Staturory Updates - CA CS CMA Final IDT - May June 23

Applicable for May/June 2023 CHARTMASTER’s IDT - Statutory updates
Index/Summary of amendments
Supply .............................................................................................................................. 12
Clarification on Perquisites provided by employer to the employees as per contractual agreement
[Circular No. 172/04/2022-GST dt. 06.07.22] .............................................................................. 12
Crux: Perquisites provided by the employer to the employee in terms of contractual agreement entered into
between the employer and the employee, will not be subjected to GST. .........................................................12
Clarifications regarding applicability of GST on sale of land after levelling, laying down of drainage
lines etc. [Circular No. 177/09/2022 GST dated 03.08.2022] ...................................................... 12
Crux: Sale of developed land is also sale of land and is covered by Para 5 of Schedule III & accordingly, does
not attract GST....................................................................................................................................................12
GST applicability on liquidated damages, compensation and penalty arising out of breach of
contract or other provisions of law [Circular No. 178/10/2022-GST dated 03.08.22] .................. 12
Crux: Schedule II: Para 5(e) considers: Agreeing to the obligation ....................................................................17
 to refrain from an act, to tolerate an act or a situation or to do an act as a supply of service. ................17
To be considered as supply of service, above three activities must comply with the following conditions: ....17
(1) There must be an expressed or implied agreement or contract must exist to fall within Para 5(e) .....17
(2) Consideration must flow in return to this contract/agreement.............................................................17
Charge of GST - Section 9(3) – RCM Entries amended/New entries inserted ................... 18
Goods Transport Services ............................................................................................................. 18
Crux: w.e.f. 18.07.22, GTA has the following options: .......................................................................................18
 If it opts to pay GST under FCM: 12% GST under FCM (with ITC) & 5% GST under FCM (Without ITC). ...18
 If it does not opt to pay GST under FCM: Recipient pays 5% RCM. ...........................................................18
Government Services .................................................................................................................... 19
Crux: Other than exempt services of department of Post i.e. post card, inland letter, book post and ordinary
post (envelopes weighing less than 10 grams), all other services provided to business entity/non business
entity shall be under FCM, no RCM. ...................................................................................................................19
Renting of Residential Dwelling .................................................................................................... 19
Crux: Supplier (any person) – Recipient (RP) - renting of residential dwelling – RCM. ......................................19
Composition Levy ............................................................................................................. 21
Notification: (Notification No. 14/2019 CT dated 07.03.2019.) .................................................... 21
Crux: Irrespective of the percentage of fly ash content, manufacturers of fly ash aggregates shall not be
eligible for a composition scheme. .....................................................................................................................21
Registration...................................................................................................................... 23
Notification No. 10/2019 CT dated 07.03.19: Amended ................................................................ 23
Crux: Irrespective of the percentage of fly ash content, suppliers of fly ash aggregates shall not be eligible for
a higher threshold limit for registration of 40 lacs. ............................................................................................23
Section 29(2): Cancellation or Suspension of registration - Clause (b) & (c) amended and Rule 21:
Clause (h) & (i) inserted after (g). ............................................................................................... 25
Crux: PO Can now cancel the registration of a ...................................................................................................25
 Composition dealer: if return (GSTR 4) has not been furnished beyond 3 months from due date. ..........25
 RP other than Composition dealer (filing return quarterly- i.e. under QRMP scheme): has not furnished
returns for a continuous period of two quarter. ................................................................................................25
 RP other than Composition dealer (filing return monthly): has not furnished returns for a continuous
period of six months. ..........................................................................................................................................25
Rule 21A: Suspension of registration - Second Proviso to sub-rule (4) inserted. .......................... 27
Crux: Where the registration has been suspended under sub-rule (2A) for contravention of section
29(2)(b)/(c) i.e. non filing of return for the specified period and the registration has not been cancelled by
the PO, the suspension of registration shall be deemed to be revoked upon furnishing of all the
pending returns. .................................................................................................................................................27
Exemptions ...................................................................................................................... 29
Charitable and Religious activities ................................................................................... 29
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Entry No. 80: Training/Coaching (Entry amended) ....................................................................... 29
Crux: Services by way of training or coaching in recreational activities relating to arts or culture, by an
individual shall be exempt. .................................................................................................................................29
 Hence now of training or coaching in recreational activities relating to arts or culture if provided by
some institution/company (other than individual), GST shall be payable. ........................................................29
Entry No. 14: Hotel, Inn, Guest house etc. (Entry omitted) .......................................................... 29
Crux: W.e.f. 18.07.22: GST is payable on Services by a hotel, inn, guest house, club or campsite, etc. for
residential or lodging purposes irrespective of the value of supply. .................................................................29
Government related Services ........................................................................................... 31
Entry no. 24C: Services by the Department of Posts (Entry newly inserted) ................................. 31
Entry No. 6: Services by Government (Entry amended) ................................................................ 31
Entry No. 7: Unregistered Business Entity: (Entry amended)........................................................ 31
Entry No. 8: Government to Government services (Entry amended) ............................................. 31
Entry No. 9: Services by Government, consideration is upto Rs 5000 (Entry amended) ............... 31
Crux: W.e.f. 18.07.22: Services by the Department of Posts by way of ......................................................31
 Post card, inland letter, book post & ordinary post (envelopes weighing < 10 grams) are exempt, .........31
 All other services GST payable under FCM. ................................................................................................31
Entry No. 47A: Services by way of licensing, registration and analysis or testing of food samples
supplied by the FSSAI to Food Business Operators. (Omitted). .................................................... 31
Crux: W.e.f. 18.07.22: GST is payable on services provided by FSSAI, exemption withdrawn. .........................31
Passenger & Goods transportation services ..................................................................... 33
Entry No. 15: Transport of passengers (amended) ....................................................................... 33
Crux: w.e.f. 18.07.22 GST is payable on Passenger transportation services by air in business class from these
states. .................................................................................................................................................................33
Entry No. 19A & 19B: Transportation of goods by aircraft/vessel from CS to place outside .......... 33
Crux: w.e.f. 18.07.22: GST is payable on transportation of goods by aircraft/vessel from customs station in
India to a place outside India..............................................................................................................................33
Entry No. 20: Transportation of Goods-Rail or Vessel (amended) ................................................. 33
Crux: w.e.f. 18.07.22: GST is payable on transportation of railway equipment/materials by rail/a vessel within
India. ...................................................................................................................................................................33
Entry No. 21: Transportation of Goods – GTA (amended) ............................................................. 33
Crux: w.e.f. 18.07.22: GST is payable on GTA services by way of transportation of goods irrespective of the
amount of freight charged for a consignment/consignee. (Exemption upto Rs. 1,500/750 withdrawn)..........33
Sports related................................................................................................................... 35
Entry No. 9AA. Services provided by and to FIFA & its subsidiaries for FIFA U-17 ........................ 35
Services by way of admission and Performance ............................................................... 35
Entry No. 82A: FIFA (amended) .................................................................................................... 35
Crux: ....................................................................................................................................................................35
 FIFA U-17 Women's World Cup 2020 whenever rescheduled, Services provided by/to FIFA & its
subsidiaries hall be exempt. ...............................................................................................................................35
 Also Entry tickets shall be exempt. .............................................................................................................35
Agriculture related services ............................................................................................. 37
Entry No. 24B: Warehousing services (amended) ........................................................................ 37
Crux: w.e.f. 18.07.22: Scope of exemption narrowed and hence now exemption limited to warehousing of
cereals, pulses, fruits and vegetables. ................................................................................................................37
Entry No. 53A: Services by way of fumigation in a warehouse of agricultural produce. (Omitted).
..................................................................................................................................................... 37
Entry No. 54: Agriculture related services (amended) .................................................................. 37
Crux: w.e.f. 18.07.22: GST is payable on services by way of fumigation in a warehouse of agricultural
produce. ..............................................................................................................................................................37
Healthcare related services .............................................................................................. 39
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Entry No. 73: Services provided by the cord blood banks (Entry omitted) .................................... 39
Crux: w.e.f. 18.07.22: GST is payable on services by cord blood bank, exemption withdrawn. ........................39
Entry No. 74: Health Care Services (Entry amended) .................................................................... 39
Crux: W.e.f. 18.07.22: GST is payable on services provided by a clinical establishment by way of providing
room having room charges exceeding Rs. 5,000 per day charged to a person receiving health care services. 39
 Exemption shall continue to apply on room charges for Intensive Care Unit (ICU)/Critical Care Unit
(CCU)/Intensive Cardiac Care Unit (ICCU)/Neo natal Intensive Care Unit (NICU) irrespective of the amount
charged. ..............................................................................................................................................................39
Entry No. 75: Bio-medical waste treatment (Entry omitted) ......................................................... 39
Crux: w.e.f. 18.07.22: GST is payable on Services provided by operators of the common bio-medical waste
treatment facility. ...............................................................................................................................................39
Miscellaneous services ..................................................................................................... 41
Entry No. 12: Renting of Residential house (Entry amended) ....................................................... 41
Crux: Renting of residential dwelling to a registered person: GST payable under RCM ....................................41
Services by specified organisations .................................................................................. 41
Entry No. 26: Services by Reserve Bank of India (RBI). (Entry Omitted) ...................................... 41
Entry No. 32: Services provided by the Insurance Regulatory and Development Authority of India
to insurers under the IRDA of India Act, 1999. (Entry omitted) ................................................... 41
Entry No. 33: Services provided by the Securities and Exchange Board of India. (Entry omitted) 41
Entry No. 51: Services provided by the GSTN to CG/SG/UT for implementation of GST (Omitted).
..................................................................................................................................................... 41
Crux: w.e.f. 18.07.22: Services provided by RBI, IRDA, SEBI, GSTN to CG/SG/UT made taxable. ......................41
Entry No. 52A. Tour operator service (New Entry) ........................................................................ 41
Crux: Tour operator service, which is performed partly in India & partly outside India, supplied to a foreign
tourist, to the extent of value of the tour operator service which is performed outside India shall be exempt.
............................................................................................................................................................................41
Entry No. 56: Services by way of slaughtering of animals (Entry omitted): w.e.f. 18.07.22: GST
payable ......................................................................................................................................... 41
Entry no. 42: Services received by the RBI, from outside India in relation to management of
foreign exchange reserves. (Entry omitted) ................................................................................. 41
Crux: Services received by RBI from outside India, results into Import of Service on which tax is payable under
RCM, however earlier it was exempt now made taxable, exemption withdrawn. ............................................41
Circular: Clarifications regarding applicable GST rates & exemptions on certain services. [Circular
No. 177/09/2022 GST dated 03.08.2022] .................................................................................... 43
Crux: Fee charged- ..............................................................................................................................................43
(1) From prospective students for entrance or admission, .........................................................................43
(2) from prospective students for issuance of eligibility certificate to them in the process of their
entrance/admission. ...........................................................................................................................................43
(3) For issuance of migration certificates by educational institutions to the leaving or ex-students. ........43
All the above 3 are covered under exemption entry 66.....................................................................................43
Crux: Yes, Exemption under Sl. No. 9B cover services associated with transit cargo both to and from Nepal
and Bhutan. ........................................................................................................................................................43
It is also clarified that movement of empty containers from Nepal and Bhutan, after delivery of goods there,
is a service associated with the transit cargo to Nepal & Bhutan and is therefore covered by the exemption.
............................................................................................................................................................................43
Crux: Yes they are exempt. Overloading charges at toll plazas/Higher toll charges from vehicles not having
Fastag: Same treatment as given to toll charges. Hence exempt. .....................................................................43
Crux: No. The abnormality/disease/ailment of infertility is treated using ART procedure such as IVF. It is
clarified that services by way of IVF are also covered under the definition of health care services for
the purpose of exemption notification. .............................................................................................................43
Crux: No, The exemption shall not be applicable where contract carriage is hired for a period of time,
during which the contract carriage is at the disposal of the service recipient and the recipient is thus free to
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decide the manner of usage (route and schedule) subject to conditions of agreement entered into with the
service provider. .................................................................................................................................................43
Hence, Hiring of vehicles by firms for transportation of their employees to and from work is not transport of
passengers by non-air conditioned contract carriage, Exemption shall not be applicable................................43
Crux: No, As per Entry 17(d), transportation of passengers by public transport, other than predominantly for
tourism purpose, in a vessel between places located in India is exempted. .....................................................43
It is clarified that exemption would apply to tickets purchased for transportation from one point to another
irrespective of whether the ferry is owned or operated by a private sector enterprise or by a
PSU/government. ...............................................................................................................................................43
Crux: Yes GST is applicable. ................................................................................................................................43
The exemption under entry 3 & 3A has been given on pure services & composite supplies procured
by CG, SG, UTs or local authorities for performing functions listed in the 11th and 12th schedule of the
constitution.........................................................................................................................................................43
It is clarified that if such services are procured by Indian Army or any other Government
Ministry/Department which does not perform any functions listed in the 11th and 12th Schedule, in the
manner as a local authority does for the general public, the same are not eligible for exemption under Sl. No.
3 and 3A. .............................................................................................................................................................44
Crux: No, Such renting of trucks and other freight vehicles with driver for a period of time is a service of
renting of transport vehicles with operator and not service of transportation of goods by road.....................44
Consequently, it is not eligible for exemption under Entry 18...........................................................................44
Crux: Yes, Location charges or preferential location charges (PLC) paid upfront in addition to the lease
premium for long term lease of land constitute part of upfront amount charged for long term lease of land
and are eligible for the same tax treatment, and thus eligible for exemption under Entry 41. ........................44
Crux: Yes GST is applicable. It’s a supply of service. However, guest anchors whose aggregate turnover in a
financial year does not exceed Rs. 20 lakh (Rs. 10 lakh in case of specified Special Category States) shall not
be liable to take registration and pay GST..........................................................................................................44
Tax Invoice, Credit and Debit notes .................................................................................. 45
Section 34(2): Credit note disclose in the return within time ....................................................... 45
Crux: W.e.f. 01.10.22, the maximum time limit to disclose/report a credit note .............................................45
 30th day of November of next financial year or.........................................................................................45
 Date of filing of annual return, whichever is earlier...................................................................................45
Notification Seeks to notify certain class of registered persons required to issue e-invoice ......... 45
[Notification No. 13/2020– Central Tax dated 21.03.20 (Effective 01.10.2020)] ......................... 45
Crux: w.e.f. 01.10.22: E-invoicing provisions shall apply to RP whose ATO in any PFY from 17-18 onwards
exceeds 10 crores. ..............................................................................................................................................45
Rule 46: Particulars to be stated in a tax Invoice ......................................................................... 45
Crux: RP, whose ATO in any PFY from 17-18 onwards > 10 crores, but are not issuing e-invoice, shall mention
the following declaration in the invoice issued by them. “I/We hereby declare that though our aggregate
turnover in any preceding financial year from 2017-18 onwards is more than the aggregate turnover notified
under sub-rule (4) of rule 48, we are not required to prepare an invoice in terms of the provisions of the said
sub-rule.” ............................................................................................................................................................45
Input Tax Credit ............................................................................................................... 48
Section 16: Eligibility and conditions for taking ITC ..................................................................... 48
Rule 36: Documentary requirements and conditions for claiming input tax credit ........................ 48
Crux: ....................................................................................................................................................................48
 Since form GSTR 2 has been omitted, its reference from Rule 36 has also been omitted. .......................48
 Words added ‘input tax credit in respect of’ - Drafting error corrected. ...................................................48
Section 16(2): Conditions for claiming ITC – New clause added ................................................... 48
Crux: Additional condition introduced to claim ITC: ITC w.r.t. a supply communicated in GSTR 2B shall be
availed by the RP only if it has not been restricted. Further, owing to omission of section 43A, reference to
section 43A has also been removed from clause (c) of section 16(2). ...............................................................48
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Section 16(4): Maximum time limit to claim ITC relating to Invoice or debit note ........................ 48
Crux: W.e.f. 01.10.22, the maximum time limit to claim ITC relating to Invoice or debit note .........................48
 Date of filing of annual return, whichever is earlier...................................................................................48
Rule 37: Reversal of input tax credit in the case of non-payment of consideration ....................... 49
Crux: ....................................................................................................................................................................49
- Reference of GSTR-2 omitted. ....................................................................................................................49
- Now in-case of non-payment of Value + GST to the supplier within 180 days from date of invoice, RP
shall pay the ITC availed with interest u/s 50, while furnishing GSTR-3B for the tax period immediately
following the period of 180 from the date of the issue of the invoice. .............................................................49
- Interest shall be paid u/s 50 means interest @ 18% from date to utilisation of credit till the date of
reversal of such credit. .......................................................................................................................................49
- Subsequently if payment is made to supplier, ITC reversed can be re-availed..........................................49
- Time limit u/s 16(4) shall not apply to re-availment. .................................................................................49
Section 41: Availment of input tax credit. ..................................................................................... 51
Crux: Section 41 has been substituted. Now section 41 provided that .............................................................51
 a person shall be entitled to avail ITC, as self-assessed, in his return & such amount shall be credited to
his E-credit ledger on a final basis & not on a provisional basis (as earlier). .....................................................51
 If the tax has not been paid by the supplier, the credit availed by a RP shall be reversed with interest. .51
 Later on if the supplier makes the payment of tax, credit can be re-availed by the RP. ...........................51
 However, the reversal and re-availment shall be as may be prescribed, CG is yet to prescribe the rule..51
Section 17: Apportionment of Credit and Blocked credit ............................................................... 51
Rule 42: Manner of determination of IT in respect of I/IS used for business/ non-business
purpose or taxable (incl. ZRS) and Exempt supplies. .................................................................... 51
Crux: Reference of GSTR-2 deleted. ...................................................................................................................51
Rule 43: Manner of determination of ITC in respect of capital goods & reversal thereof in certain
cases ............................................................................................................................................ 51
Crux: Clause (d) above has been inserted w.e.f. 05.07.2022. Although the GST on duty credit scrips has been
exempted, for the purpose of apportionment, the aggregate value of exempt supplies shall exclude: the
value of supply of Duty Credit Scrips. Hence now, no reversal w.r.t. duty credit scrip shall be done under rule
42 & 43................................................................................................................................................................52
Section 17(4): Banking Co. and Financial Institutions Including NBFC ......................................... 52
Rule 38: Claim of credit by a banking company or a financial institution ...................................... 52
Crux: Reference of GSTR-2 deleted and reference for GSTR 3B for reversal inserted. ......................................52
Reference of Section 42 & 43 has been omitted from the act & hence clause (d) deleted. ..............................52
Availment of ITC not blocked in case of leasing, other than leasing of motor vehicles, vessels and
aircrafts [Circular No. 172/04/2022 GST dated 06.07.2022] ....................................................... 54
Crux: “leasing” referred in 17(5)(b)(i) refers to leasing of motor vehicles, vessels and aircrafts only and not to
leasing of any other items. Accordingly, availment of ITC is not barred in case of leasing, other than leasing of
motor vehicles, vessels and aircrafts. .................................................................................................................54
Crux: Proviso after section 17(5)(b)(iii) is applicable to the whole of section 17(5)(b). .....................................54
Payment of Tax ................................................................................................................ 55
Section 49(1): .............................................................................................................................. 55
Rule 87: Electronic Cash Ledger ................................................................................................... 55
Crux: New modes for depositing an amount in E-cash ledger introduced, now deposit can be made using UPI
& IMPS. ...............................................................................................................................................................55
For deposit using IMPS mode, the mandate form shall be generated along with the challan on the common
portal and the same shall be submitted to the bank from where the payment is to be made. ........................55
Section 49(2): .............................................................................................................................. 55
Crux: Since section 43A is omitted from the act, its reference from section 49 has been deleted. ..................55
Section 49(4): .............................................................................................................................. 55
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Crux: GST Act never stated that credit in E-credit ledger can be restricted, but restriction introduced via Rule
86A, now act amended to allow such restriction. Backing of act provided to rule 86A. ...................................55
Section 49(7): .............................................................................................................................. 56
Rule 85: Electronic Liability Register ............................................................................................ 56
Crux: Since section 42 & 43 are omitted from the act, their reference from the rule has been deleted. .........56
Section 49(10): ............................................................................................................................ 56
Rule 87: Electronic Cash Ledger ................................................................................................... 56
Crux: Section 49(10)(b) introduced. ...................................................................................................................56
 Any amount of tax, interest, penalty, fee or any other amount available under CGST head in E-cash
ledger can be transferred to the CGST & IGST head of E-cash ledger of a distinct person u/s 25(4) & 25(5)
using form GST PMT 09. .....................................................................................................................................56
 Similar provisions introduced under IGST act also, hence any amount available under IGST head of E-
cash ledger can be transferred to the CGST & IGST head of E-cash ledger of a distinct person. ......................57
 Such transfer to distinct person shall not be allowed if the said registered person has any unpaid liability
in his electronic liability register. ........................................................................................................................57
Section 49(12): ............................................................................................................................ 57
Crux: There was no provision in the act backing Rule 86B, hence backing of act provided to rule 86B by
introducing section 49(12)..................................................................................................................................57
Rule 86: Electronic Credit Ledger .................................................................................................. 57
Crux: With effect from 05.07.2022, In case of a wrongly sanctioned refund: Where a RP deposits the amount
of erroneous refund u/s 54(3)(a) or under rule 96(3), along with interest & penalty through GST DRC 03, by
debiting E-cash ledger, the amount of erroneous refund deposited by the RP shall be re-credited to the E-
credit ledger by the PO by an order made in FORM GST PMT-03A. ..................................................................57
Section 50: Interest on delayed payment of Tax ........................................................................... 57
Rule 88B: Manner of calculating interest on delayed payment of tax. ........................................... 58
Crux: ....................................................................................................................................................................60
 ITC wrongly availed & utilised, interest payable from the date of utilisation till it is paid back. ...............60
Note: Amendment vide Finance act 2022 w.e.f. 01.07.2017, interest shall be 18% on ITC wrongly availed &
utilised. ...............................................................................................................................................................60
ITC wrongly availed shall be construed to have been utilised, when the balance in the electronic credit ledger
falls below the amount of input tax credit wrongly availed. ..............................................................................60
Date of Utilisation shall be: ................................................................................................................................60
(a) If ITC wrongly availed is utilised to pay tax through return, then due date of return or actual date of
filing, whichever is earlier. ..................................................................................................................................60
(b) If ITC wrongly availed is utilised to pay tax in all other cases, the date of debit in the e-credit ledger. 60
Circular: Utilisation of the amounts available in the e credit ledger and e cash ledger for payment
of tax and other liabilities [Circular No. 172/04/2022-GST dt. 06.07.22] .................................... 61
Crux: ....................................................................................................................................................................61
 Output tax, whether self-assessed/payable as a consequence of any proceeding can be paid by
utilization of E-credit ledger. .............................................................................................................................61
 E-credit ledger cannot be used for making payment of tax which is payable under RCM.............61
Crux: ....................................................................................................................................................................61
 E-credit ledger cannot be used for making payment of any interest, penalty, fees or any other
amount payable. ...............................................................................................................................................61
 E-credit ledger cannot be used for payment of erroneous refund sanctioned to the taxpayer,
where such refund was sanctioned in cash. .......................................................................................................61
Crux: E-cash ledger may be used for making any payment towards tax, interest, penalty, fees or any other
amount payable. .................................................................................................................................................61
TDS & TCS ........................................................................................................................ 63
Section 52(6): Rectification of error in GSTR 8, if mistakes or error are discovered later ............. 63
Crux: Now the maximum time limit for rectification of error/omission discovered later in GSTR-8 shall be: ..63
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 Date of filing of annual statement, whichever is earlier ............................................................................63
Returns ............................................................................................................................ 65
Section 37: Furnishing details of outward supplies ....................................................................... 65
Crux: Power to impose conditions & restriction on furnishing GSTR 1 by the supplier introduced in section 37.
Further the details of outward supplies furnished by supplier in GSTR 1 which is communicated to recipient
in GSTR-2B made subject to such conditions and restrictions, as may be prescribed. ......................................65
Crux: Now the maximum time limit for rectification of error or omission in respect of the details furnished in
GSTR 1 shall be: Earlier of ...................................................................................................................................66
 Date of filing of relevant annual return ......................................................................................................66
Crux: Restriction imposed on filing of GSTR 1, RP shall not be allowed to file GSTR 1 for a tax period, if GSTR-1
for previous tax periods has not been furnished by him....................................................................................66
Also government empowered to exempt a RP/a class of RPs from such restriction. ........................................66
Section 38: Furnishing details of inward supplies (Section substituted) ....................................... 66
Crux: Section 38 earlier was talking about GSTR 2 (Statement of Inward supplies), but GSTR 2 was ever
implemented, Now GSTR 2 has been omitted and hence the section has been substituted. Now Substituted
section 38 talks about auto generated GSTR 2B, wherein .................................................................................66
- details of Inward supplies in respect of which credit can be availed and ..................................................66
- details of supplies in respect of which such credit cannot be availed (i.e. restricted) shall be provided. .67
Rule 60: Form and manner of ascertaining details of inward supplies.- ....................................... 67
Crux: Better language used in act, word ‘auto-generated’ used instead to ‘auto-drafted’. ..............................67
Section 39: Furnishing of returns ................................................................................................. 67
Section 39(5): NRTP ..................................................................................................................... 67
Crux: Now the time limit for NRTP to furnish GSTR 5 shall be, Earlier of: .........................................................67
 13th days after the end of a calendar month or ..........................................................................................67
 Within seven days after the last day of the period of registration specified u/s 27(1)..............................67
Section 39(7): Tax shall be paid on/before the last date of filing return ...................................... 67
Crux: QRMP tax payers are given an option to pay tax, either on self-assessment basis or fixed sum method
i.e. (35% challan), this option of fixed sum method was allowed to them by the CG using the power under
section 148, now CG given the power vide insertion of point (b) in proviso to section 39(7). ..........................67
Section 39(9): Rectification of omission or incorrect particulars .................................................. 68
Crux: Now the maximum time limit for rectification of error or omission in respect of the details furnished in
GSTR 3B shall be: Earlier of .................................................................................................................................68
 Date of filing of relevant annual return ......................................................................................................68
Section 39(10): Return of previous tax periods to be furnished for filling return of current tax
period ........................................................................................................................................... 68
Crux: Now a person shall not be allowed to furnish his GSTR 3B unless GSTR 3B of previous tax period or
GSTR 1 for the current tax period has been furnished. ......................................................................................68
Section 44: Annual Return ............................................................................................................ 68
Crux: The RP, whose ATO in the FY 2021-22 is upto Rs. 2 crores has been exempted from filing AR. ..............68
Section 47: Levy of late fee........................................................................................................... 68
Crux: ....................................................................................................................................................................69
 Since section 38 is omitted, its reference from section 47 also has been omitted. ..................................69
 Section 47 had not prescribed a late fees for late filing of monthly statement i.e. GSTR 8 by TCS
collector, now section 47 has been amended to cover section 52, in order to impose late fees on late filing of
GSTR 8. Hence now the late fee on GSTR 8 is Rs 100 per day upto a maximum of Rs 5000 (under CGST act). 69
Goods and services tax practitioners (GSTPs) .............................................................................. 69
Crux: Since Form GSTR 2 i.e. details of inwards supplies, has now been omitted from the act, its reference
from section 48 & rule 80 has been omitted. ....................................................................................................69
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Offences & Penalties ........................................................................................................ 73
Clarification on various issues relating to applicability of demand and penalty provisions
under the Central Goods and Services Tax Act, 2017 in respect of transactions involving fake
invoices [Circular No. 171/03/2022-GST dt. 06.07.22] ................................................................ 73
Crux: Situation: “A” has issued tax invoice to “B” a RP without supply. .....................................................73
 Issue of fake invoice without supply, does not amount to supply .............................................................73
 No demand & recovery/penal action is required to be made against ‘A’ u/s 73/74. ................................73
 But ‘A’ shall be liable for penalty u/s 122(1) (ii) for issuing fake tax invoices. ...........................................73
 Penalty: Higher of: Rs. 10,000/ITC passed on. (Under CGST act). ..............................................................73
Crux: Situation: ‘A’ issues fake invoice to ‘B’ and B avails the ITC & uses it to pay OTL on real supply, ............74
 ‘B’ has contravened provisions of sec 16(2)(b), he shall be liable for the demand & recovery of the ITC
& penal action, u/s 74 (i.e. Tax, Interest & Penalty us/ 74). .............................................................................74
 But no penalty under any other section (including section 122). ..............................................................74
Crux: Situation: ‘A’ issued fake invoice to ‘B’, ‘B’ further issued fake invoice to ‘C’ ..........................................74
Against ‘A’: Since no supply, No demand & recovery u/s 73/74. Penalty u/s 122(1) (ii): Rs. 10,000/ITC passed
on Against ‘B’: No demand & recovery u/s 73/74. Penalty u/s 122(1) (ii): issues invoice without supply: Higher
of: 10,000/ITC passed on & ................................................................................................................................74
Penalty 122(1) (vii): takes or utilizes ITC without actual receipt: Higher of Rs. 10,000/ITC availed. ................74
Exports under GST ............................................................................................................ 75
Rule 96: Refund of integrated tax paid on goods or services exported out of India ...................... 75
Refer YouTube amendment class. ......................................................................................................................77
Refunds ............................................................................................................................ 79
Section 54(1): Application for refund within 2 years from relevant date ...................................... 79
Rule 89: Application for refund of tax, interest, penalty, fees or any other amount ...................... 79
Crux: w.e.f. 01.10.22: Refund of balance in E-cash ledger has to be claimed by filing GST RFD 01. Earlier
specified officer was not defined in the act, now definition of specified officer inserted, its borrowed from
SEZ rules..............................................................................................................................................................79
Section 54(2): Refund to UIN holders ........................................................................................... 79
Crux: The time limit to claim refund of tax paid by UIN holders on inward supplies extended from 6 months
to 2 years from the last day of the quarter in which such supply was received. ...............................................80
Section 54(10): PO may withhold refund in certain cases ............................................................ 80
Crux: Earlier the provisions of withholding u/s 54(10) was limited to ITC refund i.e. due u/s 54(3) only, post
amendment any refund due to a RP can be withheld by PO in case of default in furnishing any return or if RP
is required to pay any tax, interest or penalty. ..................................................................................................80
Section 54: In the Explanation in clause (2) after sub-clause (b), (ba)inserted ........................... 80
Crux: Relevant date in case of SEZ supplies: the due date for furnishing of return under section 39 in respect
of such supplies. .................................................................................................................................................80
Rule 89(2): Documentary evidence to obtain refund .................................................................... 80
Crux: Documentary evidence prescribed for claiming refund, in case refund is on account of export of
electricity. Exporters of electricity are required to submit: ...............................................................................81
 a statement containing the number and date of the export invoices, details of energy exported, tariff
per unit for export of electricity as per agreement,....................................................................................81
 along with the copy of statement of scheduled energy for exported electricity by Generation
Plants issued by the Regional Power Committee Secretariat and .....................................................................81
 the copy of agreement detailing the tariff per unit. ..................................................................................81
Section 54 (3): Refund of unutilized ITC....................................................................................... 81
Rule 89(4): Refund claim in case of ZRSs ..................................................................................... 81
Crux: The value of goods exported out of India shall be taken as: ....................................................................81
(i) the Free on Board (FOB) value declared in the Shipping Bill or Bill of Export ............................................81
(ii) the value declared in tax invoice or bill of supply, .................................................................................81
whichever is less. ................................................................................................................................................81
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Rule 89(5): Refund claim by person having inverted tax structure: refundable ITC to be computed
as follows: .................................................................................................................................... 81
Crux: Formula for claiming refund of ITC in case of Inverted duty structure amended, Refer YouTube
amendment lecture for detailed discussion. ......................................................................................................81
Rule 95A: Refund of taxes to the retail outlets established in departure area of an international
Airport beyond immigration counters making tax free supply to an outgoing international tourist.
..................................................................................................................................................... 82
Crux: This rule has been omitted retrospectively effect from 01.07.2019. Owing to this omission, Circular No.
106/25/2019 GST dated 29.06.2019 has been withdrawn, wherein certain clarifications were given in relation
to rule 95A. .........................................................................................................................................................82
Clarification on various issues relating to refund claimed by the recipients of supplies in respect of
deemed export [Circular No. 172/04/2022 GST dated 06.07.2022] ............................................. 82
Crux: ITC so availed by the recipient of deemed export supplies would not be subjected to provisions of
Section 17. ..........................................................................................................................................................82
Crux: ITC availed by the recipient of deemed export supply for claiming refund of tax paid on supplies
regarded as deemed exports is not to be included in the “Net ITC” for computation of refund of unutilised
ITC under rule 89(4)/ rule 89(5)..........................................................................................................................82
Refund of accumulated ITC on account of inverted duty structure allowed in cases where rate of
tax on outward supply is less than the rate of tax on inputs (same goods) at the same point of
time. [Circular No. 173/05/2022 GST dated 06.07.2022] ............................................................ 83
Crux: Cases where though inputs and output goods are same but the output supplies are made under a
concessional notification due to which the rate of tax on output supplies is less than the rate of tax on inputs.
In such cases, as the rate of tax of output supply is less than the rate of tax on inputs at the same point of
time due to supply of goods by the supplier under such concessional notification, the credit accumulated on
account of the same is admissible for refund. ...................................................................................................83
Miscellaneous Provisions .................................................................................................. 86
Section 168: Power to issue instructions or directions ................................................................. 86
Customs ........................................................................................................................... 87
Importation, Exportation & Transportation of goods ........................................................ 87
Specified deposits exempted from provisions of electronic cash ledger [Section 51A] ................. 87
Crux: CBIC has specified certain deposits which are exempted from provisions of payment through electronic
cash ledger: -.......................................................................................................................................................87
(i) with respect to goods imported or exported in customs stations where customs automated system is
not in place; ........................................................................................................................................................87
(ii) with respect to accompanied baggage; ..................................................................................................87
(iii) other than those used for making payment of, - ...................................................................................87
(a) any duty of customs, including cesses and surcharges levied as duties of customs; .............................87
(b) IGST; ........................................................................................................................................................87
(c) GST Compensation Cess; ........................................................................................................................87
(d) Interest, penalty, fees or any other amount payable under the said Act, or the Customs Tariff Act,
1975. 87
Valuation under customs .................................................................................................. 88
Section 14 amended to address the issue of undervaluation in imports ....................................... 88
Crux: Just for knowledge amendment. Please follow valuation method as taught in class. No change in
Valuation owing to this amendment. .................................................................................................................88
Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules,
2022 ................................................................................................................................. 89
Rule 1: Short title and commencement ......................................................................................... 89
Rule 2: Application ....................................................................................................................... 89
Rule 3: Definition .......................................................................................................................... 89
Rule 4: Information to give prior information ............................................................................... 89
Rule 5: Procedure to be followed .................................................................................................. 90
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Rule 6: Importer to maintain records. .......................................................................................... 90
Rule 7: Procedure for allowing imported goods for job work ........................................................ 91
Rule 8: Procedure for allowing imported goods for unit transfer. ................................................. 91
Rule 9: Procedure for supplying imported goods to the end use recipient. ................................... 92
Rule 10: Re-export or clearance of unutilised or defective goods. ................................................ 92
Rule 11: Recovery of duty in certain case. .................................................................................... 93
Rule 12. Penalty ........................................................................................................................... 93
Rule 13: ........................................................................................................................................ 93
Crux: Many amendment carried out in this rules, Refer YouTube for complete discussion on these rules. .....93
Foreign Trade Policy ......................................................................................................... 97
Applicability of FTP extended till 31.03.2023 ................................................................................ 97
Crux: Foreign Trade Policy (FTP), 2015-2020 extended till 31.03.23. ................................................................97
Exemption from IGST and GST compensation cess, in case of imports under Advance
Authorisation, EPCG, EOU/EHTP/STP/BTP units, granted without any time restriction ................ 97
Crux: Exemption from IGST and GST compensation cess, in case of imports under Advance Authorisation,
EPCG, EOU/EHTP/STP/BTP units, granted without any time restriction............................................................97
Provisions relating to denomination of export contracts amended ............................................... 97
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Supply
Clarification on Perquisites provided by employer to the employees as per contractual agreement

