Recent Important amendments in the CGST Rules

Several important amendments have been introduced to the CGST Rules through Notification No. 20/2024 – Central Tax, dated October 08, 2024. Rule 36 has been revised to restrict claiming input tax credit for tax paid due to confirmed demands involving fraud or misrepresentation under Section 74 of the CGST Act. Rule 46 eliminates the option to issue consolidated invoices for supplies exceeding Rs. 5,000 from unregistered suppliers. A new Rule 47A introduces a 30-day limit for recipients to issue invoices for reverse charge supplies. Rule 66 mandates filing of tax deduction returns by the 10th of each month, and amendments to Rule 89 omit provisions related to specific refund claims. Rule 96 removes restrictions on claiming IGST refunds for exported goods and services. Additionally, Rule 164 outlines the process for seeking waivers on interest or penalties for tax demands under Section 73. The insertion of Section 74A into the CGST Act mandates tax determination for fraudulent and non-fraudulent cases from FY 2024-25 onward. Various forms, including GST REG-20, GSTR-9, and INS-01, have also been updated to align with these changes, ensuring better compliance and clarity in the GST framework.

1. Rule 36 – Documentary requirements and conditions for claiming input tax credit

CBIC vide Notification No. 20/2024 – Central Tax dated October 08, 2024 w.e.f. October 08, 2024 sub-rule (3) of Rule 36 of the Central Goods and Services Rules, 2017 (“the CGST Rules”) mentioned below lays down that no Input Tax Credit (“ITC”) shall be availed by the registered person where tax has been paid in pursuance of any order where demand has been confirmed on account of fraud, wilful misstatement, or suppression of facts.

“(3) No input tax credit shall be availed by a registered person in respect of any tax that has been paid in pursuance of any order where any demand has been confirmed on account of any fraud, willful misstatement or suppression of facts under section 74”

Sub-rule (3) has been amended to specify that said order shall be such where demand has been confirmed on account of fraud, wilful misstatement, or suppression of facts under Section 74 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).

2. Rule 46 – Tax invoice

The CBIC Notification No. 20/2024 – Central Tax dated October 08, 20244 will be effective from November 01, 2024 second proviso to Rule 46 of the CGST Rules mentioned below lays down that where an invoice is required to be issued under section 31(3)(f) of the CGST Act, 2017, a registered person may issue a consolidated invoice at the end of a month for supplies covered under section 9(4) of the CGST Act, 2017, the aggregate value of such supplies exceeds Rs.5,000 in a day from any or all the suppliers.

“Provided further that where an invoice is required to be issued under clause (f) of sub-section (3) of section 31, a registered person may issue a consolidated invoice at the end of a month for supplies covered under sub-section (4) of section 9, the aggregate value of such supplies exceeds rupees five thousand in a day from any or all the suppliers:”

The said second proviso shall be omitted implying thereby that recipients notified under section 9(4) will no longer be able to issue consolidated invoice.

3. Insertion of Rule 47A – Time limit for issuing tax invoice in cases where the recipient is required to issue invoice

The CBIC vide Notification No. 20/2024 – Central Tax dated October 08, 2024 after Rule 47 of the CGST Act has inserted the following rule with effect from the 1st day of November, 2024, which reads as follows:

“47A. Time limit for issuing tax invoice in cases where recipient is required to issue invoice.– Notwithstanding anything contained in rule 47, where an invoice referred to in rule 46 is required to be issued under clause (f) of sub-section (3) of section 31 by a registered person, who is liable to pay tax under sub-section (3) or sub-section (4) of section 9, he shall issue the said invoice within a period of thirty days from the date of receipt of the said supply of goods or services, or both, as the case may be.”

This new rule establishes a 30-day time limit for issuing tax invoices by recipients liable to pay tax under RCM for supplies received from unregistered persons.

This amendment clarifies the timeline for recipients to issue invoices in compliance with Section 31(3)(f) of the CGST Act, streamlining the process and ensuring better tax administration. Importantly, the rule emphasizes that delays in issuing invoices could lead to the recipient being subject to interest and penalties, ensuring timely compliance. Overall, this rule enhances accountability and helps reduce tax-related delays, thus promoting efficient tax collection.

