In this Article pertaining to Finance Bill 2022 as presented with the National Budget 2022- 23 in Parliament on 1st Feb. 2022, we have endeavored to provide the comprehensive analysis with critical examination of each of the 14 proposed amendment in GST law through Clause 99 to 113 of the Finance Bill, 2022 as well as 9 proposed amendments in the existing GST Notifications through Clause 114 to 123 along with my brief comments explaining the effect of the proposals for better and quick understanding.
The proposals for amendments in CGST Act or IGST Act or UTGST Act if adopted in the same shape by the Parliament than they can be implemented after the Hon’ble President of India grants his assent i.e. on the date of its enactment, in accordance to the empowering Notifications issued by the Government in coordination with all the State Governments for corresponding amendment in respective SGST Acts. Thus, we need to keep a watch on the effectivity date as per the respective Notification for the amendments made through the prospective Finance Act 2022. Further, the retrospective effectivity for the existing Notifications as proposed through Clause 114 & 115 relating to CGST, Clause 118 &121 relating to IGST and Clause 122 and 123 relating to UTGST of Finance Bill 2022 will come into effect on the date of its enactment.
The main emphasis of proposed amendments in GST law are based on the previous recommendations of the GST Council so as to align the legal provisions in the Act with the aim to improve the system of filing Returns primarily in consonance with presently adopted interim return filing system of GSTR-1 and GSTR-3B which was actually implemented in the initial period but as per the understanding of GST Council the Tax- Payers are now well conversed with and feel comfortable by this interim system. Few improvements has been provided with an objective to make it more trade friendly on one side and on the other side to make it further robust so that only the valid claim of ITC could be availed as automatically offered on the ‘Common Portal’ based on the timely declarations made by the tax-payers; the accurate compliance has been made much more significant and stringent.
Trade-friendly amendments has been proposed in Section 49 for allowing transfer of excess cash available in the Electronic Cash Ledger ensuring better availability of liquid cash for the dealers having multiple registrations in different states as well as another very reasonable amendment with retrospective effect from 1st July, 2017 is proposed in Section 50 (3) for levy of interest at the reduced rate of 18% and that too only on that portion of amount actually utilised from the Electronic Cash Ledger.
Another trade facilitation measure has been taken by proposing amendments in Section 16(4), 34(2), 37(3), 39(9) and 52(6) which prescribes similarity in time period till 30th November of the succeeding year for required compliance by the above referred Sections. The last date of respective compliance have been de-linked from the date of filing of the return. It will help in making the compliance timeline static, single and synchronised across various Sections of the Act as well as it will provide additional time to the taxpayers for issuance of credit notes or for availing ITC or rectification of errors in GSTR-1/ GSTR-3B/ GSTR-8 thus making compliance little easier.
Now, we may one by one take each of the proposed amendment in CGST Act through the Finance Bill 2022.
Amendment by Clause 99 of Finance Bill 2022 in Section 16 of CGST Act, 2017 through Finance Bill, 2022 – Claim of ITC
Through introduction and insertion of new Clause (ba) an additional condition for availment of ITC u/s 16(2) has been introduced which is further against the ‘principal of seamless credit’ as strongly propagated in the beginning by this Government, now ITC can be availed only if the same is not restricted in auto-populated GSTR-2B as communicated to the registered person under newly introduced Section 38. Here, it is important to keep in mind that newly envisaged GSTR-2B shall provide eligible and ineligible Input Tax Credit for each month similar to GSTR-2A, but ITC in GSTR-2B remains constant or unchanged for some specified period of time. Through introduction of this clause a situation may arise that claim of ITC by the taxpayer may be restricted even when the ITC is otherwise legally eligible according to unique or specific facts and documentation but the same may be restricted by the Common Portal in auto- generated GSTR-2B based on the digital logic generally applied in the software as there is no opportunity of application of law by human brain to the specific facts and circumstances of the unique transection.
