I. BUDGET 2022 – PROPOSALS
The Hon’ble Union Finance Minister has presented budget proposals in Parliament for 2022-2023 on 1st February, 2022. Some of the important changes proposed in GST law may be noted as follows:
1. Insertion of a new sub-clause (ba) in section 16(2) of the CGST Act, 2017 to provide that ITC for supply can be availed only if such credit has not been restricted in the details communicated to the taxpayer u/s 38.
2. In Clause (c) to Section 16(2), reference to Section 43A is deleted as the said Section has been omitted.
3. In Section 16(4), the time limit for availing the credit of any invoice pertaining to a particular Financial Year is extended from the due date of September Return to 30th November, following the end of the financial year.
4. The proper officer may cancel the Registration of a Composition person under Section 29(2)(b) if the said person has not furnished returns for a financial year beyond three months from the due date of furnishing the said return.
5. The proper officer may cancel the Registration of a registered person other than a composition person under Section 29(2)(c) if the said person has not furnished returns for a financial year for such period as may be prescribed instead of the six months provided earlier.
6. The effect of the GST Credit Note, pertaining to invoices of a particular financial year, can be given in the returns up to 30th November following the financial year. Time has been extended from the due date of September return to 30th November.
7. Section 37 relating to furnishing of outward supplies is amended, and reference to Section 42 and 43
relating to mismatch is removed as said sections are omitted.
8. Section 37(4) is inserted whereby a registered person may not be allowed to furnish details of outward supplies in GSTR-1 if the details of outward supplies for any of previous tax periods have not been furnished.
9. Entire Section 38 has been substituted with new Section 38. Basically, new Section 38 provides for communication of the details of inward supplies and input tax credit to the recipient. A system-generated statement shall be communicated to the recipient based on which ITC shall be availed. The system generated statement shall also give details of restrictions of ITC on account of time limit for availing ITC, suppliers who have: (a) defaulted in payment of tax and default continues for the prescribed period; (b) output tax as per GSTR–1 exceeds the output tax paid in GSTR–3B; (c) supplier has availed ITC in excess of the ITC available to Supplier in Section 38(2)(a); (d) supplier has defaulted in making payment of tax under Section 49(12); and (e) ITC from such class of persons as may be prescribed.
10. Time Limit for furnishing GSTR 3B by a non-resident registered person is reduced from 20 days to 13 days after the end of a calendar month.
11. First Proviso to Section 39(7) is substituted to provide an additional method of payment in lieu of
the Self-assessment tax dues in such manner and subject to such conditions and restrictions as may be prescribed.
12. As per amended Section 39(9), any omission or correction in GSTR – 3B shall be corrected in GSTR 3B up to 30th November following the end of the Financial Year.
13. Section 41 has been substituted entirely. As per substituted Section 41, proviso specifically provides that the recipient may re-avail the ITC when paid by the supplier in the manner as may be prescribed.
14. Sections 42, 43 and 43A are omitted.
15. Necessary amendments proposed to be carried out in Section 47 and 48 for omitting reference to ‘inward return’ and Section 38.
16. Sub-Section (12) to Section 49 has been inserted, which provides power to restrict usage of ITC for making payment of Output liability at the prescribed percentage as may be recommended by GST Council.
17. Retrospective amendment carried out to Section 50(3) w.e.f. 1st July 2017 to provide that interest shall be applicable only on ITC ‘availed and utilised’.
18. Time limit in Section 52(6) extended to 30th November following the Financial Year.
19. As per amended Section 54(10), now any refund can be withheld till default has been cleared by the Registered Person.
20. Necessary retrospective amendments have been brought in Notifications pursuant to Section 38, Section 50, etc.
II. ADVANCE RULINGS
(A) Agent vis-à-vis Transportation
M/s Dheeraj Goyal (AAR No. 08/AP/GST/2021 dated 18th January, 2021)
The applicant in the present case acts as an intermediary between truck owners and good transport agencies. The applicant arranges truck from trunk owner to Goods Transport Agencies (GTA). The applicant submits that he is not exempt under transportation of goods nor he is GTA as he does not issue consignment notes. He submits that he is a commission agent. He receives commission from the truck owner.
