GST Library
Taxreply tweets
About GST Library
GST News
GST Calender New
E-Books
Subscription Plans
GST Case Laws
GST Notifications
GST Act / Rules
GST Rates
GST Set-off Calculator
GST Forms
Full Site Search
Classification (Chapters)
Classification (Search)
E-way Bill
Finance Bill
TaxReply India Pvt Ltd.

Understanding the GST Changes in Budget 2021

Removal​ of Requirement of GST Audit (GSTR-9C)

" Better Late Than Never "

देर आये दुरुस्त आये !

[Clause 101, Section 35 of CGST Act]

Sub-section (5) of section 35 of the CGST Act is being omitted to remove the mandatory requirement of GST Audit by CA. The effective date of removal is not yet notified.

This is a welcome change, as the said audit was putting additional burden and cost on taxpayers. However GSTR-9 will still be in effect, which is a self certified Annual Return. 

Section 35 - Accounts and other records.

35.

(1) Every registered person shall keep and maintain, at his principal place of business, as mentioned in the certificate of registration, a true and correct account of—

(a) production or manufacture of goods;

(b) inward and outward supply of goods or services or both;

(c) stock of goods;

(d) input tax credit availed;

(e) output tax payable and paid; and

(f) such other particulars as may be prescribed:

Provided that where more than one place of business is specified in the certificate of registration, the accounts relating to each place of business shall be kept at such places of business:

Provided further that the registered person may keep and maintain such accounts and other particulars in electronic form in such manner as may be prescribed.

(2) Every owner or operator of warehouse or godown or any other place used for storage of goods and every transporter, irrespective of whether he is a registered person or not, shall maintain records of the consigner, consignee and other relevant details of the goods in such manner as may be prescribed.

(3) The Commissioner may notify a class of taxable persons to maintain additional accounts or documents for such purpose as may be specified therein.

(4) Where the Commissioner considers that any class of taxable person is not in a position to keep and maintain accounts in accordance with the provisions of this section, he may, for reasons to be recorded in writing, permit such class of taxable persons to maintain accounts in such manner as may be prescribed.

(5) Every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall submit a copy of the audited annual accounts, the reconciliation statement under sub-section (2) of section 44 and such other documents in such form and manner as may be prescribed.

1[Provided that nothing contained in this sub-section shall apply to any department of the Central Government or a State Government or a local authority, whose books of account are subject to audit by the Comptroller and Auditor-General of India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force.]

(6) Subject to the provisions of clause (h) of sub-section (5) of section 17, where the registered person fails to account for the goods or services or both in accordance with the provisions of sub-section (1), the proper officer shall determine the amount of tax payable on the goods or services or both that are not accounted for, as if such goods or services or both had been supplied by such person and the provisions of section 73 or section 74, as the case may be, shall, mutatis mutandis, apply for determination of such tax.

 

Self Certified Annual Return in place of CA certified Statement in GSTR-9C

[Clause 102, Section 44 of CGST Act]

Section 44 of the CGST Act is being substituted so as to remove the mandatory requirement of furnishing a reconciliation statement duly audited by specified professional and to provide for filing of the annual return on self certification basis. It further provides for the Commissioner to exempt a class of taxpayers from the requirement of filing the annual return.

Section 44 - Annual return.

44. Every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person shall furnish an annual return which may include a self certified reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year, with the audited annual financial statement for every financial year electronically, within such time and in such form and in such manner as may be prescribed:

Provided that the Commissioner may, on the recommendations of the Council, by notification, exempt any class of registered persons from filing annual return under this section:

Provided further that nothing contained in this section shall apply to any department of the Central Government or a State Government or a local authority, whose books of account are subject to audit by the Comptroller and AuditorGeneral of India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force.

---------------

Prior to substitution, section 44 read as under:

Section 44 - Annual return.

44.

(1) Every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person, shall furnish an annual return for every financial year electronically in such form and manner as may be prescribed on or before the thirty-first day of December following the end of such financial year.

5[Provided that the Commissioner may, on the recommendations of the Council and for reasons to be recorded in writing, by notification, extend the time limit for furnishing the annual return for such class of registered persons as may be specified therein:

Provided further that any extension of time limit notified by the Commissioner of State tax or the Commissioner of Union territory tax shall be deemed to be notified by the Commissioner.]

