Recent updates and notifications in GST

Clarify restrictions in availment of input tax credit in terms of Rule 36(4)[i]

Rule 36 relates to Documentary Requirements and Conditions for claiming Input Tax Credit

In which new sub rule (4) was inserted which says "ITC to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the supplier, shall not exceed 20 per cent of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the supplier"[ii]

As this being a new provision, the restriction is not imposed through the common portal and it is the responsibility of the taxpayer that credit is availed in terms of the said rule and therefore, the availment of restricted credit in terms of Rule 36(4) of CGST Rules shall be done on self-assessment basis by the tax payers.

Various issues relating to implementation of said-rule have been examined and clarification is given:

1. What are the invoices/ debit notes on which the restriction under rule 36(4) of the CGST Rules shall apply?

The restriction of 36(4) will be applicable only on the invoices / debit notes on which credit is availed after 09.10.2019, details of which are required to be uploaded by the suppliers and which have not been uploaded.

Therefore, taxpayers may avail full ITC in respect of IGST paid on import, documents issued under RCM, credit received from ISD etc.

2. Whether the said restriction is to be calculated supplier wise or on consolidated basis?

The credit available under Rule 36(4) is linked to total eligible credit from all suppliers against all supplies whose details have been uploaded by the suppliers.

Further, the calculation would be based on only those invoices which are otherwise eligible for ITC.

Accordingly, those invoices on which ITC is not available under any of the provision would not be considered for calculating 20 percent of the eligible credit available.

3. FORM GSTR-2A being a dynamic document, what would be the amount of input tax credit that is admissible to the taxpayers for a particular tax period in respect of invoices/ debit notes whose details have not been uploaded by the suppliers?

The amount is eligible under Rule 36(4) if the supplier has uploaded FORM GSTR-1 as on the due date of filing of the returns for the said tax period.

The taxpayer may have to ascertain the same from his auto populated FORM GSTR 2A as available on the due date of filing of FORM GSTR-1

4. How much ITC a registered tax payer can avail in his FORM GSTR-3B in a month in case the details of some of the invoices have not been uploaded by the suppliers under subsection (1) of section 37.

The above question is explained with the help of Illustration:

A taxpayer "R" receives 100 invoices (for inward supply of goods or services) involving ITC of Rs. 10 lakhs, from various suppliers during the month of Oct, 2019 and has to claim ITC in his FORM GSTR-3B of October, to be filed by 20th Nov, 2019.

Case-I

Suppliers have furnished in FORM GSTR-1 80 Invoices involving ITC of Rs. 6 lakhs as on the due date of furnishing the details of Outward supplies by the suppliers.

Therefore, 20% eligible credit of the invoices uploaded i.e. 6 lakhs * 20%= 1.2 lakhs

Eligible ITC to be taken in FORM GSTR-3B to be filled on 20th Nov,2019 will be Rs. 6 Lakhs(eligible) and 1.2 lakhs (as per Rule 36(4))

Total = 7.2 lakhs

Case-II

Suppliers have furnished in FORM GSTR-1 80 invoice involving ITC of Rs. 7 lakhs as on the due date of furnishing of the details of outward supplies by the suppliers.

Therefore, 20% eligible credit of the invoices uploaded i.e. 7 lakhs * 20%= 1.4 lakhs

Eligible ITC to be taken in FORM GSTR-3B to be filled on 20th Nov,2019 will be Rs. 7 Lakhs(eligible) and 1.4 lakhs (as per Rule 36(4))

Total = 8.4 lakhs

Case-III

Suppliers have furnished in FORM GSTR-1 75 invoice involving ITC of Rs. 8.5 lakhs as on the due date of furnishing of the details of outward supplies by the suppliers.

Therefore, 20% eligible credit of the invoices uploaded i.e. 8.5 lakhs * 20%= 1.7 lakhs

Eligible ITC to be taken in FORM GSTR-3B to be filled on 20th Nov,2019 will be Rs. 8.5 Lakhs(eligible) and 1.5 lakhs (as per Rule 36(4))

Total = 10 lakhs

The additional amount of ITC availed should not exceed the Total Eligible ITC

5. When can balance ITC be claimed in case availment of ITC is restricted as per the provisions of rule 36(4)?

The balance ITC may be claimed by the taxpayer in any of the succeeding months provided details of requisite invoices are uploaded by the suppliers.

