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GSTCOUNSELLOR GSTC

VOLUME: 6 21 AUGUST, 2020

NUMBER: 21

CONTENTS...

THE EDITOR’S DESK ANNOUNCEMENT

GST UPDATES

GST NEWS

OBLIGATIONS UNDER GST

ADVANCE RULINGS UNDER GST

FROM THE GOVERNMENT / CBIC

RELEVANT TERMS AND PHRASES

DECODING GST LAW

GST UNDERSTANDING

EVENTS

GST LITERATURE

GST HUMOUR GST CAPSULE

A THOUGHT IN QUOTE

ANNOUNCEMENTS

EDITOR:NEHA SOMANI, [B.COM, ACA] CHIEF EDITOR: DR. SANJIV AGARWAL, [FCA, FCS, ACIS (UK)]

ASCO’S GOODS & SERVICE TAX COUNSELLOR

(AN INHOUSE TRI-MONTHLY NEWSLETTER ON GST)

(FOR PRIVATE CIRCULATION)

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GSTCOUNSELLOR GSTC

Dear Readers,

Dear Readers,

The Covid hit life and economy continues and all of us are becoming used to it and both co-live together. The economy is still weak and looking at various options on how to recover and move forward. Presently in India, local lockdowns are in force depending upon local situation as nationwide lockdown is not considered feasible. Indian economy has shrunk by 15-25% in first quarter of financial year 2020-21 and it is imperative for India to gain control over Covid -19 to have sustainable economic recovery. Last week, Prime Minister launched the e-platform for ‘Transparent Taxation – Honouring the Honest’ for direct taxation. Infact same should be done for indirect taxes which is contributed by both, the rich and the poor. About 65% of the total tax collections come from indirect taxes. The data sharing and analytics can bring in more tax revenue in both type of taxes. GST Council has not met for few weeks now. The next two meetings of GST Council have been announced. One is on 27 August, 2020 to discuss compensation cess issues in the backdrop of inadequate cess and state’s demands. The other meeting shall be on September 19, 2020 to discuss various issues including e-way bills for gold, changes in returns etc. CBIC has issued Notification No. 62/2020-CT dated 20.08.2020 to amend CGST Rules, 2017 in relation to registration application and its verification including physical verification of business premises. CBIC/GSTN have also allowed facility of down loading document wise details of Table 8A of Form GSTR 9, besides issuing FAQ’s on QR Code and advisory on signed QR Code in e-invoicing system. We commend this issue of newsletter amidst virtual celebrations on account of Ganesh Chaturthi. DATE: 21.08.2020 DR. SANJIV AGARWAL

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GSTCOUNSELLOR GSTC

GST Newsletter In view of COVID 19 Virus, there may be situations wherein we may not be able to release GST

Counsellor Newsletter on the scheduled dates. However, we shall try to be regular –both in

frequency and content.

Amendments in CGST Rules, 2017

(1) Registration Application [Rule 8(4A)] W.e.f. 01.04.2020, sub-rule (4A) has been substituted as follows in relation to registration application for person other than persons specified in section 25(6D) of CGSt Act, 2017. “Where an applicant, other than a person notified under sub-section (6D) of section 25, opts for authentication of Aadhaar number, he shall, while submitting the application under sub-rule (4), with effect from 21st August, 2020, undergo authentication of Aadhaar number and the date of submission of the application in such cases shall be the date of authentication of the Aadhaar number, or fifteen days from the submission of the application in Part B of FORM GST REG-01 under sub-rule (4), whichever is earlier.”

(2) Verification of registration application (Rule 9) W.e.f. 21.08.2020 following amendments / substitutions have been made: (a) Where a person, other than a person notified under sub-section (6D) of section 25,

fails to undergo authentication of Aadhaar number as specified in sub-rule (4A) of rule 8 or does not opt for authentication of Aadhaar number, the registration shall be granted only after physical verification of the place of business in the presence of the said person, in the manner provided under rule 25.

(b) The proper officer may, for reasons to be recorded in writing and with the approval of an officer not below the rank of Joint Commissioner, in lieu of the physical verification of the place of business, carry out the verification of such documents as he may deem fit.

