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This is my humble attempt to recognize the ambiguities appears at prima facie reading CGST Rules (up to 15.11.2017) and experienced some difficulties in understanding the provisions for the reason of language, relevancy, missing reference, contradiction within Section or with other section etc. It is desired that Act must be framed in such a way that it can be understood by any laymen and any type of ambiguities may be avoided.

• Issue/Rule:  Reference of 'in any State/UT' in Rule 3(5), Rule 6(7), Proviso (b) to Rule 19(1).

Relevant provision reproduced below.

Rule 3(5): Any intimation U/R 3(1)/3(3) in respect of any place of business in any State/UT shall be deemed to be an intimation in respect of all other places of business registered on the same PAN.

Rule 6(7): Any intimation or application for withdrawal U/R 6(2)/6(3) or denial of the option of composition scheme in accordance with Rule 6(5) in respect of any place of business in any State/UT, shall be deemed to be an intimation in respect of all other places of business registered on the same PAN.

19(1)-Proviso (b): the change relating to sub-clause (a) (i)&(iii) in any State/UT shall be applicable for all registrations of the registered person obtained under the provisions of this Chapter on the same PAN;

Confusion-1: From Proviso to Section 10(2) of CGST Act, it is clear that assessee can opt composition scheme only where all registered person having same PAN opt it. Hence the phrase 'in any State/UT' lead to think that this provision pertains to registered person of that State/UT. Hence phrase 'in any State/UT' appears as extraneous or may be as 'for any of registration of same PAN'.

• Issue/Rule: Rule 5. Conditions and restrictions for composition levy.-

(a) The person exercising the option of composition scheme shall comply with the following conditions, namely:-

(b) the goods held in stock by him on the appointed day have not been purchased in the course of inter-State trade or commerce or imported from a place outside India or received from his branch situated outside the State or from his agent or principal outside the State, where the option is exercised U/R 3(1).

(c) the goods held in stock by him have not been purchased from an unregistered supplier and where purchased, he pays the tax U/S 9(4);

Confusion-2: For Rule 5(1)(b): Assessee opting Composition scheme can not avail ITC on stock and also he has to forgo his credit earned in existing law. Then, what is purpose of this provision which restrict huge numbers of assessees to opt this scheme?

Confusion-3: For Rule 5(1)(c): Similar confusion as above. As in case assessee is not opting composition scheme, he is not required to pay GST U/S 9(4) on stock purchased from unregistered dealer but assessee has to pay only on future purchase only.

• Issue/Rule: Status of registration between date of liable for registration and Effective date of Registration when applied after the expiry of 30 days from the date of his becoming liable to registration. As in terms of Rule 10(3), when applied after the expiry of 30 days from the date of his becoming liable to registration, effective date of registration will be date of granting registration or of deemed registration under Rule 9(1), 9(3) or 9(5) as the case may be.

Confusion-4: What will be status of registration between date of liable for registration and these applicable dates? i.e. regarding tax liabilities and availment of ITC etc?

• Issue/Rule: Rule 11: Separate registration for multiple business verticals within a State/UT.-  (1)(c) all separately registered business verticals of such person shall pay tax under the Act on supplies made to another registered business vertical of such person and Issue a tax invoice for such supply.

Confusion-5: What if assessee have opted for composition scheme or such Business Vertical providing non-taxable supply for which it is required to Issue Bill of Supply and not tax invoice?

• Issue/Rule: 26(2) Each document including the return furnished online shall be signed or verified through electronic verification code-

(b) in the case of a HUF, by a Karta and where the Karta is absent from India or is mentally incapacitated from attending to his affairs, by any other adult member of such family or by the authorized signatory of such Karta;

(e) in the case of a firm, by any partner thereof, not being a minor or authorized signatory thereof;

(g) in the case of a trust, by the trustee or any trustee or authorized signatory thereof;

Confusion-6:  For Rule 26(2)(b), why such allowance if Karta is abroad only? What if Karta is in India but in other state or at any place very far away from the place of business?

Confusion-7: Wording of Rule 26(2)(e) lead to believe that partner not being a minor nor authorized signatory, hence there should be a comma between 'minor' and 'or authorized' i.e. 'in the case of a firm, by any partner thereof, not being a minor, or authorized signatory thereof'

Confusion-8: Rule 26(2)(g) should be more proper as 'in the case of a trust, by the trustee or any of the trustees thereof or authorised signatory thereof'

• Issue/Rule: Rule 32(4). The value of supply of services in relation to life insurance business shall be,-

(a) the gross premium charged from a policy holder reduced by the amount allocated for investment, or savings on behalf of the policy holder, if such an amount is intimated to the policy holder at the time of supply of service;

(b) in case of single premium annuity policies other than (a), 10% of single premium charged from the policy holder; or

(c) in all other cases, 25% of the premium charged from the policy holder in the first year and 12.5% of the premium charged from the policy holder in subsequent years:

Provided that nothing contained in this sub-Rule shall apply where the entire premium paid by the policy holder is only towards the risk cover in life insurance.

Confusion-9: in 32(4)(a), Comma(,) between 'investment' and 'or saving' appears as extraneous and provision give better meaning if that comma is removed.

Confusion-10:  Where 32(4)(c) covers all other cases other than referred in sub-rule (4)(a) & (4)(b), hence proviso appears as ambiguous. To which type of other case/s it would be applicable?

• Issue/Rule: Rule 32(5). Where a taxable supply is provided by a person dealing in buying and selling of second hand goods i.e., used goods as such or after such minor processing which does not change the nature of the goods and where no ITC has been availed on the purchase of such goods, the value of supply shall be the difference between the selling price and the purchase price and where the value of such supply is negative, it shall be ignored:

Confusion-11: As per Rule 32(5), supplier has to disclose his purchase price to his buyer hence it may harm to his business.

