Analysis of GST Notification & Circulars from 23.10.2018 to 04.11.2018

Dr. Sanjiv Agarwal
FCA, FCS

GST collections have exceeded Rs one lakh crore for October, 2018. This is second time in financial year 2018-19 that tax revenue has breached Rs. 1 lakh crore mark. Of this, CGST (Central Goods and Services Tax) was Rs.16,464 crore, and SGST (State Goods and Services Tax) and IGST (integrated Goods and Services Tax) contributed Rs.22,826 crore and Rs.53,419 crore, respectively. The total cess collection was Rs.8,000 crore. October’s collection of Rs. 1,00,710 crore is 6.64 per cent higher than the Rs.94,442 crore for September. According to Finance Minister, the success of GST is lower rates, lesser evasion, higher compliance, only one tax and negligible interference by taxation authorities. GST collections for October 2018 crosses Rupees One Lac Crore

The National Anti-profiteering Authority (NAA) has been passing orders on complaints but it is very difficult to establish the case of anti-profiteering in the absence of credible evidence. In one of the market surveys, it is reported that only 20% of the consumers feel that the benefit of lower GST has been passed on to consumers by consumer durable firms. In majority of cases, benefit is either not passed on or partially passed on. Link to access Orders of National Anti-profiteering Authority (NAA)

CBIC has issued various Circulars and Notifications in last few days. The approach of ‘listening, adjusting and changing’ is the order of the day. Article covers Analysis of GST Notification and Circulars issued between 23.10.2018 to 04.11.2018

(A) No compulsory registration for inter-state supplies of certain handicrafts

 (Notification No. 56/2018 – Central Tax dated 23.10.2018 )

• Central Government has superseded N. No. 8/2017-Integrated Tax dated September 14, 2017 and again notified exemption from registration for casual taxable persons making inter-state taxable supplies of specified handicraft goods.
• The said notification prescribes that relaxation shall also be available in respect of handicraft goods  as defined in “Explanation” to Notification No. 21/2018 -Central Tax (Rate) dated July 26, 2018 which includes handcrafted candles, handbags, wooden frames, handmade imitation jewellery, mats, coir articles, art ware of iron, etc.
• However, it has also been clarified that for claiming the aforesaid exemption the aggregate turnover on all India basis should not exceed Rs. 20 lakhs. Moreover, such persons shall be required to obtain a PAN and generate e-way bill in accordance with Rule 138 of CGST Rules, 2017.

(B) Authorities under Ministry of Defence exempted from TDS provisions

(Notification No. 57/2018 – Central Tax dated 23.10.2018)

• Central Government has amended the earlier Notification No 50/ 2018-Central Tax dated 13th September, 2018 to exempt certain authorities of Ministry of Defence from the compliance of TDS provisions.
• CBIC has now notified that TDS provisions prescribed under section 51(1)(a) of CGST Act shall not be applicable to authorities under the Ministry of Defence other than those specified in the annexure to notification, w.e.f 1st October , 2018.
• Accordingly, the TDS provisions shall be applicable on the:
  • Department or establishment of the Central Government or State Government(for Ministry of Defence only specified authorities)
  • Local authority; or
  • Governmental agencies; or
  • Persons notified by Government

(C) Extension in due dates of returns

(Notification No 58/2018-Central Tax & 59/2018-Central Tax dated 26.10.2018)

• CBIC has extended the due date for filing the details of goods or capital goods sent to job worker and received back in Form GST ITC-04 for the period of July, 2017 to September 2018 till 31st December 2018.
• CBIC has also extended the due date for the taxpayers whose registration has been cancelled by the proper officer on or before September 30, 2018 and who are required to furnish the final return in Form GSTR-10 till December 31, 2018.

(D) Amendment in CGST Rules, 2017

♠ Examination of Goods and Services Tax Practitioners

i. Eligibility: Person referred in rule 83(1) of CGST Rules, 2017

ii. Frequency of examination: examination for GSTP shall be conducted twice in a year on dates specified by NACIN.

iii. Registration & fee: Registration shall be done online and fees as well as manner of payment shall be specified by NACIN.

iv. Passing of examination:

 – A person enrolled required to pass exam within two years.

– If person enrolled before 01.07.2018, he shall get one more year to clear exam.

– No limit of attempts.

v. Nature of examination: Computer based exam

vi. Qualifying marks: 50% of total marks.

vii. Result shall be declared within one month of examination.

viii. A person not satisfied with his result may represent in writing, clearly specifying the reasons on official websites of the Board, NACIN and common portal.

