CBIC issues Notifications and Circulars pursuant to 47th GST Council Meeting

This Tax Alert summarizes recent Notifications and Circulars issued by Central Board of Indirect Tax and Customs (CBIC) pursuant to recommendations made by the Goods and Services Tax (GST) Council in their 47th Meeting.

The key changes are:

• Declaration is to be provided on invoice where taxpayers are exempted from issuing e-invoice. 
  
• Manner of calculating interest on delayed payment of tax and reversal of wrongly availed and utilized input tax credit (ITC) under various scenarios have been prescribed.
  
• Manner of disclosure of ITC in GSTR-3B have been clarified. Further, the consequential changes have been made in the said return.
  
• Clarification provided with respect to demand and penal provisions for transactions involving fake invoices. 
  
• It is clarified that refund in case of inverted tax structure will be eligible for supplies under concessional rate notification.
  
• Clarification provided on applicability of GST on employee perquisites. Procedure for re-credit of ITC on account of repayment of erroneous refund has also been prescribed. 
  
• Supplies by Duty Free shops (DFS) to be treated on par with exports and accordingly, earlier rules and consequential circular have been withdrawn.
  

Comments

• Compliance by way of declaration regarding non-issuance of e-invoice made effective from 5 July 2022 is likely to put taxpayers to inconvenience as it would require necessary changes in their IT system/ business processes.
  
  Further, the applicability of declaration in few scenarios, for instance, in case of debit/ credit notes and B2C invoices, requires more clarity.
  
  
• Considering the requirement of disclosing in GSTR-3B, the ineligible ITC pertaining to intra-state supply where place of supply is different from that of location of recipient, taxpayers may have to evaluate the eligibility of credit in respect of inter-state supplies in similar situation. 
  
  
• Re-credit mechanism prescribed for erroneous refund under various situations is a welcome move.
  
  However, clarification is required on the re-credit mechanism in case of repayment of refunds owing to non-receipt of foreign exchange within prescribed timelines in terms of Rule 96B.
  
  
• Section 54(3) does not prohibit claiming refund of unutilized ITC in case of inverted tax structure where the rate of tax on inputs and outward supplies are different at different points in time. This view has been endorsed earlier by Calcutta High Court. However, the Circular appears to restrict such refunds.  
  
  
• Clarification on taxability of perquisites provided by employer to employee appears to be supporting the Government’s viewpoint provided in press release in July 2017. Taxpayers may have to evaluate the tax position adopted for such transactions pursuant to this clarification.