Representation for Suggestions related to Policy & Procedures in GST

In view of the widespread hardships and legacy compliance issues arising from the transitional phase of GST, it is suggested that the Government should introduce a One-Time Amnesty Scheme for cases presently facing proceedings under Section 74 of the CGST Act, 2017, which pertains to alleged fraud, wilful misstatement, or suppression of facts. Many such cases are rooted not in deliberate evasion but in interpretational ambiguities, procedural lapses, technical limitations, and unintentional human errors common to the early adoption period.

The suggested scheme would offer a pragmatic and compassionate framework for resolution of past disputes, promote voluntary compliance, reduce litigation backlog, and restore trust in the tax ecosystem especially for small and medium businesses impacted by legacy issues during GST rollout.

• Reduced litigation burden on GST Authorities and Courts.
• Encourages voluntary compliance and revenue realization.
• Aligns with the spirit of ease of doing business and taxpayer facilitation.
• Mirrors successful past initiatives like the Sabka Vishwas Scheme under indirect taxes.

The Appellate Authority has the discretion to condone a delay of up to 1 month beyond the prescribed appeal period (i.e., 3+1 months for an aggrieved person), provided there is ‘sufficient cause’ as per Section 107(4) of the CGST Act.

However, any delay exceeding this additional 1 month period cannot be condoned under any circumstances, irrespective of the merit of the case or the genuineness of the reasons preventing timely filing. It is also observed that in many instances, taxpayers / appellants face unavoidable delays due to reasons beyond their control, such as:

(i) Technical issues;

(ii) Medical emergencies;

(iii) Unforeseen circumstances;

thereby leading to denial of justice despite meritorious claims. The existing limitation on condonation severely restricts the discretionary powers of the Appellate Authority and may result in unfair rejection of valid appeals and increases burden on the Judiciary.

• Prevent inadvertent procedural lapses from obstructing rightful claims;
• Allow consideration of genuine difficulties faced by appellants;
• Strengthen the principle of natural justice and prevent undue hardship;
• Reduce the burden on the Judiciary.

Taxpayers who have exercised their appellate rights under Section 112 of the CGST Act have to wait for justice, despite having deposited the mandatory 10% (in addition to 10% at Hon’ble Commissioner Appeals level) of the disputed amount as pre-deposit.

The lack of appellate relief has further created uncertainty across sectors and led to blockage of working capital.

Raising the threshold would reduce compliance costs and procedural burdens for small service providers, aligning with the Government’s vision of supporting MSMEs.

The current framework discriminates between suppliers of goods and services, despite both being integral to the economy. Equal treatment would promote fairness and consistency.

Although this provision has been in force since 1st July 2017, its implementation remains pending, and the parameters, methodology, and disclosure framework have yet to be notified.

Need for Implementation:

• Promotes Transparency & Trust: Public availability of compliance ratings would enable businesses to make informed decisions when selecting vendors, suppliers, or service providers – favouring those with a strong compliance track record.
• Encourages Voluntary Compliance: A transparent rating system would incentivize taxpayers to maintain timely and accurate compliance, fostering a culture of accountability.
• Reduces Risk & Disputes: Buyers can avoid dealing with non-compliant vendors, thereby minimizing input tax credit mismatches, audit exposure, and litigation.
• Supports Efficient Tax Administration: Ratings can assist tax authorities in risk profiling, prioritizing audits, and streamlining enforcement efforts.

Multiple slabs increase the cost and effort of compliance, especially for MSMEs. Rationalization would ease return filing, reduce errors, and lower audit / scrutiny risks. A simpler rate structure helps resolve issues like inverted duty structures, where input tax is higher than output tax, leading to blocked working capital.

Rationalization can reduce the tax burden on essential goods and services, while ensuring luxury and sin goods are taxed appropriately.

It is suggested that interest should not be levied on reversal of ITC, where the recipient fails to make payment to the supplier within 180 days, provided the supplier has already discharged the applicable tax liability to the Government.

In such cases, there is no unjust enrichment or wrongful availment of credit by the recipient, nor is there any loss of revenue to the exchequer. Imposing interest despite full tax being paid by the supplier places an undue financial burden on compliant businesses and undermines the principles of equity and fairness.

