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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 ON ANNUAL RETURN COMPLIANCE-PART-3

GST UPDATE ON ANNUAL RETURN COMPLIANCE-PART-3
GST UPDATE ON ANNUAL RETURN COMPLIANCE-PART-3
 
In earlier update, we discussed about the details to be filled in serial no. 4B “Supplies made to registered persons (B2B)” of Part-II of the Annual Return requiring the details of advance, inward and outward supplies on which tax is payable as declared in returns filed during the financial year. In the present update, we seek to discuss on the details required to be filed with respect to Inward Supplies on which tax is to be paid on reverse charge under serial no. 4G of the Annual Return.
 
As we all know that under GST regime, the assessee is required to pay GST under reverse charge mechanism under two sections, section 9(3) specifying goods or services under on which reverse charge is applicable and section 9(4) pertaining to supplies from un-registered persons. It is worth noting that the reverse charge mechanism under section 9(4) of the CGST Act, 2017 was deferred vide notification no. 38/2017-Central Tax (Rate) dated 13.10.2017 and so the reverse charge on account of inward supplies from un-registered persons was in operation from 1.7.2017 to 12.10.2017 subject to limit of Rs. 5,000/- per day. Therefore, while filing annual return, the assessee is required to compute their liability properly under both the sections and if GST has not been paid on the transactions attracting reverse charge mechanism, the said GST is required to be paid vide DRC-03 in cash. It is also pertinent to mention that the GST paid vide DRC-03 with respect to reverse charge mechanism would become cost to assessee as the input tax credit would not be admissible to the assessee for the same.
 
The reporting of transactions relating to reverse charge mechanism would effect liability and input tax credit simultaneously which point needs to be taken care of particularly. We hereby discuss different situations and their reporting from the perspective of filing annual return:-
 
 
Situation No. 1:-
RCM Liability for the month of Discharged in GSTR-3B for the month of Whether input tax credit admissible? Input Tax Credit availed in the GSTR-3B for the month of
October, 2017
Amount-Rs. 1,75,000/-
March, 2018 Yes March, 2018
Amount-Rs. 1,75,000/-
 
The reporting of the above transaction in annual return will be as follows:-
The RCM liability will be reported in Table 4G as Rs. 1,75,000/-
The input tax credit availed will be reported in Table 6C/6D as Rs. 1,75,000/-.
Situation No. 2
RCM Liability for the month of Discharged in GSTR-3B for the month of Whether input tax credit admissible? Input Tax Credit availed in the GSTR-3B for the month of
October, 2017
Amount-Rs. 1,75,000/-
Rs. 1,00,000/- was discharged in March, 2018.
Balance liability of Rs. 75,000/- was discharged in May, 2018.
Yes ITC of Rs. 1,00,000 taken in March, 2018
Balance ITC of Rs. 75,000/- taken in May, 2018
 
In the annual return, we are suppose to reflect transactions pertaining to financial year 2017-18 given effect for in returns filed during 2018-19 separately. Therefore, the reporting under the above situation will be as follows:-
The RCM liability of Rs. 1,00,000/- will be reported in table 4G while the balance liability of Rs. 75,000/- will be reported in table 10 of the annual return.
Similarly, the ITC availment of Rs. 1,00,000/- will be reported in table 6C/6D while the balance ITC availment will be reported in table 13 of the annual return.
 
Situation No. 3
RCM Liability for the month of Discharged in GSTR-3B for the month of Whether input tax credit admissible? Input Tax Credit availed in the GSTR-3B for the month of
October, 2017
Amount-Rs. 1,75,000/-
Not discharged till date Yes Not availed till date
 
The amount of Rs. 1,75,000/- required to be discharged under reverse charge mechanism but not paid till date by the assessee will have to be reflected in table 4G of annual return and will have to be paid vide DRC-03. It is to be noted that the assessee will not be able to take input tax credit even if the same is admissible as no claim for input tax credit can be made through filing of annual return. 
 
It is submitted that during the initial stages of implementation of GST regime, there was confusion as regards availability of input tax credit paid under reverse charge mechanism in the same month and consequently, there are cases wherein GST was paid under reverse charge mechanism but the input tax credit was claimed in subsequent months. In such cases, there will be change in the reporting mechanism as discussed in the above situations. For the sake of clarity, we explain the scenario by way of following situation:-
 
 
RCM Liability for the month of Discharged in GSTR-3B for the month of Whether input tax credit admissible? Input Tax Credit availed in the GSTR-3B for the month of
October, 2017
Amount-Rs. 1,75,000/-
Rs. 1,75,000/- was discharged in November, 2018. Yes ITC of Rs. 1,00,000 taken in January, 2018
Balance ITC of Rs. 75,000/- taken in April, 2018
 
The RCM liability will be reported in Table 4G as Rs. 1,75,000/-
The input tax credit availed will be reported in Table 6C/6D as Rs. 1,00,000/- whereas the balance input tax credit availed in April, 2018 (next financial year) will be reported in table 13 of the annual return.
 
The points as regards other aspects in filing annual return will be discussed in our next update.
This is solely for the educational purpose.
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