18 April 2017 EY GST News Alert CBEC releases draft rules on Assessment and Audit under GST and E-Way Bill Executive summary This Alert provides an insightful coverage of news related to GST and recent developments that are likely to impact trade. It will act as a summary to keep you on top of the latest GST news. For more information, please contact your EY advisor. The Central Board of Excise and Customs (CBEC) released two new draft rules on Assessment and Audit under GST and Electronic Way Bill (e-way bill) in the public domain on 14 April 2017. The key highlights of the rules are as under: Assessment and Audit The rules provide for detailed procedure and forms to be filed in connection with scrutiny of returns, provisional, final and best judgement assessment. Forms are also provided for special audit to be conducted by chartered accountant/cost accountant in certain specified cases. E-Way Bill The rules mandate the generation of e-way bills for movement of goods of value exceeding INR 50,000. E-way bill will have to be issued online on the GST common portal and it can be cancelled only within 24 hours of its issuance. The rules also prescribe documents and devices to be carried by the person-in-charge of conveyance and also provides for verification of documents and conveyances. The Government has invited comments on these draft rules from the stakeholders by 21 April 2017.
Background Four key GST legislations i.e. Central GST, Integrated GST, Union Territory GST and Compensation to States have received presidential assent. The GST Council, in its 13 th meeting held on 31 March 2017, had approved five revised GST related rules dealing with registration, return, invoice, payment and refund. Council also tentatively approved four draft rules on valuation, transition, input tax credit and composition. On 14 April 2017, new draft Rules dealing with assessment and audit and the electronic way bill have been released in public domain. Comments on the said rules have been invited till 21 April 2017 at gst-cbec@gov.in. The key features of the rules have been summarised below: Assessment and Audit Provisional assessment: Registered person requesting for payment of tax on provisional basis shall furnish an application in FORM GSTR ASMT-01, alongwith the prescribed documents. On receipt of an application, proper officer may issue a notice in FORM GST ASMT-02 requiring the registered person to appear in person or furnish additional information, if any. Registered person shall file a reply to the notice in FORM GST ASMT-03. Bond is to be executed by the registered person along with a security in form of bank guarantee in FORM GST ASMT-05. Proper officer shall issue a notice in FORM GST ASMT-06, calling for information and records required for finalisation of assessment. Final assessment order shall be issued in FORM GST ASMT-07 by the proper officer within six months of the provisional assessment order, specifying the amount payable by the registered person or the amount refundable, if any. Application may be filed by the registered person in FORM GST ASMT-08 for release of security after issuance of final assessment order. Proper officer shall release the security and issue an order in FORM GST ASMT-09 within seven working days from the date of receipt of the application after ensuring that the registered person has paid the tax amount. Scrutiny of returns: In case of any discrepancy noticed during scrutinising the return, proper officer shall issue a notice in FORM GST ASMT-10, seeking explanation from the registered person within fifteen days from the date of service of notice. Registered person may accept the discrepancy and pay the tax, interest and any other amount or else furnish an explanation in case of non-acceptance in FORM GST ASMT-11. Proper officer shall issue an order application in FORM GST ASMT-04 within ninety days from the receipt of application, either rejecting or allowing payment of tax on provisional basis. Provisional assessment will be then made indicating the value or the rate or both amount for which bond is to be executed security amount not exceeding 25% of the amount covered under bond Proper officer shall inform the registered person in FORM GST ASMT-12, in case where the explanation furnished by the registered person is accepted. Assessment in certain cases: A registered person when fails to furnish the return even after the service of a notice, the order of the assessment will be issued within 5 years of due date of the annual return of the financial year to which tax not paid relates in FORM GSTR ASMT-13. 2
In case of unregistered person (includes taxable person who fails to obtain registration or whose registration is cancelled), a proper officer should issue a notice in FORM GST ASMT-14 containing the grounds on which the assessment is proposed to be made on best judgement basis within 5 years of due date of the annual return of the financial year to which tax not paid relates. Reply should be filed within fifteen days on receipt of the notice, or else an order will be passed in FORM GST ASMT-15. In case of any evidence showing a tax evasion, proper officer shall issue an order of summary assessment in FORM GST ASMT-16, with previous permission of Additional Commissioner or Joint Commissioner. An application can be filed by the taxable person within thirty days of the summary assessment order for its withdrawal. Order of withdrawal or rejection of the application will be issued in FORM GST ASMT-18. Audit: Audit of any registered person can be undertaken by the Commissioner or any officer authorised by him, by way of a general or special order. The registered person shall be informed by a way of notice in FORM GST ADT-01 not less than 15 working days prior to conduct of the audit. If any discrepancies are noticed as observations in audit, the proper officer may inform the registered person. Registered person may file reply and the proper officer shall finalise the findings of the audit after due consideration of the reply furnished. On conclusion of the audit, the proper officer shall within 30 days inform the registered person about the findings, its rights and obligations in FORM GST ADT- 02. Special Audit: In cases where any officer not below the rank of Assistant Commissioner is of the opinion that the value has not been correctly