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Offence under GST

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Offence-under-GST

Offence under GST

An offence is defined as a breach of a law or rule, i.e. an illegal act. Similarly an offence under GST is a breach of the provisions of the GST Act. There are 21 offences under GST, which we have classified under the following sections, for your easy reference:

Fake or Incorrect Invoices / Bills

A taxable person indulges in the following GST offences:

  • Supplies any goods / services without any invoice or issues a false invoice
  • Issues any invoice or bill without supply of goods and / or services in violation of the provisions of GST
  • Issues invoices using the identification number i.e. GSTIN of another bona-fide taxable person

Fraud

A taxable person indulges in the following offence under GST:

  • Submits false information while registering under GST
  • Submits fake financial records or documents or files fake returns to evade taxes
  • Does not provide information or provides false information during proceedings

Tax Evasion

A taxable person indulges in the following offences under GST:

  • Collects GST, but does not submit it to the government within 3 months
  • Collects GST by breaking the provisions, but fails to deposit it to the government within 3 months, which will still be treated as an offence under GST
  • Obtains refund of any CGST / SGST by fraud
  • Takes and / or utilizes ITC without actual receipt of goods and / or services
  • Deliberately suppresses his sales to evade taxes

Supply or Transport of Goods

A taxable person indulges in the following offences in GST:

  • Transports goods without proper documents
  • Supplies or transports goods, which he knows will be confiscated
  • Destroys or tampers goods which have been seized

Other offences under GST

A taxable person:

  • Has not registered under GST although he is required to register under the law
  • Does not deduct TDS or deducts less amount than what is applicable
  • Does not collect TCS or collects less amount than what is applicable
  • Takes or distributes input tax credit in violation of the rules, being an Input Service Distributor
  • Obstructs the proper officer during his duty, for instance, during audit
  • Does not maintain all the books that he is required to maintain under the law
  • Destroys any kind of evidence

For all the 21 offences in GST listed above, penalty will be a minimum of INR 10,000, with variations in place, depending of the nature of the offence under GST.

Arrest under GST

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Arrests-under-GST

Arrest under GST

The term ‘Arrest’ has not been defined in the CGST / SGST Act. However, as per the law, it basically implies the taking into custody of a person under some lawful command or authority. In other words, a person is said to be arrested when he is taken and restrained of his liberty by power or colour of lawful warrant.

If the Commissioner of CGST / SGST believes that a person has committed an offence, he can be arrested by any authorised CGST / SGST officer. The arrested person will be informed about the grounds of his GST arrest motion, and he will appear before the magistrate within a period of 24 hours, in case the offence is of a cognizable nature.

As per the arrest provisions under GST, the following officers have been empowered and are required to assist the CGST / SGST officers in the execution of an arrest under GST:

  • Police
  • Railways
  • Customs
  • Officers of State / UT / Central Government engaged in collection of GST
  • Officers of State / UT / Central Government engaged in collection of land revenue
  • All village officers
  • Any other class of officers as may be notified by the Central/State Government

Note: Here, it is important to note the difference between a cognizable and a non-cognizable offense. Cognizable offenses are those where the police can arrest a person without any arrest warrant, i.e. the offense is clear enough. Examples could be murder, robbery, counterfeiting etc. Non-cognizable offenses are those, where a police officer cannot arrest a person without a warrant issued by a competent authority. They are relatively less serious crimes like public nuisance, assault etc.

Offenses which warrant Arrest under GST

The following are the offenses, for which the arrest provisions under GST become applicable:

  • When a taxable person supplies any goods or services without any invoice or issues a false invoice
  • When a taxable person issues any invoice or bill without supply of goods / services in violation of the provisions of GST
  • When a taxable person collects GST, but does not submit it to the government within 3 months
  • When a taxable person has already been convicted earlier under the same provisions i.e. this is his 2nd offense

To sum up the offences which warrant arrests, broadly it may be said, that if tax evasion is more than INR 100 lakhs i.e. INR 1 Crore, or when a person has committed his 2nd offense (i.e. first arrest under GST has occured already), an arrest will be made.

Procedures related to Arrest under GST – Points to Note

The following are certain key procedures that you should note with regards to arrest provisions in GST:

  • Cognizance of Offense – A court cannot take cognizance of any offense punishable without the prior permission of the designated authority. Only a Magistrate of the First Class (and above) can conduct the trial for such an offense.
  • Availability of Bail – Bail is available only for non-cognizable and specified bail-able offenses.
  • Summons – A proper officer can summon any person to provide evidence or to produce a document. Any person summoned, has to either attend the summon himself, or send an authorized representative. Both entities will appear under oath.