The commission is received by deducting the same from money to be passed on to truck owner after receipt of same from GTA, or if GTA directly pays to truck owner, the truck owner pays to him. Under the above facts, the issue raised was that the applicant should be liable on the amount retained by him and not on the gross amount.
The learned AAR held the applicant as intermediary as per provision of section 2(13) of IGST Act and ‘Agent’ as per the definition in section 2(5) of CGST Act.
In light of above the AAR reproduced question and gave answer as under:
‘Question: Whether the applicant will be classified under transportation of goods by road, which is exempt or commission agents or goods transport agencies and under what HSN code his services are classified and what will be the turnover?
Answer: The applicant will be classified as ‘Agent’ providing supporting service for transportation of goods under heading 9967(ii) as per the Notification No. 11/2017 Central Tax (Rate) and the amount received by him will form part of his turnover.’
(B) Basis for working of ratio for transfer of ITC in case of Demerger
M/s. IBM India Private Limited (KAR ADRG 47/2021 dated 30th July, 2021)
The applicant is a private limited company and has intended to separate its Managed Infrastructure services (‘MIS’) unit into a new company. Pursuant to such transfer, the applicant is to carry out the remaining business.
The applicant has sought an advance ruling in respect of the following questions:
‘i. Whether the value of assets which are outside the purview of GST is required to be included in the value of assets for the purpose of apportionment towards transfer of input tax credit in case of de-merger in terms of Section 18(3) of CGST Act, 2017 read with Rule 41(1) of CGST Rules, 2017?
ii. If the answer to Question (i) is yes, whether following assets are required to be considered for the purpose of determining the value of assets for apportionment towards transfer of input tax credit in case of de-merger in terms of Section 18(3) of CGST Act, 2017 read with Rule 41(1) of CGST Rules, 2017:-
a. Assets which are created only to comply with the requirements of the Accounting Standards;
b. Assets which are not being transferred as part of de-merger.
iii. If the answers to Question 1 and / or 2 are yes, whether the assets which are not attributable to any particular GSTIN be considered in the GSTIN of the head office of the Company for the purpose of computation of asset ratio?’
The AAR held that according to Section 18(3) of the CGST Act, 2017 whenever there is reconstitution of a registered person, by way of demerger, with a specific provision for transfer of liabilities, the said registered person is allowed to transfer the input tax credit which remains unutilized in his electronic credit ledger to the demerged businesses in the manner as may be prescribed. The manner is prescribed in Rule 41 of CGST Rules. The AAR observed that the proviso to the sub-rule (1) of rule 41 of the CGST Rules, 2017 provides that the input tax credit shall be apportioned to the demerged unit in the ratio of the ‘value of assets’ of the new unit as specified in the demerger scheme to the value of entire assets of the registered person. Referring to the CBIC Circular No. 133/03/2020-GST dated 23rd March, 2020, the AAR held that the term ‘entire assets’ has been mentioned in the circular, and hence all the assets of the parent company in the State are to be considered to find out the ratio. Regarding the question of whether the assets which are created to comply with the requirements of accounting standards also AAR held that they form part of the ‘entire assets’ and hence are to be included in the scope of ‘entire assets’. It is also held that since there are no specific exclusions contemplated in the provisions of the Act or rules made thereunder, these assets are also includible in the ‘entire assets’.
In light of above the learned AAR replied to questions reproduced above as under:
‘A1. The value of assets which are outside the purview of GST is required to be included in the value of assets for apportionment towards transfer of input tax credit in case of demerger in terms of Section 18(3) of CGST Act, 2017 read with Rule 41(1) of CGST Rules, 2017.
A2. The value of assets includes the assets which are created only to comply with the requirement of accounting standards and also the assets which are not being transferred as part of demerger.
A3. There is no question of assets which are not being attributed to any particular GSTIN. For the purpose of computation of asset ratio, the assets which are transferred to the new units has to be considered to the total assets which the company was maintaining in the particular state and accordingly ITC apportionment is to be calculated.’
