The Delhi Government notified the Delhi Goods and Services Tax (Third Amendment) Rules, 2020 vide Notification No. 16/2020- State Tax dated 23.10.2020, to further amend the Delhi Goods and Services Tax Rules, 2017.
The amendments made are briefly discussed below:
1. Aadhaar Authentication and Physical verification:
New Rule 8(4A) inserted from 01.4.2020:
While submitting an application for GST registration (GST REG-01) , the applicant shall undergo authentication of Aadhaar number for grant of registration from 01.04.2020.
Proviso to Rule 9(1) inserted from 01.04.2020:
The notification inserted a proviso wherein it is stated that where a person, other than those notified of section 25(6D), fails to undergo authentication of Aadhaar number as specified in rule 8(4A), then the registration shall be granted only after physical verification of the principal place of business in the presence of the said person, not later than 60 days from the date of application, in the manner provided under rule 25 and the provisions of sub-rule (5) shall not be applicable in such cases.
Rule 25 substituted (w.e.f 23.03.2020):
Rule 25 of Delhi GST Rules , 2017 has been substituted wherein new Rule states that where the proper officer is satisfied that the physical verification of the place of business of a person is required due to failure of Aadhaar authentication before the grant of registration, or due to any other reason after the grant of registration, he may get such verification of the place of business, in the presence of the said person, done and the verification report along with the other documents, including photographs, shall be uploaded in FORM GST REG-30 on the common portal within a period of fifteen working days following the date of such verification.
2. Amendment made in Rule 43 (Reversal of ITC on capital goods) from 01.04.2020:
Amendment in sub-clause (c)
- Credit on common capital goods have to be claimed on basis of tax reflected on the invoice.
- Input tax credit on capital goods earlier used exclusively for non business / exempt supplies , and subsequently to be used for both exempt and taxable supplies , shall be availed as credit in electronic credit ledger.
- Ineligible credit attributable to period during which it was used for exempt supplies- Credit amount shall be reduced by 5% for every quarter / part thereof, to be denoted as ‘Tie’.
- Such amount computed above must be added directly to the output tax liability and computed separately for each tax head i.e. CGST / SGST/ UTGST and IGST in Form GSTR-3B.
Amendment in sub-clause (d)
Input tax credit on capital goods earlier used exclusively for taxable supplies, and subsequently to be used for both exempt and taxable supplies shall be added directly to pool of common credit for the purposes of credit reversal to be done monthly based on the useful life of 5 years.
Amendment in sub-clause (e)
An explanation has been added in the sub-clause which clarifies that the useful life shall be 5 years from the date of invoice and provides that the formula for arriving at such reversals must be applied only during the useful life of capital goods.
Omission of sub-clause (f)
Sub-clause(f) has been omitted thereby removing the concept of ‘Tr’ which is a sum of all credits on capital goods attributable to each tax period.
3. Turnover for GST Audit enhanced for FY 2018-19 (from 23.03.2020)
As per Rule 80(3) of Delhi GST Rules , GST audit under Section 35(5) is required if aggregate turnover of the tax payer exceeds Rs 2 crore. However this limit has been enhanced to Rs 5 crore for FY 2018-19 by insertion of proviso to Rule 80(3) as under:
“Provided that every registered person whose aggregate turnover during the financial year
2018-2019 exceeds five crore rupees shall get his accounts audited as specified under subsection (5) of section 35 and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C for the financial year 2018- 2019, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.”.
4. New sub-rule (4A) inserted in rule 86 (Electronic Credit ledger) from 23.03.2020:
The following sub-rule has been inserted in Rule 86:
“(4A) Where a registered person has claimed refund of any amount paid as tax wrongly paid
or paid in excess for which debit has been made from the electronic credit ledger, the said
amount, if found admissible, shall be re-credited to the electronic credit ledger by the proper
officer by an order made in FORM GST PMT-03.”.
5. Substitution of clause(C) to Rule 89(4) (Refund of ITC on zero rated supplies made without payment of tax under LUT / Bond) from 23.03.2020:
„(C) “Turnover of zero-rated supply of goods” means the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking or the value which is 1.5 times the value of like goods domestically supplied by the same or, similarly placed, supplier, as declared by the supplier, whichever is less, other than the turnover of supplies in respect of which refund is claimed under sub-rules (4A) or (4B) or both;‟
This means that the value of turnover of zero-rated supply of goods for purposes of refund of ITC in case of without payment of tax has been capped up to maximum of 1.5 times of the value of like goods domestically supplied respectively.
