various circulars
have been issued by the Ministry of Finance to give effect to the recommendations
made by the GST Council in the 47th meeting.
A summary of the relevant ones is captured below for your ready reference:
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Circulars |
Clarifications |
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Circular
No 170/02/2022-GST dated 6 July 2022 |
1) Manner of reporting
of eligible ITC, ineligible ITC and ITC reversal in Form GSTR-3B:
Table 4(A) - ITC
Available – Import of goods, Import of Service, Inward supplies liable to
reverse charge, ISD Credit and All other ITC
►
All ITC, whether eligible or ineligible, which is being
reflected in current month’s GSTR-2B would be shown in different fields of
Table 4A.
4(B)
- Reversals
i) Table 4(B)(1) ►
ITC reversal which are absolute and not reclaimable
such as reversal by banking company or financial institutions (Rule
38), on input and input services on account of exempt supply (Rule 42)
and on capital goods on account of exempt supply (Rule 43) ►
Ineligible ITC under sec 17(5) of CGST Act
ii) Table 4(B)(2) ► ITC reversal which
are temporary and reclaimable such as reversal due to non-payment to supplier
within 180 days (Rule 37), non-receipts of goods (Rule 16(2)(b)) and
non-payment of tax to government (Rule 16(2)(c)) ► ITC reversal which
was availed earlier in Table 4A because of some inadvertent mistake
4(C) – Net ITC
available
► Net ITC available
will be calculated in Table 4 (C) = (Table 4(A) – (Table 4(B)(1) + Table
4(B)(2)) and the same will be credited to the electronic credit ledger of the
person
4(D)
– Other Details
i) Table 4(D)(1) ► ITC reclaimed which
was reversed earlier under Table 4(B)(2)
ii) Table 4(D)(2) – ► ITC not available
due to expiry of time period under Section 16(4) (due date of filing GSTR 3B
of September of following year) ► ITC not available
in case where recipient of intra-state supply is located in state/UT other
than PoS
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2) Manner of
furnishing details of interstate supplies to unregistered persons,
composition dealers and UIN holders i) Details in Table
3.2 to be reported place of supply-wise details in respect of following
supplies: ► Inter-state
supplies to Unregistered person (reported in Table 7B/5/9/10 of GSTR-1, as
applicable) ► Supplies to
Composition dealers and UIN holders (reported in Table 4A/4C/9 of GSTR-1, as
applicable)
ii) Further, details in
Table 3.2 to be updated based on the amendment made in Table 9/10/11 of
GSTR-1
Accordingly,
it is advised to update the customer database with correct state name to
ensure correct PoS is declared in tax invoice and in GSTR 3B, so as to ensure
tax reaches the Consumption State as per the principles of destination-based
taxation system.
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Circular
No 171/03/2022-GST dated 6 July 2022 |
Clarifications
on applicability of demand and penalty provisions in respect of transactions
involving issuance of invoice without actual supply (hereinafter referred to
as “fake invoices”)
i) Issuance of fake
invoice by one registered person (A) to another registered person (B) ► No demand, recovery
and penal action can be initiated on ‘A’ under Section 73 and 74 as there is
no actual supply. ► Registered person
‘A’ shall be liable to penalty under Section 122(1)(ii) - Higher of INR
10,000 or amount of tax evaded
ii) Issuance of fake invoice by one registered person (A) to
another registered person (B). ITC availed and utilised by B on such fake
invoice issued. Further, B issues invoice along with underlying supply to its
buyers ► Demand and recovery
can be initiated on B under Section 74 for contravention of Section 16(2)(c)
[Non receipt of goods/services] ► Interest under
Section 50 is also applicable ► Further, as per
Section 75(13) of CGST Act, no dual penal action shall be initiated under any
provisions of CGST Act, including Section 122, once penal action under Section
74 has been initiated
iii) Issuance of fake
invoice by one registered person (A) to another registered person (B). ITC
availed and utilised by B on such fake invoice issued. Further, fake invoice
is issued by B to third person (C) passing on such ITC to (C)
► No demand and
recovery can be initiated on B under Section 73 and 74 either for fraudulent
availment of ITC or tax on outward supply. ► Registered person
‘B’ shall be liable to a penalty under Section 122(1)(ii) and Section
122(1)(vii) for issuance of fake invoice and availment/utilisation of credit without
actual receipt of goods or services- Higher of INR 10,000 or amount of tax
evaded
Key note: ► Any person who has
retained the benefit of transactions specified under Section 122(1A) and at
whose instance such transactions are conducted shall also be liable for
penalty equivalent to amount of tax evaded or benefit of ITC passed on. ► Further, in cases
of aforementioned scenarios, provisions of Section 132 (relating to
prosecution) may also be invoked subject to conditions specified therein.