Combined reading of newly inserted clause (ba) of subsection (2) of Section 16 with clause (aa) of the same subsection (2) of Section 16 which was made applicable w.e.f. 1st January, 2022 gives the total effect of new restrictions on ITC, thus it is an interplay of multiple clauses as well as multiple sections of the CGST Act under which the amount of ITC is closely scrutinised as per conditions and restrictions provided therein. This will certainly be an ambiguous and difficult proposition to be followed by the taxpayers for a valid claim of ITC. This may not only lead to enormous litigation but will make the life of genuine taxpayer very difficult and complicated.
Further, it is good that through amendment in section 16(4) the time-limit to avail ITC u/s 16(4) has now been extended to earlier of the two events of either till the date of filing of the Annual Return as per Section 39 or 30th November of subsequent year instead of the previously prescribed date upto 20th October (prescribed date of filing September return) of the subsequent year.
Amendment by Clause 100 of Finance Bill 2022 in Section 29(2)(b)/(c) – Cancellation of GST Registration of Composition Dealer & Other Dealers due to continuous Non-filing of Returns by defaulting Registered Dealers
Through this amendment in Clause (a) the Composition Tax-Payer’s Registration can be cancelled if they have not filed their GSTR- 4 Return for the Financial Year beyond 3 months from the due date, thus Govt will wait and allow only for three mounts to file the return by Composition Dealer otherwise his Registration may be cancelled. This provision will bring discipline amongst small tax-payer paying GST under Composition Scheme u/s 10 of CGST Act.
By proposed amendment in Clause (b) the powers have been taken by the Government to prescribe the time period of the continuous default by all other normal category of dealers other than composition dealers for cancellation of their GST Registration. This provision may create confusion because of the possible frequent changes in the prescribed period as the leverage is available with the Government instead of the prerogative of the Parliament. The Central Government is taking more and more powers under the law without further required to approach the Parliament, resulting in centralised and concentrated powers to administer the GST law in its own hands by issuing Notifications as and when the Government deem fit.
Amendment by Clause 101 of Finance Bill 2022 in Section 34 – Time Period for Issue of Credit Notes pertaining to a Financial Year now extended till 30th November of subsequent Financial Year
Through this amendment, now the Credit Notes in respect of supply made in a financial year can be issued by 30th November of the subsequent financial year, currently this was allowed till 20th October which is the prescribed limitation for filing of monthly return of September, thus effectively the taxpayers shall have 40 more days for making this compliance.
This provision has extended the time limit to issue ‘credit notes’ and make amendments through ‘credit notes’ pertaining to any outward supply in a previous financial year which can now be made till 30th November of next financial year as well as rectification pertaining to outward liability of the previous year can also be done up to 30th November of the subsequent year, which is a welcome step to keep sometime (30 days) in between before filing of the Annual Return, this will make the compliance little easier. It is to be clarified that ‘commercial credit note’ without effecting the GST can be issued beyond this date also.
Amendment by Clause 102 of Finance Bill 2022 in Section 37 – Furnishing details of Outward Supplies – Extension of Time Period for making Rectifications in Returns for a FY till 30th November of subsequent FY
Through this proposed amendment in sub-section (1) of Section 37 any rectification of error in outward supplies, invoices, debit notes, credit notes and revised invoices to be reported in GSTR-1/ GSTR-3B is now permitted till 30th November of the subsequent financial year, it was currently allowed till 20th October which is the prescribed limitation for filing of monthly return of September, thus effectively the taxpayers shall have 40 more days for making this compliance. The powers of prescribing the procedure and making the rule has been taken by the Government.
The effect of this proposal could both be good and bad, good because the taxpayer have got opportunity to make the declarations till 30th November of the subsequent financial year and bad because unless the error is corrected by the outward supplier, the inward supplier shall not get the corresponding benefit of ITC and the amount of ITC could not be fixed and validated. This may create problems for the inward supplier, he may have to wait and pursue for earliest possible rectification of the error in the declarations made by the outward supplier.
