Highlights of Key Changes in GST w.e.f January 01, 2022

[niranjan gupta]

The Goods and Services Tax has witnessed some key changes heading into the New Year 2022. The government had made amendments earlier but notified to make it effective from January 1, 2022.

These changes flow from the amendment in the CGST Rules; Changes in the Concessional Rate Notification on specified handicraft items; the existing GST rates in textile sector would continue beyond 1st January, 2022; Mandatory Aadhaar Authentication for registered person; changes vide the Finance Bill, 2021, that amends the Central Goods and Services Tax Act, 2017 and so on. Now, the author of this article would like to shed light on the important key changes in the provisions of GST Laws.

Here are the highlights of key changes in GST effective from January 1, 2022:-

1. Summary of Notification No. 40/2021-Central Tax dated 29.12.2021:

1. Section 16 (2) (aa) of the CGST Act, has been notified which states that the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37. Therefore, the validity of Rule 36(4) of the CGST Rules that prescribes the condition with 5% limit to avail ITC on invoices/debit notes not uploaded by the supplier in GSTR-1 which will be of no relevance w.e.f. January 01, 2022 as the recipient would not be able to take any ITC if the same is not reflecting in recipients GSTR- 2B.
2. Due date for GSTR-9 as well as GSTR-9C for the F.Y 2020-21 has been extended from 31st Dec, 2021 to 28th Feb, 2022 by amending Rule 80.                         
3. Rule 95 has been amended to provide that where Unique Identity Number of the applicant is not mentioned in a tax invoice, the refund of tax paid by the applicant on such invoice shall be available only if the copy of the invoice, duly attested by the authorized representative of the applicant, is submitted along with the refund application in FORM GST RFD-10.
4. Rule 142 has been amended to align it with new provisions of Sec 129 providing for 7 days’ time for issuance of notice and further 7 days for issuance of order.
5. A new Rule 144A has been inserted providing for recovery of penalty by sale of goods or conveyance detained or seized in transit.

• Where the penalty u/s 129 is not paid within 15 daysof date of receipt of order of detention, Proper officer shall proceed for sale or disposal of goods or conveyance so detained.
• The said goods or conveyance shall be sold through a process of auction, including e-auction, for which a notice shall be issued in FORM GST DRC-10.
• Auction process shall be cancelled where the person transporting said goods or the owner of such goods pays the amount of penalty, including any expenses incurred in safe custody and handling of such goods or conveyance, after the time period of 15 days but before the issuance of notice for auction.

Atleast 15 days’ notice to be given for auction.

• Where an appeal has been filed by the person under the provisions of sub-section (1) read with sub-section (6) of section 107, the proceedings for recovery of penalty by sale of goods or conveyance detained or seized in transit under this rule shall be deemed to be stayed.

(f)  Rule 154 has been substituted to provide for Disposal of proceeds of sale of goods or conveyance and movable or immovable property.

(g)  Rule 159 has been amended to provide that a copy of order of attachment in FORM DRC-22 shall also be sent to the person whose property is being attached under section 83. Other changes in Rule 159 have been made to incorporate the changes made in Sec 83 providing for attachment of property of a person other than the taxable person i.e any person specified in sub-section (1A) of section 122.

(i)  Any objection to the order of provisional attachment of property is to be filed in FORM DRC-22A whose format has also been notified now.

(j)  Changes have been made in FORM DRC-10, DRC-11, DRC-12, DRC-22, DRC-23 and APL-01 to incorporate above changes as well as the changes brought vide N.N 39/2021-CT dated 21st Dec, 2021.

2. Certain changes in theConcessional Rate Notification on specified handicraft items from January 01, 2022 (Notification No. 20/2021- Central Tax (Rate) dated December 28, 2021)

S. No.	Old HSN	Old Entry	New HSN	New Entry
4	4414 00 00	Wooden frames for painting, photographs, mirrors etc	4414	Wooden frames for painting, photographs, mirrors etc
29	7419 99	Art ware of brass, copper/ copper alloys, electro plated with nickel/silver	7419 80	Art ware of brass, copper/ copper alloys, electro plated with nickel/silver

3. The GST Council has recommended to defer the decision to change the tax rates for textile from 5% to 12% recommended in the 45th GST Council meeting.Consequently, the existing GST rates in textile sector would continue beyond 1st January, 2022.

4. Mandatory Aadhaar authentication for registered person under GST

The Central Government vide Notification No. 38/2021-CT dated 21.12.2021 has notified January 1, 2022as the implementation date for Rule 10B of CGST Rules, 2017.

