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PAPER 8: INDIRECT TAX LAWS

STATUTORY UPDATE FOR NOVEMBER 2023 EXAMINATION

For the sake of brevity, Central Goods and Services Tax, Integrated Goods and Services Tax, Central Goods and Services Tax Act, 2017, Integrated Goods and Services Tax Act, 2017, Central Goods and Services Tax Rules, 2017 and Integrated Goods and Services Tax Rules, 2017 have been referred to as CGST, IGST, CGST Act, IGST Act, CGST Rules and IGST Rules respectively.

The following are applicable for November 2023 examination:

1. The provisions of the CGST Act, 2017 and IGST Act, 2017 as amended by the Finance Act, 2022 including significant notifications and circulars issued and other legislative amendments made, up to 30th April, 2023.
2. The provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975, as amended by the Finance Act, 2022, including significant notifications and circulars issued and other legislative amendments made, up to 30th April, 2023.

* The amendments made by the Annual Union Finance Acts in the CGST Act, 2017 and IGST Act, 2017 are made effective from the date notified subsequently. Thus, only those amendments made by the relevant Finance Acts which have become effective till 30.04.2023 are applicable for November 2023 examinations. Accordingly, the amendments made by the Finance Act, 2022 are applicable for November 2023 examinations.

However, it may be noted that amendment made by the Finance Act, 2021 in section 16 of the IGST Act, 2017 and amendments made by the Finance (No. 2) Act, 2019 in sections 2(4), 95, 102, 103, 104, 105 and 106 of the CGST Act, 2017 and the insertion of new sections 101A, 101B & 101C in the CGST Act, 2017, have not become effective till 31.10.2022 and thus, are not applicable for November 2023 examinations.

The subject matter of Part I: Goods and Services Tax of October 2021 edition of the Study Material read with Supplementary Study Paper 2023 of Paper 8: Indirect Tax Laws is based on the provisions of the CGST Act and the IGST Act as amended

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upto 31.10.2022.

The amendments made by the notifications and circulars issued between 01.11.2022 and 30.04.2023 in GST laws are given in this Statutory Update.

The content discussed in Part II: Customs & FTP of the Study Material read with Supplementary Study Paper 2023 is based on the customs law as amended by the Finance Act, 2022 and significant notifications and circulars issued till 31.10.2022. The significant notifications/ circulars issued from 01.11.2022 and 30.04.2023 in Customs & FTP are given in this Statutory Update.

For the ease of reference, the amendments have been grouped into Chapters which correspond with the Chapters of the Study Material.

PART-I: GOODS AND SERVICES TAX

No supply of service by the insured to the insurance company in lieu of

2

SUPPLY UNDER GST

‘No Claim Bonus’ offered by said insurance company to him

The issue which arose for consideration was whether the deduction on account of ‘No Claim Bonus’ (NCB) allowed by the insurance company from the insurance premium payable by the insured, can be considered as consideration for the supply provided by the insured to the insurance company, for agreeing to the obligation to refrain from the act of lodging insurance claim during the previous year(s).

As per practice prevailing in the insurance sector, the insurance companies deduct ‘No Claim Bonus’ from the gross insurance premium amount, when no claim is made by the insured person during the previous insurance period(s). The customer/ insured procures insurance policy to indemnify himself from any loss/ injury as per the terms of the policy and is not under any contractual obligation not to claim insurance claim during any period covered under the policy, in lieu of NCB.

It is, therefore, clarified that there is no supply provided by the insured to the insurance company in form of agreeing to the obligation to refrain from the act of lodging insurance claim during the previous year(s) and NCB cannot be considered as a consideration for any supply provided by the insured to the insurance company.

[Circular No. 186/18/2022 GST dated 27.12.2022]

1. Provisions of reverse charge mechanism (RCM) notification extended to the Courts and Tribunals also

3

CHARGE OF GST

Notification No. 13/2017 CT (R) dated 28.06.2017 as amended has notified specified categories of supply of services wherein whole of the tax shall be paid on reverse charge basis by the recipient of services.

Clause (h) of explanation to this notification earlier provided that provisions of this notification, in so far as they apply to the Central Government and State Governments, shall also apply to the Parliament and State Legislatures. Thus, in case of notified services supplied by Central Government, State Governments, Parliament and State Legislatures, GST will be paid by the recipient.

This provision has now been extended to the Courts and Tribunals also in respect of taxable services supplied by them such as renting of premises to telecommunication companies for installation of towers, renting of chamber to lawyers, etc.

With effect from 01.03.2023, above clause has been amended to provide that the provisions of this notification, in so far as they apply to the Central Government and State Governments, shall also apply to the Parliament, State Legislatures, Courts and Tribunals.

Parallel amendment in reverse charge notification in case of inter-State supply of services has been carried out by amending Notification No. 10/2017 IT(R) dated 28.06.2017.

[Notification No. 02/2023 CT (R) dated 28.02.2023 and Notification No. 02/2023 IT (R) dated 27.02.2023]

Entry Nos. referred to in this chapter correspond to entries in Notification No. 12/2017 CT (R) dated 28.06.2017 which grants exemption from GST for intra-State supply of specified services. However, these entry numbers have been given only for reference purposes and are not relevant for examination purpose.

4

EXEMPTIONS FROM GST

Amendments in the services exempted from GST

Notification no. 12/2017 CT(R) dated 28.06.2017 provides list of services exempted from CGST. Parallel exemptions from IGST have been granted to inter-State supply of services vide Notification No. 9/2017 IT(R) dated 28.06.2017.

The amendments in the list of exempted services have been highlighted in bold/in strikethrough form, hereunder:

Amendments in the existing exemptions

Following existing exemptions have been amended:

Sl. No.	Description of services	Effective from
12	Services by way of renting of residential dwelling for use as residence except where the residential dwelling is rented to a registered person. Explanation — For the purpose of exemption	01.01.2023

under this entry, this entry shall cover services by way of renting of residential dwelling to a registered person where, –

1. the registered person is proprietor of a proprietorship concern and rents the residential dwelling in his personal capacity for use as his own residence; and
2. such renting is on his own account and not that of the proprietorship concern.

Withdrawal of existing exemptions

Exemption from CGST available to following services has been withdrawn:

Sl. No.	Description of services	Effective from
23A	Service by way of access to a road or a bridge on payment of annuity.	01.01.2023

Parallel amendments in exemptions from IGST to inter-State supply of services have been carried out by amending Notification No. 9/2017 IT(R) dated 28.06.2017.

[Notification No. 15/2022 CT(R) dated 30.12.2022]

1. Exemption available to educational institutions and Central and State educational boards for conduct of entrance examination extended to any authority/ board/ body set up by the Central/State Government including National Testing Agency for conduct of entrance examination for admission to educational institutions

With effect from 01.03.2023, clause (iva) has been inserted in the Explanation to Notification no. 12/2017 CT(R) dated 28.06.2017. It clarifies that any authority, board or body set up by the Central Government or State Government including National Testing Agency for conduct of entrance examination for admission to educational institutions shall be treated as educational institution for the limited purpose of providing services by way of conduct of entrance examination for admission to educational

institutions.

[Notification No. 01/2023 CT(R) dated 28.02.2023]

1. Clarification on applicability of GST on accommodation services supplied by Air Force Mess and other similar messes to its personnel

The issue which arose for clarification is whether GST is payable on accommodation services supplied by Air Force Mess to its personnel.

