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By: Dr. Sanjiv Agarwal
April 17, 2021
All Articles by: Dr. Sanjiv Agarwal       View Profile
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In the backdrop of rising Covid-19 cases in its second wave, the International Monetary Fund (IMF) has raised its forecast of economic growth for India to 12.5% as per latest World Economic Outlook (WEO) for the FY 2022. In fact, it has pitched India as the fastest growing economy major and the only economy to likely to grow in double digits.

IMF has forecasted world economy to grow at 6% in FY 2021 and at 4.4% in FY 2022. None other country in the world is expected to grow at rates close to India (China @ 8.4%, US @6.4%, Spain @ 6.4%, France @ 5.8%).

Also, Reserve Bank of India has also maintained economic forecast at 10.5% for financial year 2022, looking at uncertainly over Covid surge in second phase now India is reeling under. There has been no change in RBI’s stance in Monetary Policy announced in April first week. Once again, RBI assures that it will do whatever it takes to sustain the economic recovery.

Domestic economic activities are likely to rebound and it will directly impact tax revenue. Indirect tax collection has exceeded the revised estimate by 9% for the financial year 2020-21 which is a welcome sign of economic activities picking up.

Advnce rulings continue to provide fodder to media and stress to taxpayers AAAR, Tamil Nadu recently held that ‘gift vouchers’ are not ‘goods’ but to be considered as an instrument of ‘consideration’. Such pre-paid vouchers are neither goods  nor services and GST will not be applicable on supply of vouchers but underlying supply of goods or services shall alone be taxable at the time of redemption. We also have conflicting advance rulings on allowability of ITC on CSR expenses. E-invoicing is likely to become a fraud proof and fool proof system of invoicing, doing trade and transportation of goods. It will also curb tax evasion. There is a dedicated invoice registration portal for the same.

GST Council meeting is long overdue but it may happen after recent state elections.

GST law: not Citizen Friendly – Apex Court

  • Purpose of Parliament for GST law was meant to be citizen friendly tax structure which is defeated by the manner in which GST law has been enforced.
  • Actions of tax authorities ought to strike a balance between protection of tax revenue vis-à-vis allowing genuine businesses to function and operate. Tax authorities should not look at all businesses to be fraudulent.
  • Powers of provisional attachment of assets u/s 83 in GST law are ‘draconian and as a ‘pre-emptive strike’.
  • Tax authorities can’t start attaching assets unless there is alienation, winding up or liquidation of assets.
  • Tax authorities have to abide by the mandate of law, the letter of law and the sprit of law.

[Source: Supreme Court observations dated 06.04.2021 in M/S RADHA KRISHAN INDUSTRIES VERSUS STATE OF HIMACHAL PRADESH & ORS. - 2021 (4) TMI 568 - SC ORDER]

Debatable point of law – can’t be subject of an order of rectification

  • Section 102 of the CGST Act, 2017 provides that the Appellate Authority may amend any order passed by it under section 101 so as to rectify any error apparent on the face of the record.
  • An error apparent on the face of the record means an error which strikes on mere looking and does not need long-drawn-out process of reasoning on points where there may conceivably be two opinions. Such error should not require any extraneous matter to show its incorrectness.
  • Authority held that “a decision on a debatable point of law or facts is not a mistake apparent from record and debatable issue cannot be subject of an order of rectification.


HSN code/ service accounting code mandatory on invoices as per revised requirement from 1st April 2021 for GST taxpayer with turnover of more than ₹ 5 crore

  • With effect from 1st April, 2021, it has been made mandatory for a GST taxpayer, having turnover of more than ₹ 5 crore in the preceding financial year, to furnish 6 digits HSN Code (Harmonised System of Nomenclature Code), or as the case may be, SAC (Service Accounting Code) on the invoices issued for supplies of taxable goods and services. A taxpayer having turnover of upto ₹ 5 crore in the preceding financial year is required to mandatorily furnish 4 digits HSN code on B2B invoices. Earlier, the requirement was 4 digits and 2 digits respectively.
  • With effect from 1st April, 2021, GST taxpayers will have to furnish HSN/SAC in their invoices, as per the revised requirement.
  • HSN codes for goods at 6 digits are universally common. Therefore, common HSN codes apply to Customs and GST. Accordingly, codes prescribed in the Customs tariff are used for the GST purposes too (as has been specifically mentioned in the GST rate schedule).
  • HSN search facility is also available on the GST portal.

          [Source: Ministry of Finance PIB Release ID : 1708713  dated 31.03.2021]

Clarification on reporting HSN Codes in 4 or 6 digits

  • Taxpayers are mandated to declare specified digits (6 or 8) of Harmonised System of Nomenclature (HSN) / Service Accounting Code (SAC) Code on raising of tax invoices, w.e.f. April 1, 2021.
  • Specific 6-digit HSNs, as available in the HSN/Customs Tariff (with corresponding description of goods) are allowed in the system. Declaration of HSN at 4/6 Digits has to be out of valid HSN codes only.  
  • However, there are instances that some taxpayers are trying to report truncated first 6-digits out of an otherwise valid 8-digit HSN, which are actually not available in Tariff at 6-digit level and with no corresponding description of goods. These are invalid and hence not being allowed in the System.
  • Taxpayers may, note that based on the harmonious interpretation of the Notifications, read with Customs Tariff Act, 1975, as made applicable to GST; the number of digits of HSN, as specified vide Notifications No. 12/2017 & 78/2020 (Central Tax), are the minimum number of digits of HSN to be mentioned on the invoice.
  • If the HSN of any Goods/Service is otherwise valid but not accepted on GST Portal / e-invoice Portal / e-way Bill portal, taxpayer can raise a ticket on GST Self-Service Portal: > Report Issue > Type ‘HSN’ in ‘Type of Issue/Concern’ search box > Select relevant sub-category, e.g. ‘e-Invoice – IRP – HSN Code related’.

[Source: GSTN  dated 12.04.2021 - (// ]


By: Dr. Sanjiv Agarwal - April 17, 2021



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