Recent Updates In GST & Service Tax till 14th April 2023

Stay updated on the latest developments in GST and Service Tax until April 14, 2023. Explore amendments, rate changes, collection figures, and regulatory updates for seamless compliance.

GST was introduced from 1^st July, 2017 and it entered into 7^th financial year on 01.04.2023. A lot has been done in these close to six years but yet lot of reforms are to take place.

Finance Bill, 2023 got Lok Sabha on 24.03.2023 and Rajye Sabha approved the same on 27.03.2023. The proposed new amendments pave the way for constitution of GST Appellate Tribunal  which may see the right of the day in few months now. GST Tribunal like important institution of GST. Finance Act, 2023 has since been enacted with president assent’s on 31.03.2023 as Act No. 8 of 2023. Finance Act, 2023 shall come into force from 01.04.2023, i.e. today. CBIC has issued many Notifications on 31.03.2023 to implement the provisions of Finance Act, 2023

While the Budget session of Parliament was concluded with passage of Finance Bill 2023, this budget session is reported to be least productive in recent years. As against proposed Bills, only 3 non-finance bills were passed by Rajya Sabha and only one bill by Lok Sabha.

GST rate rationalization is due for some time now but given the elections in coming months in few states, it is unlikely to happen before general elections in 2024. While frequent rate rejig is not desirable, the Group of Ministers looking after rate changes may also require reconstitution.

CBIC has notified phased implementation of Electronic Cash Ledger (ECL) in Customs w.e.f. 01.04.2023. Full exemption has been provided from basic Customs Duty in case of all imported drugs and food for special medical purposes for personal use for treatment of rare diseases listed under the National Policy for Rare Diseases, 2021.

CBIC is also considering issuing a SOP for investigation in view of the GST Appellate Tribunals being set up in near future and there may be rush for large number of appeals.

March, 2023 has reported a gross GST collection of Rs. 1,60,122 crore which is 13% higher growth on YoY basis. For financial year 2022-23 as a whole, GST collection has crossed Rs. 18 lakh crore mark and is Rs. 18,07,679 crore (Rs. 14,83,292 crore in finance year 2021-22). March, 2023 collections is Monthly GST revenues have been more than Rs. 1.4 lakh crore for 12 months in a row, with Rs. 1.6 lakh crore crossed for the 2nd time since inception of GST. Gross revenues in 2022-23 were 22% higher than that last year.

Economic Advisory Council to the Prime Minister (EAC-PM) has released a Paper on GSTN performance is last five years. Accordingly, GSTN’s performance has improved steadily resulting in steady increase in taxpayers, presently @1.12 crore as against just 38 lakhs in July, 2017. The complaints have declined from 2.36 lakh in 2018 to 17000 in Q3 of 2022. However, technology related issues like bugs and defects still exist.

It is gathered from media reports that Group of Ministers (GoM) set up to recommend GST rate on online gaming, casinos etc may propose 18% GST in games of skills and 28% on game of chance. GST Council in its next meeting in June, 2023 may decide on the same.

Generation and quoting of Document Identification Number (DIN) is mandatory under CGST. Government of West Bengal vide Trade Circular No. 01/2023 dated 29.03.2023 has issued directions w.e.f. 01.04.2023 in this regard. For all communications issued under GST by the officers of the Directorate to taxpayers and other concerned persons u/s 168 of the WBGST Act, 2017, DIN will be required on all communications.

CBEC has issued instructions dated 21.03.2023 in relation to payment of Service Tax by Department of post and Ministry of Railways by way of book adjustment so as to give clarity for pending adjudications.

Restriction in Late fee of GSTR-4

In case GSTR-4 (return by composition dealer) is not filed within the due date, late fee restricted to Rs. 500 for the quarters July 2017 to March 2019 and for the Financial year 2019-20 to 2022-23 but furnish the said return between the period from April 2023 to June 2023, provided the amount of tax payable is NIL.

