21 June 17 EY Tax Alert CBEC releases four Rules approved by GST Council and issues Notifications under Central and Integrated GST Tax Alerts cover significant tax news, developments and changes in legislation that affect Indian businesses. They act as technical summaries to keep you on top of the latest tax issues. For more information, please contact your EY advisor. Executive summary This Tax Alert summarizes the Rules finalized by the Goods and Services Tax (GST) Council in its 17 th meeting held on 18 June 17 and the Notifications issued by the Central Board of Excise and Customs (CBEC) under Central GST and Integrated GST Acts. The Council finalized Rules relating to Advance Ruling, Assessment and Audit, Appeals and Revision and Anti-Profiteering. Among other things, Rules for Advance Ruling provide for the appointment of officer in the rank of Joint Commissioner as member of National Anti-profiteering Authority. Assessment and Audit Rules provide for provisional assessment on furnishing of bond or security. Appeals and Revision Rules provide for mechanism to file appeals. Anti- Profiteering Rules provide for an administrative set up in this regard. Since the system relating to e-way bills is still being developed, the Government will issue a notification specifying the documents to be accompanied by a person carrying any consignment of goods when the goods are in transit. The Council has also taken a decision to relax provisions for filing of returns for the first two months of GST implementation. CBEC has issued six notifications relating to CGST Act and two notifications relating to IGST Act. These notifications will be effective from 22 June 17. The Council has launched its official website www.gstcouncil.gov.in where all information relating to GST will be available. The next meeting of the Council will be held on 30 June 17 to finalize pending issues.
Background Goods and Services Tax (GST) Council in its 17th meeting held on 18 June 17, finalized the rules relating to: Advance Ruling; Assessment and Audit; Appeals and Revision; and Anti-profiteering The final Rules were issued by the Central Board of Excise and Customs (CBEC) on. Rules for E-way Bills will be finalized since once the system relating to e-way bills is developed and approved by the Council. The Council has also provided relaxation in return filing procedure for first two months of GST implementation. Tax would be payable for the first two months based on simple return Form GSTR 3B to be submitted on or before th of the succeeding month. The Returns can be submitted for the month of July and August 17, as per the timelines given below: Return GSTR 1 GSTR 2 (auto populated from GSTR-1) Jul, 17 Aug, 17 Due 10 10 Ext. 1-5 16- Due 11-15 11-15 Ext. 6-10 21-25 GSTR 3B CBEC has issued six notifications under Central Goods and Services Tax Act, 17 (CGST Act) and two notifications under Integrated GST Act, 17 (IGST Act). These notifications will be effective from 22 June 17. Given below are the key changes with the draft rules published earlier. Advance Ruling An appeal against the advance ruling shall be made by the concerned officer or the jurisdictional officer in FORM GST ARA 3. No fee shall be payable by the said officer for filing an appeal. Assessment and Audit Requirement to state the reasons for rejection of application for provisional assessment in FORM GST ASMT-04 is done away with. The proper officer shall issue an order allowing payment of tax on a provisional basis in the form specified above. ØIn case of any discrepancy during scrutiny of returns, the proper officer shall issue a notice seeking an explanation. The time limit to furnish explanation is increased from 15 days to 30 days from the date of service of the notice or such further period as may be permitted by him. A notice for best judgment assessment will be issued in FORM GST ASMT-14 to taxable person and not to an unregistered person. A notice will contain the grounds on which the assessment is proposed to be made on best judgment basis. Appeals and Revision Rules Supporting documents are required to be filed along with appeal. Requirement for submission of hard copy of appeal documents has been done away with. Memorandum of cross-objections in case of appeal to Tribunal can be filed electronically. Requirement for filing the memorandum in quintuplicate is eliminated. Jurisdictional officer is required to issue a statement in FORM GST APL-04 indicating the final amount of demand confirmed by the High Court or the Supreme Court. Anti-profiteering Rules Constitution of Authority and Committee The following authority and committee will be constituted: National Anti-profiteering Authority Standing Committee on Anti-profiteering State level Screening Committee Power to determine methodology and procedure The Authority may determine the methodology and procedure to ascertain whether a registered person has passed on the benefit of reduction in tax rate or benefit of input tax credit to the recipient by way of commensurate reduction in prices. Examination of application The Standing Committee shall examine, within two months from the date of application, the accuracy and adequacy of the evidence provided in the application to determine whether there is prima-facie evidence that the benefit has not been passed to the recipient. Further, all applications from supplier or recipient on issues of local nature shall first be examined by State level Screening Committee and upon satisfaction, it shall forward the application with its recommendation to Standing Committee for further action.
