GST update No 182 on confusion created by internal circular

Incorporation of GST Law symbolised the concept of simplified tax reform and ease of doing business. One of the significant reasons behind implementation of GST was ideology of “One Nation One Tax”. However, with the passage of time, there had been various adverse advance rulings and circulars issued by CBIC which has widened the disparities resulting into increase in complexities in the existing in GST Law. The present update is about the variances existing on issuance of Circulars which has supressed the theory of unanimous decisions by Centre and State, irrespective of their tax jurisdictions. The practice adopted by the State Government of issuing their own Circulars has increased the level of difficulties for taxpayers as it seeks to create discrimination amongst the assessees registered under the jurisdiction of Centre and State region. The assessees registered under the State jurisdiction are bound to follow such Circulars whereas the assessees registered under the jurisdiction of Centre are not required to implement them. To illustrate- time and again the revenue authorities are issuing notices and letters demanding justifications regarding discrepancies in Input Tax Credit in GSTR-2A and 3B without even trying to find out the reasons of those discrepancies which leads to sheer wastage of precious time of taxpayers and tax officers. The said issue was addressed by Maharashtra Government vide Internal Circular No. 02A of 2022 dated 25.02.2022 wherein it was clarified that in case the difference of Input credit is Rs. 2.5 Lakhs or more, CA Certification shall be required while in either case, Supplier’s certification along with ledger confirmation shall be required. Although this circular is in favour of the assessee, yet it has increased the level of miseries faced by the taxpayers having different Jurisdictions as the said circular is not accepted by Central Tax authorities. It is worth noting that although the assessee is not bound by the Circulars, yet implementation of these circulars increases ambiguity in the minds of assessee and departmental officers. It is pertinent to mention that there have been numerous judgements in the CA. PRADEEP JAIN ??www.capradeepjain.com??pradeep@capradeepjain.com??5 erstwhile regime that have been affirmed by Supreme Court wherein it has been concluded that circulars which are contrary or inconsistent with the statutory provisions are not binding on departmental officers also. Reliance may be placed on the decision given in the case of COMMISSIONER OF CENTRAL EXCISE, BOLPUR V/S M/S RATAN MELTING & WIRE INDUSTRIES [2008-TIOL-194-SC-CX-CB] wherein it was held that a circular which is contrary to the statutory provisions has no existence in law. It is submitted that sometimes the circulars prescribe guidelines that have been nowhere prescribed in law as has been stated in the preceding paragraph which may be favourable or against the assessee. In such situation, clarifications tend to create confusion and complications in the interpretation of laws. Moreover, if each state starts adopting the practice of issuing circular on their own levels, it shall become more challenging for the assessee to keep a track on their applicability and interpretations, leading to increase in compliance burden on their part. Instead, the CBIC should seek suggestions from States and issue centralised clarifications that are uniformly applicable throughout the country. A strict action to curb the practise of allowing States to issue their internal circulars is need of the hour.

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GST update No 182 on confusion created by internal circular

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