GOODS AND SERVICES TAX UPDATES

ANNOUNCEMENT

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GSTCOUNSELLOR GSTC

(c) Provided that where a person, other than a person notified under sub-section (6D) of section 25, fails to undergo authentication of Aadhaar number as specified in sub-rule (4A) of rule 8 or does not opt for authentication of Aadhaar number, the notice in FORM GST REG-03 may be issued not later than twenty one days from the date of submission of the application.

(d) If the proper officer fails to take any action -

(i) within a period of three working days from the date of submission of the application in cases where a person successfully undergoes authentication of Aadhaar number or is notified under sub-section (6D) of section 25; or

(ii) within the time period prescribed under the proviso to sub-rule (2), in cases

where a person, other than a person notified under sub-section (6D) of section 25, fails to undergo authentication of Aadhaar number as specified in sub-rule (4A) of rule 8; or

(iii) within a period of twenty one days from the date of submission of the

application in cases where a person does not opt for authentication of Aadhaar number; or

(iv) within a period of seven working days from the date of the receipt of the

clarification, information or documents furnished by the applicant under sub-rule (2),

the application for grant of registration shall be deemed to have been approved.

(3) Physical verification of business premises w.e.f. 21.08.2020 [Rule 25] W.e.f. 21.08.2020, this rule will apply on failure of addhaar authentication or due to not opting for aadhaar authntication.

(Source: Notification No. 62/2020-Central Tax dated 20.08.2020)

Form GSTR-4 annual return by composition taxpayers Who doesn’t need to file Form GSTR-4 (Annual Return)? Following persons are not required to file Form GSTR-4 (Annual Return):

• Non-resident taxable person • Regular taxpayer who have not opted in composition scheme for any period during the

financial year • OIDAR • Input service distributor • Casual Taxable Person • Person required to Deduct Tax at Source u/s 51 • Person required to Collect Tax at Source u/s 52 • UIN holder

[Source : FAQs on GSTR-4 (Annual Return) Offline Utility issued by GSTN]

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GSTCOUNSELLOR GSTC

Form GSTR-9 How to download document wise details of Table 8A of Form GSTR-9. GSTN has issued following advisory on 17.08.2020

1) A facility has been provided to the taxpayers to download document wise details of Table 8A of Form GSTR-9, from the portal in excel format. This can be done by using a new option of ‘Document wise Details of Table 8A’ given on the GSTR-9 dashboard, from Financial Year 2018-19 onwards. This will help the taxpayer in reconciling the values appearing in Table 8A of Form GSTR 9, thus facilitate filling the Form GSTR 9.

2) Table 8A of Form GSTR 9 is populated on basis of documents in filed Form GSTR-1 or Form GSTR-5 of the supplier. Thus, all documents which are present in GSTR-2A (Table 3 & 5), will not be available here, as documents which are in uploaded or submitted stage in Form GSTR 1 or 5, are not accounted for credit in table 8A of Form GSTR 9.

3) This excel download will address issues like: • Figures of Input Tax Credit (ITC), as pre-populated in table 8A of GSTR-9, not

matching with the figures, as appearing in their Form GSTR-2A; • To view details of documents that are auto-populated from GSTR-2A, to table 8A

of Form GSTR-9. 4) Steps to Download: To download, navigate to Services > Returns > Annual Return >

Form GSTR-9 (PREPARE ONLINE) > DOWNLOAD TABLE 8A DOCUMENT DETAILS option.

5) It may be noted that:

§ Excel download option will be available once GSTR-9 tab for filing is enabled

§ Generated excel will be downloaded as a zip file, if number of documents are less

§ Generated excel can be downloaded in multiple parts, if number of documents are Large

§ Data saved/submitted in Form GSTR-1/5 will be shown in Form GSTR-2A, but will not be shown in downloaded excel file of Table 8A of Form GSTR-9

6) Downloaded excel file will contain: • GSTIN, Trade Name or Legal Name of the supplier • The period (month) in which the document featured in GSTR-2A of the recipient • Document wise details of B2B (invoices), B2BA (amended invoices), CDNR (credit

and debit notes) and CDNRA (credit and debit notes amended), filed by supplier in their Form GSTR-1/GSTR-5, in separate Excel sheets

• Details from only Form GSTR-1/GSTR-5, which are filed till 31st October of subsequent year

• In case of amendments, only latest value will be accounted for • Field showing “ITC available for Table 8A” – “Yes” or “No” • If ITC is not available, a column named ‘Reason for Non-accounting’ with reasons

for non-accounting in Table 8A

[Source : www.gst.gov.in/services.gst.in]

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GSTCOUNSELLOR GSTC

Setting up of GSTAT continue to be in limbo

• Madras High Court has restrained Central Government from appointing Technical Members to GST Appellate Tribunal (GSTAT) till further orders.

