MM TAX CLUB

NOTIFICATION No. 14/2022 – Central Tax dated 5th July, 2022

In exercise of the powers conferred by section 164 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following rules further to amend the Central Goods and Services Tax Rules, 2017, namely: —

1. Short title and commencement. -(1) These rules may be called the Central Goods and Services Tax (Amendment) Rules, 2022.

(2) Save as otherwise provided in these rules, they shall come into force on the date of their publication in the Official Gazette.

2. In the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the said rules), in rule

21A, in sub-rule (4), after the proviso, the following proviso shall be inserted, namely: -

“Provided further that where the registration has been suspended under sub-rule (2A) for contravention of the provisions contained in clause (b) or clause (c) of sub-section (2) of section 29 and the registration has not already been cancelled by the proper officer under rule 22, the suspension of registration shall be deemed to be revoked upon furnishing of all the pending returns”.;

3. In the said rules, in Explanation 1 to rule 43, after clause (c), the following clause shall be inserted, namely: –

“(d) the value of supply of Duty Credit Scrips specified in the notification of the Government of India, Ministry of Finance, Department of Revenue No. 35/2017-Central Tax (Rate), dated the 13^th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number GSR 1284(E), dated the 13thOctober, 2017”;

4. In the said rules, in rule 46, after clause (r), the following clause shall be inserted, namely: -

“(s) a declaration as below, that invoice is not required to be issued in the manner specified under sub-rule (4) of rule 48, in all cases where an invoice is issued, other than in the manner so specified under the said sub-rule (4) of rule 48, by the taxpayer having aggregate turnover in any preceding financial year from 2017-18 onwards more than the aggregate turnover as notified under the said sub-rule (4) of rule 48-

“I/We hereby declare that though our aggregate turnover in any preceding financial year from 2017-18 onwards is more than the aggregate turnover notified under sub-rule (4) of rule 48, we are not required to prepare an invoice in terms of the provisions of the said sub-rule.”

5. In the said rules, in rule 86, after sub-rule (4A), the following sub-rule shall be inserted, namely: -

“(4B) Where a registered person deposits the amount of erroneous refund sanctioned to him, –

(a) under sub-section (3) of section 54 of the Act, or

(b) under sub-rule (3) of rule 96, in contravention of sub-rule (10) of rule 96,

along with interest and penalty, wherever applicable, through FORM GST DRC-03, by debiting the electronic cash ledger, on his own or on being pointed out, an amount equivalent to the amount of erroneous refund deposited by the registered person shall be re-credited to the electronic credit ledger by the proper officer by an order made in FORM GST PMT-03A.”;

6. In the said rules, in rule 87, –

(a) in sub-rule (3), after clause (i), the following clauses shall be inserted, namely: -

“(ia) Unified Payment Interface (UPI) from any bank;

(ib) Immediate Payment Services (IMPS) from any bank;‖;

(b) in sub-rule (5), after the words ―Real Time Gross Settlement‖, the words ―or Immediate Payment Service‖ shall be        inserted;

(c) after sub-rule (13), the following sub-rule shall be inserted, namely: -

“(14) A registered person may, on the common portal, transfer any amount of tax, interest, penalty, fee or any other amount available in the electronic cash ledger under the Act to the electronic cash ledger for central tax or integrated tax of a distinct person as specified in sub-section (4) or, as the case may be, sub-section (5) of section 25, in FORM GST PMT-09:

Provided that no such transfer shall be allowed if the said registered person has any unpaid liability in his electronic liability register.”;

7. In the said rules, with effect from the 1st July, 2017, after rule 88A, the following rule shall be deemed to have been inserted, namely: -

“88B. Manner of calculating interest on delayed payment of tax.-(1) In case, where the supplies made during a tax period are declared by the registered person in the return for the said period and the said return is furnished after the due date in accordance with 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, the interest on tax payable in respect of such supplies shall be calculated on the portion of tax which is paid by debiting the electronic cash ledger, for the period of delay in filing the said return beyond the due date, at such rate as may be notified under sub-section (1) of section 50.

(2) In all other cases, where interest is payable in accordance with sub section (1) of section 50, the interest shall be calculated on the amount of tax which remains unpaid, for the period starting from the date on which such tax was due to be paid till the date such

tax is paid, at such rate as may be notified under sub-section (1) of section 50.

(3) In case, where interest is payable on the amount of input tax credit wrongly availed and utilised in accordance with sub-section (3) of section 50, the interest shall be calculated on the amount of input tax credit wrongly availed and utilised, for the period starting from the date of utilisation of such wrongly availed input tax credit till the date of  reversal of such credit or payment of tax in respect of such amount, at such rate as may be notified under said sub-section (3) of section 50.

