GST – Decoded JUNE 2020

LETS EXPLORE GST TOGETHER

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Table of Contents

Important Due Dates ................................................................................................................................................. 2

Relief measures in respect of COVID-19 outbreak ................................................................................................... 4

Atmanirbhar Bharat Abhiyaan – Make in India ........................................................................................................ 5

Form GST ITC-02A .................................................................................................................................................. 7

Filing of TRAN 1- Analysis of Delhi High Court's latest decision and law amended by the Government............. 9

Latest Notifications/Circulars ................................................................................................................................. 13

Contact us:.................................................................................................................................................................. 0

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Important Due Dates

GST Filing Dates extended for providing relief to taxpayers in the outbreak of COVID-19 pandemic- Government has extended due dates for GST filings to support taxpayers facing challenges due to COVID-19. These are notified in Notifications and Circulars issued by CBIC.

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

1 2 3 4 5 6

7 8 9 10 11 12 13 Payment of TDS collected in May 20 w/o interest @ 0.75%

14 15 16 17 18 19 20 1st inst. of

advance tax & PF & ESI payment (May 20)

21 22 23 24 25 26 27 GSTR 3B if

t/o > 5Cr (Feb20-Apr20)

GSTR 3B if t/o > 5Cr (May20)

28 29 30 GSTR 3B if

t/o > 1.5Cr but < 5Cr (Feb20 & Mar20) - 30th June for Apr20

Payment under Vivad se Vishwas Scheme & ITR 1-7 for AY 19-20

TDS, TCS statements for Q4 of FY 19-20

GSTR 5, 5A for Feb20-May20 & GSTR 6, 7, 8 for Mar20-May20

GST CMP-02 (composition scheme for FY 20-21) & GSTR 3B if t/o < 1.5Cr (Feb20)

GSTR 1 for Mar, Apr, May if t/o > 1.5Cr - GSTR1 quarterly for Jan-Mar20

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Normal Taxpayers filing Form GSTR-3B

Return filing period

t/o up to Rs. 1.5 Cr t/o exceeding Rs. 5 Cr Rs 1.5 Cr < t/o < Rs. 5 Cr

Feb 2020 30th June 2020 24th June, 2020 29th June 2020 Mar 2020 03rd July 2020 24th June, 2020 29th June 2020 Apr 2020 06th July 2020 24th June, 2020 30th June 2020 May 2020 27th June, 2020

Taxpayers having aggregate turnover of upto Rs. 5 Cr. in preceding FY

May, 2020 Group 1 States/UTs

12th July, 2020

Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, Daman & Diu and Dadra & Nagar Haveli, Puducherry, Andaman and Nicobar Islands, Lakshadweep

May, 2020 Group 2 States/UTs

14th July, 2020

Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand, Odisha, Jammu and Kashmir, Ladakh, Chandigarh, Delhi

Normal Taxpayers filing Form GSTR-1

Tax period Due Date Waiver of late fee if return filed on or before

March 2020 11.04.2020 30.06.2020 April 2020 11.05.2020 30.06.2020 May 2020 11.06.2020 30.06.2020 Quarterly taxpayers Jan to March 2020 30.04.2020 30.06.2020

Source - https://www.gst.gov.in/newsandupdates/read/371

Income Tax Compliance Due Dates in the month June 2020-

Due Date Compliance

7th June 2020 Due date for deposit of Tax deducted/collected for the month of May, 2020

14 June 2020 Due date for issue of TDS Certificate for tax deducted under section 194-IA, 194-IB, 194M in the month of April, 2020

15 June 2020 First instalment of advance tax for the AY 2021-22

30 June 2020 Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194-IA, 194-IB, 194M in the month of May, 2020

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Relief measures in respect of COVID-19 outbreak

India is in lockdown mode like many other countries to limit the spread of COVID 19 and this has been impacting individual taxpayers. The Government has been supporting the taxpayers by extending deadlines and reducing penalties and other various relief measures.

- A belated tax return and revised tax return for Financial Year (FY) 2018-19 was to be filed on or before 31 March 2020. This due date is now extended to 30 June 2020.

- Due date for payment under Sabka Vishwas (Legacy Dispute Resolution) Scheme extended: Following are the highlights of the Rules:

The designated committee shall intimate the amount payable by 01 May 2020; Due date for furnishing statement of amount in Form SVLDRS - 3 shall be 31 May

2020; Due date for payment under Form SVLDRS - 3 shall be 30 June 2020.

