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GST - Credit card holder offered loan - Service rendered by Citi Bank in extending loan is nothing but a service pertaining to the said credit card - Interest component of EMI of loan advanced by bank is not exempted: HCGST -Since the petitioner has prayed for a relief to compel the respondent bank to grant exemption, the writ petition is maintainable: HCCus - Order cancelling Special Warehouse Licence is an appealable order before the Tribunal - Respondent to work out the remedies in accordance with law: HCGST - Printing of content provided by recipient using paper & materials of applicant and supply of such printed leaflets to recipient is a composite supply - Supply of service of printing is principal supply; GST @18%: AARCX - SVLDRS, 2019 - In the SCN, it is not mentioned that the duty demand is jointly and severally payable - A co-noticee is one who is liable for the very same amount along with others: HCGST - Authority has proceeded to pass order for cancellation of registration on new material or facts which neither formed part of SCN nor the same were disclosed to writ applicant - Order set aside: HCGST - TRAN-1 - Rule 117 being directory in nature, the time limit for transitioning of credit would in no manner result in forfeiture of rights even when credit is not availed within the period prescribed: HCGST - Age is just a numberI-T - Amount received in excess of amount standing to credit of partnership firm which is paid towards notional gain on revaluation of land is liable to tax : HCGovt revises tariff value of edible oils & goldI-T - Prosecution of assessee upheld where wilful concealment of correct income by not filing ITR within time stipulated, is clearly established : HCDigital Assets transfer - CBDT notifies Form 26QF for crypto exchangeI-T - Re-assessment - Best of judgment order - Assessee not diligent in pursuing matter, failed to give adequate reply to notices; cannot later allege contravention of natural justice: HCCBDT notifies NFT resulting in transfer of ownership to be excluded for taxation purposeI-T - One opportunity can be granted to assessee as offence is compoundable: HCNiti Aayog & WFP table report on Take Home Ration schemeI-T - Case can be fixed for either limited scrutiny or complete scrutiny and in case it is for complete scrutiny, then no written approval is required by AO from PCIT: ITATConsumer Price Index for Industrial Workers for May 2022 rises by 1.02%I-T - Penalty imposed u/s 271(1)(c) sustained where assessee does not submit any evidence to show that it made voluntary disclosure during assessment proceedings, before detection of bogus loss claimed: ITAT8 Core Industries - Power, Cement, Coal & Fertilisers record high growth in May 2022I-T - Assessee did not write off provisions for doubtful debts due to fear of losing right to civil proceedings for recovery of debts; deduction allowed for provision of doubtful debts: ITATGovt releases calendar for Treasury Bills auctionI-T - Amount received in excess of amount standing to credit of partnership firm which is paid towards notional gain on revaluation of land is liable to tax : ITATGST Tribunal - Challenge is to remove microbes of bias in fleshing it out!Cus - Once in 100% EOU, raw material imported duty free is used in manufacture of final product and same is cleared on payment of duty in DTA, customs duty on raw material cannot be demanded: CESTATGST FileCX - Empty packaging material of cenvatable input is not liable for payment either as excise duty or as cenvat credit under Rule 6(3) of CCR, 2004: CESTATGovt releases Public Debt Management report for Jan-Mar 2022ST - Relevant date for computing six months periods under Notification No. 41/2007-ST to be taken the date when service tax paid and not first day of month following quarter in which export made, merely on the ground of limitation refund cannot be rejected: CESTATMigration of e-BRC Portal/Website to new IT platformST - Since the typographic error in challan number and corelation of compiled record of appellant is impressed upon by them, request of remanding the matter is hereby accepted: CESTAT
Supplier sins and Recipient repents - Part II

MAY 13, 2021

By Shailesh Sheth, Advocate, M/s. SPS Legal

"Ngakyaw ate it, but it was Ngakyi who had to pay."
[From  "Hill Proverbs of the Inhabitants of the Chitagong Hill Tracks' by Capt. Thomas Herbert Lewin]

BEFORE we discuss the provisions of S.16(2)(c) and (aa) of the CGST Act, 2017 and their implications as well as maintainability, it would be necessary and advantageous to have a comprehensive look at the provisions governing the FORM GSTR-2A, Rule 36(4) of the CGST Rules, 2017 and FORM GSTR-2B .

In Part-I, we have already had a brief look at the 4 (four) conditions prescribed in clauses (a) to (d) of S.16(2) of the CGST Act, 2017 which a taxpayer is required to fulfil so as to be eligible to ITC. [A new condition prescribed by clause (aa) inserted in S.16(2) by the Finance Act, 2021 has not been referred to and will be separately discussed later.] It is in the context of condition prescribed at clause (c) of S.16(2) that one needs to analyse the provisions relating to FORM GSTR-2A, Rule 36(4) and FORM GSTR-2B and understand their implications.

FORM GSTR-2A - A facility that turned into a liability!

