Nag Vidarbha Chamber of Commerce has made a Representation and suggestions on few provisions under GST which includes suggestions on provision of Sec. 16(4) of CGST Act 2017 which lays down the condition to take input tax credit by a dealer in books of accounts within a prescribed due time, Levy of Interest under Section 50, Rule 36(4) of CGST Rules, 2017 and Handicap GST Portal.


Tel. : 2522434, Fax No. : 0712-2542422 E-mail: [email protected]


Ref:/ GST/2019-20


1) Shri. Narendra ji Modi,
Hon’ble Prime Minister of India,
Government of India
NEW DELHI-110001

2) Nirmala Sitharaman
Hon’ble Minister for Finance; and Corporate Affairs,
Government of India
NEW DELHI- 110 001

3) Nitin ji Gadkari,
Hon’ble Minister for Road Transport & Highways of India and
Shipping Ministry of Micro, Small and Medium Enterprises in the
Government of India
2, Motilal Nehru Place,
In front of Lal bahadur Shastri Smarak,
Akbar Road, New Delhi – 110001

4) shri. Ajitdada Pawar
Hon’ble Finance Minister of Maharashtra
5th Floor, Main Building Mantralaya, Mumbai-400032
Office Ph: 02222843657, 22843647

5) The Secretary of Lok Sabha
Sansad Marg, Gokul Nagar,
Janpath, Connaught Place,
New Delhi, Delhi 110001

6) The Secretary of Rajya Sabha
Sansad Marg, Gokul Nagar,
Janpath, Connaught Place,
New Delhi, Delhi 110001

7) The Principal Secretary Revenue & Finance
North Block,
New Delhi – 110001

8) The Commissioner of State GST,
27 Nesbit Road Mazgaon, Tadwadi,
Maharana Pratap Chowk,
Mumbai – 400010, Maharashtra

9) The President,
GST Bar Association,
State GST Bhavan, Telengkhedi Road,
Civil Lines, Nagpur – 440001

10) The President,
GST Practitioners Association of Maharashtra,
8 & 9, Mazgaon Tower,
21, Mhatar, Pakhadi Road, Mazgaon,
Mumbai – 400010

11) The Chief Commissioner of CGST,
Nagpur Zone,

12) The Principal Commissioner of CGST
Nagpur – 1,

13) The Principal Commissioner of CGST
Nagpur – H,

14) The Jt. Commissioner, SGST Nagpur
GST, Telengkhedi Road,
Civil Lines, Nagpur – 440001

Sub.: Representation and suggestions on few provisions under GST

Hon ble Sir,

Nag Vidarbha Chamber of Commerce (NVCC) Established in 1944, is Apex Trade Association of 13 lac traders of various trade, commerce & industry and their association’s from Vidarbha region, with mission & vision of –

  • To promote, support, or defend constitutionally the legislation or other action, either legislative or executive by the State or Central Government, Railways, Local Authority or any other authorities affecting or likely to affect the trade & commerce activity in the region directly or indirectly.
  • To consider, originate and support improvements in the laws of the country.

Thus NVCC is instrumental in addressing the needs of business community from the region and operate as a bridge between the Central, State & Local Government and business community, so as to balance the interest of both sides.

Goods and Services Tax (GST) is a landmark legislation brought into force under your able leadership to make India a common market by “One Nation – One Tax” theory. The noble intention of the law is to do away with multiple taxation under indirect tax and to remove the cascading effect of taxation. The implementation of GST has been welcomed open heartily by all trade bodies, traders, manufacturers, service providers and all. However, it is brought to our kind notice that few provisions in the law and its narrow interpretation by tax authorities are creating undue hardship to the traders across the country. We would like to draw your kind attention towards it and would request your good office to intervene in the interest of trade and industry across India.

1) Sec. 16(4) of CGST Act, 2017: The provision of Sec. 16(4) of CGST Act 2017 lays down the condition to take input tax credit by a dealer in books of accounts within a prescribed due time. The provision is published here below for your kind perusal:

Sec. 16 (4) A taxable person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services after furnishing of the return under section 34 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier

The tax authorities are interpreting the above condition as that the dealer has to file returns to claim the input tax credit before the above given due date as specified in Sec. 16(4). However, this interpretation of their understanding of the section is resulting into huge hardship to the dealer as mentioned below:

a. The tax authorities are ignoring the fact that the section talks about taking the credit which is implied as taking in books of accounts and not availing in GST return

b. Taking ‘away the input tax credit by the narrow interpretation of law by tax authorities will badly hit the intention of the GST enactment which is to do away the cascading effect.

c. The law is new and imposing such a harsh condition uniformly for all dealers would be quite harsh and arbitrary.

d. The period of six months is too short as many time dealers are not able to file return due to paucity of funds. It should be extended to at least 1 year from the end of the financial year. In fact, the due date was extended to 1 year for the FY 2017-18.

e. The section is a beneficial provision and is inserted in the law to grant more time to the dealer to complete pending transaction and is not there in the law for detrimental action to be taken by tax authorities.

f. The provision has already been challenged at few courts and the courts need to intervene to safeguard the right of the dealer.

g. Taking away the input tax credit would badly affect the financial condition of many dealers across the country and many units would get shutdown which would badly effect employment generation and overall economy at large.

