Government introduces Form GSTR-2B and amends GSTR-2A under GST

This Tax Alert summarizes two Press Release, dated 29 August 2020,issued by the Central Board of Indirect Taxes and Customs (CBIC) relating to the introduction of new Form GSTR-2B and enhancement made in existing Form GSTR-2A under GST. 

GSTR-2B has been launched basis the recommendations of the GST Council in its 39th meeting held on 14 March 2020^[1]. It is an auto-drafted input tax credit (ITC) statement which will be generated for every registered person based on the information furnished by suppliers in their respective GSTR-1, GSTR-5 and GSTR-6. It will be made available on the 12^th day of the succeeding month. Statement for July 2020 has been made accessible on trial basis.

The key features of GSTR-2B are: 

• It contains information on import of goods from the ICEGATE system including inward supplies from Special Economic Zone (SEZ) units/ developers.  
• It shows summary of all the ITC available and non-available under each section. Advisory given against each section clarifies the actions to be taken by the taxpayers in their GSTR-3B.  
• Document level details of all invoices, credit notes, debit notes, etc., are available for viewing as well as for download. 

GSTR-2B would aid in determining the ITC available and help in reducing the time taken for preparing returns, minimizing errors, assisting reconciliation and simplifying compliance.

In Form GSTR-2A, two new tables have been inserted for displaying details of import of goods and inward supplies from SEZ Units/ Developers basis bill of entry (BOE) data received from ICEGATE system. At present, the system does not contain information of BOEs filed at non-computerized ports and the imports made through courier services. However, the same will be made available shortly along with the amendment information in BOEs. Taxpayers are requested to provide feedback by raising a ticket on self-service portal https://selfservice.gstsystem.in/

Tax Due date – August 2020.

India

S. No	Due Date	Related to	Compliance to be made
1	11.09.2020	GST	Filing of GSTR-1 for August 2020.
2	20.09.2020	GST	– Payment & filing of GST return for the Month of August 2020- Form GSTR 3B
3	30.09.2020	GST	Filing of Annual Return in GSTR 9 and Reconciliation Statement in GSTR 9C for FY 2018-19
4	07.09.2020	TDS/TCS (Income Tax)	· Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of August 2020. · Deposit TDS from Salaries deducted during the month of August 2020 • Deposit TCS for collections made under section 206C including sale of scrap during the month of August 2020, if any • Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of August 2020, if any
5	30.09.2020 (Extended due date is November 30th 2020)	Income tax	Filing of income  tax return for the Corporate assesses (or) Non Corporate assesses (Whose books of accounts are required to be audited U/s 44AB of IT act 1964 (or) working partner (of a firm whose books of accounts required to be audit ( in case of Assesses not having international or specified domestic transaction). (All Sasken Trusts Return have to be filed.)
6	15.09.2020	Income Tax	Payment of Advance tax for the Corporate and Non Corporate assesses –Amount not less than 45% of tax payable respectively.

Rules of Transfer of Bonded items from SEZ to STPI Unit

• As per section 30(a) of the SEZ Act, 2005, any transfer of goods from SEZ to DTA is liable to customs duty as levied in the case of imported goods.  

• As per Rule 38 of the SEZ Rules, 2005, any goods admitted to a Special Economic Zone without payment of duty may be transferred to a Software Technology Park without payment of duty subject to certain conditions, namely:

• The SEZ and STPI unit shall have to maintain proper account of goods transferred;

• The goods transferred or given on loan basis shall not be counted for the purpose of Net Foreign Exchange Earning by the SEZ unit;

• The transferred goods shall be accounted, as import by the receiving unit while the value of the same shall be deducted from the import of the transferring unit;

• Written permission of the specified officer of the STPI shall have to be obtained for transfer of goods from SEZ unit to STPI

• Further, as per rule 46(13) of the SEZ Rules, 2005, a SEZ unit can transfer goods to a STPI unit without payment of duty subject to a specific process being followed in this regard – filing of BOE, intimation etc.

• Hence, if the goods are coming within the ambit of Customs Notification 52/2003/ 78 or 2017, (being goods eligible for exemption upon procurement by a STPI unit by virtue of their usage in authorised operations) then exemption can be claimed, otherwise applicable duty will need to paid on filing of BOE.

