bringing news which are beyond facts, we have covered all the judicial and regulatory developments in direct and indirect taxes with interesting insights. We have also covered developments of the erstwhile indirect tax laws, which can be helpful precedents for disposing the pending litigations.
Compiling all such developments, we are glad to bring to you, the 27th Edition of our ‘Vision 360’ Newsletter in association with TIOL. We have covered the key judicial and legislative developments in Direct, Indirect Tax other regulatory areas in the month of September 2022. We hope that reading of the newsletter would bring an enriching experience to you! Your valuable feedback is always welcome at email@example.com or firstname.lastname@example.org
The Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme has extended their export benefits under the tax refund scheme to the pharmaceuticals, chemicals and iron & steel sectors under chapters 28, 29, 30 and 73 of ITC (HS) schedule of items. The expanded list of items will be applicable for exports made from December 15, 2022 and shall be applicable till September 30, 2023.
[Press Release dated 07.12.2022]
Though the RoDTEP benefits for the newly introduced sectors remains seemingly narrow and limited, but still is capable of boosting the already growing export market of India. It also opens the immense possibilities for the left out sectors / industries to make formal representations to the Government and avail the benefits. Further, the rate changes in the existing tarrif of RoDTEP benefits does also provide and opportunity to increase the existing rates through formal justification/representation to the relevant authorities.
The Petitioner contented that certain observations and allegations about fake invoices and fake forms were made in the impugned order however, the SCN had no such allegations or any details. Aggrieved, the Petitioner preferred a Writ.
The HC emphasized that it was duty of the proper officer to provide all the details to the Petitioner. It was further held that every SCN should contain every detail required to be effectively responded mandatorily. Accordingly the impugned order and SCN was quashed and set aside.
Archana Textile Corporation [2022-VIL-661-BOM]
As a settled position of law, there is an implicit requirement of observance of the principles of natural justice that the notice must be expressed in such a manner that reasons can be spelt out from the same. Under the GST regime, it is often seen that the Revenue authorities issue summary notices without making concrete allegations and proceed to raise demands. In a recent judgement by the Gujarat HC in RE: Vinayak Metal [2022-VIL-759-JHR], it was held that notices and orders, which are not decipherable, are non-speaking and therefore, liable to be quashed.
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