• Issue/Rule: mention of 'Quarter' in Proviso to Rule 32(5) [Also for Rule 40(1)(a), Rule 40(2), Proviso to Rule 43(1)(c) and Proviso to Rule 43(1)(d)]

Relevant provision reproduced below.

Proviso to Rule 32(5): Provided that the purchase value of goods repossessed from a defaulting borrower, who is not registered, for the purpose of recovery of a loan or debt shall be deemed to be the purchase price of such goods by the defaulting borrower reduced by 5% points for every quarter or part thereof, between the date of purchase and the date of disposal by the person making such repossession.

Confusion-12: Here word 'quarter' has not been defined in the Rules.  Therefore, in terms of Rule 2(e), considering definition given at Section 2 (92) of CGST Act i.e. 'quarter' shall mean a period comprising three consecutive calendar months, ending on the last day of March, June, September and December of a calendar year, where date of purchase is 29.09.2017 and date of disposal is 02.10.2017 i.e. period is only for 4 days spread in two different quarters and he has to reduce 5% for each quarter or part i.e. total 10%. Therefore it is required that meaning of quarter or period may be defined for such rules.

• Issue/Rule: Rule 35: Value of supply inclusive of IGST, CGST, SGST, UTGST.-Where the value of supply is inclusive of IGST or, as the case may be, CGST, SGST, UTGST, the tax amount shall be determined in the following manner, namely……

Confusion-13: Heading indicates that it is to find value but formula given therein is to find tax and not for value. It would be proper that heading for the rule be amended.

• Issue/Rule: Rule 35: Explanation- (b) 'supplies of goods or services or both of like kind and quality' means any other supply of goods or services or both made under similar circumstances that, in respect of the characteristics, quality, quantity, functional components, materials, and the reputation of the goods or services or both first mentioned, is the same as, or closely or substantially resembles, that supplies.

Confusion-14: Bold, underlined and italic word/phrase appears as is confusing or not proper exactly and also formation of sentence should be arranged in better way.

• Issue/Rule: Rule 37: Reversal of ITC in the case of non-payment of consideration.-

(1) A registered person, who has availed of ITC on any inward supplies, but fails to pay to the supplier thereof, the value of such supply along with the tax payable thereon, within the time limit specified in the second proviso to S.16(2)(i.e.180 days), shall furnish the details of such supply, the amount of value not paid and the amount of ITC availed of proportionate to such amount not paid to the supplier in FORM GSTR-2 for the month immediately following the period of 180 days from the date of the Issue of the invoice:

Provided that the value of supplies made without consideration as specified in Schedule I of the said Act shall be deemed to have been paid for the purposes of the second proviso to Section 16(2).

(2) The amount of ITC referred to U/R 37(1) shall be added to the output tax liability of the registered person for the month in which the details are furnished.

(3) The registered person shall be liable to pay interest at the rate notified U/S 50(1) for the period starting from the date of availing credit on such supplies till the date when the amount added to the output tax liability, as mentioned U/R 37(2), is paid.

Confusion-15: Though recipient has not paid amount to supplier, such supplier has to pay GST. However in such case, recipient shall have to reverse ITC with payment of interest to the government. Thus Government is taking benefit and supplier who suffered tax is getting nothing.

 • Issue/Rule: Rule 39(b): The ISD shall, in accordance with the provisions of clause (d), separately distribute the amount of ineligible ITC (ineligible under the provisions U/S 17(5) or otherwise) and the amount of eligible ITC;

Confusion-16: If ITC is not eligible, why such exercise to distribute ineligible ITC?

• Issue/Rule: Rule 39(c): the ITC on account of CGST, SGST, UTGST and IGST shall be distributed separately in accordance with the provisions of clause (d);

Confusion-17: Rule 39(c) would be better if it is like this- the ITC on account of CGST, SGST, UTGST and IGST shall be calculated separately in accordance with the provisions of clause (d) and shall be distributed in accordance with the provisions of clause (e) & (f).

• Issue/Rule: Rule 39(e): the ITC on account of IGST shall be distributed as ITC of IGST to every recipient;

Rule 39(f): the ITC on account of CGST and SGST or UTGST shall-

(i) in respect of a recipient located in the same State/UT in which the ISD is located, be distributed as ITC of CGST and SGST or UTGST respectively;

(ii) in respect of a recipient located in a State/UT other than that of the ISD, be distributed as IGST and the amount to be so distributed shall be equal to the aggregate of the amount of ITC of CGST and SGST or UTGST that qualifies for distribution to such recipient in accordance with clause (d);

Confusion-18:  As per Rule 39(e), IGST shall be distributed as IGST to all recipient units whereas as per Rule 39(f), CGST/SGST/UTGST shall be distributed as CGST/SGST/UTGST respectively to recipient units in same State/UT of ISD and as IGST to recipient units other than in state/UT of ISD as aggregate of CGST/SGST/UTGST.

Thus many of recipient units not in position to use IGST shall be at loss. Specifically recipient units located in state/UT of original supplier (i.e. supplier to ISD), who could have got respective CGST/SGST/UTGST if would be supplied directly to them by supplier, in absence of this provision, shall have to suffer loss of ITC.

• Issue/Rule: Rule 39(1)(h): the ISD shall Issue an ISD credit note, as prescribed U/R 54(1), for reduction of credit in case the ITC already distributed gets reduced for any reason;

Rule 39(1)(j). any ITC required to be reduced on account of issuance of a credit note to the ISD by the supplier shall be apportioned to each recipient in the same ratio in which the ITC contained in the original invoice was distributed in terms of clause (d), and the amount so apportioned shall be-

(i) reduced from the amount to be distributed in the month in which the credit note is included in the return in FORM GSTR-6; or

Confusion-19: Both the provisions appears as contradictory and should be at one place with 'either or' condition. Where ISD Get credit note, it has to reduce ITC availed or if ITC already distributed ISD has to Issue credit note to recipient units. Both provisions are not to be adopted simultaneously for any transaction.