For instance, say in a case, a negligible demand of Rs. 3,000/- of tax and interest (comprising Rs. 1,500 CGST and Rs. 1,500 SGST, each) resulted in a penalty of Rs. 20,000, due to the application of the minimum penalty clause.

Such outcomes appear incongruous with the principle of proportionality and place an unjust burden on small taxpayers, especially where the default is technical or rectifiable.

• The minimum penalty of Rs. 10,000 should be replaced with 10% of the tax payable, irrespective of the absolute amount.
• A similar amendment may be made in New Section 74A of the CGST Act.

Micro and Small businesses often face delayed payments from customers, or their credit period is for 2-3 months from the invoice date, yet are required to discharge GST liability at the time of invoice issuance, leading to working capital strain.

Linking tax liability to actual receipts would reduce defaults and improve compliance among micro and small enterprises.

Minutes of 53rd GST Council Meeting also states that “Amount credited in Electronic Cash Ledger is already available with the Government.” [Para 4.120 of the 53^rd GST Council Meeting Minute Book]

However, Notification No. 12/2024-CT inserting the proviso was made effective 10^th July, 2024, whereas the Rule 88B of the CGST Rules, 2017, was made effective retrospectively, from 01^st July, 2017, which requires a review.

Many officers in field formations are asking for interest for the past period, wherein amount was deposited in the Electronic Cash Ledger before the due date of filing of return, but return is submitted, belatedly, after the due date.

In contrast, exporters opting to pay IGST on export supplies are allowed to utilize ITC of capital goods, thereby creating a distortion and inequity between the two modes of zero-rating.

This discrepancy leads to unnecessary strain on working capital, discourages capital investment, and undermines the intent of the zero-rated supply regime. GST paid on capital goods becomes a sunk cost despite the supply being exempted from tax under Section 16 of the IGST Act.

While the system enhances transparency and strengthens the ITC framework, it also introduces operational challenges for micro and small taxpayers, particularly those accustomed to traditional compliance methods.

Key Concerns for Small Businesses:

• System Upgrade Costs: Businesses are required to invest in new accounting software, API integrations, and secure data infrastructure to comply with IMS protocols.
• Manpower Requirements: The need for trained personnel to manage real-time invoice actions adds to the administrative burden, especially for MSEs with lean teams.

• Reduce compliance costs and administrative strain on MSEs
• Align with the Government’s commitment to ease of doing business for MSMEs

• Lease/Rent Agreements: capped at 1–2 MB
• Electricity Bills, etc: restricted to 100 KB

In many cases, original scanned copies of these documents -particularly those with multiple pages, seals, or notarizations—exceed the permissible limits, requiring taxpayers to compress or split files. This not only leads to loss of clarity, increased effort, and technical challenges, but also delays the registration process and exposes users to file upload errors.

• Ease the registration process for taxpayers and consultants
• Ensure better legibility and quality of supporting documents
• Align technical capabilities across GST modules for consistency
• Promote smoother onboarding of businesses into the GST regime.

It is suggested that the GST portal be enhanced to provide a functionality that allows taxpayers to download GSTR-2A and GSTR-2B data for the entire financial year in a single consolidated file including a custom date range option.

• Saving time and effort for taxpayers and consultants during refund, scrutiny and audit preparation
• Reduces risk of errors in data compilation across multiple months
• Simplifies input tax credit reconciliation
• Enhances transparency and ease of compliance under the GST framework.

• Simplify data matching with GSTR-1, GSTR-2A/2B, and books of accounts
• Save considerable time and effort otherwise spent on downloading and consolidating 12 separate monthly reports
• Improve reporting accuracy and audit readiness
• Benefit large businesses and consultants handling high volumes of EWB transactions.

• Facilitates easy reconciliation with GSTR-1, books of accounts, and financial statements
• Saves time by eliminating the need to manually download and merge multiple monthly files
• Enhances data accuracy
• Improves user experience and portal efficiency for high-volume filers.

These communications are visible only when taxpayers navigate to each respective module, often leading to missed or delayed responses due to fragmented visibility.

