GST Update - Circulars issued by CBIC pursuant to 47th GST Council meeting | nasscom | The Official Community of Indian IT Industry

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GST Update - Circulars issued by CBIC pursuant to 47th GST Council meeting

Tejasvi

@tejasvi

July 11, 2022

Public Policy

404

The 47^th GST Council meeting was held on June 28-29, 2022. To give effect to the decisions of the Council’s meeting, Central Board of Indirect Taxes and Customs (CBIC) has issued the following Circulars:

Circular No 170/02/2022-GST: Mandatory furnishing of correct and proper information of inter-State supplies and amount of ineligible/blocked Input Tax Credit (ITC) and reversal thereof in GST returns

It has been noticed that the address of unregistered person are captured incorrectly by the supplier, especially those belonging to banking, insurance, finance, stock broking, telecom, digital payment facilitators, OTT platform services providers and Ecommerce operators, leading to wrong declaration of Place of Supply (PoS) in both the invoices issued under S.31 of Central Goods and Services Tax Act, 2017 (CGST Act), as well as in Table 3.2 of FORM GSTR 3B.

Advisory has been issued in the context of declaration of inter-state supplies PoS wise.

Taxpayers will be required to update their customer database properly with correct State name and ensure that correct PoS is declared in the tax invoice and in Table 3.2 of FORM GSTR-3B while filing their return, so that tax reaches the Consumption State as per the principles of destination-based taxation system.

It is important that any reversal of ITC or any ITC which is ineligible under any provision of CGST Act should not be part of Net ITC Available in Table 4(C) and accordingly, should not get credited into the Electronic Credit Ledger (ECL) of the registered person.

Detailed advisory has been issued on the type of ineligible credits and their disclosure along with illustration.

Circular No 171/03/2022-GST: Clarification on various issues relating to applicability of demand and penalty provisions under the Central Goods and Services Tax Act, 2017 in respect of transactions involving fake invoices.

The government noticed a number of cases where the registered persons were found to be involved in issuing fake tax invoices, without actual supply of goods or services, in order to enable the recipients of such invoices to avail and utilize (ITC) fraudulently. The government has nor clarified the following:

Where registered person “A” issues invoice to another registered person “B” without any supply – As there is no supply, there is no tax liability on A. However, penal action under S. 122(1)(ii) of CGST Act will be initiated against A.
Where A issues invoice to B without supply and B avails credit and does further supply where such credit is used – As B has availed credit in contravention of the provisions of S. 16(2) of CGST Act, B will be liable for demand and recovery along with interest penalty under S. 74 of CGST Act.
Where A issues invoice to B without supply, B avails credit and also issues invoice to C without supply - No demand and recovery of either ITC wrongly/ fraudulently availed by ‘B’ in such case or tax liability in respect of the said outward transaction by ‘B’ to ‘C’ is required to be made from ‘B’ under S. 73 or S. 74 of CGST Act. However, penal action under S. 122(1)(ii) will be initiated on B.

Circular No. 172/04/2022-GST: Clarification on various issue pertaining to GST

Deemed export supplies (procurements by STP/ EOU) – Tax paid on deemed export supplies is allowed as ITC to enable refund claim. It does not mean actual credit which is subject to restrictions under Section 17 or for ‘Net ITC’ for claiming refund of zero rated supplies
Credits linked to any supply which is obligatory for employer to provide its employees – Relaxation applies to S. 17(5)(b) and not just to sub-clause (iii)
Leasing credit restriction only applies to leasing of motor vehicles, vessels and aircrafts
Perquisites provided by the employer to the employee in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST when the same are provided in terms of the contract between the employer and employee.
Electronic credit ledger – can be used for payment of output tax whether self-assessed or as a consequence of any proceeding. Cannot be used to pay reverse charge liability, interest, penalty, fees, or payment of erroneous refund sanctioned in cash
Electronic cash ledger – can be used for any payment under the GST law

Circular No. 173/05/2022-GST: Clarification on issue of claiming refund under inverted duty structure where the supplier is supplying goods under some concessional notification

There may be cases where though the input and output supplies are same at a given point in time, the tax rate can be different on output due to a concessional notification. Such cases are eligible for inverted duty refund.

Circular No: 174/06/2022-GST: Prescribing manner of re-credit in electronic credit ledger using FORM GST PMT-03A

Prescribes mechanism to claim recredit of erroneous refund which is deposited by the tax payer. Manual filing in Annexure A to begin with till automated functionality is developed.

Copy of the Circular is attached for your reference.

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Tejasvi