GST updates on ITC credit and revocation of order of cancellation of registration

Rohit Kumar Singh  on 25 April 2019


Update Category: Manner of Utilisation of GST ITC and Process for revocation of order for cancellation of registration
Update Source: CBIC Portal - Notification and Orders
Release No.: TM/GST/030 dated 24th April 2019\

CBIC has recently issued few notifications under CGST and IGST as well as has issued few Circulars clarifying some issues. We bring to you the summary of such notifications -


S. No

Provisions

Notification/Circular No

Applicable Provisions of GST

A

Clarification in respect of utilization of ITC under GST

Circular No 98/17/2019-GST dated 23rd April, 2019

Sec 49A and Sec 49B

B

Amendment to provisions of Revocation of Cancellation of Registration

Notf. 20/2019 - Central Tax dated 23rd April, 2019

Rule 23 of CGST Rules, 2017

C

Clarification regarding filing of application for revocation of cancellation of registration

Circular No 99/18/2019-GST dated 23rd April, 2019

Rule 23 of CGST Rules, 2017 & Notf. 20/2019 - CT dated 23rd April 2019


Let us analyze the provisions of the notification and circular issued in a summarized manner.

A. Clarification in respect of utilization of ITC under GST - Circular No 98/17/2019 - GST dated 23rd April, 2019

Section 49 was amended and Section 49A and Section 49B were inserted vide CGST Tax (Amendment) Act, 2018 with effect from 1st February 2019.

Based on the representations received from the trade and industry regarding challenges being faced by taxpayers due to bringing into force of section 49A of the CGST Act, 2017, that this is resulting in accumulation of input tax credit for one kind of tax (say State tax) in electronic credit ledger and discharge of liability for the other kind of tax (say Central tax) through electronic cash ledger in certain scenarios.


ITC Balance

Utilized for Set off against liability of

Remarks

IGST

IGST

CGST

SGST

UTGST

After utilization towards payment of IGST only, balance can be used for set off of liability for CGST or SGST or UTGST (in any manner)

CGST

IGST

CGST

NA

NA

Cannot be used against SGST/UTGST

SGST

IGST

NA

SGST

NA

Cannot be used against CGST/UTGST

UTGST

IGST

NA

NA

UTGST

Cannot be used against CGST/SGST


Note - Utilization of CGST/SGST/UTGST shall be allowed only when ITC for IGST has been first utilized in full.

Rule 88A was inserted in the CGST Rules, 2017 vide notification No. 16/2019- Central Tax, dated 29th March, 2019.

Rule 88A in the CGST Rules allows utilization of input tax credit of Integrated tax towards the payment of Central tax and State tax, or as the case may be, Union territory tax, in any order subject to the condition that the entire input tax credit on account of Integrated tax is completely exhausted first before the input tax credit on account of Central tax or State / Union territory tax can be utilized.

Example -

Amount of ITC available and Output Tax Liability under different tax heads -


Head

Output Liability

Input Tax Credit

Integrated Tax

1000

1300

Central tax

300

200

State/ Union Territory Tax

300

200

Total

1600

1700


Option - I


ITC on account of

Discharge of Output liability on account of

Balance of ITC

Remarks

Integrated Tax

Central Tax

State/ Union Territory Tax

Integrated Tax

1000

200

100

0

ITC on account of IGST has been exhausted completely

Central Tax

0

100

-

100

Cannot be used against SGST/UTGST

State/ UT Tax

0

-

200

0

Cannot be used against CGST/SGST

Total

1000

300

300

100


Option - 2


ITC on account of

Discharge of Output liability on account of

Balance of ITC

Remarks

Integrated Tax

Central Tax

State/ Union Territory Tax

Integrated Tax

1000

100

200

0

ITC on account of IGST has been exhausted completely

Central Tax

0

200

-

0

Cannot be used against SGST/UTGST

State/ UT Tax

0

-

100

100

Cannot be used against CGST/SGST

Total

1000

300

300

100


Presently, the GSTN common portal supports the order of utilization of input tax credit in accordance with the provisions before implementation of the provisions of the CGST (Amendment) Act i.e. pre-insertion of Section 49A and Section 49B of the CGST Act.

Till the new order of utilization as per newly inserted Rule 88A of the CGST Rules is implemented on the GSTN common portal, taxpayers may continue to utilize their input tax credit as per the functionality available on the GSTN common portal

Link to download the Circular:

http://www.cbic.gov.in/resources//htdocs-cbec/gst/Circular-98-17-2019-GST.pdf;jsessionid=5C86BF5CACA8F48A3CB8EF250F9661C5

B. Amendment to provisions of Revocation of Cancellation of Registration - Notification No 20/2019 - Central tax and Circular No 99/18/2019 dated 23rd April 2019

Provisions of Rule 23 of the CGST Rules, 2017 provides for procedure for Revocation of Cancellation of registration. It lays down the procedural guidelines to be followed in this case. However, the provisions did not provide for any timeline for filing of returns before filing application for revocation of cancellation.

The proposed amendment in Rule 23 of the CGST Rules, 2017 provides as under  -

  1. The person whose registration has been cancelled shall file all returns due, within a period of thirty days from the date of order of revocation of cancellation of registration, for the period from the date of the order of cancellation of registration till the date of the order of revocation of cancellation of registration.  
  1. The person whose registration has been cancelled from retrospective date, he shall file all returns due (from the period of effective date of registration), within a period of thirty days from the date of order of revocation of cancellation of registration, for the period from the effective date of cancellation of registration till the date of the order of revocation of cancellation of registration.

Link to download the Circular:

http://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-20-central-tax-english-2019.pdf;jsessionid=C64F80F8281ADBDA00B885BA87919EE7

C. Removal of Difficulty Order for revocation of order for cancellation - Circular No 99/18/2019 - GST dated 23rd April, 2019

  1. section 29 of the CGST Act empowers the officer to cancel the registration (including from a retrospective date). Thus registration may have been cancelled either from the date of order of cancellation of registration or from a retrospective date due to non-furnishing of return in Form GSTR 3B (Regular tax Payers) or Form GSTR 4  (For composition tax payers).
  2. As per provisions Rule 23 of the CGST Rules, 2019, the person whose registration is cancelled has to apply for revocation of registration of cancellation within 30 days of such cancellation. Large number of people could not apply for revocation within 30 days.
  3. An one time opportunity is provided to all such cases where order for cancellation has been passed up to 31st March, 2019, may apply for revocation on or before 22nd July 2019.

Link to download the Circular:

http://www.cbic.gov.in/resources//htdocs-cbec/gst/Circular-99-18-2019-GST.pdf;jsessionid=020DFCE9E38B038E8D5A14570BCD8E32

Note: This is for information only. For exact details of changes, the notification/Circular may please be referred to, as and when they are issued


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