Month: December 2022

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Laws of claiming GST Input credit.

Section 16(2)(aa) read with Rule 36(4) mandates that the ITC can be claimed only on the basis of GSTR-2B.
 
However, this prerequisite has been challenged before Guwahati High Court in the case of Mcleod Russel India Limited vs Union of India.
 
A similar condition for claiming input VAT under Delhi VAT was held unconstitutional by Delhi High Court and the Supreme Court in the case of Arise India Limited. The condition was stuck down on the ground that the statute does not create a rational distinction between bona-fide purchasing dealers vis-à-vis fraudulent dealers, which rendered the provision invalid under Article 14 of the Constitution of India.
 
Several other High Courts on similar lines have either struck down similar provisions under their jurisdictional VAT laws denying ITC on mis-matched credit or have applied doctrine of reading down in favour of bonafide taxpayers where constitutional validity was concerned.
 
The Courts under the erstwhile laws have consistently held that a purchaser who acted in a bona-fide manner cannot be penalised for default made by its supplier. Section 16(2)(aa) also fails to distinguish bona-fide buyers with fraudulent buyers.
 
Be that is at may, can GSTN through its advisory supersede the legal provisions?

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Tax Due date – January 2023.

Sr NoDue DateRelated toCompliance to be made
111.01.2023GSTFiling of GSTR 1 for the month of December, 2022
220.01.2023GSTPayment of GST for the month of December, 2022 Filing of GSTR 3B for the month of December, 2022
407.01.2023TDS/TCS (Income Tax)· Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of December 2022. · Deposit TDS from Salaries deducted during the month of December 2022 • Deposit TCS for collections made under section 206C including sale of scrap during the month of December 2022, if any
531.01.2023TDS/TCSFiling of TDS/TCS quarterly return for Q3 (Oct to Dec-2022).
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GST Council recommends decriminalization of offences and measures for trade facilitation

This Tax Alert summarizes a press release issued by the Ministry of Finance on various recommendations made by the Goods and Services Tax (GST) Council in its 48th meeting held on 17 December 2022.

The key recommendations are as follows:

  • Decriminalization of certain offenses, increasing the threshold of tax amount from INR 1 crore to INR 2 crores for launching prosecution and reducing the compounding amount for offenses.
  • Paras 7, 8(a) and 8(b) earlier inserted in Schedule III to Central Goods and Services Tax Act, 2017 (CGST Act) w.e.f. 1 February 2019, to be made retrospectively effective from 1 July 2017.
  • Amendment in GST law to prescribe a procedure for filing refund application by unregistered buyers on cancellation of supply agreements, where time limit to issue credit note by the supplier has expired.
  • Restricting filing of returns/ statements to a maximum period of three years from the relevant due dates.
  • Clarifying issues pertaining to the place of supply of services of transportation of goods outside India and availability of input tax credit (ITC) to the recipient of such supply.


Comments:

  • Relaxation in the provisions relating to offences, prosecution and compounding is a welcome move and likely to aid the ease of doing business agenda of the Government.
  • Although the threshold for launching prosecution will be increased to INR 2 crores, as per CBIC guidelines, prosecution would normally be initiated where amount of tax evasion is more than INR 5 crores except in case of habitual evaders and arrest cases.
  • Allowing refund to unregistered buyers in case of cancellation of supply agreements is a much-needed relief to the general public. Earlier, in a few cases, recipients of supply had approached the High Courts to claim refund where the levy was struck down.
  • Retrospective effect to the amendments under Schedule III to the CGST Act may benefit taxpayers in pending litigations. However, the Government should allow refund in cases where a person has already paid tax on such transactions.
  • While the recipient of supply is able to check GSTR-3B filing status of the supplier, he is unable to verify whether the supplier has paid tax to the Government. Thus, prescribing the mechanism under Rule 37A will be critical for complying with the provisions of section 16(2)(c).
  • Courts in the past have held that the provisions of IBC have an overriding effect over the tax laws. Necessary changes were carried out under the Income tax law in the Budget for FY 2022-23. Amendment in Rule 161 and proposed issuance of Circular appears to be on the similar line.
  • Proposed Rule 88C and amendment in Rule 59(6) may lead to additional compliance by taxpayers. There may be genuine reasons for difference in tax reported in GSTR-3B and GSTR-1 (for e.g., adjustment of credit note pertaining to earlier period in GSTR-3B of the current period). The difference may now have to be substantiated on a monthly basis.
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Tax Due Date – December 2022

S NoDue DateRelated toCompliance to be made
111.12.2022GSTR – 1Filing of GSTR – 1 for the month of November 20222
220.12.2022GSTPayment of GST for the month of November, 2022 Filing of GSTR 3B for the month of November, 2021
307.12.2022TDS/TCS (Income Tax)· Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of November 2022. · Deposit TDS from Salaries deducted during the month of November 2022 • Deposit TCS for collections made under section 206C including sale of scrap during the month of November 2022, if any • Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of November 2022, if any
415.12.2022Income taxPayment of Advance tax for the Corporate and Non Corporate assesses –Amount not less than 75% and 60% of advance tax respectively.
531.12.2022GSTFiling of Annual Return –  GSTR 9 & 9C.