• GSTAT’s can not be constituted or made functional in absence of such members. • A petition had been filed by the Revenue Bar Association (RBA) challenging the rules

concerning the appointment and the terms of service governing the President and Members of the GSTAT that is the GSTAT (Appointment and Conditions of Service of President and Members) Rules, 2019.

• Since the Respondent (Union of India) sought adjournment, Madras High Court has extended the interim order dated 03.10.2019 till further orders.

[Source : Service Bar Association v. Union of India in W.P. No. 10863/2020 and WMP Nos. 13183 & 13185 /2020; Order dated 17.08.2020]

The Goods and Services Tax (GST) Council has scheduled two important meetings on August 27 and September 19, according to senior Government sources. Finance Minister had earlier mentioned that the Council’s 41st meeting on August 27 would discuss a single matter: compensation to states for revenue losses under the indirect tax regime.As compensation cess collection has plummeted amid weak economic activities due to the Covid-19 pandemic, GST collection in 2020-21 is unlikely to see enough growth to meet this shortfall. As a result, the 41st meeting GST Council headed by the Union Finance Minister is likely to see efforts to resolve the differences between Centre and states over responsibility of the cess liability.

The Council will weigh several options such as market borrowing to fund compensation deficit, adding more items under compensation cess, and/or rationalising tax rate, HT quoted two officials as saying.States and the Centre have voiced differing opinions on the proposal for market borrowing. The Attorney General of India’s legal opinion stated that the Centre is not obligated to pay for the revenue shortfall and the Centre can allow states to borrow on the strength of future receipts from the compensation fund, with the central government taking the final decision in the matter.

States argue that the compensation corpus will not have enough funds to cover for the borrowing, and that it is the Centre’s responsibility to pay compensation on time. States, thus,

GOODS AND SERVICES TAX

41ST GST COUNCIL MEET: COVID MAKES FOR GRIM BACKDROP AS BATTLE BREWS OVER REVENUE SHARING

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are more in favour of expanding the ambit of compensation cess and raising tax rates to build revenues.There is virtually no money left to pay compensation to states from April. Market borrowing is one of the solutions, but who will take the guarantee is a big question and that issue needs to be resolved.

When the new indirect tax regime was introduced in July 2017, the GST law assured states of a 14 per cent increase in annual revenues for five years (up to 2022) — with the revenue shortfall made good through compensation cess levied on luxury goods like automobiles and and sin goods like liquor, cigarettes and other tobacco products.Compensation cess collected in 2017-18 and 2018-19 was higher than the GST compensation paid in those years. While in 2019-20, states were paid Rs 1,65,302 crore compensation even though toalcess collection was at Rs 95,444 crore and this gap is expected to widen this year.

The Council may look at sin goods, like pan masala which attracts 100 per cent cess with an upper ceiling at 130 per cent, to bolster cess collection. Aerated drinks incur cess of 12 per cent with upper limit at 15 per cent, and the rate of cess on tobacco products is limited at Rs 4,170 per 1,000 sticks or 290 per cent ad valorem. This gives the Council enough window to levy additional cess in increments, which it may look at in the 42nd meeting as well.At the Council’s 42nd meeting on September 19, there is a strong likelihood of discussions happening on issues like resolution of inverted duty structure, tax on pan masala and measures on ease of doing business, according to various reports.

(SOURCE: ECONOMIC TIMES DATED 20.08.2020)

The GST Council will meet on August 27 to discuss modalities to meet the shortfall in compensation paid to States for their revenue loss on account of GST implementation. Another meeting of the Council has been scheduled on September 19 to discuss various other issues.The August 27 meeting assumes significance as it will consider the opinion given by the Attorney General (AG) on ways to meet to the compensation shortfall.

