RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

Recently IMF has cautioned India on economic slowdown stating that India is in the midst of a significant economic slowdown calling for urgent steps to check the slowdown and continuing with fiscal consolidation. The policy reforms suggested are ongoing cleaning up of bank’s balance sheets, strengthening of bank’s governance, regulatory oversight of NBFCs, monetary easing, GST related reforms, further ease of doing business, IBC  related reforms, expanding tax base and overall macro-economic management. The growth of Indian economy is now being talked about @ 5 percent for the FY 2019-20 which will be lowest in last 10 years. There seem to be a dismal performance on industrial front.   However, International Monetary Fund has cut down India’s 2019 growth projections to 4.8% from 6.1% in October 2019, mainly due to sharper slowdown in local demand and non-banking financial sector. Fiscal deficit may also widen in current fiscal. Even the world economy’s projections have been slashed to 2.9%.

The provisions in relation to setting up of National Appellate Advance Ruling Authority have been notified w.e.f. 1^st January, 2020. CGST Rules, 2017 also stand amended extending the date for filing Form TRAN- 1 and TRAN-2 upto 31^st March, 2020 and April, 2020 respectively for those who could not file it earlier due to technical glitches. Also, new format on e-invoicing under GST have been prescribed. FAQs on e-invoicing under GST have also been released. The last date for GSTR-1 for December, 2019 has also been extended from 10.01.2020 to 17.01.2020. CBIC has also commenced audit exercise for FY 2017-18 of GST assessees as notices are being issued in large number across the country.

GST National Conference was held early this month with the objective of streamlining GST system which inter alia, covered a mechanism and machinery for disseminating inter-departmental data among various agencies like GSTC, CBDT, CBIC, FIU, DoR, DGGI and State Tax Administration etc. in order to achieve efficiency in curbing evasion and augment revenue collection. It also discussed ways to bridge the compliance gap and enhancing revenue, which would result in recovering unmatched credit, reviewing refunds, management of non-filers, reporting of electronic invoice to GST system and comprehensive and coordinated audit. Nine point strategy was framed to ensure objectivity, efficacy and smooth implementation of GST focusing on curbing tax evasion, plug loopholes and data sharing amongst multiple regulators. At the same time, it was emphasized that genuine taxpayers are not harassed. In any case, it is expected from the Government to strike a balance between ease of doing business and compliance.

Ministry of Finance has increased the GST collection targets for January and February, 2020 by ₹ 10,000 crore, i.e., ₹ 1.15 lakh crore each and for March, 2020 at ₹ 1.25 lakh crore. The GST Department has been instructed to aggressively use the data analytics features of the GSTN system. The Department plans to intensify its collection efforts in the next 2-3 months, using advanced tracking measures to track GST evaders. Most of the information is available with the authorities at the click of a button.

In an effort to plug revenue leaks, the Central Goods & Services Tax (CGST) administration has started blocking input tax credit (ITC) for assessees who availed input credit against fake invoices, or against invoices without the receipt of goods or services, or both. The action so far include- Directorate General of GST Intelligence has asked all the 26 field formations to make lists of entities that availed fake credit, and block their ITC; for the entities located outside their jurisdiction, the field formations have to forward the list to their counterparts; data is being collected from all the zones to assess how much input tax credit has been blocked and how it will impact revenue collection.

According to data collected by the DGGI, 148 cases of GST evasion were booked from July 1, 2017 to March 31, 2018, and over ₹ 750 crore was recovered. In FY19, the number of such cases rose to 1,473, with recovery amounting to nearly ₹ 20,000 crore. Till October this fiscal year, nearly 1,000 cases had been booked with over ₹ 8,000 crore recovered.

The Budget session of Parliament shall be convened from 31^st January, 2020 and the Budget for FY 2020-21 is scheduled to be presented on 1^st February, 2020. With Budget round the corner, exporters look forward to clarity on tax refunds, enhancing speed of refunds and uncertainty on continuity of promotional schemes. Delayed refunds adversely affect the liquidity and put avoidable pressure on working capital. The Budget may have some changes in GST law in relation to input tax credit, e-way bill, tax evasion, penal provisions etc. The law ought to be simple to implement and comply.

