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Highlights of New GST Returns

In the 27th GST Council meeting, the GST Council first announced the new GST return filing process. In the 28th GST Council meeting, the new GST returns and return filing process have been approved. Within a week, a draft of the new GST return forms has been placed in the public domain, to seek feedback from businesses, CAs and other industry members. As per the latest update, the GST Council is likely to implement the new return filing process from January, ’19. It is important for businesses to know the changes proposed in the GST return filing process. In this blog, let us understand the key highlights of the new GST return filing process.

a. Simplified monthly return for persons having turnover of more than Rs. 5 Crores

Regular taxpayers having turnover of more than Rs 5 Crores can now file a simplified monthly return. The new GST return form will have 2 main tables:

  • Outward supplies
  • Input tax credit based on invoices uploaded by suppliers

The due date of the monthly return will be 20th of the next month. However, the new GST return filing dates will be staggered, based on businesses’ turnover, to avoid undue load on the GSTN server.

b. Quarterly return for persons having turnover up to Rs. 5 Crores

Businesses having turnover up to Rs. 5 Crores (against the earlier limit of Rs. 1.5 Crores) will have an option to file quarterly returns. Businesses opting to file quarterly returns will, however, have to pay taxes and avail input tax credit on a monthly basis. These businesses have an option to file 3 types of new GST returns:

  • Sahaj: Businesses which purchase from suppliers in India and make supplies only to consumers (B2C) in India can opt to file the Sahaj return
  • Sugam: Businesses which purchase from suppliers in India and make supplies only to other businesses and consumers (B2B + B2C) in India can opt to file the Sugam return
  • Quarterly returns: Businesses which make imports, exports, supplies to SEZ, etc. can opt to file the quarterly return. The quarterly return will be similar to the monthly return but will be simpler and will not require certain details present in monthly returns, such as missing invoices, pending invoices, exempted supplies, etc. to be filled. However, these details will still be required to be filled by businesses filing quarterly returns, in their Annual return.

c. Simplified new GST return filing process: Upload-Lock-Pay

The new return filing process can be summarised as ‘Upload-Lock-Pay’. This means:

Upload: Invoices for supplies made will be continuously uploaded by sellers. Invoices uploaded till 10th of the next month will be available for input tax credit for the buyer.

Lock: The invoices uploaded by sellers can be continuously viewed and locked by the buyers. Here, ‘lock’ means to accept an invoice uploaded by a seller. Buyers also have options to reject the invoice, mark as pending, etc.

Pay: Taxpayers can pay the tax due on supplies after claiming input tax credit on invoices locked.

Here, a point to note is that unlike the current return filing process, only the invoices uploaded by the supplier will be considered for input tax credit for buyers. There is no provision for buyers to upload invoices.

This process will also ensure that the new GST returns are largely auto-filled based on invoices uploaded by sellers and accepted by buyers. Also, all the invoices which are not rejected or marked as pending by buyers will be considered to be accepted and locked at the time of filing of return. These steps will reduce the manual effort required to file the new GST return, especially for businesses where number of invoices is huge.

d. Profile-based return filing

Businesses will have the facility to configure their profile with details of the nature of supplies they usually make and receive. Based on this configuration, each business will be shown only the relevant fields of the return to be filled. This is again a step to customize and simplify the return filing process.

e. Facility to file return by SMS for nil return filers

Persons filing nil return (no purchase and no sale) will have the facility to file the GST return by simply sending an SMS.

f. Facility to amend return filed

Businesses will have the facility to amend invoice details and other information of a return already filed. Amendment of a return can be done by filing an ‘Amendment return’ and taxpayers can pay the additional tax payable through the amendment return. This will help them to save on the interest liability applicable if they have to wait for the next return to amend the details.

Hence, there are many changes that the GST Council has planned to ensure that the new GST return filing process is simple and easy for all businesses. However, it is important for businesses to prepare for the changes that are coming and set in place the required processes to ensure a smooth transition to the new GST return filing process. In our upcoming articles, we will help you understand each of these changes in more detail.

28th GST Council Meeting Updates

On 21st July, 2018, the 28th GST Council meeting was conducted to take major decisions pertaining to the existing GST model. A plethora of changes took place, with respect to rate changes in goods, rate changes in services, and most importantly, the simplified GST return filing model, which has been under speculation for a long time.