• Type of communication (e.g., SCN, Order, Intimation)
• Date of issue
• Relevant module or form reference
• Quick-access link for viewing and responding.

In contrast, the “Electronic Cash Ledger” and “Electronic Credit Ledger” modules allow data retrieval for up to 12 months, offering users greater flexibility and access to relevant financial information.

• Simplify historical tracking of refund, and other filed applications
• Improve user efficiency and reduce dependence on offline records
• Promote transparency and consistency across portal utilities
• Support ease of compliance for businesses and consultants.

The only options available are either to file an appeal or to apply under an Any Other Category — which is not procedurally correct and lacks legal clarity.

This limitation becomes particularly problematic in cases where:

Minor errors or omissions in the original application led to rejection but do not warrant a formal appeal.

Refiling of refund applications under the same category, with necessary validations and system controls.

This manual entry is time-consuming, prone to clerical errors, and adds to the compliance burden, especially for businesses with multiple HSN codes and high-volume transactions.

• Improve reporting accuracy and data consistency
• Reduce manual effort and chances of errors
• Enhance compliance efficiency, especially during peak filing seasons
• Promote ease of doing business, particularly for MSMEs
• Implementing this feature would align with the broader vision of a technology-driven and taxpayer-friendly GST system.

Sometimes due to operational delays, or inadvertent errors, it prevents timely cancellation of IRNs within the prescribed one-day window. As a result, taxpayers are compelled to issue credit notes for transactions that never occurred, which creates unnecessary entries in GSTR-1.

• Provide taxpayers with reasonable operational flexibility
• Prevent unwarranted credit note issuance for cancelled or aborted transactions.

The current system of pointing a correct location on maps provided by the service provider integrated in the GST Portal is quite difficult and works very slowly. Also, pointing latitude and longitude is not easy for each and everyone.

To enhance address accuracy and streamline taxpayer onboarding, it is suggested that the GST portal integrate DIGIPIN functionality into its registration and amendment modules. This integration would allow taxpayers to:

• Fetch and validate their geo-tagged address using DIGIPIN
• Ensure location precision in business registration and place-of-business declarations
• Improve delivery of departmental communications and field verifications
• Reduce errors due to ambiguous or unstructured addresses, especially in rural and semi-urban areas.

Benefits of DIGIPIN Integration with GST Portal will:

• Enhances address standardization and compliance accuracy
• Supports faster and more reliable verification by tax authorities
• Promotes ease of doing business, particularly for MSMEs and remote-location taxpayers
• Aligns with the Government’s vision of Digital Public Infrastructure (DPI) and Address-as-a-Service (AaaS).

On grant of registration, a taxable person is required to file his first return. Currently, there is no separate form prescribed and timeline for furnishing the first return. Taxpayers are expected to report these transitional supplies through regular returns such as GSTR-1, GSTR-3B, or GSTR-4, etc., depending on their category.

Key Implementation Considerations:

• The first return requirement applies only when taxable supplies have been made between the date of application and the date of registration, provided the registration certificate is granted with retrospective effect from the date of application.
• In such cases, the taxpayer is required to issue revised tax invoices, as per Rule 53 of the CGST Rules, 2017, to account for GST liability on supplies made prior to registration. This provision applies only when a person receives a certificate of registration in Form GST REG-06, which specifies the effective date of registration as the date of application, even though the certificate itself may be issued at a later date.
• Additionally, under Section 18(1)(a), a person who applies for registration within 30 days of becoming liable is entitled to claim input tax credit (ITC) on:

> Inputs held in stock

> Inputs contained in semi-finished or finished goods

As on the day immediately preceding the date of liability to pay tax.

This provision ensures that supplies made during the pre-registration period are legally recognized, and both the supplier and recipient can comply with tax obligations and claim ITC appropriately.

• A dedicated return form to be introduced on the GST portal to facilitate accurate reporting of first return data.
• Clear Rules / instructions or circular be issued by the Board regarding (i) Issuance of revised invoices; (ii) Eligibility and documentation for ITC claims; (iii) Return filing timelines and formats.

Thus, Operationalizing the first return provisions under Section 40 will enhance transparency, legal clarity, and ease of doing business for taxpayers entering the GST regime.