According to sources, the AG has opined that there is no obligation on the Central government to pay the GST compensation shortfall. It is the GST Council which has to decide on making good the shortfall in the GST compensation fund by providing the sufficient amount to be credited to this.

The GST Council can recommend to the Centre to allow the States to borrow on the strength of the future receipts from the compensation fund. It would be, however, for the Central government to take a final decision in the matter under Article 293(3) of the Constitution.

The AG said the Constitution provides for GST compensation to States for loss of revenue on account of implementation of the GST. There is no obligation under the Constitution or GST laws to make good the loss on account of a natural disaster, Covid-19, economic slowdown, etc, because they are not related to the implementation of GST. The GST Council has to decide how to meet the shortfall in such circumstances, and not the Central government, an official explained the AG’s opinion.Another source said the Parliament in 2017 rejected an amendment

GST COUNCIL MEET ON AUGUST 27 TO DISCUSS COMPENSATION PAYOUT

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which had proposed make the Central government accountable to meet the GST compensation shortfall by paying from the Consolidated Fund of India.

In fact, the issue had come up again during a Parliamentary committee meeting last month, where Finance Ministry officials expressed the Centre’s difficulty in paying GST compensation to States. On Monday, the Centre claimed settling the compensation for full fiscal 2019-20 by paying over Rs. 1.65-lakh crore as against a cess collection of Rs. 95,444 crore.

The Goods and Services Tax (Compensation to States) Act, 2017 mandates payment of full revenue compensation for the first five years from the date of introduction of GST. It is paid bi-monthly; the last instalment for a financial year is given in the next year.

For calculating the compensation amount, the projected nominal growth rate of revenue subsumed for a State during the transition period has been fixed at 14 per cent per annum. For calculation, 2015-16 has been taken as the base year. Cess is levied on various goods and services falling in the category of 28 per cent slab to pay for the compensation.

The options before the GST Council for meeting the shortfall are: to rationalize GST rates, cover more items under the compensation cess or increase the compensation cess, or recommend higher borrowing by States to be repaid by the future collection into the compensation fund, etc. Considering the current situation of economy, it is believed that borrowing could be the best possible solution.

(SOURCE: BUSINESS LINE DATED 20.08.2020)

GST Network said it has enabled a functionality to help GST payers know their input tax credit (ITC) eligibility in their Annual Return, making it more convenient to file GSTR-9. So far, the GST system used to compute eligible ITC NSE 1.30 % based on suppliers' sales return GSTR-1, but the break-up at the invoice level was not provided. Taxpayers used to raise a query on the computation of ITC.

In a statement, Goods and Services Tax Network (GSTN), which handles the technology backbone of GST, said that to bring the entire computation to taxpayers by way of showing each invoice filed by the suppliers and showing eligibility against each, this functionality has been developed.

GSTN has rolled out an important functionality today which will help GST taxpayers know their exact eligibility of ITC flowing in their Annual Return and thereby filing the annual return, i.e. GSTR-9 more conveniently.For this functionality, a new tab Download Table-8A detailshas been introduced on the GSTR-9 dashboard of the GST portal from Financial Year 2018-19 onwards.

(SOURCE: ECONOMIC TIMES DATED 18.08.2020)

GST NETWORK ENABLES FUNCTIONALITY TO HELP GST PAYERS ON ITC ELIGIBILITY

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The government’s tax transparency initiative with faceless assessment and appeals and a taxpayer charter is welcome. Corruption depends on human interface and the misuse of arbitrary powers by taxmen. That must go. Contactless assessment will minimise the interface between the assessing officer and the assessee, and improve compliance. Tax officers must also desist from making high-pitched assessments in their zeal to meet collection targets. Launching the platform for ‘Transparent Taxation — Honouring the Honest’, Prime Minister urged people to introspect and pay their tax dues.

However, the way to increase direct tax collections is to clean up the goods and services tax (GST), which generates audit trails to income currently escaping tax. Nearly 66% of the total tax collections in the country come from indirect taxes that are borne by the rich and poor alike. The share of direct taxes in total tax revenues must rise. The mining of GST data and electricity bills makes it eminently feasible. The gross value added for the economy is equal to the gross profits plus wages and salaries.It holds at the firm level and can be used to estimate the value added by each production unit, and its distribution to taxable entities. Electricity bills and employee provident fund payouts must tally with the claimed production and value added levels.

