GST WEEKLY UPDATE : 49/2022-23 (05.03.2023) By CA Vipul Khandhar

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-By CA Vipul Khandhar

1. GSTN launches e-invoice registration services with private IRPs:

In another step towards further digitization of the business process flow, GSTN has launched the e-invoice registration services through multiple private IRPs at the recommendation of the GST Council. Four private companies viz. Clear Tax, Cygnet, E&Y and IRIS Business Ltd were empaneled by GSTN for providing these e-invoice registration services to all GST taxpayers of the country. The details of the existing and new IPRs is available at https://einvoice.gst.gov.in/einvoice/dashboard

The taxpayers now have a choice of more than one IRP (earlier being the only single portal of NIC), which they can use to register their e-invoices. This adds significant capacity and redundancy to the single e-invoice registration portal which existed earlier.

The end-to-end flow of a digitally signed e-invoice between sellers and buyers by integration with the GST system will lead to ease of compliance for the taxpayers. It will also lead to facilitation of auto-drafting and auto-populating of invoice details in the GST returns which would lead to increased accuracy, correctness of reporting of supplies and availing of ITC by the recipients of the supply.

2. Delhi GST Dept. issued Important SOP for Cancellation of Registration and for Repository of Non-genuine Taxpayers:

(Circular No.F.3(479)/GST/Policy/2023/ 346 dated March 01, 2023)

Standard Operating Procedure for cancellation of Registration

In order to ensure uniformity of procedure for cancellation of registration all Ward In charges/Proper officer are directed to follow the following instructions:-

Cases where cancellation is initiated by the Proper Officer on his own motion:-

Identification of entities who generate “fake invoices” is the first step in curbing this menace. This method also involves identification of generators and users. To identify the generators of fake invoices the following risk parameters can be used.

a) Multiple GSTIN registrations for a given address
b) Multiple GSTIN for a given PAN
c) GSTIN using incomplete or wrong addresses
d) Tax payer using sensitive commodities.
e) Common e-mail, common mobile numbers, common address, common authorized signatories, common promoters for multiple GSTIN.
f) Mismatch between the premises declared and the volume of goods transacted.
g) Mismatch between the quantum or transactions and the e-way bills generated. If there are, no e-way bills or less c-way bills generated compared to the details of transactions as per the GST returns.
h) PAN involved in any “fake invoice” fraud or any other GST frauds appear as either in GSTR 1 A or GSTR 2A.
i) Abnormal ITC utilization (for example above 95%).

Where cancellation proceeding are initiated by the Proper Officer on above grounds, the registration should be cancelled from the date of registration i.e ab-initio. This gives an upper hand to the Revenue as all the activities of the taxpayers become ab-ionic invalid. Date of cancellation gets reflected in GSTR-2A of the recipient enabling the Proper Officer of the recipients to deny input tax credit on such supplies received from the cancelled taxpayer. However, an opportunity of the personal hearing is to be accorded to the taxpayer before issuing an order.

When application for cancellation is submitted by the registered taxpayer :-

When application is submitted by a registered taxpayer on GST portal the proper officer has to ensure that immediate action is taken on the application in order to safeguard Govt. revenue.

(A) Checking registration profile of the taxpayer thoroughly to find out:

Nature of constitution i.e. proprietorship, partnership.
Age of stakeholders.
Whether the business premises was rented or self owned.
Whether documents uploaded on the portal are complete and genuine.
Whether field visit was conducted at the time of registration.
Number of nature of amendments carried out during the registration tenure.

(B) Brief scrutiny of returns to find out:-

Volume of business transactions conducted by the taxpayer.
Whether returns upto date from which cancellation has been sought are filed.
Whether there is any mismatch between output tax liabilities as per GSTR 1 & GSTR 3B and/or mismatch between input tax credit as claimed in GSTR 3B and that is auto populated in GSTR 2A.
Whether 2A of the taxpayer contains supplies received from cancelled dealers/non —genuine taxpayers.

