Latest GST News, Information, Notifications & Announcements [Period 20/12/22 to 26/12/22]

1.         GST Council has Proposed New Provision for Reversal of ITC in case of Non-Payment of Tax by Suppliers:

  • The Council Meeting has decided to incorporate a new provision in the CGST Act allowing the taxpayer to reverse the input tax credit if the supplier fails to pay tax by a set deadline. The council also proposed a system for re-availability of such credit if the supplier pays tax later.
  • GST Council recommended to insert Rule 37A in CGST Rules, 2017 to prescribe the mechanism for reversal of input tax credit by a registered person in the event of non-payment of tax by the supplier by a specified date and mechanism for re-availment of such credit, if the supplier pays tax subsequently. This would ease the process for complying with the condition for availment of input tax credit under section 16(2)(c) of CGST Act, 2017.
  • Rule 37(1), as it existed prior to October 1, 2022, stated that only the amount proportionate to the invoice value that has not been paid after 180 days must be totalled.
  • Reversal of ITC under GST rules means that the credit for previously used inputs is now added to the output tax liability, thereby nullifying the credit claimed previously. Payment of interest may also be required depending on when such reversal occurs.

2.    Provisional Assessment in GST:

  • A supplier will come to know the extent of his tax liability which has to be discharged on a continuous and regular basis only after assessment. Assessment means determination of tax liability and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment.
  • The Asst. Commissioner/Dy. Commissioner of Central Tax provisionally determines the amount of tax payable by the supplier and is subject to final determination. On provisional assessment, the supplier can pay tax on provisional basis but only after he executes a bond with security, binding them for payment of the difference between the amount of tax as may be finally assessed and the amount of tax provisionally assessed. On finalization of the provisional assessment, any amount that has been paid on the basis of such assessment is to be adjusted against the amount that has been finally determined as payable. In case of short payment, the same has to be paid with interest and in case of excess payment, the same will be refunded with interest.

Procedure:

  • In case a supplier is unable to determine the value of goods or services or both or to determine the rate of tax applicable thereto, he can request the Asst. Commissioner/Dy. Commissioner of Central Tax in writing, giving reasons for payment of tax on a provisional basis. The supplier requesting for payment of tax on a provisional basis has to furnish an application along with the documents in support of his request, electronically in FORM GST ASMT-01 on the common portal, either directly or through a Facilitation Centre notified by the Commissioner.
  • The Asst. Commissioner/Dy. Commissioner of Central Tax will scrutinize the application in FORM GST ASMT-01. In case, additional information or documents in support is required by the Asst. Commissioner/Dy. Commissioner of Central Tax to decide the case, notice in FORM GST ASMT-02 will be issued to the supplier requesting for submission of the same. The supplier has to file a reply to the notice in FORM GST ASMT – 03, and if he desires can also appear in person before the Asst. Commissioner/Dy. Commissioner of Central Tax to explain his case. The Asst. Commissioner/Dy. Commissioner of Central Tax will then issue an order in FORM GST ASMT-04 within a period not later than ninety days from the date of receipt of the request, allowing the payment of tax on a provisional basis.The order will indicate the value or the rate or both on the basis of which the assessment is to be allowed on a provisional basis and the amount (this amount shall include the amount of integrated tax, central tax, State tax or Union territory tax and cess payable in respect of the transaction) for which the bond is tobe executed along with the security to be furnished. The security will not exceed twenty-five percent of the amount covered under the bond. The supplier has to execute the bond in FORM GST ASMT-05 along with a security in the form of a bank guarantee for an amount as mentioned in FORM GST ASMT-04.A bond furnished to the proper officer under the State Goods and Services Tax Act or Integrated Goods and Services Tax Act shall be deemed to be a bond furnished under Central Goods and Services Tax Act. On executing the bond the process of the provisional assessment is complete and the supplier can supply the goods or services or both and pay the tax at the rate or on the value that has been indicated in the order in FORM GST ASMT-04.

Finalization of provisional assessment:

  • The provisional assessment will be finalized, within a period not exceeding six months from the date of issuance of FORM GST ASMT-04. The Asst. Commissioner/Dy. Commissioner of Central Tax will issue a notice in FORM GST ASMT-06, calling for information and records required for finalization of assessment and shall issue a final assessment order, specifying the amount payable by the registered person or the amount refundable, if any, in FORM GST ASMT-07. On sufficient cause being shown and for reasons to be recorded in writing, the time limit for finalization of provisional assessment can be, extended by the Joint Commissioner or Additional Commissioner for a further period not exceeding six months and by the Commissioner for such further period not exceeding four years.

Interest liability

  • In case any tax amount becomes payable subsequent to finalization of the provisional assessment, then interest at the specified rate will also be payable by the supplier from the first day after the due date of payment of the tax till the date of actual payment, whether such amount is paid before or after the issuance of order for final assessment. In case any tax amount becomes refundable subsequent to finalization of the provisional assessment, then interest (subject to the eligibility of refund and absence of unjust enrichment) at the specified rate will be payable to the supplier. Release of Security consequent to Finalization Once the order in FORM GST ASMT-07 is issued, the supplier has to file an application in FORM GST ASMT- 08 for the release of the security furnished. On receipt of this application the Asst. Commissioner/Dy. Commissioner of Central Tax will issue an order in FORM GST ASMT–09 within a period of seven working days from the date of the receipt of the application, releasing the security after the amount payable if any as specified in FORM GST ASMT-07 has been paid.

3.    CBIC constitutes Customs, Central Excise and Service Tax Settlement Commission aimed to resolve and settle Show Cause Notices:

  • The Competent Authority has constituted Settlement Commission Benches at Delhi, Mumbai, Chennai & Kolkata constituted vide Public Notice No. 01/2022 dated December 13, 2022
  • Fillip to Alternative Dispute Resolution Mechanism for expeditious settlement of show cause notices issued in cases under Customs Act & Central Excise Act and Finance Act, 1994 (Service Tax)
  • Settlement Commission is empowered to grant immunity from fine, penalty & prosecution, on merit, to noticee and co-noticees

4.    AAR & Judicial Decisions:

(i) AAR On GST on transfer of independent part of business pertaining to a mobile software
(Applicant – M/s Capfront Technologies Pvt Ltd)

AAR held that transfer of independent part of business pertaining to ‘Loan Front’ app, a mobile software, qualifies to be a transfer of going concern, and the said activity amounts to ‘Service by way of transfer of going concern as an independent part’ and thus is exempted from GST in terms of Sl. no.2 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017, as amended.

(ii) AAR On Roombr, a walltop computer is classifiable under tariff heading 84714190:

(Applicant – Virtualive Technologies Pvt Ltd)

In the instant case the impugned product roombr comprises a central processing unit, a Bluetooth keyboard and IR pen to provide interactivity support as an input unit and a projected interactive display as an output unit. Therefore, even on this aspect also the impugned product squarely gets covered under the category of automatic data processing machines under the tariff heading 8471 41.

Now we proceed to decide the sub classification of the impugned product. The heading 8471 41 has three sub headings covering Micro Computer, Large or main frame computer and other. In the instant case the impugned product is neither a micro-computer nor a large or main frame computer and thus it gets covered under others. Therefore the impugned product is classifiable under tariff heading 8471 41 90.

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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