In this blog, we will take you through the major updates from 28th GST Council meeting, with regards to the GST rate changes of specific goods.

Reduction in GST Rates – 28th GST Council Meeting

The 28th GST Council meeting saw a plethora of reductions in the GST rate, which are listed as follows:

Reduction in GST Rates from 28% to 18%

As per the 28th GST Council recommendations, the rate of the following goods were reduced from 28% to 18%:

  • Paints and varnishes, including enamels and lacquers
  • Glazier’s putty, grafting putty, resin cements
  • Refrigerators, freezers and other refrigerating or freezing equipment including water cooler, milk coolers, refrigerating equipment for leather industry, ice cream freezer etc.
  • Washing machines
  • Lithium ion batteries
  • Vacuum cleaners
  • Domestic electrical appliances – food grinders and mixers, food or vegetable juice extractors, shavers, hair clippers etc.
  • Storage water heaters and immersion heaters, hair dryers, hand dryers, electric smoothing irons etc.
  • Televisions up to the size of 68 cm
  • Special purpose motor vehicles – crane lorries, fire fighting vehicle, concrete mixer lorries, spraying lorries
  • Works trucks which are self-propelled, not fitted with lifting or handling equipment which are used in factories, warehouses, dock areas or airports for short transport of goods
  • Trailers and semi-trailers
  • Miscellaneous articles such as scent sprays and similar toilet sprays, powder puffs and pads for the application of cosmetics or toilet preparations

Reduction in GST Rates from 28% to 12%

As per the 28th GST Council updates, the GST rate for fuel cell vehicles was reduced from 28% to 12%. In addition, the 28th GSTCouncil also decided to remove the previously applicable compensation cess on fuel cell vehicles.

Reduction in GST Rates from 18% to 12%

As per the 28th GST Council meeting updates, the GST rates of the following goods was decided to be reduced from 18% to 12%:

  • Bamboo flooring
  • Brass kerosene pressure stove
  • Hand operated rubber roller
  • Zip and slide fasteners
  • Handbags including pouches and purses, jewellery box
  • Wooden frames for painting, photographs, mirrors etc.
  • Art ware of cork, including articles of sholapith
  • Stone art ware, stone inlay work
  • Ornamental framed mirrors
  • Glass statues, other than those of crystal
  • Glass art ware including pots, jars, votive, cask, cake cover, tulip bottle, vase
  • Art ware of iron
  • Art ware of brass, copper / copper alloys, electro plated with nickel / silver
  • Aluminium art ware
  • Handcrafted lamps including panchloga lamp
  • Worked vegetable or mineral carving, articles thereof, articles of wax, of stearin, of natural gums or natural resins or of modelling pastes, including articles of lac, shellac
  • Ganjifa card

Reduction in GST Rates from 18% to 5%

As per the 28th GST Council meeting highlights, the GST rates of the following goods were reduced from 18% to 5%:

  • Ethanol for sale to oil marketing companies for blending with fuel
  • Solid bio fuel pellets

Reduction in GST Rates from 12% to 5%

As per the 28th GST Council meeting news, the GST rates of the following goods was reduced from 12% to 5%:

  • Chenille fabrics and other fabrics
  • Handloom dari
  • Phosphoric acid – fertilizer grade only
  • Knitted cap / topi having retail sale value not exceeding INR 1000
  • Handmade carpets and other handmade textile floor coverings, including namda / gabba
  • Handmade lace
  • Hand woven tapestries
  • Hand-made braids and ornamental trimming in the piece
  • Toran

Reduction in GST Rates to 0%

This was probably the most lauded section of the 28th GST Council changes. At the 28th GST Council meeting, the GST rate for the following goods were culled down to 0%:

  • Stone / Marble / Wood Deities
  • Rakhi (other than that of precious or semi-precious material)
  • Sanitary Napkins
  • Coir pith compost
  • Sal Leaves, siali leaves and their products
  • Sabai Rope
  • Phool Bhari Jhadoo which is a raw material for brooms
  • Khali dona
  • Circulation and commemorative coins, sold by Security Printing and Minting Corporation of India Ltd to the Ministry of Finance

Clarifications in GST Rates – For specific goods

Apart from GST rate reductions, certain clarifications with regards to GST rates of certain goods also formed part of the 28th GST Council highlights.