Amendment by Clause 102 of Finance Bill 2022 in Section 37 –Furnishing details of Outward Supplies-Ease of Doing Business as Regular Engagement all through the Month in Filing of GST Returns is Not Required
Through this proposed amendment the Proviso 1 of Sub-Section (1) of Section 37 and Sub-Section (2) of Section 37 has to be omitted, effectuating the removal of the requirement of confirming the ‘inward supply transaction’ in the earlier prescribed GSTR-2A by the ‘inward supplier’ between 15th and 17th day of the succeeding month as appearing in the auto-populated GSTR-2A based on GSTR-1 of the outward supplier. This will do away with the requirement of two-way digital communication as earlier envisaged in the procedure for filing of monthly GST Returns. The responsibility of the outward supplier for declaring the supply transactions correctly within the prescribed time has increased, the amount of ITC available shall become static for the inward supplier. This provision shall certainly be a positive action for ease of doing business for the registered dealer (inward supplier) as there is no requirement of regular engagement in the system of filing, confirming and then lastly depositing the due tax every month in accordance to the prescribed GST returns.
Amendment by Clause 102 of Finance Bill 2022 in Section 37 – the Scope of Rectification of any Error or Omission is Enhanced as well as Extension of Time Period for making Rectifications in Returns for a FY till 30th November of next FY
Through this amendment the scope of rectification of any error or omission has been enhanced which was earlier confined to the errors or omissions of ‘unmatched transactions’ under Section 42 or 43, this amendment is also necessary as the provisions of Section 42 and 43 have been omitted.
The time-period for rectification of error or omission has been extended by 40 days from 20th October (prescribed date of filing September return) to 30th November of the subsequent year, thus making the compliance little easier.
Amendment by Clause 102 of Finance Bill 2022 in Section 37 – Furnishing details of Outward Supplies – Timely Compliance for all Previous Tax Periods is Essentially Required for a Fully Compliant Dealer
Through this proposed amendment no outward supply could be filed in GSTR-1/ GSTR-3B for the current tax period until the outward supply or due amount of tax for all the previous tax periods has been duly reported in GSTR–1/GSTR-3B. The relaxation in such strict conditions can be granted by the Government under special conditions and restrictions for specified class of registered dealers.
The proposed amendments in Section 37 as discussed in 4 previous sub-topics has also been made with aim to alien the existing legal provisions {Section 39 (10) and Rule 59 (6) as applicable for GSTR-3B} relating to system of filing the returns as well as to provide for a tax period-wise sequential filing of GSTR-1/ GSTR-3B to make the smooth system of GST return filing in accordance to the prescribed time limit which is very essential element of successful implementation of GST.
This will also remove the earlier requirement of continuous/repeated communication between the inward and outward supplier after filing the data in GSTR-1 for verification of outward supply as reported by outward supplier and the inward supply as received/recorded by inward supplier. The GST Council after many rounds of discussion is trying to make the system of GST return filing little easier for the taxpayer but actual benefit could be assessed once this new system on GSTN platform is digitally implemented.
Substitution of fresh Section 38 by Clause 103 of Finance Bill 2022 – Claim of ITC to be made as per auto- generated GSTR-2B, old provisions completely deleted in place of which new provision substituted – ITC could be availed by the recipient on the basis of communication based on furnishing of details by outward supplier
Under the new system of GST return filing and reporting of the supply transactions, Sub section (1) seeks to provide for prescribing outward supplies furnished by a registered person in GSTR-1 and also such other supplies as may be prescribed in such form and manner, within prescribed time, subject to conditions and restrictions for communication of details of inward supplies and input tax credit available to the recipient by means of an auto-generated statement GSTR-2B and to do away with earlier required two-way communication process in return filing. This is a step for ease of doing business with an aim to provide comfort and safety on one hand to the inward supplier but on the other hand to make the system more robust for allowing/availability of ITC in accordance to the conditions and restrictions and that too after close monitoring in accordance to the procedure which may be prescribed by making Rules which shall also provide better clarity on this very important issue of availment of ITC.
