10 Key GST Amendments with effect from 01.01.2022

10 Key GST Amendments with effect from 01.01.2022

Goods and Service Tax (“GST”) has gone through various changes since implementation and government is making all the efforts to make sure that ITC is claimed only to the extent which is appearing in GSTR-2A and all the practises of passing of fake Input Tax Credit without actual movement of goods is avoided to the maximum. Also, provisions with respect to e-way bill have also been made stringent to make sure that no movement of goods is made without accompanying e-waybill. 

In this directions, CBIC has announced some major amendments in Goods and Service Tax which are to be made effective from 01.01.2022. Following are the key changes becoming applicable from 01.01.2022:

1. Aadhar Authentication for Registered Person

  • With effect from 01.01.2022, every person registered under GST shall get his Aadhar Authentication done.
  • Aadhar Authentication shall be carried out of authorised signatory and following persons:
Nature of EntityPerson required to get his Aadhar Authentication done
Proprietorship ConcernProprietor
Partnership ConcernAny of the partner
HUFKarta
CompanyManaging Director or any of Whole Time Director
AOP/BOI/Societyany of the Members of the Managing Committee
TrustTrustee in the Board of Trustees
  • In case of failure to complete Aadhar Authentication, the entity shall not eligible for following actions on GST Portal:
    • Filing of application for revocation of cancellation of GST Registration
    • File Application of refund in Form GST RFD-01 under Rule 89
    • Refund of IGST paid on export of goods
  • If Aadhar number has not been alloted to the concern person then he shall submit the following documents for identification:
  • Aadhaar Enrolment ID slip and
  • Bank passbook with photograph/ Voter ID Card/ Passport/ Driving Licence
  • However, Aadhar authentication should be completed within 30 days of Allotment of Aadhar number

2. GST Leviability on activities or transactions between any person, other than individual, and its members

  • Under existing provisions, as per Para 7 of Schedule II of CGST Act, 2017, supply of goods by unincorporated associations or BOI to its members for consideration are treated as “Supply of Goods” and therefore, such supply is liable to GST.
  • There has been a lot of litigations around applicability of GST on goods supplied or services provided by AOP/Society/BOI to its members. There are various precedences on the same. 
  • In the matter of STATE OF WEST BENGAL & ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE & ORS. VERSUS M/S. RANCHI CLUB LTD. [2019 (10) TMI 160 – SUPREME COURT], Hon’ble Supreme Court held that there can be no sale of goods or provision of service between Unincorporated persons and its members due to principle of mutuality. Society/clubs etc. and its members are treated as the same person.
  • To remove the effect of such precedence, Section 7 of CGST Act, 2017 has been amended to incorporate that the activities or transactions by a person (other than an individual) to its members or constituents or vice-versa for consideration shall be considered as “supply”. Therefore, the same shall be liable to GST.
  • Further, as per explanation, such person and its members or constituents shall be deemed to be two separate persons.
  • To override precedence of Hon’ble supreme court, such amendment has been given retrospective effect from 01.07.2017.
  • Further, the corresponding entry in Schedule No. II has been deleted with effect from 01.07.2017 itself.

3. ITC limited to invoices appearing in GSTR-2A/GSTR-2B

  • Provisions related to eligibility to claim ITC are given under Section 16 of CGST Act read with Rule 36 of CGST Rules, 2017.
  • As per Rule 36(4) of CGST Rules, 2017, every registered person is entitled to claim ITC with respect to invoices which are uploaded by supplier in GSTR-1 and which are correspondingly appearing in GSTR-2A/2B of the recipient. 
  • However, for the invoices not uploaded by the supplier in GSTR-1, the registered person shall be entitled to claim ITC to the extent of 5%.
  • With effect from 01.01.2022, liberty of additional ITC of 5% has also been taken away. As per amendment in Section 16 of CGST Act, a registered person shall be entitled to claim ITC with respect to those invoices or debit notes which are uploaded by supplier in his GSTR-1 and same are appearing in GSTR-2A/2B of the recipient.
  • Corresponding amendments are also made in Rule 36(4) of CGST Rules, 2017.

4. Tax payable with respect to sales disclosed in GSTR-1 but not included in GSTR-3B (Section 75 of CGST Act, 2017)

  • Till 31st December, 2021, As per Section 75(12) of CGST Act, 2017, if any self assessed tax remains unpaid in accordance with details furnished in GSTR-3B then such self assessed tax shall be recovered from the assessee alongwith interest.
  • For determining tax liability, details furnished in GSTR-3B shall be considered.
  • With Effect from 01.01.2021, Provisions of Section 75 has been amended to include that if any sales has been disclosed in GSTR-1 and same has not been disclosed in GSTR-3B then tax on such sales is also recoverable from the registered person alongwith interest.
  • Such amendment has been made to avoid malpractice of fake invoices wherein supplier issues passes on the ITC to the recipient by disclosing the sales in GSTR-1 but does not includes such sales in GSTR-3B to avoid tax payment.
  • E.g. 
GSTR-1GSTR-3B
Taxable Turnover10,00,0004,00,000
Output GST Liability @ 18%1,80,00072,000
Input GSTNot Disclosed50,000
  • So till 31st December, 2021, registered person is liable to pay GST of INR 22,000 alongwith interest, if any.
  • However, with effect from 01.01.2022, self assessment tax payable is INR 1,30,000 (180000-50000) alongwith interest, if any.
  • However, such an amendment can be harsh for genuine mismatch errors in filing of GSTR-1 and GSTR-3B. 

