Indirect Tax/IDT Amendments | CA Final | November 2023

Amendments CA Final November 2023

The significant notifications/circulars issued up to 30th April 2023 are relevant for November 2023. Further, amendments which were applicable for May 2023 examinations are also relevant for November 2023 examinations. The amendments made by the notifications and circulars issued between 1st November, 2022 up to 30th April, 2023 in GST laws, Customs & FTP as well as the amendments made by the Finance Act, 2021 and Finance Act, 2022 which became effective between the aforesaid timeframe have been discussed herewith.

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CA Final | Nov. 2023 Exam

Paper 8, Indirect Tax Laws

Section A: Goods & Services Tax

Key Highlights of Amendments

Amendment Details

Chapter 2: Supply under GST

1. No supply of service by the insured to the insurance company in lieu of ‘No Claim Bonus’ offered by said insurance company to the insured

Clarification: As per the prevalent practice in the insurance sector, insurance companies deduct ‘No Claim Bonus’ (NCB) from the gross insurance premium amount, when no claim is made by the insured person during the previous insurance period(s). The insured procures insurance policy to indemnify himself from any loss/injury as per the terms of the policy and is not under any contractual obligation not to claim insurance claim during any period covered under the policy, in lieu of NCB.

Thus, there is no supply provided by the insured to the insurance company in form of agreeing to the obligation to refrain from the act of lodging insurance claim during the previous year(s) and NCB cannot be considered as a consideration for any supply provided by the insured to the insurance company.

Chapter 3: Charge of GST

2. Amendment in the Provisions of applicability of Reverse Charge Mechanism (RCM) (Section 9(3) of CGST Act and Section 5(3) of IGST Act and Section 5(3) of IGST Act)

Before Amendment: In case of notified services supplied by Central Government, State Governments, Parliament and State Legislatures, GST will be paid by the recipient.

After Amendment: With effect from 01.03.2023, GST will be paid by the recipient of service, in case of notified services supplied by Central Government, State Governments, Parliament and State Legislatures, Courts and Tribunals.

3. Clarification regarding exemption of services under GST by way of Residential Dwelling for use as Residence

Services by way of renting of residential dwelling for use as residence except where the residential dwelling is rented to a registered person are exempt.

Explanation — For the purpose of exemption under this entry, this entry shall cover services by way of renting of residential dwelling to a registered person where, –

(i) the registered person is proprietor of a proprietorship concern and rents the residential dwelling in his personal capacity for use as his own residence; and

(ii) such renting is on his own account and not that of the proprietorship concern.

Note: Although the aforesaid clarification has been passed on 01.01.2023 but since, the same has been given within one year of amendment, as per Section 11 of the CGST Act, it shall be effective from the date when the amendment was made i.e., 18.07.2022.

Chapter 4: Exemptions from GST

4. Clarification regarding applicability of GST (Section 11)

A. Entrance examination for admission to educational institutions conducted by any authority/board/body set up by the Central/State Government including National Testing Agency

All services supplied by ‘educational institutions’ and ‘Central and State educational boards’ for conduct of entrance examination are exempt from GST. With effect from 01.03.2023, it has been clarified that any authority, board or body set up by the Central Government or State Government including National Testing Agency for conduct of entrance examination for admission to educational institutions shall be treated as educational institution for the limited purpose of providing services by way of conduct of entrance examination for admission to educational institutions. Therefore, entrance examination for admission to educational institutions conducted by any authority/board/body set up by the Central/State Government including National Testing Agency shall also be considered as exempt from GST.

B. Accommodation services supplied by Air Force Mess and other similar messes to its personnel

All services supplied by Central Government, State Government, Union Territory or local authority to any person other than business entities (barring a few specified services such as services of postal department, transportation of goods and passengers etc.) are exempt from GST vide Entry 6. Therefore, it is hereby clarified that accommodation services provided by Air Force Mess and other similar messes, such as, Army mess, Navy mess, Paramilitary and Police forces mess to their personnel or any person other than a business entity are covered by Entry 6 provided the services supplied by such messes qualify to be considered as services supplied by Central Government, State Government, Union Territory or local authority. Consequently, the aforesaid services are eligible for exemption.

