Unlock the Gateway to Tax Wisdom with GST Weekly Digest May 2023 Vol-5! Delve into a realm of tax enlightenment as we unravel the freshest updates, breaking news, and profound insights. This edition unveils key highlights from GST council meetings, the latest advancements in GST returns, game-changing e-invoicing updates, and a treasure trove of knowledge. Stay ahead of the curve and immerse yourself in our comprehensive weekly digest to empower your tax journey!
Digest Period: 28/05/2023 to 03/06/2023
GST – Sunday, 28th May, 2023
Table of Contents
Chhattisgarh Chief Minister’s Demands at NITI Aayog Meeting
Chhattisgarh chief minister Bhupesh Baghel made the demands during the eighth meeting of the governing council of NITI Aayog held here under the chairmanship of Prime Minister Narendra Modi.
Compensation for revenue loss due to GST regime and refund of Rs 19,000 crore in New Pension Scheme
Transfer of additional levy received from minerals to Chhattisgarh
Revision of royalty rates for coal and major minerals
Bear security expenditure of Rs 11,828 crore on central forces deployment
Restoration of old pension scheme and refund of NPS contributions
Permanent arrangement for revenue loss compensation under GST
Increased share of central taxes for Chhattisgarh
Emphasis on promoting entrepreneurship and using local resources in rural areas
Availability of adequate iron ore for local industries
Promotion of industrialization in tribal regions and availability of iron ore for steel plants
Implementation of MNREGA in cities with less than 20,000 population
Appointment of nodal officer for international air service from Raipur airport
Setting up of solar power plants in aspirational districts
Integrated MIS system for women and children programs
Increase in Centre-State funding under centrally sponsored schemes
AAR Telangana rejects application for advance ruling on inter-state GST registration
The AAR in Telangana rejected the application of M/s. Comsat System Private Limited for an advance ruling. They stated that the ruling is only applicable in Telangana and cannot determine whether the assessee needs to register in another state. The applicant installs antennas across India and a customer requested GST registration in the installation state. The AAR held that they cannot rule on this matter as it falls under the jurisdiction of a different state’s Goods and Services Tax Act.
GST – Monday, 29th May, 2023
Gujarat Industrial Units Oppose GST on GIDC Plot Transfers
Gujarat’s industrial units strongly oppose GST on GIDC plot transfers. MSMEs face higher GST liabilities than profits due to short-term plot transfers. Industry associations plan to petition the high court, arguing against GST without input tax credit.
GCCI states GIDC plots are leasehold land, not subject to GST. The GST department collects transfer data and issues tax notices. GCCI’s chairman expresses concern over improper tax notices and disputes. Ankleshwar Industries Association advises against GST payments.
The state government assures action with the GST council, but legal recourse is possible.
Extension of GST Return Due Dates for Manipur: Advisory by GSTN
The Goods and Service Tax Network (GSTN) has issued an advisory on May 28, 2023, regarding the extension of GST return due dates for the state of Manipur.
Through Notifications No. 11/2023 – Central Tax, 12/2023 – Central Tax, and 13/2023 – Central Tax, all dated May 24, 2023, the government has extended the due date for filing GSTR-1, GSTR-3B, and GSTR-7 for the April 2023 tax period until May 31, 2023. This extension applies to all taxpayers with their principal place of business in Manipur.
These changes have been implemented on the GST Portal starting from May 27, 2023.
Taxpayers who have already filed their returns before May 27, 2023, will have the late fee credited to their ledgers. Any interest amounts displayed in the next return can be corrected by the taxpayers themselves, as the field is editable.
Enhancements in E-Waybill System: De-registration, Cancellation, and 2FA Implementation
The National Informatics Centre (NIC) has introduced several innovative updates to the E-Waybill System, benefiting Enrolled Transporters and Common Enrolled Taxpayers. These updates, outlined in the May 29, 2023, update, bring new features and enhanced security measures to the e-Waybill portal.
De-registration for Transporters: Transporters who registered in the e-Waybill Portal using Enrolment (based on PAN) but no longer wish to continue using the system can now de-enrol themselves. This new provision allows enrolled transporters to easily de-register from the e-Waybill System, rendering them unable to access the portal.
