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E-Invoicing Under GST

editor — Fri, 12 Apr 2024 11:41:19 +0000

E-invoicing within the GST framework refers to the electronic authentication of invoices as outlined by GST regulations. It’s akin to how GST-registered businesses utilize e-way bills for transporting goods. Likewise, specific GST-registered entities are required to produce e-invoices for their Business-to-Business (B2B) transactions.

What is e-invoicing under GST?

E-invoicing, or electronic invoicing, refers to a system where B2B invoices and certain other documents are electronically authenticated by GSTN for further use on the common GST portal.
The GST Council decided to implement e-invoicing in its 35th meeting, initially covering specific categories of mostly large enterprises, which later expanded to include mid-sized and small businesses.

Who must generate e-invoice and its Applicability?

E-invoicing applies based on turnover criteria or e-invoice limits set by phases.
Taxpayers exceeding specified turnover limits in any financial year from 2017-18 to 2021-22 must comply with e-invoicing from FY 2022-23 onwards.
Certain notified businesses are exempt from e-invoicing, such as insurers, banking companies, and others as listed by CBIC notifications.

Transactions and documents criteria

Systems before & after e-invoicing

Time limit to generate e-Invoice

Process of getting an e-invoice

Benefits of e-Invoicing to businesses

How can e-invoicing curb tax evasion?

What are the mandatory fields of an e-invoice?

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Calcutta High Court’s Verdict on GST Pre-Deposit Requirements

editor — Fri, 12 Apr 2024 10:29:32 +0000

Introduction:

In a recent ruling, the Calcutta High Court addressed the clarification of GST pre-deposit requirements, specifically focusing on the interpretation discrepancy between the GST Department and the GST Law.

Facts of the Case:

Issue:

Petitioner’s Argument:

Respondent’s Argument:

Held:

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Collaborative Audits by Central and State GST Authorities Targeting Businesses

editor — Tue, 09 Apr 2024 06:48:00 +0000

Beginning this fiscal year, there will be a collaborative effort between Central and State Goods and Services Tax (GST) authorities to conduct audits within the indirect tax framework.

This joint approach is expected to bring significant advantages to taxpayers by eliminating repetitive notifications and inquiries. Current industry data suggests that around 11,000 cases are either duplicated or entangled in legal disputes due to investigations by both Central and State agencies. Various Central GST zones have issued internal communications instructing officials to collaborate with their state counterparts on audits to ensure better coordination, as per sources.

The concept of conducting audits collaboratively was proposed during a national coordination meeting last month to streamline tax enforcement processes. The directives indicate that Central GST officers should also participate in audits conducted by State GST teams to improve SGST officers’ audit capabilities and facilitate the exchange of crucial compliance information. To support these joint audit efforts, the Central Board of Indirect Taxes and Customs (CBIC) has instructed each zone to devise a specific framework.

The responsibility for implementation, delegated to zonal heads, aims to optimize time and resources. Experts in the industry believe this initiative will enhance the fairness and efficiency of the audit process, providing a more comprehensive examination that benefits both tax authorities and taxpayers. It will help in avoiding redundant procedures and shield taxpayers from undergoing multiple audits for the same issues.

Furthermore, the CBIC has directed its officers to halt investigations into offenses already under scrutiny by state GST officials or for which notifications have been issued.

Source: https://economictimes.indiatimes.com/news/company/corporate-trends/central-state-gst-officials-to-conduct-joint-audits-of-firms/articleshow/109143298.cms?from=mdr

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Merely uploading SCN under the category “Additional Notices” instead of “Notices” on the GST portal does not constitute sufficient intimation to the taxpayer

editor — Tue, 09 Apr 2024 05:43:22 +0000

Introduction:

The Hon’ble Delhi High Court, in the case of Anhad Impex v. Assistant Commissioner, addressed the issue of whether the misplacement of a Show Cause Notice (SCN) in the “Additional Notices” category instead of “Notices” on the GST portal constitutes sufficient intimation to the taxpayer. This analysis examines the court’s findings and the implications for similar cases.