National Appellate Advance Ruling Authority

The provisions relating to National Appellate Advance Ruling Authority, as introduced by Finance Act, 2019 have been notified to come into force w.e.f. 1^st January,  2020 (i.e., sections 92 to 112 except section 97, section 100 and sections 103 to 110) CGST Act, 2017.

(Source: Notification No. 01/2020-Central Tax dated 01.01.2020)

Amendment in CGST Rules, 2020 have been notified by CBIC

• CBIC has notified CGST (Amendment) Rules, 2020 which extends the due date of furnishing FORM TRAN-1 and FORM TRAN-2 to March 31, 2020 and April 30, 2020 respectively for registered persons who could not submit the said declaration by due date on account of technical difficulties.
• Form REG-01 and Form GSTR-3A have been amended while new format of Form INV-01 has been prescribed.

(Source : Notification No. 02/2020-Central Tax dated 01.01.2020)

GSTR-1 Due date extension

Late fee for non-filing of GSTR-1 from July, 2017 to November, 2019 was waived off for the returns (GSTR-1) filed by 10^th January, 2020. The date has been extended to 17^th of January, 2020.

(Source: Notification No. 04/2020 – Central Tax dated 10.01.2020)

Appointment of Revisional Authority under GST

CBIC has authorized following officers as Revisional Authority under section 108 of CGST Act, 2017:

• Principal Commissioner or Commissioner of Central Tax for decisions or orders passed by the Additional or Joint Commissioner of Central Tax.

• Additional or Joint Commissioner of Central Tax for decisions or orders passed by the Deputy Commissioner or Assistant Commissioner or Superintendent of Central Tax.

(Source: Notification No. 05/2020 – Central Tax dated 13.01.2020)

Nine point strategy to plug revenue leakage in GST  

• Linking foreign exchange remittances with IGST refund for risky and new exporters
• Investigation of fraudulent Input Tax Credit (ITC) cases by income tax
• Single bank account for foreign bank receipts and refund disbursement
• Centre state committee to curb GST evasion
• Access to banking transactions by GST system
• Aligning GST system with Financial Intelligence Unit (FIU)
• Sharing data with other Departments
• Changes in forms

(Source: Press Release dated 07.01.2020)

GST statistics available on GST common portal 

Following statistics are available in the GST portal under the Downloads section:

• Registration type-wise Taxpayer base (active taxpayers as on 30th November, 2019).
• State-wise and Month-wise GSTR-3B and GSTR-1 filing summary for the return period July, 2017 to October, 2019.
• State-wise and Month-wise revenue collection on GST Portal.
• Month-wise revenue collection of IGST on Import on Customs Portal.
• State-wise and Month-wise settlement of IGST to States/Union Territories.
• State-wise and Year-wise Pre-GST regime revenue from taxes subsumed in GST.

The data available on the portal is in downloadable form and will be updated on a monthly basis. Presently, all the data is in Excel format, however the same will be made available in interactive graphical format soon for ease of Communication.

(Source: GSTN)

DGGI directs to block disputed Input Tax Credit against Fake Invoices

• The Directorate General of GST Intelligence (DGGI ) directed that all the Zonal Chief Commissioners have the facility to block/unblock ITC availed in a situation covered under Rule 86A(1)(a) of the CGST Rules, 2017 against fake invoices or against invoices without receipt of goods or services or both if such availed of credit are located in their jurisdiction.

• The Chief Commissioners of each zone should appoint an officer of the rank of Deputy Commissioner/Assistant Commissioner, as a nodal officer, assisted by a few more officers, who should undertake this activity.

• In a Communication issued to all Principal Commissioners of the State Department, the DGGI also directed that, all over India, should also make a Cell in their zone head office nominating one AD/DD rank officer as nodal officer assisted by a few other officers to block the credit of such avails received from their zonal CGST Chief Commissioner, who are located outside the jurisdiction of the concerned CGST Zone.

• Rule 86A. Conditions of use of amount available in electronic credit ledger-

The Commissioner or an officer authorized by him in this behalf, not below the rank of an Assistant Commissioner, has reasons to believe that credit of input tax available in the electronic credit ledger has been fraudulently availed or is ineligible in as much as the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed under rule 36- issued by a registered person who has been found non-existent or not to be conducting any business from any place for which registration has been obtained; or

Without receipts of goods or services or both.

(Source: DGGSTI  Letter No. F.No. 587/CE/167/Po1/2019/ 11219-11269 dated 13.01.2020)

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)