Once de-registered, their Transporter ID becomes invalid for e-Waybills, and updating Part-B details for the de-registered ID is not possible.
Cancellation of Common Enrolment: Taxpayers who opted for common enrolment but later decide not to continue with their common enroll ID can now cancel it.
This feature enables taxpayers to de-register from common enrolment, allowing them to choose an alternative option. After cancellation, the common enrolment ID cannot be used to update transporter details. However, Part-B details can still be updated for previously assigned e-Waybills linked to the common enrolment ID before cancellation.
A one-month time limit is provided after cancellation, after which login access will be blocked, preventing any further activity in the e-Waybill system. Users can then log in using their GSTIN credentials and generate new e-Waybills.
2 Factor Authentication (2FA): To enhance the security of e-Waybill login access, 2 Factor Authentication has been enabled and is initially optional for users. However, in the coming weeks, it will become mandatory. Users operating the e-Waybill system from multiple locations using a single credential are strongly advised to create sub-users immediately.
These updates bring greater flexibility, control, and security to the E-Waybill System, streamlining the de-registration process for transporters and providing an option to cancel common enrolment for taxpayers.
With the implementation of 2FA, the system ensures enhanced protection against unauthorized access. The NIC remains committed to continually improving and optimizing the e-Waybill System to meet the evolving needs of enrolled transporters and taxpayers.
GST – Tuesday, 30th May, 2023
Traders Assured: No Penalty for Missing GSTIN Display, SGST Officials Clarify
SGST officials have provided reassurance to traders and industrialists, stating that businesses not displaying their GST identification numbers (GSTIN) outside their premises will not face a penalty of Rs 50,000.
Reports of such penalties caused panic in the industry, prompting the Punjab Pradesh Beopar Mandal (PPBM) to raise the issue with senior SGST officials. After the meeting, the officials confirmed that no decision had been made regarding this penalty.
The PPBM urged businessmen to contact them if threatened with the penalty and forwarded the names of officials who had issued such threats.
The assurance from SGST officials brings relief to traders, eliminating the need for panic or confusion.
GSTN Advisory: GTAs Opting for Forward Charge Mechanism Must File Declaration
In a recent advisory, the Goods and Service Tax Network (GSTN) has provided guidelines for Goods Transport Agencies (GTAs) opting to pay tax under the forward charge mechanism (FCM).
GTAs that have commenced business or crossed the registration threshold on or after April 1, 2023, and wish to opt for payment of tax under the FCM, must file their declaration in Annexure V for the FY 2023-24 physically before the relevant jurisdictional authority.
The declaration should be submitted within the specified time limits as prescribed in Notification No. 05/2023-Central Tax (Rate), dated May 09, 2023.
GST – Wednesday, 31st May, 2023
Punjab Government Targets Unregistered IELTS Centres for GST Collection
In a bid to boost revenue, the Punjab government is taking action against unregistered IELTS centres that have been charging students GST but failing to pay it themselves.
Punjab Finance Minister Harpal Cheema has called for a review meeting to address the issue of GST collection from IELTS centres. The government aims to impose fines on unregistered centres and bring them under the ambit of GST, requiring them to register and pay the 18% GST applicable to their services.
The International English Language Testing System (IELTS) is a popular English language proficiency test taken by aspiring students and migrants. Punjab estimates that around 6 lakh Punjabi students undergo IELTS training annually, with over 60,000 students taking the exam each month.
In addition, many opt for the Pearson Test of English (PTE), leading to the proliferation of coaching centres. It is believed that Punjab has around 20,000 IELTS centres, charging fees ranging from Rs 6,000 to Rs 20,000 per month.
The Punjab government aims to tackle the issue of unregistered centres, which has resulted in significant potential revenue loss. Recent raids have exposed illegal IELTS coaching centres operating without proper registration. The government plans to ensure that all centres comply with the necessary licensing and registration requirements.
