RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

As we enter 2020, GST in India also rolls into its 31^st month (introduced w.e.f. 1^st July, 2017) still struggling with attaining maturity, consistency and settlement of issues and procedural hiccups.

GST, as a tax law with widest ramifications from any tax law in India, was introduced with much hopes on reforms and ease of doing business front but has somehow not been able to meet that end. All stakeholders still struggle to pay tax, file returns or to make other compliances on GSTN portal. Too many and too frequent changes has made this law fragile to handle and deal with. In all fairness and fitness of things, Central Government and GST Council must take immediate steps to redress all issues once for all, interact with policy makers, law framers, tax experts and all other stakeholders to identify the holes and plug them. A major restructuring is called for in GSTN portal and its deliverables. Let 2020 be the year dedicated for GST back office and portal re-corrections and re-transformation so that GST actually becomes a law it was dreamt of.

CBIC has notified Standard Operating Procedure (SoP) for dealing with non-filers in GST which entail very harsh consequences such as attachment of bank accounts and cancellation of registration for non-filing of returns for a specified period.

CBIC has extended Sabka Viswas Legacy Dispute Resolution Scheme, 2019 by 15 days upto 15^th January, 2020. It is reported that 73% of the eligible taxpayers have availed the scheme with a tax dues commitment of ₹ 30627 crore. In all, 133661 taxpayers submitted their declarations by 31^st December (Morning).

Of late there have increased number of tax evasion cases being reported and arrests being made. These emanate from fake invoices, fake input credit claims etc. There is a need for intelligent use of data analytics to curb such abuse. At the same time, GST refunds must be made seamless and simple for the eligible ones.

GST council sets up grievance redressal committees at zonal, state level

• The GST Council, in its 38th meeting, had approved constitution of 'Grievance Redressal Committee (GRC)' at Zonal and State level for speedy redressal of grievances of taxpayers pertaining to tax related issues and the related procedure.
• The committee will consist of both central tax and state tax officers, representatives of trade and industry and other GST stakeholders.
• The Grievance Redressal Committee will be constituted for a period of two years and the term of each member will be for the same period
• The committee will meet once every quarter or more frequently as decided by the co-chairs. The stakeholders will send their grievances or suggestions to the secretary of the committee, who will place the same before the committee. Further, the secretary of the committee will also submit a quarterly progress report to the GST Council Secretariat as well as to the GST Policy Wing, CBIC.
• For time bound handling of grievances and accountability, GSTN will develop a portal for recording all such grievances (including their scanned images) and their disposal.

(Source : F. No. 20/10/16/2018-GST (Pt. I) dated 24.12.2019)

Relaxation of late fee in Form GSTR-1

• The Central Government waived off the amount of late fee payable for the registered persons who failed to furnish the details of outward supplies in Form GSTR-1 for the months/quarters from July, 2017 to November, 2019 by the due date but furnishes the said details in Form GSTR-1 between the period from 19th December, 2019 to 10th January, 2020.

• The notification shall come into force with effect from the 19th  day of December, 2019.

(Source:  Notification No. 74/2019 – Central Tax dated 26.12.2019)

Blocking of Input Tax Credit (ITC): New Rule 86A!!

• Rule 86A in the CGST Rules has been inserted w.e.f. 26.12.2019 to empower the revenue to impose additional condition/restriction on use of amount of input tax credit available in the electronic credit ledger. Where the Proper Officer has reasons to believe that ITC available in E-Credit Ledger has been fraudulently availed or is ineligible may, for reasons to be recorded in writing, not allow utilization of such ITC or refund of unutilized amount to the extent of:
  • ITC availed for the invoices issued by the supplier who has been found non-existent or not to be conducting any business from any place for which registration has been obtained;
  • ITC availed without the receipt of goods or services or both;
  • ITC availed in respect of the supply, the tax charged in respect of which has not been paid to Government;
  • The recipient has been found non-existent or not to be conducting any business from any place for which registration has been obtained;.
  • ITC availed for which tax invoice or other valid document is not in the possession of the registered person.

• The new rule puts a restriction for maximum of one year on the input tax credit available in the credit ledger of taxpayer to the effect that it cannot be used for discharging the GST output liability under section 49 of CGST Act, 2017 or not to allow refund of the credit in some situations.

