Indirect Tax Alert - Notifications issued pursuant to the recommendations in the 50th GST Council Me

Notifies the effective dates for amendments proposed by the Finance Act, 2021 (FA 2021)¹

Section 123 of the FA 2021 - Section 16 of the Integrated Goods and Services Tax Act, 2017 (IGST Act): The following amendments would be made effective from 1 October 2023:
- Supplies to SEZ developer / SEZ unit would be treated as ‘zero-rated supply’ only if they are ‘for authorised operations’.
- The option for making zero-rated supplies on payment of IGST would not be available for specified class of persons or specified class of goods/ services.

[Notification no:27/2023-Central Tax dated 31 July 2023]

Notifies the effective dates for amendments proposed by the Finance Act, 2023 (FA 2023)²

Sections 137 to 159 of FA 2023 (except Section 149 to 154 of FA 2023): The following amendments to the Central Goods and Services Tax Act, 2017 (CGST Act) shall come into force with 1 October 2023:
- Section 137 of the FA, 2023 - Section 10 of the CGST Act: A registered person supplying goods through an Electronic Commerce Operator (ECO) is eligible to pay tax under the composition scheme.
- Section 138 of the FA, 2023 - Section 16 of the CGST Act:
  - Second proviso to Section 16 (2) has been rephrased to make it amply clear that nonpayment of consideration for supply along with GST within 180 days, results in liability to pay tax along with applicable interest (phraseology “adding to his output tax liability” substituted).
  - Recipient entitled to avail Input Tax Credit (ITC) upon making payment “to the supplier”.
- Section 139 of the FA, 2023 – Section 17 of the CGST Act:
  - Supply of warehoused goods before clearance for home consumption to be treated as exempt supply requiring reversal of ITC.
  - ITC restricted on goods or services, or both used or intended to be used for meeting Corporate Social Responsibility obligations under the Companies Act, 2013.
- Section 140 of the FA, 2023 – Section 23 of the CGST Act: Provisions concerning persons not liable to obtain GST registration have been amended w.e.f. 1 July 2017 to provide that the Government, subject to conditions and restrictions, can specify the category of persons who are exempted from obtaining registration.
- Sections 142-145 of the FA, 2023 – Sections 37, 39, 44 and 52 of the CGST Act: Returns in Form GSTR-1, GSTR-3B, GSTR-4, GSTR-5, GSTR-6, GSTR-8, GSTR-9 and GSTR-9C cannot be filed after the expiry of three years from the due date, except when allowed by the Government.
- Section 146 of the FA, 2023 – Section 54 of the CGST Act: Restriction on “ITC provisionally accepted” has been deleted from the purview of 90% refund on provisional basis on zero rated supplies.
- Section 147 of the FA, 2023 – Section 56 of the CGST Act: Government to prescribe the mechanism for computation, manner, and restrictions for payment of interest on delayed refunds beyond 60 days.
- Section 155 of the FA, 2023 – Section 122 of the CGST Act: ECO liable to penalty of INR 10,000 or equivalent to the tax involved (whichever is higher) in cases where supplies effected from an unregistered person (other than who are specifically allowed), a person not permitted to make interstate supply, or furnishing incorrect details in Form GSTR-8.
- Section 156 of the FA, 2023 – Section 132 of the CGST Act:
  - Obstructing or preventing any officer in the discharge of his duties, tampering with, or destroying any material evidence or documents, or failure to supply any information or supplies false information are being decriminalised.
  - Monetary limit for initiating prosecution has been increased from INR 10mn to INR 20mn, except for offences relating to the issue of tax invoices without supply leading to wrongful availment or utilisation of ITC or refund of tax.
- Section 158 of the FA, 2023 – Section 158A of the CGST Act: New provision has been inserted for sharing of information furnished by the taxpayers (viz. particulars in the registration application, returns or e-invoice or e-Waybill or any other as may be prescribed) on the GST Common portal, with other systems basis taxpayer’s consent.
- Section 159 of the FA, 2023 - Schedule III of the CGST Act: Following entries in Schedule III (non-supplies) deemed to have been inserted with effect from 1 July 2017:
  - Supply of goods from a place in non-taxable territory to another place in non-taxable territory without such goods entering India;
  - Supply of warehoused goods to any person before clearance for home consumption;
  - Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin located outside India but before clearance for home consumption.
    Any tax paid on account of the amendment in Schedule III during the period 1 July 2017 to 31 January 2019 would not be refundable.
- Sections 141, 148 & 157 of the FA, 2023 - In addition to the above, the provisions of Section 30 (Revocation of cancellation of registration), Section 62 (Assessment of non-filers of returns), Section 138 (Compounding of offence) have been amended.
- Section 160 to 162 of FA 2023: The following amendments to the IGST Act shall be made effective from 1 October 2023:
  - Section 160 of the FA, 2023 – Section 2 of the IGST Act: The definitions of ‘non-taxable online recipient’ and ‘online information database access or retrieval services’ have been amended.
  - Section 161 of the FA, 2023 – Section 12 of the IGST Act: Place of supply for transportation of goods delinked from the place of destination of goods, where the supplier and recipient of service are located in India.
  - Section 162 of the FA, 2023 - Section 13 of the IGST Act: The provision stipulating the place of supply of services of transportation of goods shall be the place of destination of goods to be deleted.
Section 149 to 154 of the FA 2023: Sections 109, 110, 114, 117, 118 and 119 of the CGST Act dealing with the GST Appellate Tribunal, its constitution, powers, qualification, appointment, conditions of service (of President and Members) and its Benches have been amended with effect from 1 August 2023.

