The word restrictive means imposing restriction on activities, which are not desirable as per the provisions of law. GST Law prescribes certain restriction in CGST Acts/CGST Rules for smooth implementation and compliance of statutory provisions of GST law to protect the Government revenue and provide to the taxpayers. The restrictive clauses are welcome provisions but excessive restrictions leads to violation of principles of Natural justice.
The author wishes to highlights the important restrictive clauses under GST laws, which needs due compliances are summarized as under:
1. GST Registration: (Section 25(6) (A) and Rule- 25
A new registrant shall have to undergo authentication of Aadhaar, or furnish proof of possession of Aadhaar number for obtaining GST registration.
Where the proper officer is satisfied that the physical verification of the place of business of a person is required due to failure of Aadhaar authentication before the grant of registration, he may get such verification of the place of business, in the presence of the said person, done and the verification report along with the other documents, including photographs, shall be uploaded in FORM GST REG-30 on the common portal within a period of 15 working days following the date of such verification.
2. Cancellation of Registration: Section 29(2)(c) and Rule 21.
The proper officer may cancel the registration of a person if a registered person fails to file returns for consecutive of six months and also in case of registration has been obtained by means of fraud, willful misstatement or suppression of facts.
3. Revocation of cancellation of registration: Rule 23(1).
A registered person, whose registration is cancelled by the proper officer on his own motion, may submit an application for revocation of cancellation of registration, in FORM GST REG-21, to such proper officer, within a period of thirty days from the date of the service of the order of cancellation of registration at the common portal.
4. Composition dealer: Section 10(4).
A taxable person registered under section 10, shall not collect any tax from the recipient on supplies made by him nor shall he be entitled to any credit of input tax.
5. Advance payment of tax & Registration valid for 90 days: Section 27.
The certificate of registration issued to a casual taxable person or a non-resident taxable person shall be valid for the period of 90 days and they have make an advance deposit of tax in an amount equivalent to the estimated tax liability of such person.
6. Notice to return defaulter : Section 46
Where a registered person fails to furnish a return under section 39 or section 44 or section 45, a notice shall be issued requiring him to furnish such return within 15 days.
7. Eligibility for taking input tax credit: Section 16(1).
Every registered person shall be entitled take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business.
8. Conditions for taking input tax credit: Section 16(2).
No registered person shall be entitled to the credit of any tax in respect of supply of goods or services or both to him unless, satisfy that he is possession of a tax invoice or debit note or such other duty paying documents, he has received the goods or services or both, the tax charged in respect of such supply has been paid to the Government and he has furnished the return under section 39.
9. Payment by recipient within 180 days: Second proviso to sub-section 2 of Section 16 and Rule 37.
Where a recipient fails to pay to the supplier of goods or services or both, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability. In other words non-payment consideration by the recipient as per rule 37, provided that the value of supplies made without consideration as specified in Schedule I of the said Act shall be deemed to have been paid under Section 16(2).
10. No ITC on depreciation on the tax component: Section 16(3).
Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961, the input tax credit on the said ax component shall not be allowed.
11. Time limit for taking ITC: Section-16(4).
A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 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.
12. Time limit for issuing tax invoice: Section 31& Rule 47.
A registered person supplying taxable goods shall before or at the time of removal goods shall issue invoice, in the case of reverse charge, shall issue invoice in respect of goods or services on the date of receipt of goods or services and in the case of taxable supply of services, shall be issued within a period of thirty days from the date of the supply of service. In the case of banking, non-banking & financial institution including non-banking financial institution shall issue invoice within period of forty five days from the date of the supply of services.
13. Apportionment of Credit: Section 17(1) (2) (3) & (4).
Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business, amount of credit restricted to exempt but no restriction for taxable supplies including zero-rated supplies and banking company is eligible 50% of the ITC and rest shall lapse.
14. No ITC on blocked credits: Section 17 (5).
In put tax credit shall not be allowed certain type of services provided by motor vehicle, food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, rent-a-cab, works contract services, construction of an immovable property (other than plant or machinery), goods or services used for personal consumption, goods lost, stolen, destroyed, written off or free samples and tax paid under section 74,129 and 130 of the CGST Act.