(Source:  Notification No. 75/2019 – Central Tax dated 26.12.2019)

CBIC notifies 18% GST rate for bags & sacks (woven/non-woven) made of polyethylene or polypropylene strips

CBIC has notified 18% GST rate for flexible intermediate bulk containers (HSN 6305 32 00) and woven/non-woven bags and sacks of polyethylene or polypropylene strips or the like, laminated or not, used for packing of goods (HSN 3923 or 6305). GST rate of 18% will be applicable from January 1, 2020.

(Source:  Notification No. 27/2019 – Central Tax (Rate) dated 30.12.2019)

The following entries shall be substituted with effect from the 1st day of January, 2020 in Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, namely, -

(5)

“Provided that the leased plots shall be used for the purpose for which they are allotted, that is, for industrial or financial activity in an industrial or financial business area: Provided further that the State Government concerned shall monitor and enforce the above condition as per the order issued by the State Government in this regard: Provided also that in case of any violation or subsequent change of land use, due to any reason whatsoever, the original lessor, original lessee as well as any subsequent lessee or buyer or owner shall be jointly and severally liable to pay such amount of central tax, as would have been payable on the upfront amount charged for the long term lease of the plots but for the exemption contained herein, along with the applicable interest and penalty: Provided also that the lease agreement entered into by the original lessor with the original lessee or subsequent lessee, or sub- lessee, as well as any subsequent lease or sale agreements, for lease or sale of such plots to subsequent lessees or buyers or owners shall incorporate in the terms and conditions, the fact that the central tax was exempted on the long term lease of the plots by the original lessor to the original lessee subject to above condition and that the parties to the said agreements undertake to comply with the same.”.

(Source:  Notification No. 28/2019 – Central Tax (Rate) dated 31.12.2019)

Reverse Charge Mechanism on Rent-a-cab services

The following shall be substituted in Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017, namely: -

(1)	(2)	(3)	(4)
“15	Services provided by way of renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient, provided to a body corporate.	Any person, other than a body corporate who supplies the service to a body corporate and does not issue an invoice charging central tax at the rate of 6 per cent. to the service recipient	Anybody corporate located in the taxable territory.”.

(Source:  Notification No. 29/2019 – Central Tax (Rate) dated 31.12.2019)

Clarification on Reverse Charge Mechanism on Rent-a-cab services

Though a supplier providing the service to a body corporate under RCM may still be paying GST @ 5% on the services supplied to other non body corporate clients, to bring in greater clarity, serial No. 15 of the notification No. 13/2017-CT (R) dated 28.6.19 has been amended vide notification No. 29/2019-CT (R) dated 31.12.19 to state that RCM shall be applicable on the service by way of renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient only if the supplier fulfils all the following conditions:–

(a) is other than a body-corporate;

(b) does not issue an invoice charging GST @12% (6% CGST + 6% SGST) from the service recipient; and

(c) supplies the service to a body corporate.

(Source:  Circular No. 130/49/2019 – GST dated 31.12.2019)

Sabka Vishwas (SVLDRS) Scheme extended

• SVLDRS-2019 has been extended by 15 days from 31.12.2019 to 15.01.2020.

• To ensure that eligible tax payers do not miss out SVLDRS due to last minute rush, the last date has been extended by 15 days as a one time measure.

• 73% of the total eligible taxpayers have availed the scheme and committed tax dues of ₹ 30627 crores (gross tax dues ₹ 69550 crore).

• Out of total of 1.84 lakh eligible taxpayers, 133661 taxpayers have availed the scheme.

[Source: PIB Release dated 31.12.2019; Notification No. 7/2019-CE(NT) dated 31.12.2019)]

GST Revenue collection for December, 2019

The  gross GST revenue collected in the month of December. 2039 is ₹ 1,03,184 crore of which CGST is Rs. 19,962 crore, SGST is ₹ 26,792 crore, IGST is ₹ 48,099 crore (including ₹ 21,295 erore collected on imports) and Cess is ₹ 8,331 crore (including ₹ 847 crore collected on imports). The total number of GSTR 3B Returns filed lor the month of November up to 31^st December, 2019 is 81.21 lakh.

(Source:  Press Note dated 01.01.2020)