Explanation. —For the purposes of this sub-rule, —

(1) input tax credit wrongly availed shall be construed to have been utilised, when the balance in the electronic credit ledger falls below the amount of input tax credit wrongly availed, and the extent of such utilisation of input tax credit shall be the amount by which the balance in the electronic credit ledger falls below the amount of input tax credit wrongly availed.

(2) the date of utilisation of such input tax credit shall be taken to be, —

1. the date, on which the return is due to be furnished under section 39 or the actual date of filing of the said return, whichever is earlier, if the balance in the electronic credit ledger falls below the amount of input tax credit wrongly availed, on account of payment of tax through the said return; or

2. the date of debit in the electronic credit ledger when the balance in the electronic credit ledger falls below the amount of input tax credit wrongly availed, in all other cases.”;

8. In the said rules, in rule 89, –

(a) in sub-rule (1), after the fourth proviso, the following Explanation shall be inserted, namely: -

‗Explanation. — For the purposes of this sub-rule, ―specified officer‖ means a “specified officer” or an “authorised officer” as defined under rule 2 of the Special Economic Zone Rules, 2006.‘;

(b) in sub-rule (2), –

1. in clause (b), after the words ―on account of export of goods‖, the words, “other than electricity” shall be inserted;

(ii) after clause (b), the following clause shall be inserted, namely: -

“(ba) a statement containing the number and date of the export invoices, details of energy exported, tariff per unit for export of electricity as per agreement, along with the copy of statement of scheduled energy for exported electricity by Generation Plants issued by the Regional Power Committee Secretariat as a part of the Regional Energy Account (REA) under clause (nnn) of sub-regulation 1 of Regulation 2 of the Central Electricity Regulatory Commission

(Indian Electricity Grid Code) Regulations, 2010 and the copy of agreement detailing the tariff per unit, in case where refund is on account of export of electricity;”;

c) in sub-rule (4), the following Explanation shall be inserted, namely: -

“Explanation. – For the purposes of this sub-rule, the value of goods exported out of India shall be taken as –

(i)            the Free on Board (FOB) value declared in the Shipping Bill or Bill of Export form, as the case may be, as per the Shipping Bill and Bill of Export (Forms) Regulations, 2017; or

2. the value declared in tax invoice or bill of supply,

whichever is less.‖;

(d)           in sub-rule (5), for the words ―tax payable on such inverted rated supply of goods and services‖, the brackets, words and letters ―{tax payable on such inverted rated supply of goods and services x (Net ITC’ ITC availed on inputs and input services)}.‖ shall

be substituted;

9. In the said rules, rule 95A shall be deemed to have been omitted with effect from the 1st July, 2019;

10. In the said rules, with effect from the 1st day of July, 2017, in rule 96, –

(a) in sub-rule (1), for clause (b), the following clause shall be deemed to have been substituted, namely: -

“(b) the applicant has furnished a valid return in FORM GSTR-3B:

Provided that if there is any mismatch between the data furnished by the exporter of goods in Shipping Bill and those furnished in statement of outward supplies in FORM GSTR-1, such application for refund of integrated tax paid on the goods exported out of India shall be deemed to have been filed on such date when such mismatch in respect of the said shipping bill is rectified by the exporter;”;

(b) in sub-rule (4),

(i) in clause (b), for the figures ―1962‖ the figures and word ―1962; or‖ shall be deemed to have been substituted;

(ii) after clause (b), the following clause shall be deemed to have been inserted, namely: -

“(c) the Commissioner in the Board or an officer authorised by the Board, on the basis of data analysis and risk parameters, is of the opinion that verification of credentials of the exporter, including the availment of ITC by the exporter, is considered essential before grant of refund, in order to safeguard the interest of revenue.”;

3. sub-rule (5) shall be deemed to have been omitted;

4. after sub-rule (5), the following sub-rules shall be deemed to have been inserted, namely: -

“(5A)Where refund is withheld in accordance with the provisions of clause (a) or clause (c) of sub-rule (4), such claim shall be transmitted to the proper officer of Central tax, State tax or Union territory tax, as the case may be, electronically through the common portal in a system generated FORM GST RFD-01 and the intimation of such transmission shall also be sent to the exporter electronically through the common portal, and notwithstanding anything to the contrary contained in any other rule, the said system generated form shall be deemed to be the application for refund in such cases and shall be deemed to have been filed on the date of such transmission.