All services supplied by Central Government, State Government, Union Territory or local authority to any person other than business entities (barring a few specified services such as services of postal department, transportation of goods and passengers etc.) are exempt from GST vide Entry 6. Therefore, it is hereby clarified that accommodation services provided by Air Force Mess and other similar messes, such as, Army mess, Navy mess, Paramilitary and Police forces mess to their personnel or any person other than a business entity are covered by Entry 6 provided the services supplied by such messes qualify to be considered as services supplied by Central Government, State Government, Union Territory or local authority.

[Circular No. 190/02/2023 GST dated 13.01.2023]

1. Recipient entitled to ITC where the place of supply determined in terms of the proviso to section 12(8) of the IGST Act, 2017 is outside India

.

5

PLACE OF SUPPLY

Section 12(8) of the IGST Act provides that the place of supply of services by way of transportation of goods, including by mail or courier to a registered person shall be the location of such registered person, where location of the supplier as well as the recipient of services is in India.

However, the proviso to the aforesaid sub-section provides that where the transportation of goods is to a place outside India, the place of supply of the said service shall be the place of destination of such goods. Since in such cases the place of supply of services is the concerned foreign destination and not t he State where the recipient is registered under GST, doubts were being raised regarding the availability of ITC of the said services to the recipient located in India.

Thus, Circular No. 184/16/2022 GST dated 27.12.2022 clarifies as under:

Sl. No.

Issue

Clarification

(i)

In case of supply of services by way of transportation of goods, including by mail or courier, where the transportation of goods is to a place outside India, and where the supplier and recipient of the said supply of services are located in India, what would be the place of supply of the said services?

The place of supply of services by way of transportation of goods, including by mail or courier, where both the supplier and the recipient are located in India, is determined in terms of section 12(8) of the IGST Act1. Hence, in case of supply of services by way of transportation of goods, including by mail or courier, where the transportation of goods is to a place outside India, and where the supplier and recipient of the said supply of services are located in India, the place of supply is the concerned foreign destination where the goods are being transported, in accordance with the proviso to section 12(8) of IGST Act. X is a person registered under GST in the State of West Bengal who intends to export goods to a person Y located in Singapore. X avails the services for transportation of goods by air to Singapore from an air cargo operator Z, who is also registered under GST in the State of West Bengal. In this case, the place of supply of the services provided by Z to X is the place of destination of goods i.e., Singapore, in terms of the proviso to section 12(8) of IGST Act.

1 Rule 12(8) of the IGST Act reads as follows:

The place of supply of services by way of transportation of goods, including by mail or courier to,—

1. a registered person, shall be the location of such person;
2. a person other than a registered person, shall be the location at which such goods are handed over for their transportation:

Provided that where the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods.

(ii)	In the case given in (i) above, whether the supply of services will be treated as inter- State supply or intra-State supply?	The aforesaid supply of services would be considered as inter-State supply in terms of section 7(5) of the IGST Act since the location of the supplier is in India and the place of supply is outside India. Therefore, IGST would be chargeable on the said supply of services. In respect of example given above, Z would charge IGST from X for supply of services by way of transportation of goods.
(iii)	In the case given in (i) above, whether the recipient of service of transportation of goods would be eligible to avail ITC in respect of the said input service of transportation of goods?	Section 16 lays down the eligibility and conditions for taking ITC whereas, section 17 provides for apportionment of credit and blocked credits under circumstances specified therein. The said provisions of law do not restrict availment of ITC by the recipient located in India if the place of supply of the said input service is outside India. Thus, the recipient of service of transportation of goods shall be eligible to avail ITC in respect of the IGST so charged by the supplier, subject to the fulfilment of other conditions laid down in section 16 and 17 of the CGST Act. In the example given above, X would be eligible to take ITC of IGST in respect of supply of services received by him from Z, subject to the fulfilment of other conditions laid down in section 16 and 17 of the CGST Act.

No Claim Bonus permissible as deduction under section 15(3)(a) for the purpose of calculation of value of supply of the insurance services provided by insurance company to insured

7

VALUE OF SUPPLY

The issue which arose for clarification was whether ‘No Claim Bonus’ (NCB) provided by the insurance company to the insured can be considered as an admissible discount for the purpose of determination of value of supply of insurance service provided by the insurance company to the insured.

As per section 15(3)(a), value of supply shall not include any discount which is given before or at the time of supply if such discount has been duly recorded in the invoice issued in respect of such supply.

The insurance companies make the disclosure of the fact of availability of discount in form of NCB, subject to certain conditions, to the insured in the insurance policy document itself and also provide the details of the NCB in the invoices also. The pre-disclosure of NCB amount in the policy documents and specific mention of the discount in form of NCB in the invoice is in consonance with the conditions laid down for deduction of discount from the value of supply under section 15(3)(a).

It is, therefore, clarified that NCB is a permissible deduction under section 15(3)(a) for the purpose of calculation of value of supply of the insurance services provided by the insurance company to the insured.

Accordingly, where the deduction on account of NCB is provided in the invoice issued by the insurer to the insured, GST shall be leviable on actual

insurance premium amount, payable by the policy holders to the insurer, after deduction of NCB mentioned on the invoice.

[Circular No. 186/18/2022 GST dated 27.12.2022]

• 1. Clarification on applicability of GST on incentive paid by MeitY to acquiring banks under Incentive scheme for promotion of RuPay Debit Cards and low value BHIM-UPI transactions

The issue which arose for clarification is whether GST is applicable on the incentive paid by Ministry of Electronics and Information Technology (MeitY) to acquiring banks under the Incentive scheme for promotion of RuPay Debit Cards and low value BHIM-UPI transactions.

Under the Incentive scheme for promotion of RuPay Debit Cards and low value BHIM- UPI transactions, the Government pays the acquiring banks an incentive as a percentage of value of RuPay Debit card transactions and low value BHIM-UPI transactions up to ` 2000. The Payments and Settlements Systems Act, 2007 prohibits banks and system providers from charging any amount from a person making or receiving a payment through RuPay Debit cards or BHIM-UPI.

The service supplied by the acquiring banks in the digital payment system in case of transactions through RuPay/BHIM UPI is the same as the service that they provide in case of transactions through any other card or mode of digital payment. The only difference is that the consideration for such services, instead of being paid by the merchant or the user of the card, is paid by the Central Government in the form of incentive.

However, it is not a consideration paid by the Central Government for any service supplied by the acquiring bank to the Central Government. The incentive is in the nature of a subsidy directly linked to the price of the service and the same does not form part of the taxable value of the transaction in view of the provisions of section 2(31) and section 15.

It is hereby clarified that incentives paid by MeitY to acquiring banks under the Incentive scheme for promotion of RuPay Debit Cards and low value BHIM-UPI transactions are in the nature of subsidy and thus not taxable.

[Circular No. 190/02/2023 GST dated 13.01.2023]

• • 1. Only proportionate reversal of ITC required in case of part payment of the value of supply plus tax in respect of an inward supply within 180 days

8

INPUT TAX CREDIT

Second proviso to section 16(2) read with rule 37 (as amended lately with effect from 01.10.2022) provides that the registered person must pay to the supplier, the value of the goods and/or services along with the tax within

180 days from the date of issue of invoice. However, where a registered person, who has availed of ITC on any inward supply fails to pay to the supplier thereof, the amount towards the value of such supply plus tax payable thereon, within 180 days, he shall pay an amount equal to the ITC availed in respect of such supply along with interest.