Chapter 5: Place of Supply

5. Recipient entitled to ITC where the place of supply determined in terms of the proviso to section 12(8) of the IGST Act, 2017 is outside India

Background: Section 12(8) of the IGST Act provides that the place of supply of services by way of transportation of goods, including by mail or courier to a registered person shall be the location of such registered person, where location of the supplier as well as the recipient of services is in India.

However, the proviso to the aforesaid sub-section provides that where the transportation of goods is to a place outside India, the place of supply of the said service shall be the place of destination of such goods.

Clarification: Circular dated 27th December, 2022 has been issued to clarify the following issues in case of supply of services by way of transportation of goods, including by mail or courier-

Chapter 7: Value of Supply

6. No Claim Bonus (NCB) permissible as deduction for the purpose of calculation of value of supply of insurance services provided by insurance company to insured (Section 15(3)(a) of CGST Act)

As per section 15(3)(a), value of supply shall not include any discount which is given before or at the time of supply if such discount has been duly recorded in the invoice issued in respect of such supply.

The insurance companies make the disclosure of the fact of availability of discount in form of No Claim Bonus (NCB), subject to certain conditions, to the insured in the insurance policy document itself and also provide the details of the NCB in the invoices also. The pre-disclosure of NCB amount in the policy documents and specific mention of the discount in form of NCB in the invoice is in consonance with the conditions laid down for deduction of discount from the value of supply under section 15(3)(a).

It is, therefore, clarified that NCB is a permissible deduction under section 15(3)(a) for the purpose of calculation of value of supply of the insurance services provided by the insurance company to the insured.

Accordingly, where the deduction on account of NCB is provided in the invoice issued by the insurer to the insured, GST shall be leviable on actual insurance premium amount, payable by the policy holders to the insurer, after deduction of NCB mentioned on the invoice.

Chapter 8: Input Tax Credit (ITC)

7. Insertion of words to sub-rule (1) of Rule 37 (with effect from 01.10.2022)

i. after the words, “value of such supply”, the words, “, whether wholly or partly,” shall be inserted;

ii. after the words, “shall pay”, the words, “or reverse” shall be inserted;

iii. after the words, “in respect of such supply”, the letters and words, “, proportionate to the amount not paid to the supplier,” shall be inserted.

8. Reversal of input tax credit (ITC) in case of non-payment of tax by the supplier and re-availment thereof (Rule 37A — newly inserted)

The newly inserted Rule 37A covers a scenario where a registered person (recipient) avails ITC in GSTR-3B for a tax period in respect of such invoice/debit note, the details of which have been furnished by its supplier in the statement of outward supplies (in Form GSTR-1/using IFF). However, the supplier does not furnish return in Form GSTR-3B for the tax period corresponding to the said statement of outward supplies till 30th September following the end of Financial Year (FY) in which the ITC in respect of such invoice/debit note has been availed.

In such a case, the said amount of ITC shall be reversed by the said recipient, while furnishing a return in Form GSTR-3B on or before 30th November following the end of such FY during which such ITC has been availed.

However, where the said amount of ITC is not so reversed by recipient, such amount shall be payable by the said person along with interest thereon under section 50.

Further, where the said supplier subsequently furnishes the return in Form GSTR-3B for the said tax period, the said registered person may re-avail the amount of such credit in the return in Form GSTR-3B for a tax period thereafter.

Chapter 9: Registration

9. Amendments relating to procedure for registration

i. Rule 8 of CGST Rules – Application for Registration

Before Amendment: Every person liable to be registered under section 25(1) and every person seeking registration under section 25(3) of CGST Act, i.e., the applicant, shall before applying for registration, declare his Permanent Account Number, mobile number, e-mail address and State/Union Territory (UT) in Part A of Form GST REG-01 on the common portal.

After Amendment: Every person liable to get registered and person seeking voluntary registration shall, before applying for registration, declare his Permanent Account Number (PAN) and State/UT in Part A of FORM GST REG-01 on GST Common Portal.

