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Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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GST UPDATE NO 286 ON PRACTICAL DIFFICULTIES IN AMENDED GSTR-3B

GST UPDATE NO 286 ON PRACTICAL DIFFICULTIES IN AMENDED GSTR-3B
The new format of GSTR-3B has been made applicable for the return filed for the month of August, 2022. We have already highlighted the complexities and the increased compliance burden on the assessee due to revised GSTR-3B format requiring proper accounting and presentation of ineligible input tax credit. In the present update, we seek to point out various other practical difficulties being faced by the assessees while filing their GSTR-3B in the new format.
Before proceeding further, it is pertinent to briefly summarise the changes made in the revised GSTR-3B format. Serial no. 4(A)(5) of the GSTR-3B pertains to all other ITC which will have figure of credit auto-populated from GSTR-2B. Serial no. 4(B) comprises of the details of ITC reversed. Serial no. 4(B)(1) pertains to ITC reversed as per Rule 38, 42, and 43 of CGST Rules and section 17(5). Moreover, serial no. 4(B)(2) will comprise of other reversal of credit. The matter does not end here as the assessee is also required to furnish the other details in serial no. 4(D). As per serial no. 4(D)(1), details of ITC reclaimed which was reversed under table 4(B)(2) in earlier tax period is to be reflected while in serial no. 4(D)(2), ineligible ITC under section 16(4) and ITC restricted due to POS provisions is to be reported.
We hereby discuss the various practical issues of presentation being faced by the assessees as follows:-
1. Treatment of non-issuance of credit note by the supplier for sales returns/short receipt:- At times, it is observed that there is short receipt of goods or sales returns for which the supplier does not issue any credit note. Resultantly, the recipient issues debit note and reverses the applicable input tax credit. The question arises is how to reflect the said input tax credit in the revised GSTR-3B. As the credit note is not being reflected in GSTR-2B, the recipient assessee needs to voluntarily reverse the proportionate input tax credit. The recipient assessee will reverse the credit in serial no. 4(B)(2) of the GSTR-3B on the basis of debit note raised by it. However, there is no clarity as to the treatment when the supplier actually issues the credit note and the same is being reflected in GSTR-2B subsequently. In such a situation, theserial no. 4(A)(5) will be auto-populated with lower input tax credit in the month in which the credit note is being reflected by the supplier but in reality, the assessee had already reversed the applicable input tax credit in earlier GSTR-3B. Now, the question arises is whether the recipient assessee can make adjustment by including such credit in serial no. 4(A)(5) when the credit note is being reflected in GSTR-3B? Moreover, will the recipient assessee need to reflect such credit in serial no. 4(D)(1) simultaneously? This will require the assessee to keep track record of debit notes and credit notes that are being reflected in GSTR-2B which will be a herculean task. A suitable clarification needs to be issued to address this difficulty by the government at the earliest possible.
2. Invoice reflected in GSTR-2A does not pertain to the assessee:- It is possible that certain invoices that are being reflected in GSTR-2A do not pertain to the assessee. However, with the revised format in operation, even such credit which do not pertain to the assessee will be part of serial no. 4(A)(5) of the GSTR-3B. Consequently, the assessee will reflect the said credit in serial no. 4(B)(2) as other credit reversal. But as per interpretation, this column stands for the credit to be claimed later on. But this credit is not to be claimed by taxpayer , hence a view is formed that it should be shown in 4(B)(1). But this is for specific clause of Rule, 42 and 43 of CGST Rules and Section 17(5) of CGST Act. Hence, it should be shown A(B)(2) only. This should be clarified by the department.
3. Invoice not received but the input tax credit reflected in GSTR-2B:- It is submitted that as input tax credit can be availed only when the assessee is in possession of valid GST invoice, the said credit will be reflected in serial no. 4(A)(5) of the GSTR-3B. Consequently, the assessee will reflect the said credit in serial no. 4(B)(1) if it is certain that the credit is ineligible. However, if the assessee is not sure whether the credit is eligible or ineligible, the said credit will be reflected in serial no. 4(B)(2) as other credit reversal. However, on receipt of valid GST invoice, such credit will have to be reflected in serial no. 4(A)(5) and 4(D)(1) if the credit is under eligible category. Again the ambiguity raised in earlier point will be raised. Hence, a suitable clarification from CBIC is solicited.
4. Invoice pertains to July month and reflected in GSTR-2B of July month but omitted from claiming in GSTR-3B:- There may be situation that invoice for the month of July, 2022 was omitted
from claiming in GSTR-3B which is now being claimed in the month of August, 2022. However, the said invoice was already reflected in GSTR-2B of July, 2022 and was also booked in the accounts of assessee. In such a case, the assessee will have to report the input tax credit pertaining to the said invoice in serial no. 4(A)(5) of the GSTR-3B of August, 2022. Moreover, the said credit also needs to be reflected in serial no. 4(D)(1) of the GSTR-3B as the inflated credit of serial no. 4(A)(5) needs to be re-conciled by the assessee. This is on the assumption that the assessee is in a way re-claiming the said input tax credit in the month of August, 2022 which was reflected in GSTR-2B of July month but could not be claimed for clerical mistake. It is to be assumed that omission is as good as reversing the said credit, similar to the situation of goods in transit. Although, some experts may opine that such an interpretation would lead to retrospective application of the new format which is not legally valid. A suitable clarification is needed from the government on this point.
5. Invoice pertains to June, 2022 but reflected in GSTR-2B of August, 2022 and booked in the month of August, 2022:- There may be situation that supplier has filed belated GSTR-1 for an invoice pertaining to the month of June, 2022 due to which the credit pertaining to the said invoice is being reflected in GSTR-2B of August, 2022. As the said invoice was not reflected in GSTR-2B for the month of June, 2022, the assessee did not record the said credit in their books of accounts. Now, the assessee will have to report the said credit pertaining to invoice raised in the month of June, 2022 in serial no. 4(A)(5) of the GSTR-3B. However, it is not required to reflect such credit in serial no. 4(D)(1) of the GSTR-3B because the said credit was not accounted for by the assessee in their books of accounts earlier.
The above problems are only illustrative and the actual difficulties will be encountered when the GSTR-3B returns are being regularly filed in the new format. It is hoped that the government issues suitable clarification to resolve various presentational disputes at the earliest possible so that objective of ease of doing business is achieved.
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