Taking a holistic view of inspection, search, seizure and arrest under GST, it can be concluded that the government as well as the GST body have well defined arrest provisions in GST, to restrict tax evasion activities across the nation. Given the stringent nature of these offenses, which attract sizeable penalty, taxpayers would hopefully be discouraged from engaging in any illegal business practices.

Seizure under GST

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Seizure-under-GST

Seizure under GST

The term “Seizure” has not been specifically defined under GST. In legal terms, seizure under GST implies the act of taking over something or someone by force through a legal process, such as, the seizure of evidence found at the scene of a crime. It generally means – taking possession forcibly against the wishes of the owner.

Difference between Detention and Seizure under GST

In this context, most taxable persons may be confused about the difference between detention and seizure under GST. Detention is basically the act of not allowing the owner any access to the seized goods under GST, by means of a legal order or notice. In case of a detention, the ownership and possession of goods still lie with the owner, and it is issued, only when it is suspected that the goods are liable for confiscation.

However, seizure is actually taking over or possessing the goods by the department, although the ownership stays with the owner. A seizure under GST can be made only after inquiry or investigation that the goods are liable to confiscation.

Procedure for Seizure under GST

The following are the provisions pertaining to seizure of goods under GST:

  • The proper officer will give an order of seizure of goods under GST in Form GST INS-02
  • The officer authorized to search will have the power to seal the door of the premises. He can also break open the door of any premises, in case access is denied. He can also break open any cupboard or box in which goods, books, documents etc. are suspected to be concealed
  • However, if it is not practical to seize the goods, the proper officer will order the owner not to remove these goods without the prior permission of the officer. The officer will issue an order of prohibition in Form GST INS-03
  • The officer will keep the books and documents as long as it is necessary for examination and inquiry
  • Other books which are not relevant to the issue of notice will be returned within 30 days from the date of the notice
  • The seized goods under GST can be released on a provisional basis against a bond, for the value of the goods in Form GST INS-04. The owner must also furnish a security in the form of a bank guarantee for the amount due i.e. the applicable tax, interest and penalty payable
  • If the owner fails to produce the provisionally released goods at the appointed date and place, then the security will be encashed and adjusted against the amount due
  • Provisions of the Code of Criminal Procedure will apply to search and seizure of goods in GST

Post-Seizure Procedures

  • Goods – Post the seizure in GST, all the goods which have been taken into custody will be properly listed by an officer. The goods will then be divided into hazardous and non-hazardous, and also into perishable and non-perishable. The government can issue a list of hazardous or perishable goods which can be disposed as soon as they are seized. Also, post the seizure in GST, a notice is to be issued by the department. If the notice is not issued within 6 months, from the date of seizure of goods in GST, they will need to be returned. This time limit is extendable by 6 more months.
  • Documents – In case the person who is the owner of the documents, wants to make copies, he can do so in presence of the officer.

Post inspection, search and seizure under GST, if the Commissioner believes that a person has committed an offence under the requisite section of the GST Act, the concerned person can be arrested. In our next blog, we will understand the specific provisions laid down for Arrest under GST.

Inspection and Search under GST

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Inspection-and-Search-under-GST

Inspection and Search under GST are conducted as per the provisions laid down in the GST law. Let us understand them one by one.

Inspection under GST

A Joint Commissioner (or any officer of a higher rank), may conduct an inspection under GST, only via written authorization, if they have reasons to believe that a taxable person has done any of the following, in order to evade tax:

  • Suppressed any transaction of supply
  • Suppressed stock in hand
  • Claimed input tax credit in excess
  • Violated any of the provisions
  • Kept goods which have escaped payment of tax
  • Kept accounts and / or goods in such a way as to evade tax

Now, if you read the section above, you will come across a phrase “reasons to believe”. What do we mean by “reasons to believe” under the GST provisions? As per the GST rules, “reason to believe” means, having knowledge of facts, that would make any reasonable person, knowing the same facts, to reasonably conclude the same thing. As per the Indian Penal Code, a person is said to have “reason to believe” a thing, if he has sufficient cause to believe that thing but not otherwise. This will be something that will be based on examination and evaluation, and not on something which is an opinion. In short, “reasons to believe” will be based on facts rather than interpretation of facts. Also, this should be something, which should not be mentioned in writing at any stage. In fact, as per the GST rules, “reasons to believe” shall not be disclosed to any person or any authority or the Appellate Tribunal.