[Circular No. 172/04/2022-GST dt. 06.07.22]
Issue: Whether various perquisites provided by the employer to its employees in terms of
contractual agreement entered into between the employer and the employee are liable for GST?
Clarification: Schedule III to the CGST Act provides that “services by employee to the employer in the
course of or in relation to his employment” will not be considered as supply of goods or services and hence
GST is not applicable on services rendered by employee to employer provided they are in the course of or
in relation to employment.
Any perquisites provided by the employer to its employees in terms of contractual agreement entered into
between the employer and the employee are in lieu of the services provided by employee to the employer
in relation to his employment. It follows therefrom that perquisites provided by the employer to the
employee in terms of contractual agreement entered into between the employer and the employee, will not
be subjected to GST when the same are provided in terms of the contract between the employer and
employee.
Crux: Perquisites provided by the employer to the employee in terms of contractual agreement entered
into between the employer and the employee, will not be subjected to GST.
Clarifications regarding applicability of GST on sale of land after levelling, laying down of
drainage lines etc. [Circular No. 177/09/2022 GST dated 03.08.2022]
Issue: Whether GST is applicable on sale of land after levelling, laying down of drainage lines
etc.
Clarification: As per Sl no. (5) of Schedule III of the Central Goods and Services Tax Act, 2017, ‘sale of
land’ is neither a supply of goods nor a supply of services, therefore, sale of land does not attract GST.
Land may be sold either as it is or after some development such as levelling, laying down of drainage
lines, water lines, electricity lines, etc. It is clarified that sale of such developed land is also sale of land
and is covered by Sr. No. 5 of Schedule III of the Central Goods and Services Tax Act, 2017 and
accordingly does not attract GST.
However, it may be noted that any service provided for development of land, like levelling, laying of
drainage lines (as may be received by developers) shall attract GST at applicable rate for such services.
Crux: Sale of developed land is also sale of land and is covered by Para 5 of Schedule III & accordingly,
does not attract GST.
GST applicability on liquidated damages, compensation and penalty arising out of breach of
contract or other provisions of law [Circular No. 178/10/2022-GST dated 03.08.22]
In certain cases/instances, questions have been raised regarding taxability of an activity or transaction as
the supply of service of agreeing to the obligation to refrain from an act or to tolerate an act or a
situation, or to do an act.
Applicability of GST on payments in the nature of liquidated damage, compensation, penalty, cancellation
charges, late payment surcharge etc. arising out of breach of contract or otherwise and scope of the entry
at para 5 (e) of Schedule II of CGST Act in this context has been examined in the following paragraphs.
“Agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an

act” has been specifically declared to be a supply of service in para 5(e) of Schedule II of CGST
Act if the same constitutes a “supply” within the meaning of the Act. The said expression has
following three limbs: -
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a. Agreeing to the obligation to refrain from an act-
Examples of activities that would be covered by this part of the expression would include
 Non-compete agreements, where one party agrees not to compete with the other party in a
product, service or geographical area against a consideration paid by the other party.
 a builder refraining from constructing more than a certain number of floors, even though
permitted to do so by the municipal authorities, against a compensation paid by the neighbouring
housing project, which wants to protect its sunlight, or
 An industrial unit refraining from manufacturing activity during certain hours against an
agreed compensation paid by a neighbouring school, which wants to avoid noise during those hours.
b. Agreeing to the obligation to tolerate an act or a situation-

Some Examples would include activities such as
 a shopkeeper allowing a hawker to operate from the common pavement in front of his shop against
a monthly payment by the hawker, or
 An RWA tolerating the use of loud speakers for early morning prayers by a school located in the
colony subject to the school paying an agreed sum to the RWA as compensation.
c. Agreeing to the obligation to do an act-

This would include the case
- Where an industrial unit agrees to install equipment for zero emission or discharge at the behest of
the RWA of a neighbouring residential complex against a consideration paid by such RWA, even
though the emission/discharge from the industrial unit was within permissible limits and there was
no legal obligation upon the individual unit to do so.
The description “agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to
do an act” was intended to cover services such as described above. However, over the years doubts have
persisted regarding various transactions being classified under the said description.
Some of the important examples of such cases are Service Tax/GST demands on –
i. Liquidated damages paid for breach of contract;
ii. Compensation given to previous allottees of coal blocks for cancellation of their licenses pursuant
to Supreme Court Order;
iii. Cheque dishonor fine/penalty charged by a power distribution company from the customers;
iv. Penalty paid by a mining company to State Government for unaccounted stock of river bed material;
v. Bond amount recovered from an employee leaving the employment before the agreed period;
vi. Late payment charges collected by any service provider for late payment of bills;
vii. Fixed charges collected by a power generating company from State Electricity Boards (SEBs) or by
SEBs/DISCOMs from individual customer for supply of electricity;
viii. Cancellation charges recovered by railways for cancellation of tickets, etc.
In some of these cases, tax authorities have initiated investigation and in some advance ruling authorities
have upheld taxability.
A perusal of the entry at serial 5(e) of Schedule II would reveal that it comprises the
aforementioned three different sets of activities viz. (a) the obligation to refrain from an act,
(b) obligation to tolerate an act or a situation and (c) obligation to do an act.
Above three activities must comply with the following conditions:

1. There must be an expressed or implied agreement or contract must exist
Above three activities must be under an “agreement” or a “contract” (whether express or implied) to
fall within the ambit of para 5(e) of Schedule II. In other words, one of the parties to such
agreement/contract (the first party) must be under a contractual obligation to either (a) refrain or (b)
tolerate or (c) do.
Such contractual arrangement must be an independent arrangement in its own right. Such
arrangement/agreement can take the form of an independent stand- alone contract or may form part
CA Ramesh Soni | +91 93536 19482 13

of another contract. Thus, a person (the first person) can be said to be making a supply by way of
refraining from doing something or tolerating some act or situation to another person (the second
person) if the first person was under an obligation to do so and then performed accordingly.
Such a contract cannot be imagined or presumed to exist just because there is a flow of
money from one party to another. There must be an expressed or implied promise by the recipient
of money to agree to do or abstain from doing something in return for the money paid to him.
2. Consideration must flow in return to this contract/agreement

Further some “consideration” must flow in return from the other party to this contract/agreement (the
second party) to the first party for such (a) refraining or (b) tolerating or (c) doing.
Contractual arrangement can be independent or part of another contract

