CBIC issues Circulars and Notifications pursuant to recommendations in the 48th GST Council Meeting

This Tax Alert summarizes recent Circulars and Notifications issued by Central Board of Indirect Taxes and Customs (CBIC) based on the recommendations made in the 48th Goods and Services Tax (GST) Council meeting held on 17 December 2022.

The key clarifications and amendments in Central Goods and Services tax Rules, 2017 (CGST Rules) are:

• Clarification has been issued to address the difference in the quantum of input tax credit (ITC) availed in GSTR-3B and that reflecting in GSTR-2A for the financial years 2017-18 and 2018-19.
  
  
• ITC on services of transportation of goods outside India is eligible to the recipient located in India.
  
  
• Clarification has been provided regarding the modalities for implementation of the order of the adjudicating authority under Insolvency and Bankruptcy Code, 2016, pertaining to the GST dues.
  
  
• Manner of filing refund application by an unregistered person on cancellation of supply agreement has been prescribed.
  
  
• Rule 37A has been inserted in CGST Rules for prescribing manner of reversal of ITC by recipient due to non-payment of tax by the supplier. 
  

Comments

• Pursuant to the Circular, the suppliers may need to cooperate with their B2B customers by providing them with requisite certificates in order to reconcile the difference between GSTR-3B and GSTR-2A.
  
  
• Maharashtra Government had earlier issued guidelines [Internal Circular No. 02A of 2022] for scrutiny of GST returns for FY 2017-18 and 2018-19 which inter alia dealt with mismatch in ITC between GSTR-3B and GSTR-2A. It also provided for obtaining a CA certificate in cases where such mismatch exceeded INR 2.5 lakhs. 
  
  
• Clarification pertaining to the place of supply of services of transportation of goods outside India and availability of ITC to the recipient is likely to reduce the cost of export. 
  
  
• Clarification in respect of Section 75(2) appears to provide a fresh time period of two years to the proper officer to pass an order under Section 73, even though it would have otherwise become time barred had the notice originally been issued under Section 73 instead of Section 74.
  
  
• Insertion of Rule 37A may lead to additional compliance by the taxpayers since they may be required to check the return filing status of each of their suppliers.
  
  
• Rule 37A and 88C appears to aim at curbing the menace of fake invoicing and passing of credit without payment of tax to the Government.