• In addition to the above, vide Circular No 3/1/2018-IGST dated 25 May 2018 issued by the Ministry of Finance, it is clarified that IGST shall be levied and collected at the time of final clearance of the warehoused goods for home consumption i.e., at the time of filing the ex-bond bill of entry for clearance of the warehoused goods for home consumption.  In other words, any sale of goods before their clearance from the warehouse would not be subject to the levy of IGST. 

• Further, the GST law has been framed and portal designed to enable payment of GST by the importing unit from the SEZ unit.  Accordingly, where such import is covered by an exemption (in this case Notification No 52/ 2003 or 78/ 2017), the same should not attract GST. 

• Therefore, the transfer of goods from SEZ unit to STPI unit should not entail levy of IGST, since the same being in the nature of a transfer from one bonded warehouse to another, it will be treated as transfer of goods before their clearance from the warehouse, subject to the goods being eligible for exemption under relevant customs notifications referred to above.

Supreme Court Explains Imp Law On Capital Gains

Raj Pal Singh vs. CIT (Supreme Court)

S. 45 Capital Gains: In matters relating to compulsory acquisition of land under the Act of 1894, completion of transfer with vesting of land in the Government essentially correlates with taking over of possession of the land under acquisition by the Government. However, where possession is taken over before arriving of the relevant stage for such taking over, capital gains shall be deemed to have accrued upon arrival of the relevant stage and not before. To be more specific, in such cases, capital gains shall be deemed to have accrued: (a) upon making of the award, in the case of ordinary acquisition referable to Section 16; and (b) after expiration of fifteen days from the publication of the notice mentioned in Section 9 (1), in the case of urgency acquisition under Section 17 (All imp judgements referred)

For chargeability of income-tax, the income ought to have either arrived or accrued. In the matter of acquisition of land under the Act of 1894, taking over of possession before arrival of relevant stage for such taking over may give rise to a potential right in the owner of the property to make a claim for compensation but, looking to the scheme of enactment, it cannot be said that transfer resulting in capital gains is complete with taking over of possession, even if such taking over had happened earlier than the point of time of vesting contemplated in the relevant provisions

Summary of observations from e–invoicing webcast conducted by GSTN & NIC

We wish to update that GSTN and NIC has conducted a webcast on 14 August 2020 on e-invoicing. For ease of reference, we have summarised below the key observations:

• E-invoicing to be applicable on tax payers who have turnover of over 500 crores in any of the previous FY i.e. from 2017-18 to 2019-20 (7.57)
• SEZ unit and not SEZ developer is exempted from e-invoicing  (11.25)
• 30-40 validations to be run on the invoice data by IRP before issuing IRN (18.24) (List available on NIC portal)
• GSTR-1 to be populated by GSTN based on information shared by IRP (19.33) 
  • Details of the process described from 1.14.56 onwards. 
  • IRN number and date to be included from 2^nd phase (1.20.24) 
• Printing of QR code on invoice is mandatory – It can be placed anywhere in the invoice (21.15) 
• Printing/ quoting of IRN on the invoice is optional (21.47)
• B2G (Business to Government) transactions are also covered under e-invoicing (25.42).  Inclusion of B2G supplies to be clarified (1.31.24)
• Access of the taxpayer to IRP would be blocked if B2C transactions are sent on continuous basis (32.38)
• Once the IRN has been cancelled for a particular invoice number, IRN cannot be generated for the same invoice number (33.31)
• EWB user can use the EWB credentials to access the sand box environment for testing – Non EWB user can follow the steps mentioned in the presentation (35.01)
• Production portal of e-invoicing is https://einvoice1.gst.gov.in (37.33)
• Details of people eligible for e-invoicing can be verified on above portal (38.28) – It can be checked for only 1 GSTIN at a time. 
• Part B of EWB can be generated through Acknowledgment number (IRN generation) or IRN on EWB portal – EWB can also be generated in bulk (47.09)
• IRN can be generated through multiple GSPs – Different username is required for each GSP (49.47)
• QR code verify app along with brief document on QR code is made available on the above portal (50.37)
• Details of the process of e-invoice to GSTR1 described from 1.14.56 onwards
  • Near real time replication of information on GSTR-1 – Tax payer to be able to edit the auto-populated details in GSTR-1 (1.17.44)
  • Both the data would be kept in GSTR-1 database and any unmatched data would be reported to tax authorities (1.18.05)
  • Invoice auto-populated in GSTR-1, then edited and then if cancelled will not be removed from GSTR-1. (1.19.58)
  • GSTIN of supplier/ buyer, invoice number and invoice date cannot be changed (1.26.25)
  • IRN and IRN date to be made available in GSTR-1, GSTR-2A, GSTR-2B etc. in the second phase (1.20.24)
• IRP will not validate the original invoice reference for CN/ DN (1.24.00)
• List of suppliers eligible for e-invoicing has been provided in e-invoice portal (1.24.52)
• Preceding document number and date is optional and not mandatory (1.32.30)
• Separate Invoice should be issued for GST and non-GST supplies (1.28.09)
• Further clarity would be provided for applicability of e-invoicing on Nil rated supplies (1.40.53)
• E-invoice JSON would be available for 2 days from generation to download from IRP (1.44.25)
• Electronic copy of e-invoice and EWB would be sufficient for sale of goods from one place to another (2.00.35)
• No specific dimensions for printing QR code image on invoice – It should be enough to be readable through mobile app (2.04.08)
• Exemption from e-invoicing is qua service and not qua entity – In case, the entities provide non-exempt services (from e-invoicing perspective), then such entities would be required to generate e-invoice (2.06.46)
• FTWZ is exempted from e-invoicing compliance in the same way as SEZ (2.15.07)

