Category: GST

As per the recent updates on the GST portal, a new facility given is to the registered person to withdraw the registration cancellation application filed in Form GST REG-16.

Main condition imposed for the withdrawal is that the *proper officer should not have initiated any action against the cancellation application filed by the taxpayer.*

Prior to the withdrawal of the cancellation application, it is important to track the status of the cancellation application by login http://www.gst.gov.in, go to Services > Registration > Track Application Status, enter ARN

A Registered person is required to file an application in Form GST REG-16 for cancellation of GST registration in following circumstances:

• Closure/ discontinuation of the business,
• Change in constitution resulting into the change of PAN,
• The registered person is not liable to pay tax under GST,
• The registered person is not required to register under GST,
• Post obtaining voluntary registration, the registrant didn’t commence the business within the stipulated time period, or
• Transfer of business on account of amalgamation or de-merger or sale.

The gross GST Collection in FY 2021-22 post COVID-19 pandemic outbreak are showing an increasing trend. This was stated by Union Minister of State for Finance Shri Pankaj Chaudhary in written reply to a question in Lok Sabha today.

Giving more details, the Minister stated the gross GST collection for FY 2020-21 and 2021-22 (till Oct 2021) as under: –

Giving out the Gross Direct Tax collection figures for the FY 2021-22, the Minister stated that as on 23.11.2021 Gross Direct Tax collection figures for the FY 2021-22 are at Rs. 815262.7 crore showing a growth of 48.11% and 18.15% over the Gross collection figures for the corresponding period in FY 2021-22 and FY 2019-20, respectively. The Net Direct Tax Collection figures for the FY- 2021-22 as on 23.11.2021 are at Rs. 692833.6 crores showing a growth of 67.93% and 27.29% over the Net collection figures for the corresponding period FY 2020-21 and FY 2019-20, respectively as per Annexure-I, the Minister stated.

In relation to the compensation cess, the Minister stated that the GST compensation cess levied under Section 8 of the GST (Compensation to States) Act, 2017 is transferred into a non-lapsable Fund known as GST Compensation Fund which forms part of the Public Account of India as provided in Section 10(1) of the Act. The States are being compensated for any loss of revenue arising on account of implementation of GST for five years out of the Compensation Fund as per Section 10(2) of the said Act. GST compensation for financial years 2017-18, 2018-19 and 2019-20 has already been paid to the states, the Minister added.

The Minister stated that the economic impact of the pandemic has led to higher compensation requirement due to lower GST collection and at the same time lower collection of GST compensation cess. GST compensation of Rs. 1,30,464 crore has been released to all States/ UTs to partly meet the compensation payable for the period April’20 to March’21as the amount in GST Compensation Fund was not adequate to meet the full compensation requirement. This issue of shortfall in release in GST compensation was deliberated in 41^st & 42^nd GST Council meetings and accordingly, Centre had borrowed loan of Rs. 1.1 lakh crore from open market and passed on as back-to-back loan to States/UTs to meet their resource gap due to short release of GST Compensation for FY 2020-21. Similarly, as per deliberation in 43rd GST Council meeting, Centre has borrowed Rs. 1.59 lakh crore loan and passed on to the States/UTs as was done in last year. Taking into account GST compensation released to States as well as back-to-back loan, pending GST compensation to States/UTs is as per Annexure II, the Minister added.

Removal of Inverted Tax Structure on MMF Textiles Value chain and uniformity of rates brings relief to Textiles sector;

Uniform rate of 12% for entire value chain of MMF textiles sector will reduce the compliance burden of the industry players;

MMF textiles sector will be benefiting and save lot of working capital;

It will provide clarity to the industry and settle, once and for all, the issues caused by inverted tax structurePosted Date:- Nov 22, 2021

The Government has notified uniform goods and services tax rate at 12 % on MMF, MMF yarn, MMF fabrics and apparel that has addressed the inverted tax structure in the MMF textile value chain. The changed rates will come into effect from 1st January, 2022. This will help the MMF segment grow and emerge as a big job provider in the country.

The Textiles & Apparel (T&A) industry was having long pending (first under sales tax then, under VAT and finally under GST regime) demand for removal of inverted tax structure on manmade fibre (MMF) value chain. The GST on MMF, MMF Yarn and MMF Fabrics were 18%, 12% and 5% respectively. The taxation of inputs at higher rates than finished products created build up of credits and cascading costs. It further led to accumulation of taxes at various stages of MMF value chain and blockage of crucial working capital for the industry.

