Issue No. Nov/2024/01

CIRCULARS ISSUED BY CBIC

Circular No. 237/31/2024-GST dated 15/10/2024

Recent amendments to Section 16 of the CGST Act have introduced some important changes that affect how taxpayers and authorities handle past cases involving the wrong availment of Input Tax Credit (ITC), particularly in relation to contraventions of Section 16(4). The different scenarios are placed as follows: –

1. No Demand Notice Issued: For cases where investigations into ITC violations have started but no formal demand notice has been issued, authorities must now consider the new provisions under sub-sections (5) and (6) of Section 16, allowing eligible taxpayers to claim ITC.

2. Demand Notice Issued, No Order: If a demand notice has been issued but no adjudicatory order is made, the authority must acknowledge the new amendments when passing their decision.

3. Order Issued, Appeal Filed: In cases where an order has been made and an appeal is pending, the appellate authority should consider the retrospective changes in their assessment.

4. Revisional Authority Proceedings: Similar considerations apply to cases under revisional authority proceedings where no order has been issued; the new provisions must be taken into account.

5. Orders Issued, No Appeal Filed: Taxpayers with confirmed demands who haven’t filed an appeal can rectify their situation under the special procedure outlined in Notification No. 22/2024, applicable within six months.

Procedure for Filing Applications for Rectification:

v  Eligibility: Taxpayers whose ITC claims were denied due to Section 16(4) violations can apply for rectification under the new provisions {Section 16(5) or (6)} via the GST portal.

v  Application Process: Applications must include specific details about the denied claims and be submitted electronically. Original officers will process these requests within 3 months.

v  Adverse Effects: If a rectification negatively impacts a taxpayer, they are entitled to be heard before any adverse orders are issued, and they can appeal if necessary.

v  Limitations: The special rectification process is strictly for cases involving Section 16(4) contraventions. Applications outside this scope will be rejected.

CIRCULAR NO. 238/32/2024-GST DATED 15/10/2024

Clarifications relating to waiver of interest or penalty, or both related to demands under Sec 73

The CBIC has issued important circular addressing the retrospective amendments to Section 16 of the CGST Act and the waiver of interest or penalties related to demands under Section 73 for the financial years 2017-18, 2018-19, and 2019-20. This is based on the recommendations of the GST Council and the newly introduced of Section 128A, introduced by the Finance Act (No. 2) of 2024.

v  Application Filing:

For cases without orders: Use FORM GST SPL-01 electronically via the GST portal.

For cases with orders: Use FORM GST SPL-02.

v  Filing Time Limits:

Applications must be submitted within three months from March 31, 2025.

For notices reassessed under Section 73, applications are due within six months from the proper officer’s re-determination.

v  Withdrawal of Appeals:

Taxpayers must withdraw any pending appeals or writ petitions before filing a waiver application, providing proof of withdrawal with their application.

v  Waiver Eligibility:

Payments made before or after the effectiveness of Section 128A count as long as they are by the notified date, and amounts collected by tax officers before this date also count. Waivers apply only to full payments of the demanded tax; partial payments and any recovered interest or penalties are not eligible. The waiver is limited to specific tax periods, excluding erroneous refund claims, and any additional liabilities imposed after an appeal must be paid within three months. Transitional credit demands raised under Section 73 are also eligible for waiver.

GST PORTAL – NEWS & UPDATES

Important advisory for GSTR-9/9C

Starting F.Y. 2023-24, GST system will auto-populate eligible ITC for domestic supplies (excluding reverse charge and imports ITC) from Table 3(I) of GSTR-2B to Table 8A of GSTR-9. These changes in GSTR-9 and 9C for the FY 2023-24 will be available on the GST portal from 15th October 2024 onwards.

A validation utility will be executed progressively (for validation by taxpayers) to complete the auto population of GSTR-9 from GSTR-2B for Apr-23 till Mar-24.

Attention – Locking of auto-populated liability in GSTR-3B

To make tax filing easier and reduce errors, the GST Network (GSTN) has improved the process by introducing a pre-filled GSTR-3B Form. This Form automatically populates tax liabilities from the supplier’s GSTR-1 and ITC claims from GSTR-2B, along with a detailed PDF for taxpayers. Taxpayers can now also correct any mistakes in their outward supplies via GSTR-1A before submitting GSTR-3B. Additionally, they can manage their inward supplies and ITC claims using the new Invoice Management System (IMS), where they can accept, reject, or mark supplies as pending. Starting January 2025, changes to the auto-populated tax liability in GSTR-3B will be restricted, so any necessary adjustments should be made through GSTR-1A. While locking of auto-populated ITC will happen later, a separate advisory will be issued once all IMS-related concerns are addressed.

Advisory on GST REG 07 (Registration compliance for buyers of metal scrap)

GSTN has introduced an update to facilitate the registration compliance for buyers of metal scrap through form GST REG-07. This update follows the new GST provisions for metal scrap buyers as outlined in the advisory issued on 13/10/2024.

Taxpayers in this category are required to select “Others” in Part B of Table 2 under the “Constitution of Business” section. A text box will appear where the taxpayer must enter “Metal Scrap Dealers.” This entry is mandatory for those selecting the “Others” option. Once this is completed, the remaining details in form GST REG-07 should be filled and submitted on the common portal to meet the registration requirements as per Notification No. 25/2024 – Central Tax, dated October 9, 2024.

DUE DATES