CBIC has recently issued few notifications under CGST and IGST as well as has issued few Circulars clarifying some issues which includes Manner of Utilisation of GST ITC and Process for revocation of order for cancellation of GST registration.
We bring to you the summary of such notifications –
| S. No | Provisions | Notification/Circular No | Applicable Provisions of GST |
| A | Clarification in respect of utilization of ITC under GST | Circular No 98/17/2019-GST dated 23rd April, 2019 | Sec 49A and Sec 49B |
| B | Amendment to provisions of Revocation of Cancellation of Registration | Notf. 20/2019 – Central Tax dated 23rd April, 2019 | Rule 23 of CGST Rules, 2017 |
| C | Clarification regarding filing of application for revocation of cancellation of registration | Circular No 99/18/2019-GST dated 23rd April, 2019 | Rule 23 of CGST Rules, 2017 & Notf. 20/2019 – CT dated 23rd April 2019 |
Let us analyze the provisions of the notification and circular issued in a summarized manner.
1. Clarification in respect of utilization of ITC under GST – Circular No 98/17/2019 – GST dated 23rd April, 2019
Section 49 was amended and Section 49A and Section 49B were inserted vide CGST Tax (Amendment) Act, 2018 with effect from 1st February 2019.
Based on the representations received from the trade and industry regarding challenges being faced by taxpayers due to bringing into force of section 49A of the CGST Act, 2017, that this is resulting in accumulation of input tax credit for one kind of tax (say State tax) in electronic credit ledger and discharge of liability for the other kind of tax (say Central tax) through electronic cash ledger in certain scenarios.
| ITC Balance | Utilized for Set off against liability of | Remarks | |||
| IGST | IGST | CGST | SGST | UTGST | After utilization towards payment of IGST only, balance can be used for set off of liability for CGST or SGST or UTGST (in any manner) |
| CGST | IGST | CGST | NA | NA | Cannot be used against SGST/UTGST |
| SGST | IGST | NA | SGST | NA | Cannot be used against CGST/UTGST |
| UTGST | IGST | NA | NA | UTGST | Cannot be used against CGST/SGST |
Note – Utilization of CGST/SGST/UTGST shall be allowed only when ITC for IGST has been first utilized in full.
Rule 88A was inserted in the CGST Rules, 2017 vide notification No. 16/2019- Central Tax, dated 29th March, 2019.
Rule 88A in the CGST Rules allows utilization of input tax credit of Integrated tax towards the payment of Central tax and State tax, or as the case may be, Union territory tax, in any order subject to the condition that the entire input tax credit on account of Integrated tax is completely exhausted first before the input tax credit on account of Central tax or State / Union territory tax can be utilized.
Example –
Amount of ITC available and Output Tax Liability under different tax heads –
| Head | Output Liability | Input Tax Credit |
| Integrated Tax | 1000 | 1300 |
| Central tax | 300 | 200 |
| State/ Union Territory Tax | 300 | 200 |
| Total | 1600 | 1700 |
Option – I
| ITC on account of | Discharge of Output liability on account of | Balance of ITC | Remarks | ||
| Integrated Tax | Central Tax | State/ Union Territory Tax | |||
| Integrated Tax | 1000 | 200 | 100 | 0 | |
| ITC on account of IGST has been exhausted completely | |||||
| Central Tax | 0 | 100 | – | 100 | Cannot be used against SGST/UTGST |
| State/ UT Tax | 0 | – | 200 | 0 | Cannot be used against CGST/SGST |
| Total | 1000 | 300 | 300 | 100 | |
Option – 2
| ITC on account of | Discharge of Output liability on account of | Balance of ITC | Remarks | ||
| Integrated Tax | Central Tax | State/ Union Territory Tax | |||
| Integrated Tax | 1000 | 100 | 200 | 0 | |
| ITC on account of IGST has been exhausted completely | |||||
| Central Tax | 0 | 200 | – | 0 | Cannot be used against SGST/UTGST |
| State/ UT Tax | 0 | – | 100 | 100 | Cannot be used against CGST/SGST |
| Total | 1000 | 300 | 300 | 100 | |
Presently, the GSTN common portal supports the order of utilization of input tax credit in accordance with the provisions before implementation of the provisions of the CGST (Amendment) Act i.e. pre-insertion of Section 49A and Section 49B of the CGST Act.
Till the new order of utilization as per newly inserted Rule 88A of the CGST Rules is implemented on the GSTN common portal, taxpayers may continue to utilize their input tax credit as per the functionality available on the GSTN common portal.
2. Amendment to provisions of Revocation of Cancellation of Registration
Notification No 20/2019 – Central tax and Circular No 99/18/2019 dated 23rd April 2019
Provisions of Rule 23 of the CGST Rules, 2017 provides for procedure for Revocation of Cancellation of registration. It lays down the procedural guidelines to be followed in this case. However, the provisions did not provide for any timeline for filing of returns before filing application for revocation of cancellation.
The proposed amendment in Rule 23 of the CGST Rules, 2017 provides as under –
- The person whose registration has been cancelled shall file all returns due, within a period of thirty days from the date of order of revocation of cancellation of registration, for the period from the date of the order of cancellation of registration till the date of the order of revocation of cancellation of registration.
- The person whose registration has been cancelled from retrospective date, he shall file all returns due (from the period of effective date of registration), within a period of thirty days from the date of order of revocation of cancellation of registration, for the period from the effective date of cancellation of registration till the date of the order of revocation of cancellation of registration.
3. Removal of Difficulty Order for revocation of order for cancellation
Circular No 99/18/2019 – GST dated 23rd April, 2019
- section 29 of the CGST Act empowers the officer to cancel the registration (including from a retrospective date). Thus registration may have been cancelled either from the date of order of cancellation of registration or from a retrospective date due to non-furnishing of return in Form GSTR 3B (Regular tax Payers) or Form GSTR 4 (For composition tax payers).
- As per provisions Rule 23 of the CGST Rules, 2019, the person whose registration is cancelled has to apply for revocation of registration of cancellation within 30 days of such cancellation. Large number of people could not apply for revocation within 30 days.
- An one time opportunity is provided to all such cases where order for cancellation has been passed up to 31st March, 2019, may apply for revocation on or before 22nd July 2019.
Note – This is for information only. For exact details of changes, the notification/Circular may please be referred to, as and when they are issued.
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