In any case, once the Joint Commissioner (or any officer of a higher rank) is clear that action has to be taken, he can then authorize any officer via Form GST INS-01 to inspect places of businesses, belonging to the following entities:

  • Taxable person
  • Transporter
  • Owner or Operator of the Warehouse
  • Any other place, as deemed fit

Search under GST

On the face of it, “Search” and “Inspection” may sound like the same activity. Hence, before understanding the provisions for Search under GST, it is important to understand the difference between Inspection and Search in GST.

Search under GST Inspection under GST
Involves an attempt to find something. Search is an action of a government official (a tax officer or a police officer, depending on the case) to go and look through or carefully examine a place, person, object etc. in order to find something concealed or to discover evidence of a crime. The search of a person, or vehicle or premises, can only be done under the proper and valid authority of law. Is the act of examining something, often closely. Inspection under GST is a softer provision than search. It enables officers to access any place of business of a taxable person and also any place of business of a person engaged in transporting goods or who is an owner or operator of a warehouse or godown.

On the basis of results emerging from inspection or any other reason, the Joint Commissioner (or any officer of a higher rank) can order for a search, via written authorization, if he has reasons to believe that the following exist:

  • Goods which are liable for confiscation
  • Documents or Books or other things which will be useful during proceedings and are hidden somewhere

Based on his conclusions, the Joint Commissioner (or any officer of a higher rank) can, either on his own or through an authorized officer, follow the provisions of inspection and search under GST and seize the goods and documents. However care should be taken to record materials and relevant information, before the issue of the search warrant or before conducting the search.

Appellate Authority for Advance Ruling under GST

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Appellate-Authority-for-Advance-Ruling-under-GST

In our previous blog, we went through the provisions of advance ruling under GST. We also understood that the first level of appeal for advance ruling is to be made to the Authority for Advance Ruling (AAR). However, a taxable person who is not satisfied by the advance ruling of the AAR can approach the second level i.e. the Appellate Authority for Advance Ruling i.e. the AAAR.

It is a good time to note, that appealing against the advance ruling is a new provision in GST. The previous tax regime did not have any scope for appeal against Advance Ruling at all, and the only way to contest the ruling was by going through the Division Bench of the High Court. However, this process has been made easy by the introduction of an appeal mechanism to the Appellate Authority for Advance Ruling under GST – which we will understand in this blog.

Appellate Authority for Advance Ruling Process

The following are the various provisions laid down pertaining to the procedure for advance ruling by the Appellate Authority for Advance Ruling, under GST:

Initiation of Advance Ruling Procedure by AAAR

  • The initiation of the appeal to Appellate Authority for Advance Ruling can be made by the applicant or the officer who is aggrieved by any advance ruling
  • Appeal against the advance ruling of the AAR, must be made within 30 days from the date of the advance ruling issued by the AAR. However, this limit is extendable by 30 days.

Advance Ruling Forms by AAAR

  • The application for appealing against the advance ruling of the AAR, has to be made in Form GST ARA-02, along with the payment of fees of INR 10,000
  • If the appeal is made by a GST tax officer, then Form GST ARA-03 needs to be filed. However, no fees will be applicable in this case.

Advance Ruling Purview by AAAR

The AAAR can, by order, either confirm or modify the advance ruling issued by the AAR, which is appealed against. However, if the members of the AAAR, differ in opinion on any point, then an advance ruling cannot be issued.

Post the decision of the AAAR, a copy of the advance ruling signed by the members will be sent to the applicant, the prescribed or the jurisdictional CGST / SGST officer and to the initial authority that passed the Advance Ruling i.e. the AAR.

Advance Ruling Time Limit by AAAR

An advance ruling decision by the AAAR will be given within 90 days from the date of the application.

Rectification of the Advance Ruling by AAAR

The AAAR can amend its own order to rectify any apparent mistake, if the same is noticed within 6 months from the date of the original order. The rectification of the order can be done by:

  • AAAR on its own
  • Prescribed or the Jurisdictional CGST / SGCT officer
  • Applicant

However, it is to be noted that any rectification which may result in increase in tax liability or decrease in input tax credit, will be allowed only after giving a notice and an opportunity to be heard to the applicant.

Scope of the Advance Ruling by AAAR

The advance ruling decision by the Appellate Authority for Advance Ruling will be binding only on the following entities:

  • Applicant
  • Jurisdictional Tax Authorities in respect of the Applicant

However, if the law or the facts of the original advance ruling change, then the advance ruling issued by the AAAR will not apply.