Substitution of fresh Section 38 by Clause 103 of Finance Bill 2022 – Claim of ITC to be made as per GSTR-2B – Six additional restrictions for availing ITC has been prescribed making life of inward supplier much more difficult
This provision is very damaging and against the basic spirit of GST law viz seamless availability of input tax credit in the chain of transactions till the goods or services are finally consumed in the economy. These additional 6 restrictions shall certainly result in the ‘cascading effect’ of tax on tax in the chain of transactions. The restrictions for availing the benefit of ITC in brief are:-
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Within specified initial period of taking registration by a new registered dealer and invoices which were issued earlier (within 30 days) to the grant of new registration;
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A registered dealer has short paid or defaulted in payment of tax for a specified period or the supplier failed to file the GSTR-1 return;
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The output tax payable by the registered dealer as per GSTR-1 exceeds the output tax paid as per GSTR-3B by a specified percentage;
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The registered dealer, during specified period availed credit of an amount that exceeds the credit that can be availed till the specified percentage i.e. if the supplier has defaulted in compulsorily cash payment of tax under Rule 86A/86B;
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The registered dealer who has defaulted in discharging tax liability in accordance with Section 49(12);
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On account of the details being furnished under Section 37(1) by such other class of persons as may be prescribed.
Fresh insertion of these six clauses of Sub- section (2) provides for the details of inward supplies and nature of transactions in respect of which input tax credit may be availed and the details of supplies on which input tax credit cannot be availed by the recipient, as communicated in auto generated statement.
In times to come the inward supplier i.e. the buyer of the goods or recipient of service needs to be much more vigilant in choosing the outward supplier, even though self- policing mechanism has been tried to be put in place which will make the business difficult for a non-compliant vendor but maintaining distance and not performing any transaction with a non-compliant supplier shall be the basic responsibility of the inward supplier. Self-Regulation shall be the key for ease of doing business in the era of GST.
By these proposed amendments, it seems that the Government thinks that the administrative machinery of GST officers is failing in its duty for ensuring proper compliance by a registered dealer for the outward supply, that is why the burden is being tried to be shifted by these provisions on to another dealer who is just doing business without any legal power under GST law to exercise over the outward supplier who has made default in spite of the fact that the inward supplier is absolutely genuine and innocent. The Government or its officers cannot the absolved from their legal duty as entrusted on them under the GST law, a businessman (inward supplier) cannot himself enforce the law on an independent dealer (outward supplier).
Why the primary burden which is legally casted upon the ‘outward supplier ’ in the scheme of GST law is being shifted onto the ‘inward supplier ’ during the chain of transactions? Why should a genuine and innocent ‘inward supplier’ be responsible for the default of the ‘outward supplier’ who is a registered dealer under the control of the jurisdictional/proper officer having authority to monitor and collect tax under the GST law?
This shall certainly become the most controversial and litigated provision of GST law as these amendments are nothing but extension to controversial provision of existing Section 16 (c) which provides that the inward supplier can only get the benefit of ITC when the outward supplier had already deposited the tax. The GST Council rather than shifting the burden onto the ‘inward supplier’ shall use their authority of law through its officers all across the country so that the ‘outward supplier’ who is primary liable for payment of GST should comply the law in its true spirit, this will make a conducive atmosphere of business which will flourish the economy. The present provisions of the GST law seems to be in-sufficient to check the fake registrations and consequent fraudulent chain of transactions to befool the genuine and innocent registered dealers; the consequent loss of revenue and the faith in the attribute of self-policing in GST is fast diminishing. The Government and its administrative machinery must take concrete measures to catch hold-of the real beneficiary to the evasive tactics of the fraudulent business instead of unreasonably and unjustifiably harassing the genuine registered dealers. The officers must truthfully apply their mind to distinguish between genuine and fraudulent dealers rather than just the collection of revenue loss, unless the administrators identify the real beneficiary as already provided in the GST law this tendency of fraudulent transaction and failed billing will not stop.
Amendment by Clause 104 of Finance Bill 2022 in Section 39 – Furnishing of Return
The proposed amendment in subsection (5) ensures that the non-resident taxable person should file its return within 13 days of the close of the previous month instead of 20 days as earlier provided to synchronise the date with GSTR-2B.