The remedy is to extend the reach of formal finance, make small units keep books and bring these into tax net. Data analytics must be used to track the physical volumes of raw materials along their production chain ending in tax-evaded goods. If garments evade taxes, the suppliers of the fibre that is spun into yarn later converted to fabric should be asked to furnish the details of all their customers. These should be traced, and their customers, and so on. Reverse charge should be used more widely, also be universal so that buyers can pay tax on their purchases directly to the government while recognising the vendor on whose behalf the tax is being paid.

(SOURCE: ECONOMIC TIMES DATED 14.08.2020)

The GST intelligence officials have detected over Rs 17 crore tax evasion by a major cement manufacturer in Satna and arrested one of its directors, according to an official statement. They also conducted multiple searches in the states of Madhya Pradesh and Uttar Pradesh from August 5 to August 11 at various premises belonging to the cement manufacturer located at Maihar, Satna and their registered dealers and distributors.

Searches have indicated that substantial quantities of cement and clinker have been supplied clandestinely without payment of Goods & Service Tax (GST) in the states of MP and UP, the statement issued by the Directorate General of GST Intelligence (DGGI), Bhopal zonal unit.The searches were conducted at Maihar, Satna, Allahabad, Kushinagar, Agra, Kanpur and New Delhi. In all, 28 searches were conducted during the one-week long operation.

GST INTELLIGENCE DETECTS OVER RS 17-CR TAX EVASION BY MP CEMENT FIRM

IMPLEMENT GST, TO BOOST DIRECT TAX

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During the factory search, the team of DGGI officials was surrounded by a mob of people who threatened and interfered with the official proceedings.Immediate assistance from Madhya Pradesh Police was requested which was spontaneously provided. Subsequent operation was conducted under the security cover provided by the Madhya Pradesh Police, it said.

During the operation it has been revealed that more than 400,000 tons of limestone has been procured in excess of what has been declared in the formal records of the company during the period from January till July, 2020.By suppressing the procurement of limestone, the company appears to have manufactured cement and clinker which has been supplied clandestinely to various dealers and units in Madhya Pradesh and Uttar Pradesh without the payment of the GST.In this process, as per preliminary estimates about Rs 15.1 crore of GST is suspected to have been evaded during the seven-month period from January till July, 2020.

More than 1.2 million cement bags were found short in stocks when compared with the formal records maintained by the company, it said, adding that these are also suspected to have been supplied clandestinely without payment of GST.The DGGI officials also recovered cash transaction private records from company officials revealing unaccounted cash credit of more than Rs 7.5 crore for few months period in the year 2018.

The GST implication on these transactions is estimated to be about Rs 2.1 crore, it said, adding that unaccounted cash of Rs 52.39 lakh was also recovered by the central GST officials during the searches.In view of the serious offences committed and the evidences collected, two directors of the company were identified as organiser and financial beneficiary of this GST evasion case.One of the directors, has been arrested on 12th August, 2020 under the provisions of Central GST Act, 2017.

Another director did not join the investigations despite being summoned for three times. He produced a medical opinion regarding Covid-19 symptoms. However, he has now absconded and is being traced by the officials.The absconding director had been earlier convicted for offence under Indian Penal Code in the coal block allocation case by the Delhi District court in the year 2017.

(SOURCE: BUSINESS STANDARD DATED 13.08.2020)

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DUE DATES OF VARIOUS FILINGS IN RESIDUAL AUGUST, 2020

Return Purpose Period To be filed by

GSTR-3B Payment of tax July, 2020 20/22/24.08.2020

ITC-04 Details of goods or capital goods sent to job worker and received back

June , 2020 31.08.2020

GSTR-5 To be filed by Non- Resident taxable persons. The due date of GSTR-5 in normal course is earlier of,

a) Within 20 days after the end of a calendar month b) Within 7 days after the last day of validity period of registration.

July, 2020 31.08.2020

GSTR-5A To be submitted by the OIDAR service providers. GSTR-5A is furnished on or before within 20 days after the end of the month.

