Important Updates and Due Date Compliances under GST for January 2022

Compliance timelines

• Note 1 - 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
• Note 2 - 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 2021

1. Circular on changes in GST on service supplied by restaurants through e-commerce operators

The Department has issued a Circular clarifying certain points on the impact in GST on service supplied by restaurants through e-commerce operators. The GST Council in its 45th meeting held on 17th September, 2021 had recommended to notify ‘Restaurant Service‛ under section 9(5) of the CGST Act, 2017. Accordingly, the tax on supplies of restaurant service supplied through e- commerce operators shall be paid by the e-commerce operator. In this regard Notification No. 17/2021 dated 18.11.2021 had been issued. The Department has now issued a Circular regarding modalities of compliance to the GST laws in respect of supply of restaurant service through e-commerce operators (ECO).

(Circular No. 167 / 23 /2021 - GST dt. 17th December, 2021)

In light of the above, E-commerce operator and registered person would report taxable supplies notified under section 9(5) of CGST Act, 2017 as specified in the CBIC Circular No. 167/23/2021 dated 17.12.2021 and as per guidance on GSTN as follows:

• Supplies under 9(5) reported by ECO - Table 3.1(a) of GSTR-3B
• Registered person/Restaurant supplying through ECO - Table 3.1(c) along-with nil and exempted supply.

2. Customs Tariff Of India 2022

The Tariff Unit, Customs Policy Wing, Central Board of Indirect Taxes and Customs, Government of India has issued the Customs Tariff Of India 2022 - The First Schedule to the Customs Tariff Act, 1975 as effective from 01-01-2022. The same can be accessed here. The Customs Tariff Of India 2022 can be downloaded here. For ease of reference, the changes introduced in the Tariff of 2022 vis a vis 2021, have been highlighted in red in the document.

Please note that as per GST Notification No. 1/2017- CT (Rate) dated 28.06.2017, Explanation (iii) and (iv), "Tariff item", "sub-heading", "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and Chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). Further the rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification too.

3. CBIC issued Guidance Note on Correlation of Customs Tariff between 2021-2022 pursuant to changes in HSN codes as per HS-2022

CBIC has issued a correlation document (at 8 digit level) which presents the correlation between the tariffs at the 8-digit level documenting the manner in which the commodities covered by tariff of 2021 have been accommodated in the tariff of 2022. The new HS-2022 has around 351 amendments at 6 Digit level whereas India follows 8 digit classifications. For ease in co-relation between HS 2021 and HS 2022 at the 8-digit level, The "Correlation code" is provided at each 8 digit entry to provide clear meaning and the change happened in HSN Codes as per HS-2022. The new (seventh) edition of the Harmonized System (HS) nomenclature, HS-2022, shall come into force from 1st January, 2022.

D.O.F. No. 524/11/2021-STO(TU) Dated December 20th, 2021

4. Aadhaar authentication of registered person is mandatory for filing of Refund/ Revocation of cancelled registration applications

Authentication of specified persons, as per the constitution of the assessee, is now required for (i) filing of application for revocation of cancellation of registration, (ii) filing of refund application in FORM RFD-01; and (iii) refund under rule 96 of the integrated tax paid on goods exported out of India; w.e.f. Jan 01, 2022. The functionality in this regard had already been deployed on the GSTN portal w.e.f. January 06, 2021. The taxable person, who has not yet authenticated their Aadhaar, may like to go through this authentication process before filing the above applications and enabling GST system to validate and transmit the IGST refund data from GST system to ICEGATE system.

(Notification No. 38/2021 - Central Tax dt. 21^st December, 2021)

5. Amendments of Finance Act, 2021 notified on 21st December, 2021

1. Supply between a person, other than an individual, to its members or constituents or vice versa included in supply

Section 7 and Schedule II (serial no. 7) of the CGST Act, 2017 has been amended so as to say that any transaction between a person, other than an individual, to its members or constituents or vice versa, shall be included within the scope of supply; w.r.e.f. July 01, 2017. The amendment provides that it would have an overriding effect over the other statues, any judgement, decree or order of any Court, Tribunal or Authority.

