Important Updates and Due Date Compliances under GST for January 2023

Important clarifications/ amendments issued by the Government on GST in December 2022/ January 2023 along with compliance timelines in January 2023

Compliance timelines

• Note 1: List 1 States - Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana or Andhra Pradesh or the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands and Lakshadweep
• List 2 States - Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha or the Union territories of Jammu and Kashmir, Ladakh, Chandigarh and Delhi. Updates in the month of December 2022/ January 2023

1. Important decisions taken in the 48th GST Council held on Dec 17, 2022

1. Procedure for refund by unregistered persons
2. Insertion of Rule to provide for a mechanism for reversal of ITC upon non-payment of taxes by the supplier and the re-availment of such ITC by the recipient
3. Insertion of Rule to provide to either pay the differential duty or explain the difference in case of GSTR-1 and 3B mismatch while filing of subsequent GSTR-1
4. Restricting the filing of returns (GSTR-1/3B/9/9C/8) beyond three years from the due date of filing such returns
5. GSTR-1 to be amended to allow reporting of supplies made through e-commerce operators u/s 9(5) and u/s 52 (i.e. where TCS is applicable)
6. Raising of limit for launching prosecution against any person with a minimum tax evasion of Rs. 2 crore against the present limit of Rs. 1 crore, subject to some exceptions
7. Reduction of compounding in case of certain offences from 50% - 150% to 25% - 100% of the tax amount
8. GST would not be payable by a registered person if the residential property is rented out to him in his personal capacity and not on account of his business
9. Unregistered dealers can make intra-state supply vide e-commerce from 1/10/2023
10. Transactions of High Sea Sales and Merchant Trading Sales to be deemed to be a part of Schedule III w.r.e.f. July 01, 2017
11. Reversal of ITC in case of non-payment within 180 days to be only proportionate ITC related to non-payment amount
12. Clarification to be provided to explain the meaning of certified copy of order in original and the direction for issuance of acknowledgement by the appellate authority while filing appeals
13. Procedure for withdrawal of appeals filed to be prescribed
14. Circular to be issued for the treatment of statutory dues for whom the proceedings have been finalized under the IBC, 2016
15. Procedure for cancellation of TDS/ TCS registrations to be provided for cancellation of their registration on their request
16. Amendment in Place of Supply for GST applicability and ITC availability where destination of goods is outside India
17. Issue of a Circular to clarify the legal position of GSTR-2A and 3B mismatches for the years 2017-18 and 2018-19
18. Issue of a Circular to provide clarification on re-determination of demand u/s 74 to u/s 73
19. Issue of a Circular with regard to applicability of e-invoicing w.r.t an entity
20. Proposal to run a pilot of Biometric based Aadhaar authentication and risk based physical verification of premises in the state of Gujarat
21. To restrict the misuse of PAN, mobile number and email ID used for registration of such PAN would be used for OTP based verification on the GST portal
22. Amendments in the definition of "Online information and database access or retrieval services" and "non-taxable online recipient" to be done
23. Apart from the above procedural changes, proposals for changes in rates and clarifications for certain goods and services have also been proposed.

The proposals would be given effect through the relevant circulars/ notifications/ law amendments which alone shall have the force of law.

2. No proposal before the Government to reduce the threshold limit for e-invoicing to Rs. 5 Crore with effect from 01.01.2023

CBIC has tweeted that some news reports have appeared in media suggesting that though @GST_Council has recommended reducing threshold for generation of e-invoice to Rs. 5 cr. w.e.f. 1.1.23, the Govt. has yet to issue notification in the matter, giving rise to uncertainties amongst the taxpayers. It has been clarified that presently, e-invoicing has been made mandatory for registered persons having aggregate turnover of more than Rs. 10 crore in any preceding financial year from 2017-18 onwards. There is no proposal before the Government, at present, to reduce this threshold limit to Rs. 5 Crore with effect from 01.01.2023, as no such recommendation has been made by GST Council as yet. (Tweets from CBIC @cbic_india [Official Handle of the Central Board of Indirect Taxes & Customs, responsible for administering Indirect Taxes in India Ministry of Finance, Government of India] dt. Dec 26, 2022.

3. Notifications for recommendations passed in the 48th meeting of GST Council

1. Form GSTR-1 has been amended to change the manner of reporting details relating to supplies made through the e-commerce operator ('ECO')

2. Procedure is prescribed for filing application of refund by the unregistered buyers where the contract/ agreement for supply of services, like construction of flat/house and long-term insurance policy, is cancelled. Circular no. 188/20/2022-GST dated December 27th, 2022 has been issued in this respect detailing the procedures.

3. Rule 37A is inserted under the CGST Rules to provide for the mechanism and time limit of reversal of ITC by the recipient where tax is not paid by the supplier to the Government

4. New Rule 88C and Form GST DRC-01B in the CGST Rules for issuing intimation to the taxpayer for the differences between liability reported in Form GSTR-1 and in Form GSTR-3B, where such difference exceeds a specified amount and/ or percentage

5. Rule 37(1) of the CGST Rules is amended w.e.f. 01-10-2022 to provide for the reversal of input tax credit only proportionate to the amount not paid to the supplier vis-a-vis the value of the supply, including tax payable

6. Rule 108 and Rule 109 of the CGST Rules are amended to provide clarity on the requirement of submission of the certified copy of the order appealed against and the issuance of final acknowledgement by the appellate authority

7. New Rule 109C and new Form GST APL-01/03W to provide the facility for withdrawal of an application of appeal up to a certain specified stage (Notification No. No. 26/2022 - Central Tax dated December 26th, 2022)

