GST has completed 4 years from its implementation as on 1’st July’2021 and it is time for celebration of 4’th Anniversary. The Government has been taken number of steps for the simplification of GST and easing of compliances in the GST regime as per the recommendations of GST Council. In the last 4 years about 44’s GST Council meeting were held to consider the suggestions of the stakeholders and to recommend for amendments in GST law.

The Government has considered number of procedural changes to simplify the tax system and smooth functioning of GST in the country. A number of objectives have been achieved in the GST regime with implementation new provisions for compliance by the taxpayer. Significant decisions were taken on GST rate on multiple products & for COVID related items.

4 years of GST A Good & Simple Tax

The various milestone improvements were brought in the GST system for the 2020-2021 can be summarized as under:

1. Implementation of Electronic Invoicing system: The GST Council in its 37’th meeting held on 20th September, 2019 has approved introduction of ‘E-invoicing’ or ‘electronic invoicing’. Every registered person whose aggregate turnover (including exempt supplies and exports clearances) on PAN India basis exceeds Rs.100 crores in a financial year, shall mandatorily generate e-invoices in the case of B2B supplies. Registered person has to generate Invoice Reference Number (IRN) in the notified common portals of GST and the same IRN shall be incorporated in the e-invoice. For which specific invoice format has been designed shall be adopted by the registered person in his software. No e-invoice shall be valid unless bears IRN. From 1’st January’2021 made it mandatory for taxpayers having turnover more than of Rs.500 crore in each of the previous financial years from 2017-18 to 2019-20 are required to use e-invoicing. From January 1, 2021 e-invoicing has been made mandatory for business with a turnover of more than 100 crores in each of the financial years 2017-18 to 2019-20. Further, the CBIC on 8’th March’2021 announced that e-invoicing will be mandatory for business with as turnover of more than Rs.50 crores (in any financial year 2017-18 onwards) from 1’st April’2021.

2. Quick Response Code ( QR Code) : A registered person, whose aggregate turnover in a financial year exceeds five hundred crore rupees, to an unregistered person (hereinafter referred to as B2C invoice), shall have Quick Response (QR) code: Provided that where such registered person makes a Dynamic Quick Response (QR) code available to the recipient through a digital display, such B2C invoice issued by such registered person containing cross-reference of the payment using a Dynamic Quick Response (QR) code, shall be deemed to be having Quick Response (QR) code. This QR code date implementation has been differed to 1’st July’2021.

3. Quarterly return Monthly Payment Scheme :

As a trade facilitation measure and in order to further ease the process of doing business, the GST Council in its 42nd meeting held on 05.10.2020, had recommended that registered person having aggregate turnover up to five (5) crore rupees may be allowed to furnish return on quarterly basis along with monthly payment of tax, with effect from 01.01.2021.

4. Time limit for filing application for Revocation of Cancellation of Registration: where GST registration was cancelled by proper officer due to non-filing of returns for consecutive of six months in terms of section 29(2) of the CGST Act, 2017 and they could not apply for revocation of cancellation of registration within 30 days as stipulated in Section 30 of the CGST Act, 2017. With the recommendations of GST council, the Government provided a permanent mechanism to apply for revocation of cancellation of registration and in place of 30 days about another 60 days has been permitted with the approval of Additional Commissioner / Joint Commissioner or the Commissioner as the case may be. Accordingly, the said changes have been carried in the CGST Rules and GSTN portal w.e.f. 18.05.2021.

5. Amendment relating to E-way Bill :

The amendment in the CGST Rules has been made to provide that E-Way Bill shall not be allowed to be generated in respect of outward movement of goods of registered person who has not furnished FORM GSTR-3B / GSTR-1 / GST CMP-08 for two moths/quarters. Hence, if supplier is non-complaint with the GST return filings, recipient would not be able to generate the EWB.

6. Amendment of Refund provision relating relevant date of refund :

The amendment has been made in the CGST Rules to provide that time period from the date of filing refund application till the date the deficiency memo shall be excluded in computing limitation period of 2 years from the relevant date in terms of Section 54(1) of the CGST Act, 2017.

7. Introduction of facility to withdrawal the refund application:

New provisions are introduced to allow applicants to withdraw their refund application. The application can be withdrawn at any time before the issuance of provisional sanction order, refund sanction order, withhold order, etc. The applicant can submit FORM GST RFD -01W. Once the said application for withdrawal is submitted on GST portal, the amount was debited from the electronic credit ledger shall be restored to the claimant’s account.