Fabrics

Fabrics attract GST at the rate of 5%, but it was subject to the condition, that refund of accumulated ITC because of inverted duty structure will not be allowed. However, considering the difficulties faced by the fabric sector, it was decided in the 28th GST Council meeting, that the refund will henceforth be allowed – and the same will be applicable on all purchases post the notification is issued.

Footwear

A GST rate of 5%, which was earlier applicable to footwear priced up to INR 500, will now be extended to footwear priced up to INR 1000. Footwear having a retail sale price of more than INR 1000, will continue to attract 18% GST.

Other Clarifications

  • Milk enriched with vitamins or minerals salt (fortified milk) will be exempt from GST
  • Water supplied for public purposes (other than in sealed containers) will be exempt from GST
  • 5% GST will be charged on Pool Issue Price (PIP) of Urea imported on government accounts for direct agriculture use, instead of assessable value plus custom duty
  • 5% GST will be charged on both treated (modified) tamarind kernel powder and plain (unmodified) tamarind kernel powder
  • 5% GST will be charged on beet and cane sugar, including refined beet and cane sugar
  • 5% GST will be charged on marine engines
  • 5% GST will be charged on unpolished kota stone and similar stones (other than marble and granite)
  • 18% GST will be charged on ready to use polished kota stone and similar stones (other than marble and granite)
  • Coal rejects from washery, arising out of cess paid coal on which ITC has not been taken, will be exempt from GST compensation cess

Post these changes, the most important 28th GST Council news doing the rounds is, that only 35 goods now remain in the highest tax bracket i.e. 28% – a huge relief for household consumers. The 28th meeting of the GST Council has indeed paved the way for a more simplified GST tax bracket, and one can hope that it will continue to get even more simplified in the days to come.

Enabling option of single E-way Bill for multiple vehicles

Prosecution and Compounding under GST


We have discussed about the various offences under GST, and also we have gone through the various penalties corresponding to the various offences in detail. In this blog, we will discuss about prosecution provisions under GST, and also about how compounding of offenses have been defined in the GST law, to save time in judicial procedures. These provisions for prosecution and compounding under GST are thus super critical for businesses.

Prosecution under GST

Prosecution, is defined as the act of conducting legal proceedings against someone, in respect of a criminal charge. Under GST, any taxable person who commits an offence amounting to deliberate intention of fraud, becomes liable for prosecution, or in other words, criminal charges.

Offenses liable to attract Prosecution under GST

The following are the offences, for which a taxable person can become liable for prosecution under GST:

  • Supply of any goods and / or services without an invoice, in order to evade taxes
  • Issue of any invoice without the supply of any goods and / or services, thus taking ITC or refund by fraud
  • Collection of GST (even if it is done against the provisions), but failure to submit the same to the government, within the specified time limit of 3 months
  • Obtaining of refund of CGST / SGST by fraud
  • Submission of fake records or documents or filing of fake returns to evade taxes
  • Obstruction of the proper officer during his duty, for instance, while conducting audit
  • Acquisition or receipt of any goods and / or services with full knowledge that it is in violation of the GST rules, and is liable for confiscation
  • Destruction of evidence
  • Not providing information or providing false information during proceedings
  • Helping any taxable person to commit fraud

Punishment for Prosecutable Offences

As per the provisions of prosecution in GST, the taxable person committing any of the above listed offences i.e. prosecutable offences shall be punished as follows:

Amount of Tax Involved in Offence Bail Applicability Term of Jail
INR 100 to 200 Lakhs Bail-able Up to 1 year
INR 200 to 500 Lakhs Bail-able Up to 3 years
Above INR 500 Lakhs Bail-able* Up to 5 years

*Note: However, if a taxable person commits the following offences and the amount of tax involved in the offence exceeds INR 500 Lakhs, then the offences will be deemed as non-bail-able:

  • Supply of any goods and / or services without an invoice, in order to evade taxes
  • Issue of any invoice without the supply of any goods and / or services, thus taking ITC or refund by fraud
  • Collection of GST (even if it is done against the provisions), but failure to submit the same to the government, within the specified time limit of 3 months