Facts of the Case:

Introduction:

Facts of the Case:

M/s. Anhad Impex ("the Petitioner") received an Impugned Order dated November 29, 2023, from the Assistant Commissioner ("the Respondent"), creating a demand under Section 73 of the CGST Act.
The Petitioner asserted that they never received the SCN, which formed the basis of the Impugned Order, thus depriving them of the opportunity to respond or participate in adjudication proceedings.
SCNs are typically uploaded under the "Notices" section on the GST portal, but in this instance, it was placed in the less accessible "Additional Notices" category, leading the Petitioner to miss it.
The Respondent contended that uploading the notice on the GST portal suffices as per Section 169 of the CGST Act.

Issue:

Whether the misplacement of the SCN in “Additional Notices” rather than “Notices” warrants the invalidation of the demand order?

Held:

The court noted that the Petitioner's lack of response to the SCN indicated a lack of proper and timely intimation.
Placing the SCN under "Additional Notices" instead of "Notices" made it less accessible, infringing upon principles of natural justice and provisions of the CGST Act.
Referring to precedents such as East Coast Constructions & Industries Ltd. v. Asstt. Commissioner and Murugesan Jayalakshmi v. State Tax Officer, the court emphasized the importance of proper categorization on the portal.
Consequently, the Impugned Order was set aside, with directions for the Petitioner to respond to the SCN, and the Respondent to re-adjudicate the matter with a personal hearing within four weeks.

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GST Implications on Lump Sum Transfer Charges for Leasehold Rights

editor — Sat, 06 Apr 2024 04:51:43 +0000

In a recent ruling by the Uttar Pradesh Authority for Advance Rulings (AAR), Remarkable Industries (P.) Ltd. sought clarification regarding the GST implications on lump sum upfront premium paid as transfer charges for leasehold rights. The case, identified as Advance Ruling No. UP/ADRG/41/2023, offers significant insights into the classification and applicable GST rate concerning the transfer of leasehold rights.

Facts of the Case:

Remarkable Industries (P.) Ltd. ("the Applicant") operates in the manufacturing and selling of various products.
The Applicant acquired an industrial plot from the Noida Authority under a lease deed for a 99-year period.
The lease involved the payment of a lump sum upfront premium and subsequent annual lease charges.
After utilizing the plot for manufacturing purposes, the Applicant decided to transfer its leasehold rights to M/s S K Industries ("the Assignee") for consideration.
The transfer process required permission from the Noida Authority, payment of transfer charges by the buyer, and the execution of a fresh lease deed with the Assignee.
Notably, the transfer did not entail sub-leasing or creation of fresh benefits from the land; it solely involved the transfer of existing leasehold rights for consideration.

Issue:

Whether the activity of transferring leasehold rights by the Applicant constitutes sub-leasing and, if not, what is the appropriate classification and applicable GST rate for the said activity?

Held:

The Uttar Pradesh, AAR in Advance Ruling No. UP/ADRG/41/2023 held as follows:

The activity of the Applicant is akin to agreeing to transfer one's leasehold rights and does not amount to sub-leasing.
The transfer represents compensation for agreeing to transfer the leasehold rights to the Assignee without creating additional benefits from the land.
As per the CGST Act and Schedule II, the transaction is classified as a service rather than a transfer of immovable property.
The Applicant's right under the lease deed is extinguished after assignment, and there is no creation of fresh benefits from the land.
The transaction falls under "Other miscellaneous service" (SAC 999792) and is taxable at an 18% GST rate as per Notification No. 11/2017-Central Tax (Rate) dated June 28, 2017.

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Audit wing of SGST Authority shall keep all proceedings in abeyance if the subject matter is pending before the CGST Authority

editor — Thu, 04 Apr 2024 10:57:29 +0000

The Audit division of the State Goods and Services Tax (SGST) Authority is mandated to suspend all actions if a matter is pending before the Central Goods and Services Tax (CGST) Authority, according to a ruling by the Calcutta High Court in the case of Mahabir Prasad Kedia v. Assistant Commissioner of State Tax [MAT No. 2388 of 2023 dated January 9, 2024].