6. Amendment in Rule 92 (Order sanctioning refund) from 23.03.2020)
New sub-rule (1A) inserted
Where, upon examination of the application of refund of any amount paid as tax other than the refund of tax paid on zero-rated supplies or deemed export, the proper officer is satisfied that a refund under sub-section (5) of section 54 of the Act is due and payable to the applicant, he shall make an order in FORM RFD-06 sanctioning the amount of refund to be paid, in cash, proportionate to the amount debited in cash against the total amount paid for discharging tax liability for the relevant period, mentioning therein the amount adjusted against any outstanding demand under the Act or under any existing law and the balance amount refundable and for the remaining amount which has been debited from the electronic credit ledger for making payment of such tax, the proper officer shall issue FORM GST PMT-03 re-crediting the said amount as Input Tax Credit in electronic credit ledger.”;
Further the reference to above new sub-rule has been inserted in sub-rule(4) and (5) of Rule 92.
7. Explanation inserted in rule 96 (Refund of IGST paid on goods / services exported out of India) , in sub-rule (10),in clause (b) from 23.03.2020:
Following Explanation is inserted with effect from the 23rd October, 2017:
“Explanation.- For the purpose of this sub-rule, the benefit of the notifications mentioned
therein shall not be considered to have been availed only where the registered person has paid
Integrated Goods and Services Tax and Compensation Cess on inputs and has availed
exemption of only Basic Customs Duty (BCD) under the said notifications.”.
8. New Rule 96B inserted from 23.03.2020:
In the Delhi Goods and Services Tax Rules, 2017, rule 96B is inserted as under:
“96B. Recovery of refund of unutilised input tax credit or integrated tax paid on export of goods where export proceeds not realised. –(1) Where any refund of unutilised input tax credit on account of export of goods or of integrated tax paid on export of goods has been paid to an applicant but the sale proceeds in respect of such export goods have not been realised, in full or in part, in India within the period allowed under the Foreign Exchange Management Act, 1999 (42 of 1999), including any extension of such period, the person to whom the refund has been made shall deposit the amount so refunded, to the extent of nonrealization of sale proceeds, along with applicable interest within thirty days of the expiry of the said period or, as the case may be, the extended period, failing which the amount refunded shall be recovered in accordance with the provisions of section 73 or 74 of the Act, as the case may be, as is applicable for recovery of erroneous refund, along with interest under section 50:
Provided that where sale proceeds, or any part thereof, in respect of such export goods are not realised by the applicant within the period allowed under the Foreign Exchange Management Act, 1999 (42 of 1999), but the Reserve Bank of India writes off the requirement of realisation of sale proceeds on merits, the refund paid to the applicant shall not be recovered.
(2) Where the sale proceeds are realised by the applicant, in full or part, after the amount of refund has been recovered from him under sub-rule (1) and the applicant produce evidence about such realisation within a period of three months from the date of realisation of sale proceeds, the amount so recovered shall be refunded by the proper officer, to the applicant to the extent of realisation of sale proceeds, provided the sale proceeds have been realised within such extended period as permitted by the Reserve Bank of India.”
This rule states that if sale proceeds in respect of exports are not received within the time prescribed under Foreign Exchange Management Act, 1999 then refund paid to applicant needs to be deposited back along with interest under section 50 within 30 days of expiry of such period. In case the applicant fails to deposit such amount, recovered shall be initiated under section 73 or 74 of the CGST Act.
If such sale proceeds are received with in extended time allowed by RBI and taxpayer produces evidence about such realisation within 3 months from such realisation to proper officer, the amount so recovered shall be refunded back by proper officer to the applicant.
9. New Undertaking to Form GST RFD-01 from 23.03.2020:
A new undertaking to Form RFD-01 has been inserted which is reproduced hereunder:
“I hereby undertake to deposit to the Government the amount of refund sanctioned along with interest in case of non-receipt of foreign exchange remittances as per the proviso to section 16 of the IGST Act, 2017 read with rule 96B of the CGST Rules 2017.”
The above amendments are in line with amendment made in CGST Rules, 2017 vide Notification No. 16/2020- Central Tax dated 23.03.2020.
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
