Seeks to clarify ‘issues in respect of challenges faced by the registered persons in implementation of provisions of GST Laws’.
a) Issues relating to Insolvency and Bankruptcy Code
i) IRP/RP shall now be required to obtain registration within thirty days of the appointment of the IRP/RP or by 30th June, 2020, whichever is later.
ii) IRP/RP would not be required to take a fresh registration in those cases where statements in FORM GSTR-1 under section 37 and returns in FORM GSTR-3B under section 39 of the CGST Act, for all the tax periods prior to the appointment of IRP/RP, have been furnished under the registration of Corporate Debtor (earlier GSTIN).
iii) The new registration by IRP/RP shall be required only once, and in case of any change in IRP/RP after initial appointment under IBC, it would be deemed to be change of authorized signatory and it would not be considered as a distinct person on every such change after initial appointment. Accordingly such a change would need only change of authorized signatory which can be done by the authorized signatory of the Company who can add IRP /RP as new authorized signatory or failing that it can be added by the concerned jurisdictional officer on request by IRP/RP.
For details regarding GST aspects under IBC you can refer to our article titled Special GST procedure for entities in CIRP under IBC – CBIC clarification dated 06.05.2020.
b) Other issues
i) The requirement of notification no. 40/2017- Central Tax (Rate) dated 23.10.2017 for exporting the goods by the merchant exporter within 90 days from the date of issue of tax invoice by the registered supplier gets extended to 30th June, 2020, provided the completion of such 90 days period falls within 20.03.2020 to 29.06.2020.
ii) Due date of furnishing of FORM GST ITC-04 for the quarter ending March, 2020 stands extended up to 30.06.2020.
2. Circular No. 137/07/2020 dated 13-04-2020
Circular clarifying issues in respect of challenges faced by registered persons in implementation of provisions of GST issued
Issues 1 to 3: Refund / Adjustment of tax in following situations:
| Sl.No | Situation | Advance received | Invoice Issued | Supply made | Mechanism of refund / adjustment of tax |
| 1. | Cancellation of Service Contract and refund of advance. | Yes | Yes | No | Adjustment against output tax liability by issuing credit note. In absence of output tax liability, refund can be claimed. |
| 2. | Return of Goods by recipient. | Not relevant | Yes | Yes | Same as above. |
| 3. | Cancellation of Service Contract and refund of advance. | Yes | No | No | Issue of refund voucher and apply for refund of GST. |
Issue No 4: Taxpayer can continue to make the supply without payment of tax under LUT (on basis of LUT filed for 2019-20) provided that the LUT for 2020-21 is furnished on or before 30.06.2020.
Issue No 5: The due date for furnishing of return in FORM GSTR-7 (by tax deductors) along with deposit of tax deducted for months March,2020 to May,2020 has been extended till 30.06.2020 and no interest under section 50 shall be leviable if tax deducted is deposited by 30.06.2020.
Issue No 6: Where the due date of filing of refund application falls during the period from 20.03.2020 to 29.06.2020, the same has been extended till 30.06.2020.
For detailed discussion on the above circular you can refer to article titled CBIC clarification vide Circular No.137/07/2020-GST due to COVID-19 pandemic decodified.
3. Circular No. 136/06/2020 dated 03-04-2020
Clarification in respect of various measures announced by the Government for providing relief to the taxpayers in view of spread of Novel Corona Virus (COVID-19) – Reg
a) Relief to tax payers under composition scheme
1. The taxpayers under Composition Scheme, as per the notification No. 34/2020- Central Tax, dated 03.04.2020, have been allowed, to,-
(i) furnish the statement of details of payment of self assessed tax in FORM GST CMP-08 for the quarter January to March, 2020 by 07.07.2020; and
(ii) furnish the return in FORM GSTR-4 for the financial year 2019-20 by 15.07.2020.
