Sarfaraj Ansari: February 2023

Friday 24 February 2023

जीटीए द्वारा फॉरवर्ड चार्ज के तहत भुगतान का विकल्प चुनने के लिए अनुबंध-V में एक घोषणा फाइल करने का विकल्प जीएसटी पोर्टल पर Enable किया गया है।

The option to file a declaration in Annexure-V to opt for payment under Forward Charge by GTA has been enabled on the GST Portal.

15th March 2023 is the last date for submission of the declaration for FY 2023-24

Wednesday 22 February 2023

Cancellation of GST Registration without stating a reason in SCN/Order is cryptic in nature

The Hon’ble Gujarat High Court in Gigamade Machineries Private Limited v. State of Gujarat [R/Special Civil Application No. 17599 of 2022 dated February 10, 2023] quashed and set aside the Show Cause Notice (“SCN”) and consequential order cancelling the GST Registration of the assessee, on the grounds of being violative of principles of natural justice, as the reasons for cancellation of GST Registration were not stated. Held that, the order is not only non-speaking but also cryptic in nature, which entails penal and pecuniary consequences and the Revenue Department ought to have referred to the contents of the SCN and have followed the principles of natural justice.

Facts:

Gigamade Machineries Private Limited (“the Petitioner”) is a firm to whom a SCN dated May 9, 2022 (“the Impugned SCN”) was issued by the Revenue Department (“the Respondent”) under Section 29 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) read with Rule 22(1) of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”) stating that, the Petitioner was found non-existing or non-functioning at the principal place of its business and proposing to cancel the GST Registration of the Petitioner. However, the Impugned SCN, did not disclose the basis for suo moto initiating process for cancellation of GST Registration.

The Petitioner filed a reply of the Impugned SCN stating that, it does not give any reasons for initiating process of cancellation of GST registration of the Petitioner and has been issued by a person who is not authorized in law to initiate process for cancellation of GST Registration. Subsequently, an order dated June 4, 2022 (“the Impugned Order”) was passed, cancelling the GST Registration of the Petitioner, wherein, the reasons for such cancellation were not mentioned.

Being aggrieved, this petition has been filed.

Issue:

Whether the Impugned Order passed for cancellation of GST Registration without specifying the reasons is maintainable?

Held:

The Hon’ble Gujarat High Court in R/Special Civil Application No. 17599 of 2022 held as under:

Observed that, the Impugned SCN is absolutely vague, bereft of any material particulars and the Impugned Order is also vague and a non-speaking order.
Stated that, the Respondent ought to have at least referred to the contents of the Impugned SCN and the response thereto, which was not done.
Further stated that, the Respondent ought to have followed the principles of natural justice, which has not been done.
Opined that, the Impugned Order is not only non-speaking but also cryptic in nature and the reason of cancellation of GST Registration of the Petitioner is not decipherable therefrom.
Held that, the principles of natural justice stand violated and the Impugned Order entails penal and pecuniary consequences.
Quashed and set aside the Impugned SCN and the Impugned Order.
Permitted the Respondent to issue fresh notice for cancellation of GST Registration, in accordance with the law.
Revived the GST Registration of the Petitioner.

Relevant provisions:

Section 29 of the CGST Act:

“Cancellation or suspension of registration.

(1) The proper officer may, either on his own motion or on an application filed by the registered person or by his legal heirs, in case of death of such person, cancel the registration, in such manner and within such period as may be prescribed, having regard to the circumstances where––

(a) the business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or

(b) there is any change in the constitution of the business; or

(c) the taxable person is no longer liable to be registered under section 22 or section 24 or intends to optout of the registration voluntarily made under sub-section (3) of section 25:

Provided that during pendency of the proceedings relating to cancellation of registration filed by the registered person, the registration may be suspended for such period and in such manner as may be prescribed.

(2) The proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where,––

(a) a registered person has contravened such provisions of the Act or the rules made thereunder as may be prescribed; or

(b) a person paying tax under section 10 has not furnished 5 the return for a financial year beyond three months from the due date of furnishing the said return; or

(c) any registered person, other than a person specified in clause (b), has not furnished returns for such continuous tax period as may be prescribed; or

(d) any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced business within six months from the date of registration; or

(e) registration has been obtained by means of fraud, wilful misstatement or suppression of facts:

Provided that the proper officer shall not cancel the registration without giving the person an opportunity of being heard.

Provided further that during pendency of the proceedings relating to cancellation of registration, the proper officer may suspend the registration for such period and in such manner as may be prescribed.

(3) The cancellation of registration under this section shall not affect the liability of the person to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made thereunder for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation.

(4) The cancellation of registration under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may be, shall be deemed to be a cancellation of registration under this Act.

(5) Every registered person whose registration is cancelled shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher, calculated in such manner as may be prescribed:

Provided that in case of capital goods or plant and machinery, the taxable person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery, reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery under section 15, whichever is higher.

(6) The amount payable under sub-section (5) shall be calculated in such manner as may be prescribed.”

Rule 22(1) of the CGST Rules:

“Cancellation of registration-

(1) Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled under section 29, he shall issue a notice to such person in FORM GST REG-17, requiring him to show cause, within a period of seven working days from the date of the service of such notice, as to why his registration shall not be cancelled.”

DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose and for the reader’s personal non-commercial use. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon. Further, no portion of our article or newsletter should be used for any purpose(s) unless authorized in writing and we reserve a legal right for any infringement on usage of our article or newsletter without prior permission.