• Issue/Rule: Rule 39(3): Subject to Rule 39(2), the ISD shall, on the basis of the ISD credit note U/R 39(1)(h), Issue an ISD invoice to the recipient entitled to such credit and include the ISD credit note and the ISD invoice in the return in FORM GSTR-6 for the month in which such credit note and invoice was Issued.

Confusion-20:  Where ISD receive credit note and need to reduce ITC availed, it Issue Credit note as per Rule 39(1)(h) for reduction in ITC by recipient units. Here, as per provision says that, based on ISD credit note i.e. credit note, to Issue ISD invoice to the recipient entitled to such credit.  This is confusing as ISD credit note and ISD invoice have contradictory effect of reduce and avail ITC respectively.

• Issue/Rule: 41. Transfer of credit on sale, merger, amalgamation, lease or transfer of a business.-

(1) A registered person shall, in the event of sale, merger, de-merger, amalgamation, lease or transfer or change in the ownership of business for any reason, furnish the details of sale, merger, de-merger, amalgamation, lease or transfer of business, in FORM GST ITC-02, electronically on the common portal along with a request for transfer of unutilized ITC lying in his electronic credit ledger to the transferee:

Provided that in the case of demerger, the ITC shall be apportioned in the ratio of the value of assets of the new units as specified in the demerger scheme.

(2) The transferor shall also submit a copy of a certificate Issued by a practicing chartered accountant or cost accountant certifying that the sale, merger, de-merger, amalgamation, lease or transfer of business has been done with a specific provision for the transfer of liabilities.

Confusion-21: While reading clause (1), it appears that it is an independent clause. Whereas while reading clause (2) it appears that transfer of ITC available only where such transfer is with a specific provision for the transfer of liabilities. Thus, clause (1) should be subject to clause (2).

• Issue/Rule: 42(1) (i) the amount of ITC attributable towards exempt supplies, be denoted as 'D1' and calculated as- D1= (E÷F) × C2,

where, 'E' is the aggregate value of exempt supplies during the tax period, and 'F' is the total turnover in the State of the registered person during the tax period (C2 is common Credit):

Provided that where the registered person does not have any turnover during the said tax period or the aforesaid information is not available, the value of 'E/F' shall be calculated by taking values of 'E' and 'F' of the last tax period for which the details of such turnover are available, previous to the month during which the said value of 'E/F' is to be calculated;

Confusion-22: Calculation based on turnover doubtful, can be misused. The word 'attributable' has not been defined here but it give sense as 'involved'. ITC involved has direct nexus with Quantity used and not with value of resultant product.

Suppose, Common Input(CI), 100 unit@Rs.100/- per unit purchased for Rs. 10000/-. Cenvat credit involved Rs.12 per unit (Rs.1200 for 100 Unit). If equal quantity of Common Input (CI) used in Exempted as well as dutiable finished goods (FG), credit eligible and ineligible must be equal but on calculation by given formula, where the value FG is different, eligibility is changed. Plz see below Table.


 

CI used

Logically ITC involved

Value of CI

Value of other material

Costing of FG

Sale value of FG

As per formula Credit attributed

Product-1 taxable

50

600

5000

500

5500

6000

12.94964

Product-2 exempted

50

600

5000

500000

500500

550000

1187.05

Total

100

1200(C2)

10000

500500

506000

556000

1200


Therefore, first should be try to find out ITC based on consumption of supply from Lab test, issue/production register etc. and if satisfactory result not found, then only this method to be applied.

• Issue/Rule: 42(1)(j): the amount of credit attributable to non-business purposes if common inputs and input services are used partly for business and partly for non-business purposes, be denoted as 'D2, and shall be equal to 5% of C2;

Confusion-23: Not better idea as some assessee may have mainly non-business purposes transactions mainly and some may have very negligible. Thus it may badly effect correct eligibility of ITC giving undue benefit to some and snatching due ITC from some.

• Issue/Rule: 42(1)(m): the amount equal to aggregate of 'D1,' and 'D2,' shall be added to the output tax liability of the registered person:

Provided that where the amount of input tax relating to inputs or input services used partly for the purposes other than business and partly for effecting exempt supplies has been identified and segregated at the invoice level by the registered person, the same shall be included in 'T1' and 'T2' respectively, and the remaining amount of credit on such inputs or input services shall be included in 'T4'.

Confusion-24: Phrase 'Provided that where the amount….. shall be included in 'T1' and 'T2' respectively' already covered in 42(1)(c)&(d) so already not contained in remaining ITC.  For phrase' and the remaining amount of credit on such inputs or input services shall be included in 'T4'.' But in terms of 42(1)(f), 'T4' is ITC attributable to inputs and input services intended to be used exclusively for effecting supplies other than exempted but including zero rated supplies. Then how after balance ITC which may be used for non-business or exempted supply also  be treaded as T4?

• Issue/Rule: 43. Manner of determination of ITC in respect of capital goods and reversal thereof in certain cases.-

(1) Subject to the provisions U/S 16(3), the ITC in respect of capital goods, which attract the provisions U/S 17(1)&(2), being partly used for the purposes of business and partly for other purposes, or partly used for effecting taxable supplies including zero rated supplies and partly for effecting exempt supplies, shall be attributed to the purposes of business or for effecting taxable supplies in the following manner, namely,-

(a) the amount of input tax in respect of capital goods used or intended to be used exclusively for non-business purposes or used or intended to be used exclusively for effecting exempt supplies shall be indicated in FORM GSTR-2 [at Sl.3(12)] and shall not be credited to his electronic credit ledger;

(b) the amount of input tax in respect of capital goods used or intended to be used exclusively for effecting supplies other than exempted supplies but including zero-rated supplies shall be indicated in FORM GSTR-2 and shall be credited to the electronic credit ledger;

(c) the amount of input tax in respect of capital goods not covered under clauses (a) and (b), denoted as 'A', shall be credited to the electronic credit ledger and the useful life of such goods shall be taken as 5 years from the date of the invoice for such goods:

Provided that where any capital goods earlier covered under clause (a) is subsequently covered under this clause, the value of 'A' shall be arrived at by reducing the input tax at the rate of 5% points for every quarter or part thereof and the amount 'A' shall be credited to the electronic credit ledger;

Explanation.- An item of capital goods declared under clause (a) on its receipt shall not attract the provisions U/S 18 (4), if it is subsequently covered under this clause.