We have provided below the link of webcast hosted by GSTN and NIC. Please refer the time stamp in the video against each observation

CBIC revises guidelines for conducting hearings through videoconferencing

Please find below update in relation to guidelines for conducting hearings through videoconferencing. The CBIC had decided that personal hearing in respect of any proceedings may be conducted through videoconferencing facility. This was done to ensure social distancing and reduce physical presence by using modern information and communication technology systems.

The key highlights of the guidelines are:

• Mandatory conduct of hearing through virtual mode before the appellate or adjudicating authority.
• Date and time of hearing shall be informed in advance.
• Submissions during the virtual hearing shall be recorded in writing and the PDF copy of the record shall be mailed to the party within one day of the hearing.
• Modification of record of personal hearing, if required can be done.
• Additional Submission may be submitted through self-attest scanned copy of the same to the adjudicating/appellate authority

CBIC notifies prospective amendment to interest provision under GST

This Tax Alert summarizes a recent notification¹ issued by the Central Board of Indirect Taxes and Customs (CBIC) appointing 1 September 2020 as the date on which provisions of section 100 of the Finance (No. 2) Act, 2019 shall come into force.  

Vide section 100, a proviso had been inserted in section 50(1) of the Central Goods and Services Tax Act, 2017. As per the proviso, in case of belated filing of return, interest shall be levied only on the tax liability paid in cash, i.e., the net tax liability after adjusting input tax credit available with the taxpayer. The said proviso was not made effective till date. 

The proviso covers only the cases where the return for the period is filed belatedly and not the scenario where the tax liability of a month is reported in subsequent months.

It is pertinent to note that the GST Council, in its 39th meeting held on 14 March 2020, had decided that the proviso will be given retrospective effect from 1 July 2017². 

Earlier, while the Telangana High Court³ held that interest on delayed payment of tax is leviable on gross tax liability, the Madras High Court⁴ ruled that interest shall apply only on net tax liability.  

For the past period, industry may represent to government for retrospective applicability of the proviso w.e.f. 1 July 2017 in line with the decision of the GST Council. 

It will be interesting to see whether this amendment will have a bearing on the outcome of cases pending before various high courts.

CBIC issues notification for administration of Rules of Origin under Trade Agreements

This tax alert summarizes the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR, 2020)¹ notified by the Central Board of Indirect Taxes and Customs (CBIC). 

The key features of CAROTAR, 2020 are: 

• The importer shall furnish details of Certificate of Origin (CoO) in the bill of entry and make necessary declaration in order to claim preferential rate of duty.

• The importer shall possess information (indicated in Form I) to demonstrate the manner in which the origin criteria is satisfied and maintain all supporting documents for at least five years from the date of filing of bill of entry.  

• During customs clearance or thereafter, if the proper officer has a reason to believe that origin criteria has not been met, he may seek information and documents from the importer.   