(5B) Where refund is withheld in accordance with the provisions of clause (b) of sub-rule (4) and the proper officer of the Customs passes an order that the goods have been exported in violation of the provisions of the Customs Act, 1962 (52 of 1962), then, such claim shall be transmitted to the proper officer of Central tax, State tax or Union territory tax, as the case may be, electronically through the common portal in a system generated FORM GST RFD-01 and the intimation of such transmission shall also be sent to the exporter electronically through the common portal, and notwithstanding anything to the contrary contained in any other rule, the said system generated form shall be deemed to be the application for refund in such cases and shall be deemed to have been filed on the date of such transmission.

(5C) The application for refund in FORM GST RFD-01 transmitted electronically through the common portal in terms of sub-rules (5A) and (5B) shall be dealt in accordance with the provisions of rule 89.”;

5. sub-rule (6) and sub-rule (7) shall be deemed to have been omitted;

11. In the said rules, in FORM GSTR-3B, -

1. in paragraph 3.1, in the heading, after the words ―liable to reverse charge‖, the brackets, words and figures ―(other than those covered in 3.1.1)‖ shall be inserted;

2. after paragraph 3.1, the following paragraph shall be inserted, namely: -

“3.1.1 Details of supplies notified under sub-section (5) of section 9 of the Central Goods and Services Tax Act, 2017 and corresponding provisions in Integrated Goods and Services Tax/Union Territory Goods and Services Tax/State Goods and Services Tax Acts.

3. in paragraph 3.2, in the heading, after the words, figures, brackets and letter ―supplies shown in 3.1(a)‖, the word, figures, brackets and letter ―and 3.1.1(i)‖ shall be inserted;

(d) in the table, under paragraph 4, in column (1), -

(i) in item (B), for the entries against sub-item (1), the following entries shall be substituted, namely: -

“As per rules 38, 42 and 43 of CGST Rules and sub-section (5) of section 17‖;

(ii) in item (D), -

(A) for the heading, the following heading shall be substituted, namely: -

―Other Details‖;

(B) for the entries against sub-item (1), the following entries shall be substituted, namely:-

“ITC reclaimed which was reversed under Table 4(B)(2) in earlier tax period‖;

(C) for the entries against sub-item (2), the following entries shall be substituted, namely: -

“Ineligible ITC under section 16(4) and ITC restricted due to PoS provisions’;

(e) Under the heading the Instructions, after paragraph 3, following paragraphs shall be inserted,

namely: -

“(4) An Electronic Commerce Operator (ECO) shall not include in 3.1(a) above, the supplies on which the ECO is required to pay tax under sub-section (5) of section 9 of the Central Goods and Services Tax Act, 2017 and shall report such supplies in 3.1.1(i) above.

(5) A registered person making supplies through an Electronic Commerce Operator (ECO) shall not include in 3.1(a) above, the supplies on which the ECO is required to pay tax under sub-section (5) of section 9 of the Central Goods and Services Tax Act, 2017 and shall report such supplies in 3.1.1(ii) above.”;

12. In the said rules, in FORM GSTR-9, under the heading Instructions, -

(a) in paragraph 4, -

            (A) after the word, letters and figures ―or FY 2020-21‖, the word, letters and figures ―or FY 2021-22‖ shall be inserted;

(B) in the Table, in second column, -

(I) against serial numbers 5D, 5E and 5F, the following entries shall be inserted at the end, namely: –

“For FY 2021-22, the registered person shall report Non-GST supply (5F) separately and shall have an option to either separately report his supplies as exempted and nil rated supply or report consolidated information for these two heads in the “exempted” row only.‘;

(II) against serial numbers 5H, 5I, 5J and 5K, for the figures and word ―2019-20 and 2020-21‖, the figures and word ―2019-20, 2020-21 and 2021-22‖ shall respectively be substituted;

(b) in paragraph 5, in the Table, in second column, -

(A) against serial numbers 6B, 6C, 6D and 6E, for the letters and figures ―FY 2019-20 and 2020-21‖, the letters, figures and word ―FY 2019-20, 2020-21 and 2021-22‖ shall respectively be substituted;

(B) against serial numbers 7A, 7B, 7C, 7D, 7E, 7F, 7G and 7H, for the figures and word ―2019-20 and 2020-21‖, the figures and word ―2019-20, 2020-21 and 2021-22‖ shall be substituted;

(c) in paragraph 7, -

            (A) after the words and figures ―April 2021 to September 2021.‖, the following shall be inserted, namely: -

