RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

The slowdown in economy continues. The output in core sectors has claimed by 5.2 percent in September, 2019 with production in all major sectors declining - steel, cement, electricity, natural gas, crude oil, refinery products and coal. The ease of doing business ranking has however, improved with India moving up at 63rd position.

It is learnt that the revenue Officer’s Committee on revenue augmentation is examining the feasibility of imposing GST on some items including food grains on reverse charge basis as tax on certain items is today lower than the tax in pre-GST era. It is also reviewing rates under composition scheme. It is also learnt that E-way bill on gold is being examined by the Law Committee as a measure to tighten enforcement amid reports of GST evasion. But at the same time, it will not be easy amid security concerns. To address that, an encrypted version of e-way bill is being discussed.

CBIC has issued Notification No. 51 dated 31.10.2019   to give effect to the constitution of Jammu & Kashmir and Laddakh as Union Territories which will now be subject to UTGST in place of SGST.

GST collection declined 5.29 per cent to ₹ 95,380 crore in October 2019, in comparison to the same month last year. GST revenue collection in October 2018 stood at ₹ 1,00,710 crore. Notably, GST collection increased 3.76 per cent in comparison to September 2019, when it was ₹ 91,916 crore. 

It is a hard fact that GST revenue collections have off late shown a falling trend as is clearly evidenced from the official data released by Government itself:

                                                                                                                             (Rs. in crore)

Month	2019	2018	2017
October	95380	100710	93333
September	91916	94442	94067
August	98202	93960	95633

The possible reasons for this decline may be many and arguable but one thing is certain- there is a visible slow down in economy, otherwise YoY figures will not very much. While cyclical factors are not ruled out, the declining trend talks of slowdown in economy in manufacturing and service sectors, i.e., from where GST mainly comes from. Decline in demand and consumption of goods and services leading to stress on production capacities (automobile is just one example), unemployment coupled with non-commensurate increments in salaries, of course owing to economic slowdown, fall in disposable incomes and so on…….. the reasons could be added.

One needs to look at the decline in tax revenue in right perspective and we can not draw a conclusion that despite festive season, tax collection is down. No, that explanation may prove be wrong. The tax collection for October, 2019 will get reflected in November, 2019 when tax for October is payable . Moreover, input tax credit is being taken by assessees (we can assume that it is genuinely availed) and rate of GST has been reduced on many goods and services in past 6 months owing to trade demands and political compulsions.

Going forward, India needs to tighten the loose ends in GST administration and frame a policy for GST rates rationalization. It should also have lower tax rates on expanded base for taxation and gradually reduce exemptions. Bringing in real estate, electricity and some petroleum products may also be revisited. Looking at continued economic slowdown and reduced consumption, it is only expected that GST revenue collections may continue to be under stress for remaining part of the current fiscal.

• Guidelines for concessional GST on Purchase of Vehicle by Disabled

The Department of Heavy Industry, Ministry of Heavy Industries & Public Enterprises, Government of India, in pursuance of Ministry of Finance Notification No. 14/2019-Integrated Tax Rate dated 30.09.2019, has notified the revised guidelines for availing the concessional rate of GST, for purchase of vehicle by the persons with orthopaedic disability, of 40% or more . Accordingly,

• The concession can be availed for following motor vehicles of length not exceeding 4000mm only :

•  Petrol, Liquefied petroleum gases (LPG) or compressed natural gas (CNG) driven vehicles of engine capacity  not exceeding 1200cc; and
• Diesel driven vehicles of engine capacity not exceeding 1500 cc

• For availing the concessional duty, an eligible applicant with Orthopedic Physical Disability (40% or more) shall make an application to Department of Heavy Industry (DHI) in the format prescribed. Documents to be submitted are as follows :

• Medical certificate duly signed and countersigned.
• Copy of Income Tax Return filed for the last three years.
• A self-declaration for not availing concession in last five years and for non - disposal of vehicle for 5 years from the date of purchase in the prescribed format.

[Source : F.No. 12/42 /2015-AEI dated 24.10.2019]

• Clarification on SVLDRS

• Pending Audit

            An audit shall be considered as pending (where there is a demand raised in such audit) till the time, either the Show Cause Notice is issued or the assesses deposits such demand. Even if Final Audit report is issued before 30.06.2019 but no SCN is issued, and demand is still pending, audit shall be considered as pending.