• Verification request can be made before the appropriate authority where proper officer has doubt regarding genuineness or authenticity of CoO or has a reason to believe that the country of origin criterion stated in CoO has not been met or claim of preferential rate is invalid.

• Where it is determined that goods originating from an exporter or producer do not meet the origin criteria, other claims of preferential rate of duty filed for identical goods imported from the same person, prior to or after such determination, may be rejected.

The rules shall come into force from 21 September 2020. A Circular² has also been issued in this regard.

Comments:

1. The rules have been framed to curb the practice of availing concessional customs duty by routing non-originating exports to India through preferential trade countries.
2. It imposes significant new obligations on importers, who are now primarily responsible to provide information required by the Revenue authorities for evaluating claims for preferential rate of duty under trade agreements.
3. Importers will need to review current documentation relating to preferential imports under trade agreements and ensure obtaining requisite information from overseas exporters/ suppliers including appropriate declaration, for evidencing fulfillment of ‘origin’ requirements.

This could be challenging at times as exporters/ suppliers may have concern of exposing critical business sensitive information. It may be prudent for businesses to engage an independent third-party, wherever necessary, to evaluate whether criteria specified in the corresponding Rules of Origin are satisfied and provide repository services to retain the necessary information.

CBIC amends provisions related to GST registration

The Central Board of Indirect Taxes and Customs (CBIC), pursuant to the GST Council’s recommendation, made Aadhaar verification mandatory for granting GST registration with effect from 1 April 2020.

In line with the above, the CBIC has now introduced the following changes related to GST registration in the Central Goods and Services Tax Rules, 2017:

Opted for Aadhaar authentication

·         Date of submission of application: Effective from 21 August 2020, the date of submission of the application in such case shall be earlier of –  

–       the date of authentication of the Aadhaar number or

–       15 days from the submission of the application in Part B of Form GST REG-01.

·         Deemed approval: If the proper officer fails to take any action within three working days from the date of submission of application, the registration shall be deemed to have been approved.

Failure in Aadhaar authentication or not opting for Aadhaar authentication

·         Mandatory physical verification: Effective from 21 August 2020, in such case, the registration shall be granted only after physical verification of the place of business in a prescribed manner. Further, notice in Form GST REG-03 may be issued not later than 21 days from the date of submission of the application.

·         Deemed approval: The registration shall be deemed to have been approved, if the proper officer fails to take any action –

–       within 21 days from the date of submission of application or –       within seven working days from the date of the receipt of the clarification

Manufacture and Other Operations in Special Warehouse Regulations, 2020 notified

The Central Board of Indirect Taxes and Customs (CBIC) recently notified the Manufacture and Other Operations in Special Warehouse Regulations, 2020 from 17 August 2020. Some of the important aspects of the regulations are as under:

·         Units covered: The regulations shall be applicable to:

–       Units carrying on manufacturing process or other operations in relation to goods in a warehouse or special warehouse; or

–       Units applying for permission to carry on the said process in a warehouse or special warehouse.

·         Eligibility to apply: The following persons are eligible to apply for operating:

–       A person who applies for licensing of a special warehouse along with permission to undertake manufacturing and other operations in the said warehouse.

–       A person who has been granted licence for warehousing specified goods in accordance with Special Warehouse Licensing Regulations, 2016.

·         Application process: An application under these regulations shall be made to the Principal Commissioner of Customs (PCC) or the Commissioner of Customs (CC), along with an undertaking to:

–       Maintain accounts of receipt and removal of goods in digital form and digitally furnish the same to the bond officer every month.

–       Provide facilities, equipment and personnel as required by the Regulations.

–       Execute a bond and submit security in such manner and format as may be specified.

–       Inform the original and revised input-output norms, as the case may be, for raw materials and the final products.

–       Pay for the services of supervision of the warehouse by custom officers as determined by PCC or CC.

–       Comply with such other terms and conditions as may be specified by the PCC or CC.

·         Grant of permission: The PCC or CC, upon due verification of the application and after ensuring that all requirements of regulations have been fulfilled, may grant permission to operate under the provisions of these regulations, along with a licence to operate as a special warehouse where required, subject to such conditions as deemed necessary. ·         Validity of permission: The permission granted under these regulations shall remain valid unless it is cancelled or surrendered or the licence to operate as a special warehouse is cancelled or surrendered