Such contractual arrangement must be an independent arrangement in its own right. Such arrangement or
agreement can take the form of an independent stand- alone contract or may form part of another contract.
Thus, a person (the first person) can be said to be making a supply by way of refraining from
doing something or tolerating some act or situation to another person (the second person) if the
first person was under an obligation to do so and then performed accordingly.
Taxability of these transactions is discussed in greater detail in the following paragraphs.
Liquidated Damages
It is common for the parties entering into a contract, to specify in the contract itself, the compensation that
would be payable in the event of the breach of the contract. Black’s Law Dictionary defines ‘Liquidated
Damages’ as cash compensation agreed to by a signed, written contract for breach of contract, payable to
the aggrieved party.
The taxability or otherwise of liquidated damages is clarified as under:
It is argued that performance is the essence of a contract. Liquidated damages cannot be said to be a
consideration received for tolerating the breach or non-performance of contract. They are rather payments
for not tolerating the breach of contract. Payment of liquidated damages is stipulated in a contract to ensure
performance and to deter non-performance, unsatisfactory performance or delayed performance.
Liquidated damages are a measure of loss and damage that the parties agree would arise due to breach of
contract. They do not act as a remedy for the breach of contract. They do not restitute the aggrieved
person. A contract is entered into for execution and not for its breach. The liquidated damages or penalty
are not the desired outcome of the contract. By accepting the liquidated damages, the party aggrieved by
breach of contract cannot be said to have permitted or tolerated the deviation or non-fulfilment of the
promise by the other party. Where the amount paid as ‘liquidated damages’ is an amount paid only to
compensate for injury, loss or damage suffered by the aggrieved party due to breach of the contract and
there is no agreement, express or implied, by the aggrieved party receiving the liquidated damages, to
refrain from or tolerate an act or to do anything for the party paying the liquidated damages, in such cases
liquidated damages are merely a flow of money from the party who causes breach of the contract to the
party who suffers loss or damage due to such breach. Such payments do not constitute consideration for a
supply and are not taxable.
Examples of such cases are:
(1) damages resulting from damage to property, negligence, piracy, unauthorized use of trade name,
copyright,
(2) penalty stipulated in a contract for delayed construction of houses,
(3) forfeiture of earnest money by a seller in case of breach of ‘an agreement to sell’ an immovable property
by the buyer or by Government or local authority in the event of a successful bidder failing to act after
winning the bid, for allotment of natural resources.
The key in such cases is to consider whether the impugned payments constitute consideration
for another independent contract envisaging tolerating an act or situation or refraining from
doing any act or situation or simply doing an act. If the answer is yes, then it constitutes a
‘supply’ irrespective of by what name it is called, otherwise it is not a “supply”.
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If the payment is merely an event in the course of the performance of the agreement and it does not
represent the ‘object’, as such, of the contract then it cannot be considered ‘consideration’.
On the contrary, consider the following examples:
(1) A contract may provide that payment by the recipient of goods or services shall be made before a
certain date and failure to make payment by the due date shall attract late fee or penalty.
(2) A contract for transport of passengers may stipulate that the ticket amount shall be partly or wholly
forfeited if the passenger does not show up.
(3) A contract for package tour may stipulate forfeiture of security deposit in the event of cancellation of
tour by the customer.
(4) A contract for lease of movable or immovable property may stipulate that the lessee shall not terminate
the lease before a certain period and if he does so he will have to pay certain amount as early
termination fee or penalty.
(5) Some banks similarly charge prepayment penalty if the borrower wishes to repay the loan before the
maturity of the loan period.
In the above examples, amounts paid for acceptance of late payment, early termination of lease or for
pre-payment of loan or the amounts forfeited on cancellation of service by the customer as contemplated
by the contract as part of commercial terms agreed to by the parties, constitute consideration for the supply
of a facility, namely, of acceptance of late payment, early termination of a lease agreement, of prepayment
of loan and of making arrangements for the intended supply by the tour operator respectively.
Therefore, such payments, even though they may be referred to as fine or penalty, are actually payments
that amount to consideration for supply, and are subject to GST, in cases where such supply is taxable.
Since these supplies are ancillary to the principal supply for which the contract is signed, they shall be
eligible to be assessed as the principal supply. Naturally, such payments will not be taxable if the principal
supply is exempt.
Cheque dishonour fine/ penalty

The supplier wants payment to be received on time and does not want cheque to be dishonoured. There is
never an implied or express offer or willingness on part of the supplier that he would tolerate deposit of an
invalid, fake or unworthy instrument of payment against consideration in the form of cheque dishonour fine
or penalty.
The fine or penalty that the supplier or a banker imposes, for dishonour of a cheque, is a penalty imposed
not for tolerating the act or situation but a fine, or penalty imposed for not tolerating, penalizing and thereby
deterring and discouraging such an act or situation. Therefore, cheque dishonour fine or penalty is not a
consideration for any service and not taxable.
Penalty imposed for violation of laws

Penalty imposed for violation of laws such as traffic violations, or for violation of pollution norms or other
laws are also not consideration for any supply received and are not taxable.
Same is the case with fines, penalties imposed by the mining Department of a Central or State Government
or a local authority on discovering mining of excess mineral beyond the permissible limit or of mining
activities in violation of the mining permit.
Laws are not framed for tolerating their violation. They stipulate penalty not for tolerating violation but for
not tolerating, penalizing and deterring such violations. There is no agreement between the Government
and the violator specifying that violation would be allowed or permitted against payment of fine or penalty.
There cannot be such an agreement as violation of law is never a lawful object or consideration.
In short, fines and penalty chargeable by Government or a local authority imposed for violation of a statute,
bye-laws, rules or regulations are not leviable to tax.
Forfeiture of salary or payment of bond amount in the event of the employee leaving the
employment before the minimum agreed period
The provisions for forfeiture of salary or recovery of bond amount in the event of the employee leaving the
employment before the minimum agreed period are incorporated in the employment contract to discourage
non-serious candidates from taking up employment.
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The said amounts are recovered by the employer not as a consideration for tolerating the act of such
premature quitting of employment but as penalties for dissuading the non-serious employees from taking
up employment and to discourage and deter such a situation.
Further, the employee does not get anything in return from the employer against payment of such amounts.
Therefore, such amounts recovered by the employer are not taxable as consideration for the service of
agreeing to tolerate an act or a situation.
Late payment surcharge or fee

The facility of accepting late payments with interest or late payment fee, fine or penalty is a facility granted
by supplier naturally bundled with the main supply. It is not uncommon or unnatural for customers to
sometimes miss the last date of payment of electricity, water, telecommunication services etc.
Almost all service providers across the world provide the facility of accepting late payments with late fine
or penalty.
Even if this service is described as a service of tolerating the act of late payment, it is an ancillary supply
naturally bundled and supplied in conjunction with the principal supply, and therefore should be assessed
as the principal supply.
Since it is ancillary to and naturally bundled with the principal supply such as of electricity, water,
telecommunication, cooking gas, insurance etc. it should be assessed at the same rate as the principal
supply.
However, the same cannot be said of cheque dishonour fine or penalty as discussed earlier.
Fixed charges for power

The price charged for electricity by the power generating companies from the State Electricity Boards
(SEBs)/DISCOMS or by SEBs/DISCOMs from individual customers has two components, namely, a minimum
fixed charge (or capacity charge) and variable per unit charge.
The fact that the minimum fixed charges remain the same whether electricity is consumed or not or it is
scheduled/consumed below the contracted or available capacity or a minimum threshold, does not mean
that minimum fixed charge or part of it is a charge for tolerating the act of not scheduling or consuming
the minimum the contracted or available capacity or a minimum threshold.
Both the components of the price, the minimum fixed charges/capacity charges and the variable/energy
charges are charged for sale of electricity and are thus not taxable as electricity is exempt from GST.
Cancellation charges
It is a common business practice for suppliers of services such as hotel accommodation, tour and travel,
transportation etc. to provide the facility of cancellation of the intended supplies within a certain time period
on payment of cancellation fee.
Cancellation fee can be considered as the charges for the costs involved in making arrangements for the
intended supply and the costs involved in cancellation of the supply, such as in cancellation of reserved
tickets by the Indian Railways.
Services such as transportation travel and tour constitute a bundle of services. The transportation service,
for instance, starts with booking of the ticket for travel and lasts at least till exit of the passenger from the
destination terminal.
All services such as making available an online portal or convenient booking counters with basic facilities
at the transportation terminal or in the city, to reserve the seats and issue tickets for reserved seats much
in advance of the travel, giving preferred seats with or without extra cost, lounge and waiting room facilities
at airports, railway stations and bus terminals, provision of basic necessities such as soap and other
toiletries in the wash rooms, clean drinking water in the waiting area etc. form part and parcel of the
transportation service; they constitute the various elements of passenger transportation service, a
composite supply.
The facilitation service of allowing cancellation against payment of cancellation charges is also a natural
part of this bundle. It is invariably supplied by all suppliers of passenger transportation service as naturally
bundled and in conjunction with the principal supply of transportation in the ordinary course of business.
Therefore, facilitation supply of allowing cancellation of an intended supply against payment of cancellation
fee or retention or forfeiture of a part or whole of the consideration or security deposit in such cases should
be assessed as the principal supply.
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For example, cancellation charges of railway tickets for a class would attract GST at the same rate as
applicable to the class of travel (i.e., 5% GST on first class or air-conditioned coach ticket and nil for other
classes such as second sleeper class). Same is the case for air travel.
Accordingly, the amount forfeited in the case of non-refundable ticket for air travel or security deposit or
earnest money forfeited in case of the customer failing to avail the travel, tour operator or hotel
accommodation service or such other intended supplies should be assessed at the same rate as applicable
to the service contract, say air transport or tour operator service, or other such services.
However, as discussed earlier, forfeiture of earnest money by a seller in case of breach of ‘an agreement
to sell’ an immovable property by the buyer or such forfeiture by Government or local authority in the event
of a successful bidder failing to act after winning the bid for allotment of natural resources, is a mere flow
of money, as the buyer or the successful bidder does not get anything in return for such forfeiture of earnest
money. Forfeiture of earnest money is stipulated in such cases not as a consideration for tolerating the
breach of contract but as a compensation for the losses suffered and as a penalty for discouraging the non-
serious buyers or bidders. Such payments being merely flow of money are not a consideration for any
supply and are not taxable.
Crux: Schedule II: Para 5(e) considers: Agreeing to the obligation

 to refrain from an act, to tolerate an act or a situation or to do an act as a supply of service.
To be considered as supply of service, above three activities must comply with the following
conditions:
(1) There must be an expressed or implied agreement or contract must exist to fall within Para 5(e)
(2) Consideration must flow in return to this contract/agreement.
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Charge of GST - Section 9(3) – RCM Entries amended/New entries inserted
Goods Transport Services
Entry Category of Supply of Services Supplier of service Recipient (liable)

1 Supply of Services by a goods transport agency GTA who has not Person mention
(not paid 6% GST) paid central tax at under (a) to (g),
(i) Any factory registered under by the the rate of 6%,1 but located in
Factories Act, 1948 taxable territory
(ii) Any society registered under the Societies (TT).
Registration Act, 1860/any other law for the
time being in force
(iii) Any co-operative society established
by/under any law
(iv) Any person registered under GST act
(v) Any body-corporate established by/under
any law;
(vi) Any partnership firm (reg/un-reg)
including AOPs;
(vii) Any Casual taxable person
Proviso: RCM not applicable if:

Services provided by a GTA to—
(a) a Department/Establishment of CG/SG/UT;
(b) Local authority; or
(c) Govt agencies,
which has taken registration under the CGST act
only for the purpose of deducting tax under
section 51 & not for making a taxable supply of
goods or services.
Provided further that nothing contained in

this entry shall apply where, -
i. the supplier has taken registration
under the CGST Act, 2017 and exercised
the option to pay tax on the services of
GTA in relation to transport of goods
supplied by him under forward charge;
and
ii. the supplier has issued a tax invoice to
the recipient charging Central Tax at the
applicable rates and has made a
declaration as prescribed in Annexure
III on such invoice issued by him.
Explanation: the person who pays or is liable to pay freight for the transportation of goods by road in
goods carriage, located in the taxable territory shall be treated as the person who receives the service for
the purpose of this notification;
Crux: w.e.f. 18.07.22, GTA has the following options:

 If it opts to pay GST under FCM: 12% GST under FCM (with ITC) & 5% GST under FCM (Without
ITC).
 If it does not opt to pay GST under FCM: Recipient pays 5% RCM.
1
Omitted vide NNo. 05/22 CT w.e.f. 18.07.22
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Government Services

5 Services supplied by the CG, SG, UT, LA to a BE CG, SG, UT, LA Any business
excluding- entity located in TT
(1) renting of IMP, and
(2) services specified below-
(i) Services by Department of Posts by
way of SP, EP post, life insurance, &
agency services provided to a
person other than CG/SG/UT/LA;
(ii) Services in relation to an aircraft/a
vessel, inside/outside the precincts of a
port/an airport;
(iii)Transport of goods or passengers.
Crux: Other than exempt services of department of Post i.e. post card, inland letter, book post and ordinary
post (envelopes weighing less than 10 grams), all other services provided to business entity/non business
entity shall be under FCM, no RCM.
Renting of Residential Dwelling

5AA Service by way of renting of residential Any person Any registered
dwelling to a registered person. Person
Entry No. 12: Renting of Residential house (Entry amended)

Services
 by way of renting of residential dwelling
 for use as residence
 except where the residential dwelling is rented to a registered person.
Analysis of Amendment:
Supplier – Ramesh Recipient – Suresh Residential Property FCM/RCM/
Exempt
Any Person (Registered/Un- Registered Person Used for the purpose of residence RCM
registered) of employees (Business Expense)
Any Person (Registered/Un- Registered Person Used by Suresh as his residence Exempt
registered) (Expense claimed as drawings)
Any Person (Registered/Un- Unregistered Person Used by Suresh as his residence / Exempt
registered) Used for the purpose of residence
of employees
Crux: Supplier (any person) – Recipient (RP) - renting of residential dwelling – RCM.
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Composition Levy
Notification: (Notification No. 14/2019 CT dated 07.03.2019.)
An eligible RP, whose aggregate turnover in the PFY did not exceed 1.5 crores, may opt to pay, under
composition, an amount of tax as prescribed under rule 7 of the CGST Rules, 2017:
Provided that the said aggregate turnover in the preceding financial year (PFY) shall be Rs 75 lakh in
the case of an eligible registered person, registered u/s 25 of the said Act, in any of the following States,
namely:
(i) Arunachal Pradesh,
(ii) Manipur,
(iii) Meghalaya,
(iv) Mizoram,
(v) Nagaland,
(vi) Sikkim,
(vii) Tripura,
(viii) Uttarakhand
Note: RP shall not be eligible to opt for composition levy u/s 10(1) if such person is a
manufacturer of the goods stated below:
SN Description
1 Ice cream and other edible ice, whether or not containing cocoa.
2 Pan masala.
2A Aerated Water
3 All goods, i.e., Tobacco and manufactured tobacco substitutes.
4 Fly ash bricks or fly ash aggregates with 90% or more fly ash content; Fly ash blocks2
5 Bricks of fossil meals or similar siliceous earths
6 Building bricks
7 Earthen or roofing tiles
Crux: Irrespective of the percentage of fly ash content, manufacturers of fly ash aggregates shall not be
eligible for a composition scheme.
2
Amendment vide Notification No. 16/2022-Central Tax w.e.f. 18.07.22
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Registration
Notification No. 10/2019 CT dated 07.03.19: Amended
In exercise of the powers conferred by section 23(2) of the CGST Act, 2017, the CG, on the
recommendations of the Council, hereby specifies the following category of persons, as the category of
persons exempt from obtaining registration under the said Act, namely:
Any person, who is engaged in exclusive supply of goods and whose aggregate turnover in the financial
year does not exceed forty lakh rupees, except,
(a) persons required to take compulsory registration u/s 24;
(b) persons engaged in making supplies of the goods, the description of which is specified in the Table
below:
Sl No. Description
1 Ice cream and other edible ice, whether or not containing cocoa
2 Pan masala
3 All goods, i.e., Tobacco and manufactured tobacco substitutes
4 Fly ash bricks or fly ash aggregates with 90% or more fly ash content; Fly ash
blocks3
5 Bricks of fossil meals or similar siliceous earths
6 Building bricks
7 Earthen or roofing tiles
(c) persons engaged in making intra-State supplies in the States of Arunachal Pradesh, Manipur,
Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand; and
(d) persons exercising voluntary registration u/s 25(3), or such RPs who intend to continue with their
registration.
Crux: Irrespective of the percentage of fly ash content, suppliers of fly ash aggregates shall not be eligible
for a higher threshold limit for registration of 40 lacs.
3
Amendment vide Notification No. 15/2022-Central Tax w.e.f. 18.07.2022
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Section 29(2): Cancellation or Suspension of registration - Clause (b) & (c) amended and Rule
21: Clause (h) & (i) inserted after (g).
The PO may cancel the registration of a person from such date, including any retrospective date, as he
may deem fit, where, –
(a) a RP has contravened such (rule 21) provisions of the Act/the rules made thereunder as may be
prescribed; or
Rule 21-Registration to be cancelled in certain cases
The registration granted to a person is liable to be cancelled, if the said person, -
(a) does not conduct any business from the declared place of business; or
(b) issues invoice or bill without supply of goods or services or both in violation of the provisions of the
Act, or the rules made thereunder; or
(c) violates the Anti profiteering provisions.
(d) violates the provision of rule 10A (furnishing of Bank account details on portal)
(e) avails input tax credit in violation of the provisions of section 16 of the Act or the rules made
thereunder; or
(f) furnishes the details of outward supplies in FORM GSTR-1 under section 37 for one or more tax
periods which is in excess of the outward supplies declared by him in his valid return under section
39 for the said tax periods; or
(g) violates the provision of rule 86B.
(h) being a registered person required to file return under section 39(1) for each month or
part thereof, has not furnished returns for a continuous period of six months;
(i) being a registered person required to file return under proviso to subsection (1)
of section 39 for each quarter or part thereof, has not furnished returns for a continuous
period of two tax periods.4
(b) a person paying tax under section 10 (Composition supplier) has not furnished the return for a
financial year beyond three months from the due date of furnishing the said return returns for
three consecutive tax periods; or
(c) any registered person, other than a person specified in clause (b), has not furnished returns for such
continuous tax period as may be prescribed a continuous period of 6 months.5; or
(d) any person who has taken voluntary registration u/s 25(3) has not commenced business within 6
months from the date of registration; or
(e) Registration has been obtained by means of fraud, wilful misstatement or suppression of facts:
Crux: PO Can now cancel the registration of a

 Composition dealer: if return (GSTR 4) has not been furnished beyond 3 months from due date.
 RP other than Composition dealer (filing return quarterly- i.e. under QRMP scheme): has not
furnished returns for a continuous period of two quarter.
 RP other than Composition dealer (filing return monthly): has not furnished returns for a
continuous period of six months.
4
Inserted (w.e.f. 01.10.2022) vide Notification No. 19/2022 - CT dated 28.09.2022.
5
Amendment Vide the finance act 2022 w.e.f. 1st day of October, 2022
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Rule 21A: Suspension of registration - Second Proviso to sub-rule (4) inserted.
(4) The suspension of registration under sub-rule (1) or sub-rule (2) or sub-rule (2A) shall be deemed to
be revoked upon completion of the cancellation proceedings by the PO & such revocation shall be
effective from the date on which the suspension had come into effect.
Provided that the suspension of registration under this rule may be revoked by the PO, anytime during
the pendency of the proceedings for cancellation, if he deems fit.
Provided further that where the registration has been suspended under sub-rule
(2A) for contravention of the provisions contained in clause (b) or clause (c) of sub-section
(2) of section 29 and the registration has not already been cancelled by the proper
officer under rule 22, the suspension of registration shall be deemed to be revoked
upon furnishing of all the pending returns6
Crux: Where the registration has been suspended under sub-rule (2A) for contravention of
section 29(2)(b)/(c) i.e. non filing of return for the specified period and the registration has not been
cancelled by the PO, the suspension of registration shall be deemed to be revoked upon
furnishing of all the pending returns.
6
Inserted vide Notification No.14/2022 - CT dated 05.07.2022.
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Exemptions
Charitable and Religious activities
Entry No. 80: Training/Coaching (Entry amended)
Services by way of training or coaching in recreational activities relating to –

(a) recreational activities relating to arts or culture, by an individual, or
(b) sports by charitable entities registered under section 12AA or 12AB of Income Tax Act.
Crux: Services by way of training or coaching in recreational activities relating to arts or culture, by an
individual shall be exempt.
 Hence now of training or coaching in recreational activities relating to arts or culture if provided by
some institution/company (other than individual), GST shall be payable.
Entry No. 14: Hotel, Inn, Guest house etc. (Entry omitted)
Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging
purposes, having value of supply of a unit of accommodation below one thousand rupees per day or
equivalent.
Crux: W.e.f. 18.07.22: GST is payable on Services by a hotel, inn, guest house, club or campsite, etc. for
residential or lodging purposes irrespective of the value of supply.
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Government related Services
Entry no. 24C: Services by the Department of Posts (Entry newly inserted)
Services by the Department of Posts by way of post card, inland letter, book post and
ordinary post (envelopes weighing less than 10 grams).
Entry No. 6: Services by Government (Entry amended)
Services by the CG, SG, UT, LA excluding the following services—

(a) services by the Department of Posts by way of speed post, express parcel post, life insurance,
and agency services provided to a person other than the CG, SG, UT;
(b) Services in relation to an aircraft or a vessel, inside or outside the precincts of a port/an airport;
(c) Transport of goods or passengers; or
(d) any service, other than services covered under entries (a) to (c) above, provided to business entities.
Entry No. 7: Unregistered Business Entity: (Entry amended)
Services provided by the CG/SG/UT/LA to a business entity with an ATO up to such amount in the preceding
financial year as makes it eligible for exemption from registration under the CGST act.
Explanation - For the purposes of this entry, it is hereby clarified that the provisions of this entry shall not
be applicable to following services:
(a) Services –
(i) by the Department of Posts by way of speed post, express parcel post, life insurance, and
agency services provided to a person other than the CG, SG, UT;
(ii) in relation to an aircraft or a vessel, inside or outside the precincts of a port/an airport;
(iii) of transport of goods or passengers; and
(b) Services by way of renting of immovable property.
Entry No. 8: Government to Government services (Entry amended)
Services provided by the CG/SG/UT/LA to another CG/SG/UT/LA.