2. In addition to the above, taxpayers opting for the composition scheme for the financial year 2020-21, have been allowed, as per the notification No. 30/2020- Central Tax, dated 03.04.2020, to,-
(i) file an intimation in FORM GST CMP-02 by 30.06.2020; and
(ii) furnish the statement in FORM GST ITC-03 till 31.07.2020.
b) Relief in regard to due dates of filing GSTR-3B
1. The due dates for furnishing FORM GSTR-3B for the months of February, March and April, 2020 has not been extended.
2. However, as per notification No. 31/2020- Central Tax, dated 03.04.2020, NIL rate of interest for first 15 days after the due date of filing return in FORM GSTR-3B and reduced rate of interest @ 9% thereafter has been notified for those registered persons whose aggregate turnover in the preceding financial year is above Rs. 5 Crore. For those registered persons having turnover up to Rs. 5 Crore in the preceding financial year, NIL rate of interest has also been notified.
3. Further, vide notification as per the notification No. 32/2020- Central Tax, dated 03.04.2020, Government has waived the late fees for delay in furnishing the return in FORM GSTR-3B for the months of February, March and April, 2020.
4. The lower rate of interest and waiver of late fee would be available only if due tax is paid by filing return in FORM GSTR-3B by the date(s) as specified in the Notification.
For detailed discussion on due dates of GSTR-3B alongwith computation of interest and late fee for all brackets of assessee our Article “Lets master the GST Return filing / payment of tax calender” may be referred to.
c) Condition for applicability of reduced rate of interest of tax payer have turnover > Rs 5 cr for GSTR-3B of February, March and April, 2020
1. As the due date for furnishing the return remains unchanged; i.e. 20th day of the month succeeding such month. The rate of interest has been notified as Nil for first 15 days from the due date, and 9% p.a thereafter, for the said months.
2. The reduced rate of interest is subject to the condition that the registered person must furnish the returns in FORM GSTR-3B on or before 24th day of June, 2020.
3. In case the returns in FORM GSTR-3B for the said months are not furnished on or before 24th June, 2020 then interest at 18% p.a shall be payable from the due date of return, till the date on which the return is filed. In addition, regular late fee shall also be leviable for such delay along with liability for penalty.
d) Calculation of interest for the months of February, March and April, 2020 for taxpayer whose turnover is > Rs. 5 Crore
The rate of interest has been notified as Nil for first 15 days from the due date, and 9 % thereafter, for the said months.
e) Conditions for availing the NIL interest for the months of Feb, March and April, 2020, for a tax payer whose turnover is up to Rs. 5 Crore
1. The due date for furnishing the return remains unchanged. The rate of interest has been notified as Nil for the said months.
2. The conditions for availing the NIL rate of interest is that the registered person must furnish the returns in FORM GSTR-3B on or before the date as mentioned in the notification No. 31/2020- Central Tax, dated 03.04.2020.
3. In case the return for the said months are not furnished on or before the date mentioned in the notification then interest at 18% per annum shall be charged from the due date of return, till the date on which the return is filed.
5. In addition, regular late fee shall also be leviable for such delay along with liability for penalty.
f) Late fee for filing of GSTR-1
In terms of notification No. 33/2020- Central Tax, dated 03.04.2020, late fee leviable under section 47 has been waived for delay in furnishing the statement of outward supplies in FORM GSTR-1 under Section 37, for the tax periods March, April & May, 2020 and quarter ending 31st March 2020 if the same are furnished on or before the 30th June, 2020.
g) Deferment of applicability of ITC restriction under Rule 36(4) of the CGST Rules
Vide notification No. 30/2020- Central Tax, dated 03.04.2020, a proviso has been inserted in CGST Rules 2017 to provide that the said condition shall not apply to input tax credit availed by the registered persons in the returns in FORM GSTR-3B for the months of February, March, April, May, June, July and August, 2020, but that the said condition shall apply cumulatively for the said period and that the return in FORM GSTR-3B for the tax period of September, 2020 shall be furnished with cumulative adjustment of input tax credit for the said months in accordance with the condition under rule 36(4).