2. ITC availment in GSTR 3B restricted to details as furnished by the supplier

Section 16(2) has been amended to say that now ITC shall be restricted to the details uploaded by the supplier and available in form GSTR 2B. The relaxation of 5% under rule 36(4) is now no more available w.e.f. Jan 01, 2022.
Government has cleared a long pending confusion amongst assessees as to whether one is eligible to avail ITC as per data populated in GSTR 2A or GSTR 2B. The Government vide issue of a Notification and amending Rule 36(4) of the CGST Rules, 2017, has notified that the details available in GSTR 2B shall be eligible as ITC. (Notification No 40/2021 - Central Tax dated 29th December, 2021).

3. Seizure and Confiscation of goods and conveyances to be made into separate proceedings

Finance Act 2021 has made amendment in the above explanation to exclude Section 129 and 130 of the CGST Act from its purview. Explanation 1(ii) of Section 74 of the CGST Act provided that where the notice under the same proceedings is issued to the main person liable to pay tax and some other persons, and such proceedings against the main person have been concluded under Section 73 or Section 74 of the CGST Act then the proceedings against all the persons liable to pay penalty under sections 122, 125, 129 and 130 of the CGST Act were deemed to be concluded, The said amendment has made seizure and confiscation of goods and conveyances in transit a separate proceeding from the recovery of tax.

The Government has also amended the CGST Rules and laid down the procedure for Auction instead of confiscation of goods or conveyance detailed or seized in transit. Applicable procedure and forms have been notified. The provision relating the manner of utilization of proceeds of sale of goods or conveyance has been changed to include the proceeds realized from the Auction sale also. The amendment has also been made to provide that if after utilization of specified amounts, and something remains balance then instead of direct payment of the said amount to the concerned person it would be credited in the electronic cash ledger (except where the person is not registered under GST laws). (Notification No. 40/2021 - Central Tax dated 29th December, 2021).

4. Details of supplies and tax payable as declared in GSTR 1 to be assessed as Self-assessed tax

The definition of self-assessed tax in section 75 has been amended to include the tax payable in respect of details of outward supplies furnished in GSTR 1 u/s 37, but not included in the GSTR 3B furnished u/s 39. This amendment now empowers the Government to issue demand notice on the basis of difference between GSTR 1 and not paid in GSTR 3B based on self-assessment system u/s 79 - Recovery of Tax.

5. Provisional attachment in certain cases

The scope of sections under which Provisional attachment can be done has been increased manifold to include all sections in Chapters XII (Assessment) (sections 59 to 64), Chapter XIV (Inspection, Search, Seizure and Arrest) (sections 67 to 72) and Chapter XV (Demands and Recovery) (sections 73 to 84). Earlier provisional attachment was allowed only for proceedings u/s 62, 63, 64, 67, 73 and 74. Further the scope of Provisional attachment has been increased to include that provisional attachment can also be done of a person who retains the benefit of a transaction and at whose instance such transaction is conducted. This will enable the Government to provisionally attach assets of persons who are involved in the chain of fraudulent transactions and middlemen.

Applicable changes in the CGST Rules have now been notified to prescribe the procedure and forms for such provisional attachment. Notably the Rule has also been amended to specifically provide that the proper officer shall share the copy of the attachment order (i.e. Form GST-22) to the person whose property has been attached. Further, the specific manner for raising an objection against the provisional attachment order has also been provided (i.e. in Form GST DRC-22A). (Notification No. 40/2021 - Central Tax dated 29th December, 2021). The Notification can be accessed here.

6. Filing of GSTR 1 not allowed if GSTR 3B has not been filed for preceding month

A registered person shall not be allowed to furnish FORM GSTR-1, if he has not furnished the return in FORM GSTR-3B for the preceding month. Earlier the restriction was for preceding two months which has now been reduced to just the preceding month.

This functionality will be implemented on the GST Portal shortly, after which the system will check the filing of preceding GSTR-3B before permitting to file GSTR-1 for the subsequent month. Taxpayers may kindly ensure timely filing of GSTR-1 and GSTR-3B in consonance with Rule 59 of CGST Rules, 2017 to avoid any inconvenience in this regard.