In the said rule, it is mandatory for the registered person to undergo Aadhaar authentication for the below purposes:-

5. Filing of application for revocation of cancellation of registration in FORM GST REG-21 under Rule 23 of CGST Rules, 2017
5. Filing of refund application in FORM RFD-01 under Rule 89 of CGST Rules, 2017
5. Refund of the IGST paid on goods exported out of India under Rule 96 of CGST Rules, 2017.

Need to complete this process to have timely refund.

5. E-commerce operator and registered person would report taxable supplies notified under section 9(5) of CGST Act, 2017 in GSTR-3B

As per the GST Council decision to notify “Restaurant Service”under section 9(5) of the CGST Act, 2017 along with other services notified earlier such as motor cabs, accommodation and housekeeping services wherein the tax on such supplies would be paid by electronic commerce operator if such supplies made through it, Notification No. 17/2021-Central Tax (Rate) and 17/2021-Integrated Tax (Rate) dated 18.11.2021 have been issued. Accordingly, the tax on supplies of restaurant service supplied through e-commerce operators, shall be paid by the e-commerce operator with effect from the 1st January, 2022.

6. Changes vide the Finance Act, 2021, that amends the Central Goods and Services Tax Act, 2017 (Notification No. 39/2021–Central Tax dated December 21, 2021)

• • Section 7 (1) (aa) of the CGST Act, is notified and effective retrospectively w.e.f 1st July, 2017 to tax supplies between club and its members. This amendment has included the transaction between club and its member for any consideration within the purview of “supply”. [Clause 108]
  • Explanation 1, in clause (ii) to Section 74 of the CGST, Act has been amended to delink the provisions of penalty under Sec 129 & Sec 130 from Sec 74. [Clause113]
  • Explanation to Section 75(12) of the CGST Act, shall be inserted which states that “self-assessed tax” shall include the tax payable in respect of details of outward supplies furnished under section 37, but not included in the return furnished under section 39. This means Self assessed tax shall also include supplies and tax declared in GSTR-1 as well. [Clause 114]
  • The powers of provisional attachment of property under Section 83 of the CGST Act, has been increased to include any proceedings under Chapter XII (Assessment), Chapter XIV (Inspection, Search, Seizure & Arrest) or Chapter XV (Demands & Recovery).[Clause 115]
  • Section 107 of the CGST Act, has been amended to provide that an appeal against an order Sec 129(3) shall be filed only when a sum equal to twenty-five per cent of the penalty has been paid by the appellant. [Clause 116]
  • Section 129 of the CGST Act, relating to Detention, seizure and release of goods and conveyances in transit has been amended. Increased in the Penalty provision from 100% to 200%.  [Clause 117]
  • Pursuant to sub-section 3 of section 129 of the CGST Act, the proper officer detaining or seizing goods or conveyance shall issue a notice within seven daysof such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven daysfrom the date of service of such notice, for payment of penalty under clause (a) or clause (b) of sub-section (1). [Clause 117]
  • Further, sub- section (3) of Section 130 of the CGST Act, has been omittedfrom said section. (“Where any fine in lieu of confiscation of goods or conveyance is imposed under sub-section (2), the owner of such goods or conveyance or the person referred to in sub-section (1), shall, in addition, be liable to any tax, penalty and charges payable in respect of such goods or conveyance.”)  [Clause 118]
  • Section 151 of the CGST Act, has been substituted to enlarge the scope of the same. The Commissioner’s power to collect statistics has been substituted with the power to call for information. [Clause 119]
  • Section 152 of the CGST Act, has been amended to allow the information collected under Sec 150 or Sec 151 to be used for the purpose of any proceedings under this Act ONLY after giving an opportunity of being heard to the person concerned. [Clause 120]
  • Para 7 of Schedule II to the CGST Act, deeming the supply of goods by an unincorporated association or body of persons to members has been omitted retrospectively w.e.f 1st July, 2017.  [Clause 122]

Conclusion:

The Government is continuously taking steps to tighten the noose of the tax evasion matters. There are so many powers given to the department so that possible leakage of the tax can be traced.

As noted above, these amendment will have far reaching impact on the taxpayers and their daily business activities. In the interest of ease of doing business, it would be suggested that the government should laid down procedural guidelines for the betterment of taxpayers so that the honest and bonafide taxpayers are not caught in the cross fire.

We are trying to make tax payer responsible to comply with the GST laws. The Government should also be responsible towards taxpayer. Need concrete steps to act timely with respect to:

1. 1. Refunds
   2. Interest on refunds
   3. Assessment
   4. Adjudication
   5. Appeals