(d) the aggregate of the amounts of 'A' credited to the electronic credit ledger under clause (c), to be denoted as 'Tc', shall be the common credit in respect of capital goods for a tax period:

Confusion-25:  From the clause (a) and (b), both appears as independent provision however it appears that it is not so. Therefore clause (b) should be starting with word 'after excluding ITC as per clause (a), otherwise in clause (b) 'other than exempted supplies ' should be like 'other than exempted supplies and non-business'.

Confusion-26: In terms of Section 18(4) where ITC availed but opted composition scheme or if supply is exempted, ITC to be reversed. Where CG on receipt to be used for non-business purpose or for exempted supply it is covered in clause (a) and if subsequently on covered under this clause 9(c), ITC for remaining life can be availed. Than how Section 18(4) not attract?

Confusion-27: In terms of Rule 43(1)(c) give 'A' is denoted as 'Tc' in 43(1)(d). It would better to denote 'A' as 'Tc' directly in Rule 43(1)(c).

Confusion-28: From the wording of Rule 43(1)(e)(f),(g)(h) & 43(2) it is not clear whether  calculation of 'Tm', 'Tr' & 'Te' is for all individual Capital Goods or as aggregate of all Capital Goods. If it is for individual item of Capital Goods, it may be in very small amount even in minor fraction and also would be a tedious job. Also,  Calculation based on turnover doubtful , can be misused.

• Issue/Rule: 44. Manner of reversal of credit under special circumstances.-

(3) Where the tax invoices related to the inputs held in stock are not available, the registered person shall estimate the amount U/R 44(1) based on the prevailing market price of the goods on the effective date of the occurrence of any of the events specified U/S 18(4) (i.e. Exempt/Opt CMP) or, as the case may be, S.29 (5) (i.e. cancel Regn).

Confusion-29: Where relevant invoice not available, this provision suggest to adopt value as PMV but what to do of PMV in absence of Tax Rate? This provision should also suggest that current tax rate should be adopted or otherwise?

• Issue/Rule: 44(6) The amount of ITC for the purposes U/S 18(6) (i.e. supply of CG) relating to capital goods shall be determined in the same manner as U/R 44(1)(b) and the amount shall be determined separately for ITC of CGST, SGST, UTGST and IGST:

Provided that where the amount so determined is more than the tax determined on the transaction value of the capital goods, the amount determined shall form part of the output tax liability and the same shall be furnished in FORM GSTR-1 .

Confusion-30: 'instead of reversal of ITC in term of Rule 4(1)(b)' should be added at last in the proviso.

• Issue/Rule: Rule 44A: Manner of reversal of credit of Additional duty of Customs in respect of Gold dore bar.- The credit of Central tax in the electronic credit ledger taken in terms of the provisions of section 140 relating to the CENVAT Credit carried forward which had accrued on account of payment of the additional duty of customs levied under S.3(1) of the Customs Tariff Act, 1975 (51 of 1975), paid at the time of importation of gold dore bar, on the stock of gold dore bar held on the 01.07.2017 or contained in gold or gold jewellery held in stock on the 01.07.2017 made out of such imported gold dore bar,shall be restricted to one-sixth of such credit and five-sixth of such credit shall be debited from the electronic credit ledger at the time of supply of such gold dore bar or the gold or the gold jewellery made therefrom and where such supply has already been made, such debit shall be within one week from the date of commencement of these Rules.

Confusion-31: Where credit is restricted to one-sixth, how five-sixth of such credit shall be debited from the electronic credit ledger? In case, whole credit allowed initially, why not reversal/debit of whole but to the extent of five-sixth only giving benefit of one-sixth of credit to the assessee? Also, where supply has already been made, relevant duty would have been paid thereon at the time of clearance.

• Issue/Rule: Rule 45(4): Where the inputs or capital goods are not returned to the principal within the time stipulated in Section 143(i.e.1 or 3 Yr), it shall be deemed that such inputs or capital goods had been supplied by the principal to the job worker on the day when the said inputs or capital goods were sent out and the said supply shall be declared in FORM GSTR-1 and the principal shall be liable to pay the tax along with applicable interest.

Confusion-32: From which date interest to be calculated? What if goods are returned from un-registered job-worker after specific time limit after principal paid tax and interest considering as supply? Can principal adjust the same or again has to pay tax considering as procurement from un-registered dealer?

• Issue/Rule: Rule 46. Tax invoice.- Subject to Rule 54, a tax invoice referred to in Section 31 shall be Issued by the registered person containing the following particulars, namely,-

(e) name and address of the recipient and the address of delivery, along with the name of the State and its code, if such recipient is un-registered and where the value of the taxable supply is Rs.50,000/- or more;

(f) name and address of the recipient and the address of delivery, along with the name of the State and its code, if such recipient is un-registered and where the value of the taxable supply is less than Rs.50,000/- and the recipient requests that such details be recorded in the tax invoice;

Confusion-33: it would better if Provisions of Rule 46(1)(a)&(f) are clubbed at one place.