[Notification no:28/2023-Central Tax dated 31 July 2023]

Special procedure in respect of supply of goods through ECO by composition taxpayers and persons exempted from registration

Effective 1 October 2023, the CBIC has notified special procedure to be followed by ECO for supply of goods made through it by taxpayers registered under Section 10 of the CGST Act (composition taxpayers) and persons exempted from registration (exempted persons) (specified persons) which is summarised hereunder:

ECOs shall not allow inter-state supply of goods made through it by specified persons.
In respect of exempted persons, ECOs can facilitate the supply of goods only if an enrolment number has been allotted to such persons on the common portal and shall not collect tax at source under Section 52(1) of the CGST Act in respect of supply of goods made by exempted persons.
ECOs shall collect tax at source under Section 52(1) of the CGST Act for supplies made by composition taxpayers and such collected tax should be deposited with the Government under Section 52(3) of the CGST Act.
ECOs must furnish the details of the supply of goods made by specified persons in FORM GSTR-8.

Where multiple ECOs are engaged in a single supply of goods in respect of an exempted person, then ECO in this Notification would refer to the ECO that ultimately releases the payment to such person for the goods supplied.

[Notification no:36&37/2023-Central Tax dated 4 August 2023]

Notifies various amendments to the Central Goods and Services Tax Rules, 2017 (CGST Rules)

The CBIC has notified the following amendments to the CGST Rules, given hereunder:

The following amendments have been notified with effect from 4 August 2023:

Sl. No.	Rule	Gist of the amendment
1.	Registration (Rules 9, 10A, 21A and 25)	Rule 9 - Verification of application and approval: Taxpayer's presence is no longer mandatory during the physical verification of the place of business by the Tax Authorities. Rule 10A – Furnishing of Bank Account details: Taxpayers to furnish bank account details on the GST portal within the prescribed period, being earliest of the following: 30 days of obtaining registration; or Before furnishing the details of outward supplies in Form GSTR-1 / Invoice Furnishing Facility (IFF) Rule 21A – Suspension of registration: GST registration to be suspended in the following circumstances: Significant difference/ anomalies between outward liability as per Form GSTR-3B vis-à-vis Form GSTR-1; or Significant difference/ anomalies between input tax credit (ITC) availed in Form GSTR-3B vis-à-vis Form GSTR-2B (i.e., procurements reported by the suppliers in their Form GSTR-1); or Contravention of Rule 10A of the CGST Rules to furnish bank account details. However, in case of contravention of Rule 10A of the CGST Rules, the suspension of GST registration (which has not been cancelled by the Tax Authorities) shall be deemed to be revoked upon compliance of Rule 10A of the CGST Rules. Rule 25 – Physical verification of business premises in certain cases: Physical verification of business premises may be conducted before or after the grant of GST registration in specified manner and circumstances.
2.	Input tax credit (Rule 43)	Rule 43 – Manner of determination of input tax credit in respect of capital goods and reversal thereof in certain cases: Explanation 1 to Rule 43 inter alia provides that for the purpose of Rules 42 and 43 of the CGST Rules, the aggregate value of exempt supplies shall exclude the value of transportation services in respect of goods transported by a vessel from a Customs station in India to a place outside India. The aforesaid provision dealing with the exclusion of transportation service has been deleted.
3.	Tax Invoice (Rule 46)	Rule 46 – Tax Invoice: In respect of taxable services supplied by or through an electronic commerce operator or by a supplier of online information and database access or retrieval services, to an unregistered recipient, the tax invoice issued by the supplier to contain the name of the State of the recipient, instead of full address and the same shall be deemed to be the address on record of the recipient.
4.	Returns (Rule 59)	Rule 59 – Form and manner of furnishing details of outward supplies: The following class of registered taxpayers will not be able to furnish Form GSTR-1/ Invoice Furnishing Facility (IFF): Taxpayers who have been issued intimation in Form GST DRC-01C under Rule 88D of the CGST Rules and have neither furnished a reply thereto nor paid an amount equal to the excess ITC as specified in such intimation. Taxpayers who have not furnished their bank account details under Rule 10A of the CGST Rules.
5.	Payment of tax (Rules 88D)	Rule 88D – Manner of dealing with difference in ITC available in the auto-generated statement containing details of ITC and that availed in Form GSTR-3B: A new Rule 88D has been inserted to inter alia stipulate that: The Taxpayers will be issued an automated intimation in Form GST DRC-01C on the GST portal when the ITC availed in Form GSTR-3B exceeds the ITC available in Form GSTR-2B, by a specific amount/ percentage. In response, the Taxpayer may explain reasons for such difference or make payment of excess ITC along with interest, within a period of seven days. Failure to provide a satisfactory response/ payment of excess tax along with interest (if any), could result in initiation of proceedings under Sections 73 / 74 of the CGST Act.
6.	Refund (Rules 89 and 96)	Rule 89 – Application for refund of tax, interest, penalty, fees, or any amount: Third proviso to Rule 89(1) to be amended to clarify that casual taxable persons and non-residential taxable persons can claim refund of advance tax deposited by them under Section 27 of the CGST Act which exceeds the actual tax payable only after they file the last return. The refund application on account of excess payment of tax shall also be accompanied with a statement indicating details of interest (if any) and other amounts paid by the taxpayer. Rule 96 – Refund of IGST paid on goods or services exported out of India: The following provisos to Rule 96(2) have been omitted: Where the due date for filing Form GSTR-1/ IFF return has been extended, the supplier is to furnish information pertaining to exports after furnishing Form GSTR-3B return and the same shall be transmitted to the Customs portal; and The information furnished as above shall be auto-drafted in FORM GSTR-1 for the said tax period.
7.	Appeals and Revision (Rules 108 and 109)	Rule 108 – Appeal to the Appellate Authority & 109 – Application to the Appellate Authority: An appeal/ application shall be filed electronically, except in the following instances (in which case, a provisional acknowledgement shall be issued immediately): The Commissioner has notified that the appeal/ application along with the relevant documents may be filed manually; or The appeal/ application cannot be filed electronically due to non-availability of the decision or order to be appealed against on the common portal.
8.	E-way Rules (Rule 138F)	Rule 138F - Information to be furnished in case of intra-State movement of gold, precious stones, etc. and generation of e-way bills thereof: A new rule has been inserted inter alia suggesting that the Commissioner of State tax/ Union Territory tax may mandate the generation of E-Way Bill (Part-A of Form GST EWB-01) for intra-state movement of gold, precious stones, etc. in cases where the value of supply exceeds INR 0.2mn.
9.	Demands and Recovery (Rule 142B)	Rule 142B – Intimation of certain amounts liable to be recovered under Section 79: This is a new provision which inter alia stipulates that: An intimation in Form GST DRC-01D will be issued to a taxpayer in respect of tax or interest which becomes recoverable in accordance with Section 75 of the CGST Act read with Rule 88C of the CGST Rules (or otherwise) under Section 79 of the CGST Act. Any amount which remains unpaid after a period of seven days from the date of intimation shall be recovered in accordance with the provisions of CGST Rules.

