CA Raghav Rathi
CBIC issued notification No. 09/2022-Central Tax to 14/2022-Central Tax under Central Goods and Service Tax (CGST) Act, 2017 on 05th July 2022, a note highlighting the important take out from the notifications are as follow:
i. 09/2022-Central Tax dt. 05.07.2022 –
The most awaited clauses of Finance Act, 2022 i.e., clause (c) of section 110 and section 111 has been enforced from 05.07.2022. The impact of which would be as follows
a) The clause (c) of Sec. 110 brought amendment in Sec. 49(10) of CGST Act, 2017 in accordance of which now the balance lying in the electronic cash ledger of registered person in one state GSTIN, could be transfer to the electronic cash ledger of the distinct person of said registered person i.e., other state GSTIN of the registered person through FORM GST PMT-09 under rule 87(14) of the CGST Rules, 2017 subject to condition that the transferor unit does not have any unpaid liability in electronic liability ledger.
For example– A Ltd. having two units, one in Rajasthan and second in Gujarat. Both have separate GSTN. The Rajasthan unit have unutilized balance of Rs. 100 in electronic cash ledger in tax column after discharging all its liability. Now the Gujarat Unit need Rs. 50 in its electronic cash ledger to discharge its tax liability. A Ltd. instead of applying for refund of Rs. 100 in Rajasthan Unit and depositing Rs. 50 in electronic cash ledger of Gujarat Unit, now through FORM GST PMT-09, can directly deposit the said amount from Rajasthan Unit electronic cash ledger to Gujarat Unit Electronic Cash Ledger.
b) Sec. 111 brought retrospective amendment, w.e.f. 01.07.2017, in Sec. 50(3) of CGST Act, 2017 in accordance of which the interest on reversal of input tax credit (ITC) would only arise if the wrong ITC has been availed as well as utilized. For this Rule 88B(3) has been inserted w.e.f. 01.07.2017 which states as follows:
i. Interest u/s 50(3) would be levied only from date of utilization of such wrongly availed ITC till the date of reversal of such credit.
ii. The wrong input tax credit would be said to have been utilized when the balance in electronic credit ledger falls short of the wrongly availed ITC and to the extent it falls short, would be considered as wrongly utilized. For example few scenarios are stated below:
- The registered person has availed wrong ITC of Rs. 100 in GSTR-3B of a particular month and from the day of availing such wrong ITC, the balance of electronic credit ledger never falls below of Rs. 100. No interest would be chargeable for reversal of wrongly availed ITC u/s 50(3).
- If the registered person has availed wrong ITC of Rs. 100 in GSTR-3B of a particular month and the balance in electronic credit ledger fall below only to the extent of Rs. 50 in succeeding period, at the time of reversal, interest would be levied only on Rs. 50 u/s 50(3), in case due to filing of GSTR-3B return, from the date or due date of filing of such return, whichever is earlier, and in all other cases, from the date of debit in electronic credit ledger, when the amount falls short in electronic credit ledger, till the date of reversal.
ii. 10/2022-Central Tax dt. 05.07.2022 –
Under first proviso to Section 44 of the CGST Act, 2017 no Annual Return (GSTR-9) is needed to be filed by the Registered Person having Annual Aggregate Turnover less than Rs. 2 Crores in Financial Year 2021-22.
iii. 11/2022-Central Tax dt. 05.07.2022 –
Seeks to extend due date of furnishing FORM GST CMP-08 for the quarter ending June, 2022 till 31.07.2022
iv. 12/2022-Central Tax dt. 05.07.2022 –
Seeks to extend the waiver of late fee for delay in filing FORM GSTR-4 for FY 2021-22 till 28.07.2022
v. 13/2022-Central Tax dt. 05.07.2022 –
This notification is brough into force retrospectively w.e.f. 01.03.2020. Extension of time limit for passing order under section 73(10) [Recovery of tax not paid or short paid or erroneously refunded; or input tax credit wrongly availed or utilized other than reason of fraud or suppression of facts or willful misstatement] and exclusion of limitation period under section 54/55 of the act for filing of refund application has been prescribed under the notification.
