GST WEEKLY UPDATE :25/2024-25 (22.09.2024)
1. Re-opening of Reporting ITC Reversal Opening Balance (17.09.24):
1. Vide Notification No. 14/2022 – Central Tax dated 05th July, 2022 (read with circular 170/02/2022-GST, Dated 6th July,2022), the Government introduced certain changes in Table 4 of Form GSTR-3B regarding availment & reversal of ITC along-with reporting of re-claimed and ineligible ITC. Accordingly, the re-claimable ITC earlier reversed in Table 4(B)2 may be subsequently claimed in Table 4(A)5 on fulfilment of necessary conditions and such reclaimed ITC also needs to be reported in Table 4D(1).
2. To facilitate the taxpayers in correct and accurate reporting of ITC reversal and reclaim thereof and to avoid clerical mistakes, a new ledger namely Electronic Credit Reversal and Re-claimed Statement was introduced on the GST portal from August 2023 return period for monthly taxpayers and from July-September 2023 quarter for quarterly taxpayers. The taxpayers were also given an opportunity to report their cumulative ITC reversal as an opening balance in the newly introduced Electronic Credit Reversal and Re-claimed Statement.
Extension of due dates for reporting opening balance:
3. Now, the Taxpayers are being provided with one final opportunity to report their cumulative ITC reversal (ITC that has been reversed earlier and has not yet been reclaimed) as opening balance for “Electronic Credit Reversal and Re-claimed Statement”, if any, before hard locking the reversal and reclaim ledger. Please note the important dates to report opening balance are mentioned below.
(i) The functionality to reporting the opening balance will be available from 15th September 2024 to 31st October 2024.
(ii) The amendments in declared opening balance will be available till 30th November, 2024.
(iii) Taxpayers having monthly filing frequency are required to report their opening balance considering the ITC reversal done till the return period of July 2023 only. As after this period balance is already available in ledger.
(iv) Quarterly taxpayers shall report their opening balance up to Q1 of the financial year 2023-24, considering the ITC reversal made till the April-June 2023 return period only. As after this period balance is already available in ledger.
4. It may be noted that soon system would not allow to re-claim of ITC in excess of the amount reversed earlier and the taxpayers will not be able to reclaim excess ITC compared to the balance available in their Electronic Credit Reversal and Re-claimed Statement. Therefore, it is advised to make use of this extended period to ensure that all relevant information is reported accurately.
2. INVOICE MANAGEMENT SYSTEM W.E.F 01.10.2024 ONWARDS: Impact on ITC and on liability of supplier under different scenarios:
| For forward charge applicable tax payer. | ||||||
| Record Type | Action taken on IMS and impact on B2B ITC credit | Supplier3BLiability | ||||
| Action on Original Record | ITC Amount | Action on Amendment Record | ITC Amount | Liability of the Record | Incrlaibility on action taken | |
| B2B/DN/ ECO[9/5] Invoice | Accept | + Full Amount | + Full Amount | Nil | ||
| Reject | Nil | |||||
| Pending | Nil | |||||
| B2BA/DN Upward | Accept | + Full Amount | Accept | +Delta | +Delta | Nil |
| Reject | Nil | |||||
| Pending | ||||||
| Reject | Nil | Accept | + Full Amount | +Delta | Nil | |
| Reject | Nil | |||||
| Pending | ||||||
| Pending | Nil | Accept | + Full Amount | +Delta | Nil | |
| Reject | Nil | |||||
| Pending | ||||||
| B2BA/DNA Downward | Accept | + Full Amount | Accept | -Delta | -Delta | Nil |
| Reject | Nil | +Delta | ||||
| Pending | Not Allowed | NA | ||||
| Reject | Nil | Accept | + Full Amount | -Delta | Nil | |
| Reject | Nil | |||||
| Pending | ||||||
| Pending | Nil | Accept | + Full Amount | -Delta | Nil | |
| Reject | Nil | |||||
| Pending | ||||||
| CN | Accept | -Full Amount | – Full Amount | Nil | ||
| Reject | Nil | + Full Amount | ||||
| Pending | Not Allowed | |||||
| CNA Upward | Accept | -Full Amount | Accept | -Delta | -Delta | Nil |
| Reject | Nil | +Delta | ||||
| Pending | NA | NA | ||||
| Reject | Nil | Accept | -Full Amount | – Full Amount | Nil | |
| Reject | Nil | + Full Amount | ||||
| Pending | NA | NA | ||||
| Pending | Not Allowed | Not Allowed | ||||
| CNA Downward | Accept | -Full Amount | Accept | +Delta | +Delta | Nil |
| Reject | Nil | |||||
| Pending | Nil | |||||
| Reject | Nil | Accept | -Full Amount | Nil | ||
| For the reverse charge applicable tax payer: | ||||||
| RCM to Forward charge | ||||||
| RCM to FCM – Inv/DN | Accept | + Full Amount | + Full Amount | Nil | ||
| Reject | Nil | |||||
| Pending | Nil | |||||
| RCM to FCM-CN | Accept | -Full Amount | – Full Amount | Nil | ||
| Reject | Nil | + Full Amount | ||||
| Pending | Not allowed | Not Allowed | ||||
| FCM to RCM- Inv/DN | Accept | + Full Amount | 3.1d&4A(3) | -Full Amount | – Full Amount | |
| Reject | Nil | |||||
| Pending | Nil | |||||
| FCMCN to RCM CN | Accept | -Full Amount | + Full Amount | + Full Amount | ||
| Reject | Nil | |||||
| Pending | Not Allowed | |||||
Note:“Delta” indicates the change in value.
