India: IDT Newsletter – December 2022 Edition

Pursuant to the 48th GST Council Meeting, certain amendments have been made in the Central Goods and Services Tax Rules, 2017 ("CGST Rules"). Some of the important amendments are:

• Rule 9 has been amended to provide that the application for registration will be approved only after physical verification of the premises (even after Aadhar authentication) if the said person is identified on the common portal based on data analysis and risk parameters.
• Rule 12 has been amended to provide that a registered person can suo motu cancel TDS / TCS registration.
• Rule 37 has been amended to provide that recipient needs to reverse Input Tax Credit ("ITC") only proportionate to the amount not paid to the supplier.
• Rule 37A has been inserted to provide for reversal of ITC by the recipient by November 30, 2022 of the following year if Form GSTR 3B has not been furnished by the supplier by September 30, 2022 of the following year. If ITC is not reversed by November 30, 2022 the amount will be payable alongwith interest. When the supplier subsequently furnishes Form GSTR 3B, credit may be re-availed.
• Rule 88C has been inserted to specify procedure for recovery of tax in case of difference in Form GSTR 1 and Form GSTR 3B, by such amount and such percentage as may be recommended by the GST Council. Where any amount remains unpaid after seven days of intimation or no explanation is furnished or the explanation is found to be acceptable, such amount shall be recoverable under section 79.
• Rule 59 has been amended to provide that a person to whom an intimation is issued under Rule 88C would be subsequently barred from filing Form GSTR 1 for subsequent periods, unless he has furnished a reply explaining reasons for the difference or deposited the unpaid tax.
• Rule 89 has been amended to specify the procedure for unregistered persons to claim GST refund.
• Rule 108 has been amended to exclude the requirement of furnishing a certified copy of the order in case of filing of appeal when the order is uploaded in the GST portal. In case the order is not uploaded on the GST portal, a self-certified copy of the order may be furnished within a period of 7 days of filing the appeal.

Rule 109C has been inserted to permit withdrawal of appeals at any time before issuance of show cause notice by appellate authority or before issuance of order, whichever is earlier.

Notification No. 12/2022-Central Tax (Rate) dated 30.12.2022

Notification No. 13/2022-Central Tax (Rate) dated 30.12.2022

The following rate changes have been made with effect from January 1, 2023:

• Exemption has been granted to husk of pulses, along with chilka and concentrates, chuni or churi, and khanda used as "cattle feed".
• GST Rate reduced from 18% to 5% in respect of Ethyl Alcohol that is sold to oil marketing companies or refineries to blend it with motor spirit or petrol.
• GST rate of 12% would not be available for carbonated beverages of fruit drink or carbonated beverages with fruit juice. These products would be taxable at 28% (excl. compensation cess).

GST rate increased from 12% to 18% for pencil sharpeners.

• By way of Explanation, it has been clarified that GST exemption would be available if residential dwelling is rented to a GST-registered person in their "personal capacity" for their own use/account as a residence and not for business.
• GST exemption has been withdrawn in respect of service by way of access to a road or a bridge on payment of annuity.

The Circular clarifies the procedure to be followed in case of difference in ITC availed in Form GSTR-3B as compared to that reflected in Form GSTR-2A for FY 2017-18 and 2018-19:

• A detailed procedure to be followed in the following specified scenarios which may have caused the mismatch:
• • Where supplier has not filed Form GSTR 1 but filed Form GSTR 3B.
  • Where supplier has filed Form GSTR 1 and Form GSTR 3B but has failed to disclose the particular supply.
  • Where supplier has wrongly reported B2B supply as B2C supply in Form GSTR 1.
  • Where wrong GSTIN of the recipient has been reflected in Form GSTR 1 [in this case, the jurisdictional tax authority of registered person whose GSTIN was mentioned wrongly would be intimated that ITC is to be disallowed].
• It has been stipulated that:
• • Where the difference between ITC claimed in Form GSTR 3B and reflected in Form GSTR 2A in respect of a supplier exceeds INR 5 lacs: The registered person must produce a certificate for the concerned supplier from CA/CMA certifying that: (a) supplies have been actually made by the supplier to the registered person and (b) tax has been paid by the supplier in his return in Form GSTR 3B. Certificate issued by the CA/CMA shall contain UDIN which can be verified from the respective institute's website.

Where difference does not exceed INR 5 lacs: A certificate must be produced from the concerned supplier certifying that: (a) supplies have been made by the supplier to the registered person and (b) tax has been paid by the supplier in his return in Form GSTR 3B. No CA/CMA certificate is required.

It has been clarified that these instructions will only apply to ongoing proceedings in scrutiny/ audit/ investigation etc. and not to completed proceedings. These instructions will also apply in those cases where adjudication or appeal proceedings are still pending.

• Where the transportation of goods is outside India and the supplier and recipient are in India, the place of supply is the destination of goods as per Section 12(8) of the IGST Act. With respect to such transactions, it has been clarified that:
• • ITC of IGST paid would be available to the recipient.
  • The GST provisions do not restrict availment of ITC by the recipient located in India if the place of supply of the said input service is outside India.

The supplier must report the place of supply by selecting State Code "96 – Foreign Country" in Form GSTR 1.

• Section 75(2) of the CGST Act provides that where allegations of fraud, suppression are held by the Appellate Authority/Tribunal as not sustainable, then the officer must redetermine the duty in terms of Section 73(1). In relation to such situations, it has been clarified that:
• • The proper officer is required to issue an order for re- determination of tax within 2 years from the date of communication of the Appellate Authority's order. This re- determination order will be passed under Section 75(3).
  • As the normal time limit for issuance of show cause notice under Section 73 is 2 years and 9 months, re-determination would cover only those periods which are covered within the normal limitation period.

The proceedings for the period not covered within the aforesaid time limit would be dropped.

The Circular has clarified the following issues:

• No-claim bonus ("NCB"): Qua NCB, it has been clarified that:
• • There is no supply provided by the insured to the insurance company in not lodging an insurance claim. NCB cannot be treated as consideration for supply provided by the insured to the insurance company.
  • NCB amount is pre-disclosed in the policy document and therefore fulfils the conditions of Section 15(3) of the CGST Act. Therefore, clarified that NCB is an admissible deduction under Section 15(3) for the purpose of deduction from the value of insurance services.

E-invoicing: It has been clarified that exemption from e-invoices is applicable for the whole entity and not restricted to the nature of supply.

Provides for the Postal Export (Electronic Declaration and Processing) Regulations, 2022 under which any person holding a valid Import-Export Code could export goods in furtherance of business through a foreign post office appointed by the Board under Section 7(1)(e) of the Customs Act, 1962.

Further, the Regulations provide for filing of Forms PBE-III and PBE-IV for export of goods through e-commerce.