a) For recovery of tax not paid or short paid, or of ITC wrongly availed or utilized, the order under section 73(10) is needed to be passed within 3 years from due date of filing of Annual Return. For FY 2017-18, in Rajasthan, the due date of filing Annual Return was 05th February 2020. Ideally if counting is done from that day, the order for any recovery u/s 73(9) for FY 2017-18 is needed to passed till 05th February 2023 and notice was required to be issued till 05th November 2022. However, government has extended the said date to 30th September 2023 and therefore, the notice u/s 73(1) for FY 2017-18 can now be issued till 30th June 2023. That the government has got extra time of around eight months to issue notice pertaining to FY 2017-18.
b) For recovery of erroneous refunds granted government has excluded period from 01.03.2020 to 28.02.2022 for computation of period of limitation u/s 73(10) of the CGST Act, 2017. Thereby for refund sanctioned for the period FY 2017-18, 2018-19, 2019-20, 2020-21 for whom the limitation period was needed to be counted from the due date of filing of Annual Return i.e., 5th 2020 for FY 2017-18, 31st Dec. 2020 for FY 2018-19, 31st March 2021 for FY 2019-20 and 31st December for FY 2020-21, the limitation period would be counted from 01st March 2022 for FY 2018-19, 2019-20 and 2020-21 and thereby extending time limit for passing of order for recovery of erroneous refunds under section 73(9) for FY 2018-19, 2019-20 and 2020-21 to 01st March 2025, and for FY 2017-18 to 06th February 2025. This would be huge blow for the industries and exorbitant powers in the hands of executives.
c) For filing of refund application under Section 54 and 55 of the CGST Act, 2017, the government has proposed to remove 01.03.2020 to 28.02.2022 for computation of period of limitation and therefore, the period of limitation for filing of refund application for any period between 01.03.2020 to 28.02.2022 will start from 01.03.2022, therefore, in our opinion the refund application for the Month of March 2020 in case of inverted duty structure could be filed till 01.03.2024. This is a welcoming move from government and big sigh of relief for the registered person who has not filed refund application till date from June 2018. In our opinion, the last day of filing of refund for June 2018 now would be 20.07.2022 and application can be filed for the succeeding months from June 2018. The assesses who have any refund application pending for the aforesaid period should hurry up in preparing and filing the refund applications.
vi. 14/2022-Central Tax dt. 05.07.2022–
The CGST Rules, 2017 is amended vide the aforesaid notification. The important rules amended are highlighted as below:
a) Second Proviso to Rule 21A (4) inserted to automatically revoke the suspension of registration after filing of pending returns which was suspended for non-filing of return for a continuous period of six months.
b) Explanation 1 of Rule 43 has been amended to exclude value of supply of Duty Credit Scrips for the purpose of computation of exempt turnover for the reversal of common input tax credit pertaining to capital goods.
c) Although all the company having turnover more than Rs. 20 Crore is required to generate e-invoice the invoice issued by them. However, for the following supplies no E-invoice is required to be generated: –
(i) B2C Transactions;
(ii) Non-GST Supplies;
(iii) Nil Rated and Exempt supplies.
Now under clause (s) of Rule 46 of CGST Rules, 2017, the supplies for which no e-invoice is required to be generate, the following declaration would need to be embedded on the invoice: –
“―I/We hereby declare that though our aggregate turnover in any preceding financial year from 2017-18 onwards is more than the aggregate turnover notified under sub-rule (4) of rule 48, we are not required to prepare an invoice in terms of the provisions of the said sub-rule’ –‘”
d) In terms of Rule 86(4B), the erroneous refund sanctioned under Sec. 54(3) of the Act, if deposited back again in the government exchequer along with interest and penalty as applicable through FORM GST DRC-03, the amount equivalent to the erroneous refund deposited shall be re-credited to the electronic credit ledger of the assessee via FORM GST PMT-03A.