Other specified punishments for Prosecutable Offences

  • For obstruction of the proper officer during his duty, destruction of evidence, falsifying information during proceedings & helping another taxable person to commit fraud – Up to 6 months imprisonment with fine
  • Repeat Offences – Up to 5 years imprisonment with fine

Compounding under GST

Compounding of offences under GST is a method, wherein litigation time, and time of judicial procedures can be cut down. Generally, in the case of prosecution for an offence in a criminal court, the accused has to appear before the Magistrate at every hearing by using the services of an advocate. Given, that court proceedings are both expensive and time-consuming, the accused taxable person may make use of the compounding provisions under GST, wherein, he will not be required to appear in Court personally. Also, under the same provisions, he may be discharged on the payment of a compounding fee, which will not be more than the maximum fine which can be levied under the relevant provisions of prosecution and compounding under GST.

However, compounding under GST will not be available to the following entities:

  • Any taxable person who has already committed any of the offences mentioned under prosecution, detailed above i.e. repeat offenders
  • Any taxable person who has committed an offence involving supplies above INR 1 Crore and has been allowed to compound before
  • Any taxable person who is also being tried under other acts such as Narcotic Drugs Act, FEMA etc.
  • Any taxable person convicted by a court under GST
  • Any taxable person guilty of destruction of evidence, falsifying information during proceedings or preventing an officer from doing his duty

Amount Payable for Compounding under GST

Compounding in GST will be allowed only after the full payment of all taxes, interests and penalties which are due. As per the provisions of prosecution and compounding under GST, the amount payable for compounding under GST is defined as follows:

  • Minimum Limit – 50% of the tax or INR 10,000 whichever is less
  • Maximum Limit – 150% of the tax or INR 30,000 whichever is more

On payment of the compounding amount, no further proceedings shall be initiated against the accused taxable person for the same offence and all criminal proceedings, if already initiated, will be abated immediately. In conclusion, to avoid any kind of loss, businesses should be aware of the functioning of prosecution and compounding under GST.

Recent AAR Rulings

 

We had discussed about the advance ruling mechanism under GST. If you recall, the first level of jurisdiction as far as advance ruling is concerned, is held by a body known as the Authority for Advance Rulings (AAR). An AAR a.k.a. Authority of Advance Rulings is primarily a quasi-judicial body that allows companies to get a guidance on their potential tax liabilities relating to any transaction, in advance, such that they can plan their business accordingly. Understandably, most AAR rulings are case specific, but all the same, they have a significant impact on tax assessment for other firms, who may have the same doubts, or are facing similar circumstances.

In this blog, we will share with you certain recent AAR rulings, related to food, beverages and catering services, which have led to certain GST rates being clarified. These AAR rules and regulations have cleared the doubts of numerous catering services which operate across the country, as well as vendors who supply food and beverages in trains and stations.

AAR Rulings – Canteen Services provided by outside vendors in offices and factories

Rashmi Hospitality Services, based out of Gujarat had filed an application, seeking an advance ruling on whether, the GST rate on supplies made to non-air conditioned canteens of offices and factories, needed to be taxed at 12% GST or 18% GST. In response to this application, the Gujarat bench of the Authority of Advance Rulings stated, that the catering service provided by Rashmi Hospitality Services to recipients who have in-house canteens, where meals, snacks, tea etc., are ultimately consumed by employees or workers, and thus, do not alter the nature of service provided. Thus, the GST rate for such a service will be considered as 18%.

Thus it was a given, that such a move would imply a higher compliance burden for companies, which would translated into higher cost for food. Thus most companies would, understandably, tend to recover the food expenses from employees. To attain further clarity on the same, Caltech Polymers, based out of Kerala had filed an application, seeking an advance ruling on whether, the recovery of food expenses from employees or canteen services would come under the definition of outward supplies, and whether it will attract GST or not.

In response to this application, the AAR Kerala bench stated, that recovery of food expenses from the employees, for the canteen services provided by the company, would indeed come under the definition of “outward supply”, and therefore be considered taxable as a supply of service under GST. However, the authority of advance ruling Kerala, did not clarified, whether the GST rate to be levied was 5% (without ITC), or 18%, treating the same as an outdoor catering service. Irrespective of the rate, such a move is bound to push up the cost of food for employees and factory workers, and also could lead to possible disputes on valuation, which will then need to get solved.