At the outset, it may be clarified that the present discussion relating to FORM GSTR-2A is in the context of Rule 59 of the CGST Rules, 2017 as was in existence during the period from July 1, 2017 to December 31, 2020. The said Rule 59 along with Rule 60 have been amended by Not. No. 82/2020-CT dt. November 10, 2020 w.e.f. January 01, 2021 and the nature and implications of these amendments will be discussed separately.

Every registered taxpayer [other than those excluded vide S. 37(1)] is required, in terms of S.37 of the CGST Act, 2017 read with R.59(1) of the CGST Rules, 2017, to file a return in FORM GSTR-1 containing the details of outward supplies of goods or services or both effected during a tax period on or before the due date. The (unamended) R.59(3), inter alia, provided that the details of outward supplies furnished by the supplier shall be made available electronically to the registered persons (recipients) concerned, in PART-A of FORM GSTR-2A, through the common portal after the due date of filing of FORM GSTR-1.

For the uninitiated, it may be pointed out here that contrary to the popular perception, 'FORM GSTR-2A' was always in vogue from the beginning i.e. from July 01, 2017 in terms of R.59(3) of the CGST Rules, 2017. What is, however, important is that there never was any responsibility on the taxpayers to file FORM GSTR-2A nor was it even conceptually envisaged by the lawmakers. The details in the FORM GSTR-2A were being auto-populated on the basis of the FORM GSTR-1 filed by the taxpayers (suppliers) and through the GSTN Portal, were being made available electronically to the recipients for their information and verification.

However, even though FORM GSTR-2A was always being generated on the Common Portal since the inception of GST law, it had hardly caught the attention of the taxpayers. Compared to the number of registered taxpayers, a very meagre number of taxpayers was referring to FORM GSTR-2A and a large number of taxpayers were oblivious or indifferent to its existence. It was only with the introduction of sub-rule (4) in R.36 of the CGST Rules, 2017 vide Not. No. 49/2019-CT dt. 09.10.2019 w.e.f. 09.10.2019 that 'FORM GSTR-2A' suddenly became an all-important FORM and the 'talk of the town'!

The moot question that arises is "Whether the benefit of ITC can be denied to a taxpayer (recipient) in respect of any supplies, the details of which are not reflected in FORM GSTR-2A?"

Let us analyse the legal position concerning this issue.

As stated above, no responsibility whatsoever is cast upon the taxpayer to file FORM GSTR-2A nor has the same been envisaged by the lawmakers. The purpose of FORM GSTR-2A need not be spelt out in detail. It was merely a facilitating mechanism enabling the taxpayers (recipients) to verify as to whether the details of supplies obtained by them during the relevant tax period had been declared by the supplier via FORM GSTR-1 or not. In case the details of any outward supplies were not visible in FORM GSTR-2A, it only raised a presumption that the supplier concerned had not uploaded the details in FORM GSTR-1 and might not have discharged the tax liability thereon. The recipient taxpayer then could take up the matter with the supplier concerned so as to protect his right to ITC on the relevant supplies. Further, FORM GSTR-2A is not a 'Return' but merely a 'Statement' generated by the System based on the details of outward supplies declared in FORM GSTR-1 by the supplier. (In hindsight, one may even feel that 'R' that means 'Return' is a misnomer in the description of ' FORM GSTR-2A' as it is not a 'Return ' at all!)

Not only this, but on a closer examination of the statutory provisions, one will observe that 'FORM GSTR-2A' as such has no legal backing or recognition either under S. 37 or any other provisions of the CGST Act, 2017. Moreover, FORM GSTR-2A is admittedly a "Dynamic Form" and the details reflected therein are subject to change on a continuous basis.

The above being the legal position, it is absolutely illegal to deny the benefit of ITC to a taxpayer (Recipient) in respect of a supply received by him merely on the ground that the details of the said supply are not reflected in FORM GSTR-2A for the relevant period. Unfortunately, the Departmental officers and in particular, the Audit Officers, are on rampage and are raising the demands towards ITC availed by the taxpayers, solely on the basis of the non-availability of the details of outward supplies in FORM GSTR-2A! The demands so raised are undisputedly arbitrary and without authority of law. It may be stated here that in case the details of any outward supplies made by a taxpayer (supplier) during the relevant tax period are not visible in FORM GSTR-2A, it can only be a 'wake-up call' for both, the tax officers and the taxpayers concerned and a valid reason for them to undertake an immediate verification of the factual position at the erring supplier's end. However, without undertaking such verification and investigation, the Department cannot adopt a short and convenient route of denying ITC on the relevant supply to the recipient taxpayer, in total disregard of statutory provisions and all judicial norms.

To sum up, FORM GSTR-2A is a system-generated statement, the purpose of which is to keep the recipient-taxpayer on vigil and facilitate verification by him, if the circumstances so necessitate, of the factual and legal position in respect of any supply received by him where the supplier concerned seems to have erred or defaulted.

This facilitating provision cannot and should not become a curse for the taxpayers!

[To be continued…]

See Part-I

[The views expressed are strictly personal.]

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