- Specified investment / payments or donation to avail deductions from income for FY 2019-

20 can now be made till 30 June 2020.

- Reduction of rate of interest on delayed payment of tax to 0.75% from 1%.

- The due date to link Aadhaar and PAN has been extended to 30 June 2020.

- EPFO has allowed employees to obtain a non-refundable advance from their existing PF balances while in service and this amount being in the nature of advance, will not be taxable.

- An Ordinance to provide relaxation in the provisions of certain Acts and for matters connected therewith or incidental thereto was passed wherein the time limit for filing of appeal, furnishing of return, or any other compliance under the GST Act has been extended.

- To address MSMEs fear of outgrowing in size to receive benefits given by the government to businesses categorized as per the current MSME definition, Nirmala Sitharaman revised the definition.

Let’s read more about the reforms introduced under Atmanirbhar Bharat Abhiyaan.

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Atmanirbhar Bharat Abhiyaan – Make in India The Hon’ble Prime Minister, Mr. Narendra Modi, addressed the nation amidst the COVID-19 outbreak on 12th May 2020 and announced a special economic package for an Atmanirbhar or self-reliant India. He promised a sum of Rs. 20 Lakh Crores, which is equivalent to approximately 10% of India’s GDP. PM Modi emphasized on the need to make India a self-reliant economy and introduced the ‘Atmanirbhar Bharat Abhiyan’ which will provide special economic packages to the labourers, farmers, honest taxpayers, MSMEs and cottage industry.

The package pledged by GOI shall give a thrust to local manufacturing, local markets and local supply-chains. The entire scheme focuses on providing stimulus to the Make in India initiative and transforming local Indian companies into global brands. Atmanirbhar Bharat Abhiyaan lays strong foundations for raising our per capita GDP.

Several reforms are announced to make India a self-reliant economy and mitigate negative effects in the future. Some of the reforms are:

• Simple and clear laws • Rational taxation system • Supply chain reforms in agriculture • Capable human resources • Robust financial system

Five pillars of self-reliant India:

1. Economy – To bring in quantum jump and not incremental change. Goal is to make India a 5 trillion economy by 2025;

2. Infrastructure – To become the identity of India; 3. System – based on 21st century technology driven arrangements; 4. Vibrant Demography – source of energy for a self-reliant India; and 5. Demand – the strength of our demand and supply chain should be utilized to full capacity.

Under this abhiyaan, FM Ms. Nirmala Sitharaman announced various reliefs on 13th May to support our economy in this fight for humanity. The main focus for development under this Abhiyaan has been on MSMEs. The very definition of MSMEs has been changed to include more Indian manufacturers and service providers under its purview. The criterion for being classified as an MSME has been changed in the following manner:

Composition Criterion

Classification Micro Small Medium

Manufacturing Investment < Rs. 1 cr. Investment < Rs. 10 cr. Investment < Rs. 20 cr.

Service Turnover < 5 cr. Turnover < 50 cr. Turnover < 100 cr.

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Some of the reliefs to be provided to the MSMEs in India are:

i. Rs 3 lakh crores Collateral-free Automatic Loans for Businesses / MSMEs which will ensure that 45 lakh units will have access to working capital to resume their business activities.

ii. Provision of Rs 20,000 crores Subordinate Debt for Stressed 2 lakh MSMEs. iii. Funds of Fund with a corpus of Rs. 10,000 crores for providing equity funding for MSMEs

with growth potential. iv. Global tenders will be disallowed in Government procurement tenders up to Rs 200 crores.

Government has laid down a plan to support businesses other than MSMEs as well:

i. Small businesses having loans under the MUDRA-Shishu scheme worth ₹50,000 or less, will receive a 2% interest subsidy for the next year.

ii. Rs 30,000 crore pledged for Special Liquidity Scheme for NBFCs/HFCs/MFIs. iii. Power departments/utilities and distribution companies in U.T.s would be privatized based

on a new tariff policy to be announced. iv. The pending income tax refunds to charitable trusts and non-corporate businesses and

professions including proprietorship, partnership and LLPs and co-operatives to be issued immediately.

v. Rates of TDS for non-salaried specified payments made to residents and rates of TCS for the specified receipts to be reduced by 25% of the existing rates. (Applicable till 31st March 2021)

vi. Due date of all income-tax return for FY 2019-20 extended to 30th November 2020 and in case of Tax audits, to 31st October 2020.

vii. Period of Vivad se Vishwas Scheme for making payment without additional amount extended to 31st December 2020.

viii. Date of assessments getting barred on 30th September 2020 extended to 31st December 2020 and those getting barred on 31st March 2021 got extended to 30th September 2021.