July, 2020 31.08.2020

GSTR-6 Details of all the invoices on which credit has been received and details of tax invoices issued by ISD to be furnished

July, 2020 31.08.2020

GSTR-7 Details of TDS deducted, amount of TDS paid and payable and any refund of TDS claimed

July , 2020 31.08.2020

GSTR-8 Details of tax collected at source(TCS) July, 2020 31.08.2020

OBLIGATIONSUNDER GOODS AND SERVICES TAX

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Valuation of and ITC on second hand goods (Jewellery)

In Attica Gold Pvt. Limited, In re (2020) 4 TMI 690 (AAR, Karnataka)], the valuation of supply of second hand gold jewellery which are purchased from individuals who are not registered under GST by a person who is dealer in second hand goods (jewellery) and raising invoices as such goods only , with no change in the form and nature of such goods, can be made as prescribed under sub-rule (5) of rule 32 of the Central Goods and Service Tax Rules.In case the said dealer purchases second hand jewellery from registered person, such dealer will be eligible to claim input tax credit on such inward supplies but if he claims the input tax credit against such inward supplies, he would not be eligible for the margin scheme of valuation as prescribed in sub-rule (5) of rule 32 of the Central Goods and Services Tax Rules for the outward supplies of such second hand jewellery.

MINISTRY OF FINANCE

(Department of Revenue)

(CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS)

NOTIFICATION NO. 62/2020–Central Tax

New Delhi, the 20th August, 2020

G.S.R. 517(E).-In exercise of the powers conferred by section 164 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following rules further to amend the Central Goods and Services Tax Rules, 2017, namely:-

1. Short Title and commencement.-

(1) These rules may be called the Central Goods and Services Tax (Tenth Amendment) Rules, 2020.

GOODS AND SERVICES TAX : FROM THE GOVERNMENT

ADVANCE RULING UNDER GST

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(2) Save as otherwise provided, they shall come into force on the date of their publication in the Official Gazette.

2. In the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the said rules), in rule 8, for sub-rule (4A), the following sub-rule shall be substituted with effect from 01st April, 2020, namely: -

“(4A) Where an applicant, other than a person notified under sub-section (6D) of section 25, opts for authentication of Aadhaar number, he shall, while submitting the application under sub-rule (4), with effect from 21st August, 2020, undergo authentication of Aadhaar number and the date of submission of the application in such cases shall be the date of authentication of the Aadhaar number, or fifteen days from the submission of the application in Part B of FORM GST REG-01 under sub-rule (4), whichever is earlier.”.

3. In the said rules, in rule 9, with effect from 21st August, 2020,-

(i) in sub-rule (1), for the proviso, the following provisos shall be substituted, namely:-

“Provided that where a person, other than a person notified under sub-section (6D) of section 25, fails to undergo authentication of Aadhaar number as specified in sub-rule (4A) of rule 8 or does not opt for authentication of Aadhaar number, the registration shall be granted only after physical verification of the place of business in the presence of the said person, in the manner provided under rule 25:

Provided further that the proper officer may, for reasons to be recorded in writing and with the approval of an officer not below the rank of Joint Commissioner, in lieu of the physical verification of the place of business, carry out the verification of such documents as he may deem fit.”;

(ii) in sub-rule (2), before the Explanation, the following proviso shall be inserted, namely: -

“Provided that where a person, other than a person notified under sub-section (6D) of section 25, fails to undergo authentication of Aadhaar number as specified in sub-rule (4A) of rule 8 or does not opt for authentication of Aadhaar number, the notice in FORM GST REG-03 may be issued not later than twenty one days from the date of submission of the application.”;

(iii) in sub-rule (4), for the word, “shall”, the word “may” shall be substituted;

(iv) for sub-rule (5), the following sub-rule shall be substituted, namely: -

“(5) If the proper officer fails to take any action, -

(a) within a period of three working days from the date of submission of the application in cases where a person successfully undergoes authentication of Aadhaar number or is notified under sub-section (6D) of section 25; or

(b) within the time period prescribed under the proviso to sub-rule (2), in cases where a person, other than a person notified under sub-section (6D) of section 25, fails to undergo authentication of Aadhaar number as specified in sub-rule (4A) of rule 8; or

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(c) within a period of twenty one days from the date of submission of the application in cases where a person does not opt for authentication of Aadhaar number; or

(d) within a period of seven working days from the date of the receipt of the clarification, information or documents furnished by the applicant under sub-rule (2),

the application for grant of registration shall be deemed to have been approved.”.