(D) Any other information/documents received from internal or external sources:

In case the Proper Officer forms an opinion that the activities of the taxpayers were suspicious, he may direct the GSTI to conduct local enquiries to ascertain whether any such firm existed and carried out the business activities at the scale as reported in returns.
If GSTI report is negative one, then necessary action with respect to imposition of penalty may be initiated including cancellation of registration ab-initio.
Application for cancellation has to be accepted only when the dues arc cleared by the taxpayers and rejection of an application needs to be followed by cancellation proceeding under Section 29(2).

Note: It is necessary that action on the application to be taken within 30 days.

(E) Details of authorized signatory/ GSTPICA/Advocate etc. In his/her registration details shall be taken on record for future correspondence.

The order issued by the Proper Officer should be speaking one containing details of the case and reasons of rejection of plea taken by the registered taxpayer.

The cancellation of registration shall not affect the liability of the person to pay tax and other dues for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date or cancellation.

The taxpayer whose registration has been cancelled is required to furnish GSTR-10 within 03 months of cancellation or date of order of cancellation whichever is later. The proper officer must ensure compliance in this regard.

Tax to be paid under Reverse Charge Mechanism (RCM) on Services provided by Courts / Tribunals([Source: Notification No. 02/2023 -Central Tax (Rate) dated 28.02.2023):

The CBIC has amended Notification No. 13/2017-CT (Rate) dated 28.06.2017 to provide that services provided by Courts and Tribunals shall be covered under RCM and provisions of RCM Notification No. 13/2017-CT (Rate) shall apply to Courts and Tribunals as they apply to the Central Government and State Governments.

This Notification shall come into force with effect from 1st March, 2023.

GST on Pencil Sharpeners and Rab reduced ([Source: Notification No. 03/2023 -Central Tax (Rate) dated 28.02.2023]

CBIC has amended Notification No. 1/2017-CT (Rate) to provide that pencil sharpeners shall be taxable at 12% (6% CGST; 6% SGST).

This will cover pencil sharpeners under HSN Code 8214

The rate on pencil sharpeners has been reduced from 18% to 12%.

All other items under this HSN Code (except pencil sharpeners) will be taxed at 18%

Also, “Jaggery of all types including Cane Jaggery (gur), Palmyra Jaggery, pre-packaged and labelled; Khandsari Sugar, pre-packaged and labelled; Rab, pre-packaged and labeled” will be taxed @ 5%

This Notification shall be effective from 1st March, 2023.

GST exempt on ‘Rab’, if not pre-packaged and labelled([Source: Notification No. 04/2023 -Central Tax (Rate) dated 28.02.2023]:

CBIC has amended Notification No. 2/2012-CT (Rate) dated 28.06.2017 to exempt ‘Rab’ which is not pre-packaged and labelled.

However, pre-packaged and labelled Rab shall be taxable at 5%.

This exemption shall be effective from 1st March, 2023.

AAR & Judicial Decisions:

(i) Hon’ble Highcourt of Andhra Pradesh Decision Regarding Assessee cannot be compelled to follow a circular for claiming refund which is practically not possible:

(Applicant – M/s. Varshan Enterprises)

The Hon’ble High Court of Andhra Pradesh vide its order dated 09.12.2022 in the matter of M/s Varshan Enterprises Vs. Office Of The GST Council in Writ Petition No. 10637 of 2021, held that the petitioner cannot be compelled to follow a circular for claiming refund, which debarred the petitioner for manual filing and practically impossible to be followed or performed.

Held: –

The Hon’ble Court after considering the submissions made and facts of the case, found that in the present matter, the point which arises for consideration is, the the directions and relief as sought by the petitioner can be granted or not.

