RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

20 November, 2019 was to last date to file Form GSTR 3B for month of October 2019. The data released by CBIC indicate that returns filed on last two days were 11.52 lakh and 14.36 lakhs where as cumulative figure till 20.11.2019 is 60.91 lakh indicating that bulk of returns are filed on last 2 days or so, of course putting tremendous pressure on the GST network resulting in GSTN system even not functioning for some time on last day. CBIC has explained that system is working properly and that any online system has to have a load threshold and for GST return filing system it is at 1.5 lakh returns filing at a particular moment. If this threshold is reached then the site shows a message asking the taxpayer to wait for his turn in a few minutes. Infact it actually advised the taxpayers not to wait till last three days to file the returns. The last date is not the due date of filing but the last date upto which it could be filed.

CBIC has also clarified that salaries are not subject to GST and no GST has been demanded on salaries paid to CEOs or employees. CBIC said that the media reports in this regard alleging that tax authorities want to impose GST on salaries paid to employees is factually incorrect and misrepresents tax authorities. Offices of an organisation in different States are regarded as distinct persons under Section 25 of CGST Act. Hence, what is taxable under GST is supply of goods and services by the head office to its branch office/s and vice versa. Any tax charged on such supplies is available to the recipient as input tax credit. This is not any additional cost to the organisation. Also, it is a worldwide practice under GST laws.

Recently, Punjab & Haryana High Court has pronounced a judgment that no arrests can be made of Chartered Accountants or Advocates who had filed the returns but are not a beneficiary or part of any fraud without there being any corroborative evidence. [Akhil Krishan Maggu & Anr. v. Deputy Director, Directorate General of GST Intelligence & Ors. [CWP No.24195 of 2019(O&M) dated 15.11.2019 (P & H High Court) (2019) 11 TMI 942].

CBIC has issued Notification Nos. 57 to 62 and Circular Nos. 124 to 126 during the last 10 days.

• CBIC Notifications issued in respect of Jammu & Kashmir and Ladakh
• Last date for filing Form GSTR-1 for the period July, 2019 to September, 2019 (Monthly) extended to 30.11.2019

[Source : Notification No. 57/2019- Central Tax dated 26.11.2019]

• Last date for filing Form GSTR-1 for the period October, 2019 extended to 30.11.2019

[Source : Notification No. 58/2019- Central Tax dated 26.11.2019]

• Last date for filing Form GSTR-7 (TDS) for the period July, 2019 to October, 2019 extended to 30.11.2019

[Source : Notification No. 59/2019- Central Tax dated 26.11.2019]

• Last date for filing Form GSTR-3B  for the period July, 2019 to September, 2019 (Monthly) extended to 30.11.2019

[Source : Notification No. 60/2019- Central Tax dated 26.11.2019]

• Last date for filing Form GSTR-3B  for the October, 2019 extended to 30.11.2019

[Source : Notification No. 61/2019- Central Tax dated 26.11.2019]

• Migration Plan from J & K State to Union Territories

As per Jammu and Kashmir Reorganization Act, 2019, the State of J & K has been divided between Union Territories, namely, UT of J & K and UT of Ladakh. Accordingly, CBIC notified the transition plan with respect to J & K reorganization w.e.f. 31.10.2019. It has prescribed a special procedure for those persons whose principal place of business or place of business lies in the erstwhile State of Jammu and Kashmir till the 30th day of October, 2019; and lies in the Union territory of Jammu and Kashmir or in the Union territory of Ladakh from the 31st day of October, 2019 onwards. This special procedure is to be followed till 31^st December 2019.

[Source : Notification No. 62/2019- Central Tax dated 26.11.2019]

• Optional filing of annual return under Notification No. 47/2019- CT dated 09.10.2019

Notification No. 47.2019-CT dated 09.10.2019 provided for special procedure for those registered persons whose aggregate turnover in a financial year does not exceed two crore rupees and who have not furnished the annual return under section 44(1) / Rule 80(1) of section 44 of the said Act read with sub-rule (1) of rule 80 of the Central Goods and Services Tax Rules, 2017. It provided that the annual return shall be deemed to be furnished on the due date if it has not been furnished before the due date for the financial year 2017-18 and 2018-19, in respect of those registered persons.

CBIC has issued certain clarifications to ensure uniformity in implementation of law, viz,

1. For persons paying tax u/s 10, the tax payers under composition scheme, may, at their own option file FORM GSTR-9A for the financial years 2017-18 and 2018-19 before the due date. After the due date of furnishing the annual return for the year 2017-18 and 2018-19, the common portal shall not permit furnishing of FORM GSTR-9A for the said period.
2. For persons paying tax u/s 51 or 52, the tax payers, may, at their own option file FORM GSTR-9 for the financial years 2017-18 and 2018-19 before the due date. After the due date of furnishing the annual return for the year 2017-18 and 2018-19, the common portal shall not permit furnishing of FORM GSTR-9 for the said period.
3. If any registered tax payer, during course of reconciliation of his accounts, notices any short payment of tax or ineligible availment of input tax credit, he may pay the same through FORM GST DRC-03.

[Source : Circular No. 124/43/2019- GST dated 18.11.2019]

• Fully electronic refund process through GST – RFD-1 and single disbursement

• In order to make the process of submission of the refund application electronic, Circular No. 79/53/2018-GST dated 31.12.2018 was issued wherein it was specified that the refund application in FORM GST RFD-01A, along with all supporting documents, shall be submitted electronically. However, various post submission stages of processing of the refund application continued to be manual.
• The necessary capabilities for making the refund procedure fully electronic, in which all steps of submission and processing shall be undertaken electronically, have been deployed on the common portal with effect from 26.09.2019.
• The Circulars issued earlier laying down the guidelines for manual submission and processing of refund claims have been suitably modified and a fresh set of guidelines needs to be issued for electronic submission and processing of refund claims.
• This Circular stipulate the modalities to be followed for all refund application filed in Form GST RFD-1 on common portal w.e.f. 26.06.2019, i.e., in relation to:

• Refund forms
• Deficiency memos
• Scrutiny of applications
• Re-crediting of electronic credit ledger on account of rejection of refund claims
• Application for refund of IGST paid on export of services and supplies made to SEZ
• Disbursal of refunds
• Refund of unutilized input tax credit
• Refund of tax paid on deemed exports guidelines for refund claim of Compensation Cess
• Zero rated supplies
• Refund of transitional credit
• Restrictions under Rule 96(10)
• Calculation of refund amount for claims of refund of accumulated input tax credit on account of inverted duty structure refund of TDS / TCS deposited in excess
• Debit of electronic credit ledger by using FORM GST DRC-03
• Refund of IGST paid on exports etc 

[Source: Circular No. 125/44/2019- GST dated 18.11.2019]

• Applicability of  GST rate on Job work  

• Services by way of treatment or processing undertaken by a person on goods belonging to another registered person will attract GST @ 12%.
• Manufacturing services which are carried out on physical inputs (goods) owned by persons other than those registered under the CGST Act, 2017 will attract GST @ 18%.
• Job work means any treatment or processing undertaken by a person on goods belonging to another registered person and the expression ‘job worker’ shall be construed accordingly.

[Source: Circular No. 126/45/2019-GST dated 22.11.2019]