SUGGESTIONS ON “GOODS AND SERVICES TAX”

Provision regarding restriction of 20% credit of invoices not reflecting in GSTR-2A should be dispensed with:- The Rule 36(4) of the CGST Rules, 2017 has introduced a new provision that has been made applicable w.e.f. 9.10.2019 due to which the taxpayers are required to re-concile their input tax credit claimed in GSTR-3B with the input tax credit reflected in their GSTR-2A as on due date of filing GSTR-1 and have to ensure that they have availed input tax credit of invoices not reflected in their GSTR-2A only to the extent of 20% of the eligible credit available with respect to invoices reflected in their GSTR-2A. The taxpayers are anxious about this provision as it will lead to increase in the routine compliance with GST Laws manifold. Moreover, this provision has many repercussions which are discussed as follows:-
GSTR-2A is dynamic and practically difficult to re-concile:-As we all know that GSTR-2A updates on real time basis and the taxpayer will have to make reconciliation on regular basis. Furthermore, although, the circular no. 123/42/2019-GST dated 11.11.2019 prescribe that the GSTR-2A available as on due date of filing GSTR-1 is to be considered, but it ignores the fact that the GSTR-2A updates on real time basis. Moreover, there is no option to download GSTR-2A for a particular period as specified by the assessee. Consequently, GSTR-2A downloaded on the same day may reflect different data. As such, reconciliation mechanism will be a tedious task and the provision should be struck down.
Complexity in proportionate reversal to be done by assessee:-The assessee engaged in making taxable and exempted supplies are require to reverse credit according to the provisions of Rule 42 of the CGST Rules, 2017. It is not clear whether the invoices pertaining to common credit on which credit could not be claimed on account of 20% restriction would be included in the computation of reversal as per Rule 42 of the CGST Rules, 2017. For example- if the assessee is required to reverse 25% of his credit according to the formula of proportionate credit under Rule 42 of the CGST Rules, 2017 then whether the invoices for common credit which could not be claimed due to 20% restriction would be considered in the reversal calculation or not. A suitable clarification is need on this aspect and it is requested that the draconian provision introduced vide Rule 36(4) of the CGST Rules, 2017 should be removed.
Re-credit on payment to the supplier after expiry of 180 days:- There is also possibility that the assessee claims re-credit of input tax credit with respect to invoices for which credit was reversed earlier on account of non-payment to the supplier within 180 days from the date of issue of invoice. There is no clarity as regards whether such re-credit would be included in the “eligible credit” for the purpose of computation of 20% ceiling as imposed by the government. A suitable clarification on this aspect is needed at the earliest.
Invoice level re-conciliation is to be done and proper records to be maintained:- The provision simply puts a ceiling of input tax credit admissibility to the extent of 20% of the uploaded invoices but the assessee is required to claim input tax credit on invoice level. Say for example- in case of an assessee, 20% comes to Rs. 16,000/- but the combination of invoices not uploaded by the supplier is Rs. 15,272/- and rest all invoices involve credit greater than Rs. 10,000/- then the assessee should avail Rs. 15,272/- and not Rs. 16,000/- in GSTR-3B. In nutshell, the credit availment to the extent of 20% should also be supported by invoices and should not be on ad-hoc basis. This will again lead to increased compliance on the part of assessee as the invoices not claimed have to be tracked till they are reflected in the GSTR-2A. Therefore, the provision should be abolished so that the objective of GST being simplified tax reform is achieved.
Whether mechanism of reconciliation is cumulative or monthly is not clear :- The provision is silent on the aspect whether the exercise of re-conciliation is to be made on monthly basis or on cumulative basis. For example- If during the month of November, 2019- the invoices issued and reflected in GSTR-2A in the month of November, 2019 is Rs. 6,00,000/- whereas the invoices pertaining to the month of October, 2019 uploaded in November, 2019 is Rs. 2,00,000/-. In such a case, whether eligible credit for the purpose of computing 20% amount is to be taken as Rs. 6,00,000/- or Rs. 6,00,000/-+ Rs. 2,00,000/-? A suitable clarification should be issued in this regard. Moreover, if the re-conciliation exercise is to be made on cumulative basis, it will increase the compliance burden on the assessee and hence, the provision should be struck down.
Amendment in invoices will further add complications in calculation:-It is known that the suppliers can amend the invoices for any particular financial year upto due date of filing of return for the month of September month of the next financial year. There can be possibility that invoice got reconciled and credit availed but subsequently the supplier amended/cancelled the invoice. This will require re-conciliation of past reconciled data to ensure that the effect of amendment/cancellation is considered. Similarly, if the supplier has reported incorrect GSTIN for an invoice in GSTR-1 and thereafter amended the GSTIN for such an invoice in his subsequent GSTR-1, in such case, GST portal does not remove the original invoice from GSTR-2A of the person whose GSTIN was wrongly reported. Further, amended invoice would appear as an amendment in GSTR-2A of actual recipient. This will further add to complications in the computations made by the assessee by considering data reflected in GSTR-2A.
Supplier filing GSTR-1 on quarterly basis:-This provision would discourage purchases made by the assessees from registered persons who have opted for filing GSTR-1 on quarterly basis thereby leading to adverse impact on MSME sector. Therefore, this provision should be done away with and the old mechanism of credit availment should be restored.
Credit availment on goods in transit have to be separately accounted:-It is worth noting that the assessees would not only require to re-concile the input tax credit not reflected in GSTR-2A but will be required to keep track of input tax credit on goods in transit which are reflected in GSTR-2A but have been claimed by the assessee in subsequent month on actual receipt. This will add to the accounting compliance and so the provision should be discarded.
