Health Check of the Company - vaishali kharde

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GST – Weekly Updates – 10.07.2021 CA Vaishali Kharde (Founder and CEO of VBK and Company) Overview Export Benefits GST Areas Covered - GST Online Portal Updates Weekly Key Key Updates Pronouncements Highlights Ongoing Litigation Link For Recorded Videos Links for Recorded discussion on GST Updates dated 10.07.2021 • Part - 1 | Online Portal Updates | 10.07.2021 • Part - 2 | Key Highlights | 10.07.2021 • Part - 3 | Ongoing Litigation | 10.07.2021 • Part - 4 | Key Pronouncements | 10.07.2021 Online Portal Updates New Functionality Related to SCN on GST Portal Adjournment of PH New Functionality related to SCN Extension for filing reply to SCN Changes Related to QRMP Scheme on GST Portal 1 • Auto population of GSTR-3B liability from IFF and Form GSTR 1 • The liability declared through optional IFF for Month 1 and Month 2 of a quarter & in GSTR-1 for Month 3 of that quarter would now be auto-populated in their GSTR-3B (Quarterly). These fields are editable and in case their values are revised upwards or downwards, the edited field(s) would get highlighted in red colour with a warning message. However, the system would not prevent taxpayer from filing of Form GSTR-3B with edited values. • 2. • Nil filing of Form GSTR-1 (Quarterly) through SMS • SMS facility has been enabled for Nil GSTR-1 (Qtrly) under QRMP Scheme. A message can be send in specified format to 14409. • The format of the message is < NIL > space < Return Type (R1) > space< GSTIN > space < Return Period (mmyyyy) > . Example: NIL R1 07XXXXX1234H8Z6 062020 (where return period must be last month of the quarter) Changes Related to QRMP Scheme on GST Portal 3 • Impact of cancellation of registration on liability to file Form GSTR-1 • In case registration of a taxpayer under QRMP Scheme is cancelled, with effective date of cancellation being any date after 1st day of Month 1 of a quarter, they would be required to file Form GSTR-1 for the complete quarter, as the last applicable return. For example if the taxpayer’s registration is cancelled w.e.f. 1st of April, he/she is not required to file Form GSTR-1 for Apr-June quarter and Form GSTR-1 for Jan-Mar Quarter shall become the last applicable return. However, if the registration is cancelled on a later date during the quarter, the taxpayer would be required to file Form GSTR-1 for Apr-June quarter. In such cases the filing will become open on 1st of month following the month with cancellation date i.e. if cancellation has taken place on 20th May, Form GSTR-1 for Quarter Apr-June can be filed anytime on or after 1st of June. Key Highlights Amazon Business customers will now able to claim ITC Earlier, customers were able to get GST invoices only for the orders shipped to a state where they had a GSTIN registration. Thus billing address on the invoices were same as shipping address and customers who did not have GSTIN for shipping address could not claim GST Input tax credit for such orders But now ‘Bill to Ship to’ feature launched by amazon will able to resolve this issue and customer can avail ITC Complaint can be filed on Denial of Benefits of GST Rate-Cut As per news report consumer can file a complain on denial of the benefit of the reduced GST rates on Covid relief items such as some medicines, thermometer, oximeter or hand sanitiser, NAA has communicated to tax officials to take up any complaint filed by consumers on priority and to forward the same to the anti- profiteering Authorities Thus, Revisit the Basic Cost structure of product if GST rate is reduced. Ongoing Litigation GST Authorities Using Radio Frequency Data to Detect Tax Evasion, Fraud Technology • Detection of frauds with respect to movement of Goods • E-way bills were integrated with the radio frequency identification (RFID) tags in January 2021. • Thus, now cross-verifying the details of vehicle movement specified in the e-way bill with their physical movement will detect mismatches and accordingly will help to detect tax evasion and/or frauds related to fake invoices or firms GST Authorities Using Radio Frequency Data to Detect Tax Evasion, Fraud Technology • Thus, now Authorities have started detecting instances of tax evasion and/or fraud by identifying mismatches between E-way bill issued for transporting goods and the data from radio frequency tags that commercial vehicles use to pass through toll plazas. Key Pronouncements Interim relief granted:Recovery Order of ITC due to mis-match Case • Bharat Aluminium Company [2021-TIOL-1414-HC-CHHATTISGARH-GST] ▪ As per the Press Release of GST Council dated 04th May 2018, there shall Issue not be any automatic reversal of ITC of buyer on non-payment of tax by the seller. • It is directed that on petitioner's depositing 5% amount of Rs.14,93,79,211/- demanded vide order dated 22.01.2021 within a period Observation of 15 days, no coercive steps shall be taken pursuant to the said order. • Matter listed 02nd August, 2021 Interim relief granted:Recovery Order of ITC due to mis-match • Para 18.3 of 28th GST Council meeting • This would reduce the number of pending invoices for which input tax credit is to be taken. There would be no automatic reversal of input tax credit at the recipient's end where tax had not been paid by the supplier. Revenue administration shall first try to recover the