(Source: Notification No. 02/2023- Central Tax dated 31.03.2023)

Revocation of Cancellation of Registration

In case the registration got cancelled before 31^st December 2022 and the dealer had failed to apply for revocation within the time specified, the dealer may apply the special procedure for applying the revocation of cancellation of registration as under:

a) The application for revocation must be filed before 30th June 2023.

b) The application must be filed after filing of the returns due upto the effective date of cancellation along with the due tax, interest, late fees, and penalty as due.

c) No further extension of time period will be available in such cases

This will also cover cases where appeal under section 107 has been rejected on the ground of failure to adhere to time limits.

(Source: Notification No. 03/2023- Central Tax dated 31.03.2023)

Aadhaar / Biometric Aadhaar based Authentication for Registration

• CBIC has prescribed procedure and timelines for Aadhaar Authentications and submission of application for registration.
• Sub-rule 4A of rule 8 of the CGST Rules, 2017 has been substituted to provide Aadhar based authentication as well as Bio-metric based authentication.
• If applicant opts for authentication of Aadhaar number then the date of submission of the application shall be the date of authentication of the Aadhaar number, or fifteen days from the submission of the application whichever is earlier.
• If any person who has opted for authentication of Aadhaar number and is identified on the common portal, based on data analysis and risk parameters, then its application shall be followed by biometric-based Aadhaar authentication and taking photograph of the individual applicant or of such individuals in relation to the applicant where the applicant is not an individual – only for Government State.

(Source: Notification No. 04/2023 & 05/2023 – Central Tax dated 31.03.2023)

Special procedure for Assessment of Non-filers of Returns

The assessment of non-filers of returns shall be deemed to have been withdrawn, if the person whose assessment order was passed on or before 28th February 2023 and not filed return with 30 days from the pass of the assessment order. If the registered person follows the special procedures as under:

a) Shall furnish the return on or before 30th June 2023.

b) The return shall be filed with the due tax along with the interest and the late fees.

The above is irrespective of the fact that any appeal has been filed or the appeal has been decided

(Source: Notification No. 06/2023- Central Tax dated 31.03.2023)

Relaxation in Late fee for delay in filing of GSTR-9

In case GSTR-9 had not been filed for the financial year 2017-18 to 2021-22, the registered person may file the same from 1st April 2023 to 30th June 2023. The total late fee as calculated in Section 47 in respect of the said return shall waived in excess of Rs. 20,000/-. (Rs. 20,000 includes CGST+SGST)

Late fee for the financial year 2022-23 and onwards is as under:

Aggregate Turnover	Late Fee (CGST+SGST)
Upto Rs. 5.00 Crores	Rs. 50 per day subject to 0.04 percent of the turnover
More than Rs. 5.00 Crores to Rs. 20.00 Crores	Rs. 100 per day subject to 0.04 percent of the turnover
More than Rs. 20.00 Crores	Rs. 200 per day subject to 0.50 percent of the turnover

(Source: Notification No. 07/2023 – Central Tax dated 31.03.2023)

Restriction in Late fee of GSTR-10

In case GSTR-10 (Final return) had not been filed within the due date and the same is filed between 01^st April, 2023 to 30^th June, 2023, the late fee will be restricted to Rs. 1,000/- (CGST+SGST).

(Source: Notification No. 08/2023 – Central Tax dated 31.03.2023)

New time-lines for issuing order’s under section 73 and 74

• Central Government has extended time limit for issuing order under Section 73 for FY 2017-2018 to FY 2019-2020.
• CBIC has issued notification to extend the time limit for issuing orders under Section 73(10). The time limit for the financial year 2017-18 is extended up to 31^st December, 2023; for the financial year 2018-19, the time limit is extended up to the 31st March, 2024 and for the financial year 2019-20, the time limit is extended up to 30th June, 2024.
• Thus, for issuance of order under section 73(9) for recovery of tax not paid or short paid or of input tax credit wrongly availed or utilized, time limit specified under section 73 (10) have been extended as follows:

Financial Year	Last date of issue of order
2017-18	31st December, 2023
2018-19	31st  March, 2024
2019-20	30th  June, 2024

(Source: Notification No. 09/2023 – Central Tax dated 31.03.2023)

