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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 WAIVER OF INTEREST IN CASE OF NON PAYMENT WITHIN 180 DAYS AND REVERSAL OF CREDIT THEREOF ??

GST UPDATE ON WAIVER OF INTEREST IN CASE OF NON PAYMENT WITHIN 180 DAYS AND REVERSAL OF CREDIT THEREOF ??
We have prepared a series of amendment proposed in recent GST council meeting. This update is also in continuation of the same. One more amendment proposed by GST council is waiver of interest on reversal of credit on non-payment within 180 days to supplier of goods.
The present relevant provision of Section 16(2) of the CGST Act, 2017 reads as follows -­
 
Where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed.
Therefore, if a person has availed input tax credit on inward supplies of goods or services or both and has not paid the amount due to the supplier within the time span of 180 days from the date of availing the credit, then such person shall have to reverse the amount of credit already availed in respect of that transaction. Such credit earlier availed will be added back to the output tax liability of the registered person. Apart from this aspect of reversal of credit on non-payment of the invoice value, there was also a clause of payment of interest on such procrastination.
This matter can be conveniently explained with the help of an example given below :
For example: Mr X, of Jodhpur has purchased goods from Mr.Z, of Delhi worth Rs 100,000/- on 1.08.2017. Such purchases are taxable with the rate 12% under GST. Therefore amount of IGST involved here is Rs 12000/-. Mr. X has received the goods on 15.08.2017. Mr X has taken input tax credit of such amount of IGST on 15.08.2017. Later on Mr X failed to pay the invoice value of 1,12,000/- to Mr Z even after 180 days from the date of taking credit i.e. upto 11.2.2018. This delay of payment will now require Mr X to reverse the credit of IGST, which shall be added back to output tax liability ledger. Mr. X reverses the credit on exact date of 11.2.2018. Also, he has to pay interest, calculated @ 18% on the amount IGST 12000/-. Time period involved for such calculation of interest will be commencing immediately from the date of availing credit and continuing till the date of reversal.  Suppose, Mr. X has made payment on 18.3.2018 then he can take credit back on such date.
But normally, the person taking the credit is not aware of the fact that 180 days has elapsed and he has not made the payment to supplier. He forgot to reverse the credit. The departmental audit comes and point out the same. Meanwhile the payment has been made and he is eligible to take the credit back also. Like in present example, the payment is made on 18.03.2018 by Mr. X. Hence, the interest will be charged from the date of taking credit on 15.08.2017 to date of re-eligible to take credit i.e.15.03.2018. There is no need of reversal as he is now eligible to take the credit once again.
But, there were certain recommendations made during the 28th meeting of the GST council held by the Ministry of Finance. One of such recommendations involved an amendment made to the above explained concept of delayed payment which states that ifthe recipient fails to pay the due amount to the supplier within 180 days from the date of availing credit, the input tax credit availed by the recipient will be reversed, but liability to pay interest is being done away with.
This can be interpreted in two ways. To start with, according to the first view it can be held that now there will no payment of interest and only consequence of such non-payment will be reversal of ITC already availed, thereby leading to NIL cost.
Now come again to example in hand. In first situation, Mr. X has reversed the credit on 11.02.2018. No need to pay the interest. He can again take the credit on 18.03.2018 when payment is made by Mr. X. There is no problem.
Situation 2 in above referred example wherein Mr. X forgets to reverse the credit. The audit points out the same. Meanwhile he has already made the payment to Mr. Z. Now he is re-eligible to take the credit. No need of reversal now. But the point is that he needs to pay the interest also. No interest is payable for both the periods i.e from 15.08.2017 to 11.02.2018 and also for the period from 11.02.2018 to 18.03.2018. The view taken above suggests the same. This seems to be absurd result. No reversal as well as no interest payment. Then nobody will do reversal under this provision.
Yet another view to this recommendation can be taken that there will be no complete waiver of interest. The waiver is only for the period when the assessee ought to have reversed the credit. The period after that date is his output liability and he has to pay the interest for remaining period. Hence, the interest is to be paid after 180 days if he has not reversed the credit. This concept can be more clearly explained via continuing to previous example:
Mr. X has not reversed the credit in situation 2. The audit has pointed out the same. He need not to reverse the credit as he has become re-eligible by making payment to Mr. Z. He needs not to pay the interest for the period from 15.08.2017 to 11.02.2018. But interest will be recovered for the period from 11.02.2018 to 18.03.2018 as it was his output liability. This seems to be more logical and legal interpretation.

Thus, there is ambiguity with respect to treatment of interest on the payment made to the supplier by the recipient.The notification has not been received so far. We shall wait till the notification is issued by the Government officials to clear the ambiguities arose by the press release released by the officials.

 
    
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