AAR Rulings – Canteen Services provided by outside vendors in educational institutions

Similar to the above scenario, quite a few applications were filed, asking for an advance ruling on the GST rate to be levied on services provided by canteens in educational institutions. In response to the same, the AAR as well as the Ministry of Finance clarified, that food and drinks, served in a mess or a canteen of an educational institution would attract 5% GST, without ITC. However, if schools (only up to higher secondary level) supplied food directly to students, then the same will be exempt from GST.

AAR Rulings – Supply of food and beverages in trains

Deepak & Co, based out of Delhi had filed an application, asking for an advance ruling on the GST rate to be levied on the supply of food and beverages in trains. Deepak & Co, had entered an agreement with the Indian Railways for the supply of food and beverages, packaged, cooked or at MRP, on mail and express trains, and thus needed immediate clarity on the same. The application had come in the aftermath of a circular from the Central Board of Indirect Taxes and Customs (CBIC) in January 2018, which had announced a lower GST rate of 5% for foods and drinks served on trains, platforms or stations by Indian Railways or IRCTC. However, there were a faction of businesses who felt that serving food and drinks on train, was to be treated equivalent to outdoor catering, the rate for which was specified already at 18% GST.

In response to this application, the AAR Delhi bench clarified, that the train is after all, a medium of transport, and thus could not be treated equivalent of a restaurant, eating joint or canteen. Thus, the supply of food and beverages directly to passengers at a fixed rate on platforms or trains, did not have any element of services, and therefore, GST should ideally be charged on the individual items as per their respective applicable rates. The authority of advance ruling Delhi also noted that the mere heating and cooling of beverages were incidental and not eligible for any tax benefit. Thus, in a final AAR ruling, it was stated, that supply of food and beverages in trains will face GST as per the respective items being served and not at the concessional rate of 5% specified by the government earlier.

In our next blog, we will visit some more AAR rulings pertaining to other sectors, where some confusions have been cleared, leading to a better understanding of the GST rate which has to be applied.

Intra State E-way Bill : Things to watch out for

If official records are to be considered, the entire implementation of the system and the generation of inter-state e-way bills nationwide has been largely successful. Till the 13th of May, i.e. in a period of almost 45 days, more than 4.15 crore e-way bills have been successfully generated, which included more than 1 crore intra state e-way bills for movement of goods. The path thus looks smooth for rest of India to become part of the system as well – Maharashtra is looking to take the leap for intra-state e-way bill on May 31st and Punjab and Goa from June 1st. In any case, both interstate EWB as well as intra state e-way bills for movement of goods will become mandatory from June 3rd, 2018 – which implies that businesses across the country will need to factor in the same, while planning for their respective consignments.

Here’s listing 7 things you can keep in mind, as you prepare your business for the intra state e-way bill:

  • You can generate the intra state e-way bill using your GSTIN by logging on to http://ewaybillgst.gov.in. The e-way bill registration process can be completed in a matter of minutes
  • E-way bill generation will be done when the value of the taxable consignment, along with the tax value, is more than INR 50000
  • If you have sent material for Job Work then either you or the Job Worker can generate the e-way bill
  • As a supplier, you can authorize the transporter, e-commerce operator or the courier agency to fill Part A of the e-way bill
  • If the distance between your primary place of business and that of the transporter is less than 50 KMs, only Part A of the e-way bill is required to be filled, and Part B is not required to be filled
  • Once the e-way bill is generated, the recipient of goods can confirm or deny the receipt of goods before the actual delivery or 72 hours, whichever is earlier
  • In cases where the goods are being transported by railways, aeroplane or ship, the e-way bill can only be generated by the supplier or a recipient, and not by the transporter. However, in such cases, an e-way bill can be generated even after the goods shipment has started

It can be safely said that with businesses adhering to these intra state e-way bill guidelines, and with the tax authorities working in tandem to ensure the right compliances for the inter state e-way bill, the nation-wide single e-way bill will soon be a successful reality. Coupled with the obvious advantages of robust technology that businesses will look to use, this will surely ensure seamless commerce across state borders, something which is bound to give both businesses as well as the government authorities a lot of relief in the time to come.