However, nothing contained in this entry shall apply to services -
(i) by the Department of Posts by way of speed post, express parcel post, life insurance, and
agency services provided to a person other than the CG, SG, UT;
(ii) in relation to an aircraft or a vessel, inside or outside the precincts of a port/an airport;
(iii) of transport of goods or passengers;
Entry No. 9: Services by Government, consideration is upto Rs 5000 (Entry amended)
Services provided by CG/SG/UT/LA where the consideration for such services does not exceed Rs 5,000.
Provided that nothing contained in this entry shall apply to –
(i) services by the Department of Posts by way of speed post, express parcel post, life insurance,
and agency services provided to a person other than the CG, SG, UT;
(ii) Services in relation to an aircraft or a vessel, inside or outside the precincts of a port/an airport;
(iii) Transport of goods or passengers;
Crux: W.e.f. 18.07.22: Services by the Department of Posts by way of

 Post card, inland letter, book post & ordinary post (envelopes weighing < 10 grams) are exempt,
 All other services GST payable under FCM.
Entry No. 47A: Services by way of licensing, registration and analysis or testing of food samples
supplied by the FSSAI to Food Business Operators. (Omitted).
Crux: W.e.f. 18.07.22: GST is payable on services provided by FSSAI, exemption withdrawn.
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Passenger & Goods transportation services
Entry No. 15: Transport of passengers (amended)
Transport of passengers, with or without accompanied belongings, by –

(a) air in economy class, embarking from/terminating in an airport located in the state of Arunachal
Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura/at Bagdogra located in WB;
(b) non-air-conditioned contract carriage other than radio taxi, for transportation of passengers, excluding
tourism, conducted tour, charter or hire; or
(c) Stage carriage other than air- conditioner stage carriage.
Provided that nothing contained in items (b) & (c) above shall apply to services supplied through an
electronic commerce operator, and notified u/s 9(5) of the CGST Act, 2017.
Crux: w.e.f. 18.07.22 GST is payable on Passenger transportation services by air in business class
from these states.
Entry No. 19A & 19B: Transportation of goods by aircraft/vessel from CS to place outside
Entry No. 19A: Services by way of transportation of goods by an aircraft from customs station of clearance
in India to a place outside India. Exemption is available till 30th day of September, 2022.
Entry No. 19B: Services by way of transportation of goods by a vessel from customs station of clearance
in India to a place outside India. Exemption is available till 30th day of September, 2022.
Crux: w.e.f. 18.07.22: GST is payable on transportation of goods by aircraft/vessel from customs station
in India to a place outside India.
Entry No. 20: Transportation of Goods-Rail or Vessel (amended)
Services by way of transportation by rail/a vessel from one place in India to another of the following goods:
(a) relief materials meant for victims of natural/man-made disasters, calamities, accidents/mishap;
(b) defence or military equipment;
(c) newspaper or magazines registered with the Registrar of Newspapers;
(d) railway equipment or materials; (omitted)
(e) agricultural produce;
(f) milk, salt and food grain including flours, pulses and rice; and
(g) organic manure.
Crux: w.e.f. 18.07.22: GST is payable on transportation of railway equipment/materials by rail/a vessel
within India.
Entry No. 21: Transportation of Goods – GTA (amended)
Services provided by a goods transport agency, by way of transport in a goods carriage of:
(a) Agricultural produce;
(b) Goods, where consideration charged for the transportation of goods on a consignment transported in a
single carriage does not exceed Rs 1,500; (omitted)
(c) Goods, where consideration charged for transportation of all such goods for a single consignee does not
exceed Rs 750; (omitted)
(d) milk, salt and food grain including flour, pulses and rice;
(e) organic manure;
(f) newspaper or magazines registered with the Registrar of Newspapers;
(g) relief materials meant for victims of natural or man-made disasters, calamities, accidents/mishap; or
(h) defence or military equipments.
Crux: w.e.f. 18.07.22: GST is payable on GTA services by way of transportation of goods irrespective of
the amount of freight charged for a consignment/consignee. (Exemption upto Rs. 1,500/750 withdrawn).
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Sports related
Entry No. 9AA. Services provided by and to FIFA & its subsidiaries for FIFA U-17
Services provided by and to

 Fédération Internationale de Football Association (FIFA) and its subsidiaries
 directly or indirectly
 related to any of the events under FIFA U-17 Women's World Cup 2020 to be hosted in India whenever
rescheduled.
Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly
or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
Services by way of admission and Performance
Entry No. 82A: FIFA (amended)
Services by way of right to admission to the events organised under FIFA U-17 Women's World Cup 2020
whenever rescheduled.
Crux:
 FIFA U-17 Women's World Cup 2020 whenever rescheduled, Services provided by/to FIFA & its
subsidiaries hall be exempt.
 Also Entry tickets shall be exempt.
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Agriculture related services
Entry No. 24B: Warehousing services (amended)
Services by way of storage or warehousing of cereals, pulses, fruits and vegetables.
Services by way of storage or warehousing of cereals, pulses, fruits, nuts and vegetables, spices, copra,
sugarcane, jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo, unmanufactured tobacco,
betel leaves, tendu leaves, coffee and tea.
Crux: w.e.f. 18.07.22: Scope of exemption narrowed and hence now exemption limited to warehousing
of cereals, pulses, fruits and vegetables.
Entry No. 53A: Services by way of fumigation in a warehouse of agricultural produce. (Omitted).
Entry No. 54: Agriculture related services (amended)
Services relating to
 cultivation of plants and
 rearing of all life forms of animals, except the rearing of horses,
 for food, fibre, fuel, raw material or other similar products or agricultural produce by way of—
(a) agricultural operations directly related to production of any agricultural produce including
cultivation, harvesting, threshing, plant protection/testing;
(b) supply of farm labour;
(c) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting,
drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk
packaging and such like operations which do not alter the essential characteristics of agricultural
produce but make it only marketable for the primary market;
(d) renting/leasing of agro machinery/vacant land with or without a structure incidental to its
use;
(e) loading, unloading, packing, storage or warehousing of agricultural produce;
(f) agricultural extension services;
(g) services by any Agricultural Produce Marketing Committee/Board/services provided by a
commission agent for sale or purchase of agricultural produce.
(h) services by way of fumigation in a warehouse of agricultural produce.
Crux: w.e.f. 18.07.22: GST is payable on services by way of fumigation in a warehouse of agricultural
produce.
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Healthcare related services
Entry No. 73: Services provided by the cord blood banks (Entry omitted)
Crux: w.e.f. 18.07.22: GST is payable on services by cord blood bank, exemption withdrawn.
Entry No. 74: Health Care Services (Entry amended)
Services by way of-

(a) Health care services by
(i) a clinical establishment,
(ii) an authorised medical practitioner or
(iii) para-medics;
Provided that nothing in this entry shall apply to the services provided by a clinical
establishment by way of providing room [other than Intensive Care Unit (ICU)/Critical Care
Unit (CCU)/Intensive Cardiac Care Unit (ICCU)/Neo natal Intensive Care Unit (NICU)]
having room charges exceeding Rs. 5,000 per day to a person receiving health care services.
(b) Services provided by way of transportation of a patient in an ambulance, other than those
specified in (a) above.
Crux: W.e.f. 18.07.22: GST is payable on services provided by a clinical establishment by way of providing
room having room charges exceeding Rs. 5,000 per day charged to a person receiving health care services.
 Exemption shall continue to apply on room charges for Intensive Care Unit (ICU)/Critical Care Unit
(CCU)/Intensive Cardiac Care Unit (ICCU)/Neo natal Intensive Care Unit (NICU) irrespective of the
amount charged.
Entry No. 75: Bio-medical waste treatment (Entry omitted)
Services provided by operators of the common bio-medical waste treatment facility to a clinical
establishment by way of treatment or disposal of bio-medical waste or the processes incidental thereto.
Crux: w.e.f. 18.07.22: GST is payable on Services provided by operators of the common bio-medical
waste treatment facility.
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Miscellaneous services
Entry No. 12: Renting of Residential house (Entry amended)
Services by way of renting of residential dwelling for use as residence except where the residential
dwelling is rented to a registered person.
Crux: Renting of residential dwelling to a registered person: GST payable under RCM
Services by specified organisations
Entry No. 26: Services by Reserve Bank of India (RBI). (Entry Omitted)
Entry No. 32: Services provided by the Insurance Regulatory and Development Authority of India
to insurers under the IRDA of India Act, 1999. (Entry omitted)
Entry No. 33: Services provided by the Securities and Exchange Board of India. (Entry omitted)
Entry No. 51: Services provided by the GSTN to CG/SG/UT for implementation of GST (Omitted).
Crux: w.e.f. 18.07.22: Services provided by RBI, IRDA, SEBI, GSTN to CG/SG/UT made taxable.
Entry No. 52A. Tour operator service (New Entry)
Tour operator service, which is performed partly in India and partly outside India, supplied
by a tour operator to a foreign tourist, to the extent of the value of the tour operator service
which is performed outside India:
Provided that value of the tour operator service performed outside India shall be such
proportion of the total consideration charged for the entire tour which is equal to the
proportion which the number of days for which the tour is performed outside India has
to the total number of days comprising the tour, or 50% of the total consideration charged
for the entire tour, whichever is less:
Provided further that in making the above calculations, any duration of time equal to
or exceeding 12 hours shall be considered as one full day and any duration of time less
than 12 hours shall be taken as half a day.
Explanation. - “foreign tourist” means a person not normally resident in India, who enters
India for a stay of not more than six months for legitimate non-immigrant purposes.
Illustrations: A tour operator provides a tour operator service to a foreign tourist as follows
(a) 3 days in India, 2 days in Nepal; Consideration Charged for the entire tour: Rs. 1,00,000/-
Exemption: Rs. 40,000/- (= Rs.1,00,000/- x 2/5) or, Rs. 50,000/- (= 50% of Rs.1,00,000/-
) whichever is less, i.e., Rs. 40,000/- (i.e., Taxable value: Rs. 60,000/-);
(b) 2 days in India, 3 nights in Nepal; Consideration Charged for the entire tour: Rs.1,00,000/-
Exemption: Rs. 60,000 (= Rs.1,00,000/- x 3/5) or, Rs. 50,000/-(= 50% of Rs.1,00,000/-)
whichever is less, i.e., Rs. 50,000/- (i.e., Taxable value: Rs. 50,000/-);
(c) 2.5 days in India, 3 days in Nepal; Consideration charged for the entire tour: Rs.1,00,000/-
Exemption: Rs. 54,545 (= Rs.1,00,000/- x 3/5.5) or, Rs. 50,000/-(= 50% of Rs.1,00,000/-
) whichever is less, i.e., Rs. 50, 000/- (i.e., Taxable value: Rs. 50,000/-).
Crux: Tour operator service, which is performed partly in India & partly outside India, supplied to a foreign
tourist, to the extent of value of the tour operator service which is performed outside India shall be exempt.
Entry No. 56: Services by way of slaughtering of animals (Entry omitted): w.e.f. 18.07.22: GST
payable
Entry no. 42: Services received by the RBI, from outside India in relation to management of
foreign exchange reserves. (Entry omitted)
Crux: Services received by RBI from outside India, results into Import of Service on which tax
is payable under RCM, however earlier it was exempt now made taxable, exemption withdrawn.
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Circular: Clarifications regarding applicable GST rates & exemptions on certain services.
[Circular No. 177/09/2022 GST dated 03.08.2022]
Sl Issue Clarification
No.
1 Whether GST is applicable on Crux: Fee charged-
application fee charged for entrance (1) From prospective students for entrance or admission,
or the fee charged for issuance of (2) from prospective students for issuance of eligibility
eligibility certificate for admission certificate to them in the process of their
or for issuance of migration entrance/admission.
certificate by educational (3) For issuance of migration certificates by educational
institutions. (Refer Entry 66) institutions to the leaving or ex-students.
All the above 3 are covered under exemption entry 66.
2 Whether Exemption under Sl. No. 9B Crux: Yes, Exemption under Sl. No. 9B cover services
covers services associated with associated with transit cargo both to and from Nepal and
transit cargo both to and from Nepal Bhutan.
and Bhutan. It is also clarified that movement of empty containers
Whether GST is applicable on from Nepal and Bhutan, after delivery of goods there, is a
transportation of empty containers service associated with the transit cargo to Nepal & Bhutan
returning from Nepal and Bhutan to and is therefore covered by the exemption.
India, after delivery of transit cargo.
3 Whether the additional toll fees Crux: Yes they are exempt. Overloading charges at toll
collected in the form of higher toll plazas/Higher toll charges from vehicles not having Fastag:
charges from vehicles not having Same treatment as given to toll charges. Hence exempt.
fastag/ overloading charges are
exempt from GST.
4 Whether GST is applicable on services Crux: No. The abnormality/disease/ailment of infertility is
by way of Assisted Reproductive treated using ART procedure such as IVF. It is clarified
Technology (ART) procedures such as that services by way of IVF are also covered under
In vitro fertilization (IVF). the definition of health care services for the purpose of
exemption notification.
5 Whether hiring of vehicles by firms Crux: No, The exemption shall not be applicable where
for transportation of their employees contract carriage is hired for a period of time, during
to and from work is exempt under Sr. which the contract carriage is at the disposal of the service
No. 15(b) of Notification No.12/2017- recipient and the recipient is thus free to decide the manner
Central Tax (Rate) transport of of usage (route and schedule) subject to conditions of
passengers by non-air conditioned agreement entered into with the service provider.
contract carriage Hence, Hiring of vehicles by firms for transportation of
their employees to and from work is not transport of
passengers by non-air conditioned contract carriage,
Exemption shall not be applicable.
6 Whether GST is applicable on private Crux: No, As per Entry 17(d), transportation of passengers
ferry tickets. For instance, private by public transport, other than predominantly for tourism
ferries are used as means of purpose, in a vessel between places located in India is
transport from one island to another exempted.
in Andaman and Nicobar Islands. It is clarified that exemption would apply to tickets
purchased for transportation from one point to another
irrespective of whether the ferry is owned or operated
by a private sector enterprise or by a PSU/government.
7 Whether GST is applicable on Crux: Yes GST is applicable.
sanitation and conservancy services The exemption under entry 3 & 3A has been given on
supplied to Army and other Central pure services & composite supplies procured by CG,
and State Government departments. SG, UTs or local authorities for performing functions
listed in the 11th and 12th schedule of the constitution.
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Sl Issue Clarification
No.
It is clarified that if such services are procured by Indian
Army or any other Government Ministry/Department which
does not perform any functions listed in the 11th and 12th
Schedule, in the manner as a local authority does for the
general public, the same are not eligible for exemption
under Sl. No. 3 and 3A.
8 Whether transport of minerals within Crux: No, Such renting of trucks and other freight vehicles
a mining area, say from mining pit with driver for a period of time is a service of renting of
head to railway siding, beneficiation transport vehicles with operator and not service of
plant etc., by vehicles deployed with transportation of goods by road.
driver for a specific duration of time Consequently, it is not eligible for exemption under Entry
would be covered under Entry 18 18.
which exempts transport of goods by
road except by a GTA.
9 Whether location charges or Crux: Yes, Location charges or preferential location
preferential location charges (PLC) charges (PLC) paid upfront in addition to the lease premium
collected in addition to the lease for long term lease of land constitute part of upfront
premium for long term lease of land amount charged for long term lease of land and are eligible
constitute part of the lease premium for the same tax treatment, and thus eligible for exemption
or upfront amount charged for long under Entry 41.
term lease of land and are eligible for
the same tax treatment.
10 Whether GST is applicable on Crux: Yes GST is applicable. It’s a supply of service.
payment of honorarium to the Guest However, guest anchors whose aggregate turnover in a
Anchors. financial year does not exceed Rs. 20 lakh (Rs. 10 lakh in
case of specified Special Category States) shall not be liable
to take registration and pay GST.
Note: To make it simple for students, Circular No. 177/09/2022 GST dated 03.08.2022 has been
summarised and crux of all the clarifications have been given above, for complete circulars
students can refer the ICAI supplementary study material for May 23.
CA Ramesh Soni | +91 93536 19482 44

Tax Invoice, Credit and Debit notes
Section 34(2): Credit note disclose in the return within time
Any registered person who issues a credit note in relation to a supply of goods or services or both shall
declare the details of such credit note in the return for the month during which such credit note has been
issued but not later than
 the thirtieth day of November 7 September following the end of the FY in which such supply was
made, or
 the date of furnishing of the relevant annual return, whichever is earlier
- and the tax liability shall be adjusted in such manner as may be prescribed:
Crux: W.e.f. 01.10.22, the maximum time limit to disclose/report a credit note
 30th day of November of next financial year or
 Date of filing of annual return, whichever is earlier.
Notification Seeks to notify certain class of registered persons required to issue e-invoice
[Notification No. 13/2020– Central Tax dated 21.03.20 (Effective 01.10.2020)]
Notifies Registered person, other than a government department, a local authority, a SEZ unit and
those referred to in sub-rules (2), (3), (4) and (4A) of rule 54 of the said rules, whose aggregate turnover
in any preceding FY from 2017-18 onwards exceeds ten crores8 twenty crore rupees, as a class of
registered person who shall prepare invoice and other prescribed documents, in terms of rule 48(4) of the
said rules in respect of supply of goods or services or both to a registered person or for exports.
This notification shall come into force from the 1st October, 2020 2022.
Crux: w.e.f. 01.10.22: E-invoicing provisions shall apply to RP whose ATO in any PFY from 17-18 onwards
exceeds 10 crores.
Rule 46: Particulars to be stated in a tax Invoice
(s) a declaration as below, that invoice is not required to be issued in the manner specified under
rule 48(4), in all cases where an invoice is issued, other than in the manner so
specified under the said rule 48(4), by the taxpayer having aggregate turnover in any
preceding financial year from 2017-18 onwards more than the aggregate turnover as notified
under the said sub-rule (4) of rule 48-
“I/We hereby declare that though our aggregate turnover in any preceding financial year
from 2017-18 onwards is more than the aggregate turnover notified under sub-rule (4) of
rule 48, we are not required to prepare an invoice in terms of the provisions of the said sub-
rule.”9
Crux: RP, whose ATO in any PFY from 17-18 onwards > 10 crores, but are not issuing e-invoice, shall
mention the following declaration in the invoice issued by them.
“I/We hereby declare that though our aggregate turnover in any preceding financial year
from 2017-18 onwards is more than the aggregate turnover notified under sub-rule (4) of rule
48, we are not required to prepare an invoice in terms of the provisions of the said sub-rule.”
7
Amendment vide finance act 2022 w.e.f. 01.10.22
8
W.e.f. the 1st day of October,2022, for the words “20 crore rupees”, the words “10 crore rupees” shall be substituted.
9
Inserted vide Notification No. 14/2022-CT dated 05.07.2022.
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Input Tax Credit
Section 16: Eligibility and conditions for taking ITC
Section 16(2):
Notwithstanding anything contained in this section, no registered person shall be entitled to the
credit of any input tax in respect of any supply of goods or services or both to him unless, —
(a) he is in possession of a tax invoice/debit note/such other tax paying documents as prescribed(Rule 36);
Rule 36: Documentary requirements and conditions for claiming input tax credit
(2) ITC shall be availed by a registered person only if all the applicable particulars as specified in the
provisions of Chapter VI are contained in the said document, and the relevant information, as
contained in the said document, is furnished in GSTR-2 by such person:
(4) No input tax credit shall be availed by a registered person in respect of invoices or debit notes the
details of which are required to be furnished under sub-section (1) of section 37 unless, -
(a) the details of such invoices or debit notes have been furnished by the supplier in the statement of
outward supplies in FORM GSTR-1 or using the invoice furnishing facility; and
(b) the details of input tax credit in respect of10 such invoices or debit notes have been
communicated to the registered person in FORM GSTR-2B under sub-rule (7) of rule 60.
Crux:
 Since form GSTR 2 has been omitted, its reference from Rule 36 has also been omitted.
 Words added ‘input tax credit in respect of’ - Drafting error corrected.
Section 16(2): Conditions for claiming ITC – New clause added
(ba) the details of ITC in respect of the said supply communicated to such registered person under
section 38 has not been restricted;11
(c) Subject to the provisions of section 41 or section 43A, the tax charged in respect of such supply has
been actually paid to the Government, either in cash/through utilisation of ITC admissible in respect of
the said supply; and
Crux: Additional condition introduced to claim ITC: ITC w.r.t. a supply communicated in GSTR 2B
shall be availed by the RP only if it has not been restricted.
Further, owing to omission of section 43A, reference to section 43A has also been removed from clause
(c) of section 16(2).
Section 16(4): Maximum time limit to claim ITC relating to Invoice or debit note
A RP shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods
or services or both after
- the thirtieth day of November12 due date of furnishing of the return u/s 39 for the month of
September following the end of financial year to which such invoice or debit note pertains or
- furnishing of the relevant annual return, whichever is earlier.
Crux: W.e.f. 01.10.22, the maximum time limit to claim ITC relating to Invoice or debit note
 Date of filing of annual return, whichever is earlier
10
Amendment vide NNo. 19/2022 w.e.f 01.10.22
11
Inserted vide finance act 2022, w.e.f. 01.10.22
12
Substituted by Finance act 2022 w.e.f. 01.10.22
CA Ramesh Soni | +91 93536 19482 48
Rule 37: Reversal of input tax credit in the case of non-payment of consideration13
(1) Non-payment to supplier within 180 days, pay the ITC availed with interest while furnishing
GSTR-3B.
A RP, who has availed of ITC on any inward supply of goods/services/both, other than the supplies
on which tax is payable on reverse charge basis, but fails to pay to the supplier thereof, the
amount towards the value of such supply along with the tax payable thereon, within the time limit
specified in the second proviso to section 16(2), shall pay an amount equal to the ITC availed in
respect of such supply along with interest payable thereon under section 50, while
furnishing the return in FORM GSTR-3B for the tax period furnish the details of such supply,
the amount of value not paid and the amount of ITC availed of proportionate to such amount not paid
to the supplier in GSTR-2 for the month immediately following the period of 180 from the date of the
issue of the invoice:
Provided that the value of supplies made without consideration as specified in Schedule I of the said
Act shall be deemed to have been paid for the purposes of the second proviso to section 16(2):
Provided further that the value of supplies on account of any amount added in accordance with the
provisions of section 15(2)(b) shall be deemed to have been paid for the purposes of the second proviso
to sub-section (2) of section 16.
(2) Where the said registered person subsequently makes the payment of the amount
towards the value of such supply along with tax payable thereon to the supplier thereof, he
shall be entitled to re-avail the input tax credit referred to in sub-rule (1)
(2) The amount of ITC referred to in sub-rule (1) shall be added to the output tax liability of the registered
person for the month in which the details are furnished.
(3) The registered person shall be liable to pay interest at the rate notified under section 50(1) for the
period starting from the date of availing credit on such supplies till the date when the amount added to
the output tax liability, as mentioned in sub-rule (2), is paid. (omitted)
(4) Re-availment on payment