Time limits for issuance of Show Cause Notices

• The time lines for issuance of Show Cause Notices (SCNs) under section 73 and 74 of CGST Act, 2017 (as amended) and read with Notification No. 9/2023-CT dated 31.03.2023 will be as per following Table :

Period (Financial Year)	SCN to be issued u/s 73 upto	SCN to be issued u/s 74 upto
2017-2018	30.09.2023	05.08.2024
2018-2019	31.12.2023	30.06.2025
2019-2020	30.03.2024	30.09.2025
2020-2021	30.11.2024	28.08.2026
2021-2022	30.09.2025	30.06.2027
2022-2023	30.09.2026	30.06.2028

(Source: Section 73 and 74 of CGST Act, 2017

read with Notification No. 9/2023-CT dated 31.03.2023)

Specific-tax linked Compensation Cess on tobacco products

• The Compensation Cess rate on pan masala, tobacco, and tobacco products have been converted from current ad-valorem to specific-tax linked to the Retail Sale Price (RSP).
• The changes have been carried out through amendment in the Schedule to the Goods and Service Tax (Compensation to States) Act, 2017. (Section 163 of the Finance Act, 2023 refers).
• The Schedule has been amended to revise the maximum rate at which GST Compensation Cess shall be collected for items such as pan masala, tobacco and manufactured tobacco substitutes, including tobacco products and to link the same with retail sale price.
• This amendment is effective from 1st April, 2023

(Source: Notification No. 01/2023- Compensation Cess dated 31.03.2023)

Effective date for Compensation Cess on tobacco products

• Amendments made in sub-section (2) of section 8 of the GST (Compensation to States) Act, 2017 have been notified for the effective rates on pan masala, tobacco & tobacco products as per the recommendations made by GST Council w.e.f 1st April, 2023.
• The CBIC has brought in amendments by the Finance Act, 2023 to cap the maximum rate of GST compensation cess on pan masala, cigarettes and other forms of tobacco and linked the highest rate to their retail sale price. The maximum GST compensation cess rate for pan masala will be 51 per cent of the retail sale price per unit compared with 135 per cent ad valorem at present. The cess rate for tobacco has been fixed at Rs 4,170 per thousand stick plus 290 per cent ad valorem or 100 per cent of the retail sale price per unit.  So far, the highest rate was Rs 4,170 per thousand stick plus 290 per cent ad valorem. The cess is levied over and above the highest GST rate of 28 per cent.
• The amendment in Notification No. 1/2017-CT dated 28.06.2017 which specifies the rate of Compensation Cess on goods stands amended w.e.f. 01.04.2023

(Source: Notification No. 02/2023- Compensation Cess (Rate) dated 31.03.2023)

Applicability of GST rate and classification of Rab

• The CBIC has issued notification based on the recommendation of the GST council in its 49th meeting which was held on 18th February, 2023 to provide that 5% GST rate shall be applicable on Rab, when sold in pre-packaged and labelled, and Nil GST, when sold in other than pre-packaged and labelled with effect from the 1st March, 2023.
• Now, CBIC has issued clarification that in view of the prevailing divergent interpretation and genuine doubts regarding the applicability of GST rate on Rab, the issue for past period is regularized on “as is” basis.

(Source: Circular No. 191/03/2023-GST dated 27.03.2023)

15% increase in GST Collection

There has been an increase of 15% in GST Collection in the month of December (FY 2022-23) as compared to the month of December (FY 2021-22). The monthly GST revenue is more than 1.4 lakh crore for 11 consecutive months in the FY 2022-23.

