The Ministry of Finance has issued the following notifications, orders and circulars dated 30.12.2019, 31.12.2019 and 01.01.2020 to amend or notify the amended provisions of the GST Law.
I. Key Changes
A. Reverse Charge Mechanism (RCM) on renting of motor vehicles.
1. Liability to pay tax under RCM on renting of motor vehicle by Body Corporates being recipient has been inserted w.e.f. 01.10.2019. The Central Government has amended Serial no. 15 and the entries relating thereto under N. No. 13.2017-Central Tax (R) dated 28.06.2017 by replacing the same with the following: [N. No. 29/2019-Central Tax (R) dated 31.12.2019]
|Sl.No.||Category of Supply of Services||Supplier of service||Recipient of service|
|15||Services provided by way of renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient, provided to a body corporate.||Any person, other than a body corporate who supplies the service to a body corporate and does not issue an invoice charging central tax at the rate of 6 per cent. to the service recipient||Any body corporate located in the taxable territory.|
2. The Central Government has clarified the position of law that after the amendment referred above, the liability to pay GST on renting of motor vehicles under RCM shall not arise if any of the following conditions is satisfied:
a. Cost of fuel is not included in the price charged from the service recipient.
b. The service recipient is not a body corporate.
c. The service provider is a body corporate.
d. The service provider issues an invoice charging 12% (availing full ITC) GST from the service recipient.
3. The liability to pay GST under RCM on renting of motor vehicle has been summarized as under:
|S.No.||Constitution of Supplier
|Supplier Registered under GST?||
Cost of Fuel
is included in the total consideration charged?
|Supplier is charging GST @ 12%?||Constitution of Recipient
|Whether Service Receiver is liable to pay GST under RCM|
|1.||Non-Body Corporate||Registered||Yes||No||Body Corporate||Yes|
|2.||Non-Body Corporate||Un-registered||Yes||NA||Body Corporate||Yes|
B. Mandatory to provide option of prescribed mode of Electronic Payment to Buyers by prescribed class of registered persons. However, such class of registered persons are yet to be prescribed. [Section 31A]
C. Transfer of Cash Balance to Electronic Cash Ledger of Different Heads: Facility to the registered person to transfer any amount of tax, interest, penalty, fee or any other amount available from one head of electronic cash ledger to the electronic cash ledger for integrated tax, central tax, State tax, Union territory tax or cess. [Section 49(10)]
D. Extension of due date of filing Form Tran-1 & Tran-2 to 31.03.2020 & 30.04.2020 respectively. [Rule 117(1A) & Rule 117(4)(b(iii)]
E. E-Invoicing (Generation of invoice reference number) through GST Portal: The CBIC has mandated that registered persons whose aggregate turnover in a Financial Year exceeds Rupees One Hundred Crores shall prepare invoices by including such particulars contained in Form GST INV-01 w.e.f. 01.04.2020 after obtaining an Invoice Reference Number by uploading information contained therein on the Common Goods and Services Tax Electronic Portal. The schema for generating of e-invoices from Common GST E-Portal in Form GST INV-01 has been introduced.
F. Non-Filers of Returns – Standard Operating Procedure to be Followed by the GST Department
Section 46 of the CGST Act provides for issuance of notices to return defaulters. Such notice is issued in form GSTR 3A, wherein it is also mentioned that if the return is not filed within 15 days, then tax liability shall be assessed under Section 62 of the CGST Act (best judgment assessment).
The Government has observed that different practices are being followed by the Department on this issue. Therefore, by using the powers under Section 168 of the CGST Act (Power to issue instructions/ directions – for the purpose of uniformity in the implementation of the Act) has issued a Standard Operating Procedure to be followed in case of non-filers of returns.
Standard Operating Procedure
1. A system generated message 3 days before the due date.
2. A system generated mail / message would be sent to all the defaulters immediately after the due date. [The said mail/message is to be sent to the authorized signatory as well as the proprietor/partner/director/karta, etc.]
3. 5 days after the due date of furnishing the return, a notice in FORM GSTR-3A shall be issued electronically to such registered person who fails to furnish return under section 39, requiring him to furnish such return within 15 days.
4. Note: The above said notice would be deemed to be issued for best judgment assessment and no further communication would be required to pass an order by way of best judgment under Section 62, in case of subsequent failure to file such return within 15 days.
5. In case the said return is still not filed within 15 days by the defaulter of the said notice, the proper officer may proceed to assess the tax liability, to the best of his judgment under section 62 of the CGST Act and would issue order under rule 100 of the CGST Rules in FORM GST ASMT-13. The proper officer shall upload the summary thereof in FORM GST DRC-07.
6. In case the defaulter furnishes a valid return within 30 days of the service of assessment order in FORM GST ASMT-13, the said assessment order shall be deemed to have been withdrawn section 62(2) of the CGST Act.
7. In case the default continues immediately after lapse of 30 days from issuance of order in FORM ASMT-13, then the proper officer may initiate proceedings under section 78 and recovery under section 79 of the CGST Act.
Basis of information for passing best judgment assessment:
8. For the purpose of best judgment assessment of tax liability under section 62 of the CGST Act, the proper officer may take into account the details of outward supplies available in the statement furnished under section 37 (FORM GSTR-1), details of supplies auto-populated in FORM GSTR-2A, information available from e-way bills, or any other relevant material information available from any other source, including from inspection which he has gathered under section 71.
Additional actions which might be initiated if the default continues:
9. In deserving cases, based on the facts of the case, the Commissioner may resort to provisional attachment to protect revenue under section 83 of the CGST Act before issuance of FORM GST ASMT-13.
