Mazars Tax Alert | Edition 04.21

Key highlights of the 45^th GST Council meeting held on 17^th September’ 2021

Relaxation in requirement of filing Form GST ITC-04:
GST Council has proposed as under:
 

 
Interest to be charged on “Ineligible ITC availed and utilized”:
GST Council has proposed retrospective amendment of section 50(3) of the CGST Act, 2017 w.e.f. 01.07.2017 to provide that interest is to be paid by a taxpayer on “Ineligible ITC availed and Utilized” and not on “Ineligible ITC availed”.
 
Further, it is also clarified by the Council that rate of interest in such cases should be 18% w.e.f. 01.07.2017.
Transfer of unutilized balance of CGST and IGST in cash ledger between distinct person is permitted without going through refund procedure:

Unutilized balance in CGST and IGST cash ledger may be allowed to be transferred between distinct person, without going through the refund procedure, subject to certain safeguards.
 
Other measures taken for streamlining compliances in GST:

1. Aadhaar authentication to be mandatory for being eligible for filing refund claim and application for revocation of cancellation of registration.
2. Late fee for delayed filing of FORM GSTR-1 to be auto-populated and collected in next open return in FORM GSTR-3B.
3. Refund to be disbursed in the bank account, which is linked with same PAN on which registration has been obtained under GST.
4. Rule 59(6) to be amended w.e.f. 01.01.2022 to restrict the filing of Form GSTR-1 in case registered person has not furnished the return in FORM GSTR-3B for the preceding month.
5. Rule 36(4) of CGST Rules, 2017 to be amended, to restrict availment of ITC in respect of such invoices/ debit notes, which are furnished by the supplier in FORM GSTR-1/ IFF and are communicated to the registered person in FORM GSTR-2B.

GST Council recommended issuance of circulars in order to remove ambiguity and legal disputes on various issues:

1. Clarification on scope of “intermediary services”.
2. Clarification relating to interpretation of the term “merely establishment of distinct person” in condition for qualifying as export of services- A person incorporated in India under the Companies Act, 2013 and a person incorporated under the laws of any other country are to be treated as separate legal entities and would not be barred by the condition (v) of the sub-section (6) of the section 2 of the IGST Act 2017 for considering a supply of service as export of services.
3. Date of issuance of debit note- w.e.f. January 01, 2021, the date of issuance of debit note (and not the date of underlying invoice) shall determine the relevant financial year for the purpose of determining time limit for claiming ITC.
4. There is no need to carry the physical copy of tax invoice in cases where invoice has been generated by the supplier in the manner prescribed under Rule 48(4) of the CGST Rules, 2017 i.e., Generation of E-invoice in Form INV-01.
5. Clarification on restriction imposed under Section 54(3) of CGST Act, 2017– Only those goods which are actually subjected to export duty i.e., on which some export duty has to be paid at the time of export, will be covered under the restriction imposed under Section 54(3) of CGST Act, 2017 from availment of refund of accumulated ITC.
6. Provision to be incorporated in CGST Rules, 2017 for removing ambiguity regarding procedure and time limit for filing refund of tax wrongfully paid as specified in Section 77(1) of the CGST/SGST Act, 2017 and Section 19(1) of the IGST Act, 2017.