Initiation and conduct of proceedings If the Standing committee is satisfied that there is prima-facie evidence that the benefit due to GST is not passed on to the recipient, it shall refer the matter to Director General of Safeguards for a detailed investigation. The Director General of Safeguards shall complete the investigation within a period of three months (further extendable by three months) from the date of receipt of reference from Standing Committee and furnish the report to the Authority. Order of Authority The Authority shall, within a period of three months from the receipt of report mentioned above, determine whether benefit due to GST has been passed on to the recipient by way of commensurate reduction in prices. In case, the Authority determines that the benefit has not been passed on, it may order: Reduction in prices Refund of amount of benefit not passed on along with interest @ 18% to the recipient Recovering the amount including interest and depositing the same in the Consumer Welfare Fund in case the recipient does not claim the refund or is not identifiable Imposition of penalty Cancellation of registration Tenure of Authority Authority shall cease to exist after the expiry of two years term of the Chairman unless the Council extends the same. E-way Rules GST Council will approve the E-way bill system once it is developed. Till such time, the Government may, by notification, specify the documents that the person in charge of a conveyance carrying any consignment of goods shall carry while the goods are in movement or in transit storage. CGST Notifications Notification No. 1/17 Central Tax, dated Section 1(3) of CGST Act empowers Central Government to issue notification in the Official Gazette in relation to effective date of the Act and includes effective date of application of different sections. Sections 1 to 5, Section 10, Sections 22 to 30, Section 139, Section 146 and Section 164 of the CGST Act have been effective from 22 June 17. Sections specified above deal with definition, tax administration, composition levy, registration, migration of existing taxpayers, common portal and powers of the Government to make rules under the Act. Notification No. 2/17 Central Tax, dated The Notification deals with appointment of different officers ranging from Principal Chief Commissioner to Additional Commissioners of Central Tax (Appeals) and also appointment of central tax officers subordinate to them as central tax officers. It also specifies the territorial jurisdiction of each category of officers. Notification No. 3/17 Central Tax, dated Vide the said Notification, Government has notified Rules for (i) Composition levy and (ii) Registration together with all relevant forms. The rules are same as finalized by the GST Council. Notification No. 4/17 Central Tax, dated The Central Government has notified the website (www.gst.gov.in) managed by the GST Network, as the Common GST Electronic Portal for facilitating registration, payment of tax, furnishing of returns, computation and settlement of integrated tax and e-way bill. Notification No. 5/17 Central Tax, dated The Notification has been issued by exercising the powers conferred by Section 23(2) of the CGST Act. It empowers Central Government to specify the category of persons who may be exempted from obtaining registration under the said Act. Accordingly, the Central Government has exempted such persons from registration under the CGST Act who are exclusively involved in the supply of goods or services wherein the liability to discharge GST lies on the recipient under reverse charge. Notification No. 6/17 Central Tax, dated CBEC notifies following modes of verification for applications and returns filed under GST: Aadhaar based Electronic Verification Code; and Bank account based One Time Password. It further notifies that where the authentication of document is through any of the aforesaid modes, such
verification shall be done within two days of furnishing the documents. IGST Notifications Notification no. 1/17 Integrated Tax dated As per the Notification, provisions relating to commencement, definitions, appointment of officers, special provision of payment of tax by a supplier who is providing Online information and database access or retrieval (OIDAR) services etc. will come into force from 22 June 17. Notification no. 2/17 Integrated Tax dated OIDAR services provided or agreed to be provided by a person located in non-taxable territory and received by non-taxable online recipient needs to obtain registration from the Principal Commissioner and officers of Central tax, Bengaluru West jurisdiction. Way Forward In view of Government s commitment to implement GST with effect from 1 July 17, it would be imperative that the State of Kerala, West Bengal, Jammu and Kashmir, Punjab and Meghalaya should pass the State GST law at the earliest. The next meeting of GST Council is scheduled on 30 June 17 to finalize pending issues. Comments a. The Government has reiterated its commitment to implement GST with effect from 1 July 17 by finalizing the balance Rules and also, by issuing notifications relating to registration and administrative structure. b. Notifications effective from 22 June 17, will provide a legislative base to the process of registration and tax administration. c. The Council s decision to offer relaxation in timelines for filing returns-related details for the first two months of GST implementation is a welcome step and will provide relief to all taxpayers who are still grappling with the preparedness of their IT system for compliance. d. While the Government s re-iteration of anti-profiteering provisions being used only as a deterrent is quiet encouraging, its implementation will be critical. e. With the implementation date of 1 July 17 soon approaching, the industry is now awaiting clarity on the treatment of transactions involving Jammu and Kashmir and excise free zones.
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