10. The proper officer would initiate action under sub-section (2) of section 29 of the CGST Act for cancellation of registration in cases where the return has not been furnished for the period specified in section 29 [Section 29 empowers to cancel the registration in case of non-filing of returns for continuous period of six months].
II. Industry Specific Changes
G. Change of GST rate from 12% to 18% [N. No. 27/2019-Central Tax (R)]
1. The Central Government has increased the rate of GST on the following two goods from 12% to 18% w.e.f. 01.01.2020:
a. Woven and non-woven bags and sacks of polyethylene or polypropylene strips or the like, whether or not laminated, of a kind used for packing of goods [Entry No. 163B of Schedule III];
b. Flexible intermediate bulk containers [Entry No. 163C of Schedule III].
H. Reduction in ownership criteria of Central or State Government or Union Territory in entities for the purpose of availing exemption on services by way of granting of long-term lease of thirty years, or more) of industrial plots or plots for development of infrastructure for financial business. [N. No. 28/2019-Central Tax (R)]
1. The Central Government had provided exemption from levy of GST on Upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable in respect of service by way of granting of long term lease of thirty years, or more) of industrial plots or plots for development of infrastructure for financial business, provided by the State Government Industrial Development Corporations or Undertakings or by any other entity having 50 per cent. or more ownership of Central Government, State Government, Union territory to the industrial units or the developers in any industrial or financial business area.
2. The Central Government has issued N. No. 28/2019-Central Tax (R) dated 31.12.2019, whereby it has reduced the requirement of stake of Central Government, State Government, Union territory from 50% to 20% in any entity providing such service, to avail exemption from paying GST in respect of upfront amount payable for services provided to the industrial units or the developers in any industrial or financial business area by way of granting of long term lease of thirty years, or more) of industrial plots or plots for development of infrastructure for financial business.
3. Further, the Central Government has prescribed 4 conditions to be fulfilled by the service recipient and the service provider to avail the said exemption which is summarized as under:
a. That the leased plots shall be used for the purpose for which they are allotted, i.e., for industrial or financial activity in an industrial or financial business area;
b. That the State Government concerned shall monitor and enforce the above condition as per the order issued by the State Government in this regard;
c. That in case of any violation or subsequent change of land use, due to any reason whatsoever, the original lessor, original lessee as well as any subsequent lessee or buyer or owner shall be jointly and severally liable to pay such amount of central tax, as would have been payable on the upfront amount charged for the long term lease of the plots but for the exemption contained herein, along with the applicable interest and penalty;
d. That the lease agreement entered into by the original lessor with the original lessee or subsequent lessee, or sub- lessee, as well as any subsequent lease or sale agreements, for lease or sale of such plots to subsequent lessees or buyers or owners shall incorporate in the terms and conditions, the fact that the central tax was exempted on the long term lease of the plots by the original lessor to the original lessee subject to above condition and that the parties to the said agreements undertake to comply with the same.
III. Other few changes
I. N.No. 01/2020- Central Tax dated 01.01.2020
The Central Government has appointed 01.01.2020 as the date on which the following provisions of the Finance (No.2) Act, 2019 related to the Central Goods and Services Tax Act,2017 shall come into force:
1. New Composition Levy Scheme for Suppliers of Service or Mixed Suppliers: Proposed new alternative composition scheme for supplier of services or mixed suppliers (not eligible for the earlier composition scheme) having an annual turnover in preceding financial year upto Rs 50 lakhs. Persons opting such scheme shall be liable to pay amount equivalent to 6% of the turnover in state as GST. [Section 10(2A)]
2. Higher threshold exemption limit of Rs 40 lakhs for registration in case of supplier of goods: Threshold limit for registration under GST proposed to be enhanced from Rs 20 Lakhs to Rs 40 Lakhs in case of dealers engaged exclusively in supply of goods. [Section 22(1)]
3. Aadhaar authentication made mandatory for specified class of new taxpayers: Manner to be prescribed in which certain class of registered taxpayers are required to undergo Aadhaar authentication. Failure to undergo authentication shall deem the registration allotted to such person as invalid. However, such class of registered tax payers are yet to be notified. [Section 25(6A)/(6B)/(6C)]
4. Commissioner is empowered to extend time limit for furnishing annual return and GST Audit Report (Form 9 & 9C) [Section 44(1)]
5. Commissioner is empowered to extend the due date for furnishing of monthly and annual statement by the person collecting tax at source. [Section 52]
6. 10% penalty in Anti-profiteering matters: National Anti-profiteering Authority empowered to impose penalty equivalent to 10% of the profiteered amount. No penalty shall be levied if profiteering amount is deposited within 30 days of passing of the order by the Authority. [Section 171(3A)]
J. N.No. 02/2020- Central Tax dated 01.01.2020
The following amendments have been made to the Central Goods and Services Tax Rules,2017:
7. Insertion of column of period of validity of approval of SEZ Unit/ SEZ Developer in Part B of Form REG-01.
8. In Form GSTR-3A, following substitutions have been introduced:
a. “tax liability may” in place of words “tax liability will” in “Notice to Return Defaulter u/s 46 for not filing Return”.
b. “tax period may” in place of words “tax period will” in “Notice to Return Defaulter u/s 46 for not filing Final Return Upon Cancellation of Registration”.
9. In Form GSTR-3A , following clauses have been inserted:
a. “5. This is a system generated notice and does not require signature” in “Notice to Return Defaulter u/s 46 for not filing Return”.
b. “5. This is a system generated notice and does not require signature” in “Notice to Return Defaulter u/s 46 for not filing Final Return Upon Cancellation of Registration”.
K. N.No. 03/2020- Central Tax dated 01.01.2020
10. Transition Date for GST Transition Plan for J&K and Ladakh extended to 01.01.2020.