Indirect Tax Updates September 2024
GST Calendar –Compliances for the month of October’2024
Nature of Compliances | Due Date |
GSTR-7 (Tax Deducted at Source ‘TDS’) | October 10,2024 |
GSTR-8 (Tax Collected at Source ‘TCS’) | October 10,2024 |
GSTR-1 | October 11,2024 |
IFF- Invoice furnishing facility (Availing QRMP) | October 13,2024 |
GSTR-6 Input Service Distributor | October 13,2024 |
GSTR-2B (Auto Generated Statement) | October 14,2024 |
GSTR-3B | October 20,2024 |
GSTR-5 (Non-Resident Taxable Person) | October 20,2024 |
GSTR-5A (OIDAR Service Provider) | October 20,2024 |
PMT-06 (who have opted for QRMP scheme) | October 25,2024 |
Key Outcomes from the 54th GST Council Meeting
Below are the major decisions taken by the GST Council:
- The Council has proposed the gradual implementation of e-invoicing for B2C transactions. Currently, e-invoicing is applicable to B2B transactions for registered individuals with a turnover exceeding Rs. 5 crore, aimed at curbing fake invoicing.
- The Council also introduced the Invoice Management System, the Reverse Charge Mechanism (RCM) ledger, and the Input Tax Credit Reclaim ledger in the GST portal to enhance the existing return filing system. Taxpayers have been advised to declare their opening balances for these ledgers by 31st October 2024.
- Reports from the Group of Ministers (GoM) formed on rate rationalization and real estate were submitted as scheduled, and further deliberations on these topics will be taken up in the forthcoming Council meetings.
- No changes have been made to the GST rate for online gaming. As resolved during the 50th GST Council Meeting held in October 2023, a GST rate of 28% continues to apply to casinos, online games, and racecourses. It was agreed that this rate would be reviewed after six months of implementation. The revenue from online gaming surged by 412% within six months, rising from Rs. 1,349 crores to Rs. 6,909 crores. For casinos, revenue increased by 30%, from Rs. 164 crores to Rs. 214 crores.
- In June of the previous year, the central government extended the compensation cess on luxury and demerit goods until March 2026. The Union Minister announced that by January 2026, they plan to repay the back-to-back loans and associated interest. As of March 2025, the total cess collection (both actual and projected) stands at Rs. 8,66,706 crores, with Rs. 6,64,203 crores already disbursed as compensation, Rs. 2,69,208 crores as loans repayable, and Rs. 51,561 crores in interest. A GoM will be established to assess these figures and devise a strategy moving forward.
- A Committee of Secretaries, chaired by the Additional Secretary of Revenue, will be formed to review and address the issue of the negative balance in the IGST. They will examine how to recover excess IGST credited to certain states, with a report expected by the end of October 2024.
- Funds provided for research to state-affiliated universities, research centres created under state or central laws, or institutions with income tax exemptions under Section 35 of the Income Tax Act will be exempt from GST. These institutions can receive research funding from both public and private sources.
- The GST Council recommended enacting Sections 118 and 150 of the Finance Act, 2024. This will amend CGST Sections 16 (5) and (6) retrospectively from 1st July 2017, addressing eligibility criteria for input tax credit (ITC) and correcting wrong claims of ITC. A special procedure will be introduced under CGST Section 148 for taxpayers who received demand notices under Sections 73, 74, 107, or 108 for incorrect ITC claimed under CGST Section 16(4) and did not appeal. These taxpayers can now rectify their claims if the ITC is permitted under the newly added CGST Section 16(5) or (6).
- New guidelines and procedures will be introduced under CGST Rule 164 to waive interest, penalties, or both for tax demands raised under Section 73 of the CGST Act for the financial years 2017-18, 2018-19, and 2019-20. Taxpayers can avail of this waiver by making the necessary payments by 31st March 2025, as specified under Section 128A. The waiver process will be clarified in a circular, and the relevant provisions will be effective from 1st November 2024.
The following transactions will be taxed under the reverse charge mechanism:
- Sale of metal scrap from unregistered to registered persons
- Leasing of commercial property from unregistered to registered persons
Ration Decindi
UNO MINDA LIMITED Vs. THE JOINT COMMISSIONER OF GST AND CENTRAL EXCISE.
Issue:
The petitioner, UNO Minda Limited, challenged a show cause notice issued under Section 74 of the CGST Act, 2017, for the misclassification of two-wheeler seats under Customs Tariff Heading (CTH) 9401 instead of CTH 8714. This alleged misclassification resulted in a GST short payment of 18% instead of 28% for the period from July 2017 to October 2023. The key contention was whether the show cause notice invoking the extended period of limitation was valid, given that the petitioner claimed there was no willful misstatement.
Facts:
- The petitioner classified its two-wheeler seats under CTH 9401, which attracted an 18% GST, instead of CTH 8714, which attracts 28%.
- The authorities demanded the differential tax for the period from July 2017 to October 2023, resulting in a GST shortfall of ₹124.74 crores, which the petitioner deposited under protest.
- The petitioner sought to avail the Amnesty Scheme for tax disputes but faced an obstacle due to the bunching of show cause notices for multiple assessment years.
Ruling:
The Madras High Court set aside the bunching of the show cause notices and directed the tax authorities to issue separate show cause notices for each assessment year. This allows the petitioner to avail the Amnesty Scheme, which provides waivers for interest and penalties. The Court also recorded the petitioner’s commitment not to raise the issue of limitation or claim a refund of the ₹124.74 crores already deposited. The writ petition was disposed of.
M/s Supernova Engineers Limited v. Joint Commissioner (Appeals) & Ors
Issue:
Whether the refund application for unutilized Input Tax Credit (ITC) filed by M/s Supernova Engineers Limited is time-barred under Section 54(3) of the CGST Act, 2017, considering the extended limitation period due to COVID-19-related notifications?
Facts:
M/s Supernova Engineers Limited is engaged in the manufacture and supply of DG sets and panels. In March 2018, they supplied these goods to a Special Economic Zone (SEZ) unit of M/s Newfound Properties & Leasing Pvt. Ltd. under a zero-rated supply as per Section 16 of the IGST Act, 2017.
As the supply was zero-rated, the petitioner was eligible for a refund of unutilized ITC under Section 54(3) of the CGST Act, 2017. The claim was related to supplies made in March 2018, and as per law, the refund application had to be filed within two years from the end of the financial year, i.e., by 31.03.2020.
The petitioner filed the refund application on 27.05.2020, beyond the two-year limit. The adjudicating authority rejected the claim, stating it was time-barred. The petitioner then appealed to the Joint Commissioner (Appeals), who upheld the rejection on 29.01.2021, concluding that the refund application was filed after the limitation period.
During the pendency of the case, the Government of India issued Notification No. 13/2022-Central Tax dated 05.07.2022, which excluded the period from 01.03.2020 to 28.02.2022 for calculating the limitation period for filing refund applications, due to the COVID-19 pandemic.
Ruling:
The relevant date for filing the refund application is defined as two years from the due date of furnishing GSTR-3B returns. In this case, the relevant date for filing the refund application for March 2018 was 20.04.2020.
The court noted that the period from 01.03.2020 to 28.02.2022 was excluded from the calculation of the limitation period for refund applications under Notification No. 13/2022-Central Tax. Therefore, the refund application filed on 27.05.2020 was within the limitation period when taking into account the excluded timeframe.
The Gujarat High Court held that the petitioner’s refund application was not time-barred and directed the competent authority to reconsider the refund claim in light of the applicable laws and the exclusion of the COVID-19 period. The court disposed of the petition with these directions.
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