Arrest under GST

We discussed about the provisions of seizure under GST. While inspection, search and seizure are stringent procedures by themselves, the fact remains that if a taxable person has committed an offence which warrants a greater punishment, then he can be arrested by an officer, under the GST norms. In this blog, we will go through the provisions of arrest under GST.

Arrest under GST

The term ‘Arrest’ has not been defined in the CGST / SGST Act. However, as per the law, it basically implies the taking into custody of a person under some lawful command or authority. In other words, a person is said to be arrested when he is taken and restrained of his liberty by power or colour of lawful warrant.

If the Commissioner of CGST / SGST believes that a person has committed an offence, he can be arrested by any authorised CGST / SGST officer. The arrested person will be informed about the grounds of his GST arrest motion, and he will appear before the magistrate within a period of 24 hours, in case the offence is of a cognizable nature.

As per the arrest provisions under GST, the following officers have been empowered and are required to assist the CGST / SGST officers in the execution of an arrest under GST:

  • Police
  • Railways
  • Customs
  • Officers of State / UT / Central Government engaged in collection of GST
  • Officers of State / UT / Central Government engaged in collection of land revenue
  • All village officers
  • Any other class of officers as may be notified by the Central/State Government

Note: Here, it is important to note the difference between a cognizable and a non-cognizable offense. Cognizable offenses are those where the police can arrest a person without any arrest warrant, i.e. the offense is clear enough. Examples could be murder, robbery, counterfeiting etc. Non-cognizable offenses are those, where a police officer cannot arrest a person without a warrant issued by a competent authority. They are relatively less serious crimes like public nuisance, assault etc.

Offenses which warrant Arrest under GST

The following are the offenses, for which the arrest provisions under GST become applicable:

  • When a taxable person supplies any goods or services without any invoice or issues a false invoice
  • When a taxable person issues any invoice or bill without supply of goods / services in violation of the provisions of GST
  • When a taxable person collects GST, but does not submit it to the government within 3 months
  • When a taxable person has already been convicted earlier under the same provisions i.e. this is his 2nd offense

To sum up the offences which warrant arrests, broadly it may be said, that if tax evasion is more than INR 100 lakhs i.e. INR 1 Crore, or when a person has committed his 2nd offense (i.e. first arrest under GST has occured already), an arrest will be made.

Procedures related to Arrest under GST – Points to Note

The following are certain key procedures that you should note with regards to arrest provisions in GST:

  • Cognizance of Offense – A court cannot take cognizance of any offense punishable without the prior permission of the designated authority. Only a Magistrate of the First Class (and above) can conduct the trial for such an offense.
  • Availability of Bail – Bail is available only for non-cognizable and specified bail-able offenses.
  • Summons – A proper officer can summon any person to provide evidence or to produce a document. Any person summoned, has to either attend the summon himself, or send an authorized representative. Both entities will appear under oath.

Taking a holistic view of inspection, search, seizure and arrest under GST, it can be concluded that the government as well as the GST body have well defined arrest provisions in GST, to restrict tax evasion activities across the nation. Given the stringent nature of these offenses, which attract sizeable penalty, taxpayers would hopefully be discouraged from engaging in any illegal business practices.

Seizure under GST

We started to explore the various provisions in place which enable the officers to take action against tax evasion, namely – inspection, search, seizure and arrest. To start with, we understood all about inspection and search under GST, and all the rules in place for the same. In this blog, we will go through the provisions of seizure under GST.

Seizure under GST

The term “Seizure” has not been specifically defined under GST. In legal terms, seizure under GST implies the act of taking over something or someone by force through a legal process, such as, the seizure of evidence found at the scene of a crime. It generally means – taking possession forcibly against the wishes of the owner.

Difference between Detention and Seizure under GST

In this context, most taxable persons may be confused about the difference between detention and seizure under GST. Detention is basically the act of not allowing the owner any access to the seized goods under GST, by means of a legal order or notice. In case of a detention, the ownership and possession of goods still lie with the owner, and it is issued, only when it is suspected that the goods are liable for confiscation.

However, seizure is actually taking over or possessing the goods by the department, although the ownership stays with the owner. A seizure under GST can be made only after inquiry or investigation that the goods are liable to confiscation.