Nullification of the Advance Ruling by AAAR

If it is discovered, that the appellant has obtained the advance ruling by fraud or suppression of material facts, then the Authority for Advance Ruling (AAR) or the Appellate Authority for Advance Ruling (AAAR) will declare the ruling to be void ab initio (from the beginning). All the provisions of GST, will then be applicable to the applicant as normal without any advance ruling – however, an opportunity of being heard will be given to the applicant, in such as case, post which advance ruling nullification may take place.

In conclusion, it can be said that the provisions of advance ruling under GST are bound to make life simpler for a taxable person who wants to gain clarity on the tax arrangements to be made for a particular transaction. However, the only area where currently a clarity is not available is – that there is no defined level of appeal beyond the 2nd level i.e. the Appellate Authority for Advance ruling. However, it may be expected that the process to appeal further should be similar to that in the previous tax system, and a taxable person who is not satisfied with the decision of the AAAR, may appeal against it, via a special dispensation to the Division Bench of the High Court.

27th GST Council Meeting Updates – Returns Simplified

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Recommendations-made-by-27-GST-Council

On the 4th of May, 2018, the 27th GST Council meeting got underway, giving shape to the new returns filing model, which was awaited for the past several months. The new model was decided, based on the recommendations of the Group of Ministers, which had been constituted for the purpose of making the process a simplified one on the 17th of April, 2018. In addition the GST Council also did announce a few rate changes, and some structural changes in the shareholding pattern of the GSTN.Let’s go through all the major 27th GST Council meeting highlights:

27th GST Council meeting – Simplified returns

The 27th GST Council meeting introduced a simplified return filing process, major features of which are as follows:

One monthly return

All taxpayers, with a few exceptions, will have the facility to file one monthly returns, and the return filing dates will be determined in a staggered order, based on the turnover of the registered person. This has been primarily done to manage the load on the GST portal. Composition dealers and dealers with nil transactions will continue to file quarterly returns, as per the 27th GST Council meeting highlights.

Unidirectional flow of bills

There shall be a unidirectional flow of bills, i.e. bills may be uploaded by the seller anytime during the month, which will serve as valid documents to avail input tax credit for the buyer. The buyer too, will be able to see the uploaded invoices on a continuous basis, during a particular month. There will be no need to upload any purchase invoices as per the model suggested initially. Also, for all B2B transactions, HSN codes of 4 digits or more will need to be specified to achieve uniformity in the reporting system, as per the 27th GST Council highlights.

Simpler returns design

B2B dealers will need to fill invoice wise details of all outward supplies made by them, based on which the system will automatically calculate their tax liability. Similarly, their input tax credit will be calculated automatically by the system based on the invoices uploaded by their sellers. All this will be supported by a user-friendly interface coupled with an offline tool to upload invoices. Another major aspect of simplifying the returns process introduced by the 27th GST Council meeting was, the reduction in the content or the information required to be filled in the return forms. The details of the design of the return form, business processes and legal changes will be worked out by the appointed law committee based on these principles, as per the 27th GST Council updates.

No automatic reversal of ITC

There shall not be any automatic reversal of input tax credit from the buyer, in case the seller does not pay the tax, as was the case earlier. In case the seller defaults on the payment of tax, the recovery shall be made from the seller itself. However, as per the 27thGST Council recommendations, the option of reversal of ITC from the buyer shall also be an option available to the GST authorities, to address exceptional scenarios, such as, missing dealers, closure of business by the supplier, supplier not having adequate assets etc.

Online process for recovery and reversal

The recovery of tax or reversal of ITC shall be done through an online and automated process to reduce the human interface. The process will continue to follow the due course of issuing a notice and order, as per the updates from 27th GST Council meeting.

Supplier side control

In case a supplier has defaulted in payment of tax above a threshold amount, such a supplier will not be allowed to upload invoices and thus will not be allowed to avail any ITC. This has been introduced to avoid and to control misuse of the ITC facility. Similar safeguarding provisions have now been built in for newly registered dealers as well as per the 27th GST Council meeting updates. The GST Council has proposed setting up analytical tools to identify such transactions at the earliest, so that loss in revenue may be prevented.

Three stage transition

The following 3 stage transition to the new returns filing system was decided upon at the 27th GST Council meet:

  • Stage 1 – Present system of filing GSTR 3B and GSTR 1 returns. GSTR 2 and GSTR 3 will remain suspended. This will continue for a maximum of 6 months, by which the new return filing software will be ready.
  • Stage 2 – New return system will go live, with the facility for invoice – wise data upload and also facility for claiming ITC on a self-declaration basis, similar to the role of GSTR 3B currently. During this stage, the dealer will be constantly fed with information about the existing gap between ITC available, and provisional ITC being claimed.
  • Stage 3 – Provisional credit will get withdrawn totally, and ITC will be limited only to the invoices uploaded by the sellers from whom the dealer has purchased goods.

