GST WEEKLY UPDATE : 19/2023-24 (06.08.2023) By CA Vipul Khandhar

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-By CA Vipul Khandhar

CBIC notify various rule vide not no. 38/2023-Dt. 04.08.2023:

Sharing information of registered person available on the common portal:

Inserted Rule 163 to the CGST Rules which read as follows:

“163. Consent based sharing of information. – (1) Where a registered person opts to share the information furnished in—

(a) FORM GST REG-01 as amended from time to time;

(b) return in FORM GSTR-3B for certain tax periods;

(c) FORM GSTR-1 for certain tax periods, pertaining to invoices, debit notes and credit notes issued by him, as amended from time to time,

with a system referred to in sub-section (1) of section 158A (hereinafter referred to as “requesting system”), the requesting system shall obtain the consent of the said registered person for sharing of such information and shall communicate the consent along with the details of the tax periods, where applicable, to the common portal.

(2) The registered person shall give his consent for sharing of information under clause (c) of sub-rule (1) only after he has obtained the consent of all the recipients, to whom he has issued the invoice, credit notes and debit notes during the said tax periods, for sharing such information with the requesting system and where he provides his consent, the consent of such recipients shall be deemed to have been obtained.

(3) The common portal shall communicate the information referred to in sub-rule (1) with the requesting system on receipt from the said system-

(a) the consent of the said registered person, and

(b) the details of the tax periods or the recipients, as the case may be, in respect of which the information is required.”.

Rule 88-D :The system will now compare the ITC available in GSTR-2B with ITC availed in GSTR-3B and if the ITC availed in GSTR-3B exceeds ITC available in GSTR-2B by the prescribed amount and percentage, such difference will be electronically intimated to the taxpayer in Part A of FORM GST DRC-01C, along with the copy on email, which the taxpayer is required to respond in Part B of FORM GST DRC-01C within 7 days on the common portal or is required to pay the amount equal to the excess input tax credit availed in GSTR-3B along with the with interest section 50, through FORM GST DRC-03.

“88D. Manner of dealing with difference in input tax credit available in auto-generated statement containing the details of input tax credit and that availed in return.-

(1) Where the amount of input tax credit availed by a registered person in the return for a tax period or periods furnished by him in FORM GSTR-3B exceeds the input tax credit available to such person in accordance with the auto-generated statement containing the details of input tax credit in FORM GSTR-2B in respect of the said tax period or periods, as the case may be, by such amount and such percentage, as may be recommended by the Council, the said registered person shall be intimated of such difference in Part A of FORM GST DRC- 01C, electronically on the common portal, and a copy of such intimation shall also be sent to his e-mail address provided at the time of registration or as amended from time to time, highlighting the said difference and directing him to—

(a) pay an amount equal to the excess input tax credit availed in the said FORM GSTR-3B, along with interest payable under section 50, through FORM GST DRC-03, or

(b) explain the reasons for the aforesaid difference in input tax credit on the common portal, within a period of seven days.

(2) The registered person referred to sub-rule (1) shall, upon receipt of the intimation referred to in the said sub-rule, either,

(a) pay an amount equal to the excess input tax credit, as specified in Part A of FORM GST DRC- 01C, fully or partially, along with interest payable under section 50, through FORM GST DRC-03 and furnish the details thereof in Part B of FORM GST DRC-01C, electronically on the common portal, or

(b) furnish a reply, electronically on the common portal, incorporating reasons in respect of the amount of excess input tax credit that has still remained to be paid, if any, in Part B of FORM GST DRC-01C, within the period specified in the said sub-rule.

(3) Where any amount specified in the intimation referred to in sub-rule (1) remains to be paid within the period specified in the said sub-rule and where no explanation or reason is furnished by the registered person in default or where the explanation or reason furnished by such person is not found to be acceptable by the proper officer, the said amount shall be liable to be demanded in accordance with the provisions of section 73 or section 74, as the case may be.”

Interest on delay sanctioning refund following days excluded for calculation: Amendments in Rule 94:

In the said rules, rule 94 shall, with effect from the 1st day of October, 2023, be renumbered as sub-rule (1) and after the sub-rule as so renumbered, the following sub-rule shall be inserted, namely:-

“(2) The following periods shall not be included in the period of delay under sub-rule (1), namely:-

(a) any period of time beyond fifteen days of receipt of notice in FORM GST RFD-08 under sub-rule (3) of rule 92, that the applicant takes to-

(i) furnish a reply in FORM GST RFD-09, or

(ii) submit additional documents or reply;

and

(b) any period of time taken either by the applicant for furnishing the correct details of the bank account to which the refund is to be credited or for validating the details of the bank account so furnished, where the amount of refund sanctioned could not be credited to the bank account furnished by the applicant.”

Rules for compounding of amount for the offence committed under Section 132 of the CGST Act & amendments in Rule 162 of the CGST Rules:

Omitted the words “has co-operated in the proceedings before him” from Rule 162(3) of the CGST Rules

Post amendment the Rule 162 of the CGST Rules read as follows:

(3) The Commissioner, after taking into account the contents of the said application, may, by order in FORM GST CPD-02, on being satisfied that the applicant has co-operated in the proceedings before him and has made full and true disclosure of facts relating to the case, allow the application indicating the compounding amount and grant him immunity from prosecution or reject such application within ninety days of the receipt of the application.