Procedure for Seizure under GST

The following are the provisions pertaining to seizure of goods under GST:

  • The proper officer will give an order of seizure of goods under GST in Form GST INS-02
  • The officer authorized to search will have the power to seal the door of the premises. He can also break open the door of any premises, in case access is denied. He can also break open any cupboard or box in which goods, books, documents etc. are suspected to be concealed
  • However, if it is not practical to seize the goods, the proper officer will order the owner not to remove these goods without the prior permission of the officer. The officer will issue an order of prohibition in Form GST INS-03
  • The officer will keep the books and documents as long as it is necessary for examination and inquiry
  • Other books which are not relevant to the issue of notice will be returned within 30 days from the date of the notice
  • The seized goods under GST can be released on a provisional basis against a bond, for the value of the goods in Form GST INS-04. The owner must also furnish a security in the form of a bank guarantee for the amount due i.e. the applicable tax, interest and penalty payable
  • If the owner fails to produce the provisionally released goods at the appointed date and place, then the security will be encashed and adjusted against the amount due
  • Provisions of the Code of Criminal Procedure will apply to search and seizure of goods in GST

Post-Seizure Procedures

  • Goods – Post the seizure in GST, all the goods which have been taken into custody will be properly listed by an officer. The goods will then be divided into hazardous and non-hazardous, and also into perishable and non-perishable. The government can issue a list of hazardous or perishable goods which can be disposed as soon as they are seized. Also, post the seizure in GST, a notice is to be issued by the department. If the notice is not issued within 6 months, from the date of seizure of goods in GST, they will need to be returned. This time limit is extendable by 6 more months.
  • Documents – In case the person who is the owner of the documents, wants to make copies, he can do so in presence of the officer.

Post inspection, search and seizure under GST, if the Commissioner believes that a person has committed an offence under the requisite section of the GST Act, the concerned person can be arrested. In our next blog, we will understand the specific provisions laid down for Arrest under GST.

Mismatches between GSTR-2A & GSTR-3B

Minimize Mismatches between GSTR-2A and GSTR-3B using Tally.ERP 9

Mismatch in Input Tax Credit arising due to any difference in values between inwards supply details (furnished by businesses in their GSTR-3B) and outwards supply details uploaded by respective suppliers (available on GST portal as GSTR-2A) may lead to loss in the claimed Input Tax Credit (ITC).

Let’s look at how GSTR-3B and GSTR-2A mismatch can happen

Typically, you would have declared the consolidated value of your inward supplies in your monthly GSTR-3B returns. Your suppliers would have uploaded their sales invoices in GSTR-1, based on which your inward supplies get auto populated in GSTR-2A.

Now in case there are any discrepancies in the values of inward supplies available in GSTR-2A and inward supplies declared by you for the month in your GSTR-3B, it may lead to loss of Input Tax Credit.

Now let us understand the probable reasons for such mismatches.

Possible reasons for mismatches

  1. Your supplier has not uploaded the invoices for which you have already claimed Input Tax Credit.
  2. Values in the supplier’s invoices are not matching with values available in your books.
  3. You might have missed out recording any Purchases or Debit Notes (Purchase Returns) which resulted in reduced Input Tax Credit.

How to identify GSTR-3B and GSTR-2A mismatch

  1. Firstly, you must compare the purchases available in your books with GSTR-2A (available on GST Portal) of the respective returns period.
  2. You can manually match each purchase invoice and identify the differences or identify invoices that are not available on the GST portal or in your books.
  3. If you identify invoices whose values are either not matching or invoices are not available, connect with the respective supplier and ask him to either upload the related invoice in his latest return which is yet to be filed, or amend the invoice details at the time of filing his returns.
  4. Alternately, you can check the physical copies of respective purchase invoices and correct your purchase data, and accordingly make corrections in your latest GST returns which are yet to be filed by reversing the Input Tax Credit.

How Tally.ERP 9 eases your efforts

  1. Download GSTR-2A of the corresponding period
  2. Open Tally.ERP 9. Go to GSTR-2 Report. Load GSTR-2A into Tally.ERP 9. Within seconds, Tally.ERP 9 will show you the details of invoices which are either –
    1. Fully Matched
    2. Partially Matched: This may be due to partial match between invoices available in the books with invoices available on the GST portal.
    3. Available only in Books: This can happen if your supplier has not uploaded some invoices.
    4. Available only in Portal: This can happen if you have not recorded the transaction in your books but your supplier has uploaded the same.
  3. You can take action on the invoices which are mismatched, available only in books and available only in portal by checking with your suppliers or correcting/recording respective purchase invoices in your books.