The following amendments shall come into effect from 1 October 2023:

Sl. No.	Rule	Gist of the amendment
1.	Registration (Rule 23)	Rule 23 – Revocation of cancellation of registration: Application for revocation of cancellation of registration can be made within 90 days from the date of service of the order of cancellation of registration (as against the earlier time limit of 30 days). The aforesaid time limit can be extended by Commissioner, or any officer authorised by him (not below the rank of Additional/ Joint Commissioner) for a further period, not exceeding 180 days.
2.	Input tax credit (Rule 43)	Rule 43 – Manner of determination of input tax credit in respect of capital goods and reversal thereof in certain cases: Explanation 3 to Rule 43 to be inserted which provides that for the purpose of Rules 42 and 43 of the CGST Rules, the value of supply of goods from Duty Free Shops at arrival terminal in international airports to the incoming passengers shall be included in the value of exempt supplies.
3.	Returns (Rule 64, 67)	Rule 64 - Form and manner of submission of return by persons providing OIDAR services: Suppliers engaged in providing OIDAR services to a non-taxable online recipient to file return in Form GSTR-5A. Rule 67 - Form and manner of submission of statement of supplies through an e-commerce operator: Rule 67 of the CGST Rules has been amended to clarify that the details furnished by an e-commerce operator shall be made available to each of the registered suppliers on the GST Portal for availing ITC.
4.	Refund (Rule 94)	Rule 94 – Order sanctioning interest on delayed refunds: The following periods shall be excluded from the period of delayed refund, on which, interest is payable: Any period beyond 15 days of receipt of notice in Form GST RFD-08 that the applicant takes to furnish a reply in Form GST RFD-09 or to submit additional documents/ reply; and Any period taken by the applicant for furnishing correct bank account details to which the refund is to be credit or for validating the details of the bank account so furnished, where the refund could not be credit to the applicant’s bank account.
5.	Offences and Penalties (Rules 162 and 163)	Rule 162 – Procedure for compounding of offences: The compounding amounts for specified offences have been notified. For ease, the same has been tabulated after this table. Where the offence committed by a person falls under more than one category, the compounding amount shall be the higher of the compounding amounts. Rule 163 – Consent based sharing of information: This is a new provision which inter alia enables a registered person to opt to share specified information furnished in FORM GST REG-01, FORM GSTR-3B (for certain tax periods) and FORM GSTR-1 (for certain tax periods, pertaining to invoices, debit notes and credit notes). The aforesaid consent is to be provided only after obtaining consent of all the recipients to whom the taxpayer has issued the invoice, credit notes and debit notes during the said tax periods.

Compounding amounts – Rule 162 of the CGST Rules

Sl. No.	Offence covered under Section 132(1) of the CGST Act	Amount of tax evaded / amount of ITC wrongly availed or utilised / amount of refund wrongly taken
Sl. No.	Offence covered under Section 132(1) of the CGST Act	Exceeding INR 50mn	Exceeding INR 25mn but does not exceed INR 50mn
1.	Supplies any goods or services or both without issue of any invoice with an intention to evade tax.	Up to 75% of the amount of tax evaded, or ITC availed or utilised, or refund wrongly taken, subject to a minimum of 50% of the tax evaded, ITC wrongly availed or utilised, or refund wrongly taken.	Up to 60% of the amount of tax evaded/ ITC wrongly availed or utilised/ refund wrongly taken, subject to minimum of 40% of such amount of tax evaded, or ITC wrongly availed or utilised, or refund wrongly taken.
2.	Avails ITC using the invoice or bill without supply of goods.
3.	Collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due.
4.	Evades tax or fraudulently obtains refund and where such offence is not covered under clauses (a) to (d) of Section 132(1).
5.	Falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information with an intention to evade payment of tax.	Amount equivalent to 25% of tax evaded
6.	Acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with, any goods which he knows or has reasons to believe are liable to confiscation.
7.	Receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of the GST law.
8.	Attempts to commit the offences or abets the commission of offences specified in clause (a), (c), to (f) and clause (h) and (i) of Section 132(1).	Amount equivalent to 25% of the amount of tax evaded or ITC availed or utilised, or refund wrongly taken

In addition to the above, various forms appended to the CGST Rules have been amended.

[Notification no:38/2023-Central Tax dated 4 August 2023]

¹ Our summary of the budget can be accessed here.

² Our summary of the budget can be accessed here.