Though there is a provision in GST law to claim the unutilised Input Tax Credit (ITC) as a refund, but there were other complications and resulted more compliance burden. The inverted tax structure caused effective increase in rate of taxation of the sector. The world textiles trade has been moving towards MMF but India was not able to take advantage of the trend as its MMF segment was throttled by inverted tax regime.

This 12% uniform GST rate is likely to contribute positively to the growth of the sector in the following ways:

i) The uniform rate of 12% for entire value chain of MMF textiles sector will be benefiting and save lot of working capital. It will reduce the compliance burden of the industry players. This is a welcome step by the Government with no inversion.

ii) The uniformity of GST rates will be helpful to resolve the ITC residues that accumulated due to the inverted tax structure earlier.

iii) The uniformity in the GST rates shall 12% GST on job work related to dying and printing services will benefit the industry to absorb and recover unutilised ITC.

iv)The significant portion of MMF products (output) is expected to be exported, it will lend a better scope for encashing the untilised ITC. Also since tax on input will get refunded, on output (export) which will be zero rated, it would not add to cost and make exports competitive.

v) Uniform 12% GST will help the industry having huge portion of piled up opening ITC by enabling them to encash the same progressively

Differential rates for garment creates problem in compliance of tax regime. MMF garment cannot be identified easily and cannot be taxed differently, hence there is need for uniform rate. Uniform rate makes it simple and since there is so much high potential of value addition in garment segment that the increase in rate is likely to be absorbed in value addition.   It will provide clarity to the industry and settle, once and for all, the issues caused by inverted tax structure.

Based upon specific intelligence, the officers of the Anti Evasion branch of Central Goods and Service Tax (CGST) Commissionerate, Delhi (East) have unearthed a case of availment/utilization and passing on of inadmissible input tax credit (ITC) through bogus GST invoices without actual movement of goods of Rs 34 crore (approx).

The 7 firms were created in order to generate bogus GST invoices with an intent to pass on fraudulent ITC without actual movement of goods and without paying actual GST to the Government. These entities have generated goods less GST invoices of value Rs. 220 crore (approx.) and passed inadmissible ITC amounting to Rs. 34 crore (approx.). Sh. Rishabh Jain was the mastermind behind running this racket of creating bogus firms and generating/selling bogus GST invoices.

The modus operandi involved creating multiple firms with the intent to avail/utilize & passing on of inadmissible credit. The firms involved in this network are M/s Blue Ocean, M/s Highjack Marketing, M/s Kannha Enterprises, M/s S S Traders, M/s Evernest Enterprises, M/s Gyan Overseas & M/s Viharsh Exporters Pvt. Ltd.

Sh. Rishabh Jain tendered his voluntary statement admitting his guilt. He admitted that due to non payment against Overdraft account of Central Bank of India, the business premises were sealed by bankers. Thereafter, he indulged into issuance of bogus GST invoices without actual movement of goods.

Sh. Rishabh Jain has knowingly committed offences under Section 132(1)(b) of the CGST Act, 2017 which is cognizable and non-bailable offences as per the provisions of Section 132(5) and are punishable under clause (i) of the sub section (1) of Section 132 of the Act ibid. Accordingly, Sh. Rishabh Jain has been arrested under Section 132 of the CGST Act on 13.11.2021 and remanded to judicial custody by the duty Metropolitan Magistrate till 26.11.2021.

Further Investigations are in progress.

Dear Sir,

Please find below YouTube video link on Guidelines for disallowing debit of electronic credit ledger under Rule 86A of CGST Rules (CBEC-20/16/05/2021-GST/1552 dated 2nd November, 2021)

1. Grounds for disallowing debit of an amount from electronic credit ledger

2. Proper authority for the purpose of Rule 86A

3. Procedure for disallowing debit of electronic credit ledger/blocking credit under Rule 86 A

4. Allowing debit of disallowed/restricted credit under sub–rule (2) of Rule 86A

Regards,
Bipul Kumar

Last week week I inaugurated the DGGI Annual Conference of DGs/ADGs for the year 2021 at Mumbai on 01/11/2021. Senior officers of DGGI from across the country had met to discuss and share their thoughts on important GST related compliance and tax evasion issues. These included strengthening of enforcement mechanism, the menace of fake invoicing including those in services, transport monitoring mechanism and issues pertaining to seizure and arrests. The deliberations during the conference, it is felt, will provide key policy inputs to the Board and help in ensuring better compliance.

Simultaneously, on the trade facilitation front, guidelines for scrutinising proper availment of Input Tax Credit under Rule 86A of CGST Rules 2017 have been issued by GST Policy Wing on 02/11/2021. The guidelines inter alia lay the contours of the ‘reasons to believe’ test on objective parameters rather than on subjective consideration. The role of material evidence under Rule 86A has also been clarified. This would bring in clarity and transparency both for officers and the trade. It is also in line with the observations made by various courts regarding the laying down of such guidelines.