PAN-linked mobile number and e-mail address (fetched from CBDT database) will be captured and recorded in Form GST REG-01 and OTP-based verification will be conducted at the time of registration on such PAN-linked mobile number and email address to restrict misuse of PAN of a person by unscrupulous elements without knowledge of the said PAN-holder.

ii. Rule 9 of CGST Rules – Verification of the application and approval

Before Amendment: The application shall be forwarded to the proper officer who shall examine the application and the accompanying documents and if the same are found to be in order, approve the grant of registration to the applicant within a period of seven working days from the date of submission of the application.

After Amendment: A pilot project is to be conducted in State of Gujarat for Biometric based Aadhaar authentication and risk-based physical verification of registration applicants. Amendment in rule 8 and rule 9 have been made to facilitate the same. This will help in tackling the menace of fake and fraudulent registrations.

iii. Risk-based biometric-based aadhaar authentication of registration applicants – Pilot project in Gujarat [Sub-rules (4A), (4B) and (5) of Rule 8 amended]

An applicant who has opted for authentication of Aadhaar number and is identified on the common portal, based on data analysis and risk parameters, shall be followed by biometric based Aadhaar authentication and taking photograph:

(i) of the applicant where the applicant is an individual or

(ii) of such individuals where the applicant is not an individual,

along with the verification of the original copy of the documents uploaded with the application in Form GST REG-01 at one of the notified Facilitation Centres.

The application shall be deemed to be complete only after completion of the process laid down hereunder. An acknowledgement shall be issued to the applicant only after completion of biometric-based authentication.

Such biometric based aadhaar authentication of the high-risk applicants who opt for authentication of Aadhaar number has been introduced on a pilot basis in the State of Gujarat, in order to improve the registration process.

Chapter 10: Tax Invoice, Credit and Debit Notes

10. Invoice-cum-bill of supply (Rule 46A amended)

Before Amendment: A registered person supplying taxable as well as exempted goods or services or both to an unregistered person may issue a single “invoice-cum-bill of supply” for all such supplies.

After Amendment: A registered person supplying taxable as well as exempted goods or services or both to an unregistered person, to include the relevant particulars as prescribed in rule 46 or rule 49 or rule 54, as applicable, while issuing a single “invoice-cum-bill of supply”.

11. Exemption from generation of e-invoices available for the entity as a whole and not restricted by the nature of supply being made by the said entity [Rule 48(4) of CGST Rules]

It is clarified that certain entities/sectors which are exempted from mandatory generation of e-invoices as per rule 48(4), is for the entity as a whole and is not restricted by the nature of supply being made by the said entity.

For instance, a banking company providing banking services, may also be involved in making supply of some goods, including bullion. The said banking company is exempted from mandatory issuance of e-invoice for all supplies of goods and services and thus, will not be required to issue e-invoice with respect to any supply made by it.

Chapter 11: Accounts and Records, E-way Bill

12. E-way bill to be generated for transporting imitation jewellery [Rule 138(14) amended]

Before Amendment: Jewellery, goldsmiths’ and silversmiths’ wares and other articles (Chapter 71) can be transported without generating e-way bill.

After Amendment: ‘Imitation Jewellery’ has been specifically excluded from the list of items mentioned under Chapter 71 of GST HSN Code, which can be transported without generating e-way bill. Thus, E-way bill needs to be generated for transporting imitation jewellery.

Chapter 12: Payment of Tax

13. Electronic Cash Ledger to be updated on the basis of e-Scroll of the RBI in case of failure of bank to communicate details of Challan Identification Number to the common portal [Rule 87(8) amended]

Before Amendment: Where the bank fails to communicate the Challan Identification Number (CIN) details of taxes paid through e-payment mode to GST System for updating the Electronic Cash Ledger (ECL), the ECL of such taxpayers are updated next day on the basis of RBI e-Scroll file containing the successful payment made against the CINs as shared by banks with RBI.

However, there is presently no provision in the CGST Rules, 2017 providing for such updation of ECL based on e-Scroll of RBI.

After Amendment: Proviso has been inserted to rule 87(8):

Where the bank fails to communicate details of Challan Identification Number to the common portal, the Electronic Cash Ledger may be updated on the basis of e-Scroll of the RBI in cases where the details of the said e-Scroll are in conformity with the details in challan generated in Form GST PMT-06 on the common portal.