4. Rule 66 – Form and manner of submission of return by a person required to deduct tax at source

The (Finance No. 2) Act, 2024 had substituted Section 39(3) of the CGST Act to mandate the electronic furnishing of return for each month by the registered person required to deduct tax at source, irrespective of whether any deductions have been made in the said month or not. Further, the Government was empowered to prescribe by rules, the form, manner and the time within which such return shall be filed.

Accordingly, sub-rule (1) of Rule 66 of the CGST Rules mentioned below has been amended to provide that every registered person required to deduct tax at source shall furnish the return in Form GSTR-7 on or before the 10th day of the month succeeding the calendar month vide Notification No. 20/2024 – Central Tax dated October 08, 2024 w.e.f. November 01, 2024

“In the said rules, in rule 66, in sub-rule (1), after the word, letters and figure “FORM GSTR-7”, the words “, on or before the tenth day of the month succeeding the calendar month,” shall be inserted with effect from the 1st day of November, 2024.”

The new provision requires that the return in FORM GSTR-7, used for deducting TDS under Section 51 of the CGST Act, must be furnished on or before the 10th day of the month succeeding the relevant calendar month. This change will take effect from November 1, 2024. This amendment provides more clarity and ensures timeliness in filing returns for tax deductions at source.

5. Rule 89 – Application for refund of tax, interest, penalty, fees or any other amount

Effective from October 08, 2024 sub-rules (4A) and (4B) of Rule 89 of the CGST Act have been omitted. Consequently, reference of these sub-rules in clauses (B), (C) and (E) of sub-rule (4) and in explanation to sub-rule (5) have also been omitted.

6. Rule 96 – Refund of integrated tax paid on goods or services exported out of India

Effective from October 08, 2024 Sub-rule (10) of rule 96 provides for a bar on availment of the refund of IGST paid on export of goods or services, if benefits of certain concessional/exemption notifications, as specified in the said sub-rule, have been availed on inputs/raw materials imported or procured domestically.

Sub-rule (10) of Rule 96 of the CGST Rules has now been omitted. Accordingly, amendment has also been made in Rule 86(4B)(b).

These amendments streamline procedures and ensure that refunds on zero-rated exports are no longer considered contraventions of earlier provisions, provided the reassessment of the Bill of Entry is completed. The changes to the definitions of “Net ITC” and “Adjusted Total Turnover” further enhance transparency in refund calculations. This overall move is expected to foster a more business-friendly environment, encouraging exports and reducing procedural hurdles.

7. Rule 164 – Procedure and conditions for closure of proceedings under section 128A in respect of demands issued under Section 73

The CBIC vide Notification No. 20/2024 – Central Tax dated October 08, 2024 after rule 163, the following rule shall be inserted with effect from the 1st day of November, 2024, which reads as follows:

• A person eligible for the waiver of interest, penalty, or both under Section 128A(1)(a) must file an application electronically in FORM GST SPL-01.
• For waivers under Section 128A(1)(b) or (c), the application must be in FORM GST SPL-02.
• The application must include details of payments made using FORM GST DRC-03 toward the tax demanded under Section 73 of the CGST Act.
• Payments towards tax demanded should be credited to the Electronic Liability Register using the order’s debit entry.
• For demands involving erroneous refunds or multiple periods, the full tax amount must be paid before filing the application.
• The following dates have been notified for the payment of tax payable as per the notice, or statement, or the order referred to in clause (a) or clause (b) or clause (c) of section 128A of the CGST Act, 2017 by different class of registered person, as under:

