It now seems that Indian economy, like many others, is on the verge of returning to normalcy. Agencies have opined that economy may grow at 11-13.5% in Financial Year 2021-22.
While the Central Statistical Organization (CSO)’s GDP data is expected later this week, the GDP is expected to be back in expansion mode during October-December, 2020 quarter of the current fiscal. Various economic indicators have performed better and it is likely that ‘technical recession’ may end soon. At corporate level, Indian companies have performed well in Q3 of current fiscal owing to higher demand and cost controls.
CBIC has issued guidelines procedure to be followed during search operations u/s 67 of the CGST Act, 2017. These guidelines ought to be followed while carrying search proceedings.
Also, MOF has renamed Indian Renewal Services (Customs & Central Excise) [IRS (C&CE)] as Indian Revenue Services (Customs & Indirect Taxes) [IRS (C & IT) w.e.f. 10.02.2021. Will it make any difference in services !!
The 15th Finance Commission in its report has recommended merging of two GST rates of 12% and 18%. This may be discussed in forthcoming meeting of GST Council to be held in March, 2021. The merging of tax slabs and correcting inverted duty structure on textiles, fertilizers etc. may be taken up. With this, GST rates would be three with 5% and 28% being other two rates. There is a feeling in the revenue that GST rates are lower than the revenue neutral rates.
On GST compensation, Central Government has released 17th instalment of Rs. 5000 crore to 28 States and 3 Union Territories. With this, 91% of the GST shortfall has been released. There was an estimated shortfall of Rs. 1.10 lakh crore.
The recent increase in GST collections in past 3-4 months only indicate that tax compliance can result in rise in tax revenue if tax rates are kept at reasonable levels and voluntary compliance and payments are encouraged. With GST collections and economic growth, both now in positive direction, it appears that compliance levels are showing an improving trend. While strict handling of tax evasion showing results, tax efficiency is likely to improve further. GST audit for financial year 2019-20 is currently on, last date for which is presently 28th February, 2021. With dates getting extended for income tax too, in all fairness and probability, GST audit date deserves to be extended to atleast 31st March, 2021.
CBIC Guidelines for Search Operations
CBIC have issued guidelines procedure to be followed during search operations u/s 67 of the CGST Act, 2017. It inter alia, covers the following :
- The officer issuing authorization for search should have valid and justifiable reasons for authorizing a search, which shall be duly recorded in the file. Search should be carried out. only with a proper search authorization issued by the Competent Authority.
- The premises of a person cannot be searched on the authority of a search warrant issued for the premises of some other person. Where a search warrant, through oversight, has been issued in the name of a person w ho is already dead, the authorised officer should report to the Competent Authority and get a fresh warrant issued in the names of the legal heirs.
- In case of search of a residence, a lady officer shall necessarily be part of the search team.
- The officer authorized to search the premises must sign each page of the Panchnama and annexures. A copy of the Panchnama along with all its annexures should be given to the person in-charge of the premises being searched and acknowledgement In this regard may be taken. If the person in-charge refuses to sign the Panchnama, the same may be pasted in a conspicuous place of the premises, in presence of the witnesses. Photograph of the Panchnama pasted on the premises may be kept on record.
- These guidelines ought to be followed while carrying search proceedings.
- Specific instructions regarding search of premises/persons arc contained in the Central Excise Intelligence and Investigation Manual issued by the DGCHI, New Delhi. Subsequent instructions have also been issued from time to time as per the need of the hour, latest being DGG1 Instruction dated 14.08.2020. The instructions as elaborated in the preceding para(s) are to be followed in continuation to the earlier instructions.
- The search shall be made in the presence of two or more independent witnesses who would preferably be respectable inhabitants of the locality, and if no such inhabitants are available or willing, the inhabitants of any other locality should be asked to be witness to the search. PSU employees, Bank employees etc, may be included as witnesses during sensitive search operations to maintain transparency and credibility, The witnesses should be informed about the purpose of the search and their duties.