• Issue/Rule: 2nd Proviso to Rule 46: Provided further that where an invoice is required to be Issued U/S 31(3)(f)(RCM), a registered person may Issue a consolidated invoice at the end of a month for supplies covered U/S 9(4), the aggregate value of such supplies exceeds Rs.5000/- in a day from any or all the suppliers:

Confusion-34: Does it mean that for supply where aggregate value of such supplies exceeds Rs.5000/- in a day from any or all the suppliers, assessee can not prepare such consolidated invoice and has to Issue invoice for each transaction?

• Issue/Rule: 2nd Proviso to Rule 47: Provided further that an insurer or a Banking company/FI/NBFC, or a telecom operator, or any other class of supplier of services as may be notified by the Government on the recommendations of the Council, making taxable supplies of services between distinct persons as specified in Section 25, may Issue the invoice before or at the time such supplier records the same in his books of account or before the expiry of the quarter during which the supply was made.

Confusion-35: Issue of invoice before earlier of any of the two events? Or may be after one even but before later event?

• Issue/Rule: Rule 51: Refund voucher.- A refund voucher referred to in Section 31(3)(e) shall contain the following particulars, namely:-

(g) amount of refund made;

Confusion-36: It would be better if amount being refunded contain separate value of supply as well as tax amount.

• Issue/Rule: Rule 53. Revised tax invoice and credit or debit notes.-

(2) Every registered person who has been granted registration with effect from a date earlier than the date of issuance of certificate of registration to him, may Issue revised tax invoices in respect of taxable supplies effected during the period starting from the effective date of registration till the date of the issuance of the certificate of registration:

Confusion-37: In terms of Section 32(1), a person who is not a registered person shall not collect in respect of any Supplies any amount by way of tax under this Act. So, he would have Issued only Bill of Supply without charging tax. Therefore when such person Issue revised invoice for the period between effective date of registration and who will bear the tax which was not charged during the period?

• Issue/Rule: Rule 58. Records to be maintained by owner or operator of godown or warehouse and transporters.-

The person enrolled U/R 58(1) as aforesaid in any other State/UT shall be deemed to be enrolled in the State/UT.

Confusion-38: Deemed to be enrolled in the State/UT in concerned State/UT or all State/UT? There should be specific wording.

• Issue/Rule: Rule 60. Form and manner of furnishing details of inward supplies.-

(4) The registered person shall declare the quantum of ineligible ITC on inward supplies which is relatable to non-taxable supplies or for purposes other than business and cannot be determined at the invoice level in FORM GSTR-2.

Confusion-39: Where inward supplies related to non-business/non-taxable supplies cannot be determined at the invoice level and hence not shown in FORM GSTR-2, how quantum of ineligible ITC can be ascertained? Where to declare the same and at what time?

• Issue/Rule: Rule 83. Provisions relating to a GST Practitioner.-(1) An application in FORM GST PCT-01 may be made electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner for enrolment as GSTP by any person who,

(i) is a citizen of India;

(ii) is a person of sound mind;

(iii) is not adjudicated as insolvent;

(iv) has not been convicted by a competent court; and satisfies any of the following conditions, namely:-

(a) that he is a retired officer of the Commercial Tax Department of any State Government or of the CBEC, Department of Revenue, Government of India, who, during his service under the Government, had worked in a post not lower than the rank of a Group-B gazetted officer for a period of not less than 2 years; or

(b) that he has enrolled as a sales tax practitioner or tax return preparer under the existing law for a period of not less than 5 years; (OR)

(c) he has passed,…..

Confusion-40: It is felt that condition (b) should be ended with ';or'.

• Issue/Rule: Rule 83. Provisions relating to a GST Practitioner.-

(5) Any person against whom an order U/R 83(4) is made may, within 30 days from the date of Issue of such order, appeal to the Commissioner against such order.

(11) A GSTP enrolled in any other State/UT shall be treated as enrolled in the State/UT for the purposes specified U/R(8).

Confusion-41: for Rule 83(5): For each process or action, specific forms and manners are prescribed in these Rules. However, no form or manner is prescribed for appeal under Rule 83(5).

Confusion-42: for Rule 83(11): Treaded as enrolled in the State/UT, means in concerned State/UT or all State/UT? There should specific wordings.

• Issue/Rule: Rule 85. Electronic Liability Register.-

(3) Subject to the provisions of Section 49, payment of every liability by a registered person as per his return shall be made by debiting the electronic credit ledger maintained as per Rule 86 or the electronic cash ledger maintained as per Rule 87 and the electronic liability register shall be credited accordingly.

(4) The amount deducted/collected U/S 51/52, or the amount payable on RCM, or the amount payable U/S 10, any amount payable towards interest, penalty, fee or any other amount under the Act shall be paid by debiting the electronic cash ledger maintained as per Rule 87 and the electronic liability register shall be credited accordingly.

(5) Any amount of demand debited in the electronic liability register shall stand reduced to the extent of relief given by the appellate authority or Appellate Tribunal or court and the electronic tax liability register shall be credited accordingly.

Confusion-43: In simple word credit meant to add something and as per format of liability register given in Form PMT-01, at Note-3, liability is shown as positive. Therefore it is felt that phrase 'liability register shall be credited accordingly' should be 'amount in liability register shall be reduced accordingly to the extent of amount credited'

• Issue/Rule: Rule 87. Electronic Cash Ledger.-

Explanation 1.- The refund shall be deemed to be rejected if the appeal is finally rejected.

Explanation 2.– For the purposes of this Rule, it is hereby clarified that a refund shall be deemed to be rejected, if the appeal is finally rejected or if the claimant gives an undertaking to the AC/DC that he shall not file an appeal.

Confusion-44: For Rule 87, Explanation 1 is already covered in Explanation 2. Also similar Explanation for Rule 86 and Rule 93. Therefore it is better if all same Explanation should be clubbed at one place to avoid multiplication thereof.

• Issue/Rule: Rule 88. Identification number for each transaction.-

(1) A UIN shall be generated at the common portal for each debit or credit to the electronic cash or credit ledger, as the case may be.