For details regarding the application of the restriction cumulatively in September, 2020, our article “Relaxation in availing Input Tax Credit due to Corona Outbreak-Detailed Analysis” may be referred to.
h) Validity of expired e-way Bills
In terms of notification No. 35/2020- Central Tax, dated 03.04.2020, where the validity of an e-way bill generated under rule 138 of the CGST Rules expires during the period 20th March, 2020 to 15th April, 2020, the validity period of such e-way bill has been extended till the 30th April, 2020.
It may be noted here that recently as per Notification No. 40/2020- Central Tax ,dated 05.05.2020 the validity of e-way bills have been extended till 31st May, 2020 for those e-way bills which expire during the period from 20th day of March, 2020 to 15th day of April, 2020 and generated till 24th March, 2020.
i) Measures for tax deductors, Input Service Distributors and Non-resident Taxable persons
In terms of notification No. 35/2020- Central Tax, dated 03.04.2020, the said class of taxpayers have been allowed to furnish the respective returns specified in sub-sections (3), (4) and (5) of section 39 of the said Act, for the months of March to May, 2020 on or before the 30th June, 2020.
j) Measures taken for taxpayers who are required to collect tax at source
Under the provisions of section 168A of the CGST Act, in terms of notification No. 35/2020- Central Tax, dated 03.04.2020, the said class of taxpayers have been allowed to furnish the statement specified in section 52, for the months of March to May, 2020 on or before the 30th June, 2020.
k) Extension of time limit for compliance of provisions of the CGST Act
Vide notification No. 35/2020- Central Tax, dated 03.04.2020 except for few provisions covered in exclusion clause, any time limit for completion or compliance of any action which falls during the period from the 20th March, 2020 to the 29th June, 2020, and where completion or compliance of such action has not been made within such time, has been extended to 30th June, 2020.
4. Circular No.135/05/2020 – GST dated 31.03.2020
Circular on Clarification on refund related issues – Reg
a) Bunching of refund claims across Financial Years allowed
It has been decided to remove the restriction on clubbing of tax periods across Financial Years. Accordingly, circular No. 125/44/2019-GST dated 18.11.2019 stands modified to that extent i.e. the restriction on bunching of refund claims across financial years shall not apply.
b) Refund of accumulated input tax credit (ITC) on account of reduction in GST Rate
Refund of accumulated ITC under section 54(3)(ii) of the CGST Act would not be applicable in cases where the input and the output supplies are the same.
c) Change in manner of refund of tax paid on supplies other than zero rated supplies
Any refund of tax paid on supplies other than zero rated supplies will now be admissible proportionately in the respective original mode of payment i.e. in cases of refund, where the tax to be refunded has been paid by debiting both electronic cash and credit ledgers (other than the refund of tax paid on zero-rated supplies or deemed export), the refund to be paid in cash and credit shall be calculated in the same proportion in which the cash and credit ledger has been debited for discharging the total tax liability for the relevant period for which application for refund has been filed.
d) Guidelines for refunds of Input Tax Credit under Section 54(3)
It has been decided that the refund of accumulated ITC shall be restricted to the ITC as per those invoices, the details of which are uploaded by the supplier in FORM GSTR-1 and are reflected in the FORM GSTR-2A of the applicant. Accordingly, para 36 of the circular No. 125/44/2019-GST, dated 18.11.2019 which allowed the refund of ITC availed in respect of invoices not reflected in FORM GSTR-2A, stands modified to that extent.
e) New Requirement to mention HSN/SAC in Annexure ‘B’
Considering that distinction of goods and services is important in view of the provisions relating to refund where refund of credit on Capital goods and/or services is not permissible in certain cases, it has been decided to amend and insert a column relating to HSN/SAC Code in the statement of invoices relating to inward supply as provided in Annexure–B (to be submitted with application for refund of unutilized ITC) of the circular No. 125/44/2019- GST dated 18.11.2019 so as to easily identify between the supplies of goods and services.