You can download and compare GSTR-2A of previous periods with your books for all the GST returns filed for the previous periods to ensure that you have claimed the right Input Tax Credit and identify mismatch of GSTR-2A with GSTR-3B. Also, going forward, you can follow this activity for the returns of all upcoming months to reduce chances of mismatches.

Tally. ERP 9 Release 6.2 and higher versions allow you to import and match GSTR-2A. Download the latest release of Tally.ERP 9 and ensure that you get the right Input Tax Credit.

Appellate Authority for Advance Ruling under GST

It is a good time to note, that appealing against the advance ruling is a new provision in GST. The previous tax regime did not have any scope for appeal against Advance Ruling at all, and the only way to contest the ruling was by going through the Division Bench of the High Court. However, this process has been made easy by the introduction of an appeal mechanism to the Appellate Authority for Advance Ruling under GST – which we will understand in this blog.

Appellate Authority for Advance Ruling Process

The following are the various provisions laid down pertaining to the procedure for advance ruling by the Appellate Authority for Advance Ruling, under GST:

Initiation of Advance Ruling Procedure by AAAR

  • The initiation of the appeal to Appellate Authority for Advance Ruling can be made by the applicant or the officer who is aggrieved by any advance ruling
  • Appeal against the advance ruling of the AAR, must be made within 30 days from the date of the advance ruling issued by the AAR. However, this limit is extendable by 30 days.

Advance Ruling Forms by AAAR

  • The application for appealing against the advance ruling of the AAR, has to be made in Form GST ARA-02, along with the payment of fees of INR 10,000
  • If the appeal is made by a GST tax officer, then Form GST ARA-03 needs to be filed. However, no fees will be applicable in this case.

Advance Ruling Purview by AAAR

The AAAR can, by order, either confirm or modify the advance ruling issued by the AAR, which is appealed against. However, if the members of the AAAR, differ in opinion on any point, then an advance ruling cannot be issued.

Post the decision of the AAAR, a copy of the advance ruling signed by the members will be sent to the applicant, the prescribed or the jurisdictional CGST / SGST officer and to the initial authority that passed the Advance Ruling i.e. the AAR.

Advance Ruling Time Limit by AAAR

An advance ruling decision by the AAAR will be given within 90 days from the date of the application.

Rectification of the Advance Ruling by AAAR

The AAAR can amend its own order to rectify any apparent mistake, if the same is noticed within 6 months from the date of the original order. The rectification of the order can be done by:

  • AAAR on its own
  • Prescribed or the Jurisdictional CGST / SGCT officer
  • Applicant

However, it is to be noted that any rectification which may result in increase in tax liability or decrease in input tax credit, will be allowed only after giving a notice and an opportunity to be heard to the applicant.

Scope of the Advance Ruling by AAAR

The advance ruling decision by the Appellate Authority for Advance Ruling will be binding only on the following entities:

  • Applicant
  • Jurisdictional Tax Authorities in respect of the Applicant

However, if the law or the facts of the original advance ruling change, then the advance ruling issued by the AAAR will not apply.

Nullification of the Advance Ruling by AAAR

If it is discovered, that the appellant has obtained the advance ruling by fraud or suppression of material facts, then the Authority for Advance Ruling (AAR) or the Appellate Authority for Advance Ruling (AAAR) will declare the ruling to be void ab initio (from the beginning). All the provisions of GST, will then be applicable to the applicant as normal without any advance ruling – however, an opportunity of being heard will be given to the applicant, in such as case, post which advance ruling nullification may take place.

In conclusion, it can be said that the provisions of advance ruling under GST are bound to make life simpler for a taxable person who wants to gain clarity on the tax arrangements to be made for a particular transaction. However, the only area where currently a clarity is not available is – that there is no defined level of appeal beyond the 2nd level i.e. the Appellate Authority for Advance ruling. However, it may be expected that the process to appeal further should be similar to that in the previous tax system, and a taxable person who is not satisfied with the decision of the AAAR, may appeal against it, via a special dispensation to the Division Bench of the High Court.

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