GST –The Year Gone By And Changes W.E.F. 01.01.2022

On global landscape, the World economic output may exceed 100 trillion for first time in 2022, as per prediction of British Consultancy Cebr. India may overtake France in 2022, and Britain in 2023 to regain its place on the World’s sixth biggest economy. Major economics will have to cope up with inflation also.

The news from core sector is not good as the growth had slowed down in November, 2021 in almost all the sectors. The World Bank and Moody’s have projected the Indian economy to grow @ 8.3% and 9.3% respectively.

Economists of the country have voiced that any sharp fiscal correction should be avoided and focus should be on public investment in infrastructure to boost consumption and demand besides striving for consistency and stability in tax policies. According to RBI’s Financial Stability report, there appears to be a disconnect between the real economy and equity market. 

States have asked from the Union Government that centre should increase its share of expenditure in centrally sponsored schemes, make higher borrowing limits for states unconditional, give direct income support in certain sectors etc. States have also demanded for further extension of compensation cess for five years 2027. The FM is in the process of holding pre-budget talks with State Finance Ministers.

Despite excise duty cuts on petrol and diesel in November, gross tax revenue grew 18.2 percent in November and 50.3 percent in the April-November period. Net tax collection in November, however, declined by 18.6 percent due to a doubling of the states share in central taxes to Rs. 95,082 crore during the month.

The 46^th GST Council meeting was held in Delhi on 31^st December 2021, the last day of the year to decide on GST rates on textile, footwear, besides other issues as lot of changes were in line to be enforced from 1 January, 2022. The new GST rate structure for textiles stands deferred from the time being, though, it decided to go ahead with the changes announced for footwear sector.

GST collection the gross GST revenue collected in the month of December 2021 is Rs 1,29,780 crore of which CGST is Rs 22,578 crore, SGST is Rs 28,658 crore, IGST is Rs 69,155 crore (including Rs 37,527 crore collected on import of goods) and cess is Rs 9,389 crore (including Rs 614 crore collected on import of goods). The revenues for the month of December 2021 are 13% higher than the GST revenues in the same month last year and 26% higher than the GST revenues in December 2019. During the month, revenues from import of goods was 36% higher and the revenues from domestic transaction (including import of services) are 5% higher than the revenues from these sources during the same month last year.

Goods and Service Tax (GST) is now over 54 months old (introduced w.e.f. 1st July, 2017) and we will be completing five years in June, 2022. Yet, it still suffers from numerous short comings. However, GST has been successful on many fronts, e.g., automation, curbing tax evasion, revenue generation and so on. Lot of changes have been notified in GST rules and amendments made by Finance Act, 2021, both of which come into force w.e.f. 1^st January, 2022.

No law can be perfect unless it is tested and subjected to judicial scrutiny. GST still remains a work-in-progress, both in law and its implementation.  This piece captures the major happenings in the field of GST in the year 2021. 

2021 : The year that was for GST

• Time limitation extended by Apex Court due to Covid under all tax laws.
• Virtual e-hearings continued for all adjudications and appellate proceedings.
• Highest ever record collections of GST despite post Covid affected environ
• Capacity building and improvisation of GSTN portal.
• Deployment of deep analytics and artificial intelligence to identify tax evaders and fake traders.
• Amendments in CGST Act, 2017 via Finance Act, 2021 –Sections 7, 16, 35, 44, 50, 74, 75, 83, 107, 129, 130, 151, 152, 168, Schedule II and section 16 of IGST Act, 2017.
• GST Council meet for four times, last one being on 31^st December, 2021.
• Mandatory e-invoicing and e-way bills.
• GST audit / reconciliation done away with for all taxpayers except turnover based big taxpayers.
• Rationalization / reduction of GST rates in Covid related essential goods / items and other Covid relief measures.
• Auto population of e-invoices in returns.
• Aadhaar based authentication or e-KYC.
• Substantial changes in ITC availment rules.
• Changes in rules relating to revocation of cancellation of registration.
• Extension of due dates of filing returns, whenever need was felt.
• Taxation of specified services via e.com platform 

GST Council meetings in 2021

Notifications and Circulars issued in 2021

Most litigated issues in 2021

• Fake invoices / frauds
• Detention and seizure of goods and conveyances
• Input tax credit
• Investigation and search
• Arrests and Bail
• Transition issues 

GST Collections in 2021

Major changes in GST w.e.f 01.01.2022

• Blocking of GSTR-1 for non-filing of GSTR 3B for the previous two return periods.
• New rules related to mandatory Aadhaar authentication for GST refund & revocation application.
• New GST burden on E-Commerce operators in relation to supply of restaurant services and passenger transport services (Zomato, Swiggy, Ola, Uber etc.).
• Requirement of communication of details of invoice or debit note to the recipient for availing input tax credit.
• Self-assessed tax shall include the tax payable in respect of details of outward supplies for recovery purposes.
• Commissioner empowered to attach provisionally, any property including bank account of any person and send communication.
• No appeal to be filed against section 129(3) order, unless a sum equal to 25% of the penalty is paid.
• Commissioner’s power to call for information without issuing notice.
• Proper officer detaining or seizing goods or conveyance to issue notice within 7 days of such detention or seizure.
• Correction in Inverted Duty structure in Footwear sector which provides that all footwear, irrespective of prices will attract GST at 12 percent. The decision to change the GST rates in textiles w.e.f. 01.01.2022 has been GST Council in deferred by 46^th meeting dated 31.12.2021.
• Recovery of penalty from sale of goods or conveyance detained or seized in transit by the department by way of auction.
• New and revised HSN Codes.
• Central Tax (Rate) Notification No. 22/2021 dated 31.12.2021,in the heading “Description of Service”, in items (iii),(vi),(ix) and (x), for the words “Union territory, a local authority, a Governmental Authority or a Government Entity” the words “Union territory or a local authority” shall be substituted from serial 3 being construction services.
• Due date for furnishing annual return in form GSTR-9 and self-certified reconciliation statement in form GSTR-9C for the financial year 2020-21 has been extended from 31.12.2021 to 28.02.2022.

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