5. Circular No. 134/04/2020 dated 23-03-2020
Seeks to clarify issues in respect of issues under GST law for companies under Insolvency and Bankruptcy Code, 2016
a) Dues under GST for pre-CIRP period
No coercive action can be taken against the corporate debtor with respect to the dues for period prior to insolvency commencement date. The dues of the period prior to the commencement of CIRP will be treated as ‘operational debt’ and claims may be filed by the proper officer before the NCLT in accordance with the provisions of the IBC.
The tax officers shall seek the details of supplies made / received and total tax dues pending from the corporate debtor to file the claim before the NCLT. Moreover, section 14 of the IBC mandates the imposition of a moratorium period, wherein the institution of suits or continuation of pending suits or proceedings against the corporate debtor is prohibited.
b) Cancellation of GST registration of corporate debtor
It is clarified that the GST registration of an entity for which CIRP has been initiated should not be cancelled under the provisions of section 29 of the CGST Act, 2017. The proper officer may, if need be, suspend the registration. In case the registration of an entity undergoing CIRP has already been cancelled and it is within the period of revocation of cancellation of registration, it is advised that such cancellation may be revoked by taking appropriate steps in this regard.
c) Is IRP/RP liable to file returns of pre-CIRP period
No. In accordance with the provisions of IBC, 2016, the IRP/RP is under obligation to comply with all legal requirements for period after the Insolvency Commencement Date. Accordingly, it is clarified that IRP/RP are not under an obligation to file returns of pre-CIRP period.
During CIRP period
d) New registration be taken by the corporate debtor during the CIRP period
The corporate debtor who is undergoing CIRP is to be treated as a distinct person of the corporate debtor and shall be liable to take a new registration in each State or Union territory where the corporate debtor was registered earlier, within thirty days of the appointment of the IRP/RP. Further, in cases where the IRP/RP has been appointed prior to the issuance of notification No.11/2020- Central Tax, dated 21.03.2020, he shall take registration within thirty days of issuance of the said notification, with effect from date of his appointment as IRP/RP.
e) Filing of First Return after obtaining new registration
The IRP/RP will be liable to furnish returns, make payment of tax and comply with all the provisions of the GST law during CIRP period. The IRP/RP is required to ensure that the first return is filed under section 40 of the CGST Act, for the period beginning the date on which it became liable to take registration till the date on which registration has been granted.
f) Availing of ITC for invoices issued to the erstwhile registered person
As per special procedure the said class of persons shall, in his first return, be eligible to avail ITC on invoices covering the supplies of goods or services or both, received since appointment as IRP/RP and during the CIRP period but bearing the GSTIN of the erstwhile registered person, subject to the conditions of Chapter V of the CGST Act and rule made thereunder, except the provisions of section 16(4) of the CGST Act and rule 36(4) of the CGST Rules. In terms of notification No.11/2020- Central Tax, dated 21.03.2020 this exception is made only for the first return filed under section 40 of the CGST Act.
f) Availing of ITC for invoices by recipient of supplies from the corporate debtors undergoing CIRP
Registered persons who are receiving supplies from the said class of persons shall, for the period from the date of appointment of IRP / RP till the date of registration as required in this notification or 30 days from the date of this notification, whichever is earlier, be eligible to ITC on invoices issued using the GSTIN of the erstwhile registered person, subject to the conditions of Chapter V of the CGST Act and rule made thereunder, except the provisions of rule 36(4) of the CGST Rules.
g) Refund for amount deposited in the cash ledger by the IRP/RP
Any amount deposited in the cash ledger by the IRP/RP, in the existing registration, from the date of appointment of IRP / RP to the date of notification specifying the special procedure for corporate debtors undergoing CIRP, shall be available for refund to the erstwhile registration under the head refund of cash ledger, even though the relevant FORM GSTR-3B/GSTR-1 are not filed for the said period. The instructions contained in Circular No. 125/44/2019-GST dt. 18.11.2019 stands modified to this extent.