The post-Covid-19 era may introduce extraordinary opportunities provided the implementation deficit is adequately addressed.

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Form GST ITC-02A

Declaration for transfer of ITC in case of sale, merger, demerger, amalgamation, lease or transfer of a business under sub-section (3) of section 18

Taxpayer can apply for transfer of matched input tax credit available in the e-ledger to another business organization in case of transfer of business by way of sale of business/ merger/ demerger by the filing of ITC declaration in Form GST ITC - 02.

GST ITC-02 Filing can be done for transfer or matched ITC in case of the following circumstances:

i. In case of the entity undergoing sale, merger, de-merger, amalgamation, lease or transfer, ITC declaration for transfer of ITC in GST ITC-02 is must.

ii. The acquired or transferor entity must have matched ITC available in the E-Credit Ledger, as on effective date of merger/ acquisition/ amalgamation / lease/ transfer.

iii. Transferee and the transferor should be registered. iv. It is mandatory for the transferor to file all GST returns in the past periods. v. All the pending transactions for the action of merging should either be accepted, rejected or

modified and all liabilities of the returns filed by the transferor must be paid. vi. The transfer of business should be with specific provision of transfer of liabilities and it has to

be accompanied by a certificate issued by the CA or CS.

Procedure to file FORM GST ITC - 02:

Step 1: Log in to the GST portal with valid credentials. From the homepage, go to Services > Returns > ITC Forms. Click on ‘Transfer ITC’ on the ‘GST ITC-02A’ tile.

Step 2: Enter the necessary details of ITC to be transferred on the page displayed and ‘save’.

Step 3: Preview filled-up draft form ITC-02A before filing.

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Step 4: File Form ITC-02A either using EVC or DSC after selecting the authorised signatory. A message confirming successful submission appears along with the ARN. The filed form can also be downloaded in PDF format. The Electronic Credit Ledger will be debited with the amount of transfer. Upon the successful filing of ITC-02A, an email and SMS notification will also be automatically sent to the transferee. They can either accept or reject the transfer. To do so-

Step 5: From the Services tab, click the ‘User Services’ and then select ‘ITC 02 - Pending for actions’, choose the ARN. Now the user has to either accept or reject the request.

Step 6: Submit the declaration for ITC transferred through ITC-02A and file it either using EVC or DSC after selecting the authorised signatory. The filed form can also be downloaded in PDF format. The transferor will be notified of the response by email and SMS.

The following ITC can be transferred: i. Matched ITC balance available in the transferor’s E-credit ledger;

ii. Such ITC appearing under the major heads – Central tax, State / UT tax, Integrated tax, and CESS can be transferred.

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Filing of TRAN 1- Analysis of Delhi High Court's latest decision and law amended by the Government

Brand Equity Treaties Limited Vs Union of India (Delhi High Court) Hon’ble Delhi High Court in its judgement dated 05.05.2020 (copy enclosed) has held that

period of 90 days for claiming input tax credit in TRAN-1 is directory and therefore, period

of limitation of 3 years under the Limitation Act would apply. The Court has directed the

Department to allow all assessees to claim input tax credit in TRAN-1 by 30.6.2020. The direction

would apply to all those who could not file TRAN-1 and claim input tax credit. The court has

further directed that it should be advertised that all taxpayers who have not filed TRAN 1 can

do so by 30.6.2020. The judgment has been made applicable to all irrespective of whether the

taxpayer has approached the court or not.

The extract of important paras of judgement is as under-

Rule 117 of CGST Rules is directory in nature, insofar as it prescribes the time-limit for transitioning of

credit and therefore, the same would not result in the forfeiture of the rights, in case the credit is not availed

within the period prescribed. This however, does not mean that the availing of CENVAT credit can be in

perpetuity. Transitory provisions, as the word indicates, have to be given its due meaning. Transition from pre-

GST Regime to GST Regime has not been smooth and therefore, what was reasonable in ideal circumstances

is not in the current situation. In absence of any specific provisions under the Act, we would have to hold that

in terms of the residuary provisions of the Limitation Act, the period of three years should be the guiding

principle and thus a period of three years from the appointed date would be the maximum period for availing

of such credit.