(2) Every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35 shall furnish, electronically, the annual return under sub-section (1) along with a copy of the audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and such other particulars as may be prescribed.

6[Explanation.- For the purposes of this section, it is hereby declared that the annual return for the period from the 1st July, 2017 to the 31st March, 2018 shall be furnished on or before the 7[31st January, 2020] and the annual return for the period from the 1st April, 2018 to the 31st March, 2019 shall be furnished on or before the 31st March, 2020.]

 

Retrospective amendment to charge interest on net cash liability w.r.e.f. 01st July 2017.

[Clause 103, Section 50 of CGST Act]

Proviso to section 50(1) of the CGST Act is being substituted retrospectively to charge interest on net cash liability with effect from the 1st July, 2017.

This change was initially proposed by GST Council to charge interest on net tax liability w.r.e.f. 01/07/2017. However CBIC made this amendment, which was legally in effect from 01.09.2020. Later press release was also issued to clarify for recovery of interest on net cash tax liability w.r.e.f. 01.07.2017. It seems that govt has now made this legal amendment w.r.e.f. 01/07/2017 to avoid any confusion and litigation on the subject.

Section 50 - Interest on delayed payment of tax.

50.

(1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent., as may be notified by the Government on the recommendations of the Council.

1[Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be levied on that portion of the tax that is paid by debiting the electronic cash ledger.]

[Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be payable on that portion of the tax which is paid by debiting the electronic cash ledger.]

(2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the day succeeding the day on which such tax was due to be paid.

(3) A taxable person who makes an undue or excess claim of input tax credit under sub-section (10) of section 42 or undue or excess reduction in output tax liability under sub-section (10) of section 43, shall pay interest on such undue or excess claim or on such undue or excess reduction, as the case may be, at such rate not exceeding twenty-four per cent., as may be notified by the Government on the recommendations of the Council.

 

Retrospective amendment to extend the scope of section 7 w.r.e.f. 01st July 2017.

[Clause 99, Section 7 of CGST Act]

A new clause (aa) in sub-section (1) of Section 7 of the CGST Act is being inserted, retrospectively with effect from the 1st July, 2017, to ensure levy of tax on activities or transactions involving supply of goods or services by any person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration.

This clause seeks to extend the scope of supply to cover the activies from associations/club to its member and vice-a-versa.

Section 7 - Scope of supply.

7.

(1) For the purposes of this Act, the expression “supply” includes––

(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;

[(aa) the activities or transactions, by a person, other than an individual, to its members or constituents or viceversa, for cash, deferred payment or other valuable consideration.

Explanation.––For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another;]

(b) import of services for a consideration whether or not in the course or furtherance of business 1[and];

(c) the activities specified in Schedule I, made or agreed to be made without a consideration; 2[****]

(d) 3[****]

4[(1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.]

(2) Notwithstanding anything contained in sub-section (1),––

(a) activities or transactions specified in Schedule III; or

(b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council,

shall be treated neither as a supply of goods nor a supply of services.

(3) Subject to the provisions of 5[sub-sections (1), 1(A) and (2)], the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as—

(a) a supply of goods and not as a supply of services; or

(b) a supply of services and not as a supply of goods.

 

Strict Restriction of ITC to invoices reported by supplier in his return.

[Clause 100, Section 16 of CGST Act]

A new clause (aa) to sub-section (2) of the section 16 of the CGST Act is being inserted to provide that input tax credit on invoice or debit note may be availed only when the details of such invoice or debit note have been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note.

CGST Act is itself being amended to strictly restrict the ITC to the invoices reported by supplier in his return. Currently Rule 36(4) of CGST Rules governs and restrict the ITC to 105% of total eligible ITC reflecting in GSTR-2A through invoices reported by supplier. Now this change will practically further shift the ITC restriction from 105% to 100% of invoices reported by suppliers.

Taxpayers (as a recipient) are facling lot of problems in this compliance becuase recipient has no control over the GST Return of Supplier.

Section 16 - Eligibility and conditions for taking input tax credit.

16.

(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.