tax from the seller and only in some Our Comment exceptional circumstances like missing dealer, shell companies, closure of business by the supplier, input tax credit shall be recovered from the recipient by following the due process of serving of notice and personal hearing. He stated that though this would be part ofiT architecture, in the law there would continue to be a provision making the seller and the buyer jointly and severally responsible for recovery of tax, which was not paid by the supplier but credit of which had been taken by the recipient. Interim relief granted:Recovery Order of ITC due to mis- match • In case of M/s Onyx Designs Vs ACCT (Karnataka High Court) •It was held that benefit of Input tax Could not be deprived to the purchaser, dealer if purchaser dealer satisfactory demonstrated that Our Comment while purchasing goods, he had paid amount of tax to the selling dealer. •Similarly in case of Tarapore and Company (Jharkhand High Court) •ITC can not be denied for default by selling agent Blocking of electronic ledger Case • Vimal Petrothin Pvt Ltd [2021-TIOL-1412-HC-UKHAND-GST] • ITC available in the electronic ledger was provisionally blocked on the ground that petitioner had availed input tax credit, amounting to Rs.1.5 crores, based on fake invoices issued by non-existing Issue firms • The said blockage was made on 15.01.2020 under Rule 86(A)(1) of Rules, 2017 Blocking of electronic ledger • 86A. Conditions of use of amount available in electronic credit ledger.- • (1) The Commissioner or an officer authorised by him in this behalf, not below the rank of an Assistant Commissioner, having reasons to believe that credit of input tax available in the electronic credit ledger has been fraudulently availed or is ineligible in as much as • a) the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed under rule 36- • i. issued by a registered person who has been found non-existent or not to be conducting any business from any place for which registration has been obtained; • ii. without receipt of goods or services or both; or • b) the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed Legal Provision under rule 36 in respect of any supply, the tax charged in respect of which has not been paid to the Government; or • c) the registered person availing the credit of input tax has been found non-existent or not to be conducting any business from any place for which registration has been obtained; or • d) the registered person availing any credit of input tax is not in possession of a tax invoice or debit note or any other document prescribed under rule 36, may, for reasons to be recorded in writing, not allow debit of an amount equivalent to such credit in electronic credit ledger for discharge of any liability under section 49 or for claim of any refund of any unutilised amount. • (2) The Commissioner, or the officer authorised by him under sub-rule (1) may, upon being satisfied that conditions for disallowing debit of electronic credit ledger as above, no longer exist, allow such debit. • (3) Such restriction shall cease to have effect after the expiry of a period of one year from the date of imposing such restriction." Blocking of electronic ledger • Petitioner's electronic credit ledger cannot be blocked for any period in excess of one year, in view of express provision contained in Sub-Rule (3) of Observation Rule 86(A) of C.G.S.T. Rules • Thus it is directed to unblock ITC availed by the petitioner in its electronic credit ledger. Way forward • Revisit blocking of credit ledger Export Benefits MEIS, SEIS, ROSL and ROSCTL benefits kept on hold No fresh applications would be allowed to be All submitted applications pending for issuance submitted at the online IT module of DGFT for of scrips would also be on hold MEIS, SEIS, ROSL and ROSCTL schemes SEIS Notification for FY 19-20 D.O.No. 140604A/3/2021-DBK •Continuation of SEIS benefit for FY 2019-20 •There could be suitable cap on SEIS benefits •Necessary action for issuance of notification for implementing SEIS benefits will be taken by Department of Commerce SEIS Notification for FY 19-20 D.O.No. 140604A/3/2021-DBK •Continuation of SEIS benefit for FY 2019-20 •There could be suitable cap on SEIS benefits •Necessary action for issuance of notification for implementing SEIS benefits will be taken by Department of Commerce Substantial Benefit Cannot Be Denied For Inadvertent Human Error Case • K.I. International Ltd [W.P. No. 16328 of 2020 dated June 23, 2021] ▪ The assessee made an error while uploading the shipping bills on the EDI, wherein, the field requiring the word ‘yes or no’ for claiming the MEIS Issue Scheme benefit has been erroneously filled as ‘No’ instead of ‘yes’. But the intention of the Petitioner is expressed in the shipping bills from inception. • - The shipping bills show an intention to avail benefit under the MEIS Scheme Observation -Substantial benefit under MEIS scheme cannot be denied for inadvertent human error Substantial Benefit Cannot Be Denied For Inadvertent Human Error • Representation for grant of the MEIS Scheme filed after one year and 9 Observation months from the due date of filing the shipping bills, but it would be too harsh to deny the benefit. Way forward • Revisit MEIS benefit, if any unclaimed Thank You Firm CA Vaishali B Kharde and Co. 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