(2) The UIN relating to discharge of any liability shall be indicated in the corresponding entry in the electronic liability register.

(3) A UIN shall be generated at the common portal for each credit in the electronic liability register for reasons other than those covered U/R 88(2).

Confusion-45: As per Rule 88(1), a UIN shall be generated for each debit or credit to the electronic cash or credit ledger. Than a UIN referred in Rule 88(3) would be additional UIN separate from UIN generated in terms of Rule 88(1) for same credit entry?

• Issue/Rule: Rule 89(2): The application U/R 89(1) shall be accompanied by any of the following documentary evidences in Annexure-1 in Form GST RFD-01, as applicable, to establish that a refund is due to the applicant, namely:-

(a) the reference number of the order and a copy of the order passed by the proper officer or an appellate authority or Appellate Tribunal or court resulting in such refund or reference number of the payment of the amount specified U/S 107(6) &112(8) claimed as refund;

Confusion-46: For the purpose, details of order and also payment particulars are required therefore, it appears that the word 'or' should be replaced with 'and'.

• Issue/Rule: Rule 89, 96 & 96A prescribes that application for refund application shall be filed, processed and decided electronically and there is no provision for manual refund process. What should be for cases for the post/Land Customs Stations where EDI system is not working? Also recently due to technical problems, by way of circular it is decided to process of refund manually but Rule has no such provisions. Also, the mechanism is silent for export by Post/Courier etc. Matter is required to be considered for the Issue.

• Issue/Rule: Rule 89: Application for refund of tax, interest, penalty, fees or any other amount.-

(2) The application U/R 89(1) shall be accompanied by any of the following documentary evidences in Annexure 1 in Form GST RFD-01, as applicable, to establish that a refund is due to the applicant, namely:-………

Explanation.– For the purposes of this Rule-

(ii) where the amount of tax has been recovered from the recipient, it shall be deemed that the incidence of tax has been passed on to the ultimate consumer.

Confusion-47: Logic is not understood for to reference of ultimate consumer instead of the recipient from whom tax is recovered. It may be a case that recipient may not be ultimate consumer.

• Issue/Rule: Rule 89(3): Where the application relates to refund of ITC, the electronic credit ledger shall be debited by the applicant by an amount equal to the refund so claimed.

Rule 93: Credit of the amount of rejected refund claim.-

(1) Where any deficiencies have been communicated U/R 90(3), the amount debited U/R 89(3) shall be re-credited to the electronic credit ledger.

(2) Where any amount claimed as refund is rejected U/R 92, either fully or partly, the amount debited, to the extent of rejection, shall be re-credited to the electronic credit ledger by an order made in FORM GST PMT-03.

Confusion-48: On filing refund claim, credit ledger will be debited to the extent of claim amount as per Rule 89(3), and if deficiency found and communicated that amount will be re-credited to ledger U/R 93(1) or amount rejected fully/partially U/R 92 that amount shall be re-credited U/R 93(2). Why so much exercise? Better to debit ledger finally at the time of refund order only.

• Issue/Rule: Rule 89(4): In the case of zero-rated supplies without payment of tax under bond or LUT in accordance with the provisions U/S 16(3) of IGST Act, 2017, refund of ITC shall be granted as per the following formula –

Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC ÷ Adjusted Total Turnover.

Where,-

(B) "Net ITC" means ITC availed on inputs and input services during the relevant period;

(E) "Adjusted Total turnover" means the turnover in a State/UT, as defined U/S 2(112), excluding the value of exempt supplies other than zero-rated supplies, during the relevant period;

Confusion-49: Section 16(3) covers supply without payment of tax i.e. under Bond/LUT and also supply on payment of IGST. Therefore there should be specific provision Section 16(3)(a) instead 16(3).

Confusion-50: considering understanding of "Net ITC" above, it pertains to input tax credit availed in same period of such supply. However, there may be case where procurement of input and input service done on one month and outward supply done in subsequent period where in no procurement of input and input service was occurred. In this situation refund cannot be granted.

Confusion-51: at (E) above phrase 'excluding the value of exempt supplies other than zero-rated supplies' should be 'excluding the value of exempt supplies but including zero-rated supplies' which appears as more specific.

• Issue/Rule: Rule 90(2): The application for refund, other than claim for refund from electronic cash ledger, shall be forwarded to the AC/DC who shall, within 15 days of filing of the said application, scrutinize the application for its completeness and where the application is found to be complete in terms of Rule 89(2),(3),(4), an acknowledgement in FORM GST RFD-02 shall be made available to the applicant through the common portal electronically, clearly indicating the date of filing of the claim for refund and the time period specified U/S 54(7)(time limit for order) shall be counted from such date of filing.

Confusion-52: Why this provision covers only refund application under Rule 89(2),(3),(4) only and refund application under Rule 89(5) is excluded?

• Issue/Rule: 90(3) Where any deficiencies are noticed, the AC/DC shall communicate the deficiencies to the applicant in FORM GST RFD-03 through the common portal electronically, requiring him to file a fresh refund application after rectification of such deficiencies.

Confusion-53: Meaning and applicability of 'fresh refund application' is required to be explained that it is for the purpose of counting delay period of refund and paying interest to the claimant or also for not allowing refund on incomplete refund application within prescribed time limit?

• Issue/Rule: Rule 90(4): Where deficiencies have been communicated in FORM GST RFD-03 under the SGST Rules, 2017, the same shall also deemed to have been communicated under this Rule along with the deficiencies communicated U/R 90(3).

Confusion-54: From this provision it appears that the claimant has to file separate claim for SGST. It is not appears as true. Further clarification for the purpose and applicability is required.

