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Dr. Sanjiv Agarwal By: Dr. Sanjiv Agarwal
September 19, 2022
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CBIC issued detailed guidelines for launching of prosecution under section 132 of the CGST Act, 2017 vide Instruction No. 4/2022-23 (GST –Investigation) on 1st September 2022 followed by guidelines for filing and / or revising TRAN-1 / TRAN-2 returns as per directions given by the Apex Court in UNION OF INDIA & ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. & ANR.[2022 (7) TMI 1232 - SC ORDER] case recently. These guidelines issued vide Circular No. 180/12/2022-GST dated 09.09.2022 have been discussed inside alongwith Filco case itself. It may be noted that the option of filing or revising TRAN-1 / TRAN-2 on the common portal during the period from 01.10.2022 to 30.11.2022 is a one-time opportunity for the applicant to either file the said forms, if not filed earlier, or to revise the forms earlier filed. The applicant is required to take utmost care and precaution while filing or revising TRAN-1 / TRAN-2 and thoroughly check the details before filing his claim on the common portal.

The tax audit report under income tax has been recently amended (Form 3CD) with some additional requirements in clause 44of the Form 3CD w.e.f. 01.04.2022. Such disclosures under clause 44 are applicable to all assessees who are liable to be audited under section 44AB of Income Tax Act, 1961, irrespective of the fact that they are registered under GST or not. It also requires the breakup of total expenditure such as relating to goods or services exempt for GST, relating to composition dealers, payment to registered entities etc.

It is understood that Group of Ministers set up for studying and recommending the GST rates on sports betting, casinos and horse trading may prefer different rates for different activities All these activities are different and have different methodology, risks as well as earnings.

Opening of GSTN Portal for Transitional Credit

  • Supreme Court had in UNION OF INDIA & ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. & ANR.[2022 (7) TMI 1232 - SC ORDER] held that Goods and Service Tax Network (GSTN) is directed to open common portal for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 for two months i.e. w.e.f. 01.09.2022 to 31.10.2022.
  • Union of India has approached the Supreme Court for thirty days extension for opening special window for transitional credit claims under GST. This extension would ensure that GSTN gets sufficient time to make changes in the common portal to facilitate filing. The miscellaneous application filed by Union of India has sought the extended time between 01.10.2022 and 31.12.2022 instead of September, 2022 to October, 2022. Moreover, the portal avoids IT changes between 07th to 24th of every month in view of the peak filing period.
  • The Supreme Court bench has accepted the request of Government vide order dated 02.09.2022 and has granted extension of 30 days to Ministry of Finance for opening of the GST common portal. It has directed the GSTN to open the portal from 1st October, 2022 to 31st December, 2022 to give full effect to its order dated 22.07.2022. The portal shall therefore, be open for 92 days from 1st October, 2022.

[Source: Supreme Court Order dated 22.07.2022 read with Order dated 02.09.2022]

Guidelines for filing / revising TRAN -1 & TRAN -2 returns

In terms of directions dated 22.07.2022 and 02.09.2022 of Supreme Court in UNION OF INDIA VERSUS FILCO TRADE CENTRE PVT. LTD. [2022 (9) TMI 514 - SC ORDER] , CBIC has issued Circular No. 180/12/2022-GST dated 09.09.2022 prescribing guidelines for applicant for filing TRAN-1 / TRAN-2 or revising the TRAN-1 / TRAN-2 or revising the TRAN-1 / TRAN-2 filed earlier. Accordingly,

  • The option of filing or revising TRAN-1/TRAN-2 on the common portal during the period from 01.10.2022 to 30.11.2022 is a one-time opportunity for the applicant to either file the said forms, if not filed earlier, or to revise the forms earlier filed. The applicant is required to take utmost care and precaution while filing or revising TRAN-1/TRAN-2 and thoroughly check the details before filing his claim on the common portal.
  • Once the applicant files TRAN-1 / TRAN-2 or revises the said forms filed earlier on the common portal, no further opportunity to again file or revise TRAN-1 / TRAN-2, either during this period or subsequently, will be available to him.
  • The applicant may file declaration in FORM GST TRAN-1 / TRAN-2 or revise earlier filed TRAN-1 / TRAN-2 duly signed or verified through electronic verification code on the common portal.
  • The applicant shall at the time of filing or revising the declaration in FORM GST TRAN-1 / TRAN-2, also upload on the common portal the pdf copy of a declaration in the prescribed format.
  • Where the applicant files a claim in FORM GST TRAN-2, he shall file the entire claim in one consolidated FORM GST TRAN-2, instead of filing the claim tax period wise as referred to in sub-clause (iii) of clause (b) of sub-rule (4) of rule 117 of the Central Goods and Services Tax Rules, 2017.
  • The applicant shall download a copy of the TRAN-1 / TRAN-2 filed on the common portal and submit a self-certified copy of the same, along with declaration in Annexure ‘A’ and copy of TRANS-3, where ever applicable, to the jurisdictional tax officer within 7 days of filing of declaration in FORM TRAN-1 / TRAN-2 on the common portal.
  • The applicant can edit the details in FORM TRAN-1 / TRAN-2 on the common portal only before clicking the “Submit‖ button on the portal.
  • Those registered persons, who had successfully filed TRAN-1 / TRAN-2 earlier, and who do not require to make any revision in the same, are not required to file/ revise TRAN-1 / TRAN-2 during this period from 01.10.2022 to 30.11.2022.
  • The declaration in FORM GST TRAN-1 / TRAN-2 filed/revised by the applicant will be subjected to necessary verification by the concerned tax officers.