GST Rates discussed at the 27th GST Council meeting

While there were no GST rate changes announced as such at the 27th GST Council meeting, there was a good deal of discussion on the following two aspects:

  • Reduction of GST rates for digital transactions – Keeping in mind the need to move towards a less cash economy, the GST Council discussed a proposal to have a concession of 2% in the GST rate i.e. 1% each for CGST and SGST, for all B2C supplies in which payments are done via cheque or via digital mode. This was proposed in all cases where the overall GST rate is more than 3%, with a ceiling of INR 100 per transaction. The GST Council has recommended to set up a Group of Ministers from the State Governments to look into the proposal and make recommendations, before the next GST Council meeting, as suggested by the 27th GST Council meeting news.
  • Sugar Cess over and above 5% GST and reduction in GST rates of ethanol – Keeping in mind, the record production of sugar in the current sugar season, and the consequent reduction in sugar prices, the GST Council discussed imposing a sugar cess over and above the stipulated 5% GST rate and also considered reducing the GST rate on ethanol. The proposal has come from the food ministry, which has been mulling cutting down the GST rates on ethanol to help sugar mills clear dues worth INR 19,000 crore to sugarcane farmers. However, a conclusion could not be reached, and the GST Council finally recommended to set up a Group of Ministers from the State Governments to look into the proposal and make recommendations, within a period of 2 weeks, as per the 27th GST Council news.

GSTN changes finalised at the 27th GST Council meeting

The GSTN, as one may be aware, was created as a private limited, non-profit company, with an objective to provide shared IT infrastructure and services to Centre and State governments, tax payers and other stakeholders for the implementation of GST. Currently, the Central government and State governments are holding 24.5% equity shares respectively and the remaining 51% are held by 5 non-governmental institutions namely – HDFC, HDFC Bank, ICICI Bank, NSE Strategic Investment Co and LIC Housing Finance Ltd. Majority of the GST processes including registration, return filing, tax payment, refunds processing are largely IT driven, and thus it was a given that the GSTN was handling large scale invoice level data of lakhs of business entities.

Considering the nature of the functions handled by GSTN, the GST Council felt that the GSTN should be converted into a fully owned government company.

Keeping this in mind, it was decided at the 27th GST Council meeting, that the 51% held by the non-governmental institutions, worth INR 5.1 Crore, was decided to be distributed equally among the Centre and the State governments, thus taking the respective share of both bodies to 50% each. It was also decided that the GSTN board will be allowed to retain the existing staff at the existing terms and conditions for a period of up to 5 years, and shall also have the flexibility to hire people through contract on the terms and conditions similar to those used by GSTN till now, while hiring regular employees. Nevertheless, the existing financial commitments given by the Centre and the States to GSTN to share the capital costs and O&M costs of the IT systems will continue as before.

In short, the 27th GST Council meeting was a major game changer, as far as the simplified return filing process is concerned. Given the various initiatives discussed, proposed and finalised at the meeting, life for the business is surely bound to become simpler as far as GST compliance is concerned.

GST Appeals to High Court & Supreme Court

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GST-Appeals-to-High-Court-Supreme-Court

In our previous blog, we went through the provisions in place for the second level of appeals under GST i.e. appeals to the Appellate Tribunal. In case a person is not satisfied by the decision or the order passed by the Appellate Tribunal, he can proceed to the last two levels of appeals under GST i.e. GST appeals to High Court & Supreme Court – which we will discuss in this blog.

GST Appeals to high court & supreme court

The following questions will give you more insight on the topic of GST appeals to High Court & Supreme Court:

Who can issue GST appeal to high court?

Any taxable person who is not satisfied with the order or decision passed by the Appellate Tribunal, can issue a GST appeal to High Court, within a period of 180 days i.e. 6 months from the date of the order. However, the High Court may entertain an appeal after the expiry of 6 months, if it is satisfied that there was sufficient cause for not filing the appeal within such period. The GST appeal form to High C0urt needs to be filled accordingly.

What appeals will be allowed in the high court?