4. Verification process for completion of GST registration application via biometric-based Aadhaar authentication and photograph only applicable to the state of Gujarat

The CBIC has notified that Rule 8(4A) of the CGST Rules w.r.t. the completion of application after biometric-based Aadhaar authentication and photograph of the applicant, verification of the documents in FORM GST REG-01, shall not be applicable in all the States and Union territories except in the State of Gujarat. (Notification No. No. 27/2022 - Central Tax dated December 26th, 2022)

5. Clarification to deal with difference in ITC availed in GSTR-3B and GSTR-2A for FY 2017-18 and 2018-19

CBIC has issued clarification to deal with differences in ITC availed in GSTR-3B and GSTR-2A for FYs 2017-18 and 2018-19 since GSTR-2A could not be made available to the taxpayers on the common portal during the initial stages of implementation of GST and a detailed procedure is prescribed to ensure uniformity in the implementation. (Circular No. 183/15/2022-GST dated December 27th, 2022)

6. CBIC issues clarification on ITC availability for transportation of goods to a place outside India

CBIC has issued a clarification on entitlement of ITC for transportation of goods to a place outside India where place of supply is determined in terms of proviso to Section 12(8) of IGST Act. It is also clarified that the supplier of service shall report place of supply by selecting State code as '96- Foreign Country' from the list of codes in the dropdown menu available on the portal in FORM GSTR-1 and ITC would be available. (Circular No. 184/16/2022-GST dated December 27th, 2022)

7. Clarification with regard to applicability of provisions of section 75(2) of Central Goods and Services Tax Act, 2017 and its effect on limitation

The Circular provides clarification for cases where the appellate authority or appellate tribunal or court concludes that the notice issued by proper officer under sub-section (1) of section 74 is not sustainable for reason that the charges of fraud or any willful-misstatement or suppression of facts to evade tax have not been established against the person to whom such notice was issued, then the proper officer shall determine the tax payable by the noticee, deeming as if the notice was issued under sub-section (1) of section 73. (Circular No. 185/17/2022-GST dated December 27th, 2022)

8. Clarifications on taxability of no claim bonus and applicability of e-invoicing under GST: Circular

The CBIC has issued a circular to clarify that there is no supply provided by the insured to the insurance company in form of agreeing to the obligation to refrain from the act of lodging insurance claim during the previous year(s) and therefore, no claim bonus cannot be considered as a consideration for any supply provided by the insured to the insurance company. It has also been clarified that exemption from generation of e-invoices is for the entity as a whole and not restricted by nature of supply being made by entity. (Circular No. 186/18/2022-GST dated December 27th, 2022)

9. CBIC issues clarification on treatment of statutory dues for taxpayers where proceedings are finalised under IBC, 2016

The CBIC has clarified that proceedings conducted under IBC also adjudicate the government dues pending under the CGST Act or under existing laws against the corporate debtor and it would be covered under the term 'other proceedings' in Section 84 of CGST Act. Therefore, in cases where a confirmed demand for recovery has been issued by the tax authorities for which a summary has been issued in FORM GST DRC-07/DRC 07A against the corporate debtor, and where the proceedings have been finalised against the corporate debtor under IBC reducing the amount of statutory dues payable, then the jurisdictional Commissioner shall issue an intimation in FORM GST DRC-25 for reducing such demand. (Circular No. 187/19/2022-GST dated December 27th, 2022)

10. CBIC prescribes the manner of filing an application for refund by unregistered persons

The CBIC has issued circular to clarify that a new functionality has been made available on the common portal which allows unregistered persons to take a temporary registration and apply for refund under the category 'Refund for Unregistered person'. The date of issuance of letter of cancellation of the contract/ agreement for supply by the supplier will be considered as the date of receipt of the services by the applicant. Also, the manner and procedure for filing of refund applications by unregistered persons is prescribed. (Circular No. 188/20/2022-GST dated December 27th, 2022)

11. Notifications implementing recommendations of 48th GST Council Meeting w.r.t. changes in rates of Tax

The Government has issued the following notifications implementing recommendations of 48th GST Council Meeting w.r.t. changes in rates of Tax:

• Seeks to amend notification No. 1/2017- Central Tax (Rate) - Notification for tax rate on goods: (Notification no. 12/2022-Central Tax (Rate) dt. 30-Dec-2022)
• Seeks to amend notification No. 2/2017- Central Tax (Rate) - Notification for exemption from tax (NIL rated) in case of goods (Notification no. 13/2022-Central Tax (Rate) dt. 30-Dec-2022)
• Seeks to amend notification No. 4/2017- Central Tax (Rate) - Notification for charging tax on reverse charge mechanism on supply of goods (Notification no. 14/2022-Central Tax (Rate) dt. 30-Dec-2022)
• Seeks to amend notification No. 12/2017- Central Tax (Rate) - Notification for exemption from tax (NIL rated) in case of services (Notification no. 15/2022-Central Tax (Rate) dt. 30-Dec-2022)

The above amendments would be effective from 01-01-2023.

(Notifications under IGST and UTGST Acts have also been issued notifying similar changes)

12. BOT annuities brought under GST

Concessionaires who receive annuities from the National Highways Authority of India and state authorities for construction and maintenance of roads and highways will now have to pay GST on the toll amounts received effective January 1, 2023, as the exemption has been removed. A recent notification by the Central Board of Indirect Taxes and Customs has omitted serial 23A and related entries dealing with this in the Notification No. 12/2017- Central Tax (Rate) - Notification for exemption from tax (NIL rated) in case of services. The provision had exempted "service by way of access to a road or a bridge on payment of annuity". (Notification no. 15/2022-Central Tax (Rate) dt. 30-Dec-2022)