GST Update on Circular No. 63, 64 dated 14 September 2018 and Notification No. RFID/Sachaldal/2018-19 Dated 7th September 2018

GST Update on Circular No. 63, 64 dated 14 September 2018 and Notification No. RFID/Sachaldal/2018-19 Dated 7th September 2018
• One more circular no. 64/38/2018-GST dated September 14, 2018 has been issued by Government. The pace of issuance of circular and notifications by Government is very fast. Although they intend to simplify the procedure and give relaxations to trade and industry yet it is very difficult to keep pace with these amendments even for the consultants. This circular intends to clarify certain modifications in the procedure of interception of tand confiscation of such goods and conveyances.

We have already prepared an update for Section 129 of CGST Act 2017. As per above provision, if the goods are transported in contravention to the provisions of the CGST Act 2017 and the rules made there under then such goods shall be detained and seized. Such goods shall be released only on the payment of requisite tax and penalty in cash if the owner of goods comes forward for release of goods. But if the owner of goods does not come forward then tax and penalty equal to 50% of value of goods is to be paid in cash. But the credit of such tax paid will not be allowed to recipient of goods as per Section 17(5)(i) ibid. Further, it was clarified that this tax and penalty is to be paid by formDRC-03. Hence, it will be adjusted and cannot be utilized for duty payment in GSTR-3B. It can be explained with an example. Suppose, a supplier has issued invoice number 1 along wiht e-way bill for good sold of value of Rs.1,00,000/- and paid 18%GST on the same. But the transporter has not updated vehicle number on the same. Authority has seized the goods. Owner of goods have come forward and paid Rs. 18,000/- and penalty of Rs. 18000/- and followed the procedure of DRC-03. Now , cash paid is adjusted and he does not have balance in electronic cash ledger. Now, he files GSTR-3B and uploads this invoice number 1. Now, he has to pay the tax again. The credit of same will be available to recipient of goods. But the tax is paid twice along with one time penalty equal to tax amount. This situation is to be clarified to trade and industry but no circular is issued by Board in this regard.

However, various representations were received by the GST Council were it was discovered that even if the consignment of goods was accompanied by the proper documents, then also the proceedings under Section 129 of CGST Act 2017 were initiated on account of minor discrepancies like spelling mistakes, error in address, error in pin code etc.

On considering the above, the government has clarified that in certain situations as provided in the para 5 of Circular No. 64 that the penalty to the tune of Rs. 500/- each under section 125 of the CGST Act and the respective State GST Act should be imposed (Rs.1000/- under the IGST Act) in FORM GST DRC-07 for every consignment for such minor offences of spelling mistakes or error in address etc. This has proven to be a welcome step taken on the part of government as it has provided relief to the traders. We have seen that the vehicle is seized in small error of one digit in vehicle number by GST authorities in the past. Now, the goods will not be seized for such small errors and a token penalty will be imposed on the assessee.

• Further, Notification No. RFID/Sachaldal/2018-19 Dated 7th September 2018 issued by the State Government of Uttar Pradesh seeks to mandate the requirement of obtaining the RFID Tag. The transporters who are providing the information in FORM GST EWB 01 for the purpose of transportation of goods through the State of Uttar Pradesh are mandatorily required to get the said RFID Tag embedded on wind screen of the conveyance carrying such goods. However, this notification shall come into effect from 1st November 2018.

Though, this notification is specifically applicable to Uttar Pradesh, yet on considering the practical implication of this notification it can be held that all the transporters who intend to transport their goods through Uttar Pradesh are required to get the RFID Tag installed. For instance, if the transporter is registered in Rajasthan and the place of supply is Uttar Pradesh then he is required to get the RFID Tag. This would lead to increase in compliance procedures for the traders as well as transporters. But if the vehicle is transporting goods from Rajasthan to West Bengal and passing through Uttar Pradesh will also require RFID Tag. As per understanding of authors, it will be mandatorily required otherwise it will be difficult to implement the same. But the time duration given is very short and all the transporters can not comply the same in such short span of time. Some time should be given but this is also a welcome step that technology will be used to curb evasion and it will also reduce the checking by the department which leads to corruption.

• Vide this Circular 63/37/2018-GST dated 14th September 2018 the government has given clarifications regarding the processing of refund claims filed by the UIN Entities. Various formats/documents have been prescribed by the Government for the processing of refunds. For a detailed understanding, please refer to the circular attached for your ready reference.

This is solely for the educational purpose.
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GST Update on Circular No. 63, 64 dated 14 September 2018 and Notification No. RFID/Sachaldal/2018-19 Dated 7th September 2018

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