NOVEMBER 13, 2019

By Vijay Kumar

IN order to nudge taxpayers to timely file their statement of outward supplies, the GST Council in its meeting held on September 20th recommended imposition of restrictions on availment of input tax credit by the recipients in cases where details of outward supplies are not furnished by the suppliers in the statement under section 37 of the CGST Act, 2017.

The Government by its Notification No. 49/2019-Central Tax , dated 09.10.2019 inserted a new Sub-rule (4) to Rule 36 of the Central Goods and Services Tax Rules, 2017, which read as:

"(4) Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37, shall not exceed 20 per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37."

This left many taxpayers and consultants and of course, the knowledgeable officers in serious confusion as to the implications.

The process of tax law-making starts with a confusion with absolutely no clarity on what to tax and how to tax. Then they get this legislation passed by Parliament, when it gets the sanctity of legislative enactment. The faulty law prepared by some junior officers in the Revenue Department goes to Parliament and comes out as the revered law of the land. When doubts arise, the courts interpret what the legislative intention was. Nobody asks the under-secretary who prepared the law as to what he was up to, if he is around. Most likely, by this time he would be trying to break his head to understand what he originally meant, when he was writing laws for the country. And if you find fault with him, his boss will get angry with you.

But then, when laws are confusing, they always come out with circulars clarifying what they originally meant. Only the clarifications are more confusing than the original confusion.

Now, in this situation, they have limited the amount of input tax credit that a taxpayer can avail (not withstanding what availment is), if his supplier has not uploaded the invoice. Is the government competent to impose such restrictions? That we will decide after twenty years, when we can analyse the intention of the legislation. But as of now, the credit is restricted to twenty percent. Twenty percent of what? To understand that you need to understand a little bit of mathematics, economics, accounting, psychology and a few computer programmes, to start with.

Any way the nice Board has come out with a circular clarifying all the doubts on this restricted twenty percent credit.

First of all, the Board clarifies that it is not responsible for calculating this twenty percent, nor will the portal do it for you. You have to do it yourself - that is called self-assessment and if you don't do it properly, you will have to face the music - loud and clear.

For the sake of clarity, they have liberally considered that this restriction will not have retrospective effect and will be applicable only on the credits taken after 09.10.2019.

Further, the restriction imposed is not supplier wise. The credit available under sub-rule (4) of rule 36 is linked to total eligible credit from all suppliers against all supplies whose details have been uploaded by the suppliers.

Here is a simple clarification:

The amount of input tax credit in respect of the invoices/debit notes whose details have not been uploaded by the suppliers shall not exceed 20% of the eligible input tax credit available to the recipient in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37 as on the due date of filing of the returns in FORM GSTR-1 of the suppliers for the said tax period. The taxpayer may have to ascertain the same from his auto populated FORM GSTR 2A as available on the due date of filing of FORM GSTR-1 under sub-section (1) of section 37.

For other such simple and easy clarifications, please read the Circular No. 123/42/2019- GST, dated 11th November, 2019 a few times and if you don't understand and if you believe in God, hire God as your tax consultant and leave the rest of the story to Him.

The Synergy Conference:

The 1st full day National conference of Commissioners of State Tax (CCT) and zonal Chief Commissioners/Director Generals of Central Tax is scheduled to be held on 25th November, 2019 (Monday) under chairmanship of the Dr. Ajay Bhushan Pandey, Union Revenue Secretary.

A letter from a Deputy Commissioner in the GST Council states,

As this conference is being organized to have synergy between States and Central tax administration and to share knowledge and best practices, all Commissioners of State Tax and all Chief Commissioners/Director Generals of Central Tax are requested to personally attend this conference.

The Dictionary defines 'synergy' as

The combined power of a group of things when they are working together that is greater than the total power achieved by each working separately.

The combined power, profits, etc. that can be achieved by two organizations or groups of people working together rather than separately.

Can't we simply do away with these different GSTs and have just one GST and no need of synergy?

Poor quality of website will kill SVLDRS

Mr. Gururaj wrote in our Message Board,

The website of SVLDRS is abominable. If anything works right on the website, it is by divine grace. Starting with logging in, everything is a problem. When SVLDR3 or SVLDR 2 are issued, the declarant is not informed. The declarant or his counsel has to check almost on daily basis. Some screens show download of forms. When the download usually fails. There is a Save button on SVLDR 1 screen, but when clicked it gives message "No permission"! Without doubt, this website alone will kill the scheme. The scheme has another two months life. If the website is not improved on war footing, the scheme will eventually fail, though the scheme itself is mostly fair.

To add a few more, when you finally want to pay, you can't generate the challan and if you generate the challan and click "Make Payment", the site will tell you, "no record found". If you try to call them up on the helpdesk, you will find a poor helpless person, with little knowledge of English, simply knowing not what to do to solve your problem. I know a taxpayer who has miraculously reached the last stage of Vishwas. All that he has to do is pay the money and he is willing to pay and for the last ten days he has been frantically trying to make the payment, but for love or money he cannot generate that magic number which will allow him to make payment in the Bank. It really requires great talent to create such a pathetic portal. The Government should do something urgently to set right things; otherwise this scheme will also blossom into a good and simple scheme - which will end in a disaster.

Until next week