The move to crack down on unregistered IELTS centres follows the suggestion by Punjab Cabinet minister Kuldeep Singh Dhaliwal to incorporate IELTS into the college curriculum. Dhaliwal expressed concerns about fake centres exploiting people and advocated for making IELTS a part of the education system to prevent such malpractices.
While it is believed that most centres are registered and compliant, some operating covertly from homes may have evaded GST payment. The government officials aim to rectify this situation by bringing all centres into compliance and cracking down on any instances of tax evasion. With this initiative, the Punjab government aims to ensure that IELTS centres fulfill their tax obligations and contribute their fair share to the government’s revenue, given the substantial income generated by the sector.
GST – Thursday, 01st June, 2023
May 2023 GST Revenue: Robust Growth and Balanced Distribution
In May 2023, the total gross GST revenue collected amounted to ₹1,57,090 crore. This included ₹28,411 crore under CGST, ₹35,828 crore under SGST, ₹81,363 crore under IGST (which includes ₹41,772 crore from import of goods), and ₹11,489 crore as cess (including ₹1,057 crore from import of goods).
From the IGST pool, the government settled ₹35,369 crore to CGST and ₹29,769 crore to SGST. After the regular settlement, the total revenue for the Centre and the States in May 2023 stood at ₹63,780 crore for CGST and ₹65,597 crore for SGST.
Compared to the same month last year, the GST revenues in May 2023 witnessed a significant growth of 12%. Notably, revenue from import of goods showed a notable increase of 12%, while revenues from domestic transactions (including import of services) experienced an 11% growth compared to the same period last year.
Despite the challenging economic landscape, the robust growth in GST revenues signifies the effectiveness of the taxation system and the commitment of the government to promote fiscal stability and equitable distribution of revenue among the Centre and the States.
Developers Seek GST Relief for Rehabilitation Apartments in Mumbai Redevelopment
Real estate developers have approached the Ministry of Finance regarding concerns over the impact of GST on rehabilitation apartments in Mumbai’s redevelopment projects. The Confederation of Real Estate Developers’ Association of India (CREDAI) – MCHI has written to Finance Minister Nirmala Sitharaman, requesting a change in the GST structure for the viability of Mumbai Metropolitan Region (MMR) redevelopment projects.
With limited vacant land, Mumbai relies heavily on redevelopment and rehabilitation projects. Approximately 19,000 properties await redevelopment in the city. CREDAI President Boman Irani and members met with the finance minister to discuss this matter.
The existing GST system, where rehabilitation apartments provided free of cost to occupants are taxed, contradicts the purpose of enhancing real estate value and the feasibility of such projects. CREDAI argues that separate taxation on rehabilitation and sale components leads to double taxation and threatens the economics of these projects.
The developers’ body proposes that since the rehabilitation component is an input service for the sale component, it should not be separately taxed. Absorbing the additional GST burden increases apartment costs for customers, while projects unable to handle the extra cost hinder redevelopment progress, affecting existing occupants and slum dwellers.
To ensure the success of redevelopment projects and cater to Mumbai’s housing needs, real estate developers seek relief from GST on rehabilitation apartments.
GST – Friday, 02nd June, 2023
Karnataka High Court Rules Contractors Need to Pay Applicable Tax Rate Prevalent during VAT Regime
In a relief for contractors caught between the VAT and GST regimes, the Karnataka High Court has ruled that they should pay the tax rate applicable during the VAT regime instead of the higher tax burden imposed by the GST regime.
The court also directed government bodies to bear the differential tax burden and acknowledged that taxes were not part of a contractor’s profit.
The dispute arose when contractors, who had entered into works contracts before July 1, 2017, were asked to pay additional tax under the GST rates. The tax burden was not factored in at the time of signing agreements during the VAT regime.
Contractors paid either 4% under the composition scheme or 5% to 12% tax based on their case. However, after the GST regime commenced, works contracts were treated as “deemed service,” and contractors were required to pay GST at 18% from July 1, 2017, to August 21, 2018, and 12% thereafter.
Challenging the demand from GST authorities, contractors approached the court. In a recent judgment, the court emphasized that tax is not part of a contractor’s profit but rather a statutory obligation. The court ruled in favor of the contractors, directing the government not to take immediate action against them for a period of six months from the date of the order.
