CBIC has issued following Circulars to implement decisions taken by the GST Council in 48th Meeting held on 17.12.2022: CBIC has issued Circular Nos. 183 to 188/2022-GST dated 27.12.2022 as follows:
Clarification on difference in Input Tax Credit (ITC)
CBIC has clarified on how to deal with difference in Input Tax Credit (ITC) availed in FORM GSTR-3B as compared to that detailed in FORM GSTR-2A for FY 2017-18 and 2018-19. Accordingly,
- CBIC has prescribed procedure for dealing with Input Tax Credit mismatch between GSTR-3B and GSTR-2A returns.
- This applies only to Financial Years 2017-18 and 2018-19 only.
- Proper officer shall seek details from registered person regarding all invoices on which ITC has been availed in GSTR-3B and but not reflecting in GSTR-2A.
- Proper office will ascertain if all condition of section 16 have been fulfilled.
- The proper officer shall also check whether any reversal of input tax credit is required to be made in accordance with section 17 or section 18 of CGST Act and also whether the said input tax credit has been availed within the time period specified under section 16(4) of CGST Act.
- He will also verify whether tax on the said supply has been paid by the supplier.
- Where the difference exceeds Rs.5 lakhs in a financial year, certificate (to contain UDIN) from the Chartered Accountant or the Cost Accountant has been specified.
- If the difference is up to Rs.5 lakhs, a certificate from the supplier has been specified.
- These instructions will apply only to the ongoing proceedings in scrutiny/audit/ investigation, etc. for FY 2017-18 and 2018-19 and not to the completed proceedings.
(Source: Circular No. 183/15/2022-GST dated 27.12.2022)
Input Tax Credit in Place of Supply under section 12(8) of IGST law
- CBIC has clarified on the entitlement of input tax credit where the place of supply is determined in terms of the proviso to sub-section (8) of section 12 of the Integrated Goods and Services Tax Act, 2017.
- Section 12(8) of IGST Act 2017, provides for the place of supply of services by way of transportation of goods, including by mail or courier, where location of the supplier as well as the recipient of services is in India.
- In such cases of place of supply, the availability of Input Tax Credit to recipient located in India has been clarified.
- IGST shall be applicable as the service provider is in India whereas place of supply is outside India, i.e., foreign destination where goods are transported.
- The supplier of service shall report place of supply by selecting State Code as ‘96- Foreign Country’ from the list of codes in the drop-down menu available on the portal in FORM GSTR-1 and ITC would be available.
- It has thus been clarified that input tax credit would be available to the service recipient as per law.
(Source: Circular No. 184/16/2022-GST dated 27.12.2022)
Applicability of section 75(2) on tax determination
- As per section 75(2) of CGST Act, 2017, where the appellate authority or appellate tribunal or court concludes that the notice issued by proper officer under section 74(1) is not sustainable for reason that the charges of fraud or any willful-misstatement or suppression of facts to evade tax have not been established, then the proper officer shall determine the tax payable by the notice, deeming as if the notice was issued under Section 73(1).
- This Circular clarifies the time limit within which the proper officer is required to re-determine the amount of tax payable considering notice to be issued under section 73(1).
- In such cases, the proper officer is required to issue the order of redetermination of tax, interest and penalty payable within the time limit as specified in under sub-section (3) of section 75 of the CGST Act, i.e. within a period of two years from the date of communication of the said direction by appellate authority or appellate tribunal or the court, as the case may be.
- Thus, tax shall be determined within 2 years from the date of communication of the direction by appellate authority or appellate tribunal or the court, as the case may be.
- The Circular provides for different situations for determination of tax deeming the notice to be issued under section 73(1) of CGST Act, 2017.
(Source: Circular No. 185/17/2022-GST dated 27.12.2022)
Taxability of ‘No Claim Bonus’ by Insurance Companies
CBIC has clarified on taxability of ‘no claim bonus’ (NCB) offered by insurance companies to remove any doubts and uniformity in implementation of the provisions. Accordingly, CBIC has clarified that:
- There is no supply provided by the insured to the insurance company in form of agreeing to the obligation to refrain from the act of lodging insurance claim during the previous year(s)
- No Claim Bonus cannot be considered as a consideration for any supply provided by the insured to the insurance company.
- Further, No Claim Bonus NCB is a permissible deduction under section 15(3)(a) of the CGST Act for the purpose of calculation of value of supply of the insurance services provided by the insurance company to the insured.
