JULY 25, 2024

By CA Vaishali Kharde

IN the 53rd GST Council meeting, several amendments were recommended, many of which have been reflected in the Budget 2024 proposals.

The Hon'ble Finance Minister highlighted that GST has decreased tax incidence on the common man; reduced compliance burden and logistics cost for trade and industry; and enhanced revenues of the central and state governments.

1. Time Limit to Avail Input Tax Credit (ITC) for Past Periods:

Proposed amendments aim to insert Section 16(5) of the CGST Act, allowing taxpayers to claim ITC for invoices or debit notes from FY 2017-18 to 2020-21, if filed by November 30, 2021, through GSTR 3B returns.

However, uncertainties remain regarding scenarios like ITC eligibility when suppliers file their returns late, eligibility for refunds after reversals, and the status of pending appeals.

2. ITC pertaining to Periods of GST Registration Cancellation:

Section 16(6) of the CGST Act is proposed to be inserted to allow ITC claims for invoices or debit notes from the date of registration cancellation until revocation, provided the return is filed within 30 days of revocation order. No refunds will be permissible if GST has been paid or ITC reversed.

This amendment is to be made effective from the 1st day of July, 2017.

3. Time of Supply under Reverse Charge Mechanism (RCM)

Amendments to Section 13(3) of the CGST Act specify that in RCM scenarios where the recipient issues a self-invoice, the time of supply is determined by the earlier of payment date or invoice issuance date by the recipient. Clarity is awaited on the retrospective applicability of this change.

4. Conditional waiver of interest or penalty or both

Proposed insertion of Section 128A which allows conditional waiver of interest and penalty on demands for FY 2017-18 to 2019-20, except for erroneous refunds.

Further, it is proposed that in cases where interest and penalty have already been paid in respect of any demand for the said financial years, no refund shall be admissible for the same.

5. New Section 74A to replace Section 73 and Section 74 of the CGST Act from FY 2024-25 onwards

From FY 2024-25 onwards, Section 74A replaces Sections 73 and 74, limiting their applicability to tax determinations up to FY 2023-24. It sets a common time limit for demand notice issuance.

Below are the key Provisions with respect to Section 74A

- Section 74A provide common time limit for issuance of Demand Notices for fraudulent as well as Non-Fraudulent cases. The time limit for issuance of notice prescribed is within forty-two months from the due date for furnishing of annual return for the financial year.

- This proposed amendment provides 12 months for issuance of OIO which can be further extended maximum by the 6 Month.

- It has been proposed to extend the time limit for taxpayers to avail the benefit of reduced penalty (25%) by paying the tax demanded along with interest, from 30 days (Prescribed earlier under Section 74 of the CGST Act) to 60 days.

6. Amendments in Filing Appeals at Appellate Tribunal

Changes propose revised time limits and reduced pre-deposit amounts [existing 20% to 10%] for appeals filed before the Appellate Tribunal, effective from August 1, 2024.

Even with the aforementioned reduction, the revised maximum pre-deposit prescribed is higher compared to the Pre-GST regime. Therefore, a substantial amount of funds will still be blocked due to the pre-deposit.

It is proposed to make the said amendments effective from the 1st day August, 2024.

7. Authorized representative can appear on behalf of the Summoned Person

Proposed to insert a new sub-section (1A) in section 70 of the CGST Act to allow authorized representatives to appear on behalf of summoned persons before the proper officer.

8. Power not to recover GST not levied or short-levied as a result of general practice

Proposed Section 11A empowers the government, based on GST Council recommendations, to regularize instances of non-levy or short levy of GST due to common trade practices.

9. Sunset clause for anti -profiteering

Amendment proposed in Section 171(2) of the CGST Act, to empower the government to specify the date from which the Authority shall not accept anti-profiteering applications, with provisions for the Appellate Tribunal to handle such cases.

10. Inclusion of Certain Insurer-Related Supplies in Schedule III

Amendments to Schedule III clarify that certain activities related to co-insurance and reinsurance premiums are neither supply of goods nor services if specific GST liabilities are met.

It was anticipated that the budget would also facilitate refunds of GST already paid by compliant taxpayers, particularly in cases where relief is granted concerning interest and penalties in litigation, aligning with the principles outlined in Article 14 of the Constitution of India.

(The Author is a Chartered Accountant, Founder and CEO of CA Vaishali B Kharde and Company. The Author has also authored and co-authored books on GST and litigation.)