3. Important AAR & Important Judgements:
(i) Bombay HC sets-aside SCN demanding GST on ocean freight on transportation of goods from outside India
HC: Mohit Minerals’ verdict applies to both CIF and FOB contracts; Quashes SCN [TS-199-HC(BOM)-2024-GST]
Bombay HC sets-aside SCN demanding GST on ocean freight on transportation of goods from outside India, follows Gujarat HC verdict in Mohit Minerals as upheld by Apex Court; Renders Revenue’s contention that the decision in Mohit Minerals need to be applied only in case where the contracts were entered on Cost, Insurance and Freight (CIF) basis and not Free on Board (FOB) contracts, as untenable clarifying that, same involved both categories of contract namely CIF and FOB and the HC had declared Notification No.8/2017-Integrated Tax (Rate) dated June 28, 2017 as ultra vires of the IGST Act; Thus, reiterates that once the notification itself has been declared as ultra vires and the same has been upheld by SC, following the mandate of the settled principle of law as laid down in Kusum Ingots, the notification is no manner was available to the State Authorities to be applied as it would amount to applying an “illegal notification”; Hence, adds that “For this reason also, the show cause notice is rendered without jurisdiction”
(ii) Extension of time limits under Section 73(9) vide Notification No. 56/2023 CT – unconstitutional Guwahati High Court* The Hon’ble Guwahati High Court has quashed the validity of Notification No. 56/2023, CT, dt:23-12-2023, in the case of Shree Shyam Steel Vs UOI [WP(C)/ 3838/2024]
The Government, exercising its authority under section 168A of the CGST Act, 2017, in conjunction with IGST Act 2017 has through Notification 56/2023 specifically extend the time limits as outlined below: For the Financial Year 2018-19: The deadline to issue orders related to tax recovery for this fiscal year was extended until April 30, 2024.
For the Financial Year 2019-20:The deadline for orders regarding tax recovery in this fiscal year was extended until August 31, 2024.
This order of the Honourable Guwahati High court has answered several critical issues in terms of statutory interpretation, constitutional principles, and GST governance.
The bench noted that prima facie the notification bearing No. 56/2023 does not align with the provisions of Section 168(A) of the Central GST Act, 2017.
Section 168A, with its non-obstante clause grants the government overriding authority to extend due dates for completing proceedings and taking measures.But without a proposal/ recommendation from GSTC, the government cannot issue the notification for extending the period u/s 168A of the CGST Act, 2017 and as such, the notification bearing No. 56/2023 on 28.12.2023 is ultra vires without legislative validity.
The notification cannot stand the scrutiny of law because the power to notify u/s 168A is granted exclusively when there is a force majeure.The Court’s declaration that the notification is ultra vires Section 168A signifies that the Central Government exceeded its powers under this section. Section 168A was introduced as a special provision to deal with extraordinary situations such as force majeure (e.g., COVID-19) and allows the Government to extend statutory time limits.
However, it must be based on recommendations from the GST Council. In fact, in the 49th Meeting of the GST Council, the GSTC made a recommendation for extending the time limit for passing the order u/s 73(9) of the CGST Act, 2017 for the FY 2017-2018 up to 31.12.2023 ,FY 2018-2019 up to 31.03.2024 and for the FY 2019-2020 up to 30.06.2024.
According to the recommendation of the GST Council, a notification bearing No. 9/2023-CE was issued dated 31.03.2023 by the Central Board of Indirect Taxes and Customs.
However, GST Council has not made any proposal to date, and despite that, the CBIC has issued a Notification bearing No. 56/2023-CE on 28.12.2023 by extending the period to pass the order Under Section 73(9) of the CGST Act, 2017 for the Financial Year 2018-2019 and for the FY 2019-2020 which has been held unlawful.
Disclaimer:
This publication contains information for general guidance only. It is not intended to address the circumstances of any particular individual or entity. Although the best of endeavour has been made to provide the provisions in a simpler and accurate form, there is no substitute to detailed research with regard to the specific situation of a particular individual or entity. We do not accept any responsibility for loss incurred by any person for acting or refraining to act as a result of any matter in this publication.
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