India: Updates Issued By The Government On Certain Tax Matters Vide The 48th Goods And Services Tax Council Meeting

Clarification to deal with difference in Input Tax Credit ("ITC") availed in Form Goods and Services Tax Return ("GSTR") -3B as compared to that detailed in Form GSTR 2A for Financial Year ("FY") 2017-18 and FY 2018-19 alone. Wherein clarification for different scenarios as envisaged below are provided:

• Where the supplier has failed to file FORM GSTR-1 for a tax period but has filed the return in FORM GSTR-3B for said tax period, due to which the supplies made in the said tax period do not get reflected in FORM GSTR-2A of the recipients.
• Where the supplier has filed FORM GSTR-1 as well as return in FORM GSTR-3B for a tax period but has failed to report a particular supply in FORM GSTR-1, due to which the said supply does not get reflected in FORM GSTR-2A of the recipient.
• Where supplies were made to a registered person and invoice is issued as per Rule 46 of Central Goods and Services Tax Rules, 2017 ("CGST Rules") containing Goods and Services Tax Index Number ("GSTIN") of the recipient, but supplier has wrongly reported the said supply as B2C supply, instead of B2B supply, in his FORM GSTR-1, due to which the said supply does not get reflected in FORM GSTR-2A of the said registered person. 
• Where the supplier has filed FORM GSTR-1 as well as return in FORM GSTR-3B for a tax period, but he has declared the supply with wrong GSTIN of the recipient in FORM GSTR-1

Where the supplier has filed FORM GSTR-1 as well as return in FORM GSTR-3B for a tax period, but he has declared the supply with wrong GSTIN of the recipient in FORM GSTR-1

It is also relevant to highlight that the Karnataka High Court has recently, in a writ petition on the issue relating to quoting of wrong GSTIN, allowed the claim of the Petitioner and has observed that the issue involved is squarely covered by the said Circular. Further, even though the said Circular was issued in respect of FY 2017-18 and 2018-19, the High Court was pleased to make the same applicable in respect of transactions pertaining to FY 2019-20¹ .

• The proper officer shall first seek the details from the registered person regarding all the invoices on which ITC has been availed by the registered person in his FORM GSTR 3B, but which are not reflecting in his FORM GSTR 2A.
• He shall then ascertain fulfilment of the following conditions of Section 16, 17, and 18 of Central Goods and Services Tax Act, 2017 ("CGST Act") in respect of the ITC availed on such invoices.
• In case the difference in the ITC for the said financial year exceeds 5 lakhs, the proper officer shall ask the registered person to produce a certificate for the concerned supplier from the chartered accountant or the cost accountant certifying that supplies in respect of the said invoices of supplier have actually been made by the supplier to the said registered person and the tax on such supplies has been paid by the said supplier in his return in FORM GSTR 3B.
• In case the difference is upto INR 5,00,000 (Indian Rupees Five Lakhs), the proper officer shall ask the claimant to produce a certificate from the concerned supplier to the effect that said supplies have actually been made by him to the said registered person and the tax on said supplies has been paid by the said supplier in his return in FORM GSTR-3B.
• Having said the above, please note that these guidelines are clarificatory and may be app

Clarification on the entitlement of ITC and the type of supply under the below mentioned scenario:

• In case of supply of services by way of transportation of goods, including by mail or courier, where the transportation of goods is to a place outside India, and where the supplier and recipient of the said supply of services are located in India, what would be the place and type of supply of the said services.? Would ITC be eligible?

• The place of supply as provided under the proviso to the relevant provisions is given to be the destination of the goods.
• Further, the said supply would be integrated supply as the location of supplier is in India and place of supply is outside India.
• ITC in respect of such supplies is not restricted to the recipient who is located in India of course subject to fulfilment of credit availment conditions as provided under the GST legislations.
• It is also clarified that the supplier of service shall report place of supply of such service by selecting State code as '96- Foreign Country' from the list of codes in the dropdown menu available on the portal in FORM GSTR1.

Clarification with regard to applicability of provisions of subsection (2) of section 75 of CGST Act, and its effect on limitation.

Sub-section (2) of section 75 of CGST Act provides that in cases where the appellate authority or appellate tribunal or court concludes that the notice issued by proper officer under subsection (1) of section 74 is not sustainable for reason that the charges of fraud or any willful-misstatement or suppression of facts to evade tax have not been established against the person to whom such notice was issued then the proper officer shall determine the tax payable by the notice, deeming as if the notice was issued under sub-section (1) of section 73. 

• What would be the time period and manner for redetermination of the tax, interest and penalty payable by the notice in such cases?

• It is clarified that the proper officer is required to issue the order of redetermination of tax, interest, and penalty payable within the time limit as specified in under subsection (3) of section 75 of the GST legislation, i.e., within a period of two years from the date of communication of the said direction by appellate authority or appellate tribunal or the court, as the case may be.
• The manner of demand re-determination is also explained in detail vide this circular.