(Source: Circular No. 180/12/2022-GST dated 09.09.2022)

Launch of Prosecution under GST Law

CBIC has issued a set of detailed instruction / guidelines for launching of prosecution under section 132 of the CGST Act, 2017.

Section 132 of CGST Act, 2017 codifies the offences under GST law requires initiation of criminal proceedings and prosecution. Accordingly,

  • The nature of evidence collected during the investigation should be carefully assessed.
  • Decision should be taken on case-tocase basis considering various factors, such as, nature and gravity of offence, quantum of tax evaded, or ITC wrongly availed, or refund wrongly taken and the nature as well as quality of evidence collected.
  • Prosecution should not be filed merely because a demand has been confirmed in the adjudication proceedings. Prosecution should not be launched in cases of technical nature, or where additional claim of tax is based on a difference of opinion regarding interpretation of law.
  • In the case of public limited companies, prosecution should not be launched indiscriminately against all the Directors of the company but should be restricted to only persons who oversaw day-to-day operations of the company and have taken active part in committing the tax evasion etc. or had connived at it.
  • Decision on prosecution should normally be taken immediately on completion of the adjudication proceedings, except in cases of arrest where prosecution should be filed as early as possible.
  • In cases where any offender is arrested under section 69 of the CGST Act, 2017, prosecution complaint may be filed even before issuance of the Show Cause Notice.
  • Prosecution should normally be launched where amount of tax evasion, or misuse of ITC, or fraudulently obtained refund in relation to offences specified under sub-section (1) of section 132 of the CGST Act, 2017 is more than Rs. 5 crore.
  • Monetary limit shall not be applicable in case of:
  • Habitual evaders -A company/taxpayer would be treated as habitual evader, if it has been involved in two or more cases of confirmed demand (at the first adjudication level or above) of tax evasion/fraudulent refund or misuse of ITC involving fraud, suppression of facts etc. in past two years such that the total tax evaded and/or total ITC misused and/or fraudulently obtained refund exceeds Rs. 5 crores. DIGIT database may be used to identify such habitual evaders.
  • Arrest cases -Cases where during the course of investigation, arrests have been made under section 69 of the CGST Act.
  • Prosecution should be filed only after obtaining the sanction of the Pr. Commissioner/Commissioner of CGST in terms of section 132(6) of CGST Act, 2017.
  • In DGGI cases, prosecution should be filed only after obtaining the sanction of Pr. Additional Director General/Additional Director General, Directorate General of GST Intelligence (DGGI) of the concerned zonal unit/ Hqrs.
  • Where during the course of investigation, arrest(s) have been made and no bail has been granted, all efforts should be made to file prosecution complaint in the Court within sixty (60) days of arrest. In all other cases of arrest, prosecution complaint should also be filed within a definite time frame.
  • In cases investigated by DGGI wherever an arrest has been made above procedure should be followed by officers of equivalent rank of DGGI.
  • In the case of Companies, both the legal person as well as natural person are liable for prosecution under section 132 of the CGST Act. Under section 137(3), the provisions have been made for partnership firm or a Limited Liability Partnership or a Hindu Undivided Family or a Trust.
  • Where it is deemed fit to launch prosecution before adjudication of the case, the Additional/Joint Commissioner or Additional/Joint Director, DGGI, as the case may be, supervising the investigation, shall record the reason for the same and forward the proposal to the sanctioning authority.
  • The adjudicating authority should invariably indicate at the time of passing the order itself whether it considers the case fit for prosecution, so that it can be further processed and sent to the Pr. Commissioner/ Commissioner for obtaining his sanction of prosecution.
  • Where at the time of passing of adjudication order, no view has been taken on prosecution by the Adjudicating Authority, the adjudication branch shall re-submit the file within 15 days from the date of issue of adjudication order to the Adjudicating Authority to take a view on prosecution.
  • Once the sanction for prosecution has been obtained, prosecution in the court of law should be filed as early as possible, but not beyond a period of sixty days by the duly authorized officer (of the level of Superintendent).
  • For appeal against court order in case of inadequate punishment / acquittal, Prosecution Cell shall submit its recommendation to Principal Commissioner / Commissioner if it is of the opinion that accused person has been let off with lighter punishment than what is envisaged in the Act or has been acquitted despite the evidence being strong, filing of appeal should be considered against the order within the stipulated time.
  • In DGGI cases, Prosecution Cell in the Directorate shall examine the judgment of the court and submit their recommendations to the Pr. Additional Director General/ Additional Director General who shall take a view regarding acceptance of the order or filing of appeal.
  • Principal Chief Commissioner / Chief Commissioner shall sanction withdrawal of prosecution based on Commissioner’s report, new evidences and facts.
  • In case of DGGI cases, Principal Director General shall be the competent authority to sanction withdrawal of prosecutions.
  • Where it is found on merit that there is no contravention of the provisions of the Act in the adjudication proceedings and such order has attained finality, Pr. Commissioner/ Commissioner or Pr. Additional Director General/ Additional Director General after taking approval of Pr. Chief Commissioner/ Chief Commissioner or Pr. Director General/ Director General, as the case may be, would ensure filing of an application through Public Prosecutor in the court to allow withdrawal of prosecution in accordance with law.
  • The withdrawal can only be affected with the approval of the court.
  • It shall be the responsibility of the officer who has been authorized to file complaint, to take charge of all documents, statements and other exhibits that would be required to be produced before a Court. The list of exhibits etc. should be finalized in consultation with the Public Prosecutor at the time of drafting of the complaint.
  • Where a complaint has not been filed even after a lapse of 60 days from the receipt of sanction for prosecution, the reason for delay shall be brought to the notice of the Pr. Commissioner/ Commissioner or the Pr. Additional Director General/ Additional Director General of DGGI by the Additional/ Joint Commissioner in charge of the Commissionerate or Additional/ Joint Director of DGGI, responsible for filing of the complaint.
  • Filing of prosecution need not be kept in abeyance on the ground that the taxpayer has gone in appeal/ revision.
  • The Superintendent in charge of prosecution section should monitor receipt of all serially numbered adjudication orders and obtain copies of adjudication orders of missing serial numbers from the adjudication section every month.
  • Section 159 of the CGST Act, 2017 grants power to the Pr. Commissioner/Commissioner or any other officer authorised by him on his behalf to publish name and other particulars of the person convicted under the Act. In deserving cases, the department should invoke this section in respect of all persons who are convicted under the Act.
  • Prosecution, once launched, should be vigorously followed.
  • Section 138 of the CGST Act, 2017 provides for compounding of offences by the Pr. Commissioner/ Commissioner on payment of compounding amount. The provisions regarding compounding of offence should be brought to the notice of person being prosecuted and such person be given an offer of compounding.
  • Where  a  case  is  considered  suitable  for  launching  prosecution  and  where adequate evidence is forthcoming, securing conviction largely depends on the quality of investigation.
  • Senior should officers to take personal interest in the investigation of important cases of GST evasion and in respect of cases having money laundering angle and to provide guidance and support to the investigating officers.