declared or the credit availed is not within the normal limits, he will issue a direction in FORM GST ADT-03 to the registered person to get his records audited by the chartered accountant or cost accountant. On conclusion of special audit, the registered person shall be informed of the findings in FORM GST ADT-04. Electronic Way Bill Rules Information to be furnished prior to commencement of movement of goods and generation of e-way bill Before commencement of movement of goods, information relating to the goods needs to be furnished by registered person in Part A of FORM GST INS-01, where consignment value exceeds INR 50,000. The movement of goods may be- in relation to a supply for reasons other than supply due to inward supply from an unregistered person The registered person (either as consignor or consignee) may generate e- way bill after furnishing information in Part B of FORM GST INS-01. Where the e-way bill is not generated in above manner by the registered person and goods are handed over to a transporter, the registered person shall furnish information relating to the transporter in Part B of FORM GST INS- 01. The e-way bill shall be generated by the transporter based on information furnished by registered person. On generation of e-way bill, a unique e- way bill number (EBN) will be made available to the supplier, the recipient and the transporter on the common portal. 3
The registered person or a transporter can opt to generate and carry e-way bill even if value of consignment is less than INR 50,000. An unregistered supplier can opt for generating e-way bill on common portal. If transporter transfers goods from one conveyance to another in the course of transit, he has to generate a new e-way bill, before such transfer and further movement of goods. In case of transportation of multiple consignments in one conveyance, a consolidated e-way bill needs to be generated by the transporter in Form GST INS-02, prior to the movement of goods. Where consignor has not generated FORM GST INS-01 and the value of goods carried in the conveyance is more than INR 50,000, the transporter shall generate FORM GST INS-01 on the basis of invoice or bill of supply or delivery challan, as the case may be, and also generate a consolidated e-way bill prior to the movement of goods. In case e-way bill has been generated but goods are not being transported as per the furnished details, the e-way bill may be cancelled within 24 hours of its generation. However, such e-way bill cannot be cancelled if it has been verified in transit. The validity of e-way bill is as follows: Transportation Validity period distance Less than 100 km 1 day 100 km or more 3 days but less than 300 km 300 km or more 5 days but less than 500 km 500 km or more 10 days but less than 1000 km 1000 km or more 15 days The details of e-way bill generated shall be made available to registered recipient on common portal, who shall communicate his acceptance or rejection. In case of non-communication of acceptance or rejection by the recipient within 72 hours, it shall be deemed acceptance. Documents and devices to be carried by a person-in-charge of a conveyance The person in charge of a conveyance is required to carry: the invoice or bill of supply or delivery challan, as the case may be; and a copy of the e-way bill or the e-way bill number, either physically or mapped to a Radio Frequency Identification Device (RFID) embedded on to the conveyance. An Invoice Reference Number obtained from the common portal by uploading tax invoice in FORM GST INV-1 can be produced for verification of the proper officer in lieu of the tax invoice. Notified class of transporters may be required to obtain a unique RFID and get it embedded on to the conveyance and map the e-way bill to the RFID prior to the movement of goods. In case of warranted circumstances, a Commissioner may by notification require the person in charge of conveyance to carry following documents instead of e- way bill : tax invoice or bill of supply or bill of entry; or a delivery challan (where goods are transported other than by way of supply) Verification of documents and conveyances An authorized officer may intercept any conveyance to verify the e-way bill for all inter-state and intra-state movement of goods. Where e-way bill has been mapped with RFID, verification of movement of 4
vehicles shall be done through RFID readers. On receipt of specific information about tax evasion, physical verification of a specific conveyance can be carried out by proper officer after obtaining necessary approval of the Commissioner or an authorized officer. Inspection and verification of goods In case of inspection of goods in transit, a summary report is to be recorded online by proper officer in Part A of FORM GST INS 03, within 24 hours. Final report is to be recorded in Part B of FORM GST INS 03 within 3 days of inspection. Where physical verification of goods being transported on any conveyance has been done at one place within the State or in any other State, no further physical verification of the said conveyance shall be carried out again in the State, unless there is specific information of tax evasion. Uploading information regarding detention of vehicle Where a vehicle has been intercepted and detained for a period exceeding thirty minutes, the transporter may upload the said information in FORM GST INS-04 on common portal. Comments The robust process relating to the assessment and audit of a taxpayer would be critical in achieving one of the important objectives of improving ease of doing business and eliminating unwarranted litigation under the GST regime The detailed administrative procedure for transportation of goods rolled out by the Government will be a key enabler of seamless movement of goods across India and the muchneeded logistical efficiency in supply chains. Some of the aspects such as the threshold value of consignment, validity period of e-way bill, requirement of generating consolidated e-way bill and new e-way bill in case of transfer of goods from one conveyance to another, and requirement of e-way bill for intrastate movement of goods require further review before the rules are finalized. Online uploading of inspection reports and detention details shall aid in creating transparent systems. 5
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