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Circular
No 172/02/2022-GST dated 6 July 2022 |
1) Refund claimed by
the recipients of supplies regarded as deemed exports
i) Whether the ITC
availed for claiming refund of tax paid on supplies would be subjected to
provisions of Section 17 of the CGST Act, 2017. The ITC of tax paid on deemed export
supplies, allowed to the recipients for claiming refund, is not ITC in terms
of the provisions of Chapter V of the CGST Act, 2017, therefore it would not
be subjected to provisions of Section 17 of the CGST Act, 2017.
ii) Whether the ITC
availed for claiming refund of tax paid on supplies be included in the “Net
ITC” for computation of refund of unutilised ITC under rule 89(4) & rule
89 (5) of the CGST Rules, 2017. The ITC of tax paid on deemed export
supplies, allowed to the recipients for claiming refund, is not ITC in terms
of the provisions of Chapter V of the CGST Act, 2017, therefore such ITC
availed for claiming refund of tax paid on deemed exports supplies is not to
be included in the “Net ITC” for computation of refund of unutilised ITC on
account of zero-rated supplies or on account of inverted rated structure. |
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2) Interpretation of
section 17(5) of CGST Act
i) Whether the proviso
at the end of clause (b) section 17(5) of the CGST Act is applicable to the
entire clause (b) or is applicable only to sub-clause (iii) of clause (b). Proviso shall be applicable to entire
clause (b) of Section 17(5) i.e. food beverages, healthcare service, outdoor
catering, renting of motor vehicle, membership of club and travel benefit to
employees.
Excerpt of the aforementioned proviso is
reproduced below for reference: “Provided that the
input tax credit in respect of such goods or services or both shall be
available, where it is obligatory for an employer to provide the same to its
employees under any law for the time being in force”
ii) Whether provisions
of section 17(5)(b)(i) of the CGST Act restricts ITC on input services by way
of “leasing of motor vehicles, vessels or aircraft” or by way of any type of
leasing is barred under the said provisions. Restriction of ITC is only for
leasing of motor vehicles, vessels and aircrafts and not for leasing of any
other items. |
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3) Perquisites
provided by employer to employees as per contractual agreement
i) Whether various
perquisites provided by employer to its employees in terms of contractual
agreement are liable for GST Perquisites provided by employer to the
employee in terms of contractual agreement entered into between them, will
not be subjected to GST in terms of Schedule III of the CGST Act. |
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4) Utilisation of the
amounts available in the electronic credit and cash ledger
i) Whether the amount
available in the electronic credit ledger can be used for making payment of
any tax under the GST Laws Any payment towards output tax, whether
self-assessed in the return or payable as a consequence of any proceeding
instituted under the provisions of GST Laws, can be made by utilization of
the amount available in the electronic credit ledger of a registered person
except for making payment of any tax which is payable under reverse charge
mechanism.
ii) Whether the amount
available in the electronic credit ledger can be used for making payment of
any liability other than tax under the GST Laws Amount in credit ledger cannot be
used for making payment of any interest, penalty, fees, payment of erroneous
refund where such refund was sanctioned in cash and any other amount payable
under the acts. However amount available in the electronic cash ledger may be
used for the same.
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Circular
No 173/05/2022-GST dated 6 July 2022 |
It
has been clarified that the refund of accumulated input tax credit (ITC) on
account of inverted duty structure is allowed in cases where: i) Accumulation of ITC
is on account of rate of tax on outward supply being less than the rate of
tax on inputs (same goods) at the same point of time ii) Lower output tax
rate is due to some concessional notification issued by the Government
providing for lower rate of tax for some specified supplies subject to
fulfilment of other conditions
Accordingly
Circular No. 135/05/2020-GST dated 31 March 2020 (which clarified that refund
on account of inverted duty structure would not be admissible in cases where
the input and output supply are same) has been suitably amended incorporating
the above changes.
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Circular
No 174/06/2022-GST dated 6 July 2022 |
Clarifications on
the manner of re-credit in electronic credit ledger in cases where erroneous
refund sanctioned has been paid back by the tax payer along with applicable
interest and penalty
i)
FORM PMT 03A has
been introduced to re-credit the amount in case of following category of
refund sanctioned erroneously : ► Refund of IGST
obtained in contravention of Rule 96(10), in case benefits as mentioned in
the specified notifications have been availed ► Refund of
unutilised ITC on account of zero rated supply (export or SEZ) without
payment of tax ► Refund of
unutilised ITC due to inverted tax structure
ii)
Procedure for
re-credit of amount in electronic credit ledger : ►
Deposit the amount along with applicable interest and
penalty through FORM GST DRC-03 by clearly mentioning the reason for such
deposit ►
Written request shall be made to jurisdictional proper
officer in format prescribed in “Annexure A” (enclosed in the circular
attached) ►
The Proper officer, on being satisfied, shall re-credit
the amount and pass order in FORM GST PMT 03A, preferably within 30 days of
receipt of request or date of payment of erroneous refund, whichever is later
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