8. Amnesty Scheme to provide relief to taxpayers regarding late fee for pending returns: To provide relief to the taxpayers, late fee for non-furnishing FORM GSTR-3B for the tax periods from July, 2017 to April, 2021 has been reduced / waived as under: –

i. late fee capped to a maximum of Rs 500/- (Rs. 250/- each for CGST & SGST) per return for taxpayers, who did not have any tax liability for the said tax periods;

ii. late fee capped to a maximum of Rs 1000/- (Rs. 500/- each for CGST & SGST) per return for other taxpayers;

iii. The reduced rate of late fee would apply if GSTR-3B returns for these tax periods are furnished between 01.06.2021 to 31.08.2021.

9. Rationalization of late fee imposed under section 47 of the CGST Act

To reduce burden of late fee on smaller taxpayers, the upper cap of late fee is being rationalized to align late fee with tax liability/ turnover of the taxpayers upto 1.5 crores , from Rs.1,.5 crores to Rs.5 crores and Rs.5 crores and above.

10. Simplification of Annual Return for Financial Year 2020-21:

i. To ease the compliance requirement in furnishing reconciliation statement in FORM GSTR-9C, as taxpayers would be able to self-certify the reconciliation statement, instead of getting it certified by chartered accountants. This change will apply for Annual Return for FY 2020-21.

ii. The filing of annual return in FORM GSTR-9 / 9A for FY 2020-21 to be optional for taxpayers having aggregate annual turnover upto Rs 2 Crore;

iii. The reconciliation statement in FORM GSTR-9C for the FY 2020-21 will be required to be filed by taxpayers with annual aggregate turnover above Rs 5 Crore. Amendments in section 35 and 44 of CGST Act made through Finance Act, 2021 to be notified.

There are certain stringent provisions under CGST Act, 2017 / CGST Rules, 2017 have been incorporated in the year 2020-21, the lists of such stringent provisions is summarized as under:

1. Restriction on availing ITC – Rule 36(4)- e.f 1’st Janyary,2021 the taxpayer is restricted to avail ITC only ITC can be availed only up to 105% of GSTR 2A. The cap of 105% to be computed on invoices uploaded and returns furnished + invoices furnished by quarterly taxpayer. The violation of the said provision could lead to suspension of registration

2. Restriction on use of ITC – Rule 86(B): The taxpayers restricted to utilise ITC in credit ledger can be used only to pay 99% of output tax liability. The applicable to taxpayers having monthly taxable supply exceeding Rs. 50 lacs. The provision of restriction of ITC is not applicable to the following taxpayers

(i) Paid Income tax exceeding Rs. 1 lac in each of the last two financial years

(ii) Claimed refund of more than Rs. 1 lac on zero rated supplies or inverted duty structure in the preceding financial year

(iii) Discharged tax liability cumulatively in cash in excess of 1% in the current financial year

(iv) department, PSU, local authority or statutory body

3. Blocking of GSTR 1 – Rule 59(5): The taxpayer filing monthly return and in case default of filing GSTR-3B two month, the taxpayer filing quarterly return default of filing GSTR-3B one month and the taxpayer eligible to use ITC 99% on default of filing GSTR-3B for one month.

4. Suspension of registration – Rule 21A: The GST officer can initiate action of suspension of registration and no opportunity of being heard to be provided before suspending registration. The registration shall be suspended if significant differences or anomalies are found in comparison of GSTR 1 & GSTR 3B, GSTR 3B & GSTR 1 furnished by his supplier. The taxpayer shall be intimated in GST REG-31 on common portal or to his e-mail address highlighting the differences and giving 30 days notice as to why registration should not be cancelled during the period of suspension, no refund under section 54 shall be granted.

5. Cancellation of GST registration – Rule 21: If the taxpayer ITC availed in violation of Section 16 of the CGST Act, 2017, Outward supply in GSTR-1 is more as compare to GSTR-3B and the use of ITC exceeding 99% of the outward tax liability.

6. Changes made in GST registration – Rule 8 & 9:- with effect from 1’st January.2021. The new registration under GST shall be Aadhar based registration with Biometric based Aadhar authentication; Taking photograph of specified individual; and verification of original copy of documents uploaded in registration application at Facilitation Centre notified by the Commissioner. Registration to be granted in 7 days, as against 3 days earlier.

7. Changes made to validity of e-way bill – Rule 138 & 138(E): with effect from 1’st January’2021- For distance upto 200 kms – e-way bill would be valid for one day instead of two days earlier. For every 200 kms or part thereof – validity would be one day instead of two days earlier. E-way bill would be blocked if GST registration is suspended under rule 21A.

8. Additional condition for availing ITC : Section 16 (2) of the CGST Act provides for eligibility and conditions for taking of input tax, namely taxpayers having possession of duty paying documents, has received goods or services, tax paid to the Government on such supply and furnished return under section 39 of the CGST Act.