However, it gave the impression that the whole of ITC pertaining to such supply was to be reversed even though a part of the payment could have been made by the recipient to the supplier. That appeared to be an inadvertent departure from the principle of proportionate reversal under the original rule. Consequently, rule 37(1) has been amended retrospectively with effect from 01.10.2022 to provide for reversal of an amount of ITC proportionate to the amount not paid by the recipient to the supplier vis-à- vis the invoice value.

Relevant extract of rule 37(1) is as follows:

A registered person, who has availed of ITC on any inward supply of goods or services or both, other than the supplies on which tax is payable on

reverse charge basis, but fails to pay to the supplier thereof, the amount towards the value of such supply, whether wholly or partly, along with the tax payable thereon, within the time limit specified in the second proviso to sub-section (2) of section 16, shall pay or reverse an amount equal to the input tax credit availed in respect of such supply, proportionate to the amount not paid to the supplier, along with interest payable thereon under section 50, while furnishing the return in Form GSTR-3B for the tax period immediately following the period of one hundred and eighty days from the date of the issue of the invoice.

[Notification No. 26/2022 CT dated 26.12.2022]

• • 1. Reversal of input tax credit in the case of non-payment of tax by the supplier and re-availment thereof [New rule 37A]

Newly inserted rule 37A covers a situation where a registered person (recipient) avails ITC in GSTR-3B for a tax period in respect of such invoice/debit note, the details of which have been furnished by its supplier in the statement of outward supplies (in Form GSTR-1/using IFF). However, supplier does not furnish return in Form GSTR-3B for the tax period corresponding to the said statement of outward supplies till 30th September following the end of FY in which the ITC in respect of such invoice/ debit note has been availed.

In such a case, the said amount of ITC shall be reversed by the said recipient, while furnishing a return in Form GSTR-3B on or before 30th November following the end of such FY during which such ITC has been availed.

However, where the said amount of ITC is not so reversed by recipient, such amount shall be payable by the said person along with interest thereon under section 50.

Further, where the said supplier subsequently furnishes the return in Form GSTR-3B for the said tax period, the said registered person may re-avail the amount of such credit in the return in Form GSTR-3B for a tax period thereafter.

[Notification No. 26/2022 CT dated 26.12.2022]

• • • 1. Amendments relating to procedure for registration

9

REGISTRATION

Rule 8 and rule 9 have been amended to carry out the following amendments:

• • • • 1. PAN-linked mobile number and e-mail address (fetched from CBDT database) will be captured and recorded in Form GST REG-01 and OTP-based verification will be conducted at the time of registration on such PAN-linked mobile number and email address to restrict misuse of PAN of a person by unscrupulous elements without knowledge of the said PAN-holder.
        2. A pilot project is to be conducted in State of Gujarat for Biometric- based Aadhaar authentication and risk-based physical verification of registration applicants. Amendment in rule 8 and rule 9 have been made to facilitate the same. This will help in tackling the menace of fake and fraudulent registrations.

Amended position till 30.04.2023 has been discussed below. Please refer following discussion instead of discussion on pages 9.38 to 9.44 of Chapter 9

– Registration in Module 2 of the Study Material:

Procedure for registration

Part I

Every person liable to get registered and person seeking voluntary registration shall, before applying for registration, declare his Permanent Account Number (PAN) and State/UT in Part A of FORM GST REG-01 on GST Common Portal.

PAN is validated online by Common Portal from CBDT database and is also be verified through separate OTPs sent to the PAN linked mobile number and e-mail address.

Temporary Reference Number (TRN) is generated and communicated to the

applicant on the validated mobile number and e-mail address.

Using TRN, applicant shall electronically submit application in Part B of application form, along with specified documents at the Common Portal.

Part B of application contains the details, such as, constitution of business, jurisdiction, option for composition, date of commencement of business, reason to obtain registration, address of PPoB and nature of activity carried out therein, details of APoB, details of bank account(s), details of authorized signatory, aadhaar authentication, etc.

On receipt of such application, an acknowledgement in the prescribed form shall be issued to the applicant electronically. A Causal Taxable Person (CTP) applying for registration gets a TRN for making an advance deposit of tax in his electronic cash ledger and an acknowledgement is issued only after said deposit.*

Application shall be forwarded to the Proper Officer.

The procedure after receipt of application by the Proper Officer is depicted on next page.

* Discussed in detail in subsequent paras.

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18

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Yes

If same are found in No

order?

Yes

Registration is granted within 30 days of application

after verification of site & prescribed

within 7 working days from application submission date

Proper Officer issues notice thereby seeking clarification**, information or documents from the applicant electronically

within 30 days from application submission date

Proper Officer examines the application and accompanying documents.

where a person fails to undergo Aadhaar authentication/does not opt for Aadhaar authentication

where PO deems it fit to carry out site verification

where a person, who has undergone Aadhaar authentication, is identified on common portal, based on data analysis & risk parameters, to carry out site verification

 

Other cases

where

Registration

granted within 7 working days from the date of submission of application without site verification

documents

If applicant has furnished the clarification**, No

information or documents within 7 working

days’ time from receipt of notice?

if applicant

applicant fails to undergo

where PO

deem

where a person, who has undergone Aadhaar authentication, is

Yes

(C)

No

successfully

Aadhaar

s it fit

identified on common

If proper officer is satisfied with it?

validates his

authenticat to

c

portal, based on data

aadhaar authentication,

(A)

ion/ does not opt for Aadhaar authentication

arry

out site verific ation

analysis & risk parameters, to carry out site verification

(B)

Proper officer will grant registration

within 7 working days from the date of receipt of information/ clarification/ documents

Yes

(B) (B)

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Proper officer

may reject the application for reasons to be recorded in writing.

✮ Deemed Approval of Application

If the proper officer fails to take any action in the following cases within the stipulated time, the application for grant of registration shall be deemed to have been approved-

in cases where a person is

covered in

(B)

above

•within a period of 30 days from the date of submission of the application

•within a period of 7 working days from the in case of a person covered date of submission of the application

in

(A)

above

•within 7 working days from the date of receipt of clarification, information

in cases covered in (C) above or documents furnished by the

applicant

Thus, in case of successful authentication of Aadhaar and no SCN being issued, registration will be deemed to be approved within 7 working days. However, if Aadhar authentication is not opted for/ aadhaar authentication fails in validation/ PO deems it fit to carry out site verification and no SCN is issued, registration will be deemed to be approved within 30 days by tax official.

Tax Officer can issue SCN within 7 working days, for grant of registration, in cases of successful Aadhar authentication. However, in cases when taxpayer do not opt to provide Aadhaar/when Aadhar authentication fails/ PO deems it fit to carry out site verification, he can issue SCN upto 30 days. In both cases, applicants can submit their reply within 7 working days from issue of SCN.

Aadhaar authentication

[Section 25(6A), (6B), (6C) & (6D) read with rules 8, 9, 10B and 25]

As seen above, there’s a simplified registration procedure under GST.

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However, this easy registration procedure was unduly misused by fly-by-night operators. Thus, in an endeavor to curb/check such operators and to increase compliance, aadhaar e-KYC based registration has been introduced under the GST law. Aadhaar authentication is mandatory for the new applicants (whether an individual applicant or an applicant other than individual) in order to be eligible for grant of registration. Aadhaar Authentication process has been introduced, for the persons applying for GST registration as normal taxpayer/ composition/ casual taxable person/ Input Service Distributor (ISD)/ SEZ Developer/ SEZ Unit etc, in Form GST REG 01.

Existing registrants (those who are already registered under GST) are also required to undergo aadhaar authentication.

How aadhaar authentication is done?