6. Circular No. 133/03/2020 dated 23-03-2020
Clarification in respect of apportionment of input tax credit (ITC) in cases of business reorganization under section 18 (3) of CGST Act read with rule 41(1) of CGST Rules – reg.
a) ITC apportionment in case of demerger
For the purpose of apportionment of ITC pursuant to a demerger under rule 41(1) of the CGST Rules, the value of assets of the new units is to be taken at the State level (at the level of distinct person) and not at the all-India level.
b) Requirement to file FORM GST ITC – 02 by transferor
The transferor is required to file FORM GST ITC-02 only in those States where both transferor and transferee are registered.
c) Apportionment of ITC in partial transfer of business assets along with liabilities.
The formula for apportionment of ITC, as prescribed under proviso to sub-rule (1) of rule 41 of the CGST Rules, shall be applicable for all forms of business re-organization that results in partial transfer of business assets along with liabilities.
d) Application of ratio of value of assets for apportionment of credit
The ratio of value of assets, as prescribed under proviso to sub-rule (1) of rule 41 of the CGST Rules, shall be applied to the total amount of unutilized input tax credit (ITC) of the transferor i.e. sum of CGST, SGST/UTGST and IGST credit. The said formula need not be applied separately in respect of each heads of ITC (CGST/SGST/IGST). Further, the said formula shall also be applicable for apportionment of Cess between the transferor and transferee.
e) Determining the amount of ITC that is to be transferred to the transferee
The total amount of ITC to be transferred to the transferee (i.e. sum of CGST, SGST/UTGST and IGST credit) should not exceed the amount of ITC to be transferred, as determined under rule 41(1) of the CGST Rules. However, the transferor shall be at liberty to determine the amount to be transferred under each tax head (IGST, CGST, SGST/UTGST) within this total amount, subject to the ITC balance available with the transferor under the concerned tax head.
f) Relevant date for applying the apportionment formula
A conjoint reading of section 18(3) of the CGST Act along with rule 41(1) of the CGST Rules would imply that the apportionment formula shall be applied on the ITC balance of the transferor as available in electronic credit ledger on the date of filing of FORM GST ITC – 02 by the transferor.
g) Relevant date for calculation of ratio of value of assets
For the purpose of apportionment of ITC under rule 41(1) of the CGST Rules, while the ratio of the value of assets should be taken as on the “appointed date of demerger”, the said ratio is to be applied on the ITC balance of the transferor on the date of filing FORM GST ITC – 02 to calculate the amount to transferable ITC.
7. Circular No. 132/02/2020 dated 18-03-2020
To issue clarification in respect of appeal in regard to non-constitution of Appellate Tribunal
The appeal against the order passed by appellate authority under Section 107 of the CGST Act lies with appellate tribunal.
The appellate tribunal has not been constituted and therefore the appeal cannot be filed within three months from the date on which the order sought to be appealed against is communicated. CGST (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 mandates that the appeal to tribunal can be made within three months (six months in case of appeals by the Government) from the date of communication of order or date on which the President or the State President, as the case may be, of the Appellate Tribunal enters office, whichever is later.
Hence, as of now, the prescribed time limit to make application to appellate tribunal will be counted from the date on which President or the State President enters office. The appellate authority while passing order may mention in the preamble that appeal may be made to the appellate tribunal whenever it is constituted within three months from the President or the State President enters office. Accordingly, it is advised that the appellate authorities may dispose all pending appeals expeditiously without waiting for the constitution of the appellate tribunal.
8. Circular No. 131/01/2020 dated 23-01-2020
Standard Operating Procedure (SOP) to be followed by exporters– regarding
It is advised that exporters whose scrolls have been kept in abeyance for verification would be informed at the earliest possible either by the jurisdictional CGST or by Customs. To expedite the verification, the exporters on being informed in this regard or on their own volition should fill in information in the format attached as Annexure ‘A’ to this Circular and submit the same to their jurisdictional CGST authorities for verification by them. If required, the jurisdictional authority may seek further additional information for verification.
Verification shall be completed by jurisdiction CGST office within 14 working days of furnishing of information in proforma by the exporter.
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