Chapter 13: Returns

14. Maximum late fees payable under section 47 for delayed filing of annual return, rationalized

Before Amendment: A registered person who fails to furnish the annual return under section 44 by the due date is required to pay a late fee as under:

• Rs. 100/day during which such failure continues OR
• 0.25% of the turnover of the registered person in the State/Union Territory
  whichever is lower.

After Amendment: Total amount of late fee payable under section 47 from the financial year 2022-23 onwards, by the registered person who fail to furnish annual return by the due date, shall be as follows:

Note: An equal amount of late fee is payable by such person under the respective SGST/UTGST Act as well.

15. Taxpayer to be intimated the difference in liability in Form GSTR-1 and Form GSTR-3B and be requested to pay the differential liability or explain the difference [New rule 88C introduced and rule 59(6) amended]

A. A new rule 88C has been introduced to determine a mechanism for dealing with difference in liability reported in statement of outward supplies between Form GSTR-1 and Form GSTR-3B. Accordingly, where the tax liability as per Form GSTR-1 for a tax period exceeds the tax liability as per Form GSTR-3B for that period by more than a specified extent, the registered person would be intimated on the portal of such difference and be directed to either-

(i) pay the differential tax liability along with interest, or

(ii) explain the difference, within specified time.

Unless the taxpayer either deposits the amount specified in the said intimation or furnishes a reply explaining the reasons for any amount remaining unpaid, such a person should not be allowed to file Form GSTR-1/IFF for the subsequent tax period.

B. Rule 59(6) amended –

Before Amendment: A registered person is debarred from furnishing details of outward supplies in GSTR-1/IFF in the following cases:

(i) If GSTR-3B has not been furnished for preceding two months.

(ii) If GSTR-3B has not been furnished for preceding tax period.

After Amendment: A registered person, to whom an intimation is issued under rule 88C, of the difference between GSTR-1 and GSTR-3B for a tax period, will be blocked from furnishing the GSTR-1/using IFF for subsequent tax period unless he/she deposits amount specified in intimation or explains the reasons for any unpaid amount as required under the provisions of rule 88C.

The aforesaid provision is in addition to the existing conditions for a registered person not allowed to file GSTR-1/IFF under rule 59(6).

Chapter 15: Refunds

16. Prescribing manner of filing an application for refund by unregistered persons [Rule 89(2) amended]

• In order to enable unregistered buyers/recipients to claim refund of amount of tax borne by them, in the event of cancellation of the contract/agreement for supply of services of construction of flat/building or on termination of long-term insurance policy, a new functionality has been made available on the common portal of GST which allows unregistered persons to take a temporary registration and apply for refund under the category ‘Refund for Unregistered person’ in Form GST RFD – 01.
• Rule 89(2) has been amended to provide for the documents required to be furnished along with the application of refund by the unregistered persons and the statement to be uploaded along with the said refund application. Documentary evidences required to be attached include:

(ka) a statement containing the details of invoices viz. number, date, value, tax paid and details of payment, in respect of which refund is being claimed along with copy of such invoices, proof of making such payment to the supplier, the copy of agreement or registered agreement or contract, as applicable, entered with the supplier for supply of service, the letter issued by the supplier for cancellation or termination of agreement or contract for supply of service, details of payment received from the supplier against cancellation or termination of such agreement along with proof thereof, in a case where the refund is claimed by an unregistered person where the agreement or contract for supply of service has been cancelled or terminated;

(kb) a certificate issued by the supplier to the effect that he has paid tax in respect of the invoices on which refund is being claimed by the applicant; that he has not adjusted the tax amount involved in these invoices against his tax liability by issuing credit note; and also, that he has not claimed and will not claim refund of the amount of tax involved in respect of these invoices, in a case where the refund is claimed by an unregistered person where the agreement or contract for supply of service has been cancelled or terminated.

• Also, a certificate by a Chartered Accountant or a Cost Accountant to the effect that there is no unjust enrichment in the case of the applicant is not required to be furnished in cases where refund is claimed by an unregistered person who has borne the incidence of tax even if the amount of refund claimed exceeds Rs. 2 lakhs.
• Relevant date for filing of refund

In the aforementioned cases of refund, the date of issuance of letter of cancellation of the contract/agreement for supply by the supplier will be considered as the date of receipt of the services by the applicant.