15. Prohibition of unauthorized collection of tax: Section 32.
A person who is not a registered person shall not collect any amount by way tax against supply of goods or services and a registered person only collect tax in accordance with the provisions of this Act or the rules made thereunder.
16. Revised tax invoice and credit or debit notes: Rule 53(3).
Any invoice or debit note issued in pursuance of any tax payable in accordance with the provisions of section 74 or section 129 or section 130 shall prominently contain the words “INPUT TAX CREDIT NOT ADMISSABLE”.
17. Period of retention of accounts & records: Section 36.
Every registered person shall retain books of accounts and other records until the expiry of seventy-two months from the due date of furnishing of annual return for the year pertaining to such accounts and records.
18. Refund of tax: Section 54.
Any person claiming refund of any tax and interest , paid by him or any other amount paid by him if any, he make an application before the expiry of two years from the relevant date.
19. Access to business premises: Section 71.
No officer shall have access to any place of business of a registered person to inspect books of account, documents, computer and computer software unless being authorised by the proper officer not below the rank of Joint Commissioner.
20. Conditions for purpose of appearance: Rule 84(1) & (2).
(1) No person shall be eligible to attend before any authority as a goods and services tax practitioner in connection with any proceedings under the Act on behalf of any registered or un-registered person unless he has been enrolled under rule 83.
(2) A goods and services tax practitioner attending on behalf of a registered or an un-registered person in any proceedings under the Act before any authority shall produce before such authority, if required, a copy of the authorisation given by such person in FORM GST PCT-05.
21. Order of utilization of input tax credit: Rule 88A & Section 49(A)
Input tax credit on account of integrated tax shall first be utilised towards payment of integrated tax, and the amount remaining, if any, may be utilised towards the payment of central tax and State tax or Union territory tax, as the case may be, in any order:
Provided that the input tax credit on account of central tax, State tax or Union territory tax shall be utilised towards payment of integrated tax, central tax, State tax or Union territory tax, as the case may be, only after the input tax credit available on account of integrated tax has first been utilised fully.
22. Deemed Supply to Job worker: Section 19 & Section 143 (1).
Where the inputs or capital goods sent for job work are not received back by the principal after completion of job work or otherwise or are not supplied from the place of business of the job worker within stipulated time such inputs or capital goods had been supplied by the principal to the job worker and principal have to pay GST or reversed ITC if availed by him.
23. Furnishing of information in PART A of FORM GST EWB-01: Rule 138E.
No person (including a consignor, consignee, transporter, an e-commerce operator or a courier agency) shall be allowed to furnish the information in PART A of FORM GST EWB-01 in respect of a registered person, whether as a supplier or a recipient, who,—
(a) being a person paying tax under section 10 , has not furnished the statement in FORM GST CMP-08 for two consecutive quarters ; or
(b) being a person other than a person specified in clause (a), has not furnished the returns for a consecutive period of two months:
24. Payment of tax and other amounts in instalments: Section 80 & Rule 158.
On application field by a taxable person electronically, the Commissioner may allow payment of any amount other than amount due as per the liability self-assessed in any return, already defaulted on the payment of any amount for which the recovery process is on; the taxable person has not been allowed to make payment in instalments in the preceding financial and monthly instalments not exceeding twenty-four thousand.
25. Immunity from prosecution: Section 138 & Rule 162.
An applicant may, either before or after the institution of prosecution, make an application under sub-section (1) of section 138 in FORM GST CPD-01 to the Commissioner for compounding of an offence may grant him immunity from prosecution. Immunity granted to a person may, at any time, be withdrawn by the Commissioner, if he is satisfied that such person had, in the course of the compounding proceedings, concealed any material particulars or had given false evidence.
26. Application for advance ruling : Section 97
An applicant desirous of obtaining an advance ruling relating to classification, applicability of notification, determination of time and value, admissibility of ITC, determination of the liability to pay tax, registration and determination of supply of goods or services or both.
27. Applicability of advance ruling : Section 103
The advance ruling pronounced by the Authority or the Appellate Authority shall be binding on the applicant who had sought and concerned jurisdictional officer in respect of the applicant.