(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,––

(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;

[(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37;]

(b) he has received the goods or services or both.

1[Explanation.—For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services––

(i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;

(ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person.]

(c) subject to the provisions of 2[section 41 or section 43A], the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and

(d) he has furnished the return under section 39:

Provided that where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment:

Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed:

Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon.

(3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961, the input tax credit on the said tax component shall not be allowed.

(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or 4[****] debit note pertains or furnishing of the relevant annual return, whichever is earlier.

3[Provided that the registered person shall be entitled to take input tax credit after the due date of furnishing of the return under section 39 for the month of September, 2018 till the due date of furnishing of the return under the said section for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under sub-section (1) of section 37 till the due date for furnishing the details under sub-section (1) of said section for the month of March, 2019.]

 

To seperate the proceedings of sections 129 & 130 from proceedings of section 74.

[Clause 104, Section 74 of CGST Act]

Clause (ii) to Explanation 1 of Section 74 of the CGST Act is being amended so as make seizure and confiscation of goods and conveyances in transit a separate proceeding from recovery of tax. The purpose is to seperate the proceedings of section 139 & 130 from proceedings of section 74.

Section 74 - Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful-misstatement or suppression of facts.

74.

.....

Explanation 1.—For the purposes of section 73 and this section,—

(i) the expression “all proceedings in respect of the said notice” shall not include proceedings under section 132;

(ii) where the notice under the same proceedings is issued to the main person liable to pay tax and some other persons, and such proceedings against the main person have been concluded under section 73 or section 74, the proceedings against all the persons liable to pay penalty under [sections 122, 125, 129 and 130] sections 122 and 125 are deemed to be concluded.

Explanation 2.––For the purposes of this Act, the expression “suppression” shall mean non-declaration of facts or information which a taxable person is required to declare in the return, statement, report or any other document furnished under this Act or the rules made thereunder, or failure to furnish any information on being asked for, in writing, by the proper officer.

 

Extending the scope of Self Assessment Tax to include tax furnished in GSTR-1.

[Clause 105, Section 75 of CGST Act]

An explanation to sub-section (12) of section 75 of the CGST Act is being inserted to clarify that “self-assessed tax” shall include the tax payable in respect of outward supplies, the details of which have been furnished under section 37, but not included in the return furnished under section 39.

Earlier, sub-section (12) of section 75 covers self assessment tax in accordance with a return furnished u/s 39 only i.e. GSTR-1. However amendment seeks to cover tax declared in respect of supplies u/s 37 i.e. GSTR-1 as well.

Section 75 - General provisions relating to determination of tax.

75.

.....

(12) Notwithstanding anything contained in section 73 or section 74, where any amount of self-assessed tax in accordance with a return furnished under section 39 remains unpaid, either wholly or partly, or any amount of interest payable on such tax remains unpaid, the same shall be recovered under the provisions of section 79.

[Explanation.––

For the purposes of this sub-section, the expression "self-assessed tax" shall include the tax payable in respect of details of outward supplies furnished under section 37, but not included in the return furnished under section 39.]

 

Providing pre-condition of depositing 25% of penalty amount before filing appeal against order u/s 129(3) in case of detention and seizure of goods and conveyances in transit.

[Clause 107, Section 107 of CGST Act]

A proviso to sub-section (6) of section 107 of the CGST Act is being inserted to provide that no appeal shall be filed against an order made under sub-section (3) of section 129, unless a sum equal to twenty-five per cent. of penalty has been paid by the appellant

A pre-condition of depositing 25% of penalty amount has been provided before filing appeal against order u/s 129(3) in case of detention and seizure of goods and conveyances in transit.

Section 107 - Appeals to Appellate Authority.

107.

....

(6) No appeal shall be filed under sub-section (1), unless the appellant has paid—

(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and

(b) a sum equal to ten per cent. of the remaining amount of tax in dispute arising from the said order 1[subject to a maximum of twenty-five crore rupees], in relation to which the appeal has been filed.

[Provided that no appeal shall be filed against an order under sub-section (3) of section 129, unless a sum equal to twenty-five per cent. of the penalty has been paid by the appellant.]


 

Changing conditions for release of goods & convenaces u/s 129.

