Monthly GST updates for August 2021

1. Latest updates by way of Notifications issued

♦ Notification No. 29/2021- Central Tax dated 30.07.2021

[Omission of Section 35(5) of the GST Act i.e. GST Audit and Substitution of Section 44 – by inserting Self-Certified Reconciliation Statement]

The said notification omitted Section 35(5) of the GST Act i.e. GST Audit to be done away with by the Chartered Accountants.

Also, from now onwards, the reconciliation statement i.e. Form GSTR-9C would now be self-certified by the registered person on their own as per the amendment made in Section 44 of the GST Act.

The above changes will be with effect from 1st August 2021.

Our Views: In our view, GST Audit should not be done away with. Business gets benefitted more from the audit when their GST liability would be missed out and any ITC which should have been availed or correctness of GST liabilities and input tax credit availed by the businesses. The Government might extend the applicable turnover limit to get the GST audit done. Big business houses will get more benefit due to the GST audit.

♦ Notification No. 30/2021- Central Tax dated 30.07.2021

[Amendment in CGST Rules in Rule 80 in regard to insertion of GSTR-9C self-certification and filing of GSTR-9 for the year 2020-21

The said notification amends the rule 80 which deals with Annual Return i.e. GSTR-9 & now it includes self-certified GSTR-9C i.e. reconciliation statement.

The above changes will be with effect from 1st August 2021.

♦ Notification No. 31/2021- Central Tax dated 30.07.2021

[Exempts the registered person from filing GSTR-9 whose aggregate turnover is upto two crores for the financial year 2020-21]

The said notification exempts the registered person whose aggregate turnover in the financial year 2020-21 is upto two crores, from filing the annual return for the said financial year.

2. Recent case laws

A. Nagri Eye Research Foundation Vs. Union of India [Gujarat-HC]

Facts of the Case:

The petitioner is a registered charitable Trust set up with various objectives basically and essentially of undertaking eye and research activities to be carried out by C.H. Nagri Municipal Hospital as well as procurement and management of funds for the purpose of education and charitable activities in eye research and prevention of blindness. The petitioner trust is also running a medical store where the medicines to the indoor and outdoor patients of the petitioner Hospital are sold at a lower rate.

The petitioner had filed an application before AAR seeking advance ruling on the following questions:

a) GST Registration is required for medical store run by Charitable Trust?

b) Medical Store providing medicine at a lower rate is it amounts to supply of goods?

The AAR came to Conclusion that the petitioner trust was required to obtain GST registration for the medical store run by the Charitable Trust and the medicine store provides medicines at a lower store amounted to supply of goods. Being aggrieved by the advance ruling given by the AAR, the petitioner filed an appeal before the AAAR. The AAAR dismissed the said appeal and confirmed the findings in favour of AAR ruling. The aggrieved Petitioner have preferred the appeal against the decision of AAAR in the Gujarat High Court.

Observations of the Court:

The petitioner advocate submitted that the activities carried by the petitioner by running medical store could not be said to be a ‘‘business’’ within the meaning of Section 2(17) of the GST Act, inasmuch such activities can neither be said to be trade or commerce nor for any pecuniary benefit.

Since the petitioner advocate has emphasized that the activity carried on by the medical store of the trust could not be said to be a “business”, it would be beneficial to refer to the relevant part of the definition as contained in Section 2(17) of the CGST Act which reads as under:

“(17) “business” includes –

(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for pecuniary benefit.”

There remains no doubt that every supplier who falls within the ambit of Section 22(1) of the GST Act has to get registered himself under the Act. As per Section 7(1) of the Act, the expression ‘supply’ includes all forms of supply of goods and services or both such as sale, transfer, barter etc. made or agreed to be made for consideration by a person in the course or furtherance of business. It is not disputed that the petitioners are selling the medicines, may be at a cheaper rate but for consideration in the course of their business. The submission of the petitioner advocate that such a sale could not said to be a “business” in view of the definition contained in Section 2(17) of the said Act cannot be accepted. From the bare reading of the said definition, it clearly emerges that any trade or commerce whether or not for a pecuniary benefit, would be included in the term ‘business’ as defined under section 2(17) of the said Act. The petitioner advocate has failed to substantiate or justify as to how the activity of selling medicines to the patients for consideration could not be said to be a trade or commerce.

Ruling:

Hence, it was held that the Medical store run by the Charitable Trust would require GST registration and that the Medical Store providing medicines even if supplied at a lower rate would amount to supply of goods. The Court does not find any illegality or infirmity in the said orders passed by the advance ruling authorities.

Hence, the petition being devoid of merits is dismissed.

Our Views:

In our view, it is quite clear that the term ‘supply’ has a vast meaning and covers almost every goods or services except few. Further, goods supplied by any person would be termed as business even it is for pecuniary benefit or not. So, one thing should be keep in mind that without any pecuniary benefit also, supply of goods would be liable to tax under GST.

B. M/s. Aich Brothers Vs. Union of India [Gauhati HC]

Facts of the Case:

The petitioner is aggrieved because of striking out of the registration of the petitioner firm by the respondent GST department causing immense difficulties in getting released the payment due to him against various contractual works in different organisation namely Oil India Limited, Digboi Refinery etc. It is the contention of the learned counsel for the petitioner that whatever outstanding was shown in the portal against the name of the petitioner maintained by the respondent GST was duly paid but even then the registration was not restored for which the petitioner has filed this writ petition seeking for an appropriate direction.

The respondent sought for an appropriate direction to pay the interest amount against the pending liabilities which was later paid off. However, the appellant had not paid the interest portion on the same. The appellant requested to pay the interest in instalments due to the financial crisis faced by the appellant. However, the respondent GST department had objected to this.

Observations:

There is no dispute that due to non-payment of the interest liability for the period from October 2018 to April 2020 for delayed filing of returns GSTR-3B, the petitioner is required to make the payment and only thereafter, the registration of the petitioner shall be restored by the respondent GST. On the other hand, the appellant submitted that due to striking out of the registration, could not collect the contractual dues from the various organisations against the contractual job also cannot be disbelieved.

Ruling:

In view of the same, the respondent GST department (Assistant Commissioner) should permit the petitioner to pay the interest liability in instalment as a special case keeping in view of the pandemic situation arising out of Covid-19 and on having submitted the said application/representation along with order passed today the same shall be disposed of within a period of outer limit of 7 (seven) days from the date of receipt of the said representation. If all the dues are cleared as per the direction of the Assistant Commissioner, the registration of the petitioner shall be restored immediately.

Our Comments:

This is a good decision to pay interest in instalment in this Covid-19 situation. In this pandemic time, the Government should grant waiver of interest or the lower rate of interest for delayed payment of tax so that the registered person should not get burdened with interest.

3. Monthly Compliance Calender- August 2021

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