Click here to check the official notification

7. Appeal to Appellate Authority against Detention, seizure and release of goods and conveyances in transit

Appeal to Appellate Authority against detention, seizure and release of goods and conveyances in transit shall lie only after payment of 25% of penalty as pre-deposit. It may be noted that the % of 100% tax and 100% penalty u/s 129 has been amended to 200% penalty.

8. Detention, Seizure and release of goods & conveyances in transit

The % of 100% tax and 100% penalty u/s 129 has been amended to 200% penalty. Further with this Notification, the proceedings of u/s 129 i.e. detention, seizure and release of goods and conveyances in transit have been delinked with the provisions of Section 130 i.e. confiscation of goods or conveyances and levy of penalty. Earlier only upon non-payment of tax and penalty u/s 129, proceedings u/s 130 was initiated. Now, the proper officer detaining or seizing goods or conveyance shall issue a notice within 7 days. Thereafter, he shall pass an order within 7 days from the date of service of such notice for payment of penalty. In case of non-payment, within 15 days of receipt of order, the goods or conveyance shall be liable to be sold or disposed of in such manner and time which will be prescribed to recover penalty payable.

9. Power to call for information

At present, the Commissioner has the right to demand data only by issuing a notification. However w.e.f. 1st January 2022, he shall now be empowered to direct any person to furnish information relating to any matter dealt with in connection with this Act, within such time, in such form, and such manner, as may be specified therein and the person shall be obliged to provide the information.

10. Apart from this, some amendments have also been done in section 152 - Bar on disclosure of information and section 168 - Power to issue instructions or directions

All these amendments implementing changes of Finance Act, 2021 have been notified vide Notification No. 39/2021 - Central Tax dt. 21st December, 2021 and Notification No 40/2021 - Central Tax dated 29th December, 2021.

6. Extension of date for filing GSTR 9/9C till Feb 28, 2022

Due date for filing of GSTR-9 and 9C for the FY 2020-21 has been extended till February 28, 2022.

(Notification No 40/2021 - Central Tax dated 29th December, 2021).

7. Notification for changes in GST rate as per the decision of GST Council

As per the decision of GST Council in its last meeting, Government has notified the changes in rates of various goods.

(Notification No.18/2021-Central Tax (Rate) dated 28th December, 2021, Notification No. 19/2021-Central Tax (Rate) dated 28th December, 2021 and Notification No. 20/2021-Central Tax (Rate) dated 28th December, 2021).

8. Existing GST rates in textile sector to continue beyond 1st January, 2022

The GST Council in its 46th meeting held today at New Delhi has recommended to defer the decision to change the rates in textiles recommended in the 45th GST Council meeting. Consequently, the existing GST rates in textile sector would continue beyond 1st January, 2022. The Press Release can be accessed here.

9. Physical hearing at CESTAT kept in abeyance until further orders

Due to increase in cases of COVID, the CESTAT has decided to keep physical hearing in abeyance until further orders. Online hearing of cases will stand revived w.e.f. January 03, 2022. (F. No. 01(05)/Circular/CESTAT/2021, Office Order dt. 31-12-2021). The Office Order can be accessed here.

10. Submission of physical copies of Tax invoices by UIN holders for refund

The Government has amended CGST Rules with retrospective effect to provide that UIN agencies can submit a copy of the invoice duly attested by the authorised representative of the applicant along with the refund application in Form GST RFD-10 and seek refund in such cases where the UIN is not mentioned on the Tax Invoice. (Notification No. 40/2021 - Central Tax dated 29th December, 2021).

11. Rate Notifications issued for changes in rates

The Government has issued 2 rate notifications seeking to (i) supersede Notification No. 14/2021- CT(R) dated 18.11.2021 and amend Notification No. 1/2017- CT (Rate) dated 28.06.2017 w.r.t. footwear of sale value not exceeding Rs. 1000/- per pair; and (ii) supersede Notification 15/2021- CT(R) dated 18.11.2021 and amend Notification No. 11/2017- CT (Rate) dated 28.06.2017 w.r.t. deletion of the words “a Governmental Authority or a Government Entity” in some cases. (Notification nos. 21/2021-Central Tax (Rate) dt. 31-12-2021. The Notifications can be accessed here and 22/2021-Central Tax (Rate) dt. 31-12-2021 here.