Briefing on 48th GST Council Meeting held on 17th Dec 2022

This is to update you on the recommendations made during the 48th GST Council meeting held on 17 December 2022. Please find below the list of the relevant recommendations made:

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A.?Measures for Trade Facilitation

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? Decriminalization under GST

·??????Raise the threshold of tax for launching prosecution from 1 Crore to 2 Crores, except for the offence of fake invoicing

·??????Reduce the compounding amount from the present range of 50% to 150% of tax to the range of 25% to 100%

·??????Decriminalize certain offences viz. obstruction or preventing any o?cer in discharge of his duties, deliberate tempering of material evidence, failure to supply the information

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? Refund to unregistered buyers - Amendment proposed to prescribe procedure for ?ling refund application by the unregistered buyers, in cases where the contract / agreement for supply of services, like construction of ?at / house and long-term insurance policy, is cancelled and the time period of issuance of credit note by the concerned supplier is over.?Earlier, there was no mechanism of unregistered person to claim refund.

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? Facilitate e-commerce for micro enterprise - Approved the amendments to enable unregistered suppliers and composition taxpayers to make intra-state supply of goods through ECOs. Scheme may be implemented w.e.f. 01 October 2023.?This is in line with government initiate to promote small and medium sized enterprises.

? Retrospective amendment?- To make Paras 7, 8(a) and 8(b) in Schedule III of CGST Act, 2017 effective from 01 July 2017. These were inserted w.e.f. 01 Feb 2019 to keep certain transactions/ activities, such as supplies of goods from a place outside the taxable territory to another place outside the taxable territory, high sea sales and supply of warehoused goods before their home clearance, outside the purview of GST. However, no refund shall be available in cases where tax has already been paid in respect of such transactions.

? ITC reversal on non-payment to vendor -

·??????To amend Rule 37(1) of CGST Rules, 2017 retrospectively with effect from 01?October 2022 to provide for reversal of ITC, only proportionate to the amount not paid to the supplier.?It provides much needed clarification in a case where part payment is made to vendor.

·??????To insert Rule 37A in CGST Rules, 2017 to prescribe the mechanism for reversal of ITC in the event of non-payment of tax by the supplier and mechanism for re-availment of such ITC, if the supplier pays tax subsequently.

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? Clarification on below issues to be provided -

·??????Procedure for veri?cation of ITC in cases involving difference in ITC availed in GSTR-3B vis-a-vis ITC available as in GSTR-2A during FY 2017-18 and 2018-19.

·??????Manner of re-determination of demand by proper officer where the Appellate Authority or Appellate Tribunal or court concludes that the notice issued is not sustainable for the reason that the charges of fraud or any wilful-misstatement or suppression of facts to evade tax.

·??????Applicability of e-invoicing.

·??????Treatment of statutory dues under GST Law when proceedings have been finalised under Insolvency and Bankruptcy code, 2016.

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? Appeals

·??????Clarity to be provided for requirement of certified copy of order for filing appeals.

·??????Option to be provided for withdrawal of applicable upto specified stage.

B.?Measures for streamlining compliances

? Disclosure in GSTR-1 - Amendment in GSTR-1 for reporting by the supplier of details of supplies made through ECOs, covered under section 52 and section 9(5) of CGST Act; and reporting by the ECO in respect of supplies made under section 9(5) of CGST Act, 2017 (Aggregator model)

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? Aadhar Authentication?- To conduct a pilot in Gujarat for biometric-based Aadhaar authentication and risk-based physical veri?cation of registration applicants

? Return filing - Amended to restrict ?ling of GSTR-1, GSTR-3B, GSTR-9, GSTR-9C and GSTR-8 to a maximum period of 3 years from the due date

? GSTR-1 vs GSTR-3B -

·??????Rules and Forms to be inserted to intimate the taxpayer by the portal about differences between GSTR-1 and GSTR-3B where the difference exceeds a speci?ed amount or percentage enabling the taxpayer to either pay the differential liability or explain the difference.

·??????Restrict filing of GSTR-1 if the taxpayer has neither deposited the amount speci?ed in the intimation nor has furnished a reply explaining the reasons for the unpaid amount.

?OIDAR - Amendment in de?nition of “non-taxable online recipient” and “Online Information and Database Access or Retrieval Services ” so as to reduce interpretation issues and litigation on taxation of OIDAR Services.