- Where the deduction on account of No claim bonus is provided in the invoice issued by the insurer to the insured, GST shall be leviable on actual insurance premium amount, payable by the policy holders to the insurer, after deduction of No Claim Bonus mentioned on the invoice [section 15(3) (a) of the CGST Act].
(Source: Circular No. 186/18/2022-GST dated 27.12.2022)
Exemption for e-invoicing for an Entity
CBIC has clarified on applicability of e-invoicing with respect to an entity, i.e., whether exemption from mandatory generation of E-invoice is available for the entity as a whole or available in respect of certain supplies.
- It has been clarified that the exemption prescribed in Notification No. 13/2020-Central Tax dated 21.03.2020 is not restricted by the nature of supply made by the entity but available for the entity as a whole.
- Thus, exemption from generation of e-invoices is for the entity as a whole and not restricted by nature of supply being made by entity.
- For example, a banking company providing banking services, may also be involved in making supply of some goods, including bullion. The said banking company is exempted from mandatory issuance of e-invoice in terms of Notification No. 13/2020-Central Tax, dated 21st March, 2020, as amended, for all supplies of goods an d services and thus, will not be required to issue e-invoice with respect to any supply made by it.
(Source: Circular No. 186/18/2022-GST dated 27.12.2022)
Recovery and treatment of Statutory Dues w.r.t. Insolvency Proceedings
- CBIC has clarified on the treatment of statutory dues under GST law in respect of the taxpayers for whom the proceedings have been finalised under Insolvency and Bankruptcy Code, 2016.
- As per Section 84 of CGST Act, if the government dues against any person under CGST Act are reduced as a result of any appeal, revision or other proceedings in respect of such government dues, then an intimation for such reduction of government dues has to be given by the Commissioner to such person and to the appropriate authority with whom the recovery proceedings are pending.
- Recovery proceedings can be continued in relation to such reduced amount of government dues.
- The word ‘other proceedings’ is not defined in CGST Act. As the proceedings conducted under IBC also adjudicate the government dues pending under the CGST Act or under existing laws against the corporate debtor, the same appear to be covered under the term ‘other proceedings’ in Section 84 of CGST Act.
- Rule 161 of Central Goods and Services Tax Rules, 2017 prescribes FORM GST DRC-25 for issuing intimation for such reduction of demand specified under section 84 of CGST Act.
- It has been clarified that in cases where a confirmed demand for recovery has been issued by the tax authorities for which a summary has been issued in FORM GST DRC-07/DRC 07A against the corporate debtor, and where the proceedings have been finalised against the corporate debtor under IBC reducing the amount of statutory dues payable by the corporate debtor to the government under CGST Act or under existing laws, the jurisdictional Commissioner shall issue an intimation in FORM GST DRC-25 reducing such demand, to the taxable person or any other person as well as the appropriate authority with whom recovery proceedings are pending.
(Source: Circular No. 187/19/2022-GST dated 27.12.2022)
Application for Refund by Unregistered Persons
- CBIC has prescribed the manner of filing of application for refund by unregistered persons, i.e., manner in which an unregistered person, who has suffered the burden of GST, but the contract has been cancelled later (e.g. Construction contract or long-term Insurance policy, where the supplier is bound by the statutory time limit to issue credit note with GST), file application for refund of GST.
- Following procedure has been prescribed as to how the unregistered person can obtain a temporary GST registration to claim refund of GST:
- New functionality has been introduced in the GST common portal to obtain temporary registration in the supplier's State end apply for refund under the category 'Refund for Unregistered person'.
- Unregistered person would be required to undergo Aadhaar authentication and enter his bank account details in which he seeks to obtain the refund.
- Refund claim shall be filed in FORM GST RFD-01 on the common portal which cannot exceed the GST charged on the invoice
- Upload documentary evidence to establish that he has borne the tax incidence
- Where time limit for issue of Credit Note has not expired at the time of cancellation/termination of agreement/contract, the concerned suppliers can issue credit note and pass on the benefit.
- Date of cancellation of contract/ agreement for supply will be considered as the relevant date for ascertaining the time limit.
- Refund application would be not entertained, if the claim is less than INR 1,000/-
(Source: Circular No. 188/20/2022-GST dated 27.12.2022)
By: Dr. Sanjiv Agarwal -
January 5, 2023