He can claim proportionate ITC as and when details of some invoices are uploaded by the suppliers provided that credit on invoices, the details of which are not uploaded remains under 20 per cent of the eligible input tax credit, the details of which are uploaded by the suppliers. Full ITC of balance amount may be availed.

"R", in case total ITC pertaining to invoices the details of which have been uploaded reaches Rs. 8.3 lakhs

Taxpayer may avail full ITC in respect of a tax period, as and when the invoices are uploaded by the suppliers to the extent Eligible ITC

Case-I

Considering Case-I of Sr no iv. "R" may avail balance ITC of Rs. 2.8 lakhs in case suppliers upload details of some of the invoices for the tax period involving ITC of Rs. 2.3 lakhs out of invoices involving ITC of Rs. 4 lakhs details of which had not been uploaded by the suppliers. [Rs. 6 lakhs + Rs. 2.3 lakhs = Rs. 8.3 lakhs]

Case-II

Considering Case-II of Sr no iv. "R" may avail balance ITC of Rs. 1.6 lakhs in case suppliers upload details of some of the invoices involving ITC of Rs. 1.3 lakhs out of outstanding invoices involving Rs. 3 lakhs. [Rs. 7 lakhs + Rs. 1.3 lakhs = Rs. 8.3 lakhs]

Clarification regarding optional filing of annual return[iii]

As per Rule for filing annual return for every Registered person and Composition Tax payer other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person shall furnish an annual return in FORM GSTR-9/FORM GSTR-9A.

However, notification was been issued which made it optional to furnish the annual return for FY 2017-18 and 2018-19 for those registered persons whose aggregate turnover in a financial year does not exceed two crore rupees. Accordingly, it is clarified that the tax payers, may, at their own option file FORM GSTR-9 for the said financial years before the due date.[iv]

Central Goods and Services Tax (Seventh Amendment) Rules, 2019[v]

In FORM GST RFD-01

In Annexure 1, Following statements have been substituted namely:

1. Statement 1A: ITC accumulated due to inverted tax structure
2. Statement 2: Export of services with payment of tax
3. Statement 3: Export without payment of tax
4. Statement 4: On account of supplies made to SEZ unit or SEZ Developer
5. In Statement 4 new table inserted Statement 4A: Refund by SEZ on account of supplies received from DTA – With payment of tax
6. Statement 5: On account of supplies made to SEZ unit or SEZ Developer
7. Statement 5B: On account of deemed exports claimed by supplier and on account of deemed exports claimed by recipient
7.  
8. Statement 6: On account of change in POS (inter-state to intra-state and vice versa)

In FORM GSTR-9

Amendment made in Table

1. In Point III Details of ITC in Table 8: Other ITC related information against serial no 8C, in Column 2 "For FY 2017-18" shall be inserted before the letters and words "ITC on inward supplies"
2. And after words and figures, "April 2018 to March 2019", the following entry shall be inserted, namely: -

"For FY 2018-19, ITC on inward supplies (other than imports and inward supplies liable to reverse charge but includes services received from SEZs) received during 2018-19 but availed during April 2019 to September 2019"

3. In Point V heading before the words "Particulars of the transactions", the word, letters and figures "For FY 2017-18" shall be inserted.
4. And after the heading ending with the words and figures "April 2018 till March 2019", the following entry shall be inserted, namely: -

"For FY 2018-19, Particulars of the transactions for the FY 2018-19 declared in returns between April 2019 till September 2019"

