1. Mandatory matching of GSTR2A/GSTR2B for availing of ITC (Section 16(2)(aa))
ITC claims will now only be allowed when the details of such invoice or debit note have been furnished by the supplier in his GSTR-1 and subsequently, it appears in GSTR-2A/2B. Section 16(2) of the Act is being amended to insert Clause (aa) according to which a taxpayer is eligible to claim ITC only if it is communicated to him in GSTR 2A / 2B. The taxpayers are barred and can no longer claim 5% provisional ITC under the CGST Rule 36(4) and ensure every ITC value claimed was reflected in GSTR-2A/2B.
2. Power to call for information (Section 150 and 151)
The Jurisdictional Commissioner is now empowered to call for Information from any Person in connection with this Act by virtue of the amendment of section 150 and 151. Initially, the Commissioner could ask for Information only through the issue of Notification which has now been amended and the Jurisdictional Commissioner can call for Information from any Person in connection with this Act, within such time, in such form, and in such manner, as may be specified therein directly without the issuance of any notification. Provided that the information so received be used in further proceedings only after giving the concerned person an opportunity of being heard.
3. The detention, seizure, and confiscation of goods has also been subject to amendment (Section 73/74 and Section 129/130)
The demand made under section 73/74 has been separated from the demand made under Section 129 & 130 which relates to detention, seizure, and confiscation of goods. Initially, Section 74 stated that where the proceedings against the main person have been concluded under section 73 / 74, the proceedings against all such persons liable to pay penalty under sections 122, 125, 129, and 130 would have been deemed to be concluded. But post amendment Section 129 & Sec.130 has been removed and only proceedings under 122 & 125 would be deemed to be concluded thus resulting in proceedings of the detention, seizure & confiscation of goods and conveyances in transit (Sec.129&130) separate from the demand and recovery proceedings u/s 73& 74. Further, there have been changes in the implications of penalty in case of detention of goods which are as follows;
Where the owner of the goods comes forward for payment
- Up to 31.12.2021 – For Taxable Goods: Tax – 100% of Tax, Penalty – 100% of Tax
- Up to 31.12.2021 – For Exempted Goods: 2% of the value of goods or Rs. 25,000, Less
- w.e.f 01.01.2022- For Taxable Goods: Penalty – 200% of Tax
- w.e.f 01.01.2022- For Exempted Goods: 2% of the value of goods or Rs. 25,000, Less (No changes)
Where the owner of the goods does not come forward for payment
- Up to 31.12.2021 – For Taxable Goods: Penalty – 50% of the value of Goods – Tax paid
- Up to 31.12.2021 – For Exempted Goods: 5% of the value of goods or Rs. 25,000, Less
- w.e.f 01.01.2022- For Taxable Goods: Penalty – 50% of the value of Goods or 200% of Tax, Higher
- w.e.f 01.01.2022- For Exempted Goods: 5% of the value of goods or Rs. 25,000, Less
4. If GSTR3B has not been filed the department now has the power for recovery of tax (Section 75(12))
Section 75(12) is inserted by which the department shall have the power to recover tax where a taxpayer has furnished GSTR 1 but has failed to file its GSTR 3B. Initially, the Government could initiate Demand/ Recovery Proceedings only if liability was furnished in GSTR 3B. This gave rise to the difficulty which has now been removed by insertion of Section 75(12) and any liability as furnished in GSTR 1 and not paid through GSTR 3B is liable to be recovered.
5. Supply to members now to be a part of Scope of supply (Section 7(1)(aa))
An additional new clause (aa) in sub-section (1) of Section 7 of the CGST Act which is being inserted, retrospectively with effect from the 1st July 2017, so as to ensure levy of tax on activities or transactions involving supply of goods or services by any person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration. For the purposes of this clause, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force the person and its members or constituents shall be deemed to be two separate persons, and the supply of activities or transactions inter shall be deemed to take place from one such person to another.
6. Property and Bank Accounts took as an attachment (section 83, section 115, and section 122 (1A))
In case of pendency of any demand under specified sections, the provision of section 83 currently allows attachment of property, including bank accounts of taxpayers. By virtue of amendment attachment of property including bank accounts shall now be allowed even on initiation of any proceedings and in accordance with section 122(1A) the beneficiary property and bank accounts can also be taken as attachments.
7. Aadhar authentication made mandatory (New Rule 10B inserted)
Aadhar authentication is mandatory for being eligible for filing refund claims and application for revocation of cancellation of registration under GST is mandatory w.e.f. January 01, 2022.