Claiming input tax credit for period prior to amendment may be challenging task:-There is possibility that the assessee claims the input tax credit pertaining to period prior to amendment due to which the 20% limit is being crossed. Although, the provision is applicable prospectively, since the availment of input tax credit is a continuous process, the assessee will face unwarranted challenges and will have to give justifications for such credit availment.
Creation of GST Tribunal:-It has been more than 2 years of implementation of GST Law but till date GST Tribunals have not been constituted and have not become functional due to which the assessees are forced to file writ petitions in High Courts. It is suggested that a GST Tribunal should be operational at priority basis so that the proper channel of litigation is being followed in the GST regime.
Revision facility of GSTR-3B and GSTR-1:-It is suggested the facility for revision of GSTR-3B and GSTR-1 should be provided to the assessees.
Single return should be prescribed instead of multiple returns:-Multiple returns (GSTR-1 to GSTR-11) have been prescribed for compliance under GST. Even certain returns namely GSTR -2 & GSTR-3 have been kept in abeyance temporarily and GSTR 3B has been prescribed up to 31st March 2020 due to insufficient infrastructure of GSTN Common portal. In spite of that taxpayers are facing a lot of problems while filing their returns namely GSTR-1, GSTR-3B, GSTR-9 and GSTR-9C, due to inefficient infrastructure of GSTN Common portal. Since GST is totally technology based it will take some more time for the taxpayers as well as GSTN personnel to sort out the problems arising in the Common portal and, therefore, till that time filing of various returns should be given relaxation and a single return should be implemented. The imposition of penalty/ collection of late fees for delay filing of returns to be waived till the stabilisation of Common portal. Moreover, the multiple returns under GST should be minimised and single return should be developed for all types of business.
GST rate with no input tax credit facility should be scrapped:-GST Law was framed with the objective of seamless flow of input tax credit so that the cascading effect of taxes is removed completely. However, in the GST regime also, certain suppliers are to pay GST at a rate without the facility of availing input tax credit thereby breaking the credit chain. To illustrate, restaurants, construction of residential complex service are services for which input tax credit facility is debarred. This is against the basic principle on which GST law was framed and the facility of input tax credit should be available for all sectors without any condition.
Impractical to obtain Advance Ruling by un-registered person:-Under GST law, although un-registered person can file application to obtain advance rulings but practically it is not feasible because recently the provision of filing of manual application to the Advance Ruling Authority has been dispensed with. Now, the application for advance ruling is to be filed online and fees is also required to be deposited online through Common portal. As un-registered person has no access to the common portal to deposit fees, he cannot file his application so the provision of advance ruling is meant for registered person only. The lacuna in the provision is standing as obstacle for un-registered person to obtain Advance Rulings under GST law and needs to be amended.
Refund on account of inverted duty structure should be granted to all assessees without any restriction:- The restriction as regards claim of refund on account of inverted duty structure should be available to all assessees including real estate sector without any restriction.
No facility of reflecting negative value in amendment done in GSTR-1:-The assessees face problem in reflecting negative value while making amendment in GSTR-1. For example- if B2C supplies reflected by the assessee is Rs. 1,00,000/- and subsequently the credit notes of Rs. 20,000/- were issued, the portal does not allow the assessee to reflect negative value of Rs. 20,000/- and the assessee is required to adjust the said amount in future sales made by him. This poses problem when there are no future sales from which adjustment can be made. The portal should be amended suitably.
Permit availment of ITC pertaining to FY 2017-18 upto filing of Annual Return:- Sec 16(4) of the CGST Act, 2017 provides that a registered person shall not be entitled take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under Section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant of annual return, whichever is earlier. As of today there is no due date for filing return (GSTR 3) u/s 39 and hence input tax credit to FY 2017-18 should be allowed till the due date of filing of the annual return being 31^st December, 2019.
Interest on delayed payment of tax should not be imposed if there is sufficient credit balance available-: We submit that as per the system designed by GSTN, tax liability cannot be discharged unless the return is being filed by the assessee. Consequently, even if there is balance in the electronic cash/credit ledger but no return has been filed by the assessee, interest is being demanded from the assessee on the grounds that non-filing of return automatically leads to non-payment of taxes as no debit entry is made in the electronic cash/credit ledger of the assessee. Consequently, assessee is being asked to pay interest on the entire GST liability irrespective of the fact that there is sufficient balance in their electronic credit/cash ledger. Although section 50 of the CGST Act, 2017 has been amended but the amendment is prospective in nature. The amendment in section 50 of the CGST Act, 2017 should be given retrospective effect so that the interest is computed on the tax liability after adjustment of input tax credit.
No facility to reflect negative figures in GSTR-3B- 3.2
