Central Goods and Services Tax (Fourteenth Amendment) Rules, 2020

As per the notification dated 22 December 2020, No. 94 /2020. the validity period of e-waybill will be changed from 100 KM per day to 200 KM per day from 01/01/2021.

Time limit for system-based GST Registration increased

• The time for system-based registration has been enhanced from 3 days to 7 days.
• That means, now department shall be required to review and grant registration within 7 days against 3 days as provided earlier from the date of filing of registration application.
• Where the applicant does not do adhaar authentication or where department feels fit to carry out physical verification the time limit for grant of registration shall be 30 days instead of 21 days.

Cancellation of GSTIN

• Clause (e) in Rule 21 of CGST Rules 2017.
  • Now the officer can proceed for cancellation of GSTIN where a taxpayer avails Input Tax Credit (ITC) exceeding than that permissible in Section 16.
• Clause (f) inserted in Rule 21 of CGST Rules, 2017
  • Liability in GSTR-3B < GSTR-1, cancellation may be initiated
  • Where the liability declared in GSTR 3B is less than that declared in GSTR 1 in a particular month, department may now proceed with cancellation of GSTIN.

Suspension of GSTIN

• Now, no opportunity of being heard shall be given to a taxpayer for suspension of GSTIN, where the proper officer (PO) has reasons to believe that the registration of person is liable to be cancelled.
• The words “opportunity of being heard” omitted from clause (2) of Rule 21A.

Cancellation Notice in GST REG-31

• Where there are significant deviation / anomalies between details of outward supply between GSTR 3B and GSTR1 or inward supplies (ITC) between GSTR 3B and GSTR 2B which indicate contravention of Act, department shall now serve a notice in FORM GST REG 31 to call explanation as to why GSTIN should not be cancelled.
• Taxpayer shall be required to submit his reply within 30 days of such notice being served to him.

No refund during suspension of GSTIN

• Where a GSTIN is suspended, no refund under Section 54 of CGST Act 2017 can be availed by the taxpayer.
• This means that first GSTIN Suspension proceedings have to be closed before applying for refund.

Restriction on claim of ITC as per Rule 36(4)

• The claim of ITC in respect of invoices not furnished by the corresponding vendors has now been restricted to 5% of the credit available in GSTR 2B. This limit earlier was 10% of ITC available.
• This would mean that a taxpayer’s ITC claim shall now be restricted to 105% of the Credit reflected in his GSTR 2B.
• Any claim exceeding the specified limit shall result in violation of CGST Act read with rules which may result into suspension of GSTIN as described above.
• The provision shall come into effect from 1st January 2021.

Restriction on utilization of ITC- Rule 86B

• New Rule 86B shall be affected from 1st January 2021 wherein restriction has been placed on setting off more than 99% of tax liability from Input tax credit where the value of taxable supplies other than exempt supply and zero rated supply exceeds Rs. 50 lakhs in a month. Few exceptions have been provided to this rule which are as follows:
  • Where the taxpayer has paid Income Tax exceeding Rs. 1 lakh in two preceding financial year.
  • Where taxpayer has received refund exceeding Rs. 1 lakhs u/s 54 of CGST Act 2017.
  • Where taxpayer has used electronic cash ledger to pay off liability on outward supplies which cumulatively makes 1% of the total liability up to the said month.
  • Where a person is a Government Department, Public Sector Undertaking (PSU), local authority or a statutory body.

Validity of E-way Bill

• Earlier one day was permitted for distance up to 100 km under E-Way Bill provision.
• Now the same has been increased to 200 km.
• This means that only one day validity shall be granted to cover a distance up to 200 km which was earlier 100 km.