4. In the said rules, in rule 25, with effect from 21st August, 2020, after the words “failure of Aadhaar authentication”, the words “or due to not opting for Aadhaar authentication” shall be inserted.

[F. No. CBEC-20/06/16/2018-GST (Pt. II)]

PRAMOD KUMAR, Director

Note : The principal rules were published in the Gazette of India, vide notification No. 3/2017-Central Tax, dated the 19th June, 2017, published vide number G.S.R. 610(E), dated the 19th June, 2017 and was last amended vide notification No. 60/2020-Central Tax, dated the 30th July, 2020, published vide number G.S.R. 480(E), dated the 30th July, 2020.

For text of Notifications / Circulars / Press Releases, Finance Bill please visit www. cbic.gov.in www.gstcounsellor.com

Meanings of Latin Words and Expressions generally used in

Legal drafting and Judicial Pronouncements

Ab extra From outside From outside

Mala fide Dishonest, made or carried out in badfaith

De novo Afresh, from the beginning

Ex gratia A favour or gift that is not legallynecessary

Fiat justitia Let the justice be done though theheavens fall

Inter alia Amongst other things

LATIN WORDS AND EXPRESSIONS

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No Penalty imposed when profiteering confirmed

All along, National Anti-profiteering Authority (NAA) has been imposing penalty and issuing notices for

levy of penalty for violation of Section 171. However, in a recent order dated 14.08.2020 in Varun Goel

and DGAP, New Delhi v. Eldeco Infrastructure & Properties Ltd. New Delhi [(2020) 8 TMI 369], NAA has

interpreted that even though the supplier was found guilty of contravention of provisions of section 171 of

CGST Act, 2017, for denying the benefit of input tax credit to flat buyer, penalty could not be imposed as

there were no penalty provisions in the law when ITC was denied by the supplier. Once the profiteering

was confirmed, a show cause notice was issued seeking to invoke penal action under section 122 read

with rule 133(3)(d) of the CGST Rules, 2017.

It was observed and concluded that the supplier had not passed on the benefit of additional ITC to the

buyers of his flats/plots with effect from July 01, 2017, to August 31, 2018, which he was required to

pass on every month as it was availing the benefit of ITC every month to discharge it GST liability.

However, the supplier has passed on the benefit of ITC in the month of February, 2019 after the Authority

had initiated proceedings against the Respondent vide its notice dated December 07, 2018.

No penalty had been prescribed for violation of the provisions of Section 171 (1) of the CGST Act, and as

such, the supplier respondent was issued show cause notice to state why penalty should not be imposed

on him for violation of the above provisions as per Section 122 (1) (i) of the CGST Act as it had apparently

issued incorrect or false invoice while charging excess consideration and GST from the buyers. Section

122 (1) (i) states as under:-

“122 (1) Where a taxable person who

(i) supplies any goods or services or both without issue of any invoice or issues an incorrect or false

invoice with regard to any such supply;

……………………..

……………………..

…………………….,

he shall be liable to pay a penalty of ten thousand rupees or an amount equal to the tax evaded or the tax

not deducted under section 51 or short deducted or deducted but not paid to the Government or tax not

collected under section 52 or short collected or collected but not paid to the Government or input tax

availed or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher.”

DECODING GST LAW

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The NAA noted that the perusal of Section 122 (1) (i) reveals that the violation of the provisions of Section

171 (1) is not covered under it as it does not provide penalty for not passing on the benefits of tax

reduction and ITC. It only provides for imposition of penalty for not issuing an invoice or for issuing an

incorrect or false invoice in respect of any supply of goods or services or both. Perusal of proviso attached

to this Section also shows that it provides for imposition of penalty of ten thousand rupees or equal to the

tax evaded or the tax not deducted under section 51 or short deducted or deducted but not paid to the

Government or tax not collected under section 52 or short collected or collected but not paid to the

Government or input tax availed or passed on or distributed irregularly, or the refund claimed

fraudulently, whichever is higher. Since, the profiteered amount is not a tax imposed under the CGST

Act, 2017, the above penalty cannot be imposed for violation of the anti-profiteering provisions made

under Section 171 of the CGST Act.