• Applications should be filed within three (3) months from November 01, 2024 under Section 128A.
• In cases where adjudication order passed under Section 74 of the CGST Act, where the appellate authority or Tribunal or Courts have held that the demand is not sustainable under Section 74, but only under Section 73 and the Order is passed under Section 73(1) of the CGST Act. The Registered Person will be allowed to make the payment of tax within 6 months from the date of the Order.
• The applicant must provide proof of appeal or writ petition withdrawal. If awaiting withdrawal order, they should upload the application and later update with the final order.
• If the proper officer finds the application ineligible, they will issue a notice in FORM GST SPL-03 within three (3) months and provide a chance for the applicant to respond.
• The applicant must respond to the notice in FORM GST SPL-04 within one (1) month.
• If the officer is satisfied, they will issue an order in FORM GST SPL-05, concluding the proceedings under Section 128A.
• If not satisfied, the officer will issue a rejection order in FORM GST SPL-07.
• Orders must be issued within three months of receiving the application or reply, or four months if no reply is submitted.
• If no order is issued within the stipulated time, the application is automatically deemed approved.
• If the waiver is rejected and no appeal is filed, any original withdrawn Appeal can be restored.
• If an Appeal against rejection is accepted, the Appellate Authority will issue FORM GST SPL-06, restoring the waiver and concluding the proceedings.
• Waivers become void if additional tax payments required under Section 128A are not made within the specified timeframe.
• The officer handling the waiver application depends on whether it relates to Section 73 – non-fraud case or Section 79 – recovery of tax.

8. Amendment in various rules due to insertion of new section 74A

Section 138 of Finance (No.2) Act, 2024, inserted vide Notification No. 17/2024–Central Tax dated September 27, 2024 the new Section 74A into the CGST Act, will come into force from 1st November 2024.

The Finance (No. 2) Act, 2024 had inserted a new section 74A in the CGST Act to provide for the determination of tax not paid/short paid/erroneously refunded or ITC wrongly availed/utilized for both fraudulent and non-fraudulent reasons pertaining to the Financial Year 2024-25 onwards. Amendments have been made in Rules 88B, 88D, 96B, 121, 142 to incorporate a reference to the new Section 74A.

9. Amendments in various forms

a. FORM GST REG-20 has been substituted with a new form.

b. In FORM GST REG-31, a paragraph has been inserted to provide for suspension of registration due to violations of Rule 10A/ 21.

c. FORM GSTR-9 has been amended to reconcile the input tax credit as per FORM GSTR-3B and FORM GSTR-2B instead of FORM GSTR-2A.

d. FORM GST APL-01 and FORM GST APL-05 will be amended w.e.f. 01.11.2024 to provide for the reduced pre-deposit.

e. FORM INS-01 has been amended to provide for the sections of Bharatiya Nyaya Sanhita, 2023 in place of Indian Penal Code.

f. FORM DRC-01A will be amended w.e.f. November 01, 2024 to incorporate the reference to new section 74A.

g. Following new forms will be introduced w.e.f. November 01, 2024 in view of insertion of Rule 164:

a. FORM GST SPL – 01: Application for waiver of interest or penalty or both under section 128A in respect of a notice or a statement mentioned in clause (a) of sub-section (1) of the said section.

b. FORM GST SPL -02: Application for waiver of interest or penalty or both under section 128A, in respect of an order mentioned in clause (b) or clause (c) of sub-section (1) of the said section.

c. FORM GST SPL -03: Notice in respect to an application filed u/s 128A.

d. FORM GST SPL -04: Reply to notice issued under rule 164(8).

e. FORM GST SPL -05: Order by Proper Officer for conclusion of proceedings as per section 128A.

f. FORM GST SPL -06: Order by Appellate Authority for conclusion of proceedings as per section 128A.

g. FORM GST SPL -07: Order for Rejection of Application submitted under section 128A.

h. FORM GST SPL -08: Undertaking submitted under rule 164(15)(b)(ii).

10. Special procedure for rectification of demand orders issued for contravention of section 16(4) of the CGST Act

The CBIC vide Notification No. 22/2024-CT dated October 08, 2024 has provided the special procedure for rectification of orders for the Registered Person to be followed against whom any order has been issued confirming demand for wrong availment of ITC, on account of contravention of provisions of sub-section (4) of Section 16 of the CGST Act, but where such ITC is now available as per the sub-section (5) or sub-section (6) of Section 16 of the CGST Act, and where appeal against the said order has not been filed.