The purpose of substitution of first proviso to subsection (7) has been mentioned in the memorandum of the Finance Bill: “It further seeks to substitute the first proviso to sub- section (7) so as to provide an option to the persons furnishing return under proviso to sub-section (1) to pay either the self-assessed tax or an amount that may be prescribed.”
However, the language of this proviso does not provide any ‘option’ to the registered person but is making it mandatory through the use of word ‘shall‘ for the requirement to deposit the ‘amount determined‘, clause (b) of this proviso does not speak about the payment of ‘due amount of tax‘ in lieu of the amount referred to in clause (a). There is in clear difference in the ‘amount determined‘ and ‘amount due’ as distinctively used in this substituted proviso.
Amendment by Clause 104 of Finance Bill 2022 in Section 39 – Furnishing of Return
The amendment in subsection (9) ensures that this provision should be independent of section 37 and section 38 which makes this provision for ‘suo-moto correction/ rectification’ in the return practically possible, usable and friendly to the dealers who had by mistake filed their return with some incorrect particulars or some omission has happened.
The amendment in the proviso is to coincide with the same time period as provided in other similar provisions for rectification of errors or omissions in the Returns by 30th November of the succeeding year
Amendment by Clause 104 of Finance Bill 2022 in Section 39 – Furnishing of the return
As per the earlier provisions of subsection (10) no Return could be furnished for the current tax period until the Return for all the previous tax periods have been furnished.
Through this amendment /insertion no outward supply could be filed in GSTR-1/ GSTR-3B for the current tax period until the outward supply has been reported in GSTR–1 for all the previous tax periods.
The relaxation in such strict conditions can be granted by the Government under special conditions and restrictions for specified class of registered dealers. This provision has made it discretionary for the government machinery to favourably allow any dealer or class of dealers with the relaxation, which is against the principal of transparency & equity in the provisions of GST law. This may create confusion and unnecessary representation before the Government.
Amendment by Clause 105 of Finance Bill 2022 in Section 41 – Old provisions of provisional acceptance of ITC completely substituted
Through this amendment Section 41 of the CGST Act is being substituted so as to do away with the concept of “claim” of ITC on a “provisional” basis and to provide for availment of self-assessed input tax credit.
Here again due to this conceptual change the inward supplier has been made responsible for the default of the outward supplier even inspite of the fact that the inward supplier is absolutely genuine and innocent. The reversal of availed ITC has been required in the circumstances when the outward supplier has defaulted in making the timely payment of tax which is not in the control of the inward supplier. Why the burden of interest for delayed deposit be on the inward supplier for availment of such ITC which have been duly reflected in the Tax Invoice issued by a registered dealer-outward supplier? Why not the Government machinery be robust enough that the outward supplier must comply the law and the burden casted upon him for payment of the due amount of GST we fulfilled by outward supplier?
Omission of Section 42, 43 and 43A by Clause 106 of Finance Bill 2022 – Provisions pertaining to Matching, Reversal and Reclaiming of ITC
Through this amendment Legislature intends to omit Section 42 of the Central Goods and Services Tax Act relating to matching, reversal and reclaiming of input tax credit so as to do away with the concept of “claim” of eligible input tax credit on a “provisional” basis and subsequent matching, reversals and reclaim of such credit.
It further seeks to omit Section 43 relating to matching, reversal and reclaim of reduction in output tax liability so as to do away with two-way communication process in return filing as discussed in detail in the above paragraphs.
It also seeks to omit section 43A which earlier provided Procedure for furnishing Returns and availing ITC.
These amendments in the shape of omission of these three sections of the GST law is to remove the unnecessary provisions for the reason of insertion of new provisions (Section 38) as well as here and there prescribing new system of filing and verification of GST returns.
Amendment by Clause 107 of Finance Bill 2022 in Section 47 pertaining to levy of late fee
Through this amendment legislature intends to provide for levy of late fee for delayed filing of GSTR-8 for TCS return also under section 52 and to remove reference of section 38 as now there is no requirement under the new provisions introduced in the Finance Bill 2022 of furnishing details of inward supplies by the registered person under the said section 38. This is to keep harmony among the different provisions which have been newly introduced.