“For FY 2021-22, Part V consists of particulars of transactions for the previous financial year but paid in the FORM GSTR-3B between April, 2022 to September, 2022.”;

(B) in the Table, in second column, -

                (I) against serial numbers 10 & 11, the following entries shall be inserted at the end, namely: -

“For FY 2021-22, details of additions or amendments to any of the supplies already declared in the returns of the previous financial year but such amendments were furnished in Table 9A, Table 9B and Table 9C of FORM GSTR-1 of April, 2022 to September, 2022 shall be declared here.’;

(II) against serial number 12, -

(1) after the words, letters, figures and brackets ―September, 2021 shall be declared here. Table 4(B) of FORM GSTR-3B may be used for filling up these details.‖, the following entries shall be inserted, namely: -

“For FY 2021-22, aggregate value of reversal of ITC which was availed in the previous financial year but reversed in returns filed for the months of April 2022 to September 2022 shall be declared here. Table 4(B) of FORM GSTR-3B may be used for filling up these details.”;

(2) for the figures and word ―2019-20 and 2020-21‖, the figures and word ―2019-20, 2020-21 and 2021-22‖ shall be substituted;

(III) against serial number 13, -

(1) after the words, letters and figures ―reclaimed in FY 2021-22, the details of such ITC reclaimed shall be furnished in the annual return for FY 2021-22,‖, the following entries shall be inserted, namely: -

‘For FY 2021-22, details of ITC for goods or services received in the previous financial year but ITC for the same was availed in returns filed for the months of April 2022 to September 2022 shall be declared here. Table 4(A) of FORM GSTR-3B may be used for filling up these details. However, any ITC which was reversed in the FY 2021-22 as per second proviso to sub-section (2) of section 16 but was reclaimed in FY 2022-23, the details of such ITC reclaimed shall be furnished in the annual return for FY 2022-23.”;

(2) for the figures and word ―2019-20 and 2020-21‖, the figures and word ―2019-20, 2020-21 and 2021-22‖ shall be  substituted;

(d) in paragraph 8, in the Table, in second column, -

            (A) against serial numbers, -

(I) 15A, 15B, 15C and 15D,

(II)15E, 15F and 15G,

for the figures and word ―2019-20 and 2020-21‖ wherever they occur, the letters, figures and word ―2019-20, 2020-21 and 2021-22‖ shall respectively, be substituted.”;

(B) against serial numbers 16A, 16B and 16C for the figures and word ―2019-20 and 2020-21‖ wherever they occur, the figures and word ―2019-20, 2020-21 and 2021-22‖ shall respectively be substituted.”;

(C) against serial numbers 17 and 18, -

(I) after the words, letters and figures ―for taxpayers having annual turnover above ₹ 5.00 Cr.‖, the words, letters and figures “From FY 2021-22 onwards, it shall be mandatory to report HSN code at six digits level for taxpayers having annual turnover in the preceding year above ₹ 5.00 Cr and at four digits level for all B2B supplies for taxpayers having annual turnover in the preceding year upto ₹ 5.00 Cr.” shall be inserted;

(II) the following paragraph shall be inserted at the end, namely: -

“For FY 2021-22, the registered person shall have an option to not fill Table 18.’;

13. In the said rules, in FORM GSTR-9C, under the heading Instructions, -

(a) in paragraph 4, in the Table, in second column, for the figures and word ―2019-20 and 2020-21‖, wherever they occur, the figures and word ―2019-20, 2020-21 and 2021-22‖ shall be substituted;

(b) in paragraph 6, in the Table, in second column, against serial number 14, for the figures and word ―2019-20 and 2020-21‖, the figures and word ―2019-20, 2020-21 and 2021-22‖ shall be substituted;

Circular No.170/02/2022-GST Dated the 6^th July, 2022

Mandatory furnishing of correct and proper information of inter-State supplies and  amount  of  ineligible/blocked  Input  Tax  Credit  and  reversal  thereof  in  return  in FORMGSTR-3B and statement in FORMGSTR-1

The process of return filing has been simplified over a period of time. With effect from December 2020, FORM GSTR-3Bis getting auto-generated on the portal by way of auto-population of input tax credit (ITC)from FORM GSTR-2B(auto-generated inward supply statement)   and   auto-population   of   liabilities   from FORM   GSTR-1(Outward   supply statement),  with  an  editing  facility  to  the  registered  person. However,  it  has  been  observed that there still are some infirmities in information being furnished by the registered person in relation to inter-State supplies effected to unregistered person, registered  person paying tax under  section  10  of  the Central  Goods  and  Services  Tax  Act,  2017(composition  taxable persons)  and  UIN  holders.  Also, there  appears  to  be  lack  of  clarity regarding reporting of information about reversal of Input Tax Credit (hereinafter referred to as the “ITC”) as well as ineligible ITC in Table 4 of FORM GSTR-3B.