8. Nonfiling of GSTR3B will restrict the filing of GSTR1 (Rule 59(6))
The Central Board of Indirect Taxes & Customs had issued an update dated January 3, 2022, regarding the Implementation of Rule-59(6), as amended, on the GST Portal.
As per Notification No. 35/2021 – Central Tax dated September 24, 2021, clause (a) of the sub-rule (6) of Rule 59 of CGST Rules, 2017 was amended. By way of this amendment, for the words “for preceding two months”, the words “for the preceding month” were substituted with effect from January 1, 2022. This means that from January 1, 2022, onwards, if a monthly filer has not filed the GSTR-3B for the preceding month, then such taxpayer will not be allowed to file the GSTR-1 for the subsequent month, till the GSTR-3B for the preceding month is filed.
This automated functionality will be implemented on the GST Portal shortly, after which the system will check the filing of preceding GSTR-3B before permitting to file GSTR-1 for the subsequent month.
9. Changes in GST impacting On E-Commerce Operators.
On September 17, it was decided at the Goods and Services Tax Council meeting that e-commerce operators be made liable to pay tax on services provided through them namely transport of passengers, by any type of motor vehicles- restaurant services provided, with some exceptions. This will become effective January 1, 2022, said a statement issued by the Finance Ministry after the GST Council meeting.
You might already be aware that the government has given a directive via issued NN. 17/2021- Central Tax (Rate) dated 18th November 2021 wherein E-commerce platforms (“ECO”) like Zomato, Swiggy are liable to pay tax on the restaurant services effective 1st January 2022. The liability to pay taxes on the non-restaurant services as per this directive still lies with the restaurants themselves.
Further Circular No. 167/23/2021-GST dated 17.11.2021 issued for clarification regarding modalities of compliance to the GST laws in respect of the supply of restaurant service through ECO.
ECO is now made liable to pay GST on “restaurant services” provided through the e-commerce platform.
This change is not applicable for restaurant services provided from a premise with a declared tariff of Rs. 7,500/- or above per day.
Swiggy, Zomato qualifies, etc is qualify as an “e-commerce operator” under Section 2(45) of CGST Act, 2017.
10. Recovery of Self-assessment tax without Opportunity of Difference between GSTR-1 and GSTR-3B
Section 75 (12) states that “Notwithstanding anything contained in section 73 or section 74, where any amount of self-assessed tax in accordance with a return furnished under section 39 remains unpaid, either wholly or partly, or any amount of interest payable on such tax remains unpaid, the same shall be recovered under the provisions of section 79.”
Explanation For the purposes of this subsection, the expression “self-assessed tax” shall include the tax payable in respect of details of outward supplies furnished under section 37 but not included in the return furnished under section 39.
Earlier, Self-assessed taxes were to be determined on the basis of liabilities declared in Section 39.
In pursuance of the above, the tax payable in respect of invoices reported in GSTR-1 but not covered in GSTR 3B could not be recovered because it could not be considered as a self-assessed tax.
With this amendment, the Difference between GSTR-3B and GSTR-1 may be recovered u/s 79 without any SCN u/s 74/75.
11. Blocking of GSTR-1 for non-filing of GSTR 3B.
> NN 35/2021-Central Tax amended rule 59 of the CGST Rules, 2017 to provide that a registered person shall not be allowed to furnish form GSTR-1 if has not furnished the return in Form GSTR-3B for the preceding month.
> It means w.e.f. 1st January 2022, the GSTR-1 return filing facility will be blocked if you have not submitted the return in FORM GSTR-3B for the preceding month.
> For example, if a taxpayer has not filed GSTR-3B for November 2021, the GSTR-1 filing facility will be blocked from the 1st of January 2022.
12. Amendments in Sec. 129 & 130 of CGST Act, 2017
> Section 129(1) – 200% Penalty is required to be paid to release the goods which are seized for violation of E-way Bill provisions.
> Section 129(2) – Omitted à The goods so seized under sub-section shall be released, on a provisional basis, upon execution of a bond and furnishing of security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest, and penalty payable, as the case may be.
> Section 129(3) – Specified period of issuance of notice (7 days) and passing of order(7 days) under Section 129(3) of the CGST Act, 2017.
> No penalty shall be determined without giving the opportunity of hearing as per amended Section 129(4) of the CGST Act, 2017.
> Specified time limit for selling/ disposing of seized goods or conveyance under Section 129(6) of the CGST Act, 2017