♠ Procedure for recovery of dues under existing laws

A new rule 142A has been inserted in CGST Rules, 2017 providing for recovery of dues under existing tax laws (prior to 01.07.2017). Accordingly,

– A summary of order issued under any of the existing laws creating demand of tax, interest, penalty, fee or any other dues which becomes recoverable consequent to proceedings launched under the existing law before, on or after 01.07.2017 shall, unless recovered under erstwhile law, shall be recovered under the GST Law.

– This may be uploaded in FORM GST DRC-07A electronically on the common portal for recovery under the GST Law and the demand of the order shall be posted in Part II of Electronic Liability Register in FORM GST PMT-01.

– Where the demand of an order uploaded is rectified or modified or quashed in any proceedings, including in appeal, review or revision, or the recovery is made under the existing laws, a summary thereof shall be uploaded on the common portal in FORM GST DRC-08A and Part II of Electronic Liability Register in FORM GST PMT-01 shall be updated.

(Notification No 60/2018 – Central Tax dated 30.10.2018) 

(E) Clarification on issues relating to Cancellation of Registration

(Circular No. 69/43/2018-GST dated 26.10.2018)

• CBIC has issued clarifications on various issues in relation to processing of applications for cancellation of registration filed by taxpayers in FORM GST REG-16.
• The said Circular clarified that in cases where it is difficult to exactly identify or pinpoint the day on which occurrence of the event warranting cancellation of registration occurs, 30-days deadline may be liberally interpreted and taxpayers application for cancellation of registration may not be rejected because of possible violation of deadline.
• It has also directed the proper officers to accept all applications within 30 days (except where application is incomplete or in case of transfer, merger or amalgamation where new entity is unregistered) since cancellation of registration has no effect on liability of taxpayer for any acts of commission/omission committed before or after date of cancellation
• Person whose registration has been cancelled shall file a final return in Form GSTR-10, failing which notice in Form GSTR-3A has to be issued and in case the failure continues, assessment order in Form GST ASMT-13 under section 62 shall be issued to determine liability of taxpayer.

(F) Clarification on issues related to refund under GST

(Circular No. 70/44/2018 –GST dated 26.10.2018)

Status of refund claim after issuance of deficiency memo and re-credit of electronic credit ledger

• Presently, the common portal does not allow a taxpayer to file a fresh application for the refund, once a deficiency memo has been issued against an earlier refund application for the same period.
• It has now been clarified that till the time such facility is developed, taxpayers would be required to submit the rectified refund application under the earlier Application Reference Number (ARN) only.
• CBIC has reiterated that when a deficiency memo in FORM GST RFD-03 is issued to taxpayers, re-credit in the electronic credit ledger (using FORM GST RFD-01B) is not required to be carried out and the rectified refund application would be accepted by the jurisdictional tax authorities with the earlier ARN itself.
• A suitable clarification would be issued separately for cases in which such re-credit has already been carried out.

(G) Clarifications of issues under GST related to casual taxable person and recovery of excess Input Tax Credit distributed by an Input Service distributor

(Circular No. 71/45/2018 –GST dated 26.10.2018)

• CBIC has clarified that the amount of advance tax, which a casual taxable person is required to deposit while obtaining registration should be calculated after considering the due eligible ITC, which might be available to such taxable person.
• The said Circular clarified that in case of long running exhibitions (for a period more than 180 days), the taxable person cannot be treated as a CTP and thus such person would be required to obtain registration as a normal taxable person, subject to certain conditions as prescribed in the said circular.
• It has also directed that recipient unit(s) who have received excess credit from ISD may deposit the said excess amount voluntarily along with interest if any by using FORM GST DRC-03. If not, then proceedings under section 73 or 74 of the CGST Act can be initiated against the said recipient unit(s) and general penalty may also be imposed.

(H) Alternate Mechanism for refund of IGST paid on exports of goods

(Circular No. 40/2018-Customs dated 24.10.2018)

• CBIC has introduced several options and alternative mechanisms through which various mismatch errors between the Shipping Bill (SB) and GSTR 1 data can be handled.
• An alternative mechanism with an officer interface to resolve invoice mismatches (SB005 error) provided for the SB filed up to 15.11.2018. However, the exporters shall have to take care to ensure the details of invoice, IGST paid etc. under GSTR 1 and shipping bill match with each other, since the same transaction is being reported under GST laws and Customs Law.
• For the cases wherein the refund scroll has been generated for a much lesser IGST amount than what has actually been paid against the exported goods Directorate of Systems has provided a facility in ICES for the processing and sanctioning of the eligible differential IGST refund
• The exporter is required to submit a duly filled and signed Revised Refund Request (RRR) annexed to the circular and once the revised amount is approved by the designated AC/DC in the system, a fresh scroll will be available for generation for the differential amount only.

(I) Procedure in respect of GST return of time expired drugs or medicines

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