We request your good office to intervene and remove thiS harsh provision from the law itself as such provision are draconian and bad in law.

2) Levy of Interest u/s 50:  Sec. 50 deals with levy of Interest for delay in payment of GST tax. The issue involved here is on what amount the interest be levied. The provision is as mentioned below:

Sec. 50(1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent., as may be notified by the Government on the recommendations of the Council.

The GST mechanism works in a manner that the dealer takes credit of input tax and adjust it against its outward liability • and pays the balance amount in cash as GST tax.

Eg.: The dealer collects GST amount of Rs. 100.00 lacs from its customer during the month through sale of goods and services but also pays Rs. 95.00 lacs to various vendors towards purchase of goods or services. So, he is allowed . to adjust the credit of Rs. 95.00 lacs from the outward tax of Rs. 100.00 lacs and is required to pay Rs: 5.00 lac (Rs. 100.00 lacs – 95.00 lacs) into the government treasury. In this case if the dealer due to paucity of funds or any other reason gets delay in making payment of Rs. 5.00 lac, he is liable •to pay interest on Rs. 5.00 lacs delay amount.

    • However, the CBIC vide an internal communication and also clarification on twitter has instructed all the authorities to collect interest for delay on the amount of Rs. 100.00 lacs instead of Rs. 5.00 lac. This provision of the law needs amendment and that too’ retrospectively from 1.7.17 to levy interest only on the net tax amount instead of gross tax amount.
    • The GST council in fact in its 31st council meeting has decided that’ the interest should be levied only on the net portion and not on gross portion but the same is not notified in the law retrospectively.
    • This internal communication and tax authorities view to collect interest on gross amount has created havoc amongst the trade community and would result into loss of trust of trading community in the government.
    • In fact, few courts have already given interim relief to few petitioners from any coercive action by the department on this issue.
    • As per Hon’ble Supreme court decision in the case of Sulochana amma vs Narayana nair, any oppressive amendMent is prospective and beneficial amendment is retrospective.

3) Rule 36(4) of CGST Rules, 2017: A new rule has been inserted in the law that the input tax credit available to the dealer under GST would be restricted to 120% of the credit reflected in GST R2A of the dealer which was further brought down to 110%. This provision is not only harsh to the genuine dealer but is arbitrary and is bad in law. We have to mention as below:

a. This rule takes away the input tax credit of the dealer which is a vested right of the dealer and results into block of working capital of the dealer.

b. The linking of input tax credit with GSTR 2A is nothing but artificially blocking of credit to augment the revenue.

c. This provision has resulted into an anomaly that no big industry wishes to procure goods from MSME supplier as his periodicity to file return is quarterly and till that time the credit is not available to such big industry.

d. In fact, it has become almost difficult to calculate the 120% of 2A and communicate with the vendor asking him to file return every month and that too in a short span of 8-10 days. It is suggested that such system should be done on a annual basis and not monthly basis.

e. This system of allowing credit only if reflected in GST R2A is resulting into conflict between buyer and seller and is resulting into huge headache for genuine dealers. Instead of such provision in the law, the tax authorities should implement their mechanism to identify and regularise the tax defaulters or non-filers.

4) Handicap GST Portal: GST has been implemented for more than 30 months now and the so-called backbone of GST i.e GST Portal is a complete failure. Its limitation to handle only 1.50 lacs dealer at a time while the GST registration across India is more than 1.25 crore is itself reflect its in capability to handle the load. The inability to provide a capable portal by the government has resulted into huge stress and waste of thousands of professional manpower. It is the utmost need to enhance the capability of the portal and provide a stable and capable system so that all filing and compliance can be done smoothly. The GST Council and Ministry of Finance has overlooked the problems faced by GST practitioners due to a handicap GST portal. In fact, it should be on top of the priorities which would result into solving half of the technical issues on GST front.

We are very much hopeful and confident that few of these issues highlighted above would draw your urgent attention and your timely intervention would help the trade and industry to focus on doing business and taking Indian economy to a 5 trillion economy.

We tax payers of the country play an important role in contributing to the exchequer and we deserve a law which is not detrimental to our existence itself. The above provision mentioned above if not rectified immediately would result into shut down of lot many trade and industries and would badly affect our economy.

We are quite hopeful of positive outcome on this representation.

Thanking You

Ashwin Mehadia
(President) 9766699326
Ramwtar Totla (Srecretary) 9325504266 CA. Ritesh Mehta
(Co-Convenor Tax Committee)

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December 2021