CBIC is gearing up in its preparedness on AKAM activities to befittingly commemorate the 75th anniversary of India’s Independence. The ICONIC week allotted for Ministry of Finance is from 6th to 12th December 2021. We are planning to have two major events during this period. The event requiring your active participation is on honouring sports persons i.e. awardees of Padma / Arjuna / Dronacharya awards and those who have won medals at international competitions like Olympics, Asian Games Commonwealth games and/ or other non-athletic international sport of an equal stature, including Paralympic events. This has been informed to the Zones earlier. If you are in this category or know of some departmental officer, serving or retired who does so, immediately inform your / their details to your Sports officers or the JC / ADC (P&V) of your Commissionerate. As the time now left is very short, a quick response is expected from the Zones with names of officers and the awards / medals they have won.

They should communicate the details latest by Tuesday i.e. the 8th of December 2021 to Shri Upender Gupta, Pr. ADG, DGTS. Let us ensure that no one who is eligible is left out from the merit list.
CBIC would also be participating in the forthcoming Trade Fair in Delhi from the 14th of November, 2021. During the fair a few thematic events would be showcased. All those who are or happen to be in Delhi during this period are invited to visit our enclosure. Those interested may also volunteer their services and participate in the events.

During my visit to Mumbai, I got an opportunity to visit and take stock of the progress made in the construction of our Customs enclave at Wadala. This is a prestigious project that is coming up in a centrally located place of Mumbai and is expected to ease and address the office and accommodation needs of our departmental officers. Work is in progress and the foundation laying ceremony for the complex would be possible by early December. Phase I of this project will have six towers housing 10 Commissionerates and 769 residential quarters. It is scheduled to be completed by 2024.

On the welfare front, the Governing Body of the Welfare Fund had approved the proposals for granting financial assistance of Rs. 8.44 lakh for setting up a Gym/Recreation/sports facilities at Customs Commissionerate Hqrs. Indore during FY 2021-22 and Rs 4.06 lakh for setting up of a new canteen at Customs Canine Centre, Attari. It has also approved the proposal for reimbursement of medical claims of about Rs. 13.45 lakh incurred by 11 officers/staff for their own/dependents medical treatment.

Our anti-evasion efforts last week saw Mumbai Central CGST Commissionerate detect a fake ITC case involving Rs. 49 crores, based on data mining. Rs. 24.51 crores has been recovered and one person has been arrested.

Last week Air Cargo Customs, Chennai made a seizure of a large brass Nritya Ganapati idol that was to be exported out of India. Archaeological Survey of India on examination of the statue has opined that the idol is more than 400 years old. This detection has helped save a national treasure from being lost. Madurai airport Customs has seized gold bars weighing 4999.89 grams valued at Rs. 2.42 crore from a passenger who arrived from middle east. Such seizures call for alertness of our officers even at smaller airports having thin international flight operations.

With three months to go before the budget is presented, preparatory work has begun in right earnest. To begin with, Tax Research Unit (TRU) has invited inputs/suggestions relating to indirect taxation from
all our stakeholders. You may also add value to this exercise with contributions of your own through your Zonal Chief Commissioners. Comprehensive suggestions on fiscal changes, both on policy and procedure, you feel would be beneficial for the country are welcome. This should reach the JS, TRU by the 15th of this month. I also hope, as indicated by me earlier, that you have sent your valuable policy contributions to the Pr. Commissioner GST Policy Wing on the subject of GST revenue augmentation and compliance reduction, which is to be placed before the Group of Ministers. A chance to win an award should not be wasted.

It is my pleasure to share with you that a beginning has been made to bring to close a long pending issue of regularization of promotion in various grades of Grp ‘A’ posts. In a major achievement, a DPC was held in the UPSC today i.e. 08th November 2021 for regularization of promotions in the grade of Assistant Commissioner of Customs and Indirect Taxes against the vacancy years 2002-03 to 2012-13. This is a matter of great happness for officers and department alike as it will set the ball rolling for further regularization of promotion right up to the Commissioner level posts and for regular promotions thereafter.

Heavy rains have taken place in Tamil Nadu causing severe disruption to life and more rains are predicted. All officers and staff there, should take maximum care and support one’s colleague or fellow citizen in distress. Departmental assets should also be secured against the ravages of the weather. Do take care.

Yours sincerely,
(M. Ajit Kumar)
To
All Officers and Staff of Central Board of Indirect Taxes and Customs