GST Update No 301 on provisions applicable w.e.f. 01.10.2022

The amendments to various provisions of the CGST Act, 2017 have been carried out by the Finance Act, 2022, wherein provisions contained in section 100 to 114 have been made effective from 01.10.2022 vide Notification No. 18/2022-Central tax dated 28.09.2022. However, it is pertinent to note that amendment vide Section 110 and 111 of Finance Act, 2022 related to transfer of balance of cash ledger to distinct persons and interest as per Section 50 of CGST Act, 2017 respectively are already in force with effect from 05.07.2022. The present update is in-depth analysis of the changes notified w.e.f. 01.10.2022 vide the above referred notification.
The key takeaways of the amendments are as follows: -
1. Section 16(4) and Section 34(2) of CGST Act, 2017: The time limit for availing input tax credit as prescribed under section 16(4) of CGST Act, 2017 is extended vide amendment under Section 100 of Finance Act, 2022 upto 30th November of the following
Financial Year to which the invoice or debit note pertains. It is worth mentioning that earlier the time limit was due date of filing of return for the month of September i.e. 20th October in case of Section 16(4). Furthermore, the time limit for issuance of credit notes by the registered person in relation to supply of goods or services or both also stands extended vide Section 102 of CGST Act, 2017 upto 30th November of following Financial Year is which such supply is made. Earlier, the time limit in case of Section 34(2) of CGST Act, 2017 for credit notes, was not later than September following the Financial Year in which supply was made or date of furnishing of relevant annual return, whichever is earlier. The extended time limits are welcomed by trade and industry since now additional time is available to them.
However, this also raised question in the minds of the taxpayers such as whether the extended time limits are applicable for Financial Year 21-22 as well or is it applicable for Financial Year 22-23 onwards? It may be contended that since the extension provision is notified w.e.f. 01.10.2022, when the time limit for claiming input tax credit under section 16(4) of CGST Act, 2017 has not expired, hence the amendment will apply for availing ITC for the financial year 2021-22 also.
However, as regards credit notes for the financial year 2021-22 is concerned, it is submitted that since the date of declaration of such credit note in the return is upto September following the end of the financial year in which such supply was made or the date of furnishing of the relevant annual return, whichever is earlier, the said time period stands expired on the applicability of the amendment. Therefore, it is disputable as to whether the extended time limit with respect to declaration of credit notes is applicable for the financial year 2021-22.
2. Section 29(2) of CGST Act, 2017: The said Section is amended vide Section 101 of Finance Act, 2022 wherein it is prescribed that the proper officer may cancel the registration of a person from such date including the retrospective date in case the registered person paying tax under section 10 (composition scheme) has not
furnished the return for a financial year beyond three months from the due date of furnishing the said return. Earlier, the provision was that registration was cancelled if return for three consecutive tax periods was not furnished by the taxpayer. However, as the annual return has been introduced for composition taxpayers, consequential amendment is made. Moreover, in case of normal taxpayers, the registration would be cancelled if returns have not been furnished for such continuous tax period as may be prescribed. Earlier, it was “continuous period of six months”. This has been done with the purpose to provide flexibility to the government to specify the period of default in furnishing returns so as to cancel the GST registration of the taxpayer by way of insertion of new sub-rule (h) in Rule 21 of the CGST Rules, 2017 vide Notification No. 19/2022-Central Tax dated 28.09.2022. Hence, the government will have liberty to reduce the said period by merely amending the Rule 21(h) of the CGST Rules, 2917. The taxpayers need to exercise carefulness and be more vigilant in complying with requirement of filing returns in view of these strict provisions.3. Section 37 and 39 of CGST Act, 2017: The Section 37 and 39 is amended vide Section 103 and 105 of Finance Act, 2022 respectively wherein it is prescribed that sequential filing of details of outward supplies in GSTR-1 and to specify that GSTR-3B can only be filed only in case GSTR-1 of the relevant tax period has been filed by the taxpayer. Further, it is stated that the time limit for rectification of errors furnished in GSTR-1 is extended upto 30th November of following Financial Year instead of due date of return for the month of September i.e. 20th October. This has proved to be an added advantage for the taxpayers since now additional period of one month is available to them. This was done to synchronise and streamline the last date of all the compliances to be 30th November.
4. Section 38 of CGST Act, 2017: As per the revised Section 38 of CGST Act, 2017 as amended vide Section 104 of Finance Act, 2022 it is prescribed that an auto-generated statement having details of input tax credit shall be made available electronically to the recipient in such form and manner as prescribed. Hence, a two-way communication process is now eliminated. In this respect, it is
stated that the auto generated statement shall comprise of details of ITC available to the recipient and the details of supplies in respect of which credit cannot be availed. The details of supplies for which ITC would not be available if the said supplies are furnished :-
• By any registered person within such period of taking registration as may be prescribed; or
• By any registered person who has defaulted in payment of tax and where such default has continued for such period as may be prescribed; or
• By any registered person where the outward supplies as shown in GSTR-1 are more as compared to GSTR-3B
• By any registered person where the input tax credit as shown in GSTR-3B are more as reflected in GSTR-2B.
• By any registered person where Rule 86B is not complied with i.e. the output tax of 1% is not paid in cash
From the above it is crystal clear that the exercise of taxpayers will now increase regarding claiming of input tax credit as reflected in GSTR-2B.5. Section 41 of CGST Act, 2017: It is prescribed vide amendment under Section 106 of Finance Act, 2022 that the concept of “claim” of eligible input tax credit on “provisional” basis is eliminated. The input tax credit to be availed on self-assessment basis subject to certain conditions and restrictions which are yet to be notified. It is also stated that where supplier has not paid the tax to the government, ITC will have to be reversed by the recipient which can be re-availed later on if the supplier discharges the tax liability to the government. The said provision is draconian since it will now encourage the department to pursue recipients to reverse the credit even when the primary responsibility to pay tax is on the supplier.
6. Section 42, 43, 43A of CGST Act, 2017: Amendment is made vide Section 107 of Finance Act, 2022 wherein it is prescribed that matching, reversal and reclaim of input tax credit is omitted so as to do away with the two-way communication process in return filing.
7. Section 47 of CGST Act, 2017: The section is amended vide Section
108 of Finance Act, 2022, wherein it is prescribed that now late fee shall be levied for delayed filing of TCS return of Rs. 100/- for everyday for which default continues subject to maximum of Rs. 5000/-.
8. Section 52(6) of CGST Act, 2017: Amendment is made vide Section 112 of Finance Act, 2022 wherein it is prescribed that now the GSTR-8 filed by E-commerce Operator can be done upto 30th November of the following Financial Year instead of due date of return for the month of September i.e. 20th October.
9. Section 54 of CGST Act, 2017: This amendment is made vide Section 113 of Finance Act, 2022 wherein the time limit for availment of refund of tax paid on inward supplies by the UNOs or the embassies is extended to two years from the last date of the quarter in which the supply is received. Furthermore, the scope of withholding or recovery of refunds is also extended and clarity is provided regarding relevant date for filing of refund in respect of supplies made to SEZ.
10. Section 168 of CGST Act, 2017: The said section is amended videSection 114 of Finance Act, 2022 which is related to power to issue instructions or directions. Reference of Section 38(2) of the CGST Act, 2017 is omitted as two way matching concept is dispensed with.
The above amendments will be effective from 01.10.2022 in the CGST Act, 2017

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GST Update No 301 on provisions applicable w.e.f. 01.10.2022

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