New registrants

While filing the application for registration, the applicant gets an option as to whether he wants to opt for Aadhaar authentication or not. If he opts ‘Yes’ for Aadhaar authentication, GST system sends “authentication link” on the mobile numbers and email ids (mentioned in the registration application) of promotor/partner, and primary authorized signatory which are selected by the applicant2.

On clicking the verification link, a window for Aadhaar authentication opens where they enter the Aadhaar Number and the OTP received by them on the mobile number and email id linked with Aadhaar.

Once Aadhaar authentication has been successfully validated, his application will be deemed to be approved within 7 working days and the registration application submitted by him will not be marked for mandatory site visit, unless the tax official raises a show cause notice within stipulated time.

However, in case the applicant does not opt for Aadhaar authentication while applying for registration or where his Aadhar authentication fails in validation, registration application will not be deemed approved within 7 working days and it will be marked for mandatory site visit and approval

2 While opting for Aadhaar authentication, the applicant needs to select atleast 1 Primary Authorized Signatory and 1 Promoter/ Partner/Karta/Director/Member for authentication purposes.

thereafter, by the tax official. Registration application will get deemed approved after 30 calendar days, if tax official doesn’t take any action.

If tax official raises SCN within 30 calendar days, then applicant has 7 working days to reply to it. Tax official can take further action on that reply within 7 working days. If tax official doesn’t take any action after receipt of applicant’s reply within next 7 working days, his application will get deemed approved.

Existing registrants

All the regular taxpayers and composition taxpayer are required to get Aadhaar authenticated for existing GST registration. An existing taxpayer can get himself Aadhaar authenticated on GST portal using either Aadhaar authentication link or uploading E-KYC documents3.

Persons required to undergo aadhaar authentication

As per section 25(6A), (6B) and (6C), following persons are required to undergo aadhaar authentication:

New applicant

Every (i) individual applicant or (ii) an applicant, other than an individual, shall undergo authentication/furnish proof of possession of Aadhaar number, in the manner prescribed in rule

84. Rule 8(4A) provides that where an applicant opts for authentication of Aadhaar number, he shall, while submitting an application for registration, undergo authentication of Aadhaar number. Said authentication is required to be eligible for grant of registration.

Date of submission of the application in such cases shall be earlier of:

1. the date of authentication of the Aadhaar number, or

3 It is not mandatory for every authorized signatory, promoter or partner to get Aadhaar authenticated for an existing GST registration. The Aadhaar authentication will be needed only for 1 Primary Authorized Signatory and 1 Promoter/ Partner/ Karta/ Director/ Member.

4 vide Notification No. 18/2020 CT dated 23.03.2020

1. 15 days from the submission of the application in Part B of Form GST REG-01.

In case applicant is an individual, he shall undergo authentication of his own aadhaar number.

In case applicant is other than individual, the authentication will be of aadhaar number of the Karta, Managing Director, whole time Director, such number of partners, Members of Managing Committee of Association, Board of Trustees, authorised representative, authorised signatory and such other notified class of persons [authorised signatory of all types, Managing and Authorised partners of a partnership firm and Karta of a Hindu Undivided Family, have been so notified5].

Risk-based biometric-based aadhaar authentication of registration applicants – Pilot project in Gujarat [Sub-rules (4A), (4B) and (5) amended]

In order to improve the registration process, biometric based aadhaar authentication of the high-risk applicants who opt for authentication of Aadhaar number has been introduced on a pilot basis in the State of Gujarat.

An applicant who has opted for authentication of Aadhaar number and is identified on the common portal, based on data analysis and risk parameters, shall be followed by biometric-based Aadhaar authentication and taking photograph:

1. of the applicant where the applicant is an individual or
2. of such individuals where the applicant is not an individual,

along with the verification of the original copy of the documents uploaded with the application in Form GST REG- 01 at one of the notified Facilitation Centres.

The application shall be deemed to be complete only after completion of the process laid down hereunder.

5 vide Notification No. 19/2020 CT dated 23.03.2020

An acknowledgement shall be issued to the applicant only after completion of biometric-based authentication.

• 1. Persons already registered

Every registered person shall undergo authentication/furnish proof of possession of Aadhaar number, in prescribed form and manner and within the prescribed time.

The manner in which aadhaar authentication needs to be done by a registered person is prescribed as under:-

A registered person, who has been issued a certificate of registration under GST, shall undergo authentication of the Aadhaar number of:-

• • • Proprietor, in the case of proprietorship firm,
    • Any partner, in the case of a partnership firm,
    • Karta, in the case of a Hindu undivided family,
    • Managing director or any whole-time director, in the

case of a company,

• • • Any of the Members of the Managing Committee of an Association of persons or body of individuals or a Society, or
    • Trustee in the Board of Trustees, in the case of a Trust; and of the Authorized Signatory,

in order to be eligible for the following purposes:

• for filing of application for revocation of cancellation of registration [Rule 23]
• for filing of refund application in Form RFD-01 [Rule 89]
• for refund of the IGST paid on goods exported out of India [Rule 96]

1. Where Aadhaar number is not assigned
   1. In case of new applicant

If an aadhaar number is not assigned to a new applicant – either

• • • an individual or (ii) person/class of persons (other than individual), such individual/person/class of persons shall be offered alternate and viable means of identification in the manner specified in rule 96.

Proviso to rule 9(1) provides that where

1. a person fails to undergo authentication of aadhaar number or does not opt for authentication of Aadhaar number, or

a person, who has undergone authentication of Aadhaar number, is identified on the common portal, based on data analysis and risk parameters (presently in case pilot project in Gujarat), for carrying out physical verification of places of business

1. the proper officer, with the approval of an officer authorised by the Commissioner not below the rank of Assistant Commissioner, deems it fit to carry out physical verification of places of business

the registration shall be granted within 30 days of submission of application only after physical verification of the principal place of business in the presence of the said person, in the prescribed manner (specified in rule 25) and verification of such documents as the proper officer may deem fit.

Where the application submitted under rule 8 is found to be deficient, either in terms of any information or any document required to be furnished under the said rule, or where the proper officer requires any clarification with regard to any information provided in the application or documents furnished therewith, he may issue a notice to the applicant electronically in within a period of 7 working days from the date of submission of the application and the applicant shall furnish such clarification, information or documents electronically within a period of 7 working days from the date of the receipt of such notice [Rule 9(2)].

6 Provisos to section 25(6B) and 25(6C) read with Notification No.s 18 and 19/2020 CT both dated 23.03.2020

However, in such cases, i.e. where:

1. a person fails to undergo Aadhaar authentication/does not opt for Aadhaar authentication or

a person, who has undergone authentication of Aadhaar number, is identified on the common portal, based on data analysis and risk parameters (presently in case pilot project in Gujarat), for carrying out physical verification of places of business; or

1. PO deems it fit to carry out site verification,

the notice (in prescribed form) seeking clarifications/ information/ documents from the applicant may be issued by the proper officer not later than 30 days from the submission of the application for registration [Proviso to rule 9(2)].

In case of an already registered persons [Rule 10B]

If an Aadhaar number is not assigned to an existing registered person, such person shall be offered alternate and viable means of identification in the prescribed manner7. Such manner has been prescribed as follows:

If Aadhaar number has not been assigned to the person required to undergo authentication of the Aadhaar number, such person shall furnish the following identification documents, namely: –

1. his/ her Aadhaar Enrolment ID slip; and
2. (i) Bank passbook with photograph; or
   1. Voter identity card issued by the Election Commission of India; or
   2. Passport; or
   3. Driving license issued by the Licensing Authority

However, once Aadhaar number is allotted to such person, he shall undergo the authentication of Aadhaar number within a period of 30 days of the allotment of the Aadhaar number.

