The Article below summarizes the GST updates for the month of January 2020 with respect of two important circulars / notifications issued during the month:
The above notification makes applicable certain provisions of the Finance Act, 2019 w.e.f. 1 January 2020. The list of the provisions is given below:
1. Section 10–
2. Section 22
As per the amendment to Section 22, in case of a supplier engaged in only supply of goods, the limit for registration under GST has been raised to INR 40 lakh from the earlier 20 lakh.
3. Section 49 (Intra-head adjustment in Electronic Cash ledger
As per the amendment, any amount outstanding in the electronic cash ledger may be transferred to any other head in CGST, SGST and IGST in the electronic cash ledger and such transfer shall be deemed to be a refund under the Act. This adjustment is a welcome step as in many cases amount deposited under the wrong head had to be deposited again and the amount wrongly deposited had to be claimed as refund from the GST authorities.
Under the GST regime, several cases of monetization of fraudulent input tax credit have been observed. In such cases, it was often found that the exporters were non-existent at the addresses provided. It was also observed that these exporters were claiming ITC on the basis of fake invoices and were using this ITC to pay tax on exports which was later claimed as refund at the time of filing the GST returns. To curb this menace of fraudulent GST refunds CBIC has, through the captioned Circular, introduced the following Standard Operating Procedure (SOP) to be followed by exporters:
1. At the outset, the Board through tools of Artificial Intelligence and Data Analytics, shall select a small percentage of exporters for further verification. Till the verification is complete, the refund scrolls with respect to such exporters shall be kept in abeyance and their export consignments shall be subjected to 100 % examination at the customs port. Further, the jurisdictional CGST or Customs authorities of the concerned exporter shall inform him at the earliest to avoid any inconvenience to the genuine exporter. The concerned exporter, on being informed or his own volition, shall furnish certain information in the Format as per Annexure-A to the circular.
2. On the basis of the information furnished, the Jurisdictional CGST authorities shall complete the verification procedure within 14 days, failing which it has be to be brought to the knowledge of nodal cell constituted in Pr. Chief Commissioner / Chief Commissioner Office.
3. After completion of 14 days from the date of submission of information to the jurisdictional CGST authorities, the exporter may escalate the matter to the Chief Commissioner by sending him an email concerned (email ids of the jurisdictional Chief Commissioner given in Annexure-B to the circular). The jurisdictional Pr. Chief Commissioner / Chief Commissioner shall get the verification procedure completed within the next 7 working days.
4. In any case, where the refund remains pending for more than a month, the exporter may file a grievance at cbic.gov.in/issue by giving all the relevant details like GSTN, IEC, Shipping Bill no., Port of Export and CGST formation where the details in the prescribed format of Annexure-A were submitted by the exporter. These grievances shall be resolved by a Committee headed by Member GST, CBIC.
Thus, through this circular, due care has been taken to reduce the cases of fraudulent refunds while ensuring minimum hardship for the genuine exporter.
(The author is a practicing Chartered Accountant based in Delhi and can be reached at [email protected] or 9811933762)
Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. The author does not accept any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon. No part of this document should be distributed or copied without express written permission of the author.