In cases where the amount paid back by the supplier to the unregistered person on cancellation/ termination of agreement/contract for supply of services is less than amount paid by such unregistered person to the supplier, only the proportionate amount of tax involved in such amount paid back shall be refunded to the unregistered person.

Chapter 19: Demands and Recovery

17. Clarification pertaining to cases where it is concluded that the notice issued under section 74(1) not sustainable for reason that the charges of fraud etc. not been established against the noticee and tax payable being determined deeming as if the notice was issued under section 73(1) [Section 75(2)]

Background: Section 75(2) provides that in cases where the appellate authority or appellate tribunal or court concludes that the notice issued by proper officer under section 74(1) is not sustainable for reason that the charges of fraud or any wilful-misstatement or suppression of facts to evade tax have not been established against the noticee, then the proper officer shall determine the tax payable by the noticee, deeming as if the notice was issued under section 73(1) which deals with non-payment/short payment etc. on account of reasons other than fraud/wilful-misstatement/suppression of facts.

With reference to section 75(2) the following clarifications have been issued-

(i) What would be the time period for re-determination of the tax, interest and penalty payable by the noticee in such aforesaid cases?

Clarification: The proper officer is required to issue the order of re-determination of tax, interest and penalty payable within the time limit as specified in section 75(3), i.e., within a period of 2 years from the date of communication of the said direction by appellate authority or appellate tribunal or the court, as the case may be.

(ii) How the amount payable by the noticee, deeming the notice to have been issued under section 73(1), shall be re-computed/re-determined by the proper officer as per provisions of section 75(2)?

Clarification:

• In case, where the proper officer has to re-determine the amount of tax, interest and penalty payable deeming the notice to have been issued under section 73(1) in terms of section 75(2), i.e., where SCN was issued within 2 years and 9 months from the due date of furnishing of annual return for the respective Financial Year (FY) or from the date of erroneous refund, the same can be re-determined for so much amount of tax short paid or not paid, or ITC wrongly availed or utilized or tax payable on account of erroneous refund, along with interest and penalty payable, in terms of section 73.
• In case, where the SCN under section 74(1) was issued for tax short paid or tax not paid or wrongly availed or utilized ITC or for erroneous refund beyond a period of 2 years and 9 months from the due date of furnishing of the annual return for the FY to which such demand relates to or from the date of erroneous refund, and the appellate authority concludes that the notice is not sustainable under section 74(1) thereby deeming the notice to have been issued under section 73(1), the entire proceeding shall have to be dropped, being hit by the limitation of time as specified in section 73.
• In case, where the SCN in terms of section 74 was issued for tax short paid or not paid tax or wrongly availed or utilized ITC or on account of erroneous refund within 2 years and 9 months from the due date of furnishing of the annual return for the said FY to which such demand relates to, or from the date of erroneous refund, as the case may be, the entire amount of the said demand in the SCN would be covered under re-determined amount.
• Where the SCN under section 74(1) was issued for multiple FYs, and where notice had been issued before the expiry of the time period as per section 73(2) for one FY but after the expiry of the said due date for the other FYs, then the amount payable in terms of section 73 shall be re-determined only in respect of that FY for which SCN was issued before the expiry of the time period as specified in section 73(2).

18.Proceedings conducted under Insolvency & Bankruptcy Code (IBC) covered under the term ‘other proceedings’ in section 84

Background: As per section 84, if the government dues against any person under CGST Act are reduced as a result of any appeal, revision or other proceedings in respect of such government dues, then an intimation for such reduction of government dues has to be given by the Commissioner to such person and to the appropriate authority with whom the recovery proceedings are pending. Further, recovery proceedings can be continued in relation to such reduced amount of government dues.

Clarification: CGST Act does not define the term ‘other proceedings. The adjudicating authorities and appellate authorities under IBC are quasi-judicial authorities constituted to deal with civil disputes pertaining to insolvency and bankruptcy. As the proceedings conducted under IBC adjudicate the government dues pending under the CGST Act or under existing laws against the corporate debtor, the same appear to be covered under the term ‘other proceedings’ in section 84.