7 First proviso to section 25(6A)

In case of failure to undergo aadhaar authentication/furnish proof of possession of Aadhaar number/furnish alternate and viable means of identification, registration allotted to such person shall be deemed to be invalid and the other provisions of CGST Act shall apply as if such person does not have a registration8.

Persons/class of persons exempt from aadhaar authentication

Section 25(6D) stipulates that above provisions shall not apply to such person or class of persons or any State or Union territory or part thereof, as may be notified.

Following persons have been notified in this regard9:

• A person who is not a citizen of India
• Department or establishment of State Government or Central Government
• Local authority
• Statutory body
• Public Sector Undertaking
• A person applying for Unique Identity Number under section 25(9)

[Effective from 26.12.2022]

[Notification Nos 26 & 27/2022 CT both dated 26.12.2022 and Notification Nos. 4 & 5/2022 CT both dated 31.03.2023]

• • • 1. Option made available to TDS/TCS registrant to apply for cancellation of registration [Rule 12(3) amended]

Earlier as per rule 12(3), registration granted to persons required to deduct tax at source or to collect tax at source could be cancelled only if upon an enquiry or pursuant to any other proceeding under the CGST Act, proper officer is satisfied that such person is no longer liable to deduct tax at source or collect tax at source.

Thus, there was no option available for an e-commerce operator having TCS registration to apply for cancellation of TCS registration in case of the

8 Second proviso to section 25(6A)

9 vide Notification No. 03/2021 CT dated 23.02.2021

closure of the operations of e-commerce operator. Similarly, there was also no option for a TDS registrant to apply for cancellation of TDS registration.

Thus, rule 12(3) has been suitably amended to provide as follows:

Where, on a request made in writing by a person to whom a registration has been granted under rule 12(2) or upon an enquiry or pursuant to any other proceeding under the CGST Act, the proper officer is satisfied that a person to whom a certificate of registration has been issued is no longer liable to deduct tax at source under section 51 or collect tax at source under section 52, the said officer may cancel the registration issued and such cancellation shall be communicated to the said person electronically.

[Notification No. 26/2022 CT dated 26.12.2022]

1. Where taxable service supplied by/through ECO/supplier of OIDAR services to unregistered recipient, tax invoice to contain the name and address of the recipient, PIN code and the name of the State irrespective of value of supply

10

TAX INVOICE, CREDIT

AND DEBIT NOTES

Rule 46 prescribes the particulars that a tax invoice issued by a registered person should contain. It, inter alia, prescribes that:

• • Where recipient is registered, tax invoice shall contain the name, address and GSTIN/UIN of the recipient [Clause (d)].
  • Where the recipient is unregistered, tax invoice shall contain name and address of the recipient and the address of delivery, along with the name of the State and its code, only where the value of taxable supply ≥ ` 50,000 [Clause (e)].
  • In case where the value of taxable supply < ` 50,000, invoice shall contain such details only when the recipient requests that such details be recorded in the tax invoice [Clause (f)].

In case of supply of services to unregistered persons through online platforms in particular, recipients’ addresses were not properly captured, which affected flow of revenue to the appropriate destination States.

Therefore, following proviso has been inserted to clause (f) of rule 46 to ensure mandatory recording of address of unregistered recipients of service along with the PIN code when the said services were provided through

online platform by a registered person even if the value of taxable supply <

` 50,000:

Where any taxable service is supplied by or through an electronic commerce operator or by a supplier of online information and database access or retrieval services to a recipient who is unregistered, irrespective of the value of such supply, a tax invoice issued by the registered person shall contain the name and address of the recipient along with its PIN code and the name of the State and the said address shall be deemed to be the address on record of the recipient.

[Notification No. 26/2022 CT dated 26.12.2022]

1. Invoice-cum-bill of supply [Rule 46A amended]

Rule 46A provides that, notwithstanding anything contained in rule 46 or rule 49 or rule 5410, a registered person supplying taxable as well as exempted goods or services or both to an unregistered person may issue a single “invoice-cum-bill of supply” for all such supplies.

It may be observed in this regard that the non-obstante clause in rule 46A actually removes the obligation on the part of a registered person who is supplying taxable as well as exempted goods or services or both to an unregistered person to include the particulars as prescribed in rule 46 or rule 49 or rule 54, as applicable, while issuing the single “invoice-cum-bill of supply”.

Consequently, rule 46A is amended accordingly to make that obligatory on the part of a registered person, who is supplying taxable as well as exempted goods or services or both to an unregistered person, to include the relevant particulars as prescribed in rule 46 or rule 49 or rule 54, as applicable, while issuing a single “invoice-cum-bill of supply” by inserting following proviso:

The said single “invoice-cum-bill of supply” shall contain the particulars as specified under rule 46 or rule 54, as the case may be, and rule 49 .

10 Rule 46 prescribes the particulars that a tax invoice issued by a registered person should contain and rule 49 prescribes the particulars that are to be included in a bill of supply issued by a supplier. Rule 54 further prescribes the particulars in respect of tax invoices issued in special cases.

[Notification No. 26/2022 CT dated 26.12.2022]

1. Exemption from generation of e-invoices available for the entity as a whole and not restricted by the nature of supply being made by the said entity

In terms of Notification No. 13/2020 CT dated 21.03.2020, as amended, certain entities/sectors are exempted from mandatory generation of e- invoices as per rule 48(4). The issue which arose for consideration was whether this exemption from mandatory generation of e- invoices is available for the entity as whole, or whether the same is available only in respect of certain supplies made by the said entity.

It is hereby clarified that the said exemption from generation of e-invoices is for the entity as a whole and is not restricted by the nature of supply being made by the said entity.

A banking company providing banking services, may also be involved in making supply of some goods, including bullion. The said banking company is exempted from mandatory issuance of e-invoice in terms of Notification No. 13/2020 CT

dated 21.03.2020, for all supplies of goods and services and thus, will not be required to issue e-invoice with respect to any supply made by it.

[Circular No. 186/18/2022 GST dated 27.12.2022]

1. E-way bill to be generated for transporting imitation jewellery [Rule 138(14) amended]

11

ACCOUNTS AND RECORDS; E-WAY BILL

Rule 138(14) illustrates the cases where e-way bill is not required to be generated.

One such case is where jewellery, goldsmiths’ and silversmiths’ wares and other articles (Chapter 71)

are being transported. Thus, jewellery, goldsmiths’ and silversmiths’ wares and other articles (Chapter 71) can be transported without generating e-way bill.

This provision has been amended to provide that henceforth, e-way bill needs to be generated for transporting imitation jewellery.

[Notification No. 26/2022 CT dated 26.12.2022]

1. Electronic Cash Ledger to be updated on the basis of e-Scroll of the RBI in case of failure of bank to communicate details of Challan Identification Number to the common portal [Rule 87(8) amended]

12

PAYMENT OF TAX

In cases where bank fails to communicate the Challan Identification Number (CIN) details of taxes paid through e-payment mode to GST System for updating the Electronic Cash Ledger (ECL), the ECL of such taxpayers are updated next day on the basis of RBI e-Scroll file containing the successful payment made against the CINs as shared by banks with RBI. However, there is presently no provision in the CGST Rules, 2017 providing for such updation of ECL based on e-Scroll of RBI.