Amendment by Clause 108 of Finance Bill 2022 in Section 48 pertaining to GST Practitioners
With an aim to actually understand the effect of this simple amendment in subsection (2) of section 48, we need to understand the real purpose of existing Section 48 which provides that a registered dealer can authorise the ‘GST Practitioner’ only for the specified functions as prescribed in the specified sections of the GST law. Now as per clause 108 of Finance Bill 2022 after omission of the words ‘the details of inward supplies under section 38′, the GST practitioner cannot be authorised by the registered person for the purpose of newly introduced provisions of section 38 which certainly curtails the scope of work and consequent responsibility for a ‘GST Practitioner ’. In my opinion, it actually means that the GST practitioner of a registered dealer shall now not be entitled to receive the communication on behalf of the registered person comprising of the details of inward supplies and the availability of input tax credit for any tax period. The effect of this amendment is far-reaching as the responsibility of verification & regulation of the communication of inward supply and available ITC shall now solely rests with the registered person itself.
Amendment by Clause 109 of Finance Bill 2022 in Section 49 pertaining to payment of tax, interest, penalty and other amounts
Proposed amendment in sub-section (4) of section 49 of the CGST Act provide for prescribing restrictions for utilizing the amount available in the electronic credit ledger.
These amendments are introduced as now there is no requirement of the reference of omitted provisions after insertion of new subsections and provisions introduced in the Finance Bill 2022. This is to keep harmony among the different provisions which have been newly introduced.
Amendment by Clause 109 of Finance Bill 2022 in Section 49 pertaining to payment of tax, interest, penalty and other amounts
Being the highlight of this Finance Bill 2022, it is an important and trade friendly proposal which seeks to amend sub-section (10) so as to allow transfer of amount available in electronic cash ledger under the CGST or IGST of a registered person to the electronic cash ledger under CGST or IGST of a distinct person under same PAN which is registered under GST in another state. This will be treated as claim of refund through RFD-01 after following the procedure prescribed under Section 54.
This proposal has met a long-standing demand of trade and industry, now a registered person having excess amount available in the electronic cash ledger can transfer such excess amount to the electronic cash ledger of a ‘distinct person as defined in the provisions of GST law’ who is registered person in another State. It will entitle the registered person to use excess amount without it being lying unutilised in his electronic cash ledger, this will result a better control on cash flow and increase the liquidity of the registered dealer under the same PAN.
It also seeks to insert Sub-Section (12) so as to provide for prescribing the maximum proportion of output tax liability which may be discharged through the ‘electronic credit ledger ’. This proposal has been placed to validate Rule 86 B which was a big legal question under challenge before the Hon’ble High Courts, the Government had removed this deficiency from the GST law.
It has been clarified by the senior officers of CBIC that the genuine taxpayers who are un-intentionally facing the adverse effect of Rule 86B may utilise the option to make an application before the Commissioner vested with the powers to waive such condition of deposit through Electronic Cash Ledger in spite of the available ITC in Electronic Credit Ledger. The effect of Notification No. 94/2020 CT dated 22nd December, 2021 which had made this provision mandatory w.e.f. 1/1/2022 needs to be analysed in the light of the amended provisions.
This provision shall certainly create confusions and will be a great hindrance in seamless availability of input tax credit through the chain of transactions which is not only the commitment of the Government but also one of the main elements of introduction of GST as assured by the Government in the Parliament.
It is important to note that nothing has been mentioned in the memorandum for introduction of this provision in the GST law which certainly creates doubt about the real purpose and aim of the Revenue Department. If the GST Council empowers the Government to only allow any specified proportion of output tax liability to be adjusted from the input tax credit available with the registered person, then the Government may use such power for its advantage at its WILL consequently detrimental to the trade and industry which will certainly adversely affect the economy of the country.