• Issue/Rule: Both Proviso to Rule 96(2) & 96A(2):

Provided that where the date for furnishing the details of outward supplies in FORM GSTR-1 for a tax period has been extended in exercise of the powers conferred under section 37 of the Act, the supplier shall furnish the information relating to exports as specified in Table 6A of FORM GSTR-1 after the return in FORM GSTR-3B has been furnished and the same shall be transmitted electronically by the common portal to the system designated by the Customs:

Provided further that the information in Table 6A furnished under the first proviso shall be auto-drafted in FORM GSTR-1 for the said tax period].

Confusion-55: Both proviso are same for Rule 96(2) and 96A, so avoid multiplication both should at one place only with remark to cover other one.

• Issue/Rule: Rule 96A(1): Refund of IGST paid on export of goods or services under bond or LUT.-

(1) Any registered person availing the option to supply goods or services for export without payment of IGST shall furnish, prior to export, a bond or a LUT in FORM GST RFD-11 to the jurisdictional Commissioner, binding himself to pay the tax due along with the interest specified U/S 50(1) within-

(a) 15 days after the expiry of 3 months or such further period as may be allowed by the Commissioner from the date of Issue of the invoice for export, if the goods are not exported out of India; or

(b) 15 days after the expiry of 1 year, or such further period as may be allowed by the Commissioner, from the date of Issue of the invoice for export, if the payment of such services is not received by the exporter in convertible foreign exchange.

Confusion-56: As per Rule 96A(1), requirement of payment received in convertible foreign exchange is for service only. Why the same condition is not for goods also?

• Issue/Rule: Rule 96(3): Where the goods are not exported within the time specified U/R 96A(1) and the registered person fails to pay the amount mentioned in the said sub-Rule, the export as allowed under bond or LUT shall be withdrawn forthwith and the said amount shall be recovered from the registered person U/S 79.

Confusion-57: Rule 96A(1) covers (a) for goods & (b) for service. Hence to be more specific '96A(1)' should be as '96A(1)(a)'.

• Issue/Rule: Rule 108(3)-Proviso: Provided that where the certified copy of the decision or order is submitted within 7 days from the date of filing the FORM GST APL-01, the date of filing of the appeal shall be the date of the Issue of the provisional acknowledgement and where the said copy is submitted after 7 days, the date of filing of the appeal shall be the date of the submission of such copy.

Rule 110(4)-Proviso: Provided that where the certified copy of the decision or order is submitted within 7 days from the date of filing the FORM GST APL-05, the date of filing of the appeal shall be the date of the Issue of the provisional acknowledgement and where the said copy is submitted after 7 days, the date of filing of the appeal shall be the date of the submission of such copy.

Confusion-58: Whether the purpose above provisos is of counting period to process the appeal? Or also for not admitting appeal considering the same is not filed within prescribed time limit?

• Issue/Rule: Rule 118: Declaration to be made U/S 142(11)(c).- Every person to whom the provision of Section 142(11)(c) applies, shall within the period specified in rule 117 or such further period as extended by the Commissioner, submit a declaration electronically in FORM GST TRAN-1 furnishing the proportion of supply on which VAT or service tax has been paid before the appointed day but the supply is made after the appointed day, and the ITC admissible thereon.

Confusion-59: Here provision relates to Section 142(11)(c) and Rule says 'on which VAT or service tax has been paid' which appears as ambiguous as 142(11)(c) is applicable only where VAT or service tax both are paid. Otherwise if only VAT is paid, 142(11)(a) is applicable and if only service tax is paid, 142(11)(b) would be applicable.

• Issue/Rule: Rule 124(4): The Chairman shall hold office for a term of two years from the date on which he enters upon his office, or until he attains the age of 65 years, whichever is earlier and shall be eligible for reappointment:

(5) The Technical Member of the Authority shall hold office for a term of two years from the date on which he enters upon his office, or until he attains the age of 65 years, whichever is earlier and shall be eligible for reappointment:

Rule 137. Tenure of Authority.- The Authority shall cease to exist after the expiry of two years from the date on which the Chairman enters upon his office unless the Council recommends otherwise.

Confusion-60: The term 'enters upon his office' has not defined therefore it is appears that it should be defined properly, otherwise it may create litigation in case person appointed or had resumed duties and started work but without entering that office but work from somewhere.

• Issue/Rule: Rule 127. Duties of the Authority.-

It shall be the duty of the Authority,-

(iii) to order,

(c) imposition of penalty as specified in the Act;

Rule 133. Order of the Authority.-

(3) Where the Authority determines that a registered person has not passed on the benefit of the reduction in the rate of tax on the supply of goods or services or the benefit of ITC to the recipient by way of commensurate reduction in prices, the Authority may order-

(c) imposition of penalty as specified under the Act;

Confusion-61: As per provision, Anti-profiteering Authority may order imposition of penalty as specified in the Act, however, no relevant penalty provision found in relevant Section 171 of CGST Act or elsewhere in CGST Act.

• Issue/Rule: Rule 133: Order of the Authority.-

(1) The Authority shall, within 3 months from the date of the receipt of the report from the Director General of Safeguards [to add comma] determine whether a registered person has passed on the benefit of the reduction in the rate of tax on the supply of goods or services or the benefit of ITC to the recipient by way of commensurate reduction in prices.

Confusion-62: There should be a comma (,) between the words 'Safeguards' and 'determine'.

• Issue/Rule: 133. Order of the Authority.-

(b) return to the recipient, an amount equivalent to the amount not passed on by way of commensurate reduction in prices along with interest at the rate of 18% from the date of collection of the higher amount till the date of the return of such amount or recovery of the amount including interest not returned, as the case may be, in case the eligible person does not claim return of the amount or is not identifiable, and depositing the same in the Fund referred to in Section 57;

Confusion-63: the bold, italic and underlined phrase 'the amount including interest not returned' should be 'the amount including interest on amount not so returned'.

Confusion-64: if supplier had already returned amount to recipient after long time but before such order, what action should be on supplier?