Procedure to be followed by the Registered Person:

1. File an application for rectification of an order electronically on the common portal, within a period of six months from October 08, 2024.

2. Along with the application, the Registered Person should upload the information in the proforma in Annexure A as attached with Notification No. 22/2024-CT dated October 08, 2024.

Procedure to be followed by the Proper Officer:

1. The Authority who had issued the rectification of order, shall take a decision on the application made by the Registered Person and issue the rectified order, within a period of three months from the date of the said application.

2. The Authority who has issued a rectified order, then he shall upload a summary of the rectified order electronically in –

FORM GST DRC-08 (Rectification of Order) – in cases where rectification of an order issued under Section 73 or Section 74 of the CGST Act; and

FORM GST APL-04 (Summary of the demand after issue of order by the Appellate Authority, Tribunal or Court) – in cases where rectification of an order issued under section 107 or section 108 of the CGST Act.

11. Waiver of late fee for delayed filing of Form GSTR-7

The CBIC vide Notification No. 22/2021 – Central Tax dated June 01, 2021 providing the waiver of late fee for delay in filing of Form GSTR 7 has been superseded by Notification No. 23/2024-Central Tax dated October 08, 2024. It has now been provided that the total amount of late fee payable for failure to file the return in FORM GSTR-7 for a month by the due date shall be waived if the total CGST deducted at source in the said month is Nil.

The late fee for delayed filing of the return in FORM GSTR-7 for the month of June, 2021 onwards, by the due date continues to be Rs. 50 per day [Rs. 25 for CGST & Rs. 25 for SGST] for the period of default. However, the maximum late fee is restricted to Rs. 2,000/- [Rs. 1000 for CGST & Rs. 1000 for SGST].

This notification shall be effective from November 01, 2024.

12. Mandatory registration for supplier of Metal Scrap

Persons who are only engaged in making supplies of taxable goods or services or both, the total tax on which is liable to be paid on reverse charge basis by the recipient of such goods or services or both under Section 9(3) are exempt from obtaining registration under the CGST Act vide Notification No. 5/2017-Central Tax dated June 19, 2017.

Notification No. 5/2017-CT dated June 19, 2017 has been amended to provide that the above exemption shall not be available to any person engaged in the supply of metal scrap, falling under Chapters 72 to 81 in the first schedule to the Customs Tariff Act, 1975.

This notification shall come into force w.e.f. October 10, 2024 vide Notification No. 24/2024-Central Tax dated October 09, 2024.

13. TDS on supply of metal scrap

Notification No. 50/2018-Central Tax dated September 13, 2018 has been amended to provide that any registered person receiving supplies of metal scrap from other registered person shall deduct tax at source, as required under Section 51 of the CGST Act.

It has been further provided that TDS shall be deducted by the recipient on supply of metal scrap even when it is supplied between persons mentioned in clause (a), (b), (c) and (d) of Section 51(1).

The above amendment shall come into force w.e.f. October 10, 2024 vide Notification No. 25/2024-Central Tax dated October 09, 2024.

• From October 10, 2024 the Registered Person purchasing Metal Scrap to deduct 2% TDS from the payment made or credited to the Registered Supplier.
• TDS is required to deduct where the value of goods supplied exceeds Rs. 2.5 lakhs.
• TDS @2% is required to be deducted on the value of goods excluding CGST/SGST/UTGST/IGST.
• Every person deducting TDS is required to file a return in FORM GSTR-7 on or before 10^th of the next month.
• A certificate for deduction of TDS is to be issued in FORM GSTR 7A.
• Deductee can claim the TDS deducted, on the basis of information furnished by the Deductor in his return i.e. FORM GSTR-1.
• No deduction shall be made if the location of the supplier and the place of supply is in a State or Union territory which is different from the State or as the case may be, Union territory of registration of the recipient.

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