- The search authorization shall be executed before the start of the search and the same shall be shown to the person in charge of the premises to be searched and his/her signature with date and time shah be obtained on the body of the search authorization. The signatures of the witnesses with date and time should also be obtained on the body of the search authorization.
- While conducting search, the officers must be sensitive towards the assessee/party. Social and religious sentiments of the person(s) under search and of all the person(s) present, shall be respected at all times. Special care/ attention should be given to elderly, women and children present in the premises under search. Children should be allowed to go to school, after examining of their bags. A woman occupying any premises, to be searched, has the right to withdraw before the search party enters, if according to the customs she does not appear in public. If a person in the premises is not well, a medical practitioner may be called.
[Source: CBIC Instruction No. 01/2020-21 (GST Investigation), F.No. GST/INV/ DGOV Reference/20-21 dated 02.02.2021]
Suspension of Registration
CBIC has issued Standard Operating Procedure (SOP) for implementation of the provision of suspension of registrations under sub-rule (2A) of rule 21A of CGST Rules, 2017.
- Vide notification No. 94/2020- CT, dated 22.12.2020, sub-rule (2A) was inserted to rule 21A of the CGST Rules, 2017 which provides for immediate suspension of registration of a person, as a measure to safeguard the interest of revenue, on observance of such discrepancies /anomalies which indicate violation of the provisions of Act / Rules, and that continuation of such registration poses immediate threat to revenue.
- Till the time an independent functionality for FORM REG-31 is developed on the portal, in order to ensure uniformity in the implementation of the provisions of rule 21A(2A), the Board has provided guidelines for implementation of the provision of suspension of registrations.
- Till the time independent functionality for FORM GST REG-31is fully ready, if the proper officer considers it appropriate to drop a proceeding anytime after the issuance of FORM GST REG-31, he may advise the said person to furnish his reply on the common portal in FORM GST REG-18.
- In case the proper officer is prima-facie satisfied with the reply of the said person, he may revoke the suspension by passing an order in FORM GST REG-20.
- Post such revocation, if need be, the proper officer can continue with the detailed verification of the documents and recovery of short payment of tax, if any. Further, in such cases, after detailed verification or otherwise, if the proper officer finds that the registration of the said person is liable for cancellation, he can again initiate the proceeding of cancellation of registration by issuing notice in FORM GST REG-17.
[Source: CBIC Circular No. 145/01/2021-GST dated 11.02.2021]
IGST Refund due to mismatch in IGST liability in GSTR-3B and GSTR-1 for FY 2019-20 and FY 2020-21
- CBIC had earlier provided a procedure for refunds which were stuck in cases where the records could not be transmitted from GSTN to ICEGATE portal due to mismatch in IGST Liability between GSTR-1 and GSTR-3B vide Circular No. 12/2018-Customs dated 29.05.2018. The procedure covered the period from July 2017 to March 2019.
- However, IGST refunds are pending due to mis-match of data between GSTR-1 & GSTR-3B. The IGST refunds relatable to the Shipping Bills filed after 31.03.2019 having mismatch error between GSTR-1 and GSTR-3B could not be processed and are held up.
- In order to overcome the problems faced by the exporters, CBIC has decided that the solution provided in the Circular 12/2018-Customs read with Circular No. 25/2019-Customs would be applicable mutatis mutandis for the Shipping Bills filed during the financial year 2019-20 and 2020-21 (i.e. in respect of all Shipping Bills filed/ to be filed upto 31.03.2021).
- Now this procedure has been extended for another 2 years i.e. FY 2019-20 and 2020-21.
[Source: Circular No. 4/2021-Customs (NT) dated 16.02.2021]
Exemption from Aadhaar Authentication for Registration
- These provisions shall not apply to a person who is-
(a) not a citizen of India; or
(b) a Department or establishment of the Central Government or State Government; or
(c) a local authority; or
(d) a statutory body; or
(e) a Public Sector Undertaking; or
(f) a person applying for registration under the provisions of sub-section (9) of section 25of the said Act.
- In other words, aforementioned persons shall be exempt from Aadhaar Authentication.