 [Source: CBIC Instruction No. 04/2022-23(GST-Investigation) dated 01.09.2022]

GST on use of ‘Executive Lounges’ at Railways Status

  • Use of ‘Executive Lounges’ is a paid service at various railway stations and the charges collected are subjected to levy of GST.
  • E.g. use of executive lounge is charged @ Rs. 200 for two hours and such Rs.200 shall be eligible to levy of Service Tax @ 12%, i.e. Rs. 24, total amount being Rs. 224. The use of executive lounge comes with certain value added services such as air conditioned comfort, TV, recliners, water, wifi, washroom etc. The charges are for availing the use of lounge facilities.
  • There is no separate charge for use of only washroom and are available for free also or at nominal charges of Rs. 2-5 on pay and use basis.

[Source: Media Reports / IRCTC clarification dated 02.09.2022]

Changes in Table 4 of GSTR 3B - Reporting of ITC availment, reversal and Ineligible ITC on GSTN portal

  • GSTN has made certain changes in Table 4 of GSTR 3B in relation to eligible input tax credit (ITC) of GSTR-3B return.
  • It may be noted that the Government vide Notification No. 14/2022 – Central Tax dated 05th July, 2022 has notified few changes in Table 4 of Form GSTR-3B for enabling taxpayers to correctly report information regarding ITC availed, ITC reversal and ineligible ITC in Table 4 of GSTR-3B. Taxpayers may also refer to CBIC Circular No. 170/02/2022-GST dated 06th July, 2022 for clarification on reporting of ITC availment, ITC reversal and Ineligible ITC in GSTR-3B.
  • Accordingly,
    1. All non-reclaimable reversal of ITC needs to be reported in table 4(B)(1)
    2. All reclaimable ITC reversals may be reported in table 4(B)(2). It should be noted that ITC reversed under 4(B)(2) can be reclaimed in table 4(A)(5) at appropriate time and the break-up detail of such reclaimed ITC should be provided in 4(D)(1) in the same return.
    3. The ITC not-available mentioned in GSTR-2B of the taxpayer has to be reported in 4(D)(2) of table 4.
    4. Any ITC availed inadvertently in Table 4(A) in previous tax periods due to clerical mistakes or some other inadvertent mistake maybe reversed in Table 4(B)2.
  • The Notified changes of Table 4 of GSTR-3B have been incorporated in GSTR-3B and are available on GST Portal since 01.09.2022.
  • The taxpayers are advised to report their ITC availment, reversal of ITC and ineligible ITC correctly as per new format of Table 4 of GSTR-3B at GST Portal for the GSTR-3B to be filed for the period August 2022 onwards.

[Source: GSTN dated 02.09.2022]


By: Dr. Sanjiv Agarwal - September 19, 2022



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