The Hon’ble Court found that there is no dispute that the real recipient of the goods that are supplied by the petitioner is M/s.Vodafone Mobile Services Limited, Kandlakoya Village, Medchal Mandal, Telangana with specific GSTIN number. Further the admitted facts are regarding the invoices that were generated in March, 2018 and two other invoices that were generated in June, 2018 and the credit note bearing No.10, while uploading the details and returns information in the GST common portal, the GSTIN of M/s.Vodafone Mobile Services Limited, Mumbai was entered in instead of GSTIN of M/s.Vodafone Mobile Services Limited, Kandlakoya, Telangana.

That in view of Section 54 of CGST Act, any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed. Though, it is the contention of the petitioner that the error came to the knowledge in May, 2020 and when they made an attempt to rectify it, GST Portal is not allowing to do so. Subsequently, the petitioner filed a letter dated 17.02.2021 with the respondents, in reply to which, it was directed to follow the Circular of 2019.

Therefore, the grievance of the petitioner is that it is very difficult to follow the said Circular as the GST portal did not permit to rectify the defects. When the letter of the petitioner was so elaborate, respondents simply issued a reply directing the petitioner to follow the Circular of the year 2019.

Thereafter, the Hon’ble Court after perusal of rule 97A of the CGST rules, 2017 & the Circular dated 18.11.2019, found that the claim of the petitioner would not come under para No. 3 of the Circular. Further, when the rule 97A permits for manual filing, it is not known why the filing was restricted to electronically in the said Circular. That due to this restriction the petitioner could not file its refund claim, when the error came to notice in May 2020.

From the perusal of rule 97A & the Circular dated 18.11.2019, it was observed by the Hon’ble High Court that the respondents are compelling the petitioner to follow the Circular which is virtually impracticable to follow.

Thereafter, the Hon’ble Court taking note of decisions relied upon by the petitioners in Pentacle Plant Machineries (second supra), Commissioner of CGST & Central Excise (third supra), Mafatlal Industries Limited (first supra), Vasudha Bommireddy, Hyderabad (fifth supra), M/s. Comsol Energy Private Limited (sixth supra), n Laxmi Organic Industries Limited v. Union of India and others WP No.7861/2021, Dt.30.11.2021 HC Bombay, found that admittedly, Rule 97A of the CGST Rules also permits manual filing restriction in Circular, dated 18.11.2019, seeking refund by electronic mode only may not be proper.

That in the light of principles stated in the above decisions, the amounts that were paid by the petitioner furnishing the incorrect details cannot be taken as a tax due to the respondents, legally. Further, it cannot be claimed by the respondents that the refund claim of the petitioner is barred by limitation.

It was further found by the Hon’ble Court that in light of the of the constitutional bench decision of the Hon’ble Apex Court in Mafatlal Industries (first supra), one cannot enrich themselves under Section 72 of the Contract Act and they are bound to return the amounts which were paid wrongfully. Therefore, the contention raised on the behalf of the respondents that in view of the decision of Hon’ble Supreme Court in VKC Footsteps India Private Limited (seventh supra), the claim of the petitioner is barred by limitation is not tenable.

It was found that it is very clear that the petitioner cannot be compelled to follow the Circular of the year 2019, which debarred the petitioner from manual filing. The petitioner cannot be compelled to do certain things which are impossible to be performed.

It was found that the respondents cannot retain the disputed amount, that are paid to them, due to inadvertent error while keying the name of M/s.Vodafone Mobile Services Limited, Kandlakoya village, Medchal Mandal, Telangana State. The contention raised by the respondents that the claim of the petitioner is barred by limitation is not acceptable. Therefore, the petitioner is entitled to relief.

The Hon’ble Court with the above findings, allowed the writ petition by setting aside the communication of the Superintendent of Central GST, Bhimavaram Range vide his Reference in OC No.151/2021, dated 26.02.2021. The Petitioner was directed to make an application in manual form for refund of the amount to which he is entitled to and the respondents are directed to pass orders in accordance with law, within a period of four weeks thereafter.

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.

THANKING YOU.