Inserted Rule 162(3A) of the CGST Rules

“The Commissioner shall determine the compounding amount under sub-rule (3) as per the Table below: –

TABLE

S. No.	Offence	Compounding amount if offence is punishable under clause (i) of sub-section (1) of section 132	Compounding amount if offence is punishable under clause (ii) of sub-section (1) of section 132
(1)	(2)	(3)	(4)
1	Offence specified in clause (a) of sub-section (1) of section 132 of the Act	Up to seventy-five per cent of the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken, subject to minimum of fifty per cent of such amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken.	Up to sixty per cent of the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken, subject to minimum of forty per cent of such amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken.
2	Offence specified in clause (c) of sub-section (1) of section 132 of the Act
3	Offence specified in clause (d) of sub-section (1) of section 132 of the Act
4	Offence specified in clause (e) of sub-section (1) of section 132 of the Act
5	Offence specified in clause (f) of sub-section (1) of section 132 of the Act	Amount equivalent to twenty-five per cent of tax evaded.	Amount equivalent to twenty-five per cent of tax evaded.
6	Offence specified in clause (h) of sub-section (1) of section 132 of the Act
7	Offence specified in clause (i) of sub-section (1) of section 132 of the Act
8	Attempt to commit the offences or abets the commission of offences mentioned in clause (a), (c) to (f) and clauses (h) and (i) of subsection (1) of section 132 of the Act	Amount equivalent to twenty-five per cent of such amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken.	Amount equivalent to twenty-five per cent of such amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken.

Provided that where the offence committed by the person falls under more than one category specified in the Table above, the compounding amount, in such case, shall be the amount determined for the offence for which higher compounding amount has been prescribed.”

The changes will be made effective from October 01, 2023.

Time limit for the Revocation of GST Registration Cancellation has been applied up to 90 days of order:

· In the said rules, in rule 23, in sub-rule (1), with effect from the 1st day of October, 2023,–

(a) for the part beginning with the words “within a period of thirty days” and ending with the words and figures “section 30”, the words “within a period of ninety days from the date of the service of the order of cancellation of registration” shall be substituted;

(b) in the first proviso, for the words “Provided that”, the following shall be substituted, namely: –

“Provided that such period may, on sufficient cause being shown, and for reasons to be recorded in writing, be extended by the Commissioner or an officer authorized by him in this behalf, not below the rank of Additional Commissioner or Joint Commissioner, as the case may be, for a further period not exceeding one hundred and eighty days:

Provided further that”;

AAR & Important Judgements:

(i) Hon’ble Calcutta Highcourt Decision Regarding ITC cannot be denied to recipient without due investigation of supplier:

(Applicant – Suncraft Energy Private Limited And Another Vs Assistant Commissioner, State Tax)

The Calcutta High Court recently delivered a significant ruling in the case of Suncraft Energy Private Limited and Another vs. Assistant Commissioner, State Tax. The court addressed the issue of denial of Input Tax Credit (ITC) to the recipient without conducting a proper investigation of the supplier. The ruling emphasizes the need for a thorough examination of the supplier’s actions before reversing ITC claims.

Background: The dispute centered around the denial of ITC availed by Suncraft Energy Private Limited under the provisions of the West Bengal Goods and Services Tax Act, 2017 (WBGST Act). The Assistant Commissioner of State Tax issued a demand notice to Suncraft Energy based on discrepancies between their GSTR 2A and GSTR 3B ITC. However, the court found that no investigation was carried out against the supplier, leading to an arbitrary decision.

Court’s Verdict: The Calcutta High Court ruled that the demand notice issued to Suncraft Energy for reversing the input tax credit availed could not be sustained without proper inquiry into the supplier’s actions. The court referred to the judgments of the Hon’ble Supreme Court in Bharti Airtel and Arise India Ltd., emphasizing that Form GSTR-2A should only serve as a facilitator for self-assessment and not as a conclusive basis for denial of ITC.

The court stated that before directing the recipient to reverse the input tax credit and remit the amount to the government, the tax authorities must investigate the actions of the supplier. Only in exceptional cases, such as collusion between the recipient and the supplier or the supplier’s absence or closure of business, can proceedings be initiated against the recipient.

Conclusion: The Calcutta High Court’s ruling provides clarity on the denial of Input Tax Credit without proper investigation. It highlights the need for tax authorities to conduct thorough inquiries into supplier actions before taking action against recipients.

Disclaimer:

This publication contains information for general guidance only. It is not intended to address the circumstances of any particular individual or entity. Although the best of endeavour has been made to provide the provisions in a simpler and accurate form, there is no substitute to detailed research with regard to the specific situation of a particular individual or entity. We do not accept any responsibility for loss incurred by any person for acting or refraining to act as a result of any matter in this publication.

(The Author is a well known Chartered Accountant practicing at Ahmedabad)