Recent Developments Under GST
1. Interest on Net tax liability
It started with the GST council in its 31st meeting recommending the amendment in GST law to specify that interest is liable only on the ‘Net liability’ paid in cash. Truly speaking, this is wholly unwarranted and would have avoided the battle of the taxpayers in this subject matter.
Then the matter has gone to the Hon’ble Telangana High Court in case of Megha Engineering and Infrastructure Limited v. C.C.T, 2019-TIOL-893-HC-TELANGANA-GST wherein it was held that the interest has to be paid on Gross Tax Liability. However, the review petition is admitted by the HC and pending as on date.
Honouring the GST council recommendation, the Central Government vide Finance Act, 2019 has amended GST law to specify that the interest will be paid only on the net tax liability which read as under-
‘Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be levied on that portion of the tax that is paid by debiting the electronic cash ledger’.
Taking analogy that the amendment would be prospective, the Revenue department started issuing notices & initiated recovery proceeding by attaching bank accounts and deducted the amounts directly from the bank account of the registered persons & further the CBIC further with his twitter handle on 15.02.2020 clarified that the amendment will be made on prospective basis & till the amendment is made effective the interest has to be paid on Gross tax Liability. In this process certain taxpayers have filed writ petitions contesting the demands and got a stay while some taxpayers paid/recovered by the department. Meanwhile, the Hon’ble HC of Madras in case of Refex Industries v. AC of CGST 2020-TIOL-382-HC-MAD-GST held that interest is only on the net liability.
Considering the Hue & cry across the Country, the GST Council in its 39th Meeting has recommended for retrospective amendment.
Recently, the Government vide Notification No. 63/2020-C.T dated 25.08.2020 has notified the FA, 2019 amendment w.e.f. 01.09.2020. The issuance of this notification has left the question of the liability for the period prior to 01.09.2020.
There was an expectation that Government may come with another amendment in CGST Act, 2017 as notification is incapable of making retrospective effect in line with GST council recommendation. Instead, the CBIC has chosen the issuance of press release to assure that recoveries will not be made for the past period. While it is unknow as to why CBIC has chosen the press release route instead of law amendment or at least a circular, There were apprehensions on the binding nature of press release but the section 168 of CGST Act, 2017 can save from such worries to great extent.
2. E invoicing
E-Invoice is a standard format of the invoice recommended by the GSTN for the GST registered suppliers. There is a myth or misconception that e-invoicing means the generation of invoices from a central portal of the tax department (GSTN PORTAL). Existing software would adopt the new e-invoice standard wherein they would re-align their data access and retrieval in the standard format.
As per Rule 48(4) of CGST Rules 2017, the invoice shall be prepared by such class of registered persons as may be notified by the Government, by including such particulars contained in FORM GST INV-01 after obtaining an Invoice Reference Number by uploading information contained therein on the Common GST Portal. Further, Rule 48 (5) prescribes – Every invoice issued by a person to whom sub-rule (4) applies in any manner other than the manner specified in the said sub-rule shall not be treated as an invoice.
By Notification No. 71/2020 – dated 30 September Central Tax The government has also deferred the requirement of Dynamic QR code on B2C invoices till 31 December 2020 which is also a relief for the Taxpayers.
In the recent press release issued by CBIC on 30th September 2020, the penalties as leviable u/s 122 of the CGST Act, 2017 have been waived on e-invoices issued during October, if companies issuing them get reference numbers within 30 days. It has been decided that the invoices issued by such taxpayers during October 2020 without following the manner prescribed under rule 48(4), shall be deemed to be valid and the penalty leviable under section 122 of the CGST Act, 2017, for such non-adherence to provisions, shall stand waived if the Invoice Reference Number (IRN) for such invoices is obtained from the Invoice Reference Portal (IRP) within 30 days of the date of invoice.
3. Highlights of 42nd GST Council Meeting
A. Levy of Compensation Cess to be extended beyond 5 years
Levy of Compensation Cess to be extended beyond the transition period of five years i.e. beyond June, 2022, for such period as may be required to meet the revenue gap.
B. Relief For Small tax payers
As a further step towards reducing the compliance burden particularly on the small taxpayers having aggregate annual turnover less than ` 5 cr., the Council’s has recommended of allowing filing of returns on a quarterly basis with monthly payments by such taxpayers to be implemented w.e.f. 01.01.2021.
Such quarterly taxpayers would, for the first two months of the quarter, have an option to pay 35% of the net cash tax liability of the last quarter using an auto generated challan.
C. Revising the requirement to mention HSN/SAC on Tax Invoices
The council has recommended following changes w.e.f 1 April 2021 as under :-
|TURNOVER||HSN DIGITS||TURNOVER||HSN DIGITS|
|UPTO 1.5 CRORE||Not Required||Upto 5 Cr||4 digits|
|More than 1.5 Cr upto 5 Cr||2 Digits||More than 5 cr||8 digits|
|More than 5 Cr||4 Digits||Govt notified supplies||8 Digits|
D. Enhancement in features of return filing
With a view to further enhance Ease of Doing Business and improve the compliance experience, the Council has approved the future roadmap for return filing under GST. The approved framework aims to simplify return filing and further reduce the taxpayer’s compliance burden in this regard significantly, such that the timely furnishing of details of outward supplies (GSTR-1) by a taxpayer and his suppliers would-
• Due date of furnishing quarterly GSTR-1 by quarterly taxpayers to be revised to 13 of the month succeeding the quarter w.e.f. 01st January, 2021.
• Auto-population of liability from own GSTR-1 w.e.f. 1st January, 2021.
o Auto-population of input tax credit from suppliers GSTR-1s through the newly developed facility in FORM GSTR-2B for monthly filers w.e.f. 01st January, 2021 and for quarterly filers w.e.f. 01st April, 2021.
• In order to ensure auto population of ITC and liability in GSTR 3B as detailed above, FORM GSTR 1 would be mandatorily required to be filed before FORM GSTR3B w.e.f. 1st April, 2021.
• The present GSTR-1/3B return filing system to be extended till 31.03.2021 and the GST laws to be amended to make the GSTR-1/3B return filing system as the default return filing system.
• Enabling the taxpayer to view the ITC available in his electronic credit ledger from all sources i.e. domestic supplies, imports and payments on reverse charge etc. prior to the due date for payment of tax.
E. GST Council exempts satellite launch services by ISRO, Antrix
To encourage domestic launching of satellites particularly by young start-ups, the satellite launch services supplied by ISRO, Antrix Corporation Ltd. and NSIL would be exempted.
F. Refund to be paid/disbursed
Refund to be paid/disbursed in a validated bank account linked with the PAN & Aadhaar of the registrant w.e.f. 01.01.2021.
M. L. Patodi,
Member, Editorial Board