Waiver of final return:-Another issue is as regards inclusion of late fees for filing of final return by the assessee who has surrendered their GST registration. A taxable person whose GST registration is cancelled or surrendered has to file a return in Form GSTR-10 called as Final Return. This is statement of stocks held by such taxpayer on day immediately preceding the date from which cancellation is made effective. This return is intended to provide details of ITC involved in closing stock (including inputs and capital goods) to be reversed/ paid by the taxpayer. GSTR 10 must be filed within three months from the date of cancellation or date of cancellation order, whichever is later. For instance, if the date of cancellation is 1st September 2017, then GSTR 10 must be filed by 30th November, 2017. However, the taxpayers are facing multiple problems while filing GSTR 10 on the online portal. One of the problems faced is that taxpayer cannot see the link of Final return on the online portal so that they can file the return. Even the reason of such delay is not being communicated by the concerned authority to the assessee. This is raising the problems for the small taxpayers who have surrendered their registration due to not crossing the threshold limit, closure of business etc. Moreover, the online portal is also asking for late fees of Rs. 10000(5000 CGST and SGST each) while proceeding for filing the said return. GSTR 10 utility was provided at a later stage on the online portal and many assessees were unaware of the same and consequently there was delay in filing the final return. It is submitted that imposing penalty of Rs. 10,000/- on the assessees who have surrendered their business due to closure of business merely because the final return could not be filed due to technical lapses on the online GST portal is unjust. It is very difficult for the small taxpayers to pay late fees even after surrendering their registration. This is a huge burden on their pockets and so the late fees for filing final return should be waived. Moreover, the requirement of filing final return itself should be dispensed with.
Time limit for extension of validity/cancellation of e-way bill should be extended:- Many a times it is practically found that due to breakdown of vehicle transporting the goods, there is delay in delivering the goods to the destination within the validity period of e-way bill. Moreover, the new provisions do not permit assessee to generate two e-way bills for the same consignment. It is submitted that the time limit for extending the validity period of e-way bill being 8 hours and its cancellation being 24 hours by the supplier of goods is very short. Accordingly, the said time limits should be extended so that inconvenience to the assessees is avoided.
E-way bill suspension is hampering the business of the assessee:- According to Rule 138E of the CGST Rules, 2017, suspending the facility of generation of e-way bill of an assessee who has not filed returns for consecutive two months/quarters is very harsh and it adversely hampers the business. This provision should be scrapped as at times it is observed that even after complying with the requirement of filing returns, the facility suspended is not operational within a day and the business has to suffer.
Requirement of Reconciling GSTR-2A should be dispensed with in GSTR-9 as GSTR-2A is dynamic and practically difficult to re-concile:-As we all know that GSTR-2A updates on real time basis and the assessee is required to re-concile the input tax credit reflected in GSTR-2A, which is auto populated as per data available as on 01.05.2019 (according to Press Release) in table 8A of annual return. It is to be noted that there is no facility to download GSTR-2A for a particular date. Furthermore, the downloaded GSTR-2A from common portal is reflecting different figures when compared with auto-populated figures in table 8A of annual return. The assessee is unable to re-concile the difference between the figures auto populated in table 8A of annual return and the figures of the downloaded GSTR-2A as the GSTR-2A does not mention the date of updation. Therefore, the requirement of reconciling the GSTR-2A with the input tax credit availed should be dispensed with.
Capacity of GSTN portal to enable accessing of data by various assessees at a particular time should be increased:-As the number of assessees registered in GST have increased, the GST portal should be developed in a manner that it is capable of handling increased access to the portal by number of assessees at a time. The system failure on last dates is a common phenomenon till date which should be resolved.
No amendment permissible in GSTR-1 after the data has been transmitted to ICEGATE:-There is no facility for making amendment in GSTR-1 after the data has been transmitted to ICEGATE which leads to difficulty in claiming refund claim by the taxpayer.
Jurisdiction mapping facility should be available to assessee for new registration in GST:-While filing registration application for the first time, the assessee is not aware of the jurisdictional GST office applicable. Accordingly, it is suggested that mapping facility should be provided so as to guide the assessee regarding the jurisdiction applicable to them.
Different jurisdiction reflected for assessee and GST officer:-There is no synchronisation between the online portal available for taxpayers and that available for GST officers. At times, the jurisdiction reflected on the taxpayer portal is different than that reflected for GST officers which leads to inconvenience to the assessees. There should be perfect synchronisation in both the portals.
Refund statement does not allow B2C supplies:- While uploading various statements during the process of filing refund applications, it is commonly observed that if there are B2C supplies, then the statement cannot be uploaded on the portal and the assessee is required to provide hard copies of invoices pertaining to B2C supplies. A suitable amendment should be made to enable the assessees to mention B2C supplies in the statements while filing refund applications online on the portal.
Allowance of refund on the basis of “let Export order”:-Exporters are facing difficulty in the refund sanctioning process in the present regime as their major amount of working capital is stayed blocked. As per procedure laid down in GST regime, we enter the details regarding export i.e. Zero rated supply and the IGST payable thereon in GSTR 3B. The exporter also file invoice wise details of exports in GSTR-1 return. The data in these returns is then transferred to custom portal. The shipping bill, is already filed at the time of export, is matched with the returns filed on GST portal.