In this regard, CAG highlighted the need for having a specific provision in law for updation of ECL on the basis of e-Scroll of RBI. Thus, in order to regularize the process of updating ECL of the taxpayer on the basis of e- Scroll data received from the RBI in the cases where payment has been received successfully, but bank fails to share the signed CIN with GST System, following proviso has been inserted to rule 87(8):

Where the bank fails to communicate details of Challan Identification Number to the common portal, the Electronic Cash Ledger may be updated on the basis of e-Scroll of the RBI in cases where the details of the said e-

Scroll are in conformity with the details in challan generated in Form GST PMT-06 on the common portal.

[Notification No. 26/2022 CT dated 26.12.2022]

1. Maximum late fees payable under section 47 for delayed filing of annual return, rationalized

13

RETURNS

Section 47 stipulates a specified amount of late fee for delay in filing annual return. An equal amount of late fee is payable by such person under the respective SGST/UTGST Act as well.

The late fee can be waived off partially or fully by the Central Government. Consequently, since the inception of GST law, late fee is being regularly waived off by the Central Government either partially or fully.

From the financial year 2022-23 onwards, late fee for delayed filing of annual return, has been rationalized as follows:

Total amount of late fee payable under section 47 from the financial year 2022-23 onwards, by the registered person who fail to furnish annual return by the due date, shall be as follows:

Class of registered persons Quantum of Late fee

Registered persons having aggregate turnover ≤ ` 5 crores in the relevant FY

Delayed filing of Annual return

` 50 per day (` 25 CGST + ` 25 SGST)

0.04 % of of turnover in the State or Union territory (0.02% CGST

whichever is lower

+ 0.02% SGST)

Registered persons having following aggregate turnover:

` 5 crores < aggregate turnover≤

` 20 crores in the

relevant FY

Registered persons having aggregate turnover > ` 20 crores in the relevant FY

` 100 per day (` 50 CGST + ` 50 SGST)

0.04 % of turnover in the State or Union

territory (0.02% CGST +

0.02% SGST)

` 200 for every day during which such failure continues (` 100 CGST + ` 100 SGST)

0.50% of the turnover of the registered person in the State/Union Territory (0.25% CGST + 0.25% SGST)

whichever is lower

whichever is lower

[Notification No. 07/2023 CT dated 31.03.2023]

1. Taxpayer to be intimated the difference in liability in Form GSTR-1 and Form GSTR-3B and be requested to pay the differential liability or explain the difference [New rule 88C introduced and rule 59(6) amended]

A new rule 88C has been introduced to determine a mechanism for dealing with difference in liability reported in statement of outward supplies between Form GSTR-1 and Form GSTR-3B. Accordingly, where the tax liability as per Form GSTR-1 for a tax period exceeds the tax liability as per Form GSTR-3B for that period by more than a specified extent, the registered person would be intimated on the portal of such difference and

be directed to either (i) pay the differential tax liability along with interest, or (ii) explain the difference, within specified time.

Unless the taxpayer either deposits the amount specified in the said intimation or furnishes a reply explaining the reasons for any amount remaining unpaid, such a person should not be allowed to file Form GSTR- 1/ IFF for the subsequent tax period.

Rule 88C reads as follows:

Where the tax payable by a registered person, in accordance with the statement of outward supplies furnished by him in Form GSTR-1or using the IFF in respect of a tax period, exceeds the amount of tax payable by such person in accordance with the return for that period furnished by him in Form GSTR-3B, by such amount and such percentage, as may be recommended by the Council, the said registered person shall be intimated of such difference.

Such registered person shall be intimated in prescribed form, electronically on the common portal, and a copy of such intimation shall also be sent to his e-mail address*.

In said intimation, the said difference between GSTR-1 and GSTR-3B will be highlighted and he will be directed to:

• 1. pay the differential tax liability, along with interest under section 50, through prescribed form; or
  2. explain the aforesaid difference in tax payable on the common portal, within a period of 7 days.

*email address which registered person has provided at the time of registration or as amended from time to time

Such registered person shall, upon receipt of the aforesaid intimation, either:

1. pay the amount of the differential tax liability, as specified in intimation, fully or partially, along with interest under section 50, and furnish the details thereof electronically on the common portal; or
2. furnish a reply electronically on the common portal, incorporating reasons in respect of that part of the differential tax liability that has remained unpaid, if any,

iwithin the period of 7 days.

Where any amount specified in the said intimation remains unpaid within 7 days’ period and where no explanation or reason is furnished by the registered person in default or where the explanation or reason furnished by such person is not found to be acceptable by the proper officer, the said amount shall be recoverable in accordance with the provisions of section 79.

Further, a registered person, to whom such an intimation of difference between GSTR-1 and GSTR-3B for a tax period is issued, will be blocked from furnishing the GSTR-1/using IFF for subsequent tax period unless he deposits amount specified in intimation or explains the reasons for any unpaid amount. In other words, a registered person, to whom intimation is issued under rule 88C, has been issued on the common portal in respect of a tax period, shall not be allowed to furnish the details of outward supplies in Form GSTR-1/using IFF for a subsequent tax period, unless he has either deposited the amount specified in the said intimation or has furnished a reply explaining the reasons for any amount remaining unpaid, as required under the provisions of rule 88C above [Rule 59(6)11 amended].

[Notification No. 26/2022 CT dated 26.12.2022]

11 Rule 59(6) stipulates the cases where a registered person is debarred from furnishing details of outward supplies in Form GSTR-1/IFF.

• 1. Prescribing manner of filing an application for refund by unregistered persons [Rule 89(2) amended]

15

REFUNDS

There are cases where the unregistered buyers, who had entered into an agreement/ contract with a builder for supply of services of construction of flats/ building, etc. and had paid the amount towards consideration for such service, either fully or partially, along with applicable tax, had to get the said contract/ agreement cancelled subsequently due to non-completion or delay in construction activity in time or any other reasons. In a number of such cases, the period for issuance of credit note on account of such cancellation of service under the provisions of section 34 may already have got expired by that time. In such cases, the supplier may refund the amount to the buyer, after deducting the amount of tax collected by him from the buyer.

Similar situation may arise in cases of long-term insurance policies where premium for the entire period of term of policy is paid upfront along with applicable GST and the policy is subsequently required to be terminated prematurely due to some reasons. In some cases, the time period for issuing credit note under the provisions of section 34 may have already expired and therefore, the insurance companies may refund only the proportionate

premium net off GST12.

Hitherto, there was no facility available to such unregistered buyers/ recipients for claiming refund of amount of tax borne by them in the event of cancellation of the contract/agreement for supply of services of construction of flat/ building or on termination of long-term insurance policy.

However, section 54(1) already provides that any person can claim refund, by making an application upto 2 years from the relevant date. Further, in terms of section 54(8)(e), in cases where the unregistered person has borne the incidence of tax and not passed on the same to any other person, the said refund shall be paid to him instead of being credited to Consumer Welfare Fund (CWF).

Thus, in order to enable such unregistered person to file application for refund under section 54(1) in the situations discussed above, a new functionality has been made available on the common portal which allows unregistered persons to take a temporary registration and apply for refund under the category ‘Refund for Unregistered person’ in Form GST RFD –

1. Further, rule 89(2) has been amended to provide for the documents required to be furnished along with the application of refund by the unregistered persons and the statement to be uploaded along with the said refund application.