[Clause 108, Section 129 of CGST Act]

Clause (a) & (b) to section 129(1) has been substituted to change the pre-conditions for release of goods and conveyances. 

Clause (a):
Earlier condition was to pay tax and penalty equal to 100% of tax payable. The revised condition is to pay penalty equal to 200% of tax payable.
(The minor head has been changed from Tax to Penalty)

Clause (b):
Earlier condition was to pay tax and penalty equal to 50% of the value of goods. The revised condition is to pay penalty equal to 50% of the value of goods or 200% of the tax payable. 
(The minor head has been changed from Tax to Penalty)

 

Section 129 - Detention, seizure and release of goods and conveyances in transit.

129.

(1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released,––

(a) on payment of the applicable tax and penalty equal to one hundred per cent. of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty;

(b) on payment of the applicable tax and penalty equal to the fifty per cent. of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty;

[(a) on payment of penalty equal to two hundred per cent. of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such penalty;

(b) on payment of penalty equal to fifty per cent. of the value of the goods or two hundred per cent. of the tax payable on such goods, whichever is higher, and in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such penalty;]


 

Excluding the law of provisional release of goods upon execution of bond and security in the case of detention and seizure of goods and conveyances.

[Clause 108, Section 129 of CGST Act]

Sub-section (2) of section 129 has been omitted to exclude the effect of section 67(6). This implies that now provisions of provisional release of goods upon execution of bond and security shall not apply here.

Section 129 - Detention, seizure and release of goods and conveyances in transit.

129.

....

(2) The provisions of sub-section (6) of section 67 shall, mutatis mutandis, apply for detention and seizure of goods and conveyances.

 

Section 67 - Power of inspection, search and seizure.

67.

....

(6) The goods so seized under sub-section (2) shall be released, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be.

 

Providing time limit of 7 days for issuing notice and passing order u/s 129(3).

[Clause 108, Section 129 of CGST Act]

Sub-section (3) of section 129 has been substituted to provide the time limit of seven days for issuing notice from date of detention and pass order within further seven days from the date of service of notice.

Section 129 - Detention, seizure and release of goods and conveyances in transit.

129.

....

(3) The proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty under clause (a) or clause (b) or clause (c).

(3) The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of sub-section (1).

 

Delinking of proceedings of section 129 from proceedings of section 130.

[Clause 108, Section 129 of CGST Act]

Sub-section (6) of section 129 has been substituted to delink the proceedings under this section from the proceedings of section 130 relating to confiscation of goods or conveyances and levy of penalty.

Post this amendment, if a person fails to pay penalty u/s 129(1) then goods or conveyance so seized shall be liable to be sold instead of initiation of proceedings u/s 130 for confiscation.

Section 129 - Detention, seizure and release of goods and conveyances in transit.

129.

....

(6) Where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within 1[fourteen days] of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130:

Provided that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of seven days may be reduced by the proper officer.

“(6) Where the person transporting any goods or the owner of such goods fails to pay the amount of penalty under sub-section (1) within fifteen days from the date of receipt of the copy of the order passed under sub-section (3), the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise, in such manner and within such time as may be prescribed, to recover the penalty payable under sub-section (3):

Provided that the conveyance shall be released on payment by the transporter of penalty under sub-section (3) or one lakh rupees, whichever is less:

Provided further that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of fifteen days may be reduced by the proper officer.”.

Respective amendments have been made in section 130 also to delink the same from proceedings of section 129.

 


Finance Bill, 2021
Memorandum Explaining The Finance Bill 2021

Subscribe to Complete GST Library

Published by

TaxReply

on Feb 2, 2021

Comments


Good work.
By: Shivani | Dt: Feb 2, 2021
Replied to Shivani
Exciting assessments
By: Sanajit Kumar Roy | Dt: Feb 2, 2021
CBIC is unaware that removal of GST Audit is going to cause huge loss of revenue to exchequer.
By: Satish Kumar Nemani | Dt: Feb 2, 2021
Nice presentation and good compilation.
By: Satish Kumar Nemani | Dt: Feb 2, 2021
Well explained
By: Ravindra Patil | Dt: Feb 4, 2021


Post your comment here !


3557