e) Rule 88B has been inserted which stated that interest under proviso to Sec. 50(1) would be charged on net cash liability only for those supplies which have been declared in the return for the period to which such supplies belong but has been filed belatedly. That means if a particular supply belonging to January 2022 and is declared in the return of the January 2022 but return of January 2022 is filed belatedly, the interest for u/s 50(1) in such cases would be levied to the extent of payment made via Electronic Cash Ledger. However, in cases where the supply for the month of January 2022 is declared in the subsequent months, although the liability for the said supply is extinguished through the balance lying in electronic credit ledger, the interest u/s 50(1) would be applicable on the gross amount. No benefit of discharging the liability through electronic credit ledger is available in those scenarios.
f) Clause (ba) introduced under Rule 89(2) stating the documentary evidence required in case of filing refund for export of electricity.
g) Explanation to sub-rule (4) of Rule 89 inserted for capping the value of goods exported out of India, less of the following values: –
1. Free on Board (FOB) value declared in the shipping bill; or
2. Value declared in tax invoice or bill of supply.
As urged by the Supreme Court in the landmark judgement of VKC Footwear for reconsidering the formulae of refund of ITC under inverted duty structure and removal of anomalies thereof, sub-rule (5) of Rule 89 has been amended and the new formulae in case of inverted refund lies as follows:
Maximum Refund Amount = {(Turnover of inverted rated supply of goods and services) * Net ITC / Adjusted Total Turnover) – {tax payable on such inverted rated supply of goods and services * (Net ITC / ITC availed on inputs and input services)}
The impact of the aforesaid formulae is as under:
| Provisions | Unamended Rule 89(5) | As per amended Rule 89(5) |
| Total ITC | 1,00,000.00 | 1,00,000.00 |
| ITC of Inputs | 60,000.00 | 60,000.00 |
| ITC of Input Services | 15,000.00 | 15,000.00 |
| ITC of Capital Goods | 25,000.00 | 25,000.00 |
| Aggregate Turnover | 10,00,000.00 | 10,00,000.00 |
| Inverted Turnover | 7,50,000.00 | 7,50,000.00 |
| Tax payable on inverted turnover @ 5% | 37,500.00 | 37,500.00 |
| Refund | 7,500.00 | 15,000.00 |
| Excess Refund due to change in formulae | 7,500.00 |
i) In terms of amended Rule 96(1)(b), in case the goods are exported on payment of tax and there is mismatch in details furnished in GSTR-1 and filled in shipping bills, the refund would not be processed and the application would have deemed to be filed when the said mismatch is rectified by the exporter.
j) The necessary amendments have been brought under 96(4) and (5) to stringent the refund sanctioning process for risky exporters, to be identified on certain credentials and risk-based parameters, who has made exports on payment of tax.
k) Following amendments made in FORM GSTR-3B, being non-exhaustive list:
1. Different column for supplies made through E-Commerce Operator on which tax is to be paid under reverse charge basis by E-Commerce Operator.
2. Different columns for reversal made under Rule 38, 42 and 43 of the CGST Rules, 2017 and u/s 17(5) of the CGST Act, 2017, for ineligible ITC under section 16(4) of the act, restricted due to place of supply provisions.
l) Amendments brought under GSTR-9 and GSTR-9C to be filed for FY 2021-22 one being mandatory reporting of six-digit HSN code for taxpayer having Aggregate Annual Turnover more than Rs. 5 Crores, and four digits HSN code for others.
This all amendments are in line with the recommendation of 47th GST Council Meeting held on 28th and 29th July 2022 and we expect more of notifications and circular to give effect the recommendations of council meeting in due course of time.
This information is solely based on the contemplation of the notifications issued by the CBIC, Department of Revenue, Ministry of Finance, Government of India. Different opinions and conclusion may prevail.