The income Tax Dep has notified new rules for the Audit of NGOs and Trust from 1 April 2023

Two Audit Forms

1) Form 10B - Trust who has Income > 5 crore or received any foreign contribution or applied any part of its income outside India

2) Form No. 10BB - in other cases, above condition are not applicable

Form 10B has 49 Sections with many Questions

1- 6 Q on Basic Details

7- 8 Q on Legal

9- 9 Q on Registration Details

10-10 Q on Registration Details

11-12 Q on Objects

13-13 Q on Commencement of activities

14-14 Q on Details of Place where books of accounts

15-16 Q on Advancement of General Public Utility

17-17 Q on Business Undertaking

18-18 Q on Business Incidental to objects

19-19 Q on TDS on receipts

20- 27 Q on Voluntary contributions

28-30 Q on Income to be applied

31-32 Q on Application of Income

33-35 Q on Section 115BBI

36- 36 Q on Capital Asset

37-38 Q on Application of income out of different sources

39-39 Q on 13(10) and 22nd proviso to section 10(23C)

40-40 Q on Exp on Religious Purposes

41-42 Q on Person referred to in 13(3)

43-49 Q on Specified Violation

Each Audit Q has 1 to 15 sub-questions

Overall Approx 200 Questions need to be answered for Form 10B

Add to it 10/15 detailed Schedules

From 10B has approx 100 Q + 5/10 Scheules

Some Impractical Qs

Income of auditee has been applied, other than for the objects of the trust or institution?

Auditee has applied any income for benefit of any particular religious community or caste?

Whether auditee has not complied with the requirement of any other law?

New Audit Forms:

Trust Audit was mostly done Voluntarily for free by many CAs. This would definitely stop now as Tax Dep need a detailed Audit report

Small Trusts & NGOs shall find it difficult as cost of compliance will increase

However, the misuse of a trust shall reduce

Regard CA Chirag chauhan

Saturday 18 February 2023

Recommendations of 49th GST Council Meeting

*49th GST Council imp updates*

1. *Exports of pan masala, gutka, chewing tobaccos to beallowed against LUT only*

2. *No capacity-based taxation for Pan-masala, Gutkha and other tobacco related items* as such levy is against constitutional provision because under GST ‘supply’ is the taxable event not capacity of the machines

3. Compensation cess levied on pan masala, gutkha, chewing tobacco to be changed from transaction value to MRP based levy

4. *Extension of time limit for application for revocation of cancellation of registration from 30 days to 90 days*

5. *One time amnesty scheme for past cases of GST cancellation* on account of non-filing of the returns, but application for revocation of cancellation of registration could not be filed within the time

6. *Late fee for filing GSTR-9 for FY 2022-23 reduced* from Rs 200 per day to Rs 50 per day (Rs 100 per day if turnover exceeds 5 crores) subject to maximum of 0.04% of turnover

7. *One time amnesty scheme* in respect of pending returns in FORM GSTR-4, FORM GSTR-9 and FORM GSTR-10 by way of conditional waiver/ reduction of late fee

8. Rationalization of provision of place of supply of services of transportation of goods

*More details will be shared once the relevant notifications would be issued*

Friday 17 February 2023

GSTN Introduces much-awaited changes in GSTR-3B; Negative Values in Table 4 (ITC) of GSTR-3B are now LIVE on GST portal

The Goods and Services Tax Network ("GSTN") has issued an updated Advisory dated February 17, 2023 regarding the Introduction of Negative Values in Table 4 of GSTR-3B.

The Government vide Notification No. 14/2022 – Central Tax dated July 05, 2022 has notified few changes in Table 4 of Form GSTR-3B for enabling taxpayers to report correct information regarding ITC availed, ITC reversal and ineligible ITC in Table 4 of GSTR-3B. According to the changes, the net ITC is to be reported in Table 4(A) and ITC reversal, if any, is to be reported in Table 4(B) of GSTR-3B.

Currently in GSTR-3B, credit note (CN) is being auto-populated in Table 4B(2), as ITC reversal. Now in view of the said changes, the impact of credit notes are also to be accounted on net off basis in Table 4(A) of GSTR-3B only. Accordingly following changes have been made in the GST Portal from January-2023 period onwards and shall be applicable from tax period - January 2023’ onwards.

a. The impact of credit note & their amendments will now be auto-populated in Table 4(A) instead of Table 4(B) of GSTR-3B . In case the value of credit notes becomes higher than sum of invoices and debit notes put together, then the net ITC would become negative and the taxpayers will be allowed to report negative values in Table-4A. Also, taxpayers can now enter negative values in Table 4D(2) of GSTR-3B.

b. Consequent updates/ modification in the advisory, messages, instructions, and help-text in form GSTR-2B, without any structural changes in form GSTR-2B summary or tables have also been done in GSTR-2B.

c. The calculation logic of Comparison Report has now been changed accordingly.

The taxpayers are advised to go through instructions/help text carefully in GSTR-2B & System Generated GSTR-3B pdf before filing GSTR-3B.

The Advisory can be accessed at: https://www.gst.gov.in/newsandupdates/read/569

Wednesday 8 February 2023

Notification No. 03/2023Centralised Processing of Equalisation Levy Statement Scheme, 2023

Notification No. 03/2023

Centralised Processing of Equalisation Levy Statement Scheme, 2023

Saturday 4 February 2023

Regular taxpayers can opt for Composition Scheme for FY 2023-24; GSTN enabled functionality

The Goods and Services Tax Network (“GSTN”) has enabled the functionality for regular taxpayers can opt for the Composition Scheme for Financial Year 2023-2024 by navigating to ‘Services -> Registration -> Application to Opt for composition Levy’ and filing Form CMP-02 on the GST Portal.

Please Note: This functionality is available on the GST Portal till March 31, 2023.

Source #GST Portal