GST WEEKLY UPDATE :9/2022-23 (29.05.2022) By CA Vipul Khandhar

By CA Vipul Khandhar

1. CBIC waives GSTR-4 Late Fee:

 The CBIC has waived the late fee for GSTR-4 till 30th June 2022. GSTR-4 is a GST Return that has to be filed by a composition dealer. A dealer opting for the composition scheme is required to furnish only 1 return which is GSTR 4 once in a year by 30th of April, following a financial year.

• The notification issued on Thursday provided that “the late fee payable for delay in furnishing of FORM GSTR-4 for the Financial Year 2021-22 under section 47 of the said Act shall stand waived for the period from the 1st day of May, 2022 till the 30th day of June, 2022.”

2. No Compulsory Recovery of GST Dues during Search & Investigation:

• The GST department has clarified that there is no mandatory recovery of tax dues during the course of search or inspection or investigation proceedings and the taxpayers have option to pay the GST dues through the official portal.
• While directing the officials to inform the taxpayers regarding the provisions of voluntary tax payments through DRC-03,
• The department further clarified that there is also no bar on the taxpayers for voluntarily making the payments on the basis of ascertainment of their liability on non-payment/ short payment of taxes before or at any stage of such proceedings.
• Voluntary payment of tax before issuance of show cause notice is permissible in terms of provisions of Section 73(5) and Section 74 (5) of the CGST Act, 2017.
• This helps the taxpayers in discharging their admitted liability, self-ascertained or as ascertained by the tax officer, without having to bear the burden of interest under Section 50 of CGST Act, 2017 for delayed payment of tax and may also save him from higher penalty imposable on him subsequent to issuance of show cause notice under Section 73 or Section 74, as the case may be,” the Department said.
• The recovery of taxes not paid or short paid, can be made under the provisions of Section 79 of CGST Act, 2017 only after following due legal process of issuance of notice and subsequent confirmation of demand by issuance of adjudication order. No recovery can be made unless the amount becomes payable in pursuance of an order passed by the adjudicating authority or otherwise becomes payable under the provisions of CGST Act and rules made therein.

3. CBIC issued SOP for NCLT cases in respect of the IBC.

• The CBIC vide Instruction No. 1083/04/2022 dated May 23, 2022has issued a Standard Operating Procedure (“SOP”) for the National Company Law Tribunal (“NCLT”) cases in respect of the Insolvency and Bankruptcy Code, 2016 (“IBC”).
• GST and Customs Authorities have been classified as operational Creditors and are required to submit their claims against corporate debtors when the Corporate insolvency and resolution process is initiated and public announcement inviting claims is made by the insolvency professional.
• A timeline of 90 days from the insolvency commencement date is available for filing of claims.

4. Haryana Govt. advisory on taxpayer-friendly measures relating to ITC blocking, physical inspection, etc.:

• No officer / official shall enter the premises of any taxpayer without display of proper Identity card.
• Tax inspectors shall not visit any premise except when they are conducting physical inspection under Rule 25 of the HGST Rules, 2017 or if they are part of a search, inspection or an audit operation.
• While conducting any enquiry, suitable opportunity of being heard should be given to the complainant. Repeated summons and calling for records should be discouraged.
• In case the system does not provide for specific functions such as summons etc. then the ID can be generated using Enforcement / Enquiry ID module of the BO web system.
• From 1st April, 2022 GSTN has initiated automatic un-blocking of ITC, blocked for period of more than 1 year.

5. AAR & Judicial Decisions:

(i) AAR On GST not leviable on Employer for Free Bus Transportation provided to Employees:

(Applicant – M/s. Emcure)

The Authority for Advance Rulings (AAR) Gujarat has held that GST is not leviable on the Company for providing free transportation facilities to the employees. The applicant, M/s. Emcure submits provides the canteen and bus transportation facility to its employees based on the Human Resource (HR) Policy.

(ii) AAR On Sale of Second Hand ‘Paintings’ attracts 12% GST:

(Applicant – M/s. Saffron Art Private Limited)

The Maharashtra Authority of Advance Ruling has ruled that the 12% GST is payable on the sale of second-hand paintings.

The applicant, M/s. Saffron Art Private Limited, is in the business of procuring paintings on an approval basis from unregistered and registered persons and selling them by auction to the highest bidder.

The applicant displays the paintings on its website and conducts a sale by way of an online auction to the highest bidder. The assumption of the applicant is that its suppliers have brought the second hand or used paintings and then offered them for sale to the applicant.

Therefore, for determination of the liability to pay tax on the sale of second-hand or used ‘paintings’, the applicant can apply Rule 32(5) of CGST & MSGST Rules, 2017 and pay tax on the difference between the selling price and the purchase price. The applicant is charging 12% GST on the entire price for which the second-hand or used ‘painting’ is sold.

(iii) Decision of Allahabad Highcourt regarding Police has no authority to check invoices and accounting goods during their transportation:

(Applicant – Vishal Gupta)

– Authorities under State and Central GST laws are empowered to check and take actions in accordance of law if goods are not accompanied with proper documents

– Police has no authority to check invoices and accounting goods during their transportation

– In case of any infirmity in invoices, only GST authorities are empowered to take action including seizure of goods and not Police officers

– Prima facie, allegations of cheating and infringement of Copyright Act, were mentioned in FIR, also appeared to be without any basis

– Therefore, detention of goods and lodging of FIR by Police officers appeared to be malicious, grave abuse of power and obstruction to free trade and commerce

(iv) Decision of Chhattisgarh High court Regarding Under valuation of goods in invoice cannot be a ground for detention of the goods and Vehicle:

(Applicant – K.P. Sugandh Ltd)

This petition was filed before the Hon’ble Chhattisgarh High Court, against the order passed by the Revenue Department, for release of the seized vehicle carrying goods from the manufacturing centers to the dealer with a tax invoice and an e-way bill, belonging to the assessee, a manufacturer of pan masala and tobacco products, on the grounds of discrepancies in the valuation of the goods.

The Hon’ble Chhattisgarh High Court observed that, under valuation of a goods in the invoice cannot be a ground for detention of the goods and vehicle for a proceeding to be drawn under Section 129 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) read with Rule 138 of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”).

Further, held that, proceedings of detention and seizure of the goods and the vehicle by the respondents is without any authority of law. Set aside the order passed under Section 129 and the order of demand of tax and penalty both being unsustainable and directed the Revenue Department to release the goods.

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.

(Author is a well known Chartered Accountant practicing at Ahmedabad on Direct and Indirect Tax Matters)