(Source: Press Release ID1911272 dated 27.03.2023)

March, 2023 GST Collection

• Total gross collection for 2022-23 stands at Rs.18.10 lakh crore; average gross monthly collection for the full year is Rs.1.51 lakh crore. Gross revenues in 2022-23 were 22% higher than that last year
• The gross GST revenue collected in the month of March 2023 is Rs.1,60,122 crore of which CGST is Rs.29,546 crore, SGST is Rs.37,314 crore, IGST is Rs.82,907 crore (including Rs.42,503 crore collected on import of goods) and cess is Rs.10,355 crore (including Rs.960 crore collected on import of goods). It is for the fourth time, in the current financial year that the gross GST collection has crossed Rs.1.5 lakh crore mark registering second highest collection since implementation of GST. This month witnessed the highest IGST collection ever.
• The revenues for the month of March 2023 are 13% higher than the GST revenues in the same month last year. During the month, revenues from import of goods was 8% higher and the revenues from domestic transaction (including import of services) are 14% higher than the revenues from these sources during the same month last year. The return filing during March 2023 has been highest ever. 93.2% of statement of invoices (in GSTR-1) and 91.4% of returns (in GSTR-3B) of February were filed till March 2023 as compared to 83.1% and 84.7%, respectively same month last year.

(Source: PIB Release ID1912850 dated 01.04.2023)

Payment of Service Tax by Department of Posts and Ministry of Railways by way of book Adjustment

• Earlier, the practice of payment of Service tax by way of book adjustment adopted by the Department of Posts and the Ministry of Railways was leading to incorrect accounting and reporting as the tax payments could not be reconciled by the field units of CBIC, Book adjustment practice was also unable to provide a service wise, jurisdiction wise segregation of Service tax dues and was posing difficulties in conduct of audit.
• On the other hand, for adjudication there are different practices in field in accepting hook adjustment as a valid mode of payment. The show cause notices issued to demand the Service Tax/Central Excise duty by some field formations are at different levels of adjudication. A reference in this regard has also been received from the Ministry of Railways in which the demands have been confirmed.
• With a view to reduce litigation, Board has directed that in all cases pending adjudication in respect of Department of Posts and Ministry of Railways, where the duty/tax has been demanded only on account of the fact that amount due as tax/ duty has not been paid as per the procedure laid down but by book adjustment, the adjudicating authority may focus on the reconciliation of duty/tax paid by book adjustment.
• The noticees may for this purpose, submit the reconciliation statement of duty/tax liability and the payment proof in appropriate head and account pertaining to the demand to the satisfaction of the adjudicating authority. A certificate to this effect from O/o CGA may also be provided by the noticees.

(Source: Instructions No. CBIC-240137/20/2022-Service Tax-CBEC dated 21.03.2023)

Late fee reduction enabled @ GSTN

• GSTN has enabled late fee reduction for pending annual returns in Form GSTR-9 or 9C and final return in form GSTR-10 on the GST portal.
• Maximum GST Late Fees has been fixed upto Rs. 20,000/- (CGST + SGST) for filing pending Annual Returns (GSTR-9/9C) for financial years from 2017-18 to 2021-22, provided the same is filed between April 01, 2023 to June 30, 2023.
• Late Fees reduction for pending Final Return GSTR-10 shall be maximum late fees of Rs. 1,000/- (CGST + SGST), provided the same is filed between April 01, 2023 to June 30, 2023.

(Source: GSTN Portal dated 03.04.2023)

GSTN updated Advisory on Time limit for Reporting Invoices on the IRP Portal

GSTN as issued the following updated advisory fixing the time limits on reporting old invoices on e-invoice IRP portal:

• It has been decided by the Government to impose a time limit on reporting old invoices on the e-invoice IRP portals for taxpayers with Annual Aggregate Turnover (AATO) greater than or equal to 100 crores.
• To ensure timely compliance, taxpayers in IRP category will not be allowed to report invoices older than 7 days on the date of reporting.
• This restriction will only apply to all the document types for which IRN is to be generated. Thus, once issued, the credit / Debit note will also have to be reported within 7 days of issue.
• For example, if an invoice has a date of April 1, 2023, it cannot be reported after April 8, 2023. The validation system built into the invoice registration portal will disallow the user from reporting the invoice after the 7-day window. Hence, it is essential for taxpayers to ensure that they report the invoice within the 7-day window provided by the new time limit.
• There will be no such reporting restriction on taxpayers with AATO less than 100 crores, as of now.
• In order to provide sufficient time for taxpayers to comply with this requirement, which may require changes in IT software / systems, this will be implemented from 01.05.2023 onwards.

(Source: GSTN updated Advisory dated 13.04.2023)

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