2.         It is desirable that correct reporting of information is done by the registered person in FORM  GSTR-3Band FORM  GSTR-1 so  as  to  ensure  correct  accountal  and accurate settlement  of  funds  between  the  Central  and  State  Governments.  Accordingly,  in  order to ensure uniformity in return filing, the Board, in exercise of its powers conferred under sub-section  (1)  of  section  168  of  the Central  Goods  and  Services  Tax  Act,  2017  (hereinafter referred to as the “CGST Act”), hereby clarifies various issues in succeeding paragraphs.

3.         Furnishing  of  information  regarding inter-State  supplies  made  to  unregistered persons, composition taxable persons and UIN holders:

It has been noticed that a number of registered persons are not reporting the correct details of inter-State supplies made to unregistered persons, to registered person paying tax under  section  10  of  the  CGST  Act  (composition  taxable  persons)  and  to  UIN  holders, as required to be declared in Table 3.2 of FORM GSTR-3B,under the notion that the taxable value of the same along with tax payable has already been reported in Table 3.1of the said FORM. In certain cases, it has also been noticed that the address of unregistered person are captured incorrectly by the supplier, especially those belonging to banking, insurance, finance, stock broking, telecom, digital payment facilitators, OTT platform services providers and E-commerce  operators,  leading  to  wrong  declaration  of  Place  of  Supply  (PoS)  in  both  the invoices issued under section 31 of the CGST Act, as well as in Table 3.2 of FORM GSTR-3B.

In  this  context,  it  may  be  noted  that  the  information  sought  in  Table  3.2 of FORM GSTR-3Bis required to be furnished, place of supply-wise, even though the details of said supplies are already part of the supplies declared in Table 3.1of the said FORM. For assisting the registered persons, Table 3.2 of FORM GSTR-3B is being auto-populated on the portal based on the details furnished by them in their FORM GSTR-1.

Accordingly, it is hereby advised that  the  registered  persons  making  inter-State supplies–

1. to the unregistered persons, shall also report the details of such supplies, place of supply-wise,in Table 3.2 of FORM GSTR-3Band Table 7B or Table 5or Table 9/10of FORM GSTR-1,as the case may be;
2. to the registered  persons paying  tax  under  section  10  of  the  SGST/CGST  Act (composition taxable persons) and to UIN holders, shall also report the details of such supplies, place of supply-wise, in Table 3.2 of FORM GSTR-3Band Table 4A or4Cor 9 of FORM GSTR-1,as the case may be, as mandated by the law.
3. shall update their customer database properly with correct State name and ensure that correct PoS is declared in the tax invoice and in Table 3.2 of FORM GSTR-3Bwhile filing their return, so that tax reaches the Consumption State as per the principles of destination-based taxation system.

It is further advised that any amendment carried out in Table 9 or Table 10 of FORM GSTR-1or any entry in Table 11 of FORM GSTR-1relating to such supplies should also be given effect to while reporting the figures in Table 3.2 of FORM GSTR-3B.

4. Furnishing of information regarding ITC availed, reversal thereof and ineligible ITC in Table 4 of GSTR-3B

Table 4(A) of the FORM GSTR-3B is getting auto-populated from various entries of FORM GSTR-2B. However, various reversals of  ITC on account of rule 42 and 43 of the CGST Rules or for any other reasons are required to be made by the registered person, on his own  ascertainment,  in Table  4(B)of  the  said FORM. It  has  been  observed  that  different practices  are  being  followed  to  report  ineligible  ITC  as  well  as  various  reversals  of  ITC  in FORM GSTR-3B.

It may be noted that the  amount of Net  ITC Available as per Table 4(C)  of FORM GSTR-3Bgets  credited into  the  electronic  credit  ledger  (ECL)of  the  registered  person. Therefore, it is important that any reversal of ITC or any ITC which is ineligible under any provision of the CGST Act should not be part of Net ITC Available in Table 4(C) and accordingly, should not get credited into the ECL of the registered person.