The local export manifesto (popularly named as EGM) is filed by the shipping line. Moreover, the final EGM is being filed from the port of export stating the details of ship leaving India. These details are also matched by custom portal with shipping bill. If there is any mismatch or any other error then error report is generated by the system. These error numbers are running from serial number SB001 to SB006. Hence, in current regime of GST, the refund claim is sanctioned only after ship leaves India.

Earlier, in erstwhile Central Excise regime, the refund was granted on the basis of Let export order passed by ICD which was very much convenient for the exporters. Now, since, verification by the custodian of the ultimate port is also required, this has made the procedure of refund claim cumbersome. There is no linkage between exporter and officers at port. Moreover, a number of officers are appointed at main ports of the country. The exporter does not know whom to pursue. The error number SB006 appears on the portal due to non filing of refund by ports. A number of refund claims are pending due to this error in initial stage of implementation of IGST. Due to this, our member units are facing problems in our business. It affects liquidity to a great extent.

It is suggested that the refund of exports should be allowed on let export order only as was being done in case of Excise regime. It will help the exporters to great extent. The pending claims of exporters will be sorted out by this measure.

Allowance of re-credit of amount not sanctioned in refund claim by customs:- One more difficulty faced is that when the exporter enter the details regarding export i.e. Zero rated supply and the IGST payable thereon in GSTR 3B return on the online portal. The exporter also file invoice wise details of exports in GSTR-1 return. The data in these returns is then transferred to custom portal for processing of refund claims. The shipping bill, is already filed at the time of export, is matched with the returns filed on GST portal for sanctioning the refund of IGST paid.