The following provisions have been laid down to define the appeals, which may be allowed in the High Court:

  • Any person aggrieved by any order passed by the State Bench or Area Benches of the Appellate Tribunal may file an appeal to the High Court. The High Court may admit such an appeal, only if it is satisfied that the case involves a substantial question of law
  • Where the High Court is satisfied that a substantial question of law is involved, it shall formulate that question and the appeal shall be heard only on the basis of that question. However, the respondents will be allowed to argue that the case does not involve any such question, at the hearing of the appeal
  • The High Court can decide on any issue which –
  • Has not been determined by the State Bench or Area Benches
  • Has been wrongly determined by the State Bench or Area Benches, due to the question of law

However, appeals against orders passed by the National Bench or Regional Benches of the Tribunal will be aligned to the Supreme Court and not High Court. Also, appeals cannot be made to the High Court where two or more states OR when the State and the Centre have different views. Such cases too, will go straight to the Supreme Court. Thus the procedure of GST appeals to High Court have been well designed to account for the same.

Decisions of the high court – Points to note

As per the GST appeal procedure to High Court, the following are the provisions laid down with regards to the decisions taken:

  • The appeal will be heard by a bench of at least 2 High Court Judges, and shall be decided on the basis of majority
  • Where there is no majority, then one or more High Court Judges will be brought in to hear out the case. The original Judges shall state the point of law upon which they differ, and the case shall then be heard upon that point alone. Finally, the decision will be taken on a majority basis, by both the original and new set of Judges.

Who can issue GST appeal to supreme court?

Any taxable person who is not satisfied with the order or decision passed by the High Court, National Bench or Regional Benches of the Appellate Tribunal can issue a GST appeal to Supreme Court. However, as discussed above, cases where two States or State and Centre have different views, will be automatically appealed to the Supreme Court. The GST appeal form to Supreme Court needs to be filled accordingly, as per the procedure of GST appeals to Supreme Court laid down by the GST bodies.

Pre-Appeal conditions – Sums due to be paid

As per the GST appeal procedure to Supreme Court, a taxpayer who is planning to appeal to the Supreme Court must keep an important condition in mind, i.e. all sums due to the Government under order passed by the Appellate Tribunal or by the High Court need to be paid, prior to appealing to the Supreme Court. Thus GST appeals to High Court & Supreme Court are closely regulated as far as fees payable are concerned.

Thus, we have now covered all that you needed to know with regards to the 4 levels of appeals under GST, starting from First Appellate Authority, to Appellate Tribunal to GST appeals to High Court & Supreme Court. In our next blog, we will take you through the aspect of Advance Ruling – provisions for which have been laid down in the GST Act to make life simpler for the taxpayer involved in demand, recovery and appeals.

Mechanism for Advance Ruling in GST

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Advance-Ruling-in-GST

By definition, an advance ruling primarily means a decision provided by the adjudicating authority or the Appellate Authority to an applicant on specified matters or on specified questions, related to the supply of goods and / or services proposed to be undertaken or being undertaken by the applicant. In simple terms, an advance ruling is basically a written interpretation of tax laws, which is issued by tax authorities to corporations as well as individuals who request for clarifications related to tax. An advance ruling is mostly requested, when the taxpayer is confused about certain provisions. In this blog, we will learn in more detail about advance ruling in GST.

Why is Advance Ruling in GST necessary?

Advance Ruling in GST is deemed necessary primarily because of the following reasons:

  • To provide advance certainty for tax liability, in relation to a future activity to be undertaken by the applicant
  • To attract Foreign Direct Investment i.e. FDI, by clarifying taxation and showing a clearer picture of the future tax liability of the FDI. The clarity and clean taxation procedures will attract non-residents who would otherwise not want to get involved in messy tax disputes
  • To reduce litigation and to reduce the cost of legal disputes
  • To give decisions in a timely, transparent and inexpensive manner

When can one request for Advance Ruling?

As discussed above, any taxable person can request for an advance ruling in GST when he is confused about certain provisions. As per the provisions, advance ruling under GST is applicable on the following:

  • Classification of any goods and / or services
  • Applicability of a notification which affects the rate of tax
  • Determination of time and value of supply of goods and / or services
  • Whether ITC paid (or deemed to be paid) will be allowed
  • Determination of the liability to pay tax on any goods and / or services
  • Whether the applicant has to be registered under GST
  • Whether any particular activity done by the applicant regarding goods and / or services will result in a supply

What are the various levels of Advance Ruling?