In  this  context,  it  is  pertinent  to  mention  that  the  facility  of  static  month-wise  auto-drafted statement in FORM GSTR-2Bfor all registered persons has been introduced from August,  2020. The  statement  provides invoice-wise  total  details  of  ITC  available  to  the registered  person including  the  details  of the  ITC  on  account  of  import  of  goods. Further, details of  the  said  statement are  auto-populated  in  Table  4  of return  in FORM GSTR-3Bwhich are editable in the hands of registered person. It may be noted that the entire set of data that is available in FORM GSTR-2B is carried to the table 4 in FORM GSTR-3B,except for the details regarding ITC that is not available to the registered person either on account of limitation of time period as delineated in sub-section (4) of section 16 of the  CGST  Act  or where  the  recipient  of  an  intra-State  supply  is located  in a  different State / UT  than that of place of supply. It is pertinent to mention that the ineligible  ITC, which was earlier not part of calculation of eligible/available ITC, is now part of calculation of eligible/available ITC in view of auto-population of Table 4(A) of FORM GTSR-3Bfrom various tables of FORM GTSR-2B. Thereafter, the registered person is required to identify ineligible ITC as well as the reversal of ITC to arrive at the Net ITC available, which is to be credited to the ECL. In light of the above, the procedure to be followed by registered person is being detailed hereunder for correct report in gof information in the return:

A.         Total ITC (eligible as well as ineligible) is being auto-populated from statement in FORM GSTR-2Bin different fields of Table 4A of FORM GSTR-3B(except for the ineligible ITC on account of limitation of time period as delineated in sub-section (4) of section 16 of the CGST Act or where the recipient of an intra-State supply is located in a different State / UT than that of place of supply).

B.         Registered person will report reversal of ITC, which are absolute in nature and are not  reclaimable,  such  as on  account  of rule  38  (reversal  of  credit  by  a  banking company or a financial institution),rule 42 (reversal on input and input services on account of supply of exempted goods or services), rule 43 (reversal on capital goods on account of supply of  exempted goods or services)of the CGST Rules and for reporting ineligible ITC under section 17(5) of the CGST Act in Table 4 (B) (1).

C.        Registered person will  report reversal  of ITC,  which  are  not  permanent  in  nature and can be reclaimed in future subject to fulfilment of specific conditions, such as on  account  of rule  37of  CGST  Rules(non-payment of  consideration to  supplier within 180 days), section16(2)(b)and section 16(2)(c)of the CGST Actin Table 4 (B) (2).Such ITC may be reclaimed in Table 4(A)(5)on fulfilment of necessary conditions. Further, all such reclaimed ITC shall also be shown in Table 4(D)(1).Table  4  (B)  (2) may also  be  used by  registered  person for  reversal of any ITC availed in Table 4(A)in previous tax periods because of some inadvertent mistake

D.        Therefore, the net ITC Available will be calculated in Table 4 (C) which is as per the formula (4A -[4B (1) + 4B (2)]) and same will be credited to the ECL of the registered person.

E          .As the details of ineligible ITC under section 17(5) are being provided in Table 4(B), no further details of such ineligible ITC will be required to be provided in Table 4(D)(1).

F.         ITC not available, on account of limitation of time period as delineated in sub-section (4) of section 16 of the CGST Act or where the  recipient of an intra-State supply is located in a different State / UT than that of place of  supply, may  be  reported  by  the  registered  person  in  Table  4D(2).  Such details are available in Table 4 of FORM GSTR-2B.

4.4  Accordingly,  it  is  clarified  that  the  reversal  of  ITC  of  ineligible  credit under section 17(5) or any other provisions of the CGST Act and rules thereunder is required to be made under Table 4(B) and not under Table 4(D) of FORM GSTR-3B.

For ease of understanding, the manner of reversals is being elucidated in the illustrations enclosed as Annexure to this Circular.

5.         It is requested that suitable trade notices may be issued to publicize the contents of this Circular.

6.         Difficulty if any, in the implementation of this Circular may be brought to the notice of the Board. Hindi version will follow.

Circular No. 171/03/2022-GST Dated the 6^th July, 2022

Clarification  on  various  issues  relating  to  applicability  of  demand  and  penalty provisions under the Central Goods and Services Tax Act, 2017 in respect of transactions involving fake invoices

A  number  of  cases  have  come  to  notice  where  the  registered  persons  are  found  to  be involved in issuing tax invoice, without actual supply of goods or services or both(hereinafter referred to as “fake invoices”), in  order  to  enable  the  recipients  of  such  invoices  to  avail  and utilize input tax credit (hereinafter referred to as “ITC”) fraudulently. Representations are being received from the trade as well as the field formations seeking clarification on the issues relating to applicability of demand and penalty provisions under the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), in respect of such transactions involving fake invoices. In order to clarify these issues and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the CGST Act, hereby clarifies the issues detailed hereunder.