The difficulty faced by exporter is that the invoice issued as per Form GST INV-1 includes various charges such as freight, packing and forwarding charges on which GST is being paid by him. This is being done as provided in GST law. However, the custom portal calculates the FOB value in shipping bill by deducting these charges namely freight, insurance and packing charges. Then this portal once again calculates the IGST amount on such FOB value. It also mentions the same in shipping bill.
Consequently, while sanctioning refund claim, lower of FOB value or invoice value is considered. But higher IGST is paid on GST invoice but the custom portal considers lower IGST payment in shipping bill by adopting its own formula. This result in loss of refund of GST paid with respect to packing charges, freight and insurance charges.
But the same practice was followed in earlier excise. The duty was paid on CIF value by exporter but the amount was sanctioned on FOB value by adjudication officer. However, the differential amount was sanctioned as re-credit by adjudication officer. But there is no such mechanism in GST regime. Though if an exporter claims refund of inverted duty structure under Section 89 then non sanctioned amount was re-credited to his account by PMT-03 route. But there is no such provision of re-credit on export on payment of IGST.
Therefore, we request that custom portal should be amended to show the IGST payment as per IGST Act, 2017. Meanwhile the re-credit of non sanctioned amount be allowed.

Lapsing of Cenvat credit for Textiles :-The GST Council Meeting proposed that the refund of accumulated ITC on account of inverted duty structure shall be allowed only with the prospective effect on the purchases made after the notification is issued. The notification allowing refund of inverted duty structure on fabrics is 20/2018-Central Tax (Rate) dated 26.07.2018 but the said notification clearly states that the assessees will be able to avail the benefit of refund of inverted duty structure on or after 01.08.2018.

The major point that is a matter of huge concern is the provision wherein it has been stated that the accumulated input tax credit lying unutilized in balance after payment of tax for and up to the month of July, 2018 on the inward supplies received up to 31.07.2018 shall lapse. This will be definitely setback for textile sector as this provision is against the basic settled principle that the right validly earned cannot be extinguished.
The right legitimately earned by the assessee should not be lapsed merely by making an amendment in the law.
The formula grants refund in proportion to the turnover of inverted rated goods and the maximum refund claim admissible to an assessee is restricted to the tax paid on such inverted rated supply of goods. As such, the provision regarding lapse of credit available as on 31.07.2018 is totally unjustifiable.

Waiver of Late fees in case of Nil return filing- The GST Act mandates filing of returns for all the registered taxpayers. In cases where there are no transactions for particular period, taxpayers will still need to file a nil GST return. Pursuant to the GST Act, late fees of Rs. 20 per day per return from the due date of filing of return till the date of filing of return will be levied on these taxpayers in cases of late filing. We request you to kindly waive off the late fee for such taxpayers because the levy of late fee even on persons filing NIL returns is atrocious.
Refund of wrongly deposited tax liability:-If any assessee have wrongly deposited CGST/SGST instead of IGST tax ledger, there is online utility for refund of the wrongly paid tax amount but it is not operational till date. It is requested to kindly make this facility operational at the earliest possible.
Ceiling of Pre deposit should be reduced- The GST Council has recently recommended ceiling of Rs. 25 Crores of mandatory pre-deposit for filing appeal before the Commissioner Appeals and ceiling of Rs. 50 Crores of mandatory pre-deposit for filing appeal before the Tribunal. However, the ceilings so proposed are on higher side when observed from the perspective of MSME sector. The higher ceilings of mandatory pre-deposit will adversely effect filing of appeals by MSME sector. Therefore, a consistent ceiling of Rs. 1 Crore should be introduced with respect to mandatory pre-deposit.
Statutory Audit limit should be increased from 2 crore to 5 crore-Audit under GST is the process of examination of records, returns and other documents maintained by a taxable person. Every registered taxable person whose turnover during a financial year exceeds Rs 2 crore shall get his accounts audited by a chartered accountant or a cost accountant. Small taxpayers are already burdened with large numbers of compliance procedures to be followed every month. GST was introduced with the motive to reduce compliance intricacies in terms of return filing, one tax rate, etc. It is advisable to increase the threshold limit of GST audit from 2 crore to 5 crores for ease in complying provisions.

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