Amendment made in Instructions

1. Para 2 "It is mandatory to file all FORM GSTR-1 and FORM GSTR-3B for the financial year for which the return is being filed for before filing this return and for FY 2017-18"
2. Para 3 "For FY 2017-18 It may be noted that additional liability for the FY 2017-18 or F.Y 2018-19 not declared in FORM GSTR-1 and FORM GSTR-3B may be declared in this return. However, taxpayers cannot claim input tax credit".
3. Para 4 Table no. 4I, 4J, 4K & 4L "For F.Y 2017-18 and F.Y 2018-19 the registered person shall have an option to fill details of B2B supplies, Exports, Supplies to SEZ, and Deemed exports on net basis i.e. to net of all credit notes, debit notes or any net amendment in case there is any difficulty in reporting such details separately in this table.
4. Para 4 Table no. 5D, 5E & 5F "For FY 2017-18 and 2018-19, the registered person shall have an option to either separately report his supplies as exempted, nil rated and Non-GST supply or report consolidated information for all these three heads in the "exempted" row only."
5. Para 4 Table no. 5H, 5I, 5J & 5K "For F.Y 2017-18 and F.Y 2018-19 the registered person shall have an option to fill details of Value of exports (except supplies to SEZ), value of supplies to SEZs, Value of Supply on RCM basis, value of exempted, Nil Rated or Non-GST supplies on net basis i.e. to net of all credit notes, debit notes or any net amendment in case there is any difficulty in reporting such details separately in this table."
6. Para 5 Table no. 6B, 6C, 6D & 6E "For F.Y 2017-18 and F.Y 2018-19 the registered person shall have an option to fill details of Input tax credit on all inward supplies expect paid on RCM basis, input tax credit availed on supplies received from Unregistered supplier or input tax credit on import of goods including supply of goods received from SEZs in one row only i.e. "Inputs". No breakup of input tax credit as inputs, capital goods and input services are to be reported.
7. Para 5 Table no. 7A, 7B, 7C, 7D, 7E, 7F, 7G & 7H "For FY 2017-18 and 2018-19, the registered person shall have an option to either fill his information on reversals separately in Table 7A to 7E or report the entire amount of reversal under Table 7H only. However, reversals on account of TRAN-1 credit (Table 7F) and TRAN-2 (Table 7G) are to be mandatorily reported."
8. Para 5 Table no. 8A, 8B, 8C & 8D " The total credit available for inwards supplies pertaining the financial year for which the return is being for and reflected in FORM GSTR-2A shall be auto-populated in this table and For FY 2018-19, It may be noted that the FORM GSTR-2A generated as on the 1st November, 2019 shall be auto-populated in this table. For FY 2017-18 and 2018-19, the registered person shall have an option to upload the details for the entries in Table 8A to 8D duly signed, in PDF format in FORM GSTR-9C (without the CA certification).
9. Para 7 "For F.Y 2017-18 Part V consists of particulars of transactions for the previous financial year but paid in the FORM GSTR-3B of April to September of current FY or date of filing of Annual Return for previous financial year and For FY 2018-19, Part V consists of particulars of transactions for the previous financial year but paid in the FORM GSTR-3B between April 2019 to September 2019."
10. Para 7 Table no. 12 "For FY 2018-19, Aggregate value of reversal of ITC which was availed in the previous financial year but reversed in returns filed for the months of April 2019 to September 2019 shall be declared here. Table 4(B) of FORM GSTR-3B may be used for filling up these details. For FY 2017-18 and 2018-19, the registered person shall have an option to not fill this table.
11. Para 7 Table no. 13 "For FY 2018-19, Details of ITC for goods or services received in the previous financial year but ITC for the same was availed in returns filed for the months of April 2019 to September 2019 shall be declared here. Table 4(A) of FORM GSTR-3B may be used for filling up these details. However, any ITC which was reversed in the FY 2018-19 as per second proviso to subsection (2) of section 16 but was reclaimed in FY 2019-20, the details of such ITC reclaimed shall be furnished in the annual return for FY 2019-20. For FY 2017-18 and 2018-19, the registered person shall have an option to not fill this table."
12. Para 8 "For FY 2017-18 and 2018-19, the registered person shall have an option to not fill any table under this para."

In FORM GSTR-9C

Amendment made in Instructions

1. Para 2 "It is mandatory to file all your FORM GSTR-1, FORM GSTR-3B and FORM GSTR - 9 for Current Financial year before filing this return."
2. Para 4 "For FY 2017-18 and 2018-19, the registered person shall have an option to not fill any table under this para. However, If there are any adjustments required to be reported then the same may be reported in Table 5O (Any difference between the turnover reported in the Annual Return (GSTR9) and turnover reported in the audited Annual Financial Statement due to reasons not listed above shall be declared here)
3. Para 6 Table no. 12B, 12C & 14 "For FY 2017-18 and 2018-19, the registered person shall have an option to not fill this Table."
4. Part B of FORM GSTR-9C is been substituted i.e. CERTIFICATION which has to be referred from the said notification.

Extended due date for furnishing of returns for Registered persons in Jammu & Kashmir[vi]

Fully electronic refund process through FORM GST RFD-01 and single disbursement[vii]

The necessary capabilities for making the refund procedure fully electronic, in which all steps of submission and processing shall be undertaken electronically, have been deployed on the common portal with effect from 26.09.2019.

The Circulars issued earlier need to be suitably modified and a fresh set of guidelines needs to be issued for electronic submission and processing of refund claims.