The  fundamental  principles  that  have  been  delineated  in  the  above  scenarios  may  be adopted to decide the nature of demand and penal action to be taken against a person for such unscrupulous activity. Actual action to be taken against a person will depend upon the specific facts and circumstances of the case which may involve complex mixture of above scenarios or even  may  not  be  covered  by  any  of  the  above  scenarios. Any  person  who  has  retained  the benefit of transactions specified under sub-section (1A) of section 122 of CGST Act, and at whose instance such transactions are conducted, shall also be liable for penal action under the provisions  of  the  said  sub-section.  It  may  also  be  noted  that  in  such  cases  of  wrongful/ fraudulent availment or utilization of input tax credit, or in cases of issuance of invoices without supply of goods or services or both, leading to wrongful availment or utilization of input tax credit  or  refund  of  tax,  provisions  of  section  132  of  the  CGST  Act  may  also  be  invokable, subject to conditions specified therein, based on facts and circumstances of each case.

It is requested that suitable trade notices may be issued to publicize the contents of this Circular.

Difficulty, if any, in implementation of the above instructions may please be brought to the notice of the Board. Hindi version would follow.

Various  representations  have  been  received  seeking  clarification  with  regard  to applicability of para 3.2 of the Circular No. 135/05/2020-GST dated 31.03.2020 in cases where the supplier is required to supply goods at a lower rate under Concessional Notification issued by the Government. In order to clarify the issue and to ensure uniformity in the implementation of the provisions of law in this regard across the field formations, the Board, in exercise of its powers  conferred  by  section  168  (1)  of  the  Central  Goods  and  Services  Tax  Act,  2017 (hereinafter referred to as “CGST Act”), hereby clarifies the issue as under:

2.Vide para 3.2of Circular No. 135/05/2020-GST dated 31.03.2020,it was clarified that refund on account of inverted duty structure would not be admissible in cases where the input and output supply are same. Para 3.2 of Circular No. 135/05/2020-GST dated 31.03.2020 is reproduced, as under:

“Refund of accumulated ITC in terms clause (ii) of sub-section (3) of section 54 of the CGST Act is available where the credit has accumulated on account of rate of  tax on inputs being higher than the rate of tax on output supplies. It is noteworthy that, the input and output being the same in such cases, though attracting different tax rates at different points in time, do not get covered under the provisions of clause (ii) of sub-section (3) of section 54 of the CGST Act. It is hereby clarified that refund of accumulated ITC under clause (ii) of sub-section (3) of section 54 of the CGST Act would not be applicable in cases where the input and the output supplies are the same.”

The matter has been examined. The intent of para 3.2 of Circular No. 135/05/2020-GST dated 31.03.2020 was not to cover those cases where the supplier is making supply of goods under a concessional notification and the rate of tax of output supply is less than the rate of tax on input supply (of the same goods) at the same point of time due to supply of goods by the supplier under such concessional notification.

Therefore, it is clarified that in such cases, refund of accumulated input tax credit on account  of  inverted structure  as  per clause  (ii)  of  sub-section  (3)  of  section  54  of  the  CGST Act, 2017 would be allowed in cases where accumulation of input tax credit is on account of rate of tax on outward supply being less than the rate of tax on inputs (same goods)at the same point of time, as per some concessional notification issued by the Government providing for lower  rate  of  tax  for  some  specified  supplies  subject to fulfilment  of  other  conditions. Accordingly, para  3.2  of  the  Circular  No.  135/05/2020-GST dated 31.03.2020 stands substituted as under:

            It may be noted that refund of accumulated ITC in terms of clause (ii) of first proviso to sub-section (3) of section 54 of the CGST Act is available where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies. It is noteworthy that, the input and output being the same in such cases, though attracting different tax rates at different points in time, do not get covered under the provisions of clause (ii) of the first proviso to sub-section (3) of section 54 of the CGST Act.

There may however, be cases where though inputs and output goods are same but  the  output  supplies are  made  under a  concessional  notification due  to  which  the rate of tax on output supplies is less than the rate of tax on inputs. In such cases, as the rate of tax of output supply is less than the rate of tax on inputs at the same point of time due to supply of goods by the supplier under such concessional notification, the credit accumulated on account of the same is admissible for refund under the provisions of clause(ii) of the first proviso to sub-section (3) of section 54 of the CGST Act, other than  the  cases  where  output  supply  is  either  Nil  rated  or  fully  exempted,  and  also provided that supply of such goods or services are not notified by the Government for their exclusion from refund of accumulated ITC under the said clause.”