Changes in CGST Rules vide Notification dated 22/12/2020

New grounds for cancellation of registration under GST

Validity of e-way bill narrowed by increasing distance from 100 km. to 200 km. per day

Person whose GST registration has been suspended is now restricted from furnishing PART A of E-Way Bill

No opportunity of being heard to taxpayers for suspension of GST registration

New Form GST REG-31 notified for ‘Intimation for suspension & notice for cancellation of registration’

Time limit increased for grant of GST registration from 3 to 7 working days

Restricting use of ITC amount for discharging output tax liability in GST

Rule 36(4) amended to reduce ITC entitlement from 10% to 5%

CBIC aligns rules of Cancellation of GST registration

Biometric based Aadhaar authentication/verification process for GST registration

MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS)
NOTIFICATION
New Delhi, the 22nd December, 2020

Notification No. 94/2020-Central Tax

G.S.R. 786(E).—In exercise of the powers conferred by section 164 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following rules further to amend the Central Goods and Services Tax Rules, 2017, namely:—

1. Short title and commencement. – (1) These rules may be called the Central Goods and Services Tax (Fourteenth Amendment) Rules, 2020.

(2) Save as otherwise provided in these rules, they shall come into force on the date of their publication in the Official Gazette.

2. In the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the said rules), in rule 8, for sub-rule (4A), with effect from a date to be notified, the following sub-rule shall be substituted, namely: –

“(4A)Every application made under rule (4) shall be followed by—

(a) biometric-based Aadhaar authentication and taking photograph, unless exempted under sub­section (6D) of section 25, if he has opted for authentication of Aadhaar number; or

(b) taking biometric information, photograph and verification of such other KYC documents, as notified, unless the applicant is exempted under sub-section (6D) of section 25, if he has opted not to get Aadhaar authentication done,

of the applicant where the applicant is an individual or of such individuals in relation to the applicant as notified under sub-section (6C) of section 25 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 Facilitation Centres notified by the Commissioner for the purpose of this sub-rule and the application shall be deemed to be complete only after completion of the process laid down under this sub-rule.”.

3. In the said rules, in rule 9,-

(a) in sub-rule (1), –

(i) after the words “applicant within a period of”, for the word “three”, the word “seven” shall be substituted;

(ii) for the proviso, the following proviso shall be substituted, namely: –

“Provided that where-

(a) a person, other than a person notified under sub-section (6D) of section 25, fails to undergo authentication of Aadhaar number as specified in sub-rule (4A) of rule 8 or does not opt for authentication of Aadhaar number; or

(b) 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 thirty days of submission of application, after physical verification of the place of business in the presence of the said person, in the manner provided under rule 25 and verification of such documents as the proper officer may deem fit.”;

(b) in sub-rule (2), –

(i) for the word “three”, the word “seven” shall be substituted;

(ii)for the proviso, the following proviso shall be substituted, namely: –

“Provided that where-

(a) a person, other than a person notified under sub-section (6D) of section 25, fails to undergo authentication of Aadhaar number as specified in sub-rule (4A) of rule 8 or does not opt for authentication of Aadhaar number; or

(b) 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 notice in FORM GST REG-03 may be issued not later than thirty days from the date of submission of the application.”;

(c) for sub-rule (5), the following sub-rule shall be substituted, namely: –

“(5) If the proper officer fails to take any action, –

(a) within a period of seven working days from the date of submission of the application in cases where the person is not covered under proviso to sub-rule (1); or

(b) within a period of thirty days from the date of submission of the application in cases where a person is covered under proviso to sub-rule (1); or

(c) within a period of seven working days from the date of the receipt of the clarification, information or documents furnished by the applicant under sub-rule (2),

the application for grant of registration shall be deemed to have been approved.”.

4. In the said rules, in rule 21,-

(a) in clause (b), after the words “goods or services”, the words “or both” shall be inserted;

(b) after clause (d), the following clauses shall be inserted, namely:-

“(e) avails input tax credit in violation of the provisions of section 16 of the Act or the rules made thereunder; or

(f) furnishes the details of outward supplies in FORM GSTR-1 under section 37 for one or more tax periods which is in excess of the outward supplies declared by him in his valid return under section 39 for the said tax periods; or

(g) violates the provision of rule 86B.”.