There will be two levels of Advance Ruling in GST:

  • Authority for Advance Ruling (AAR)
  • Appellate Authority for Advance Ruling (AAAR)

An advance ruling under GST will first be sent to the Authority for Advance Ruling (AAR). Any taxable person who is not satisfied with the advance ruling can appeal to the Appellate Authority for Advance Ruling (AAAR)

Advance Ruling mechanism in GST – AAR

The advance ruling mechanism in GST is initiated with the intervention of the AAR i.e. the advance ruling authority. Let’s understand in detail.

What is the composition of the AAR?

The Authority for Advance Ruling (AAR) shall comprise 1 member from CGST and 1 member from SGST / UTGST, who will be appointed by the Central and State Governments respectively.

How to apply Advance Ruling in GST?

Generally, an application for advance ruling to the advance ruling authority under GST i.e. AAR, will be done, before the start of the proposed activity. On receipt of the application, a copy will be forwarded to the prescribed officer, who will then furnish the necessary relevant records

What are the forms required for Advance Ruling by AAR?

The application for advance ruling to the advance ruling authority, has to be made in Form GST ARA-01 along with payment of fees of INR 5000.

What is the purview of the Advance Ruling rules under GST?

The advance ruling authority under GST can, by order, either admit or reject the application. However, applications may be rejected only after giving the applicant an opportunity of being heard. Also, the reasons for rejection shall need to be provided in writing.

As per the provisions, the AAR will also not allow applications in the following cases:

  • When the same matter has already been decided in an earlier case for the applicant
  • When the same matter is already pending in any proceedings for the applicant

What is the time limit of the Advance Ruling by AAR?

An advance ruling decision will be given within 90 days by the AAR from the date of the application, as per the advance ruling system for GST.

What is the scope of the Advance Ruling by AAR?

As per the advance ruling system for GST, the decision of the AAR will be binding only on the following entities:

  • Applicant
  • Jurisdictional Tax Authorities in respect of the Applicant

If at any point in time, the members of the AAR differ in opinion on any point, they will refer the point to the Appellate Authority of Advance Ruling (AAAR). In any case, any person who is not satisfied with the ruling of the AAR, can appeal to the AAAR, more of which we will understand in our next blog.

Appeals to GST First Appellate Authority

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GST-Appeals-to-First-Appellate-Authority

In our previous blog, we went through the provisions of appeals and revisions under GST, and we also understood about the 4 levels of appeals available to any taxable person, in case he is not satisfied by the decision or order passed by the Adjudicating Authority.

In this blog we will discuss about the first level i.e. appeals to GST First Appellate Authority.

Who can appeal to GST First Appellate Authority?

  • Any taxable person who is not satisfied with the order passed by an adjudicating authority or officer can appeal to the GST First Appellate Authority within 3 months from the date of the order. This period is extendable up to 1 month.
  • Even the Commissioner can appeal to the First Appellate Authority. To begin with, the officer will examine the order for its legality or propriety based on the appellant’s motion or on the Commissioner’s request. The Commissioner can then direct his subordinate officer to apply to the GST First Appellate Authority within 6 months from the date of the order.
  • Even the authorized officer can make an application to the First Appellate Authority. In such as case, the application will be treated as an appeal made against the order.

How to file GST appeals to First Appellate Authority?

  • All GST appeals to First Appellate Authority are to be made in Form GST APL-01
  • Irrespective of the appellant, the GST First Appellant Authority will issue a final acknowledgement, along with an appeal number in Form GST APL-02

Special Allowances in GST appeals to First Appellate Authority

  • Allowing Adjournment – The GST First Appellate Authority may adjourn the hearing of the appeal if there is sufficient cause, provided the reasons are recorded in writing. Adjournment will be allowed for a maximum of 3 times.
  • Allowing Additional Grounds – The First Appellate Authority can allow an appellant to go into any ground of appeal, which was not earlier specified. This will be allowed only if the First Appellate Authority feels that the omission was not wilful.

Decisions of the First Appellate Authority under GST– Points to Note

Purview of the Decision

The GST First Appellate Authority can confirm, modify or annul the original order or decision made by the adjudicating authority, but will not refer the case back to the adjudicating authority.

Communicating the Decision

The GST First Appellate Authority shall communicate the order passed to both the appellant and the adjudicating authority. A copy of the order will also be sent to the jurisdictional commissioners of CGST and SGST.

Time Limit of the Decision

The GST First Appellate Authority must pass the decision within 1 year from the date of filing the appeal. However, if the order is stayed by an order of a Court or Tribunal, the period of such stay shall be excluded from the 1 year period.