However, the provisions of the said Circulars shall continue to apply for all refund applications filed on the common portal before 26.09.2019 and the said applications shall continue to be processed manually as prior to deployment of new system.

1. With effect from 26.09.2019, the applications for the following types of refunds shall be filed in FORM GST RFD 01 on the common portal and the same shall be processed electronically:

• unutilized input tax credit (ITC) on account of exports without payment of tax
• tax paid on export of services with payment of tax
• unutilized ITC on account of supplies made to SEZ Unit/SEZ Developer without payment of tax
• tax paid on supplies made to SEZ Unit/SEZ Developer with payment of tax
• unutilized ITC on account of accumulation due to inverted tax structure;
• supplier of tax paid on deemed export supplies;
• recipient of tax paid on deemed export supplies;
• excess balance in the electronic cash ledger;
• excess payment of tax;
• tax paid on intra-State supply which is subsequently held to be inter-State supply and vice versa;

1. account of assessment/provisional assessment/appeal/any other order;
2. "any other" ground or reason.

2. Following modalities shall be followed for all refund applications filed in FORM GST RFD-01 on the common portal with effect from 26.09.2019:

1. FORM GST RFD-01 shall be filled on the common portal by an applicant seeking refund under any of the categories mentioned above. A comprehensive list so required for Refund application is given Annexure A of the Circular.
2. The Application Reference Number (ARN) will be generated only after the applicant has completed the process of filing the refund application in FORM GST RFD-01.
3. As soon as the ARN is generated, the refund application along with all the supporting documents shall be transferred electronically to the jurisdictional proper officer who shall be able to view it on the system. Accordingly, within 15 days the acknowledgement for the complete application (FORM GST RFD-02) or deficiency memo (FORM GST RFD-03), as the case may be, would be issued electronically by the jurisdictional tax officer based on the documents so received from the common portal.
4. If a refund application is electronically transmitted to the wrong jurisdictional officer, he/she shall reassign it to the correct jurisdictional officer electronically as soon as possible within 3 working days from the day ARN was generated.

3. It has also been clarified that any refund claim for a tax period may be filed only after furnishing all the returns in FORM GSTR-1 and FORM GSTR-3B which were due to be furnished on or before the date on which the refund application is being filed.

4. It has also been clarified that the applicants applying for refund must give an undertaking that should be submitted electronically to the effect that the amount of refund sanctioned would be paid back to the Government with interest in case it is found subsequently that the requirements of clause (c) of sub-section (2) of section 16 read with sub-section (2) of section 42 of the CGST Act have not been complied with in respect of the amount refunded. This undertaking should be submitted electronically along with the refund claim.

5. The applicant, at his option, may file a refund claim for a tax period or by clubbing successive tax periods. The period for which refund claim has been filed, however, cannot spread across different financial years.

6. Refund claims under categories listed at (a), (c) and (e) in para A above pertaining to unutilized credits must be filed by the applicant chronologically. This means that an applicant, after submitting a refund application under any of these categories for a certain period, shall not be subsequently allowed to file a refund claim under the same category for any previous period. This principle / limitation, however, shall not apply in cases where a fresh application is being filed pursuant to a deficiency memo having been issued earlier.

7. It is further clarified that once an application has been submitted afresh, pursuant to a deficiency memo, the proper officer will not serve another deficiency memo with respect to the application for the same period, unless the deficiencies pointed out in the original deficiency memo remain un-rectified, either wholly or partly, or any other substantive deficiency is noticed subsequently. The same shall shall also have to be submitted within 2 years of the relevant date, as defined in the explanation after sub-section (14) of section 54 of the CGST Act.

8. It is clarified that in such cases, the proper officer shall refund on a provisional basis ninety percent of the refundable amount of the claim (amount of refund claims less the inadmissible portion of refund so found) in accordance with the provisions of rule 91 of the CGST Rules. Final sanction of refund shall be made in accordance with the provisions of rule 92 of the CGST Rules.

(For any further details please check the said Circular or Notification mentioned in endnote)

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

[i] Circular no. 123/2019- CGST dt: 11/11/2019
[ii] Notification 49/2019- CGST dt: 09/10/2019
[iii] Circular no. 124/2019-CGST dt: 18/11/2019
[iv] Notification 47/2019-CGST dt: 09/10/2019
[v] Notification 56/2019- CGST dt: 14/11/2019
[vi] Notification 52/2019,53/2019, 54/2019, 55/2019 dt: 14/11/2019
[vii] Circular no. 125/2019-CGST dt: 18/11/2019