• Issue/Rule: 134. Decision to be taken by the majority.- If the Members of the Authority differ in opinion on any point, the point shall be decided according to the opinion of the majority.

Confusion-65: There should be remedial provision for circumstances where votes are equal for both side.

• Issue/Rule: 135. Compliance by the registered person.-

Any order passed by the Authority under these Rules shall be immediately complied with by the registered person failing which action shall be initiated to recover the amount in accordance with the provisions of the CGST/ IGST/ SGST/ UTGST Act of the respective States, as the case may be.

Confusion-66: Here word used is state only and central government or union territory have not been mentioned. Why so?

 • Issue/Rule: Rule 138: Information to be furnished prior to commencement of movement of goods and generation of e-way bill.- (1) Every registered person who causes movement of goods of consignment value exceeding Rs.50000/-,-

(i) in relation to a supply; or

(ii) for reasons other than supply; or

(iii) due to inward supply from an unregistered person, shall, before commencement of such movement, furnish information relating to the said goods in Part A of FORM GST EWB-01, electronically, on the common portal.

(2) Where the goods are transported by the registered person as a consignor or the recipient of supply as the consignee, whether in his own conveyance or a hired one or by railways or by air or by vessel, the said person or the recipient may generate the e-way bill in FORM GST EWB-01 electronically on the common portal after furnishing information in Part B of FORM GST EWB-01.

(3) Where the e-way bill is not generated under sub-rule (2) and the goods are handed over to a transporter for transportation by road, the registered person shall furnish the information relating to the transporter in Part B of FORM GST EWB-01 on the common portal and the e-way bill shall be generated by the transporter on the said portal on the basis of the information furnished by the registered person in Part A of FORM GST EWB-01:

Explanation 1:…….

Explanation 2.-The information in Part A of FORM GST EWB-01 shall be furnished by the consignor or the recipient of the supply as consignee where the goods are transported by railways or by air or by vessel.

(4) Upon generation of the e-way bill on the common portal, a unique e-way bill number (EBN) shall be made available to the supplier, the recipient and the transporter on the common portal.

(9) Where an e-way bill has been generated under this rule, but goods are either not transported or are not transported as per the details furnished in the e-way bill, the e-way bill may be cancelled electronically on the common portal, either directly or through a Facilitation Centre notified by the Commissioner, within 24 hours of generation of the e-way bill:

(14) Notwithstanding anything contained in this rule, no e-way bill is required to be

Generated-

(c) where the goods are being transported from the port, airport, air cargo complex and land customs station to an inland container depot or a container freight station for clearance by Customs;

Confusion-67:  From the language of the provision, it is not clear whether Sub-rule (1) and (2) alternative or simultaneous provision?

Confusion-68: For Rule 138(1), item A.7- Reason for Transportation, from Note-4 of the said EWB-01, it appears that any one of reason/factors numbered as 0-9 should be mentioned. What if, more than one reason/factors are applicable? Say, registered sending goods upto the Port for supply as export in CKD/SKD position to abroad for Exhibition or fairs purpose?

Confusion-69: Where Rule 138(2) is for Registered Person either as consignor or consignee, it is covered under 'the said person' and 'or the recipient' appears as extraneous.

Confusion-70: Rule 138(2) is applicable where goods are transported by the registered person means undertaking transportation on his own then how this proviso covers transportation by railways or by air or by vessel for which it can't be said that goods transported by the registered person.

Confusion-71: How vehicle number in Part-B of EWB-01, be mentioned for transportation by railways or by air or by vessel?

Confusion-72: What is meaning of provision 'the recipient may generate the e-way bill in FORM GST EWB-01 electronically on the common portal after furnishing information in Part B of FORM GST EWB-01' where Part B of FORM GST EWB-01 itself is part of FORM GST EWB-01 itself?

Confusion-73: Rule 138(3) refers that Registered person shall furnish information relating to the transporter in Part B of FORM GST EWB-01 and on the basis of information by the registered person in Part A of FORM GST EWB-01, the e-way bill shall be generated by the transporter. What does it means? For the same transportation both i.e. Registered person and transporter have to generate EWB-01?

Confusion-74: Explanation-2 to Rule 138(3) indicate that the same is applicable where the goods are transported by railways or by air or by vessel. So not applicable if transportation by Transporter? If so, the same should have been referred in Rule 138(3) and why by Explanation?

Confusion-75: On reading of Rule 138(4) and confusion as mentioned at Sl. No. (vii) for Rule 138(3), it is not sure provision of 138(4) relates to which e-way bill i.e. generated by registered person or by transporter or to both?

Confusion-76: In Rule 138(9), phrase 'goods are either not transported or are not transported as per the details furnished in the e-way bill' contain portion 'not transported or are not transported' may confused.  So for more clarity, it should be like ''goods are either not transported or transported but not as per the details furnished in the e-way bill''

Confusion-77: Rule 138(14)( c) is for transported from the port, airport, air cargo complex and land customs station to an ICD or a CFS for clearance by Customs, hence it appears it is applicable for import only and not applicable vice-versa i.e. for applicable for import only and not for export from ICD/CFS. Is it correct?

• Issue/Rule: Rule 139(5): The officer seizing the goods, documents, books or things shall prepare an inventory of such goods or documents or books or things containing, inter alia, description, quantity or unit, make, mark or model, where applicable, and get it signed by the person from whom such goods or documents or books or things are seized.

Confusion-78: In this provision, in preparation of an inventory, value is not mentioned which is essential. 

• Issue/Rule: Rule 32(7): The value of taxable services provided by such class of service providers as may be notified by the Government, on the recommendations of the Council, as referred to in paragraph-2 of Schedule-I of the said Act between distinct persons as referred to in Section 25, where ITC is available, shall be deemed to be NIL.

Confusion-79: Logic not understood

The author can also be reached at  mkgandhicustom@gmail.com


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Category GST, Other Articles by - Manish K.Gandhi 



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