The dispute arose due to contracts entered into before the GST replaced the VAT regime. Various scenarios, such as work completed during the VAT regime but payments made during the GST regime, contracts entered into during the VAT regime but executed across both regimes, or bids invited during the VAT regime but finalized during the GST regime, contributed to the disagreement.
Overall, the Karnataka High Court’s ruling provides relief to contractors, ensuring they pay the applicable tax rate prevalent during the VAT regime and easing the burden imposed by the GST regime.
Indian Steel Association Seeks GST Rate Rationalization on Steel Raw Materials and By-Products
The Indian Steel Association (ISA), representing major steel mills, including Tata Steel and JSW, has written to the Finance Ministry urging a reduction in GST rates for steel-making raw materials such as scrap and by-products like slag.
The ISA proposes bringing the rates down from 18% to 5% to prevent tax evasion, litigation, supply chain disruptions, and facilitate smoother operations. The association argues that lowering the GST rate on steel scrap will curb tax evasion without impacting government revenue, as input tax credit is already available for steel production using scrap.
Additionally, the ISA calls for a reduction in the 18% GST rate on steel slag to align it with blast furnace slag and fly ash, which are currently taxed at 5%. The high GST rate on steel slag hampers its widespread adoption in various applications, including cement making and road construction.
GST – Saturday, 03rd June, 2023
ED Conducts Search Operations in GST Fraud Case
The Directorate of Enforcement (ED) conducted search operations at 25 locations in Ahmedabad, Gandhinagar, Bhavnagar, Botad, Gandhidham, Mumbai, and Bengaluru in connection with the alleged GST fraud case involving Mohammad Ejaj Bomar and others.
The accused have been booked under the Prevention of Money Laundering Act (PMLA), 2002. The searches yielded Rs 29 lakh cash, incriminating documents, including forms for changing mobile numbers, fake bills from bogus entities, and digital evidence.
The investigation focuses on the creation of fake GST firms and the use of bogus entities for providing bogus Input Tax Credit (ITC). The ED initiated a money laundering investigation based on FIRs filed by the Bhavnagar Police.
The accused allegedly changed mobile numbers linked to Aadhaar cards, which were later used for obtaining PAN and GST registrations. Fake invoices totaling over Rs 1,102 crore, involving a GST evasion of Rs 122 crore, were generated using these documents.
The accused established 461 bogus firms for these fraudulent transactions, passing on input tax credit through fake invoices on a commission basis. Payments for these invoices were made through banking channels, with cash settlements between the operator of the fake entity and the beneficiary.
Frequently Asked Questions (FAQ)
What were the demands made by Chhattisgarh Chief Minister at the NITI Aayog meeting?
The demands made by the Chhattisgarh Chief Minister at the NITI Aayog meeting include compensation for revenue loss due to the GST regime, transfer of additional levy received from minerals to Chhattisgarh, revision of royalty rates for coal and major minerals, and restoration of the old pension scheme, among others.
Why was the application for advance ruling on inter-state GST registration rejected by the AAR Telangana?
The AAR Telangana rejected the application for advance ruling on inter-state GST registration because they stated that the ruling is only applicable in Telangana and cannot determine whether the assessee needs to register in another state.
What updates have been made to the E-Waybill System?
The E-Waybill System has introduced enhancements such as de-registration for transporters, cancellation of common enrolment for taxpayers, and the implementation of 2 Factor Authentication (2FA) for enhanced security.
Will traders face a penalty for not displaying their GST identification numbers (GSTIN) outside their premises?
No, traders will not face a penalty of Rs 50,000 for not displaying their GSTIN outside their premises. The SGST officials clarified that no decision had been made regarding this penalty.
What was the total gross GST revenue collected in May 2023?
The total gross GST revenue collected in May 2023 amounted to ₹1,57,090 crore, including ₹28,411 crore under CGST, ₹35,828 crore under SGST, ₹81,363 crore under IGST, and ₹11,489 crore as cess
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