Amendment by Clause 110 of Finance Bill 2022 in Section 50 pertaining to Interest on delayed payment of tax
Another highlight of this Finance Bill 2022 is being achieved through this amendment whereby a new sub-section is to be substituted for erstwhile sub-section (3) of section 50 of the CGST Act with a retrospective effect from 1st July, 2017, so as to provide for levy of interest only on that portion of input tax credit which was wrongly availed and utilised. Earlier, it was not necessary for imposition of interest on that portion of ITC which has not been actually utilised for payment of outward tax liability by a taxpayer, only wrong or invalid ‘claim or availment of ITC’ in Electronic Credit Ledger was enough for attracting the liability of interest even in spite of the fact that the amount has not been utilised. Now, the twin conditions of availment and utilisation of ITC is necessary for imposition of interest.
If any taxpayer has already deposited the interest under protest due to pressure of demand of interest made under the erst-while provision of Section 50(3), then such taxpayer may now claim refund of the differential amount of interest paid under protest by him through filing of refund application, as this provision has been placed on statute since beginning of GST.
Amendment by Clause 111 of Finance Bill 2022 in Section 52 pertaining to Collection of Tax at Source (TCS)
Through this proposal it is sought to amend proviso to sub-section (6) of section 52 of the Central Goods and Services Tax Act providing the provisions relating to TCS, so as to provide for 30th day of November following the end of the financial year, or the date of furnishing of the relevant annual statement of TCS, whichever is earlier, as the last date upto which the rectification of errors shall be allowed in the TCS statement furnished under sub-section (4).
Amendment in Section 16(4), 34(2), 37(3), 39(9) and 52(6) Provided Same Time Period for Compliance to maintain Similarity
It will help in making the compliance timeline synchronised across various sections of the Act as well as it will provide additional time to the taxpayers for rectification of errors in GSTR-1/ GSTR-3B/ GSTR-8 or for availing ITC etc making compliance little easier.
Amendment by Clause 112 of Finance Bill 2022 in Section 54 – Refund of Tax
As per the amended proviso to subsection (1) now any taxpayer i.e. ISD or TDS or TCS or Non-Resident Taxable Person, Composition Dealer or Casual Taxable Dealer can also file refund application for excess deposit of cash in cash ledger maintained on Common Portal in the prescribed form. The transfer of excess amount to another registered dealer as provided recently in Section 49(10) shall also be governed under this provision.
As per the amended subsection (2) now UN or Embassy having UIN registrations can also file refund application for ITC before expiry of 2 years from the last date of the quarter in which inward supply was received, earlier they could file refund application within 6 months only.
As per the amended subsection (10) now the scope of the said sub-section has been extended to all types of refund claims consequent to which the GST officer can exercise its powers to withhold the refund unless all the requirements are fulfilled by the claimant of the refund.
As per the new insert sub-clause (ba) in Explanation the relevant date has been provided as a clarification for filing refund claim in respect of supplies made to a Special Economic Zone developer or a Special Economic Zone unit.
Amendment by Clause 113 of Finance Bill 2022 in Section 168 pertaining to issuance of instructions or directions Through this amendment Legislature seeks to omit Sub-Section (2) of Section 168 of the Central Goods and Services Tax Act so as to remove reference to Section 38 therefrom.
Since Subsection (2) of Section 38 provides for the auto-generated statement of Input Tax Credit available to the recipient of goods or services on the basis of the declarations made by outward suppliers, so there was no need of maintaining the reference of subsection (2) of section 38 in the present provisions of section 168 which relates to the powers of Central Board of Indirect Taxes and Customs for issuing an Order, Instructions or Directions.
Amendment by Clause 114 of Finance Bill 2022 of Notification issued under Section 146 – Common Portal
Through this amendment Legislature sought to amend notification number G.S.R. 58(E), dated the 23rd January,2018 to notify www.gst. gov.in, retrospectively, with effect from 22nd June, 2017 i.e. from the very beginning, as the ‘Common Goods and Services Tax Electronic Portal’, for all functions provided under Central Goods and Services Tax Rules, 2017, save as otherwise provided in the Notification issued vide number G.S.R. 925 (E), dated the 13th December, 2019
Amendment of Notification issued under Sub- Sections (1) and of Section 50, Sub-Section (12) of Section 54 and Section 56 as applicable in CGST, IGST & UTGST Acts by Clause 115 for CGST, 118 for IGST & 121 for UTGST of Finance Bill 2022
Through this amendment Legislature sought to amend Notification number G.S.R. 661(E), dated the 28th June, 2017 for CGST and Notification No. G.S.R. 698(E), dated the 28th June, 2017 for IGST as well as under UTGST Act, so as to notify rate of interest under sub- section (3) of section 50 of the Central Goods and Services Tax Act as 18%, retrospectively, with effect from the 1st day of July, 2017.