Accordingly, since all the Petitioners have filed or attempted to file Form TRAN-1 within the aforesaid period

of three years they shall be entitled to avail the Input Tax Credit accruing to them. They are thus, permitted to

file relevant TRAN-1 Form on or before 30.06.2020. Respondents are directed to either open the online portal

so as to enable the Petitioners to file declaration TRAN-1 electronically, or to accept the same manually.

Respondents shall thereafter process the claims in accordance with law. We are also of the opinion that other

taxpayers who are similarly situated should also be entitled to avail the benefit of this judgment. Therefore,

Respondents are directed to publicise this judgment widely including by way of publishing the same on their

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website so that others who may not have been able to file TRAN-1 till date are permitted to do so on or before

30.06.2020.

Though the taxpayers welcomed the aforesaid decision the Hon’ble Delhi High Court, the legal

fraternity has been dissecting the decision every day. Is the decision absolute and the taxpayers joy

permanent? The answer is fairly debatable. There are some issues which could not be addressed by

the Hon’ble High Court of Delhi while dealing with entitlement to transitional credits.

Section 140 of the CGST Act’2017 has been amended retrospectively w.e.f. 01.07.2017 vide the

Finance Act’2020, to empower Rule 117 to frame timeline of availing credit. Since the said

amendment was not notified, the Hon’ble Delhi Court could not address the same as by virtue of

legislation it remained suspended. The Central Board of Indirect taxes and Customs (CBIC)

issued Notification no. 43/2020-Central Tax dated 16th May’2020 to notify the amendment in

Section 128 of the Finance Act, 2020. The said Section 128 amends Section 140 of the CGST Act,

2017 retrospectively w.e.f 01.07.2017 to include the words ‘within such time’ and manner as

prescribed.

Thus, the aforesaid retrospective amendment in Section 140(1) of the CGST Act’2017 has not been

dealt by the Hon’ble Delhi High Court in its verdict and the amendment now seems to have overcome

the said Decision of the Delhi High Court. At the time of arguments before the Hon’ble Court, the

amendment was already proposed but was not implemented. The Court has not considered, as to

whether proposed retrospective amendment in Section 140(1) holds valid in the eyes of law or the

same is not valid as the proposed retrospective amendment takes away the vested right of the tax

payer & is violative of Article 14 of the Indian Constitution. In this regard reference can be made to

the decision of the Hon’ble Apex Court in the case of Osram Surya (P) limited Vs. CCE, Indore –

2002 (142) ELT 5 (SC) which propounds that validly earned credit remains to be a vested right which

cannot be taken away through retrospective amendment in law.

The manner in which the events have transpired, it appears that Government has made it a habit to

implement the entire GST regime based on trial and error methods. It was time of the Government

to react again in a hurry after the Delhi High Court came down heavily on revenue department for

the errors in legislation. The Government was quick to notify Section 128 to Finance Act, 2020 as

above without any State Government notifying the same. This is in absolute contrast to the stand of

the Government in case of proposed amendment to Section 50 of the CGST Act, 2017, which gives

heavy relief to tax payers by limiting applicability of interest to only cash portion of delayed tax

payment. The Government had announced the relaxation way back in 2019 and have still been unable

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to notify the date of applicability of relaxing amendment. The reason of the Government for not

being able to notify the same is State Governments not amending Section 50 in respective SGST Acts.

This has been tweeted by CBIC tweet dated 15.02.2020. However, when it came to amendment

relating to preventing a benefit of taxpayer, the Government was quick to act on after the decision

of the High Court and making a retrospective amendment barring vested right of tax payers without

any State making a corresponding amendment in SGST Acts.

Another question which requires consideration after retrospective amendment is, whether High

Court’s reference to Limitation Act’1963 now holds good when the time limit has now been

specifically provided in the amended CGST Act’2017. In this regard reference can be drawn to two

important decisions in the case of Hotel & Restaurant Association Vs. Star India Private Limited

– 2007 (5) STR 161 (SC) & Commissioner of Sales Tax Vs. M/s Parsons Tools & Plants – 1975

(4) SCC 22, wherein it has been held that, when the statutory provisions of the specific law constitute

a self-contained code, all obligations there under are to be considered in terms of that special code

and general provisions shall not find application thereto. The Government has kept its arsenal ready

for challenging Brand Equities case before the Hon’ble Supreme Court.