New clause (aa) to sub-section 16(2) has been inserted. ITC on invoice/debit note may be availed only when details of the same have been furnished by supplier in the statement of outward supplies (Form GSTR-1) and such details have been communicated to recipient of such invoice or debit note under section 37. By this amendment proposal gives statutory support to Rule 36(4) of the CGST Rules to restrict the ITC to 5% in respect of invoices or debit notes not furnished by the supplier in GSTR-1 or GSTR-2B. (To be notified)

9. Interest on Net Cash Liability: Section 50 of the CGST Act is being amended, retrospectively, to substitute the proviso to sub-section (1) so as to charge interest on net cash liability with effect from the 1st July, 2017.

It is to mention that the Finance (No.2) Act, 2019 inserted proviso to Section 50 stating that interest on delayed payment of tax is leviable only on that portion of output tax liability which is discharged by way of cash. The said proviso has been notified vide Notification No.63/2020-CT., dated 20.08.2020 with effect from 1-09-2021. This is in line with recommendation of 39’th GST Council meeting. With this amendment the issue of payment of tax on gross tax liability will now finally settle. Now, Section 50(1) of the CGST Act has been amended retrospectively from 1’st July, 2017 so as to charge interest on delayed payment of GST on net cash liability.

There are few pending action should be taken care by the Government for the benefit of the taxpayers listed as under:  

1. Disposal of Appeals in respect of Revocation of Cancellation of Registration: Even though the Government has announced Amnesty Scheme to provide relief to the taxpayers regarding late fee for pending returns from July’2017 to April’2021 and validity of scheme is till 31.08.2021. The taxpayers whose appeals were pending before the first Appellate Authority in respect of revocation of cancellation of registration, hence needs speedy disposal so that those taxpayers can avail the benefits of amnesty scheme within stipulated period till 31’st August’2021. The Government is required to issue circular by way of instruction to the field formations / officers for disposal of all pending appeals with the first Appellate Authorities across the country.

2. Time limit for availment of ITC in terms of Section 16(4): A registered person shall not be entitled to 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 annual return, whichever is earlier.

It is pertinent to mention that Section 16(4) of the CGST Act vide Finance Act, 2020 to the effect that “the said restriction in respect of debit note shall be considered from the year in which such debit note is issued and not the year in which the invoice relating to such debit note was issued” has been amended.

The cited amendment of section 16(4) of the CGST Act so far has not been notified for operation of the said provision. It is requested to the Government should immediately to issue notification in respect of amended section 16(4) of the CGST Act for the benefit of the taxpayers across the country.

3. Formation of Centralized Authority for Advance Ruling: The GST Council’s in its 31’st Meeting had recommended for creation of Centralized AAAR to deal with the conflicting decisions made by two or more State AAAR on the same issue. Even, the necessary amendments in the CGST Act, has been carried but the said provision so far not been notified and needs immediate action for the implementation of the said provision.

4. Formation of GST Appellate Tribunal: There is delay in formation GST Appellate Tribunal, the issue which has been decided against the registered person by the adjudicating authority or refund application has been rejected by the appropriate authority and appeal against the said order is pending before the appellate authority. But the appellate process is being kept pending by several appellate authorities on the grounds that the appellate tribunal has not been constituted and that till such time no remedy is available against their Order-in-Appeal, such appeals cannot be disposed of. However, on the recommendations of the GST Council, the Government issued the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 vide Order No. 09/2019 – Central Tax dated December 3, 2019. It was provided through the said Order that the appeal to tribunal can be made within three months (six months in case of appeals by the Government) from the date of communication of order or date on which the President of the State President, as the case may be, of the Appellate Tribunal enters office, whichever is later. CBIC vide Circular No. 132/2/2020- GST dated March 18, 2020, [2020(34)G.S.T.L.C3], has clarified that the prescribed time limit to make an application to the appellate tribunal will be counted from the date on which President or the State President enters the office. Thus, the Government is required to take initiative for the formation of GST Appellate Tribunal in the GST regime.

Conclusion: With the completion of 4 years of GST regime there are several initiatives has been taken by the Government on the recommendations of GST Council from time to time for the simplification and benefits of the taxpayers. There are certain actions needs to be addressed by the Government for improvement in the GST regime. With more simplification / easy of tax compliance makes the taxpayers self reliance not only for GST return filing, GST certification of annual return but also help the Government on policy making in the GST regime. Consequently, the Government revenue will be enhanced with the growth of business of the taxpayers in the coming days.

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February 2024