If any taxpayer has deposited any amount of excess interest under protest due to pressure of demand made under the erst- while provision of Section 50(3), then such taxpayer may now claim refund of at-least the differential amount of interest of 6% through filing of refund application, as the notified applicable rate of interest is 18% from 1st July 2017 i.e. since beginning of GST instead of 24% as the highest limit mentioned in the erstwhile provision of Section 50 subsection (3).
Retrospective exemption from, or levy or collection of Central Tax in certain cases – Unintended waste generated during the production of fish meal by Clause 116 for CGST, 119 for IGST & 122 for UTGST of Finance Bill 2022
Through this amendment Legislature seeks to provide retrospective exemption from central tax in respect of supply of unintended waste generated during the production of fish meal (falling under heading 2301), except for fish oil, during the period from the 1st day of July 2017 upto the 30th day of September 2019 (both days inclusive).
It further seeks to provide that no refund shall be made of the said tax which has already been collected.
Retrospective effect to Notification issued under sub-section (2) of section 7 by Clause 117 for CGST Act, Clause 120 for IGST Act Clause 123 for UTGST Act of Finance Bill 2022
This proposal seeks to give retrospective effect to the Notification number G.S.R. 746(E), dated the 30th September, 2019 for CGST Act & Notification number G.S.R. 745(E), dated the 30th September,2019 for IGST Act with effect from the 1st day of July, 2017.
The effect of this Notification is that the ‘Service by way of grant of alcoholic liquor license against the consideration or license fee or application fee (by way of whatever name it is called by the State Governments) has been declared as an activity which is neither supply of goods nor of services’ vide earlier Notification No. 25/2019-CT (R) dated 30th September, 2019. This Notification shall now be applicable from the retrospective effect w.e.f. 1st July, 2017. It means that the specified service for grant of alcoholic liquor license by the state government shall not be liable to tax under GST since very beginning. The analogy for granting the exemption is reasonable and in line with the provisions of the GST law, liquor as such is not covered under GST as yet, so the license fee taken by the State Government for allowing the license to manufacture or sale of liquor being a directly related activity should also be exempt from GST.
It further seeks to provide that no refund shall be made of the Central Tax or Integrated Tax or Union Territory Tax which has already been collected.
Conclusion
The proposals for amendment as presented before the Parliament in the Finance Bill 2022 are of far-reaching effects as the system of filing of GST returns is going to be changed so as to make it not only easier but at the same time to check the evasion of tax by unscrupulous dealers who are not properly and completely declaring the supply transactions. Some of the proposals needs through discussion in the Parliament as they effect the very philosophy at the root of GST, the hindrance and restrictions with more and more conditions imposed in the way of availment of Input Tax Credit shall adversely affect the dream of ‘seamless credit all through the chain of supply transactions’ in the newly introduced regime of GST. Further, the measures which shall be necessary for application of this proposed law will certainly have ‘cascading effect of tax on tax’ in the economy which needs to be fully eradicated by implementation of a near ideal GST. It is surprising to note that Hon’ble Finance Minister has not uttered a single word in the Parliament during her Budget Speech on 1st February, 2022 about these far-reaching proposals for amendment in the GST law through the Finance Bill 2022, we the stakeholders expect a purposeful discussion on the proposals before they be adopted for amendments. Hopefully the Parliament may not approve all the proposals in the same shape and form, just on the basis of the recommendations of GST Council, the taxpayers have full faith in the Parliament that the proposals shall only be adopted after proper application of mind and detailed discussion on every aspect of each such proposal as deliberated in this article.