Recent Updates In GST till 23rd March 2023

India GDP has slowed down to 4.4% in Q3 of current fiscal. However, it is expected that it may be on track to achieve 7% for the fiscal.

According to latest statistical data, industrial production has grown by 5.2% in January, 2023. This was just 2% in January, 2022 and 4.7% in December, 2022. Data also show that while the manufacturing sector’s output increased by 3.7 percent in January against 1.9 percent last January, mining output rose 8.8 percent and power generation surged 12.7 percent against 3 percent and 0.9 percent, respectively, during January, 2023. The geo-political scenario remains fraught. According to World Bank President, India may grow @ 8% provided it is able to draw investment and move faster on credit to MSMEs, land and agricultural reforms, robust private sector and so on.

While Union Budget, 2023 has been passed by Lok Sabha today with some changes in Direct Tax and GST with reference GST Tribunal, it is expected that the measures announced in the budget may help sustain the growth momentum that has been in Indian economy in current year, besides addressing the inflation issue.

CBIC has issued new Notifications under Central Tax (Rate) to give effect to GST rate changes, exemptions and change in compensation cess as recommended in 49^th meeting of GST Council. These shall be effective from March 1, 2023.

GSTN keeps issuing advisories and new functionalities to upgrade the portal and for ease of taxpayers. Recently, it issued advisories on forward charge option for GTAs, geo-coding address and new invoice portal.

Government should make all efforts to ensure early functioning of GST Tribunals which is also hampering the tax recovery. It is close to six years now and India has not a single bench of GST Tribunal (GSTAT).  In one of the recent judgment, in case of Gulf Oil Lubricants, Bombay High Court has observed that all appealable orders passed by GST authorities should stipulate a condition of declaration by the taxpayer of his intention to file an appeal. This is so because Appellate Tribunals are not yet set-up in the country and this is leading to halt of recovery of taxes, if the appeals are later on not filed.

As per the latest trends, GST collections have now settled with robust collection, revenue leakages and tax evasion being plugged and procedural issues getting addressed. It is thus, right time to move to next level of tax reforms including considering inclusion of gas, petroleum etc into the GST fold. Still some more work is required on ITC, refund and rationalization of tax slabs.

GST authorities may soon look at income tax returns and MCA filings so as to ensure that entities are correctly discharging their GST tax liability. The data analysis may focus on entities which are not exempt and are required to be registered under GST law and file returns, but not doing so.

Recently, Minister for State for Finance in a reply to a question in Parliament, stated that total number of GST offence cases registered since July, 2017 till February, 2023 is 57111 with highest being in 2022-23 (Till February). This could be possible by use of various measures including data analytics and artificial intelligence to identify and track risky taxpayers and tax evasion cases.

We are in the last 10 days of current fiscal 2022-23. It would be desirable for all tax assessees to be complaint and do a run through various compliances under the GST law.

Utilization of Cash Ledger Balance under same PAN

• GSTN portal has opened the facility of providing option to utilize the amount in cash ledger of one GSTN by another GSTN under the same / common Permanent Account Number (PAN)
• This can be done by way of transfer through form GST PMT-09 has been made effective in the GST portal.
• This can be done in terms of Rule 87 (14) of CGST Rules, 2017 read with section 25(4,5) of CGST Act, 2017.
• It may be noted that no such transfer shall be allowed if the said registered person has any unpaid liability in his electronic liability register.

(Source: GSTN Portal dated 07.03.2023)

GST Collection in February, 2023

• Rs. 1,49,577 crore gross GST revenue has been collected in February 2023 which is 12% higher than GST revenues in same month last year.
• Monthly GST revenues more than Rs 1.4 lakh crore for 12 straight months in a row.
• CGST is Rs.27,662 crore, SGST is Rs.34,915 crore, IGST is Rs.75,069 crore (including Rs.35,689 crore collected on import of goods) and Cess is Rs.11,931 crore (including Rs.792 crore collected on import of goods).
• During February, revenues from import of goods was 6% higher and the revenues from domestic transaction (including import of services) are 15% higher than the revenues from these sources during the same month last year.
• February witnessed the highest cess collection of Rs.11,931 crore since implementation of GST. Normally, February being a 28 day month, witnesses a relatively lower collection of revenue.

(Source: PIB Release ID 1903336 dated 01.03.2023)

Offences in GST regime

Total number of Goods and Services Tax (GST) offence cases registered during each of the last five years by Central GST formations :

(Source: Answer by Minister of State (Finance) in Lok Sabha on 13.03.2023)

GST Evasion, Recovery and Arrests

• Total amount of GST evasion detected, recovery/realisation made and the number of people arrested under these registered GST offence cases, State/ UT wise during 2017-18 to February, 2023 is:

Amount (in crore)  :  307991

Recovery (in crore) : 103801

Arrest (in numbers) :  1402

• Top five states are as follows:

(Source: Answer by Minister of State (Finance) in Lok Sabha on 13.03.2023)

Steps to curb GST Evasion / Offences

Following are the steps taken by the Government to prevent GST related offences:

• Using robust data analytics and artificial intelligence to identify and track risky taxpayers and detect tax evasion;
• Carrying out a nationwide special drive against unscrupulous entities for availing and passing on input tax credit (ITC) fraudulently on the strength of fake/bogus invoices. Further, availment of ITC has been restricted to invoices and debit notes furnished by the supplier in their statement of outward supplies;
• Sharing of data with partner law enforcement agencies for more targeted interventions;
• Mandatory Aadhaar based authentication for new GST registrations as well as centralized suspension of registrations of registered persons who default in timely filing of returns;
• Reduction in threshold limit for issue of e-invoice for B2B transactions from Rs. 20 crore to Rs. 10 crore w.e.f. 01.10.2022;
• E-way bill integration and tracking with RFID has been introduced and the generation of e-way bills by non- compliant taxpayers has been restricted;
• Making the beneficial owner liable for penal action and prosecution similar to that of actual supplier/recipient, in cases where a supply has been made without issuance of an invoice, or invoice has been issued without supply, or excess ITC has been availed/distributed; and
• Section 83 of the CGST Act has been amended to provide that provisional attachment of property can be done in respect of any other person who has retained benefits of such transactions.

(Source: Answer by Minister of State (Finance) in Lok Sabha on 13.03.2023)

GST registration @ residential premises

• There is no restriction for registration under GST law so as to take registration at their residential address in case of professionals.
• In other words, professionals such as management consultants, architects and other professionals are allowed GST registration for working from the residential premises.
• This stand remains irrespective of Covid-19 pandemic or otherwise.

(Source: Reply of State Minister for Finance in Rajya Sabha on 14.03.2023)

GST on ‘Service Charges’ levied by Restaurants

In an answer to Question in Lok Sabha, Union Minister of State in Ministry Finance has answered as follows:

• As per section 9 of the CGST Act, 2017, GST is levied on supply of goods or services on the value as determined under section 15 of the CGST Act, 2017. According to section 15 of the CGST Act, 2017, any amount charged by the supplier for anything done by the supplier in respect of supply of goods or services forms part of the value of service.
• Supply of restaurant service other than at hotels/premises having room tariff above Rs 7500, is taxed at the rate of 5% without Input Tax Credit (ITC) and supply of restaurant service at hotels having room tariff above Rs 7500 per day is taxed at 18% with Input Tax Credit (ITC).

(Source Reply to Q. No. 3167 In Lok Sabha on 20.03.2023
by Minister of State for Finance)

GST Registration for ‘One Person Company’ (OPC)

• “One Person Company” is defined as a company which has only one person as member under section 2 (62) of the Companies Act, 2013.
• Presently, the option of choosing One Person Company is not there in form notified by CGST/SGST Acts and hence not available on the GSTN portal also.
• As per GSTN Advisory, it has been advised that in the ‘Part B’ of GST Registration Form ‘REG-01’, applicant may select (Constitution of Business under ‘Business Details’ tab using dropdown list) option “Others”, if the taxpayer wants to register for GST as “One Person Company”. After selecting option as “Others”, the applicant shall also mention “One Person Company” in the text field and follow the steps for a normal registration application to complete the process.

[Source: GSTN Advisory dated 21.03.2023 (Home (//www.gst.gov.in/)]

Option to file complaints on GSTN Portal

GSTN has advised on how the tax payers can file or lodge complaints on GSTN Portal (GST Grievance Redressal Portal)

• Taxpayers can file GST-related complaints on the Goods and Services Tax portal and report issues, including fake GST invoices.
• GST Grievance Redressal Portal allows taxpayers to receive assistance in matters relating to GST registration, GST return filing, refunds, invoices, and GST payments.
• Following steps can be followed :
  • Step 1: Head to the GST portal.
  • Step 2: Click on the ‘help and taxpayer facilities’ head.
  • Step 3: Scroll down to select ‘grievance redressal portal’.
  • Step 4: Click to proceed.
  • Step 5: Tap to report issue.
  • Step 6: Enter the relevant details and register your complaint.
• An acknowledgment with a ticket reference number (TRN) will be generated which can be used to track the status of the complaint on the same portal through the ‘check status’ menu.

(Source: GSTN Portal dated 22.03.2023)

GSTN Advisory on HSN Code Reporting

GSTN has issued an Advisory on HSN Code reporting in e-invoices on IRPs portal in GST. Accordingly,

• As per Notification No. 78/2020-CT dated 15.10.2020, it is now mandatory for taxpayers to report a minimum of six-digit valid HSN Code for their outward supplies having AATO of more than Rs. 5 crores in any previous financial year.
• This requirement has already been implemented in the GST system,
• The same is now being implemented at IRPs portal in collaboration with IRP partners including NIC.
• It is advised that in case wherever valid six digit HSN Code is not available, a corresponding valid eight digit HSN Code be reported instead of artificially creating six digit HSN Code.
• This requirement may require changes to taxpayer’s systems as well for which it is intended to provide sufficient time for taxpayers and IRP partners to make the necessary changes to comply with this requirement.

[Source: GSTN Advisory dated 22.03.2023
(https://www.gst.gov.in/newsandupdates/read/575)]