Chapter 22: Appeals and Revisions

19. In case of appeal filed against the order of adjudicating authority which is uploaded on common portal, requirement of submission of certified copy of said order dispensed with [Rules 108(3) and 109 amended]

Background: As per section 107, an appeal against any decision or order passed by an adjudicating authority to Appellate Authority can be filed either:

(i) by the aggrieved person (taxpayer) [Section 107(1) read with rule 108] or

(ii) by the Department [Section 107(2) read with rule 109].

As per Rule 108(3) and Rule 109(2), the aggrieved person/department is required to submit a certified copy of the decision or order appealed against within 7 days of filing the appeal in Form GST APL-01/Form GST APL-03 respectively.

Substituted Rule 108(3) and Rule 109:

(a) Where the decision/order has been uploaded by the Appellate Authority on the common portal – a final acknowledgment, indicating appeal number, shall be issued by the Appellate Authority or an officer authorised by him in this behalf. The date of issue of the provisional acknowledgment shall be considered as the date of filing of appeal.

(b) Where the decision/order has not been uploaded by the Appellate Authority on the common portal – the appellant shall submit a self-certified copy of the said decision or order within a period of 7 days from the date of filing of Form GST APL-01/Form GST APL-03 as the case may be. The date of issue of the provisional acknowledgment shall be considered as the date of filing of appeal. If the aforesaid copy of order is not submitted within a period of 7 days from the date of filing of appeal, the date of submission of such copy shall be considered as the date of filing of appeal.

20. Provision for enabling withdrawal of the appeal application filed before the first Appellate Authority introduced [New rule 109C]

Background: Earlier, there was no provision in the GST law for withdrawal of the appeal filed under sections 107(1) & 107(2) before the first appellate authority against decision or orders of adjudicating authority by aggrieved person or authorized officer respectively.

Rule 109C – Withdrawal of Appeal:

The appellant may,

• at any time before issuance of show cause notice under section 107(11), or
• before issuance of the order under the said sub-section,
  whichever is earlier,

in respect of any appeal filed in Form GST APL-01 or Form GST APL-03, file an application for withdrawal of the said appeal by filing an application.

However, where the final acknowledgment in Form GST APL-02 has been issued, the withdrawal of the said appeal would be subject to the approval of the Appellate Authority and such application for withdrawal of the appeal shall be decided by the Appellate Authority within 7 days of filing of such application:

Further, any fresh appeal filed by the appellant pursuant to such withdrawal shall be filed within the time limit specified in sub-section (1) or sub-section (2) of section 107, as the case may be.

Chapter 24: Miscellaneous Provisions

21. Competition Commission of India (CCI) replaces National Anti-profiteering Authority (NAA) for anti-profiteering complaints under GST [Rules 122, 124, 125, 134 and 137 omitted and rule 127 amended]

Background: Section 171 contains the provisions relating to anti-profiteering measures under GST law. NAA was constituted under rule 137 by the Central Government to examine whether Input Tax Credit (ITC) availed by any registered person or the reduction in the tax rate had actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him.

Amendment: With effect from 01.12.2022, rule 137 has been omitted, thus, ceasing the existence of NAA, the same being replaced by the CCI. Henceforth, all investigations, based on complaints filed by consumers, will be done by the Directorate General of Anti-profiteering (DGAP) which will then submit a report to CCI.

Consequentially, definition of ‘Authority’ provided in clause (a) of Explanation to this chapter has been appropriately substituted to mean the Authority notified under section 171(2) and rules 122, 124, 125 and 134 have also been omitted. Further, consequential amendments are carried out in rule 127.

Relevant extract of amended rule 127 reads as follows:

Rule 127 – Functions of the Authority

The authority shall discharge the following functions, namely: –

(i)…………
(ii)…………
(iii)…………

In the said rules, in rule 161, for the word, “order”, the words, “intimation or notice” shall be substituted.

For official notification of amendments, please visit https://resource.cdn.icai.org/73974bos59825-gst.pdf.