It is requested that suitable trade notices may be issued to publicize the contents of this Circular.

Difficulty, if any, in implementation of this Circular may please be brought to the notice of the Board. Hindi version would follow.

Circular No. 174/06/2022-GST Dated the6thJuly, 2022

Difficulties were being faced by the taxpayers in taking re-credit of the amount in the electronic credit ledger in cases where any excess or erroneous refund sanctioned to them had been paid back by them either on their own or on being pointed by the tax officer. In order to resolve this issue, GSTN has recently developed a new functionality of FORM GST PMT-03Awhich allows proper officer to re-credit the amount in the electronic credit ledger of the taxpayer. Further, sub-rule (4B) in rule 86 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as “CGST Rules”)has been inserted vide Notification No. 14/2022-CT dated 05.07.2022  to  provide  for  re-credit  in  the  electronic  credit  ledger where  the  taxpayer deposits the erroneous refund sanctioned to him.

2.         In order to ensure uniformity in the implementation of the above provisions of the law across field formations, the Board, in exercise of its powers conferred by section 168(1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby clarifies the following:

3.         Categories of refunds where re-credit can be done using FORM GST PMT-03A:

            Reference is invited to sub-rule (4B) of rule 86 of the CGST Rules, which is reproduced as under:

(4B) Where a registered person deposits the amount of erroneous refund sanctioned to him –

1. under sub-section (3) of section 54 of the Act, or
2. under sub-rule (3) of rule 96, in contravention of sub-rule (10) of rule 96,

along with interest and penalty, wherever applicable, through FORM GST DRC-03,in  cash, 

on  his  own  or  on  being  pointed  out,  an  amount  equivalent  to  the  amount  of erroneous  refund  deposited  by  the  registered  person  shall  be  re-credited  to  the electronic credit ledger by the proper officer by an order made in FORM GST PMT-03A.

From  the  above,  it  can  be  stated  that in  respect  of the following  categories  of  refund sanctioned erroneously, re-credit of amount in the electronic credit ledger can be done through FORM GST PMT-03A, on deposit of such erroneous refund along with interest and penalty, wherever applicable, by the taxpayer:

1. Refund of IGST obtained in contravention of sub-rule (10) of rule 96.

b.   Refund of unutilised ITC on account of export of goods/services without payment of tax.

c.   Refund of unutilised ITC on account of zero-rated supply of goods/services to SEZ developer/Unit without payment of tax.

d.   Refund of unutilised ITC due to inverted tax structure

4.         Procedure for re-credit of amount in electronic credit ledger:

                The taxpayer shall deposit the amount of erroneous refund along with applicable interest and penalty, wherever  applicable, through FORM  GST  DRC-03bydebit  of  amount  from electronic cash ledger. While making the payment through FORM GST DRC-03, the taxpayer shall clearly mention the reason for making payment in the text box as the deposit of erroneous refund of unutilised ITC, or the deposit of erroneous refund of IGST obtained in contravention of sub-rule (10) of rule 96 of the CGST Rules.

            Till  the  time an  automated  functionality  for handling  such  cases  is  developed  on  the portal,  the  taxpayer  shall  make  a  written  request, in  format  enclosed  as Annexure-A, to jurisdictional  proper  officer  to  re-credit  the  amount  equivalent  to  the  amount  of  refund  thus paid back through FORM GST DRC-03, to electronic credit ledger.

The proper officer, on being satisfied that the full amount of erroneous refund along with applicable interest, as per the provisions of section 50 of the CGST Act, and penalty, wherever applicable, has been paid by the said registered person in FORM GST DRC-03by way  of debit in electronic  cash  ledger,  he  shall  re-credit  an  amount in  electronic  credit  ledger, equivalent to the amount of erroneous refund so deposited by the registered person, by passing an order in FORM GST PMT-03A, preferably within a period of 30 days from the date of receipt  of  request  for  re-credit  of  erroneous  refund amount  so  deposited  or  from  the  date  of payment  of  full  amount  of  erroneous  refund  along  with  applicable  interest,  and  penalty, wherever applicable, whichever is later.

5.         It is requested that suitable trade notices may be issued to publicize the contents of this Circular.

6.         Difficulty, if any, in the implementation of this Circular may be brought to the notice of the Board. Hindi version will follow.