Potential Detrimental Impacts of the Decision

The GST First Appellant Authority is empowered to pass an order enhancing the fees or penalty or fine, or confiscating higher value goods, or decreasing the refund or input tax credit. However, this can be done only if the appellant has been issued a Show Cause Notice (SCN) i.e. a reasonable opportunity has been given to the appellant to show cause against the proposed detrimental order, within the specified time limits.

Revisional Authority under GST

Under GST, there is a provision kept open for revision of the orders passed by the authorities at each stage. For this purpose a special body called as the Revisional Authority is empowered. As per the rules, the Revisional Authority can, either on his own, or on the request of the Commissioner of SGST / CGST, examine the records of any proceedings.

When can revision in GST take place?

The examination for the purpose of revision can take place, if he considers that any decision taken by the subordinate officer is:

  • Prejudicial to the interest of revenue
  • Illegal
  • Improper
  • Being taken without taking into account certain material facts (whether available or not at the time of issuance of the order)
  • Not in line with an observation made by the Comptroller and Auditor General (C & AG) of India

Basis the examination, the Revisional Authority can stay the order for a time period as he deems fit. However, the person concerned will always be given an opportunity of being heard. Also, he may choose to conduct further examination as he deems fit, and can on the basis of such an examination, enhance, modify or annul the concerned decision or order.

When is revision under GST not allowed?

The Revisional Authority will not revise the order, under the following circumstances:

  • If the order was already under appeal
  • If 6 months have not passed from the date of the order i.e. there is still time left for an appeal
  • If more than 3 years have passed after the date of the order
  • If the order has already been taken for revision

In case the aggrieved tax payer is not happy with the decision of the First Appellate Authority under GST, he can progress to the next level of appeal which is the National Appellate Tribunal, which we will discuss in our next blog.

How Tally.ERP 9 Helps Tax Consultants to Generate E-way Bills

Posted on by Tally Academy

Why-Tax-Consultants-should-use-TE9-for-Generating-e–Way-Bills

Note: This blogpost is intended for tax consultants. Business owners will also find this interesting to read.

As a tax consultant, you deal with different types of clients. For some, you provide end-to-end accounting services, while for others you must be providing services up to the extent of filing GST returns. More recently, you must have come across requests to generate and manage e-Way Bills as well from those clients to whom you provide end-to-end services.

As part of GST compliance, Tally.ERP 9 can be used to manage e-Way Bills efficiently. In this blogpost, we would like to highlight how Tally.ERP 9 can be best used to your advantage for managing e-Way Bills for all your clients easily.

Avoid repetitive work while generating e-Way Bills

Clients for whom you provide end-to-end services request you to generate e-Way Bills on a continuous basis. How will you execute these requests?

One way to do this is to visit the e-Way Bill portal, provide invoice level details and transportation level details, and generate e-Way Bills.

However, in this method, you will end up spending twice the effort. Firstly, you have to provide all the details on the portal. Secondly, you have to enter these details again in your accounting software for the purpose of bookkeeping and compliance.

Another way to generate e-Way Bills is to directly record the sales entry in Tally.ERP 9. While recording the entry, you can also provide additional details that are required to generate e-Way Bills. The transaction entry can be exported as a JSON file and uploaded on the e-Way Bill portal. The portal will generate your client’s e-Way Bill. Not only for sales, you can generate e-Way Bills even for purchases and sales returns using Tally.ERP 9.

By using Tally.ERP 9, you are avoiding the repetitive activity of entering same information twice.
You get to save time and ensure that the records reflect the same values as in the transaction information used for generating e-Way Bills. This reduces the chances of manual errors as well.

Identify transactions for generating consolidated e-Way Bills

If your client wants to dispatch multiple consignments in a single vehicle to the same State, then you can generate a single consolidated e-Way Bill. If the State, place of supply, vehicle number and mode of transport are the same, then you can generate e-Way Bills for each of the invoices individually, then combine these e-Way Bills to finally generate a single consolidated e-Way Bill with Tally.ERP 9.

Tally.ERP 9 makes it even easier for you. It groups invoices based on the criteria mentioned above so that you don’t have to manually select the invoices. A consolidated bill eases the life of the transporter.

Generate e-Way Bills faster for multiple invoices

Suppose you get request to generate 10 e-Way Bills from a client. It sure is a big hassle to export data of each and every invoice in JSON format and upload them individually to the portal for generating e-Way Bills.

Tally.ERP 9 makes this easier. You can export the data of all the invoices together in a single JSON file and upload the file to the e-Way Bill portal for generating e-Way Bills. This saves your time significantly and once again helps avoid manual errors.