     Voluntary Declaration

            No check is required in case of voluntary declaration as there are adequate safeguard which can be evoked later in case of false declaration.

• Ration by ARC

            An Asset Reconstruction Company (ARC) can make disclosure under this scheme and pay dues of its defaulters.

• Late Filing of Return

            Late fees waiver for any Service Tax return filed for period prior to 30.06.2019 where there is a declaration of pending demand shall be covered under the scheme.

• Single Declaration

            Disclosure of tax demands under multiple returns can be filed under a single registration. However, tie declaration limit (of 50 Lakhs) shall he considered for each return separately.

• Pending Appeal

            Appeals filed after 30.06.2019 shall be considered as eligible under the scheme if the taxpayer files an application for with drawl of such appeal. Thus with drawl in such cases must precede the application.

[Source : Circular No.  1073 / 06 /2019 –CX dated 29.10.2019]

• Jurisdiction of Jammu Commissionerate over UT of J & K and Ladakh

• The Central Board of Indirect Taxes and Customs (CBIC) had notified Jurisdiction of Jammu Commissionerate over Union Territory of Jammu & Kashmir and Union Territory of Ladakh.
• By the Virtue of Jammu and Kashmir Reorganization Act, which downgrades and bifurcates the State of Jammu and Kashmir into the Union Territory of Jammu & Kashmir and Union Territory of Ladakh with effect from October 31?
• The Central Government had earlier notified October 31 as the ‘appointed day’ for the taking effect of the Act passed by the Parliament on August 6. The Act was made along with the measures taken by the Central Government to revoke the special status enjoyed by the State of J&K by diluting Article 370 of the Constitution.

[Source: Notification No. 51/2019 – CT dated 31.10.2019]

• Filing of Application for cancellation of Registration & filing clarifications by GSTPs

• Normal/Composition/ SEZ Developer/ SEZ Unit/ Casual Taxable Person/ ISD/ NRTP users can now select a GST Practitioner for Filing of Application for Cancellation of Registration.
• UN Body/Embassy/ONP users can now select a GST Practitioner for filing clarifications on issues raised by a tax official on their registration application.
• The GSTP can save draft of the application. The taxpayer/ users and GSTP would be able to work on the drafts of the application, saved by either of them.

(Source: GSTN)

• Amendment of Registration in Core and Non-Core fields through a GST Practitioner

• TDS/TCS/NRTP/OIDAR/UN Body/Embassy/ONP Taxpayers can now select a GST Practitioner for filling the Amendment of Registration of Core and Non-Core fields.
• The GSTP can amend details and save the draft. The taxpayer would be able to work on the saved drafts of the application and file it.

(Source: GSTN)

• GST Collections for the month of October, 2019

• GST collection declined 5.29 per cent to ₹ 95,380 crore in October 2019, in comparison to the same month last year. GST revenue collection in October 2018 stood at ₹ 1,00,710 crore. Notably, GST collection increased 3.76 per cent in comparison to September 2019, when it was ₹ 91,916 crore.
• Out of gross GST collection of ₹ 95,380 crore, CGST was ₹ 17,582 crore, SGST was ₹ 23,674 crore, IGST was ₹ 46,517 crore (including ₹ 21,446 crore collected on imports), and cess was ₹ 7,607 crore (including ₹ 774 crore collected on imports). The total number of GSTR-3B returns filed for the month of September up to October 31, 2019, was 73.83 lakh.

(Source: Business Today dated 01.11.2019)

• Quoting of DIN on all Communications to Taxpayers 

• CBIC has made Document Identification Number (DIN) mandatory to be mentioned an all communications issued by officers of CBIC to taxpayers and other  concerned persons.
• Such communications may be search authorization, arrest memos, summons, inspection notices, notices of  show cause, enquiry etc.
• A communication without availed DIN may be issued in exceptional circumstances but will have to be regularized within 15 days.
• Quoting DIN will be effective from 08.11.2019
• Quoting DIN will enhance transparency and accountability.

(Source : Circular No. 122/41/2019-GST dated 05.11.2019)