In such case, following documentary evidences are required:

(ka) a statement containing the details of invoices viz. number, date, value, tax paid and details of payment, in respect of which refund is being claimed along with copy of such invoices, proof of making such payment to the supplier, the copy of agreement or registered agreement or contract, as applicable, entered with the supplier for

12 Where the time period for issuance of credit note under section 34 has not expired at the time of cancellation/termination of agreement/contract for supply of services,the concerned suppliers can issue credit note to the unregistered person. In such cases, the supplier would be in a position to also pay back the amount of tax collected by him from the unregistered person and therefore, there will be no need for filing refund claim by the unregistered persons in these cases. Accordingly, the refund claim can be filed by the unregistered persons only in those cases where at the time of cancellation/termination of agreement/contract for supply of services, the time period for issuance of credit note under section 34 has already expired.

supply of service, the letter issued by the supplier for cancellation or termination of agreement or contract for supply of service, details of payment received from the supplier against cancellation or termination of such agreement along with proof thereof, in a case where the refund is claimed by an unregistered person where the agreement or contract for supply of service has been cancelled or terminated;

(kb) a certificate issued by the supplier to the effect that he has paid tax in respect of the invoices on which refund is being claimed by the applicant; that he has not adjusted the tax amount involved in these invoices against his tax liability by issuing credit note; and also, that he has not claimed and will not claim refund of the amount of tax involved in respect of these invoices, in a case where the refund is claimed by an unregistered person where the agreement or contract for supply of service has been cancelled or terminated

Moreover, it has been provided that a certificate by a Chartered Accountant or a Cost Accountant to the effect that there is no unjust enrichment in the case of the applicant is not required to be furnished in cases where refund is claimed by an unregistered person who has borne the incidence of tax even if the amount of refund claimed exceeds ` 2 lakh.

Relevant date for filing of refund

The relevant date in respect of cases of refund by a person other than supplier is the date of receipt of goods or services or both by such person as per clause (g) in Explanation (2) under section 54. In the given cases of refund, the date of issuance of letter of cancellation of the contract/ agreement for supply by the supplier will be considered as the date of receipt of the services by the applicant.

In cases where the amount paid back by the supplier to the unregistered person on cancellation/termination of agreement/contract for supply of services is less than amount paid by such unregistered person to the supplier, only the proportionate amount of tax involved in such amount paid back shall be refunded to the unregistered person.

[Notification No. 26/2022 CT dated 26.12.2022 read with Circular No. 188/20/2022 GST dated 27.12.2022]

• 1. Clarification pertaining to cases where it is concluded that the notice issued under section 74(1) not sustainable for reason that the charges of fraud etc. not been established against the noticee and tax payable being determined deeming as if the notice was issued under section 73(1)

19

DEMANDS AND RECOVERY

Section 75(2) provides that in cases where the appellate authority or appellate tribunal or court concludes that the notice issued by proper officer under section 74(1) is not sustainable for reason that the charges of fraud or any willful-misstatement or suppression of facts to evade tax have not been established against the noticee, then the proper officer shall determine the tax payable by the noticee, deeming as if the notice was issued under section 73(1).

In this regard, Circular No. 185/17/2022 GST dated 27.12.2022 clarifies following issues:

Issues

Clarification

In some of the cases where the show cause notice (SCN) has been issued by the proper officer to a noticee under section 74(1) for demand of tax not paid/ short paid or erroneous refund or ITC wrongly availed or utilized, the appellate authority or appellate tribunal or the court concludes that the said notice is not sustainable under section 74(1) for the reason that the charges of fraud or any willful- misstatement or suppression of facts to evade tax have not been established against the noticee and directs the proper officer to re- determine the amount of tax payable by the noticee, deeming the notice to have been issued under section 73(1), in accordance with the provisions of section 75(2). What would be the time period for re- determination of the tax, interest and penalty payable by the noticee in such cases?

Section 75(3) provides that an order, required to be issued in pursuance of the directions of the appellate authority or appellate tribunal or the court, has to be issued within 2 years from the date of communication of the said direction. Accordingly, in cases where any direction is issued by the appellate authority or appellate tribunal or the court to re- determine the amount of tax payable by the noticee by deeming the notice to have been issued undersection 73(1) in accordance with the provisions of section 75(2), the proper officer is required to issue the order of redetermination of tax, interest and penalty payable within the time limit as specified in section 75(3), i.e. within a period of 2 years from the date of communication of the said direction by appellate authority or appellate tribunal or the court, as the case may be.

How the amount payable by the noticee, deeming the notice to have been issued under section 73(1), shall be re- computed/re- determined by the proper officer as per provisions of section 75(2)?

In cases where the amount of tax, interest and penalty payable by the noticee is required to be re-determined by the proper officer in terms of section 75(2), the demand would have to be re-determined keeping in consideration the provisions of section 73(2) read with section 73(10)13. Therefore, in cases where the proper officer has to re-determine the amount of tax, interest and penalty payable deeming the notice to have been issued under section 73(1) in terms of section 75(2), the same can be re-determined for so much amount of tax short paid or not paid, or ITC wrongly availed or utilized or that of erroneous refund, in respect of which SCN was issued within the time limit as specified under section 73(2) read section 73(10). Thus, only the amount of tax short paid or not paid, or ITC wrongly availed or utilized or tax payable on account of erroneous refund, along with interest and penalty payable, in terms of section 73 can be re-determined, where SCN was issued within 2 years and 9 months from the due date of furnishing of annual return for the respective FY or from the date of erroneous refund. In case, where the SCN under section 74(1) was issued for tax short paid or tax not paid or wrongly availed or utilized ITC or for

13 A combined reading of provisions of section 73(1), 73(2), 73(9) and 73(10) transpires that in cases which do not involve fraud or willful-misstatement or suppression of facts to evade payment of tax, the SCN in terms of section 73(1) has to be issued within 2 years and 9 months, from the due date of furnishing of annual return for the FY to which such tax not paid or short paid or ITC wrongly availed or utilized relates, or from the date of erroneous refund.

erroneous refund beyond a period of 2 years and 9 months from the due date of furnishing of the annual return for the FY to which such demand relates to or from the date of erroneous refund, and the appellate authority concludes that the notice is not sustainable under section 74(1) thereby deeming the notice to have been issued under section 73(1), the entire proceeding shall have to be dropped, being hit by the limitation of time as specified in section 73.

• In cases, where the SCN in terms of section 74 was issued for tax short paid or not paid tax or wrongly availed or utilized ITC or on account of erroneous refund within 2 years and 9 months from the due date of furnishing of the annual return for the said FY to which such demand relates to, or from the date of erroneous refund, as the case may be, the entire amount of the said demand in the SCN would be covered under re- determined amount.
• Where the SCN under section 74(1) was issued for multiple FYs, and where notice had been issued before the expiry of the time period as per section 73(2) for one FY but after the expiry of the said due date for the other FYs, then the amount payable in terms of section 73 shall be re-determined only in respect of that FY for which SCN was issued before the expiry of the time period as specified in section 73(2).

Proceedings conducted under IBC covered under the term ‘other proceedings’ in section 84

As per section 84, if the government dues against any person under CGST Act are reduced as a result of any appeal, revision or other proceedings in respect of such government dues, then an intimation for such reduction of government

dues has to be given by the Commissioner to such person and to the appropriate authority with whom the recovery proceedings are pending. Further, recovery proceedings can be continued in relation to such reduced amount of government dues.

The word ‘other proceedings’ is not defined in CGST Act. It is to be mentioned that the adjudicating authorities and appellate authorities under IBC are quasi- judicial authorities constituted to deal with civil disputes pertaining to insolvency and bankruptcy. For instance, under IBC, NCLT serves as an adjudicating authority for insolvency proceedings which are initiated on application from any stakeholder of the entity like the firm, creditors, debtors, employees etc. and passes an order approving the resolution plan. As the proceedings conducted under IBC also adjudicate the government dues pending under the CGST Act or under existing laws against the corporate debtor, the same appear to be covered under the term ‘other proceedings’ in section 84.