Facts:

Mr. Mahabir Prasad Kedia, the Appellant, received an audit memo highlighting several discrepancies.
Upon receiving the audit notice, the Appellant informed the SGST Authority about a show cause notice (SCN) issued by the anti-evasion wing of the CGST Department on March 28, 2023, addressing the same issues for the financial years 2017-2018 to 2021-2022.
The Appellant responded to the Impugned SCN on May 04, 2023, and the matter was pending adjudication.
Despite the Appellant's submission, the audit wing of the SGST Authority overlooked it and proceeded with the matter.
The subject was pending adjudication by the CGST Authority, to whom the Appellant had submitted a reply on May 02, 2023.

Held:

The Calcutta High Court ruled that the SGST Authority's audit division should suspend proceedings concerning the discrepancy noted, as the matter was under consideration by the CGST Authority.
Following this decision, the SGST Authority issued an SCN on December 29, 2023, clarifying that the audit wing should not proceed with the matter.
Consequently, the appeal, along with related applications and writ petitions, was disposed of.
The SGST Authority was directed to halt all proceedings regarding the noted discrepancy, including the show cause notice issued on December 29, 2023, and adhere to the adjudication order from the CGST Authority regarding the Impugned SCN.

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GST Applicability to Compensation for Liquidated Damages in Agreements

editor — Wed, 03 Apr 2024 10:27:09 +0000

In a recent ruling by the Andhra Pradesh Authority for Advance Ruling (AAR) in AAR No. 12/AP/GST/2023 dated December 21, 2023, significant clarity was provided regarding the GST implications of compensation collected for liquidated damages under contractual agreements. This ruling pertains to the case of South India Krishna Oil & Fats (P.) Ltd. (“the Applicant”), a manufacturer of edible oils, and sheds light on whether such compensation amounts are subject to GST and the related input tax credit implications.

Facts of the Case:

The Applicant, engaged in the production of edible oils, enters into agreements with customers for the supply of specified quantities of edible oils at agreed-upon rates, with delivery within specified timelines.
Instances arise where customers fail to lift the agreed quantities of edible oils within stipulated delivery dates, leading to breach or non-performance of contractual obligations.
In response to such breaches, the Applicant collects compensation amounts, termed "Liquidated Damages or Trade Settlement," from defaulting customers.

Held:

The AAR observed that as per the definition of "consideration" under Section 2(31) of the CGST/APGST Acts, it encompasses any payment made in response to or for the inducement of the supply of goods or services.
It was opined that the compensation amounts paid by customers to the Applicant for non-performance or breach of contract constitute consideration for tolerating an act or situation under an agreement.
Consequently, such compensation amounts were deemed to constitute a supply of service and were subject to CGST at 9% and SGST at 9% each under Chapter Heading No. 9997 at Serial No. 35 of Notification No. 11/2017-Central Tax (Rate) dated June 28, 2017.
Additionally, it was held that since GST is leviable on the collection of compensation for liquidated damages, the restriction of Input Tax Credit (ITC) of common services under Rules 42 and 43 of the CGST/APGST Rules does not apply.

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Investigation of Large Corporations and Multinational Companies under GST Requires ‘Formal Authorization’

editor — Tue, 02 Apr 2024 07:46:09 +0000

The Department of Revenue has issued directives to CGST officials regarding the initiation of investigations into cases involving prominent industrial entities and multinational corporations (MNCs). These guidelines aim to streamline procedures and ensure uniformity in enforcement activities while maintaining the ease of doing business.

These guidelines outline specific scenarios where written approval from the zonal Chief Commissioner is necessary before initiating an investigation or taking action. These include cases involving large corporates, major MNCs, matters already under consideration by the GST Council, or matters seeking to impose taxes or duties on a sector, commodity, or service for the first time under Central excise or GST.