The authority of Advance Ruling, Gujarat, IN RE: Satyesh Brinechem Private Limited, reported in 2020 (36) G.S.T.L. 94 (A.A.R. – GST – Guj.), held that Input tax credit is inadmissible in respect of some transactions as stated in Section 17 of the GST Acts. It is respectfully submitted that “bunds” does not fall under any of the restrictive clauses of Section 17 of the GST Acts and hence input tax credit is admissible to the applicant.
The Authority of Advance Ruling, Maharashtra, IN RE: Saint-Gobain India Pvt. Ltd, reported in 2020(39) G.S.T.L.202 (A.A.R. – GST-Mah.), held that failure by assessee to submit any samples of product for which classification sought and subject application for advance ruling made by the applicant is rejected under the provisions of sub-section (2) of Section 98 of the CGST Act,2017.
The Authority for Advance Ruling, Andhrapradesh, IN RE: Andhrapradesh State Road Transport Corporation, reported in 2020(39) G.S.T.L.192 (A.A.R.-GST-A.P.), observed that the applicant being a public sector undertaking wanted to know whether he is required to file reconciliation statement in FORM GSTR-9C. The issue before us is to tell about the applicability of GSTR-9C to the applicant. However before going into this if we look at the question on which the advance ruling can be sough under Section 97(2) doesn’t fall under the scope of advance ruling.
The Appellate Authority for Advance Ruling, Maharashtra in the case of POSCO India Pune Processing Center Pvt. Ltd. reported in 2019 (21) G.S.T.L. 351 (A.A.R. – GST), held that GST paid for hotel stay in case of rent free hotel accommodation provided to General Manager (GM) and Managing Director (MD) of assessee – Hotel Accommodation used by assessee as a residential premises of its MD/GM which was for personal comfort of both – Assessee not eligible to claim ITC for same – Sections 16 and 17(5) (g) of the CGST Act, 2017.
The Appellate Authority for Advance Ruling, Maharashtra, in the case of Biostad India Limited, reported in 2019 (22) G.S.T.L. 551 (A.A.R. – GST), held that distributing Gold Coins to customers for achieving specified sales targets is nothing but supply of gifts, ITC in respect of which is specifically barred under Section 17(5)(h) of the CGST Act,2017.
The Appellate Authority for Advance Ruling, Karnataka, in the case of Tarun Realtors Private Limited, reported in 2019 (30) G.S.T.L. 245 (A.A.R. – GST), held that input tax credit on the inward supplies of goods or services involved in the construction of immovable property which is a civil structure or building is not available to the applicant and blocked – Section 17(5) of the CGST Act, 2017.
The Appellate Authority for Advance Ruling, Tamil Nadu, in the case of Sree Varalakshmi Mahaal LLP (GST AAR Tamil Nadu), reported in 2020 (32) G.S.T.L. 597 (A.A.R. – GST – T.N.) ITC on inputs/input services used in construction of building (Mall), even if said immovable property is used for furtherance of business as said building is to be used for renting to customers, ITC on material/services used in construction cannot be claimed Since legislation intention in this regard is absolutely clear, there is no reason for going beyond statutory provisions – ITC not admissible – Section 17(5) of the CGST Act, 2017.
The Authority for Advance Ruling, Maharashtra in the case of Pasco Motor LLP, reported in 2019(22) G.S.T.L. 312(AAR-GST), held that where the goods are delivered by the supplier to a recipient on the directions of such registered person. It covers the situations where the goods are supplied on “Bill to – Ship to” basis. In other words, the goods are supplied to some other person on the directions of the buyer of the said goods, i.e., the buyer and the recipient of goods are different. The explanation to clause (b) of sub-section (2) of Section 16 of the Acts is not applicable.
Therefore, every registered person should take maximum precautions and adhere to restrictive clauses under statutes for timely compliances and to avail genuine benefit under the provisions of GST laws. The restrictive clauses under GST laws are imposing certain restrictions to control misuses of availing ITC, wrong payment of taxes, improper maintenance of records and timely submission of returns. Under GST There are certain statutes are restrictive in nature to protect the Government revenues as well as to provide benefits to the taxpayers.