[Circular No. 187/19/2022 GST dated 27.12.2022]

• • 1. In case of appeal filed against the order of adjudicating authority which is uploaded on common portal, requirement of submission of certified copy of said order dispensed with [Rules 108(3) and 109 amended]

22

APPEALS AND REVISION

An appeal against any decision or order passed by an adjudicating authority to Appellate Authority can be filed either:

• • • 1. by the aggrieved person (taxpayer) [Section 107(1) read with rule 108]

or

• • • 1. by the Department [Section 107(2) read with rule 109].

Earlier, as per rule 108(3), in respect of an appeal filed by the aggrieved person (taxpayer), a certified copy of the decision/order appealed against was required to be submitted within 7 days of filing the appeal in Form GST APL-01. This was required to be submitted in all cases. The date of filing appeal in case where certified copy was submitted within 7 days of filing appeal is the date of issuance of provisional acknowledgement, otherwise it is the date of submission of the certified copy.

Similarly, rule 109(2) relating to appeal filed by the Department provided for requirement of submission of certified copy of the order appealed against within 7 days of filing application in Form GST APL-03, in all cases.

However, in GST regime, when an order which is appealed against is issued or uploaded by the adjudicating authority on the common portal, the same can be viewed by the Appellate Authority. Accordingly, the requirement of submission by the appellant of a certified copy of such an uploaded order to vouch for its authenticity, pales into insignificance considering that the order has been uploaded by the adjudicating authority using his Digital Signature Certificate and the same is available for viewing or downloading by the Appellate Authority on the portal.

However, in cases where the decision or order has been passed manually and has not been uploaded on the common portal, the same is not available to the Appellate Authority on the common portal. In such cases, non- submission of the certified copy by the appellant restricts the Appellate Authority from entertaining the same.

Resultantly, in order to provide clarity on the requirement of submission of certified copy of the order appealed against and the issuance of final acknowledgment by the Appellate Authority, rule 108(3) and rule 109 have been substituted.

Substituted rule 108(3)

Where the decision or order appealed against is uploaded on the common portal, a final acknowledgment, indicating appeal number, shall be issued by the Appellate Authority or an officer authorised by him in this behalf. The date of issue of the provisional acknowledgment14 shall be considered as the date of filing of appeal.

However, where the decision/order appealed against is not uploaded on the common portal, the appellant shall submit a self-certified copy of the said decision or order within a period of 7 days from the date of filing of Form GST APL-01. The final acknowledgment, indicating appeal number, shall be issued by the Appellate Authority or an officer authorised by him in this behalf. The date of issue of the provisional acknowledgment shall be considered as the date of filing of appeal.

14 It is important to note that when an appeal is filed by aggrieved person to the Appellate Authority in Form GST APL-01, along with the relevant documents, a provisional acknowledgement is issued to the appellant immediately.

Further, where the said self-certified copy of the decision/order is not submitted within a period of 7 days from the date of filing of Form GST APL-01, the date of submission of such copy shall be considered as the date of filing of appeal.

Substituted rule 109 – Application to the Appellate Authority

An application to the Appellate Authority under section 107(2) shall be filed in Form GST APL-03, along with the relevant documents, either electronically or otherwise as may be notified by the Commissioner and a provisional acknowledgment shall be issued to the appellant immediately.

Where the decision/order appealed against is uploaded on the common portal, a final acknowledgment, indicating appeal number, shall be issued by the Appellate Authority or an officer authorised by him in this behalf. The date of issue of the provisional acknowledgment shall be considered as the date of filing of appeal.

However, where the decision or order appealed against is not uploaded on the common portal, the appellant shall submit a self-certified copy of the said decision or order within a period of 7 days from the date of filing of Form GST APL-03. The final acknowledgment, indicating appeal number, shall be issued by the Appellate Authority or an officer authorised by him in this behalf. The date of issue of the provisional acknowledgment shall be considered as the date of filing of appeal.

Further, where the said self-certified copy of the decision or order is not submitted within a period of 7 days from the date of filing of Form GST APL-03, the date of submission of such copy shall be considered as the date of filing of appeal.

[Notification No. 26/2022 CT dated 26.12.2022]

• • 1. Provision for enabling withdrawal of the appeal application filed before the first Appellate Authority introduced [New rule 109C]

Earlier, there was no provision in the GST law for withdrawal of the appeal filed under sections 107(1) & 107(2) before the first appellate authority against decision or orders of adjudicating authority by aggrieved person or authorized officer respectively. Thus, new rule 109C has been inserted to provide for withdrawal of appeal before the issuance of SCN or order under

section 107(11), whichever is earlier to enable the appellant to file application for withdrawal of appeal application.

Rule 109C relating to withdrawal of appeal provides as follows:

The appellant may, at any time before issuance of show cause notice under section 107(11) or before issuance of the order under the said sub-section, whichever is earlier, in respect of any appeal filed in Form GST APL-01 or Form GST APL-03, file an application for withdrawal of the said appeal by filing an application.

However, where the final acknowledgment in Form GST APL-02 has been issued, the withdrawal of the said appeal would be subject to the approval of the Appellate Authority and such application for withdrawal of the appeal shall be decided by the Appellate Authority within 7 days of filing of such application:

Further, any fresh appeal filed by the appellant pursuant to such withdrawal shall be filed within the time limit specified in sub-section (1) or sub-section

1. of section 107, as the case may be.

[Notification No. 26/2022 CT dated 26.12.2022]

Competition Commission of India (CCI) replaces National Anti- profiteering Authority (NAA) for anti-profiteering complaints under GST [Rules 122, 124, 125, 134 and 137 omitted and rule 127 amended]

24

MISCELLANEOUS

PROVISIONS

Section 171 contains the provisions relating to anti-profiteering measures under GST law. Chapter XV – Anti-profiteering of the CGST Rules prescribes the powers and functions of National Anti-profiteering Authority (NAA).

NAA was constituted under rule 137 by the Central Government to examine whether ITC availed by any registered person or the reduction in the tax rate had actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him; this was to ensure that the consumer was protected from arbitrary price increase in the name of GST. The term of the authority came to an end on 30.11.2022.

With effect from 01.12.2022, rule 137 has been omitted vide Notification No. 24/2022 CT dated 23.11.2022. Resultantly, NAA ceased to exist from 01.12.2022.

Further, with effect from 01.12.2022, NAA has been replaced by the CCI. Now, CCI15 is empowered to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him. Henceforth, all investigations, based on complaints filed

15 established under sub-section (1) of section 7 of the Competition Act, 2002

by consumers, will be done by the Directorate General of Anti-profiteering (DGAP) which will then submit a report to CCI.

Consequentially, definition of ‘Authority’ provided in clause (a) of Explanation to this chapter has been appropriately substituted to mean the Authority notified under section 171(2) and rules 122, 124, 125 and 134 have also been omitted.

Further, consequential amendments are carried out in rule 127. Relevant extract of amended rule 127 reads as follows:

Rule 127 – Functions of the Authority

The authority shall discharge the following functions, namely:-

(i)………………. (ii)..……………

(iii) ..……………

[Effective from 01.12.2022]

[Notification Nos 23 & 24/2022 CT both dated 23.11.2022]

• 1. In the said rules, in rule 161,for the word, “order”, the words, “intimation or notice” shall be substituted.

[Notification No. 26/2022 CT dated 26.12.2022]

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