5. In the said rules, in rule 21A,-

(a) in sub-rule (2), the words “,after affording the said person a reasonable opportunity of being heard,” shall be omitted;

(b) after sub-rule (2), the following sub-rule shall be inserted, namely: –

“(2A) Where, a comparison of the returns furnished by a registered person under section 39 with

(a) the details of outward supplies furnished in FORM GSTR-1; or

(b) the details of inward supplies derived based on the details of outward supplies furnished by his suppliers in their FORM GSTR-1,

or such other analysis, as may be carried out on the recommendations of the Council, show that there are significant differences or anomalies indicating contravention of the provisions of the Act or the rules made thereunder, leading to cancellation of registration of the said person, his registration shall be suspended and the said person shall be intimated in FORM GST REG-31, electronically, on the common portal, or by sending a communication to his e-mail address provided at the time of registration or as amended from time to time, highlighting the said differences and anomalies and asking him to explain, within a period of thirty days, as to why his registration shall not be cancelled.”;

(c) in sub-rule (3), after the words, brackets and figure “or sub-rule (2)”, the words, brackets, figure and letter “or sub-rule (2A)” shall be inserted;

(d) after sub-rule (3), the following sub-rule shall be inserted, namely: –

“(3A) A registered person, whose registration has been suspended under sub-rule (2) or sub-rule (2A), shall not be granted any refund under section 54, during the period of suspension of his registration.”;

(e) in sub-rule (4), –

(i) after the words, brackets and figure “or sub-rule (2)”, the words, brackets, figure and letter “or sub-rule (2A)” shall be inserted;

(ii) the following proviso shall be inserted, namely: –

“Provided that the suspension of registration under this rule may be revoked by the proper officer, anytime during the pendency of the proceedings for cancellation, if he deems fit.”.

6. In the said rules, in rule 22,-

(a) in sub-rule (3), after the words, brackets and figure “the show cause issued under sub-rule (1)”, the words, brackets, figures and letters “or under sub-rule (2A) of rule 21A” shall be inserted;

(b) in sub-rule (4), after the words, brackets and figure “reply furnished under sub-rule (2)”, the words, brackets, figures and letters “or in response to the notice issued under sub-rule (2A) of rule 21A” shall be inserted.

7. In the said rules, in rule 36, in sub-rule (4), with effect from the 1^st day of January, 2021,-

(a) for the word “uploaded”, at both the places where it occurs, the word “furnished” shall be substituted;

(b) after the words, brackets and figures “by the suppliers under sub-section (1) of section 37”, at both the places where they occur, the words, letters and figure “in FORM GSTR-1 or using the invoice furnishing facility” shall be inserted;

(c) for the figures and words “10 per cent.”, the figure and words “5 per cent.” shall be substituted.

8. In the said rules, in rule 59, after sub-rule (4), the following sub-rule shall be inserted, namely: –

“(5) Notwithstanding anything contained in this rule, –

(a) a registered person shall not be allowed to furnish the details of outward supplies of goods or services or both under section 37 in FORM GSTR-1, if he has not furnished the return in FORM GSTR-3B for preceding two months;

(b) a registered person, required to furnish return for every quarter under the proviso to sub-section (1) of section 39, shall not be allowed to furnish the details of outward supplies of goods or services or both under section 37 in FORM GSTR-1 or using the invoice furnishing facility, if he has not furnished the return in FORM GSTR-3B for preceding tax period;

(c) a registered person, who is restricted from using the amount available in electronic credit ledger to discharge his liability towards tax in excess of ninety-nine per cent. of such tax liability under rule 86B, shall not be allowed to furnish the details of outward supplies of goods or services or both under section 37 in FORM GSTR-1 or using the invoice furnishing facility, if he has not furnished the return in FORM GSTR-3B for preceding tax period.”.

9. In the said rules, after rule 86A, with effect from the 1^st day of January, 2021, the following rule shall be inserted, namely: –

“86B. Restrictions on use of amount available in electronic credit ledger.-Notwithstanding anything contained in these rules, the registered person shall not use the amount available in electronic credit ledger to discharge his liability towards output tax in excess of ninety-nine per cent. of such tax liability, in cases where the value of taxable supply other than exempt supply and zero-rated supply, in a month exceeds fifty lakh rupees:

Provided that the said restriction shall not apply where –

(a) the said person or the proprietor or karta or the managing director or any of its two partners, whole-time Directors, Members of Managing Committee of Associations or Board of Trustees, as the case may be, have paid more than one lakh rupees as income tax under the Income-tax Act, 1961(43 of 1961) in each of the last two financial years for which the time limit to file return of income under subsection (1) of section 139 of the said Act has expired; or

