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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 301 on provisions applicable w.e.f. 01.10.2022

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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