The Government is wishing all taxpayers a very happy new year by making GST Changes w.e.f. 1st January 2022. Some changes are related to GST rates whereas some changes are related to law and procedure. Here I am sharing important changes related to law and procedure. Taxpayers will soon experience impact of these changes and realise how “happy” will be the new year ahead.
Introduction of section 16(2)(aa) to the CGST Act, 2017
This clause is deemed to be effective from 1st July 2017 to give powers to the Government to restrict availment of input tax credit to the extent of auto population in GSTR 2B. Thus paving the path for support in the act to notify provisions of rule 36(4) of CGST Rules which is under challenge in various writ petitions across the nation. This clause will give power to the officer to recover input tax credit which is not reflected in GSTR-2A / 2B related to the financial years 2017-18, 2018-19 and 2019-20 (upto September 2019).
This amendment is from retrospective effect and therefore, the question is what about interest and penalty on reversal of input tax credit. Here taxpayers are advised to refer to decision of the Hon’ble Supreme Court in the case of Star India. Wherein it was held that liability of interest and penalty would not be proper where any tax liability provision is inserted with retrospective effect.
Recovery of differential amount between GSTR -1 & GSTR-3B without issue of show cause notice
At present, some taxpayers are filing GSTR-1 with correct details (so that invoices can be reflected in GSTR-2A / 2B of the respective customers and accordingly, payment can be released from such customers). However, filing GSTR-3B with the reduced amount which has affected revenue collection.
Section 75(12) is amended to provide that tax declared under GSTR-1 but not included in GSTR-3B, will be considered as “Self-Assessed Tax”. Therefore, direct recovery of such differential tax under Section 79 will be possible even without issuing any Show Cause Notice.
Scope of provisional attachment widened
Provisional attachment is made applicable in all cases of proceedings of Assessment, Inspection, Search, Seizure and Arrest or Demands and recovery. Now, provisional attachment of property, like bank accounts, can be done not only in the case of Show Cause Notices and investigation but also for other proceedings like Scrutiny of Returns and tax collected but not paid.
This will have adverse impact on litigation / assessment cases as there might be chances of attaching bank accounts more regularly even in routine matters.
Mandatory pre-deposit for e-way bill appeals
Section 83 is amended to provide for making payment of pre-deposit of 25% on the penalty amount for filing an appeal before first appellate authority against order for violation of e-way bill and other related provisions.
In practice, when any vehicle and goods are detained or seized for violation of any e-way bill provisions and where such vehicle and goods are released after furnishing bond, then in that case, tax payer is required to file an appeal against the order issued by the officer. In such cases, normally there was no specific provisions with regard to pre-deposit and therefore, as a general rule, taxpayer was required to pay pre-deposit of 10% which is now 25% w.e.f. 1st January 2022.
Increase in penalty in case of movement of vehicles without proper documents as per law
Section 129 amended to provide levy of penalty of 200% of tax amount in case of movement of vehicles without proper e-way bill / documents as per law.
This amendment is going to have a huge impact. At present, law provides 100% tax amount and 100% penalty in case of movement of goods without proper e-way bill / documents. Thus, at present, goods are released after making payment of 100% tax and 100% penalty. Subsequently, refund is sanctioned for the 100% tax amount (since tax will be paid at the time of filing of GSTR-3B) however, refund of 100% penalty is rejected which ultimately resulted into the cost. Now, since penalty will be 200% of tax amount, taxpayers will have no hope of any refund and will have no option but to book entire 200% penalty as cost. This is going to have adverse impact on transactions and business relations. Considering this, now it is at most important to take extra precaution at the time of generating of e-way bill and need to keep a track about its validity.
Authentication of the Aadhaar number
Authentication of the Aadhaar number of the partner (in case of partnership firm) or any whole time Director (in case of the company) is mandatory before filing of below applications:
- For filing of application for revocation of cancellation of registration
- For filing of refund application
Till now, we are neglecting the pop-up message of authenticating of Aadhaar number. However, now the taxpayer is required to login to the GST portal and complete the procedure of authenticating the Aadhaar number then only registration revocation application and refund applications can be filed.
About the Author for this blog
Manas Joshi is a law graduate from ILS Law College and Certified Law Manager. He is having experience of more than 16 years in indirect taxes. During this period, he has worked with various consulting firms including Big Four firms.
In the year 2014, he incorporated a private limited company namely Proficient Partners Consultancy Private Limited and in the year 2017 he incorporated another firm namely Proficient Partners LLP. His main focus in both the organisations is GST and FTP.
In Proficient Partners Consultancy, he helped many clients for smooth implementation of GST before and after GST introduction. Apart from this, his strong side is proficient advisory and timely service because of which he could gain and retain client trust and confidence.