The precise definition of ‘big industrial house’ and major MNCs under these guidelines remains unclear to tax experts. Additionally, the guidelines require CGST field formations to gather details on prevailing trade practices and transaction nature from stakeholders in such cases, ensuring sufficient justification for initiating investigations and actions.

This uniform procedure was introduced following discussions by the Central Board of Indirect Taxes and Customs (CBIC) on the necessity for standardized enforcement procedures by CGST field formations, particularly concerning regular taxpayers and their impact on the ease of doing business.

Furthermore, tax officials are instructed to confirm whether any ongoing inquiries relate to the same subject matter or taxpayer by another investigating office or tax administration. This information must be presented to the authority responsible for approving the investigation’s initiation.

Experts believe that the directive addresses industry concerns, emphasizing the importance of effective implementation to promote tax certainty and stability in the business environment.

Source: https://www.thehindu.com/business/Economy/now-gst-probe-into-big-corporates-major-mncs-needs-a-written-approval/article68013343.ece

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Madras High Court Invalidates GST Assessment Over ITC Disparity

editor — Tue, 02 Apr 2024 04:58:07 +0000

In a significant ruling, the Madras High Court addressed the validity of a GST assessment order in the case of Sri Lakshmi Silvers versus The State Tax Officer, Gugai Circle, Salem. The case centered on the adherence to procedural guidelines and principles of natural justice in GST assessments, particularly concerning disparities between GSTR-3B and GSTR-2A returns.

Facts of the Case:

The petitioner, engaged in the supply of base metals, faced a GST assessment order pertaining to the tax demand arising from differences between the Input Tax Credit (ITC) claimed in GSTR-3B returns and that reflected in the auto-populated GSTR-2A returns for the year 2019-20.
Despite receiving a notice and show cause notice, the petitioner, relying on their accountant, remained unaware, resulting in no response from their side.
The central issue revolved around the validity of the assessment order, particularly concerning principles of natural justice and adherence to specific circulars regarding GST return discrepancies.

Petitioner’s Argument:

Department’s Argument:

Held:

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Decision by High Court Allows Refund of Reversed ITC When Supplier Pays Tax

editor — Tue, 02 Apr 2024 04:23:57 +0000

The Delhi High Court, in the matter of Pedersen Consultants India Pvt. Ltd. v. Union of India and Ors. [W.P. (C) 1039/2024 dated March 19, 2024], resolved the writ petition, permitting registered entities to submit refund applications for reversed Input Tax Credit (ITC) when the supplier has subsequently filed returns and paid taxes.

Facts of the case:

In the matter of Pedersen Consultants India Pvt. Ltd. v. Union of India and Ors. [W.P. (C) 1039/2024 dated March 19, 2024], the petitioner, Pedersen Consultants India Pvt. Ltd., filed a writ petition. The petition sought direction for granting Input Tax Credit (ITC) benefits on invoices where the recipient had filed subsequent returns and paid taxes.
The petitioner argued that they were compelled by the Revenue Department to pay taxes on invoices where the supplier hadn't filed returns on time. However, the supplier later filed returns and paid taxes, potentially leading to double taxation. Hence, the petitioner sought a refund for the taxes paid on such invoices.
Responding to objections, the petitioner proposed filing a refund application under Section 54 of the Central Goods and Services Tax Act, 2017 (CGST Act). Additionally, they cited Notification No. 13/2022 dated July 05, 2022, advocating the exclusion of the period between March 1, 2020, and February 28, 2023, from the limitation for filing refund applications. The petitioner also requested exclusion of the period between filing the writ petition and the court's order.

Held:

The Delhi High Court, in W.P. (C) 1039/2024, dismissed the writ petition, allowing the petitioner to file a refund application under Section 54 of the CGST Act. The court directed the respondent to adjudicate the petitioner's claim in accordance with the law. Notably, the court recognized the petitioner's eligibility under the Notification, excluding the period from March 1, 2020, to February 28, 2022, for computing the limitation period for filing refund applications.

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