(Source: Notification No. 03/2021-CT dated 23.02.2021)
Applicability of Dynamic Q R Code on B2C invoices
- CBIC has issued clarifications for applicability of Dynamic Quick Response (QR) Code on B2C invoices and compliance of Notification No. 14/2020-CT dated 21.03.2020 which requires Dynamic QR Code on B2C invoice issued by taxpayers having aggregate turnover more than 500 crore rupees, w.e.f. 01.12.2020.
- Vide Notification No. 89/2020-Central Tax, dated 29th November 2020, penalty has been waived for non-compliance of the provisions of Notification No. 14/2020-CT dated 21.03.2020 for the period from 01st December, 2020 to 31st March, 2021, subject to the condition that the said person complies with the provisions of the said Notification from 01st April, 2021.
- Notification No. 14/2020-CT dated 21.03.2020 is applicable to a tax invoice issued to an unregistered person by a registered person (B2C invoice) whose annual aggregate turnover exceeds 500 Cr rupees in any of the financial years from 2017-18 onwards.
- In case of export invoices, though such supplies are made by a registered person to an unregistered person, however, as e-invoices are required to be issued in respect of supplies for exports, as per Notification No. 13/2020-Central Tax, dated 21st March, 2020 treating them as Business to Business (B2B) supplies, Notification No. 14/2020-CT dated 21.03.2020 will not be applicable to export invoices.
- Dynamic QR Code should contain the following information :
(i) Supplier GSTIN number
(ii) Supplier UPI ID
(iii) Payee’s Bank A/C number and IFSC
(iv) Invoice number & invoice date,
(v) Total Invoice Value and
(vi) GST amount along with breakup i.e. CGST, SGST, IGST, CESS, etc.
- Dynamic QR Code should be such that it can be scanned to make a digital payment.
- If the supplier has issued invoice having Dynamic QR Code for payment, the said invoice shall be deemed to have complied with Dynamic QR Code requirements. In cases where the supplier, has digitally displayed the Dynamic QR Code and the customer pays for the invoice:
(i) Using any mode like UPI, credit/ debit card or online banking or cash or combination of various modes of payment, with or without using Dynamic QR Code, and the supplier provides a cross reference of the payment (transaction id along with date, time and amount of payment, mode of payment like UPI, Credit card, Debit card, online banking etc.) on the invoice ; or
(ii) In cash, without using Dynamic QR Code and the supplier provides a cross reference of the amount paid in cash , along with date of such payment on the invoice, the said invoice shall be deemed to have complied with the requirement of having Dynamic QR Code.
- In case where the supplier makes available to customers an electronic mode of payment like UPI Collect, UPI Intent or similar other modes of payment, through mobile applications or computer based applications, where though Dynamic QR Code is not displayed, but the details of merchant as well as transaction are displayed/ captured otherwise, in such cases, if the cross reference of the payment made using such electronic modes of payment is made on the invoice, the invoice shall be deemed to comply with the requirement of Dynamic QR Code. However, if payment is made after generation / issuance of invoice, the supplier shall provide Dynamic QR Code on the invoice.
- If cross reference of the payment received either through electronic mode or through cash or combination thereof is made on the invoice, then the invoice would be deemed to have complied with the requirement of Dynamic QR Code. In cases other than pre-paid supply i.e. where payment is made after generation / issuance of invoice, the supplier shall provide Dynamic QR Code on the invoice.
- The provisions of the Notification No. 14/2020-CT shall apply to each supplier/registered person separately, if such person is liable to issue invoices with Dynamic QR Code for B2C supplies as per the said notification. In case, the supplier is making supply through the Ecommerce portal or application, and the said supplier gives cross references of the payment received in respect of the said supply on the invoice, then such invoices would be deemed to have complied with the requirements of Dynamic QR Code. In cases other than pre-paid supply i.e. where payment is made after generation / issuance of invoice, the supplier shall provide Dynamic QR Code on the invoice.
(Source: Circular No. 146/02/2021-GST dated 23.02.2021)