Changes in GST with effect from January 1, 2022.

Given below  summarizes recent Notifications issued by the Central Board of Indirect Taxes and Customs (CBIC).

Vide Finance Act, 2021, Government had proposed various amendments in the Central Goods and Services Tax Act, 2017 (CGST Act). The amendments relating to following shall be made effective from 1 January 2022:

• Supply by clubs/ association
• Conditions for availing input tax credit (ITC)
• Recovery due to mismatch between GSTR-1 and GSTR-3B
• Scope of provisional attachment
• Mandatory pre-deposit for filing appeal against detention or seizure order
• Detention, seizure, confiscation and release of goods and conveyances in transit
• Power to call for information
• Separation of proceeding for detention, seizure and confiscation from the proceeding u/s 73 and 74

Also, the amendments in Central Goods and Services Tax Rules, 2017 (CGST Rules) relating to Aadhar authentication for claiming refund and filing application for revocation of cancellation of registration shall come into force from 1 January 2022.

Comments:

a. Currently, as per rule 36(4) of CGST Rules, ITC on unmatched invoices can be claimed up to 5% of matched credit.
GST Council in their 45th meeting stated that the rule shall be suitably amended in line with section 16(2)(aa) of CGST Act. Such amendment is yet to be carried out.

b. Many clubs/ associations have taken a “no tax” position basis the Apex Court ruling in case of Calcutta Club Ltd. Due to retrospective amendment, department may start issuing notices to such persons demanding tax along with interest.

c. There could be cases where the tax liability basis turnover declared in GSTR-1 is more than actual tax payable in GSTR-3B. This may be due to manual or clerical error. Post amendment, recovery proceedings can be initiated even in such cases, requiring taxpayer to substantiate the difference.

d. Time limit for issuing notice and passing order in case of detention or seizure is likely to facilitate speedy disposal of proceedings.

e. While enhanced penalty and powers granted to sell or dispose detained or seized goods intends to minimize tax evasion, the same may cause hardship to taxpayers in case of undue detentions.

f. Provision empowering officer to dispose goods and conveyance, if penalty is not paid within 15 days from the date of detention order, does not appear to be aligned to section 107 of CGST Act which provides three month time period to file an appeal against such order.

g. It is relevant to note that the amendments proposed under Integrated Goods and Services Tax Act, 2017 (IGST Act) relating to zero-rated supplies, have not been made effective