5. Enhanced power of provisional attachment of property (Section 83 of CGST Act)

  • Till 31st December, 2021, GST authorities could carry out provisional attachment of property only when proceedings were pending under any of the following sections:
    • Section 62-Assessment of non-filers of returns
    • Section 63-Assessment of unregistered persons.
    • Section 64-Summary assessment in certain special cases.
    • Section 67-Power of inspection, search and seizure
    • Section 73-Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilful-misstatement or suppression of facts.
    • Section 74-Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful-misstatement or suppression of facts.
  • Further, attachment was permitted only of the properties of the concerned taxable person.
  • With effect from 01.01.2022, power of GST Authorities to provisionally attach property has been extended much beyond. Provisional attachment can be carried after initiation of proceedings under Chapter XII, Chapter XIV or Chapter XV of CGST Act.
  • Further, provisional attachment can also be undertaken against the person who has colluded and retained the benefits of the any transactions.
  • Such amended has given blind authorities to the GST Authority which can lead to coerce taxpayers into depositing tax demands without following the due process of law

6. Pre-deposit of 25% of penalty amount for filing appeal (Section 107 of CGST Act)

  • Under existing provisions, a taxpayer is required to pre-deposit 100% of admitted tax liability and 10% of disputed tax amount before filing an appeal before Appellate Authority.
  • However, a new condition of pre-deposit of 25% of penalty amount has also been added with effect from 01.01.2022. Therefore, a person shall not be able to file an appeal unless 25% of the penalty amount is paid.

7. Stringent provisions on Detention, Seizure and release of goods and conveyance in transit (Section 129 of CGST Act, 2017)

7.1 Penalty and Tax payment for release of goods

  • To make sure that good are moved with correct invoices and applicable waybills, payment for release of detained goods and conveyance has been increased in following manner:
ParticularsExisting Provisions of payment for release of detained goodsAmended Provisions of payment for release of detained goods
where the owner of the goods comes forward for payment of such penaltyIn case of Taxable Goods:
(1.) Applicable Tax
(2.) Penalty-100% of tax payable

In case of exempted goods, least of the following:
(1.) 2% of the value of goods; or
(2.) INR 25,000
In case of Taxable Goods:
(1.) Tax Payment-no requirement
(2.) Penalty-200% of tax payable

In case of exempted goods, least of the following:
(1.) 2% of the value of goods; or
(2.) INR 25,000
where the owner of the goods does not come forward for payment of such penaltyIn case of Taxable Goods:
(1.) Applicable Tax
(2.) Penalty-50% of value of the goods reduced by tax amount paid thereon

In case of exempted goods, least of the following:
(1.) 5% of the value of goods; or
(2.) INR 25,000
In case of Taxable Goods:
(1.) Tax Payment-no requirement
(2.) Penalty: Higher of the following amount:
(2.1) 5% of value of goods or
(2.2) 200% of tax payable

In case of exempted goods, least of the following:
(1.) 5% of the value of goods; or
(2.) INR 25,000

7.2 Time limit for issuance of notice and order

  • Time limit has been defined for issuance of notice and passing an order for imposing penalty on goods detained or seized. Earlier, no time limit was defined for issuing notice and order for detaining or seizing goods or conveyances specifying the tax and penalty. However, with effect from 01.01.2022, the proper officer shall issue a notice within 7 days of detention or seizing goods or conveyance and will pass the final order in next 7 days from date of service of such notice.

7.3 Sale of seized goods

  • If a person fails to make payment of determined tax and penalty with respect to detained goods then he is liable to proceedings under Section 130 of CGST Act, 2017 (Confiscation of goods or conveyances and levy of penalty). 
  • With effect from 01.01.2022, section 129 and section 130 has been completely delinked. If a person fails to make payment of interest and tax liability within 15 days from receipt of order then the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise.
  • Also, the conveyance shall be released on payment by the transporter of penalty determined by order or INR 1,00,000, whichever is less.

8. Power to Collect Information (Section 151 of CGST Act)

  • The commissioner or any person authorised by him was earlier having power to call for any information or returns from the concerned person.
  • With effect from 01.01.2022, The Commissioner or an officer authorised by him shall have the power to call for information from any person.

9. Restriction on Filing GSTR-1 for GSTR-3B non-Filers (Rule 59(6) of CGST Rules, 2017)

  • Rule 59(6) of CGST Rules, 2017 has been amended to the effect that a person shall not be allowed filing of GSTR-1 is he has not furnished GSTR-3B of the preceding month.
  • This strict measure has been taken to reduce fake invoicing. As suppliers keeps on filing GSTR-1 for passing of ITC and do not file GSTR-3B to avoid payment of GST Liability. However, w.e.f. 01.01.2022, GST portal will not allow filing of GSTR-1 if GSTR-3B of last month is pending.

10. Amendment in GST Rates

  • Amendments have been made in GST Rates of various goods and services vide Notification No. No. 18/2021 – Dated: 28-12-2021 – CGST Rate, No. 19/2021 – Dated: 28-12-2021 – CGST Rate and No. 20/2021 – Dated: 28-12-2021 – CGST Rate.
  • Few major amendments are as follows to be made effective from 01.01.2022:
ProductExisting GST RateAMended GST Rate
Footwear of sale value not exceeding ₹ 1000 per pair.5%12%
Textiles*5%12%
Job Work Service with respect to dyeing and printing of textile and textile products*5%12% & 18%

* Decision of increase in GST rates on textile and textile products from 5% to 12% has been deferred. Earlier rate was increased wide N/No. 14/2021-Central Tax (Rate), dated 18th November, 202.

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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