Certain notifications have been issued by the CBIC yesterday night on certain critical aspects. A brief summary of them all is as below:

Notification No. 92/2020 – Central Tax:

 Following sections of the Finance Act, 2020 have been brought into effect from 01.01.2021 through this notification:

  • Sec 119 – Amending Sec 10 of the CGST Act to include “services” along with “goods” in restrictions stated in sub-section 2 of Sec 10.
  • Sec 120 – Amending Sec 16(4) to omit the words “invoice relating to such” due to which time-limit mentioned in such sub-section would apply from the date of debit note and not the date of original invoice pertaining to the debit note.
  • Sec 121 – Amending Sec 29(1) to allow persons voluntarily registered under Sec 25(3) to apply for cancellation.
  • Sec 122 – Amending Sec 30(1) allowing extension of period of 30 days to apply for revocation of cancellation of registration in certain cases.
  • Sec 123 – Amending Sec 31(2) to allow the Govt to specify, by way of a notification, the categories of services or supplies in respect of which a tax invoice shall be issued, within such time and in such manner as may be prescribed.
  • Sec 124 – Amending Sec 51(3) and omitting Sec 51(4).
  • Sec 126 – Inserting Sec 122(1A) to penalise any person who retains the benefit of a transaction covered under clauses (i), (ii), (vii) or clause (ix) of sub-section (1) of Sec 122 and at whose instance such transaction is conducted.
  • Sec 127 – Amending Sec 132(1) to punish whoever commits, or causes to commit and retain the benefits arising out of, any of the specified offences in Sec 132.
  • Sec 131 – Omitting the words “whether or not for a consideration,” from Schedule II to the CGST Act w.e.f 01.07.2017.

Notification No. 93/2020 – Central Tax:

The late fee payable for delay in furnishing of FORM GSTR-4 for the Financial Year 2019-20 under section 47 of the said Act, from the 1st day of November, 2020 till the 31st day of December, 2020 has been waived for the registered person whose principal place of business is in the Union Territory of Ladakh

Notification No. 94/2020 – Central Tax:

CGST (Fourteenth Amendment) Rules, 2020 have been notified making amendments in various rules. The highlights are as follows:

♣ With effect from a date to be notified, sub-rule (4A) of Rule 8 shall be substituted. Every application for new registration shall be followed by:

(a) biometric-based Aadhaar authentication and taking photograph of the applicant, if he has opted for authentication of Aadhaar number;

or

(b) taking biometric information, photograph and verification of such other KYC documents, as notified, if he has opted not to get Aadhaar authentication done,

Such procedure is not required in case of persons exempted under Sec 25(6D).

Verification of the original copy of the documents uploaded with the application in FORM GST REG-01 is also mandated. The application shall be deemed to be complete only after completion of the process laid down under this subrule.

♣ Rule 9(1) has been amended to extend the time-limit for grant of registration from “three” working days to “seven” working days.

The proviso to the above sub-rule has also been amended to include that physical verification of the place of business shall be mandatory where:

  • A person, other than a person notified under sub-section (6D) of section 25, fails to undergo authentication of Aadhaar number or does not opt for authentication of Aadhaar number; or
  • 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.

Also, the registration shall be granted within 30 days of submission of application instead of the earlier period of 21 days in such cases.

♣ Rule 9(2) has been amended to extend the time-limit for issuing a notice in FORM GST REG-03 from “three” working days to “seven” working days in cases where Aadhar authentication is successful and from “twenty-one” days to “thirty” days in other cases as mentioned in proviso to sub-rule (1) above.

♣ Rule 21 related to Suo-moto cancellation of registration has been amended to include the following violations:

  • avails input tax credit in violation of the provisions of section 16 of the Act or the rules made thereunder; or
  • 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
  • violates the provision of rule 86B. (discussed later herewith)

♣ Sub-rule (2) of Rule 21A has been amended to omit the words “after affording the said person a reasonable opportunity of being heard” before the proper officer can suspend the registration of a person.

♣ Sub-rule (2A) has been inserted in Rule 21A where if a comparison of returns furnished by a registered person under Sec 39 with details of outward supplies furnished in FORM GSTR-1 or with the details of inward supplies derived based on the details of outward supplies furnished by his suppliers in their FORM GSTR-1, show that there are significant differences or anomalies indicating contravention of the provisions of the Act or the rules, his registration shall be suspended and the said person shall be intimated in FORM GST REG-31, electronically.

♣ Sub-rule (3A) to Rule 21A has been inserted to provide that a registered person whose registration has been suspended shall not be granted any refund under Sec 54 during the period of suspension.

♣ W.E.F 01.01.2021, Rule 36(4) shall be substituted to further reduce the margin from 10% to 5% of the eligible credit. Also, invoices furnished through IFF shall also be considered for such calculation.

♣ Sub-rule (5) to Rule 59 has been inserted to provide as follows:

  • A Registered person shall not be allowed to furnish FORM GSTR-1, if he has not furnished the return in FORM GSTR-3B for preceding two months;
  • A Registered person required to file GSTR-3B quarterly shall not be allowed to furnish details of outward supplies in FORM GSTR-1 or using IFF, if he has not furnished the return in FORM GSTR-3B for preceding tax period;
  • A Registered person to whom restriction under Rule 86B applies, shall not be allowed to furnish details of outward supplies in FORM GSTR-1 or using IFF if he has not furnished the return in FORM GSTR-3B for preceding tax period.

♣ Rule 86B has been inserted to provide that 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:

Said restriction shall not apply in following cases:

  • 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 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;
  • 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 Sec 54(3) for zero-rated supplies or inverted duty structure;
  • 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, up-to the said month in the current financial year;
  • the registered person is Govt Department, PSU, local authority or a statutory body.

The Commissioner or an officer authorised by him in this behalf has been empowered to remove the said restriction after such verifications and such safeguards as he may deem fit.

  • W.e.f 01.01.2021, Rule 138(10) related to e-way bill shall be amended to substitute the distance of “100 kms” with “200 kms” mentioned in the said rule.
  • Rule 138E has been amended to prescribe that e-way bills cannot be generated if a person has not furnished returns for two consecutive tax periods instead of earlier restriction of two consecutive months.

Also, e-way bills cannot be generated if registration of a person has been suspended under Rule 21A.

  • FORM REG-31 for intimation for suspension and notice for cancellation of registration has been prescribed.

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