In the case of (Brand Equity Treaties Limited Vs The Union of India, Delhi-High-Court), the

court said CGST act does not prescribe time limit to availing transitional credit and taxpayer can

submit TRAN-1 within 3 years from the GST appointed date by virtue of limitation act 1963.

The retrospective amendment in section 140 may help the government to overcome the rulings

treated rule 117 as a directive in nature. Even if, the Government is possessing the right of time

restriction, however, we need to understand that the vested right as per Article 300A of the

constitution of India will remain same since such rights will not get impacted by this amendment.

Further, it is interesting to find out whether the present retrospective amendment annuls the

rationale of the above cited decisions and restricts the transitional ITC particularly for the

taxpayers who do not have the evidence to show the technical glitches on the common portal.

In this regard, as seen from the rationale of the many HC decisions on the subject matter, the

Hon’ble HC decisions are not merely based on legal infirmity that Rule 117, ibid lacks the

power to prescribe time limit but various meritorious reasons. Thus, the Retrospective

amendment would not overcome the above rationale of HC decisions and it attempts to cure

the defect in the delegation alone. Therefore, in the view of the above facts and circumstances the

taxpayers still have a chance to claim the Transitional Credit and rely on the HC decisions

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Expectation and further suggested action

The Government should come up with the mechanism for the taxpayers who could not or partially

to avail the benefit of unused erstwhile credit. The taxpayers must submit TRAN-1 manually till

government comes with the mechanism. Further, if government does not come up with mechanism,

such notification (NN 43/2020) will add fuel to the burning issue of transitional credit.

The suggested course of action is as under:

Apply to the Nodal officer for enabling the filing of Form GST Tran-1 online, preferably on

or before 30.06.2020

If the application is rejected or not acted in a reasonable time, file a writ petition before the

Jurisdictional HC for necessary directions.

Manually file TRAN 1 with jurisdictional assessing officer and get proper acknowledgement.

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Latest Notifications/Circulars

Circular No. 12/2020-Income Tax dt. 20th May, 2020

It has been clarified that the provisions of section 269SU of the Act shall not he applicable to a specified person having only B2B transactions. Section 269SU was inserted in the Income-tax Act, 1961, vide the Finance (No. 2) Act 2019.

Notification No. 25/2020-Income Tax dt. 20th May, 2020

CBDT notified the year of applicability of the ‘Safe Harbour Rules for International Transactions’ (SHR) for Assessment Year (AY) 2020-21, as the existing rules were applicable only up to AY 2019-20.

Notification No. 26/2020-Income Tax dt. 21st May, 2020

CG notified ‘Kerala Cooperative Development and Welfare Fund Board’, Trivandrum, constituted by the Government of Kerala, in respect of the specified income arising to that board under section 10(46) of Income Tax Act, 1961.

Notification No. 27/2020-Income Tax dt. 27th May, 2020

CG notified ‘Cochin Special Economic Zone Authority’, Kochi, an authority constituted by the GOI, in respect of the specified income arising to that board under section 10(46) of Income Tax Act, 1961.

Notification No. 28/2020-Income Tax dt. 27th May, 2020

Central Government notified ‘Uttarakhand Environment Protection & Pollution Control Board’, Dehradun, a Board constituted by the Government of Uttarakhand, in respect of the following specified income arising to that Board, under section 10(46) of Income Tax Act, 1961.

Notification No. 29/2020-Income Tax dt. 27th May, 2020

CBDT has amended Guidelines for application of section 9A. Section 9A contains provisions related to Certain activities not to constitute business connection in India. CBDT has also notified new forms and Annexures.

Notification No. 30/2020-Income Tax dt. 28th May, 2020

CBDT notifies new Form 26AS. Budget 2020-21 had introduced a new Section 285BB in the Income Tax Act to implement revised Form 26AS.

Notification No. 31/2020-Income Tax dt. 29th May, 2020

CBDT notified Form ―Sahaj (ITR-1), Form ITR-2, Form ITR-3, Form Sugam (ITR-4), Form ITR-5, Form ITR-6, Form ITR-7 and Form ITR-V for Assessment Year 2020-21 i.e. financial Year 2019-20.

Notification No. 43/2020-Central Tax dt. 16th May, 2020

This notification seeks to bring into force Section 128 of Finance Act, 2020 in order to bring amendment in Section 140 of CGST Act w.e.f. 01.07.2017.

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