It was further observed that vide Section 112 of the Finance Act, 2019 specific penalty provisions have

been added for violation of the provisions of Section 171 (1) which have come in to force w.e.f.

01.01.2020, by inserting Section 171 (3A) which provides as under:-

“(3A) Where the Authority referred to in sub-section (2) after holding examination as required

under the said sub-section comes to the conclusion that any registered person has profiteered

under sub-section (1), such person shall be liable to pay penalty equivalent to ten per cent. of the

amount so profiteered:

PROVIDED that no penalty shall be leviable if the profiteered amount is deposited within thirty

days of the date of passing of the order by the Authority.

Explanation:- For the purpose of this section, the expression “profiteered” shall mean the amount

determined on account of not passing the benefit of reduction in rate of tax on supply of goods or

services or both or the benefit of input tax credit to the recipient by way of commensurate

reduction in the price of the goods or services of both.”

It was held that since, no penalty provisions were in existence between the period w.e.f. 01.07.2017 to

31.08.2018 when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed

under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, the notice

dated 27.05.2019 issued to the supplier / Respondent for imposition of penalty under Section 122 (1) (i)

is hereby withdrawn and the present penalty proceedings launched against it were accordingly dropped.

In view of the above, therefore, the Authority while withdrawing the notice of penalty under Section 122

(1) (i) held that no penalty provisions were in existence between the period with effect from July 01, 2017

to August 31, 2018 when the supplier had violated the provisions of Section 171 (1), the penalty

prescribed under Section 171 (3A) can not be imposed on the Respondent retrospectively.

17

GSTCOUNSELLOR GSTC

PROGRAMME : 17th INTERNATIONAL TAX CONFERENCE

[Virtual conference on Emerging World Tax Order]

DATE : 4th, 5th, 11th & 12th September, 2020

TIME : 4:30pm onwards

VENUE : Webinar

ORGANISED BY : ASSOCHAM

CONTACT DETAILS : 9999068767; ankit.raghav@assocham.com

GOODS AND SERVICES TAX UNDERSTANDING

18

GSTCOUNSELLOR GSTC

GST HUMOUR!!

Assessee (to officer): Sir! Like states, I also need GST Compensation from Department.

Tax Officer : What ? is any refund due to you

Assessee : No! No!! I want Compensation

Tax Officer : But we are not paying even Compensation Cess to states. What

do you want!

Taxpayer : Compensation to pay GST to you!!

· Towards enhancing governance in Indian Banking System - Dr. Sanjiv Agarwal,

www.taxguru.co.in, dated 06.08.2020.

· Interest income is part of aggregate turnover under GST – Dr. Sanjiv Agarwal,

Business Advisor, dated 10.08.2020.

· Profiteering charges upheld on supply of TV-LED – Dr. Sanjiv Agarwal,

www.taxmanagementindia.com dated 17.08.2020.

GST LITERATURE

19

GSTCOUNSELLOR GSTC

A THOUGHT IN QUOTE!!

“Everyone should be listening to music, any music, instead of speeches”

-Bismillah Khan, Musician

GST CAPSULE!!

“It seems unlikely there will be a surplus in the compensation cess fund in the next five years. It is not feasible for the states to borrow as it will mean that the compensation cess will mean that for compensation cess will have to be extended by another 5-10 years to repay the loan”.

- Bihar Deputy - CM Sushil Modi

20

GSTCOUNSELLOR GSTC

NEW TITLES ON GST (JAN – FEB 2020)

OUR GST PUBLICATIONS

ANNOUNCEMENTS

21

GSTCOUNSELLOR GSTC

ANNOUNCEMENTS FOR EXCLUSIVE AND IN HOUSE

SEMINAR / WORK SHOP ON

GOODS AND SERVICE TAX (GST) CONDUCTED BY

DR. SANJIV AGARWAL (FCA, FCS) PLEASE CONTACT AT:

asandco@gmail.comascogst@gmail.com

v IF YOU WISH TO SUBSCRIBE TO THIS NEWSLETTER, SEND A REQUEST TO ascogst@gmail.com