(b) the registered person has received a refund amount of more than one lakh rupees in the preceding financial year on account of unutilised input tax credit under clause (i) of first proviso of sub­section (3) of section 54; or

(c) the registered person has received a refund amount of more than one lakh rupees in the preceding financial year on account of unutilised input tax credit under clause (ii) of first proviso of sub­section (3) of section 54; or

(d) the registered person has discharged his liability towards output tax through the electronic cash ledger for an amount which is in excess of 1% of the total output tax liability, applied cumulatively, upto the said month in the current financial year; or

(e) the registered person is –

(i) Government Department; or

(ii) a Public Sector Undertaking; or

(iii) a local authority;or

(iv) a statutory body:

Provided further that the Commissioner or an officer authorised by him in this behalf may remove the said restriction after such verifications and such safeguards as he may deem fit.”.

10. In the said rules, in rule 138, in sub-rule (10), with effect from the 1^st day of January, 2021,-

(i) in the Table, against serial number 1, in column 2, for the figures and letters “100 km.”, the figures and letters “200 km.” shall be substituted;

(ii) in the Table, against serial number 2, in column 2, for the figures and letters “100 km.”, the figures and letters “200 km.” shall be substituted.

11. In the said rules, in rule 138E, –

(a) in clause (b), for the words “two months”, the words “two tax periods” shall be substituted;

(b) after clause (c),the following clause shall be inserted, namely:-

“(d) being a person, whose registration has been suspended under the provisions of sub-rule (1) or sub-rule (2) or sub-rule (2A) of rule 21A.”.

12. In the said rules, after FORM GST REG-30, the following FORM shall be inserted, namely-

“FORM GST REG – 31
[See rule 21A]

Reference No.

Date: <DD><MM><YYYY>

To,

GSTIN

Name:

Address:

Intimation for suspension and notice for cancellation of registration

In a comparison of the following, namely,

(i) returns furnished by you under section 39 of the Central Goods and Services Tax Act, 2017;

(ii) outwards supplies details furnished by you in FORM GSTR-1;

(iii) auto-generated details of your inwards supplies

for the period__________ to_________ ;

(iv) ……………………. (specify)

and other available information, the following discrepancies/ anomalies have been revealed:

• • Observation 1
  • Observation 2
  • Observation 3

(details to be filled based on the criteria relevant for the taxpayer).

2. These discrepancies/anomalies prima facie indicate contravention of the provisions of the Central Goods and Services Tax Act, 2017 and the rules made thereunder, such that if not explained satisfactorily, shall make your registration liable to be cancelled.

3. Considering that the above discrepancies/anomalies are grave and pose a serious threat to interest of revenue, as an immediate measure, your registration stands suspended, with effect from the date of this communication, in terms of sub-rule (2A) of rule 21 A.

4. You are requested to submit a reply to the jurisdictional tax officer within seven working days from the receipt of this notice, providing explanation to the above stated discrepancy/ anomaly. Any possible misuse of your credentials on GST common portal, by any person, in any manner, may also be specifically brought to the notice of jurisdictional officer.

5. The suspension of registration shall be lifted on satisfaction of the jurisdictional officer with the reply along with documents furnished by you, and any further verification as jurisdictional officer considers necessary.

6. You may please note that your registration may be cancelled in case you fail to furnish a reply within the prescribed period or do not furnish a satisfactory reply.

Name:

Designation:

NB : This is a system generated notice and does not require signature by the issuing authority.”.

[F. No. CBEC-20/06/04/2020-GST]
PRAMOD KUMAR, Director

Note : The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide notification No. 3/2017-Central Tax, dated the 19^th June, 2017, published vide number G.S.R. 610 (E), dated the 19^th June, 2017 and last amended vide notification No. 82/2020-Central Tax, dated the 10^th November, 2020, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 698(E), dated the 10^th November, 2020.

Also Read- Corrigendum to Notification No. 94/2020-Central Tax, dated 22.12.2020