GST WEEKLY UPDATE : 34/2023-24 (19.11.2023) By CA Vipul Khandhar

1. ITC Reversal on Account of Rule 37(A) – instruction by CBIC as on 14/11/2023:

1. Vide Rule 37A of CGST Rules, 2017 the taxpayers have to reverse the Input Tax Credit (ITC) availed on such invoice or debit note, the details of which have been furnished by their supplier in their GSTR-1/IFF but the return in FORM GSTR-3B for the said period has not been furnished by their supplier till the 30th day of September following the end of financial year in which the Input Tax Credit in respect of such invoice or debit note had been availed.

2. The said amount of ITC is required to be reversed by such taxpayers, while furnishing a return in FORM GSTR-3B on or before the 30th day of November following the end of such financial year, as part of this legal obligation.

3. To facilitate the taxpayers, such amount of ITC required to be reversed on account of Rule 37A of CGST Rules for the financial year 2022-23 has been computed from system and has been communicated to the concerned recipient. The email communication to this effect has been sent on the registered email id of the taxpayer.

4. The taxpayers are advised to take note of it and to ensure that such ITC, if availed by them, is reversed as per rule 37A of CGST Rules before 30th of November, 2023 in Table 4(B)(2) of GSTR-3B while filing the concerned GSTR-3B.

2. Advisory for Online Compliance Pertaining to ITC mismatch -GST DRC-01C:
Difference in Input Tax Credit (ITC) available in GSTR-2B & ITC claimed in the GSTR-3B
1. It is informed that GSTN has developed a functionality to generate automated intimation in Form GST DRC-01C which enables the taxpayer to explain the difference in Input tax credit available in GSTR-2B statement & ITC claimed in GSTR-3B return online as directed by the GST Council. This feature is now live on the GST portal.
2. This functionality compares the ITC declared in GSTR-3B/3BQ with the ITC available in GSTR-2B/2BQ for each return period. If the claimed ITC in GSTR 3B exceeds the available ITC in GSTR-2B by a predefined limit or the percentage difference exceeds the configurable threshold, taxpayer will receive an intimation in the form of DRC-01C.
3. Upon receiving an intimation, the taxpayer must file a response using Form DRC-01C Part B. The taxpayer has the option to either provide details of the payment made to settle the difference using Form DRC-03, or provide an explanation for the difference, or even choose a combination of both options.
4. In case, no response is filed by the impacted taxpayers in Form DRC-01C Part B, such taxpayers will not be able to file their subsequent period GSTR-1/IFF.

3. CBIC notifies biometric-based Aadhaar authentication for GST registration in the State of Andhra Pradesh:

Now, the CBIC vide Notification No. 54/2023- Central Tax dated November 17, 2023, in the exercise of its powers under the CGST Rules, makes further amendments to Notification No. 27/2022-Central Tax dated December 26, 2022 to implement the recommendations of the 50th GST Council.

Provisions of sub-rule (4A) of Rule 8 of the CGST Rules regarding the authentication of Aadhaar Numbers shall apply in the State of Andhra Pradesh. The amendment includes adding “State of Andhra Pradesh” alongside “State of Gujarat” and “State of Puducherry” in the aforementioned Notification.

4. Order regarding the Verification of pending GST DRC-03s Challans by Chief commissioner of CGST:

The Office of the Chief Commissioner CGST & Central Excise (Jaipur Zone), Jaipur issued Office Order No. 22/2023 dated October 16, 2023 regarding the Verification of pending GST DRC-03s Challans.
It may be noted that voluntary payment of Tax, Interest, Penalty, etc. made by the taxpayer through FORM GST DRC-03 may stem from any of the following reasons:

(i) during investigation proceedings by DGGI under the provisions of Section 63; Section 73(5)/ 74(5) before issuance of SCN; Section 73(8) / 74(8) after issuance of SCN; Section 76; Section 122 to 125; or Sections 127, 129 or 130 of the CGST Act;

(ii) during investigation proceedings by AE branch(s) of the Commissionerate under the provisions of Section 63; Section 73(5)/ 74(5) before issuance of SCN; Section 73(8) / 74(8) after issuance of SCN; Section 76; Section 122 to 125; or Sections 127, 129 or 130 of the CGST Act;
(iii) during audit proceedings under the provisions of Section 73(5) / 74(5) before issuance of SCN; Section 73(8) / 74(8) after issuance of SCN; or Section 76 of the CGST Act;

(iv) liability arising out of proceedings initiated by SGST Authorities;

(v) intimation of tax ascertained through FORM GST DRC-01A;

(vi) liability arising on furnishing of Annual Return by the taxpayer;

(vii) liability arising out of scrutiny of returns under Section 61 of the CGST Act r/w Rule 99 of the CGST Rules by the proper officer;

(viii) liability arising out of assessment of non-filers of returns under Section 62 of the CGST Act r/w Rule 100 of the CGST Rules by the proper officer;

(ix) liability arising on account of self-reconciliation of FORM GSTR- 2A/FORM GSTR-2B vis-a-vis FORM GSTR-3B by the taxpayer;

(viii) liability arising on account of self-reconciliation of FORM GSTR-1 vis-a- vis FORM GSTR-3B by the taxpayer; (xi) liability arising on account of communication of system generated FORM GST DRC-01B under Rule 88C of the CGST Rules;

(xii) liability arising on account of communication of system generated FORM GST DRC-01C under Rule 88D of the CGST Rules;

(xiii) reversal of proportionate input tax credit in terms of Rule 42(1)(1), 42(2)(a), 42(3)(a), 42(4)(c) or 43(2)(a) of the CGST Rules;

(xiv) return of erroneously granted refund in terms of Rule 86(4B) of the CGST Rules;

(xv) payment of tax in case of shortfall in duty paid procurement of inputs/ input services by promoter/ developer in terms of notification No. 11/2017-Central Tax (Rate) dated June 28, 2017 as amended r/w Instruction No. 03/02/2020-GST dated June 24, 2020;

(xvi) any other reason.

• In the above mentioned instances, liability is discharged through FORM GST DRC-03 either with reference number of SCN or intimation reference number of FORM GST DRC-01 A, etc. or by providing payment date and Financial Year.

5. AAR & Important Judgements:

(i) AAR On GST exemption extended to a works contractor is not applicable for his procurement:

The applicant, Immense Construction Company, sought an advance ruling on whether the services provided to THE INDIAN HUME COMPANY LTD. are covered by GST exemption (Notification No. 12/2017). The contract involves the operation and maintenance of water supply projects, and the applicant argues that their services qualify as pure services exempted from GST.
The AAR analyzed the nature of works contracts, specifically focusing on the supply of works contract services by a contractor and the procurement of works contract services. The ruling clarifies that, under the CGST Act, these are two independent taxable events.
Furthermore, the AAR emphasized that the exemption granted to a works contractor supplying services to the government or local bodies is not automatically extended to the procurement of works contract services. The ruling cites the strict construction of exemption notifications and the absence of a specific entry or notification under Section 11(1) of the CGST Act for such procurement.
The discussion highlights the amendment to Notification No. 12/2017 by Notification No. 2/2018, introducing entry 3A to exempt works contracts with a value of supply of goods less than 25%, provided the supply is made to the government or local authorities. However, it does not explicitly cover supplies made by sub-contractors to works contractors.

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 endeavor 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 well known Chartered Accountant precising at Ahmedabad)