The time limit specified in section 16(4) shall not apply to a claim for re-availing of any credit, in
accordance with the provisions of the Act/the provisions of this chapter that had been reversed earlier.
Crux:
- Reference of GSTR-2 omitted.
- Now in-case of non-payment of Value + GST to the supplier within 180 days from date of invoice, RP
shall pay the ITC availed with interest u/s 50, while furnishing GSTR-3B for the tax period immediately
following the period of 180 from the date of the issue of the invoice.
- Interest shall be paid u/s 50 means interest @ 18% from date to utilisation of credit till the date of
reversal of such credit.
- Subsequently if payment is made to supplier, ITC reversed can be re-availed.
- Time limit u/s 16(4) shall not apply to re-availment.
13
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Section 41: Availment of input tax credit.
(1) Every registered person shall, subject to such conditions and restrictions as may be
prescribed, be entitled to avail the credit of eligible input tax, as self-assessed, in his return
and such amount shall be credited to his electronic credit ledger.
(2) The credit of input tax availed by a registered person under sub-section (1) in respect of
such supplies of goods or services or both, the tax payable whereon has not been paid by
the supplier, shall be reversed along with applicable interest, by the said person in such
manner as may be prescribed:
Provided that where the said supplier makes payment of the tax payable in respect of the
aforesaid supplies, the said registered person may re-avail the amount of credit reversed by
him in such manner as may be prescribed.
Section 41: Claim of input tax credit and provisional acceptance thereof.
(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed, be
entitled to take the credit of eligible input tax, as self-assessed, in his return and such amount shall be
credited on a provisional basis to his electronic credit ledger.
(2) The credit referred to in sub-section (1) shall be utilised only for payment of self-assessed output tax
as per the return referred to in the said sub-section.
Crux: Section 41 has been substituted. Now section 41 provided that

 a person shall be entitled to avail ITC, as self-assessed, in his return & such amount shall be credited
to his E-credit ledger on a final basis & not on a provisional basis (as earlier).
 If the tax has not been paid by the supplier, the credit availed by a RP shall be reversed with interest.
 Later on if the supplier makes the payment of tax, credit can be re-availed by the RP.
 However, the reversal and re-availment shall be as may be prescribed, CG is yet to prescribe the rule.
Section 17: Apportionment of Credit and Blocked credit
Section 17(6): The Govt may prescribe the manner in which credit referred to in 17(1) & (2)
may be attributed.
Rule 42: Manner of determination of IT in respect of I/IS used for business/ non-business
purpose or taxable (incl. ZRS) and Exempt supplies.
(1) Manner of apportionment – Provisional computation – Monthly Denoted

as
(g) T1, T2, T3 & T4 to be determined & declared by the RP at the invoice level in
GSTR-214 [ & at summary level in GSTR-3B]
Crux: Reference of GSTR-2 deleted.
Rule 43: Manner of determination of ITC in respect of capital goods & reversal thereof in certain
cases
(1) …No Change

(a) ITC of CGs Exclusively for non-business purposes/ for effecting exempt supplies
- shall be indicated in FORM GSTR-2 and15 FORM GSTR-3B and
- ITC shall not be credited to his electronic credit ledger;
(b) ITC of CGS used exclusively for effecting Non-exempt supplies (TS incl. ZRS)
- shall be indicated in FORM GSTR-2 and FORM GSTR-3B and
- ITC shall be credited to the electronic credit ledger;
14
15
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(c) …no change A
(d) ...no change 'Tc'
(e) ...no change 'Tm'
(f) …. Deleted Tr
(g) ...no change 'Te'
Explanation 1: The aggregate value of exempt supplies shall exclude: —
(a) Services having place of supply in Nepal/Bhutan, against payment in INR.
(b) Interest/discount income, except in case of a banking company/FI/NBFC, engaged in
supplying services by way of accepting deposits, extending loans or advances; and
(c) the value of supply of services by way of transportation of goods by a vessel from the
customs station of clearance in India to a place outside India.
(d) the value of supply of Duty Credit Scrips specified in Notification No.
35/2017CT (R) dated 13.10.2017.16
(h) ...no change
(i) ...no change
Crux: Clause (d) above has been inserted w.e.f. 05.07.2022. Although the GST on duty credit scrips has
been exempted, for the purpose of apportionment, the aggregate value of exempt supplies shall exclude:
the value of supply of Duty Credit Scrips.
Hence now, no reversal w.r.t. duty credit scrip shall be done under rule 42 & 43.
Section 17(4): Banking Co. and Financial Institutions Including NBFC
Rule 38: Claim of credit by a banking company or a financial institution 17
A banking company/a financial institution, incl. a NBFC, that chooses not to comply with section 17(2), shall
follow the following procedure, namely, —
(a) the said company or institution shall not avail the credit of, —
(i) the tax paid on inputs and input services that are used for non-business purposes; and
(ii) Blocked credits u/s 17(5), in FORM GSTR-2;
(b) Avail the credit of tax paid on I/IS from DP;
(c) 50% of the remaining amount of input tax shall be ITC admissible to the company/the institution
and shall be furnished in FORM GSTR-2 and the balance amount of input tax credit shall be
reversed in FORM GSTR-3B;
(d) the amount referred to in clauses (b) and (c) shall, subject to the provisions of sections 41, 42 and 43,
be credited to the electronic credit ledger of the said company or the institution. (omitted)
Crux: Reference of GSTR-2 deleted and reference for GSTR 3B for reversal inserted.
Reference of Section 42 & 43 has been omitted from the act & hence clause (d) deleted.
16
Inserted vide Notification No. 14/2022-CT dated. 05.07.2022
17
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Availment of ITC not blocked in case of leasing, other than leasing of motor vehicles, vessels
and aircrafts [Circular No. 172/04/2022 GST dated 06.07.2022]
Issue: whether provisions of section 17(5)(b)(i) bar the availment of ITC on input services by
way of “leasing of motor vehicles, vessels or aircraft” or whether ITC on input services by way
of any type of leasing is barred under the said provisions.
Analysis: Section 17(5)(b)(i) provides that ITC shall not be available in respect of following supply of goods
or services or both—
(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery,
leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa)
except when used for the purposes specified therein, life insurance and health insurance:
Provided that the input tax credit in respect of such goods or services or both shall be available where
an inward supply of such goods or services or both is used by a registered person for making an
outward taxable supply of the same category of goods or services or both or as an element of a taxable
composite or mixed supply.”
It is clarified that “leasing” referred herein refers to leasing of motor vehicles, vessels and aircrafts only
and not to leasing of any other items.
Accordingly, availment of ITC is not barred in case of leasing, other than leasing of motor vehicles, vessels
and aircrafts.
Crux: “leasing” referred in 17(5)(b)(i) refers to leasing of motor vehicles, vessels and aircrafts only and
not to leasing of any other items. Accordingly, availment of ITC is not barred in case of leasing, other than
leasing of motor vehicles, vessels and aircrafts.
Issue: Whether Proviso after section 17(5)(b)(iii) applies to entire section 17(5)(b)?
Analysis: Section 17(5)(b) provides that ITC shall not be available in respect of following supply of goods
or services or both—
(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery,
leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa)
except when used for the purposes specified therein, life insurance and health insurance:
(ii) Provided that the input tax credit in respect of such goods or services or both shall be available where
an inward supply of such goods or services or both is used by a registered person for making an outward
taxable supply of the same category of goods or services or both or as an element of a taxable composite
or mixed supply;
(iii) membership of a club, health and fitness centre; and
(iv) travel benefits extended to employees on vacation such as leave or home travel concession:
Provided that the ITC in respect of such goods or services or both shall be available, where it is obligatory
for an employer to provide the same to its employees under any law for the time being in force.
Circular clarifies that the proviso after sub-clause (iii) [highlighted above] is applicable to the whole of
section 17(5)(b).
Crux: Proviso after section 17(5)(b)(iii) is applicable to the whole of section 17(5)(b).
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Payment of Tax
Section 49(1):
Every deposited by a person, to be credited to E-cash ledger

Every deposit made towards tax, interest, penalty, fee or any other amount by a person
 By internet banking or
 by using credit or debit cards or
 NEFT or RTGS or
 by such other mode & subject to such conditions & restrictions as may be prescribed,
 shall be credited to the electronic cash ledger of such person to be maintained
in such manner as may be prescribed (rule 87-Electronic cash ledger).
Author: New modes for deposit now prescribed under Rule 87.
Rule 87: Electronic Cash Ledger
(3) Various modes of deposit

(i) Internet Banking through authorised banks;
(ia) Unified Payment Interface (UPI) from any bank;
(ib) Immediate Payment Services (IMPS) from any bank;
(ii) Credit card or Debit card through the authorised bank;
(iii) NEFT/RTGS from any bank; or
(iv) Over the Counter payment through authorised banks for deposits up to Rs 10,000 per challan per
tax period, by cash/cheque/demand draft:
(5) Where the payment is made by NEFT/RTGS or Immediate Payment Service mode from any bank,
the mandate form shall be generated along with the challan on the common portal and the same shall
be submitted to the bank from where the payment is to be made: (Mandate form valid for 15 days
from generation of challan)
Crux: New modes for depositing an amount in E-cash ledger introduced, now deposit can be made using
UPI & IMPS.
For deposit using IMPS mode, the mandate form shall be generated along with the challan on the common
portal and the same shall be submitted to the bank from where the payment is to be made.
Section 49(2):
… The ITC as self-assessed in the return of a RP shall be credited to his electronic credit ledger, in
accordance with section 41 or section 43A, to be maintained in such manner as may be prescribed.
Crux: Since section 43A is omitted from the act, its reference from section 49 has been deleted.
Section 49(4):
The amount available in the electronic credit ledger may be used for making any payment towards output
tax under this Act or under the IGST act in such manner and subject to such conditions and restrictions
within such time as may be prescribed (rule 86: Electronic-credit ledger).18
Crux: GST Act never stated that credit in E-credit ledger can be restricted, but restriction introduced via
Rule 86A, now act amended to allow such restriction. Backing of act provided to rule 86A.
18
Amended vide finance act 2022 vide 01.10.22
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Section 49(7):
All liabilities of a taxable person under this Act shall be recorded and maintained in an electronic liability
register in such manner as may be prescribed (rule 85-Electronic liability ledger)
Rule 85: Electronic Liability Register
(1) …
(2) Debits to E liability ledger (amended)
The electronic liability register of the person shall be debited by-
(a) the amount payable towards tax, interest, late fee or any other amount payable as per the return
furnished by the said person; -
(b) the amount of tax, interest, penalty or any other amount payable as determined by a PO in
pursuance of any proceedings under the Act or as ascertained by the said person; or
(c) the amount of tax and interest payable as a result of mismatch under section 42/43/50; or19
(d) any amount of interest that may accrue from time to time.
Crux: Since section 42 & 43 are omitted from the act, their reference from the rule has been deleted.
Section 49(10):
A registered person may, on the common portal, transfer any amount of tax, interest, penalty,
fee or any other amount available in the electronic cash ledger under this Act, to the electronic
cash ledger for,––
(a) integrated tax, central tax, State tax, Union territory tax or cess; or
(b) integrated tax or central tax of a distinct person as specified in sub-section (4) or, as the
case may be, sub-section (5) of section 25, in such form and manner and subject to such
conditions and restrictions as may be prescribed and such transfer shall be deemed to be a
refund from the electronic cash ledger under this Act:
Provided that no such transfer under clause (b) shall be allowed if the said registered person
has any unpaid liability in his electronic liability register.
A RP may, on the common portal, transfer any amount of tax, interest, penalty, fee or any other amount
available in the electronic cash ledger under this Act, to the electronic cash ledger for integrated tax, central
tax, State tax, Union territory tax or cess, in such form and manner and subject to such conditions and
restrictions as may be prescribed and such transfer shall be deemed to be a refund from the electronic cash
ledger under this Act.
Rule 87: Electronic Cash Ledger
(14) A registered person may, on the common portal, transfer any amount of tax, interest,
penalty, fee or any other amount available in the electronic cash ledger under the Act to
the electronic cash ledger for central tax or integrated tax of a distinct person as
specified in sub-section (4) or, as the case may be, sub-section (5) of section 25,
in FORM GST PMT-09:
Provided that no such transfer shall be allowed if the said registered person has any unpaid
liability in his electronic liability register.20
Crux: Section 49(10)(b) introduced.

 Any amount of tax, interest, penalty, fee or any other amount available under CGST head in E-cash
ledger can be transferred to the CGST & IGST head of E-cash ledger of a distinct person u/s 25(4) &
25(5) using form GST PMT 09.
19
Amendment vide NNo. 19/2022 w.e.f. 01.10.22
20
Inserted vide Notification No.14/2022 - CT dated 05.07.2022
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 Similar provisions introduced under IGST act also, hence any amount available under IGST head of E-
cash ledger can be transferred to the CGST & IGST head of E-cash ledger of a distinct person.
 Such transfer to distinct person shall not be allowed if the said registered person has any unpaid liability
in his electronic liability register.
Section 49(12):
Notwithstanding anything contained in this Act, the Government may, on the recommendations
of the Council, subject to such conditions and restrictions, specify such maximum proportion of
output tax liability under this Act or under the IGST Act, 2017 which may be discharged through
the electronic credit ledger by a registered person or a class of registered persons, as may be
prescribed.21
Crux: There was no provision in the act backing Rule 86B, hence backing of act provided to rule
86B by introducing section 49(12).
Rule 86: Electronic Credit Ledger
(4B) Where a registered person deposits the amount of erroneous refund sanctioned to him, –
(a) under sub-section (3) of section 54 of the Act, or (b) under sub-rule (3) of rule 96, in
contravention of sub-rule (10) of rule 96, along with interest and penalty, wherever applicable,
through FORM GST DRC-03, by debiting the electronic cash ledger, on his own or on being
pointed out, an amount equivalent to the amount of erroneous refund deposited by the
registered person shall be re-credited to the electronic credit ledger by the proper officer by an
order made in FORM GST PMT-03A.22
Crux: With effect from 05.07.2022, In case of a wrongly sanctioned refund: Where a RP deposits the
amount of erroneous refund u/s 54(3)(a) or under rule 96(3), along with interest & penalty through GST
DRC 03, by debiting E-cash ledger, the amount of erroneous refund deposited by the RP shall be re-credited
to the E- credit ledger by the PO by an order made in FORM GST PMT-03A.
Section 50: Interest on delayed payment of Tax
(1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made
thereunder but fails to pay the tax or any part thereof to the Government within the period prescribed,
shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at
such rate, not exceeding eighteen percent, as may be notified (notification 13/2017-CT) by the
Government on the recommendations of the Council.
Provided that the interest on tax payable in respect of supplies made during a tax period and declared
in the return for the said period furnished after the due date in accordance with the provisions of section
39, except where such return is furnished after commencement of any proceedings under section 73/74
in respect of the said period, shall be payable on that portion of the tax that is paid by debiting the
electronic cash ledger.
(2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed,
from the day succeeding the day on which such tax was due to be paid.
(3) A taxable person who makes an undue or excess claim of ITC u/s 42(10) or undue or excess reduction
in output tax liability u/s 43(10), shall pay interest on such undue/excess claim/on such undue/excess
reduction, as the case may be, at such rate not exceeding 24%, as may be notified by the Govt on the
recommendations of the Council.
21
Amendment by the Finance Act 2022 (No. 6 of 2022) - Brought into force w.e.f. 05-07-2022
22
Inserted vide Notification No. 14/2022-CT dated 05.07.2022.
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(3) Where the input tax credit has been wrongly availed and utilised, the registered person shall
pay interest on such input tax credit wrongly availed and utilised, at such rate not exceeding
twenty-four per cent. as may be notified by the Government, on the recommendations of the
Council, and the interest shall be calculated, in such manner as may be prescribed.23
Analysis of Amendment:
 Section 50(3) has been substituted w.e.f. 1st July, 2017.
 Since Section 42 & 43 were never introduced and hence now since section 42 & 43 has been omitted,
the sub-section has been amended to provide for payment of interest on ITC wrongly availed and
utilised.
 Also Rule 88B has been introduced prescribing the manner for calculation of interest as per section 50.
Rule 88B: Manner of calculating interest on delayed payment of tax.24
(1) In case, where the supplies made during a tax period are declared by the registered person
in the return for the said period and the said return is furnished after the due date in
accordance with provisions of section 39, except where such return is furnished after
commencement of any proceedings under section 73 or 74 in respect of the said period, the
interest on tax payable in respect of such supplies shall be calculated on the portion of tax
which is paid by debiting the electronic cash ledger, for the period of delay in filing the said
return beyond the due date, at such rate as may be notified under section 50(1).
(2) In all other cases, where interest is payable in accordance with sub section (1) of section
50, the interest shall be calculated on the amount of tax which remains unpaid, for the period
starting from the date on which such tax was due to be paid till the date such tax is paid, at
such rate as may be notified under sub-section (1) of section 50.
(3) In case, where interest is payable on the amount of ITC wrongly availed and utilised in
accordance with sub-section (3) of section 50, the interest shall be calculated on the amount
of ITC wrongly availed and utilised, for the period starting from the date of utilisation of
such wrongly availed ITC till the date of reversal of such credit or payment of tax in respect
of such amount, at such rate as may be notified under section 50(3).
Explanation.-For the purposes of this sub-rule, -

(1) ITC wrongly availed shall be construed to have been utilised, when the balance in the
electronic credit ledger falls below the amount of input tax credit wrongly availed, and the
extent of such utilisation of input tax credit shall be the amount by which the balance in the
electronic credit ledger falls below the amount of ITC wrongly availed.
(2) the date of utilisation of such input tax credit shall be taken to be, -
(a) the date, on which the return is due to be furnished under section 39 or the actual date
of filing of the said return, whichever is earlier, if the balance in the electronic credit
ledger falls below the amount of input tax credit wrongly availed, on account of payment
of tax through the said return; or
(b) the date of debit in the electronic credit ledger when the balance in the electronic credit
ledger falls below the amount of input tax credit wrongly availed, in all other cases.
23
Substituted (w.e.f. 1st July, 2017) by The Finance Act 2022 (No. 06 of 2022) - brought into force w.e.f 05-07-2022
24
Inserted vide Notification No. 14/2022-CT dated. 05.07.2022 w.e.f. 01.07.2017.
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Analysis of Amendment: (Section 50 read with rule 88B)
Section 50(1) & (2) read with Rule 88A(1) & (2)
SN Supplies Declared in Proceedings Interest Period
u/s 73/74 for payable on
the period
1 Supplies the return for the Not yet tax paid by for the period of delay in
made during same period but initiated debiting E-cash filing the said return
a period return filed late (i.e. ledger (i.e. Net beyond the due date
belated return) tax liability)
2 Supplies the return for the - Gross tax starting from the date
made during next/ other period liability on which such tax was
a period due to be paid till the
date such tax is paid
3 Supplies not declared/ Initiated Gross tax starting from the date
made during declared but tax liability on which such tax was
a period short paid due to be paid till the
date such tax is paid
4 Supplies not declared Not initiated Gross tax starting from the date
made during but paid liability on which such tax was
a period Voluntarily due to be paid till the
using GST DRC date such tax is paid
03 form
Note: In all the above 4 cases, interest shall be 18%
Section 50(3) read with Rule 88B(3)

SN ITC wrongly Utilised Interest Rate Period
availed
1 Yes Yes Payable on the 18% From the date of utilisation of such
ITC wrongly wrongly availed ITC till the date of reversal
availed & utilised of such credit or payment of tax in respect
amount of such amount.
2 Yes No Not payable - -
Example:
Output ITC Utilised Net tax Interest Rate Period
Tax wrongly Paid payable on
liability availed
10,00,000 4,00,000 4,00,000 6,00,000 6,00,000 18% From the date of utilisation of
such wrongly availed ITC till
the date of reversal of such
credit or payment of tax in
respect of such amount.
10,00,000 4,00,000 Nil 10,00,000 - - -
Example: Following independent cases are the details for the month of April.
Opening ITC ITC Output ITC E-credit ITC wrongly availed
E-credit wrongly correctly Tax Utilised ledger construed to have been
Ledger availed Availed liability balance utilised
balance
Nil 2,00,000 10,00,000 8,00,000 8,00,000 4,00,000 No, since the E-credit ledger
balance has not fallen below the
ITC wrongly availed.
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Opening ITC ITC Output ITC E-credit ITC wrongly availed
E-credit wrongly correctly Tax Utilised ledger construed to have been
Ledger availed Availed liability balance utilised
balance
Nil 6,00,000 4,00,000 8,00,000 8,00,000 2,00,000 Yes, since the E-credit ledger
balance has fallen below the ITC
wrongly availed, ITC is wrongly
availed as well as utilised,
interest will have to be paid on 4
lakhs from the date of utilisation.
Example: Now let us take some example to understand when will the interest on 4 lakhs start
from:
Case Due Date Date of Date of Utilisation = Interest computation starts from
of return filing Earlier of: Due date or
for April return Actual date of filing return
1 20th May 20th May 20th May 20th May
2 20th May 16th May 16th May 16th May
3 20 May
th
26 May 20 May
th th
20th May
Example: Say there is a wrongly availed ITC of Rs 10 lakhs lying in the E-credit ledger and the
same is utilised to pay a demand order
Opening ITC ITC Demand ITC E-credit ITC wrongly availed
E-credit wrongly correctly amount Utilised ledger construed to have been
Ledger availed Availed and balance utilised
balance demand
paid
Nil 2,00,000 10,00,000 5,00,000 5,00,000 7,00,000 No, since the E-credit ledger
balance has not fallen below
the ITC wrongly availed.
Nil 2,00,000 10,00,000 11,00,000 11,00,000 1,00,000 Yes, since the E-credit ledger
balance has fallen below the
ITC wrongly availed, interest
will have to be paid on 1 lakhs
from the date of debit in the e-
credit ledger.
Crux:
 ITC wrongly availed & utilised, interest payable from the date of utilisation till it is paid back.
Note: Amendment vide Finance act 2022 w.e.f. 01.07.2017, interest shall be 18% on ITC wrongly availed
& utilised.
ITC wrongly availed shall be construed to have been utilised, when the balance in the electronic credit
ledger falls below the amount of input tax credit wrongly availed.
Date of Utilisation shall be:
(a) If ITC wrongly availed is utilised to pay tax through return, then due date of return or actual date of
filing, whichever is earlier.
(b) If ITC wrongly availed is utilised to pay tax in all other cases, the date of debit in the e-credit ledger.
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Circular: Utilisation of the amounts available in the e credit ledger and e cash ledger for payment
of tax and other liabilities [Circular No. 172/04/2022-GST dt. 06.07.22]
Issue: Whether the amount available in the electronic credit ledger can be used for
making payment of any tax under the GST Laws?
Clarification: It is clarified that any payment towards output tax, whether self-assessed in the return
or payable as a consequence of any proceeding instituted under the provisions of GST Laws, can be
made by utilization of the amount available in the electronic credit ledger of a registered person. It is
further reiterated that as output tax does not include tax payable under reverse charge
mechanism, implying thereby that the electronic credit ledger cannot be used for making payment
of any tax which is payable under reverse charge mechanism.
Crux:
 Output tax, whether self-assessed/payable as a consequence of any proceeding can be paid by
utilization of E-credit ledger.
 E-credit ledger cannot be used for making payment of tax which is payable under RCM.
Issue: Whether the amount available in the electronic credit ledger can be used for
making payment of any liability other than tax under the GST Laws?
Clarification: As per sub-section (4) of section 49, the electronic credit ledger can be used for
making payment of output tax only under the CGST Act or the IGST Act. It cannot be used for making
payment of any interest, penalty, fees or any other amount payable under the said acts.
Similarly, electronic credit ledger cannot be used for payment of erroneous refund sanctioned
to the taxpayer, where such refund was sanctioned in cash.
Crux:
 E-credit ledger cannot be used for making payment of any interest, penalty, fees or any other
amount payable.
 E-credit ledger cannot be used for payment of erroneous refund sanctioned to the taxpayer,
where such refund was sanctioned in cash.
Issue: Whether the amount available in the electronic cash ledger can be used for making
payment of any liability under the GST Laws
Clarification: As per sub –section (3) of section 49 of the CGST Act, the amount available in the
electronic cash ledger may be used for making any payment towards tax, interest, penalty, fees or any
other amount payable under the provisions of the GST Laws.
Crux: E-cash ledger may be used for making any payment towards tax, interest, penalty, fees or any
other amount payable.
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TDS & TCS
Section 52(6): Rectification of error in GSTR 8, if mistakes or error are discovered later
If any operator after furnishing a statement under sub-section (4)

- discovers any omission or incorrect particulars therein,
- other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities,
- he shall rectify such omission or incorrect particulars in the statement to be furnished for the month
during which such omission or incorrect particulars are noticed,
- subject to payment of interest, as specified in sub-section (1) of section 50:
Limitation on rectification of statement

Provided that no such rectification of any omission or incorrect particulars shall be allowed
 after the thirtieth day of November due date for furnishing of statement for the month of September
following the end of the financial year or
 the actual date of furnishing of the relevant annual statement,
whichever is earlier.
Analysis of Amendment: Earlier the time limit for rectification of error was
 due date for furnishing of return for the month of September i.e. 10th October following the
end of FY or
 Actual date of furnishing of relevant annual statement, whichever is earlier.
Now beneficial amendment from tax payer’s point of view, the time limit has been extended till
30th November.
Crux: Now the maximum time limit for rectification of error/omission discovered later in GSTR-8 shall be:
 Date of filing of annual statement, whichever is earlier
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Returns
Section 37: Furnishing details of outward supplies
(1) Details of outward supplies to be furnished by the 10th of NM in FORM GSTR-1

Every registered person, other than—
 an ISD, a NRTP, and a person paying tax under the provisions of Section 10 or 51 or 52,
 shall furnish, electronically subject to such conditions and restrictions and
 in such form (GSTR-1) and manner (rule 59) as may be prescribed,
the details of outward supplies of goods or services or both
 effected during a tax period
 on or before the 10th day of the month (for QRMP its 13th/Non-QRMP-11th) succeeding the said
tax period,
 and such details
 shall, subject to such conditions and restrictions, within such time and in such manner as
may be prescribed, be communicated to the recipient of the said supplies.
 shall be communicated to the recipient of the said supplies within such time and in such manner as
may be prescribed.
Crux: Power to impose conditions & restriction on furnishing GSTR 1 by the supplier introduced in section
37.
Further the details of outward supplies furnished by supplier in GSTR 1 which is communicated to recipient
in GSTR-2B made subject to such conditions and restrictions, as may be prescribed.
(2) Every registered person who has been communicated the details u/s section 38(3) or the details
pertaining to inward supplies of ISD u/s section 38(4), shall either accept or reject the details so
communicated, on or before the seventeenth day, but not before the fifteenth day, of the month
succeeding the tax period and the details furnished by him under sub-section (1) shall stand amended
accordingly.
Analysis: Redundant hence omitted.
(3) Any registered person, who has furnished the details under sub- section (1) for any tax period (in
GSTR-1) and which have remained unmatched under section 42/43,
 shall, upon discovery of any error or omission therein,
 rectify such error/omission in such manner as may be prescribed &
 shall pay the tax & interest, if any, in case there is a short payment of tax on account of such error
or omission,
 in the return to be furnished for such tax period.
Proviso: no rectification of error or omission in respect of the details furnished under sub-section (1)
shall be allowed
 after furnishing of the return u/s 39 for the month of September the thirtieth day of November
following the end of the financial year to which such details pertain,
 or furnishing of the relevant annual return,
whichever is earlier.
Analysis of Amendment: Since section 42 & 43 are now being omitted from the act, their reference from
section 37 has been deleted.
Earlier the time limit for rectification of error was
 Date of furnishing of return u/s 39 for the month of September following the end of FY or
 Actual date of furnishing of relevant annual return, whichever is earlier.
Now beneficial amendment from tax payer’s point of view, the time limit has been extended till 30 th
November.
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Crux: Now the maximum time limit for rectification of error or omission in respect of the details furnished
in GSTR 1 shall be: Earlier of
 Date of filing of relevant annual return
(4) A registered person shall not be allowed to furnish the details of outward supplies under sub-
section (1) for a tax period, if the details of outward supplies for any of the previous tax
periods has not been furnished by him:
Provided that the Government may, on the recommendations of the Council, by notification,
subject to such conditions and restrictions as may be specified therein, allow a registered
person or a class of registered persons to furnish the details of outward supplies under sub-
section (1), even if he has not furnished the details of outward supplies for one or more
previous tax periods.25
Crux: Restriction imposed on filing of GSTR 1, RP shall not be allowed to file GSTR 1 for a tax period, if
GSTR-1 for previous tax periods has not been furnished by him.
Also government empowered to exempt a RP/a class of RPs from such restriction.
Section 38: Furnishing details of inward supplies (Section substituted) 26
(1) The details of outward supplies furnished by the registered persons 37(1) and of such other
supplies as may be prescribed, and an auto-generated statement containing the details of
ITC shall be made available electronically to the recipients of such supplies in such form and
manner, within such time, and subject to such conditions and restrictions as may be
prescribed.
(2) The auto-generated statement under sub-section (1) shall consist of––
(a) details of inward supplies in respect of which credit of input tax may be available to the
recipient; and
(b) details of supplies in respect of which such credit cannot be availed, whether wholly or
partly, by the recipient, on account of the details of the said supplies being furnished
under sub-section (1) of section 37,––
(i) by any registered person within such period of taking registration as may be
prescribed; or
(ii) by any registered person, who has defaulted in payment of tax and where such
default has continued for such period as may be prescribed; or
(iii) by any registered person, the output tax payable by whom in accordance with the
statement of outward supplies furnished by him under the said sub-section during
such period, as may be prescribed, exceeds the output tax paid by him during the
said period by such limit as may be prescribed; or
(iv) by any registered person who, during such period as may be prescribed, has
availed credit of input tax of an amount that exceeds the credit that can be availed
by him in accordance with clause (a), by such limit as may be prescribed; or
(v) by any registered person, who has defaulted in discharging his tax liability in
accordance with the provisions of sub-section (12) of section 49 subject to such
conditions and restrictions as may be prescribed; or
(vi) by such other class of persons as may be prescribed.
Crux: Section 38 earlier was talking about GSTR 2 (Statement of Inward supplies), but GSTR 2 was ever
implemented, Now GSTR 2 has been omitted and hence the section has been substituted.
Now Substituted section 38 talks about auto generated GSTR 2B, wherein
- details of Inward supplies in respect of which credit can be availed and
25
Amendment vide Finance act 2022 w.e.f. 01.10.22
26
Substituted (w.e.f. 1st October, 2022 vide Notification No. 18/2022 - CT dated 28.09.2022.)
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- details of supplies in respect of which such credit cannot be availed (i.e. restricted) shall be provided.
Rule 60: Form and manner of ascertaining details of inward supplies.-
(7) An auto-drafted generated27 statement containing the details of ITC shall be made available to the RP
in FORM GSTR-2B, for every month, electronically through the common portal, and shall consist of…
Crux: Better language used in act, word ‘auto-generated’ used instead to ‘auto-drafted’.
Section 39: Furnishing of returns
Section 39(5): NRTP
Every registered non-resident taxable person shall, for every calendar month or part thereof, furnish, in
such form (GSTR-5) and manner as may be prescribed (rule 66), a return, electronically, within
thirteen28 days after the end of a calendar month or within seven days after the last day of the period of
registration specified u/s 27(1), whichever is earlier.
Crux: Now the time limit for NRTP to furnish GSTR 5 shall be, Earlier of:
 13th days after the end of a calendar month or
 Within seven days after the last day of the period of registration specified u/s 27(1).
Section 39(7): Tax shall be paid on/before the last date of filing return
Every RP, who is required to furnish a return under sub-section (1), other than the person referred to
in the proviso thereto, or sub-section (3) or sub-section (5), shall pay to the Government the tax due as
per such return not later than the last date on which he is required to furnish such return:
Provided that every registered person furnishing return under the proviso to sub-section (1)
shall pay to the Government, in such form and manner, and within such time, as may be
prescribed,––
(a) an amount equal to the tax due taking into account inward and outward supplies of goods
or services or both, input tax credit availed, tax payable and such other particulars during
a month; or
(b) in lieu of the amount referred to in clause (a), an amount determined in such manner and
subject to such conditions and restrictions as may be prescribed.
Provided that every RP furnishing return under the proviso to sub-section (1) shall pay to the Government,
the tax due taking into account inward and outward supplies of goods or services or both, ITC availed, tax
payable and such other particulars during a month, in such form and manner, and within such time, as may
be prescribed:
Note: Proviso to Section 39(1): the Government may, on the recommendations of the Council, notify
certain class of registered persons who shall furnish a return for every quarter or part thereof, subject to
such conditions and restrictions as may be specified therein.
Crux: QRMP tax payers are given an option to pay tax, either on self-assessment basis or fixed sum method
i.e. (35% challan), this option of fixed sum method was allowed to them by the CG using the power under
section 148, now CG given the power vide insertion of point (b) in proviso to section 39(7).
27
Amendment by NNo. 19/2022 w.e.f. 01.10.22
28
Substituted for 20th by finance act 2022 w.e.f. 01.10.22
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Section 39(9): Rectification of omission or incorrect particulars
Where any registered person after furnishing a return under sub-section (1) or sub-section (2) or sub-
section (3) or sub-section (4) or sub-section (5) discovers any omission or incorrect particulars therein,
other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall
rectify such omission or incorrect particulars in the return to be furnished for the month or quarter during
which such omission or incorrect particulars are noticed, subject to payment of interest under this Act:
Provided that no such rectification of any omission or incorrect particulars shall be allowed after the due
date for furnishing of return for the month of September or second quarter the thirtieth day of November
following the end of the FY to which such details pertain, or the actual date of furnishing of relevant
annual return, whichever is earlier.
Crux: Now the maximum time limit for rectification of error or omission in respect of the details furnished
in GSTR 3B shall be: Earlier of
 Date of filing of relevant annual return
Section 39(10): Return of previous tax periods to be furnished for filling return of current tax
period
A registered person shall not be allowed to furnish a return for a tax period if the return for any of the
previous tax periods has not been furnished by him or the details of outward supplies under sub-
section (1) of section 37 for the said tax period has not been furnished by him.
Provided that the Government may, on the recommendations of the Council, by notification,
subject to such conditions and restrictions as may be specified therein, allow a registered person
or a class of registered persons to furnish the return, even if he has not furnished the returns
for one or more previous tax periods or has not furnished the details of outward supplies under
sub-section (1) of section 37 for the said tax period. 29
Crux: Now a person shall not be allowed to furnish his GSTR 3B unless GSTR 3B of previous tax period or
GSTR 1 for the current tax period has been furnished.
Section 44: Annual Return
(1) ……
Provided that the Commissioner may, on the recommendations of the Council, by notification, exempt
any class of registered persons from filing annual return under this section
NNo. 10/2022 CT dt. 05.07.22: Exempts the registered person whose aggregate turnover in the
financial year 2021-22 is up to two crore rupees, from filing annual return.30
Crux: The RP, whose ATO in the FY 2021-22 is upto Rs. 2 crores has been exempted from filing AR.
Section 47: Levy of late fee
(1) Any registered person who

 fails to furnish the details of outward or inward supplies required u/s 37/Section 38 or returns
required under Section 39/Section 45/Section 52
 by the due date
 shall pay a late fee of one hundred rupees for every day
 during which such failure continues
29
Amendment vide finance act 2022 w.e.f. 01.10.22
30
Amendment by notification no. 10/22 dt. 05.07.22
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 subject to a maximum amount of five thousand rupees
Crux:
 Since section 38 is omitted, its reference from section 47 also has been omitted.
 Section 47 had not prescribed a late fees for late filing of monthly statement i.e. GSTR 8 by TCS
collector, now section 47 has been amended to cover section 52, in order to impose late fees
on late filing of GSTR 8. Hence now the late fee on GSTR 8 is Rs 100 per day upto a maximum of Rs
5000 (under CGST act).
Goods and services tax practitioners (GSTPs)
Section 48(2):
RP to authorize GSTP to furnish returns
A registered person may authorize an approved goods and services tax practitioner to furnish
 the details of outward supplies under section 37,
 the details of inward supplies under section 38
 and the return under section 39 or 44 or 45
 and to perform such other functions
 in such manner as may be prescribed.
Rule 80(8):
Functions of GSTP
A GSTP can undertake any or all of the following activities on behalf of a RP, if so, authorized by
him to-
(a) furnish the details of outward and inward31 supplies;
(b) ….
Crux: Since Form GSTR 2 i.e. details of inwards supplies, has now been omitted from the act, its reference
from section 48 & rule 80 has been omitted.
31
Amended vide NNo. 19/2022 w.e.f 01.10.22
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Offences & Penalties
Clarification on various issues relating to applicability of demand and penalty provisions

under the Central Goods and Services Tax Act, 2017 in respect of transactions involving fake
invoices [Circular No. 171/03/2022-GST dt. 06.07.22]
Representations are being received from the trade as well as the field formations seeking
clarification on the issues relating to applicability of demand and penalty provisions under the
Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), in respect of
transactions involving fake invoices.
In order to clarify these issues and to ensure uniformity in the implementation of the provisions
of law across the field formations, the Board, in exercise of its powers conferred by section 168
(1) of the CGST Act, hereby clarifies the issues detailed hereunder.
Sl Issues Clarification
No.
1 In case where a registered person “A” Since there is only been an issuance of tax invoice by the
has issued tax invoice to another RP ‘A’ to registered person ‘B’ without the underlying
registered person “B” without any supply of goods or services or both, therefore, such an
underlying supply of goods or activity does not satisfy the criteria of “supply”, as
services or both, whether such defined under section 7 of the CGST Act. As there is no
transaction will be covered as supply by ‘A’ to ‘B’ in respect of such tax invoice in terms
“supply” under section 7 of CGST Act of the provisions of section 7, no tax liability arises
and whether any demand and against ‘A’ for the said transaction, and accordingly, no
recovery can be made from ‘A’ in demand and recovery is required to be made against ‘A’
respect of the said transaction under under the provisions of section 73/74 of CGST Act in
the provisions of section 73 or section respect of the same. Besides, no penal action under the
74 of CGST Act. Also, whether any provisions of section 73/74 is required to be taken
penal action can be taken against against ‘A’ in respect of the said transaction. The
registered person ‘A’ in such cases. registered person ‘A’ shall, however, be liable for penal
action u/s 122 (1)(ii) of the CGST Act for issuing
tax invoices without actual supply of g/s/b.
Crux: Situation: “A” has issued tax invoice to
“B” a RP without supply.
 Issue of fake invoice without supply, does not amount
to supply
 No demand & recovery/penal action is required to be
made against ‘A’ u/s 73/74.
 But ‘A’ shall be liable for penalty u/s 122(1) (ii) for
issuing fake tax invoices.
 Penalty: Higher of: Rs. 10,000/ITC passed on.
(Under CGST act).
2 A registered person “A” has issued tax Since the registered person ‘B’ has availed and utilized
invoice to another RP “B” without fraudulent ITC on the basis of the said tax invoice,
any underlying supply of goods or without receiving the goods or services or both, in
services or both. ‘B’ avails input tax contravention of the provisions of section 16(2)(b) of
credit on the basis of the said tax CGST Act, he shall be liable for the demand and
invoice. B further issues invoice along recovery of the said ITC, along with penal action,
with underlying supply of goods or under the provisions of section 74 of the CGST Act, along
services or both to his buyers and with applicable interest under provisions of section
utilizes ITC availed on the basis of 50 of the said Act. Further, as per provisions of
the above mentioned invoices issued section 75(13) of CGST Act, if penal action for
by ‘A’, for payment of his tax liability fraudulent availment or utilization of ITC is taken against
in respect of his said outward ‘B’ under section 74 of CGST Act, no penalty for the
supplies. Whether ‘B’ will be liable for same act, i.e. For the said fraudulent availment or
the demand & recovery of the said
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Sl Issues Clarification
No.
ITC, along with penal action, under utilization of ITC, can be imposed on ‘B’ under any other
the provisions of section 73/74 or any provisions of CGST Act, including under section 122.
other provisions of the CGST Act. Crux: Situation: ‘A’ issues fake invoice to ‘B’ and B
avails the ITC & uses it to pay OTL on real supply,
 ‘B’ has contravened provisions of sec 16(2)(b), he
shall be liable for the demand & recovery of the
ITC & penal action, u/s 74 (i.e. Tax, Interest &
Penalty us/ 74).
 But no penalty under any other section (including
section 122).
3 A registered person ‘A’ has issued tax In this case, the input tax credit availed by ‘B’ in his e-
invoice to another registered person credit ledger on the basis of tax invoice issued by ‘A’,
‘B’ without any underlying supply of without actual receipt of goods or services or both, has
goods or services or both. ‘B’ avails been utilized by ‘B’ for passing on of ITC by issuing tax
input tax credit on the basis of the said invoice to ‘C’ without any underlying supply of g/s/b.
tax invoice and further passes on the As there was no supply of goods or services or both by
said input tax credit to another ‘B’ to ‘C’ in respect of the said transaction, no tax was
registered person ‘C’ by issuing required to be paid by ‘B’ in respect of the same.
invoices without underlying supply of The ITC availed by ‘B’ in his e-credit ledger on the
goods or services or both. Whether basis of tax invoice issued by ‘A’, without actual receipt
‘B’ will be liable for the demand and of g/s/b, is ineligible in terms of section 16 (2)(b) of the
recovery and penal action, under the CGST Act. In this case, there was no supply of g/s/b
provisions of section 73 or section by ‘B’ to ‘C’ in respect of the said transaction and also
74 or any other provisions of the no tax was required to be paid in respect of the said
CGST Act. transaction. Therefore, in these specific cases, no
demand & recovery of either ITC wrongly/
fraudulently availed by ‘B’ in such case or tax liability in
respect of the said outward transaction by ‘B’ to ‘C’ is
required to be made from ‘B’ under the provisions of
section 73/74 of CGST Act. However, in such cases, ‘B’
shall be liable for penal action both under section
122(1)((ii) and section 122(1)(vii) of the CGST Act,
for issuing invoices without any actual supply of
goods and/or services as also for taking/utilizing ITC
without actual receipt of goods and/or services.
Crux: Situation: ‘A’ issued fake invoice to ‘B’, ‘B’
further issued fake invoice to ‘C’
Against ‘A’: Since no supply, No demand & recovery u/s
73/74. Penalty u/s 122(1) (ii): Rs. 10,000/ITC passed on
Against ‘B’: No demand & recovery u/s 73/74.
Penalty u/s 122(1) (ii): issues invoice without
supply: Higher of: 10,000/ITC passed on &
Penalty 122(1) (vii): takes or utilizes ITC without
actual receipt: Higher of Rs. 10,000/ITC availed.
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Exports under GST
Rule 96: Refund of integrated tax paid on goods or services exported out of India
(1) Application for refund claim:

The shipping bill filed by the exporter of goods shall be deemed to be an application for refund of
integrated tax paid on the goods exported out of India and such application shall be deemed to
have been filed only when: —
(a) the person in charge of the conveyance carrying the export goods duly files a departure
manifest; or an export manifest or an export report covering the number and the date of
shipping bills/bills of export; and
(b) the applicant has furnished a valid return in FORM GSTR-3B:
Provided that if there is any mismatch between the data furnished by the exporter of
goods in Shipping Bill and those furnished in statement of outward supplies in
FORM GSTR-1, such application for refund of integrated tax paid on the goods
exported out of India shall be deemed to have been filed on such date when
such mismatch in respect of the said shipping bill is rectified by the exporter; 32
(c) the applicant has furnished a valid return in Form GSTR-3/GSTR-3B as the case may be.
(c) the applicant has undergone Aadhaar authentication in the manner provided in rule 10B;
(2) Details of export invoices furnished in GSTR 1 shall be transmitted electronically by the
common portal to ICEGATE
The details of the relevant export invoices in respect of export of goods contained in FORM GSTR-1
shall be transmitted electronically by the common portal to the system designated by the Customs
and the said system shall electronically transmit to the common portal, a confirmation that the goods
covered by the said invoices have been exported out of India:
Provided that where the date for furnishing the details of outward supplies in FORM GSTR-1 for a
tax period has been extended in exercise of the powers conferred under section 37 of the Act, the
supplier shall furnish the information relating to exports as specified in Table 6A of FORM GSTR-1
after the return in FORM GSTR-3B has been furnished and the same shall be transmitted
electronically by the common portal to the system designated by the Customs:
Provided further that the information in Table 6A furnished under the first proviso shall be auto-
drafted in FORM GSTR-1 for the said tax period.
(3) Processing of refund claim

Upon the receipt of the information regarding the furnishing of a valid return in FORM GSTR-3 or
FORM GSTR-3B, as the case may be33 from the common portal, the system designated by the
Customs or the proper officer of Customs, as the case may be, shall process the claim of refund in
respect of export of goods and an amount equal to the integrated tax paid in respect of each shipping
bill or bill of export shall be electronically credited to the bank account of the applicant mentioned in
his registration particulars and as intimated to the Customs authorities.
(4) Withholding of refund of IGST

The claim for refund shall be withheld where, -
(a) a request has been received from the jurisdictional Commissioner of Central Tax, State Tax or
Union Territory Tax to withhold the payment of refund due to the person claiming refund in
accordance with the provisions of section 54(10)/(11); or
(b) the proper officer of Customs determines that the goods were exported in violation of the
provisions of the Customs Act, 1962; or
32
Substituted w.e.f. 01.07.2017 vide Notification No. 14/2022-CT dated 05.07.2022.
33
Amendment vide NNo. 19/2022 w.e.f. 01.10.22
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(c) the Commissioner in the Board or an officer authorised by the Board, on the basis
of data analysis and risk parameters, is of the opinion that verification of
credentials of the exporter, including the availment of ITC by the exporter, is
considered essential before grant of refund, in order to safeguard the interest of
revenue.
(5) Where refund is withheld in accordance with the provisions of clause (a) of sub-rule (4), the proper
officer of integrated tax at the Customs station shall intimate the applicant and the jurisdictional
Commissioner of central tax, State tax or Union territory tax, as the case may be, and a copy of such
intimation shall be transmitted to the common portal. 34
(5A) Where refund is withheld in accordance with the provisions of clause (a) or clause (c) of
sub-rule (4), such claim shall be transmitted to the proper officer of Central tax,
State tax or Union territory tax, as the case may be, electronically through the
common portal in a system generated FORM GST RFD-01and the intimation of such
transmission shall also be sent to the exporter electronically through the common
portal, and notwithstanding anything to the contrary contained in any other rule, the
said system generated form shall be deemed to be the application for refund in
such cases and shall be deemed to have been filed on the date of such transmission.
(5B) Where refund is withheld in accordance with the provisions of clause (b) of sub-
rule (4) and the proper officer of the Customs passes an order that the goods have
been exported in violation of the provisions of the Customs Act, 1962 (52 of 1962),
then, such claim shall be transmitted to the proper officer of Central tax, State tax
or Union territory tax, as the case may be, electronically through the common portal
in a system generated FORM GST RFD-01 and the intimation of such transmission
shall also be sent to the exporter electronically through the common portal, and
notwithstanding anything to the contrary contained in any other rule, the said system
generated form shall be deemed to be the application for refund in such cases and shall
be deemed to have been filed on the date of such transmission.
(5C) The application for refund in FORM GST RFD-01 transmitted electronically through the
common portal in terms of sub-rules (5A) and (5B) shall be dealt in accordance with
the provisions of rule 89.35
(6) Upon transmission of the intimation under sub-rule (5), the PO of central tax or State tax or Union
territory tax, as the case may be, shall pass an order in Part A of FORM GST RFD-07.
(7) Where the applicant becomes entitled to refund of the amount withheld under clause (a) of sub-rule
(4), the concerned jurisdictional officer of central tax, State tax or UT tax, as the case may be, shall
proceed to refund the amount by passing an order in FORM GST RFD-06 after passing an order for
release of withheld refund in Part B of FORM GST RFD-0736
(8) For notified class of goods, Refund of IGST to govt of Bhutan and not to exporter
The CG may pay refund of the integrated tax to the Government of Bhutan on the exports to Bhutan
for such class of goods as may be notified in this behalf and where such refund is paid to the
Government of Bhutan, the exporter shall not be paid any refund of the integrated tax.
(9) Refund of IGST paid on services: file RFD 01 & dealt with in accordance with rule 89
The application for refund of integrated tax paid on the services exported out of India shall be filed in
FORM GST RFD-01 and shall be dealt with in accordance with the provisions of rule 89.
34
Omitted(w.e.f. 01.07.2017) vide Notification No. 14/2022-CT dated 05.07.2022.
35
Inserted (w.e.f. 01.07.2017) vide Notification No.14/2022 - CT dated 05.07.2022.
36
Omitted (w.e.f. 01.07.2017) vide Notification No. 14/2022-CT dated 05.07.2022.
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(10) The persons claiming refund of integrated tax paid on exports of goods or services should
not have –
(a) received supplies on which the benefit of the Govt of India, Ministry of Finance
 NNo. 48/2017-CT, dated the 18th October, 2017 except so far it relates to receipt of capital
goods by such person against Export Promotion Capital Goods Scheme or
 Notification No. 40/2017 - Central Tax (Rate), or
 NNo. 41/2017-Integrated Tax (R), dated the 23rd October, 2017, has been availed; or
(b) availed the benefit under notification No. 78/2017-Customs, or notification No. 79/2017-
Customs, dated the 13th October, 2017, except so far it relates to receipt of capital goods by
such person against Export Promotion Capital Goods Scheme.
Explanation. - For the purpose of this sub-rule, the benefit of the notifications mentioned therein shall not
be considered to have been availed only where the registered person has paid IGST and Compensation
Cess on inputs and has availed exemption of only Basic Customs Duty (BCD) under the said notifications.
Refer YouTube amendment class.
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Refunds
Section 54(1): Application for refund within 2 years from relevant date
Any person claiming refund of any tax & interest, if any, paid on such tax/any other amount paid by
him,
- may make an application before the expiry of two years from the relevant date
- In such form (GST RFD-01) and
- manner as may be prescribed. (Rule 89)
Proviso: For refund of balance in ECL balance, separate refund application is not required
A RP, claiming refund of any balance in the Electronic cash ledger in accordance with the provisions of
section 49(6), may claim such refund in the return furnished u/s 39 in such such form and37 manner as
may be prescribed (rule 89).
Rule 89: Application for refund of tax, interest, penalty, fees or any other amount
(1) Refund application in GST RFD-01 (expect in case of IGST on exports – shipping bill)
Any person, except the persons covered under notification issued under section 55 38, claiming refund
of any balance in the electronic cash ledger in accordance with the provisions of sub-
section (6) of section 49 or any tax, interest, penalty, fees or any other amount paid by him, other
than refund of integrated tax paid on goods exported out of India,
 may file, subject to the provisions of rule 10B, an application electronically in Form GST
RFD-01 through the common portal,
 either directly or through a Facilitation Centre notified by the Commissioner:
Provided that: Any claim for refund relating to balance in the E Cash Ledger in accordance with the
provisions of section 49(6) may be made through the return furnished for the relevant tax period in
GSTR 3/4/7, as the case may be.39
Provided that: Refund claim w.r.t supplies to SEZ unit/Developer
Provided further that: Refund claim with respect to Deemed Exports
Provided also that: Refund to CTP/NRTP shall be only after last return filed
Explanation.—For the purposes of this sub-rule, specified officer means a specified

officer or an authorised officer as defined under rule 2 of the Special Economic Zone Rules,
2006.40
Crux: w.e.f. 01.10.22: Refund of balance in E-cash ledger has to be claimed by filing GST RFD 01.
Earlier specified officer was not defined in the act, now definition of specified officer inserted, its borrowed
from SEZ rules.
Section 54(2): Refund to UIN holders
A specialized agency of United Nations Organisation or any Multilateral Financial Institution and
Organisation notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy
of foreign countries or any other person or class of persons, as notified u/s 55,
 entitled to a refund of tax paid by it on inward supplies of g/s/b, may
 Application: in GST RFD -10 and manner as may be prescribed, (rule 95)
37
Amendment by finance act 2022 w.e.f. 01.10.22
38
Persons covered u/s 55 like UN Bodies, Embassies etc. They file GST RFD - 10
39
Amendment vide NNO. 19/2022, w.e.f. 01.10.22
40
Inserted by Notification No. 14/2022- CT, dated 05.07.2022.
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 before the expiry of 2 years 6 months41 from the last day of the quarter in which such supply was
received.
Crux: The time limit to claim refund of tax paid by UIN holders on inward supplies extended from 6 months
to 2 years from the last day of the quarter in which such supply was received.
Section 54(10): PO may withhold refund in certain cases
Where any refund is due under sub-section (3) to a RP who has defaulted in furnishing any return or
who is required to pay any tax, interest or penalty, which has not been stayed by any court, Tribunal or
Appellate Authority by the specified date, the proper officer may—
(a) withhold payment of refund due until the said person has furnished the return/paid the tax, interest or
penalty, as the case may be;
(b) deduct from the refund due, any tax, interest, penalty, fee or any other amount which the taxable
person is liable to pay but which remains unpaid under this Act or under the existing law.
Crux: Earlier the provisions of withholding u/s 54(10) was limited to ITC refund i.e. due u/s 54(3) only,
post amendment any refund due to a RP can be withheld by PO in case of default in furnishing any return
or if RP is required to pay any tax, interest or penalty.
Section 54: In the Explanation in clause (2) after sub-clause (b), (ba)inserted
"Relevant date" means—

Situation Relevant date
(ba) in case of zero-rated supply of goods or the due date for furnishing of return under
services or both to a SEZ developer or a SEZ section 39 in respect of such supplies;
unit where a refund of tax paid is available
in respect of such supplies themselves, or
as the case may be, the inputs or input
services used in such supplies,
Crux: Relevant date in case of SEZ supplies: the due date for furnishing of return under section 39 in
respect of such supplies.
Rule 89(2): Documentary evidence to obtain refund
The application under sub-rule (1) shall be accompanied by any of the following documentary evidences in
Annexure 1 in GST RFD-01, as applicable, to establish that a refund is due to the applicant, namely:
(a) Refund of GST paid under protest
(b) Refund is on account of Export of goods

a statement containing the number and date of shipping bills or bills of export and the number and the
date of the relevant export invoices, in a case where the refund is on account of export of goods, other
than electricity;42
(ba) a statement containing the number and date of the export invoices, details of energy
exported, tariff per unit for export of electricity as per agreement, along with the
copy of statement of scheduled energy for exported electricity by Generation Plants
issued by the Regional Power Committee Secretariat as a part of the Regional Energy
Account (REA) under clause (nnn) of sub-regulation 1 of Regulation 2 of the Central
Electricity Regulatory Commission (Indian Electricity Grid Code) Regulations, 2010 and
the copy of agreement detailing the tariff per unit, in case where refund is on account
of export of electricity;
41
Substituted (w.e.f. 1st October, 2022 vide Notification No. 18/2022 - CT dated 28.09.2022)
42
Inserted by Notification No. 14/2022- CT, dated 05.07.2022.
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Crux: Documentary evidence prescribed for claiming refund, in case refund is on account of export of
electricity. Exporters of electricity are required to submit:
 a statement containing the number and date of the export invoices, details of energy exported, tariff
per unit for export of electricity as per agreement,
 along with the copy of statement of scheduled energy for exported electricity by Generation
Plants issued by the Regional Power Committee Secretariat and
 the copy of agreement detailing the tariff per unit.
Section 54 (3): Refund of unutilized ITC
Subject to the provisions of sub-section (10),

- a RP may claim refund of any unutilized ITC at the end of any tax period:
Refund of ITC allowed only in 2 situations:

Provided that no refund of unutilized ITC shall be allowed in cases other than—
(i) ZRS: zero-rated supplies made without payment of tax;
(ii) Inverted tax structure: where the credit has accumulated on account of rate of tax on inputs being
higher than the rate of tax on output supplies (other than nil rated/fully exempt supplies), except
supplies of g/s/b as may be notified by the Govt on the recommendations of the Council.
Rule 89(4): Refund claim in case of ZRSs
In the case of ZRS of g/s/b without payment of tax under bond/LUT in accordance with the provisions of
section 16(3) of the IGST act, refund of ITC shall be granted as per the following formula—
Refund Amount (maximum amount admissible)
= (Turnover of ZRS of goods + Turnover of ZRS of services) × Net ITC
Adjusted Total Turnover
Explanation.–For the purposes of this sub-rule, the value of goods exported out of India shall be
taken as –
(i) the Free on Board (FOB) value declared in the Shipping Bill or Bill of Export form, as the
case may be, as per the Shipping Bill and Bill of Export (Forms) Regulations, 2017;
or
(ii) the value declared in tax invoice or bill of supply,
whichever is less.
Crux: The value of goods exported out of India shall be taken as:
(i) the Free on Board (FOB) value declared in the Shipping Bill or Bill of Export
(ii) the value declared in tax invoice or bill of supply,
whichever is less.
Rule 89(5): Refund claim by person having inverted tax structure: refundable ITC to be
computed as follows:
Refund Amount (maximum amount admissible)

= (Turnover of inverted rated supply of goods and services) × Net ITC
Adjusted Total Turnover
less:
tax payable on such inverted rated supply of goods and services x (Net ITC/ITC available on
input/input services) .43
Crux: Formula for claiming refund of ITC in case of Inverted duty structure amended, Refer YouTube
amendment lecture for detailed discussion.
43
Substituted by Notification No. 14/2022- CT, dated 05.07.2022
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Rule 95A: Refund of taxes to the retail outlets established in departure area of an international
Airport beyond immigration counters making tax free supply to an outgoing international tourist.
Refund of taxes paid on inward supply of indigenous goods by retail outlets established at departure area
of the international airport beyond immigration counters when supplied to outgoing international tourist
against foreign exchange [Circular No. 106/25/2019-GST dt. 29.06.2019]44
Crux: This rule has been omitted retrospectively effect from 01.07.2019. Owing to this omission, Circular
No. 106/25/2019 GST dated 29.06.2019 has been withdrawn, wherein certain clarifications were given in
relation to rule 95A.
Clarification on various issues relating to refund claimed by the recipients of supplies in respect
of deemed export [Circular No. 172/04/2022 GST dated 06.07.2022]
Issue Clarification
Whether the Input Tax Credit (ITC) availed by the The refund in respect of deemed export supplies is
recipient of deemed export supply for claiming the refund of tax paid on such supplies. However,
refund of tax paid on supplies regarded as deemed the recipients of deemed export supplies were
exports would be subjected to provisions of Section facing difficulties on the portal to claim refund of
17 of the CGST Act, 2017. tax paid due to requirement of the portal to debit
the amount so claimed from their electronic credit
ledger. Considering this difficulty, the tax paid on
such supplies, has been made available as ITC to
the recipients vide Circular No. 147/03/2021-GST
dated 12.03.2021 only for enabling them to claim
such refunds on the portal. The ITC of tax paid on
deemed export supplies, allowed to the recipients
for claiming refund of such tax paid, is not ITC in
terms of the provisions of Chapter V of the CGST
Act, 2017. Therefore, the ITC so availed by the
recipient of deemed export supplies would not be
subjected to provisions of Section 17 of the CGST
Act, 2017.
Crux: ITC so availed by the recipient of deemed
export supplies would not be subjected to
provisions of Section 17.
Whether the ITC availed by the recipient of deemed The ITC of tax paid on deemed export supplies,
export supply for claiming refund of tax paid on allowed to the recipients for claiming refund of such
supplies regarded as deemed exports is to be tax paid, is not ITC in terms of the provisions of
included in the “Net ITC” for computation of refund Chapter V of the CGST Act, 2017. Therefore, such
of unutilised ITC under rule 89(4) & rule 89 (5) of ITC availed by the recipient of deemed export
the CGST Rules, 2017. supply for claiming refund of tax paid on supplies
regarded as deemed exports is not to be included
in the “Net ITC” for computation of refund of
unutilised ITC on account of zero-rated supplies
under rule 89(4) or on account of inverted rated
structure under rule 89(5) of the CGST Rules, 2017.
Crux: ITC availed by the recipient of deemed
export supply for claiming refund of tax paid on
supplies regarded as deemed exports is not to be
included in the “Net ITC” for computation of refund
of unutilised ITC under rule 89(4)/ rule 89(5).
44
withdraws, ab-initio
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Refund of accumulated ITC on account of inverted duty structure allowed in cases where rate of
tax on outward supply is less than the rate of tax on inputs (same goods) at the same point of
time. [Circular No. 173/05/2022 GST dated 06.07.2022]
Circular No. 135/05/2020 GST dated 31.03.2020, issued earlier, had clarified that refund on account of
inverted duty structure would not be admissible in cases where the input and output supply are same.
However, the intent of said clarification was not to cover those cases where the supplier is making supply
of goods under a concessional notification and the rate of tax of output supply is less than the rate of tax
on input supply (of the same goods) at the same point of time due to supply of goods by the supplier under
such concessional notification.
Therefore, it is clarified that in such cases, refund of accumulated ITC on account of inverted duty structure
would be allowed in cases where accumulation of ITC is on account of rate of tax on outward supply being
less than the rate of tax on inputs (same goods) at the same point of time, as per some concessional
notification issued by the Government providing for lower rate of tax for some specified supplies subject to
fulfilment of other conditions.
The amended clarification is as follows:
It may be noted that refund of accumulated ITC is available where the credit has accumulated on account
of rate of tax on inputs being higher than the rate of tax on output supplies. It is noteworthy that, the input
and output being the same in such cases, though attracting different tax rates at different points in time,
do not get covered under the provisions of clause (ii) of the first proviso to section 54(3).
There may, however, be cases where though inputs and output goods are same but the output
supplies are made under a concessional notification due to which the rate of tax on output
supplies is less than the rate of tax on inputs.
In such cases, as the rate of tax of output supply is less than the rate of tax on inputs at the
same point of time due to supply of goods by the supplier under such concessional notification,
the credit accumulated on account of the same is admissible for refund under the provisions of
clause (ii) of the first proviso to section 54(3), other than the cases where output supply is either Nil rated
or fully exempted, and also provided that supply of such goods or services are not notified by the
Government for their exclusion from refund of accumulated ITC under the said clause.
Crux: Cases where though inputs and output goods are same but the output supplies are made under a
concessional notification due to which the rate of tax on output supplies is less than the rate of tax on
inputs. In such cases, as the rate of tax of output supply is less than the rate of tax on inputs at the same
point of time due to supply of goods by the supplier under such concessional notification, the credit
accumulated on account of the same is admissible for refund.
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Miscellaneous Provisions
Section 168: Power to issue instructions or directions
(1) The Board may, if it considers it necessary or expedient so to do for the purpose of uniformity in the
implementation of this Act, issue such orders, instructions or directions to the central tax officers as it
may deem fit, and thereupon all such officers and all other persons employed in the implementation of
this Act shall observe and follow such orders, instructions or directions.
(2) The Commissioner specified in clause (91) of section 2, sub-section (3) of section 5, clause (b) of sub-
section (9) of section 25, sub-sections (3) and (4) of section 35, sub-section (1) of section 37, sub-
section (2) of section 3845, sub-section (6) of section 39, section 44, sub-sections (4) and (5) of
section 52, section 143(1), except the second proviso thereof, clause (l) of sub-section (3)of section
158 and section 167 shall mean a Commissioner/Joint Secretary posted in the Board and such
Commissioner/Joint Secretary shall exercise the powers specified in the said sections with the approval
of the Board.
45
Omitted “sub-section (2) of section 38,” (w.e.f. 1st October, 2022)
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Customs
Importation, Exportation & Transportation of goods
Specified deposits exempted from provisions of electronic cash ledger [Section 51A]
Section 51A of the Customs Act, 1962, provides for payment of duty, interest, penalty, fee or
any other sum payable by a person through deposit made in electronic cash ledger.
In terms of Section 51A (4) of the Customs Act, 1962, CBIC may by notification exempt certain
deposits to which provisions of Electronic Cash Ledger will not be applicable.
Accordingly, CBIC has specified certain deposits which are exempted from provisions of payment through
electronic cash ledger: -
not in place;
(ii) with respect to accompanied baggage;
(iii) other than those used for making payment of, -
(a) any duty of customs, including cesses and surcharges levied as duties of customs;
(b) IGST;
(c) GST Compensation Cess;
1975.
This notification shall come into force with effect from the 30th November 2022
Crux: CBIC has specified certain deposits which are exempted from provisions of payment
through electronic cash ledger: -
not in place;
(ii) with respect to accompanied baggage;
(iii) other than those used for making payment of, -
(a) any duty of customs, including cesses and surcharges levied as duties of customs;
(b) IGST;
(c) GST Compensation Cess;
1975.
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Valuation under customs
Section 14 amended to address the issue of undervaluation in imports
Section 14 has been amended by the Finance Act, 2022 to include provisions for rules enabling the Board
to specify the additional obligations of the importer in respect of a class of imported goods whose value is
not being declared correctly, the criteria of selection of such goods, and the checks in respect of such goods.
This amendment is a measure to address the issue of undervaluation in imports.
With effect from 30.03.2022, following amendments have been carried out by the Finance Act,
2022 in section 14:
Provided further that the rules made in this behalf may provide for,-
(i) the circumstances in which the buyer and the seller shall be deemed to be related;
(ii) the manner of determination of value in respect of goods when there is no sale, or the buyer and the
seller are related, or price is not the sole consideration for the sale or in any other case;
(iii) the manner of acceptance or rejection of value declared by the importer or exporter, as the case may
be, where the proper officer has reason to doubt the truth or accuracy of such value, and determination
of value for the purposes of this section:
(iv) the additional obligations of the importer in respect of any class of imported goods and the
checks to be exercised, including the circumstances and manner of exercising thereof, as the
Board may specify, where, the Board has reason to believe that the value of such goods may
not be declared truthfully or accurately, having regard to the trend of declared value of such
goods or any other relevant criteria.
Crux: Just for knowledge amendment. Please follow valuation method as taught in class. No
change in Valuation owing to this amendment.
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Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022
Rule 1: Short title and commencement
(1) These rules may be called the Customs (Import of Goods at Concessional Rate of Duty or for Specified
End Use) Rules, 2022.
(2) They shall come into force on the 09th September 2022.
Rule 2: Application
(1) These rules shall apply where –

a. a notification provides for the observance of these rules;
b. an importer intends to avail the benefit of any notification and such benefit is dependent
upon the use of the goods imported being covered by that notification for the manufacture of any
commodity or provision of output service or being put to a specified end use
Rule 3: Definition
(1) In these rules, unless the context otherwise requires, -

a. “Act” means the Customs Act, 1962 (52 of 1962);
b. “capital goods “means goods, the value of which is capitalized in the books of account of the
importer;
c. “customs automated system” means the Indian Customs Electronic Data Interchange
System;
d. “date of import” means the date of the order made by the proper officer under section 47,
permitting clearance of the goods;
e. “Form” means a form annexed to these rules;
f. “information” means the information provided by the importer who intends to avail the benefit
of a notification;
g. “job work” means any treatment, process or manufacture, consistent with the notification
undertaken by a person on goods belonging to the importer except gold, jewellery and
articles thereof, and other precious metals or stones and the term “job worker” shall be
construed accordingly;
h. “jurisdictional Custom Officer” means an officer of Customs of a rank equivalent to the rank of
Superintendent or Appraiser exercising jurisdiction over –
a. the premises where either the goods imported shall be put to use for manufacture or for
rendering output services;
b. the primary address specified in the Importer Exporter Code issued by Directorate General
of Foreign Trade in other cases;
i. “manufacture” means the processing of raw materials or inputs by the importer in any manner
that results in emergence of a new product having a distinct nature or character or use or name;
and the term “manufacturer” shall be construed accordingly;
j. “notification” includes any notification issued under sub-section (1) of section 25 and section 11
of the Act;
k. “Output service” means supply of service excluding after-sales service, utilizing imported goods.
l. “Section” means a section of the Act.
m. “Specified end use” means dealing with the goods imported in a manner specified in the
notification and includes supply to the intended person and the term “end use recipient” shall be
construed accordingly.
(2) Words and expressions used in these rules and not defined but defined in the Act shall have the same
meanings as assigned to them in the said Act.
Rule 4: Information to give prior information
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(1) The importer shall provide one-time prior information on the common portal, in Form IGCR-
1containing the following particulars, namely: —
i. the name and address of the importer and his job worker, if any;
ii. the goods produced or process undertaken at the manufacturing facility of the importer
or his job worker, if any, or both;
iii. the nature and description of goods imported used in the manufacture of goods at the premises
of the importer or the job worker, if any;
iv. particulars of the notification applicable on such import;
v. nature of output service rendered utilizing the goods imported;
vi. particulars of premises intended to be used in case of unit transfer;
vii. details of the end use recipient in cases where goods imported are supplied for specified
end use; and
viii. The intended ports of import.
(2) On acceptance of the information, an Import of Goods at Concessional Rate of Duty(IGCR)

Identification Number (IIN) shall be generated against such information :Provided that such
information may be updated on the common portal in case of a change in the details furnished in Form
IGCR-1
(3) The importer who intends to avail the benefit of a notification shall submit a continuity bond
with such surety or security as deemed appropriate by the Deputy Commissioner of
Customs or Assistant Commissioner of Customs having jurisdiction over the premises where the goods
imported shall be put to use for manufacture of goods or for rendering output service or being put to
use for a specified end use, with an undertaking to pay-
a. in case of a notification that provides a duty exemption, the amount equal to the difference
between the duty leviable on inputs but for the exemption and that already paid, if any, at the time
of import, along with interest, at the rate fixed by notification issued under section 28AA, for the
period starting from the date of import of the goods on which the exemption was availed and
ending with the date of actual payment of the entire amount of the difference of duty that he is
liable to pay ;
b. in all cases where the notification is other than one that provides an exemption benefit, the amount
equal to the assessable value of the goods being imported.
Rule 5: Procedure to be followed
(1) The importer who intends to avail the benefit of a notification shall be required to mention the IIN and
continuity bond number and details while filing the Bill of Entry.
(2) The Deputy Commissioner of Customs or, as the case may be, Assistant Commissioner of
Customs at the custom station of importation shall allow the benefit of the notification to the
importer.
(3) Where a Bill of Entry is cleared for home consumption, the bond submitted by the importer
gets debited automatically in the customs automated system and the details shall be made available
electronically to the jurisdictional Customs Officer.
Rule 6: Importer to maintain records.
(1) The importer shall maintain an account so as to clearly indicate –

i. quantity and value of goods imported;
ii. quantity and date of receipt of the goods imported in the relevant premises;
iii. quantity of such goods consumed including the quantity used domestically for
manufacture, quantity exported, if any, to fulfil the intended purpose and quantity of goods sent
to an end use recipient;
iv. quantity of goods sent for job work and the nature of job work carried out;
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v. quantity of goods received after job work;
vi. quantity of goods re-exported, if any, under rule 10; and
vii. quantity remaining in stock, according to bills of entry,
and shall produce the said account as and when required by the Deputy Commissioner of
Customs, or, as the case may be, the Assistant Commissioner of Customs having jurisdiction over the
premises or where the goods imported shall be put to use for manufacture of goods or for rendering
output service:
Provided that in case of non-receipt or short receipt of goods imported in the relevant premises, the
importer shall intimate such non-receipt or short receipt immediately on the common portal in the
Form IGCR-2.
(2) The importer shall submit a monthly statement on the common portal in the Form IGCR-3 by the tenth
day of the following month;
Provided that the importer may submit details of goods consumed in the Form IGCR-3A at any point
of time, for immediate re credit of the bond which shall become a part of the monthly
statement of the subsequent month.
Rule 7: Procedure for allowing imported goods for job work
(1) The importer shall maintain a record of the goods sent for job work during the month and mention the
same in the monthly statement referred to in sub-rule (2) of Rule 6.
(2) The importer shall send the goods to the premises of the job worker under an invoice or wherever
applicable, through an electronic-way bill, as specified in the Central Goods and Services Tax
Act, 2017 (12 of 2017), mentioning the description and quantity of the goods.
(3) The maximum period for which the goods can be sent to the job worker shall be six months from the
date of invoice or electronic way bill referred to in sub-rule (2).
(4) In case the importer is unable to establish that the goods sent for job work have been used as per
the particulars mentioned under rule 4, the jurisdictional Customs Officer shall take necessary
action against the importer under rule 11 and 12.
(5) The job worker shall,-

i. maintain an account of receipt of goods, manufacturing process undertaken thereon and the waste
generated, if any, during such process;
ii. produce the account details before the jurisdictional Customs Officer as and when required by the
said officer;
iii. after completion of the job work send the processed goods to the importer or to another
job worker as directed by the importer for carrying out the remaining processes, if any,
under the cover of an invoice or electronic way bill.
Rule 8: Procedure for allowing imported goods for unit transfer.
(1) The importer shall maintain a record of the goods sent for unit transfer during the month and mention
the same in the monthly statement referred to in sub-rule (2) of rule 6.
(2) The importer shall send the goods under an invoice or wherever applicable, through an
electronic-way bill, as specified in the Central Goods and Services Tax Act, 2017 (12 of 2017),
mentioning the description and quantity of the goods.
(3) The importer shall in relation to transfer of goods to another unit,-
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i. maintain an account of receipt of goods, manufacturing process undertaken thereon and the waste
generated, if any, during such process;
said officer;
iii. after completion of the said process, send the processed goods back to the premises of the
importer from where the goods were received or to a job worker for carrying out the remaining
processes, if any, under the cover of an invoice or electronic way bill.
Rule 9: Procedure for supplying imported goods to the end use recipient.
(1) The importer shall maintain a record of the goods supplied to the end use recipient during the
month and mention the same in the monthly statement referred to in sub-rule (2) of rule 6.
(2) The importer shall send the goods under an invoice or wherever applicable, through an
electronic way bill, as specified in the Central Goods and Services Tax Act, 2017 (12 of 2017),
mentioning the description and quantity of the goods.
(3) In case of supply for replenishment or Export against supply, the end use recipient shall,-
i. maintain an account of receipt of goods, manufacturing process undertaken thereon and the
waste generated, if any, during such process;
said officer;
iii. produce the relevant details to the importer for fulfilment of the benefit under the notification;
Rule 10: Re-export or clearance of unutilised or defective goods.
(1) The importer who has availed the benefit of a notification shall use the goods imported in
accordance with the conditions mentioned in the concerned notification within the period and
with respect to unutilised or defective goods, so imported, the importer shall have an option to either
re-export or clear the same for home consumption, within the said period, namely –
(i) within the period specified in the notification;
(ii) within six months from the date of import, where the time period is not specified in the
notification:
Provided that, the said period of six months can be further extended by the jurisdictional
Commissioner for a period not exceeding three months, if sufficient reason is shown that the
causes for not conforming to the time period were beyond the importer’s control.
(2) Any re-export of the unutilised or defective goods referred to in sub rule (1) shall be recorded by the
importer in the monthly statement by providing the details of necessary export documents:
Provided that the value of such goods for re-export shall not be less than the value of the said goods
at the time of import.
(3) The importer who intends to clear unutilised or defective goods for home consumption shall have an
option of voluntary payment of applicable duty along with interest on the common portal and the
particulars of such clearance and the duty payment shall be recorded by the importer in the monthly
statement.
(4) The importer shall have an option to clear the capital goods imported, after having been used for
the specified purpose, on payment of duty equal to the difference between the duty leviable on such
goods but for the exemption availed and that already paid, if any, at the time of importation, along
with interest, at the rate fixed by the notification issued under section 28AA, on the depreciated
value allowed in straight line method as under —
(i) for every quarter in the first year @ 4%;
(ii) for every quarter in the second year @ 3%;
(iii) for every quarter in the third year @ 3%;
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(iv) for every quarter in the fourth and fifth year @ 2.5%;
(v) and thereafter for every quarter @ 2%.
Explanation. –
(1) For the purpose of computing rate of depreciation under this rule for any part of a quarter, a full
quarter shall be taken into account.
(2) The depreciation shall be allowed from the date when the capital goods imported have come into
use for the purpose as laid down in the notification, upto the date of its clearance.
(5) The importer shall have the option of voluntary payment of the duty along with interest, through the
common portal and the particulars of such clearance and the duty payment shall be recorded by the
importer in the monthly statement.
Rule 11: Recovery of duty in certain case.
(1) In the event of any failure on the part of the importer to comply with the conditions mentioned in sub-
rule (1) of rule 10 or where the payment referred in sub-rules (3) and (4) of rule 10 is not paid
or short paid, the Deputy Commissioner of Customs or, as the case may be, Assistant
Commissioner of Customs having jurisdiction over the premises where the imported goods shall
be put to use for manufacture of goods or for specified end use or for rendering output service shall
take action by invoking the Bond to initiate the recovery proceedings of an amount as under –
a. in case of a notification that provides a duty exemption, equal to the difference between
the duty leviable on such goods but for the exemption and that already paid, if any, at the time of
importation, along with interest, at the rate fixed by notification issued under section 28AA, for
the period starting from the date of import of the goods on which the exemption was availed and
ending with the date of actual payment of the entire amount of the difference of duty that he is
liable to pay;
b. in cases where the notification is other than one that provides an exemption benefit, an amount
equal to the assessable value of the goods being imported.
(2) Notwithstanding anything contained in these rules in relation to removal and processing of imported
goods for job-work, the importer shall be responsible for ensuring that the said goods are used in
accordance with the purposes provided in the notification and in the event of failure to do so, the
Deputy Commissioner of Customs, or, as the case may be, the Assistant Commissioner of
Customs having jurisdiction over the premises where the imported goods shall be put to use for
manufacture of goods or for specified end use or for rendering output service shall take action in
accordance with these rules, without prejudice to any other action which may be taken under the
Act, rules or regulations made thereunder or under any other law for the time being in force.
Rule 12. Penalty
The importer or a job worker who contravenes any of the provisions of these rules or abets such
contravention shall be liable to a penalty to an extent of the amount specified under clause (ii) of sub-
section (2) of section 158 without prejudice to any other action which may be taken under the Act, rules or
regulations made thereunder or under any other law for the time being in force.
Rule 13:
References in any rule, notification, circular, instruction, standing order, trade notice or other order
pursuance to the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable
Goods) Rules,1996 and any provision thereof or to the Customs (IGCROD for Manufacture of Excisable
Goods) Rules, 2016 and any corresponding provisions thereof or to the Customs (IGCROD) Rules,
2017 and any corresponding provisions thereof shall be construed as reference to the Customs(Import of
Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022.
Crux: Many amendment carried out in this rules, Refer YouTube for complete discussion on these rules.
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Foreign Trade Policy
Applicability of FTP extended till 31.03.2023
Foreign Trade Policy (FTP), 2015-2020, (as updated) incorporating provisions relating to export and import
of goods and services will now remain in force upto 31.03.2023, unless otherwise specified.
Crux: Foreign Trade Policy (FTP), 2015-2020 extended till 31.03.23.
Exemption from IGST and GST compensation cess, in case of imports under Advance
Authorisation, EPCG, EOU/EHTP/STP/BTP units, granted without any time restriction
The imports against Advance Authorizations for physical exports are exempted from IGST and compensation
cess. Further, capital goods imported under EPCG Authorization for physical exports are exempted from
IGST and compensation cess. In case of goods imported by EOU/EHTP/STP/BTP units from DTA, IGST and
GST compensation cess are exempt.
Earlier, there was a restriction that the above exemptions were available upto 30.06.2022. The said
restriction has been relaxed and the said exemptions are now available without any time restriction.
Crux: Exemption from IGST and GST compensation cess, in case of imports under Advance Authorisation,
EPCG, EOU/EHTP/STP/BTP units, granted without any time restriction
Provisions relating to denomination of export contracts amended
As per the Foreign Trade Policy, all export contracts and invoices shall be denominated either in freely
convertible currency or Indian rupees but export proceeds shall be realised in freely convertible currency.
However, export proceeds against specific exports may also be realized in rupees, provided it is through a
freely convertible Vostro account of a non-resident bank situated in any country other than a member
country of Asian Clearing Union (ACU) or Nepal or Bhutan. Additionally, rupee payment through Vostro
account must be against payment in free foreign currency by buyer in his non-resident bank account. Free
foreign exchange remitted by buyer to his non-resident bank (after deducting the bank service charges) on
account of this transaction would be taken as export realization under export promotion schemes of FTP.
Contracts for which payments are received through ACU shall be denominated in ACU Dollar. Central
Government may relax provisions in this regard in appropriate cases. Export contracts and invoices can be
denominated in Indian rupees against EXIM Bank/ Government of India line of credit.
Now, invoicing, payment and settlement of exports and imports has also been made permissible
in Indian rupees (INR). Accordingly, settlement of trade transactions in INR may also take place
through the Special Rupee Vostro Accounts opened by AD (Authorised Dealer) banks in India, in
accordance to the following procedures:
(i) Indian importers undertaking imports through this mechanism shall make payment in INR
which shall be credited into the Special Vostro account of the correspondent bank of the
partner country, against the invoices for the supply of goods or services from the overseas
seller /supplier.
(ii) Indian exporters, undertaking exports of goods and services through this mechanism, shall
be paid the export proceeds in INR from the balances in the designated Special Vostro
account of the correspondent bank of the partner country.
[Notification No. 33/2015-2020 dated 16.09.2022].
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Staturory Updates - CA CS CMA Final IDT - May June 23

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Staturory Updates - CA CS CMA Final IDT - May June 23

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Applicable for May/June 2023 CHARTMASTER’s IDT - Statutory updates

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Clarification on Perquisites provided by employer to the employees as per contractual agreement

“Agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an

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b. Agreeing to the obligation to tolerate an act or a situation-

c. Agreeing to the obligation to do an act-

Above three activities must comply with the following conditions:

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2. Consideration must flow in return to this contract/agreement

Contractual arrangement can be independent or part of another contract

Taxability of these transactions is discussed in greater detail in the following paragraphs.

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Cheque dishonour fine/ penalty

Penalty imposed for violation of laws

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Late payment surcharge or fee

Fixed charges for power

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Crux: Schedule II: Para 5(e) considers: Agreeing to the obligation

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Goods Transport Services

Entry Category of Supply of Services Supplier of service Recipient (liable)

Proviso: RCM not applicable if:

Provided further that nothing contained in

Crux: w.e.f. 18.07.22, GTA has the following options:

Entry Category of Supply of Services Supplier of service Recipient (liable)

Renting of Residential Dwelling

Entry Category of Supply of Services Supplier of service Recipient (liable)

Entry No. 12: Renting of Residential house (Entry amended)

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Notification: (Notification No. 14/2019 CT dated 07.03.2019.)

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Notification No. 10/2019 CT dated 07.03.19: Amended

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Crux: PO Can now cancel the registration of a

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Charitable and Religious activities

Entry No. 80: Training/Coaching (Entry amended)

Services by way of training or coaching in recreational activities relating to –

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Entry No. 6: Services by Government (Entry amended)

Services by the CG, SG, UT, LA excluding the following services—

Entry No. 7: Unregistered Business Entity: (Entry amended)

Entry No. 8: Government to Government services (Entry amended)

Services provided by the CG/SG/UT/LA to another CG/SG/UT/LA.

Entry No. 9: Services by Government, consideration is upto Rs 5000 (Entry amended)

Crux: W.e.f. 18.07.22: Services by the Department of Posts by way of

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Transport of passengers, with or without accompanied belongings, by –