A QUICK GLANCE OF FOURTEENTH AMENDMENT (2020) – CGST RULES, 2017.

1. INCREASING TIME LIMIT FOR SYSTEM BASED GST REGISTRATION

• Vide Notification No. 94/2020-Central Tax dated 22nd December, 2020 the department has amended Rule 9 of Central Goods and Services Tax Rules, 2017(hereinafter referred to as “CGST Rules”) which states verification and approval of the application filed by the applicant seeking GST Registration.
• Through this amendment the time period for System Based GST Registration is increased from 3 days to 7 days.
• Further a proviso is inserted wherein it is mentioned that in cases where the applicant does not have the adhaar authentication or the department is of the view that physical verification is required then the registration will be granted in 30 days instead of 7 days.

2. DEPARTMENT POWERS ENHANCED FOR CANCELLING OF GSTIN

• Vide above mentioned notification the department has amended Rule 21of the CGST Rules wherein a Clause (e) has been inserted in which it empowers the officer for cancellation of GSTIN where taxpayer avails Input Tax Credit exceeding than that permissible in Section 16 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”).
• With the newly inserted Clause (f) in Rule 21 of the CGST Rules it can be construed that if the liability declared in GSTR-3B is less than the that declared in GSTR-1 then the department is empowered to cancel GSTIN. Through this insertion it can be construed that the department has an intention to bring synchronization between GSTR-1 and GSTR-3B filed by the registered person.
• With the newly omission from Sub Rule (2) of Rule 21A of CGST Rules it can be construed that now, there is no opportunity of being heard shall be given to a taxpayer for the suspension of GSTIN, where the proper officer has reason to believe that that the registration of registered person is liable to be cancelled.
• Where the department is of the view that there are certain anomalies between the details of outward supply i.e. between GSTR-3B and GSTR-1 or inward supplies i.e. between GSTR-3B and GSTR-2B which is in contravention of the CGST Act, the department will serve a notice in FORM GST REG 31 calling for the explanation from the registered person.

3. NO REFUND IF GSTIN SUSPENDED

With the insertion of Sub Rule (3A) to Rule 21A of the CGST Rules it can be construed that if a registered person, whose registration has been suspended, the refund will not be granted to the such person under Section 54 of the CGST Act during the period of suspension of the registration.

4. RESTRICTION ON CLAIMING ITC AS PER CGST RULES 36(4)

• The claim of input tax credit in respect of invoices not furnished by the vendors has further been amended vide the above-mentioned notification. Now it is restricted to 5 per cent of the credit available in GSTR-2B which was earlier 10 per cent.
• It can be construed that now the input tax credit is restricted to 105 per cent of the credit reflected in his GSTR-2B. If there is any contravention, then it will lead to suspension of GSTIN.
• The said provision will come into effect from 1stJanuary, 2021.

5. BLOCKING OF GSTR-1 IF GSTR 3B NOT FILED

• With the insertion of Sub Rule (5) in Rule 59 of CGST Rules it can be construed that a registered person shall not be allowed to furnish the details of outward supplies of goods or services or both in FORM GSTR- 1 if such person has not furnished the return in FORM GSTR-3B for preceding two months.
• Prior to this amendment non-filing of GSTR-3B used to result in blocking of E-Way Bill facility but from now onwards it shall also result in blocking of GSTR-1 of the taxpayer.
• Similarly, those taxpayers who files there return quarterly if they fail to file GSTR 3B for the preceding quarter then such taxpayers shall not be permitted to file their GSTR-1 for the subsequent quarter.
• Wherein the taxpayer who is restricted to avail input tax credit as per Rule 86B of the CGST Rules, such taxpayer is not permitted to file GSTR-1 where he has not filed GSTR-3B for the preceding tax period.

6. NEW RULE 86B INSERTED FOR RESTRICTING UTILIZATION OF INPUT TAX CREDIT

• That the registered person shall not use the amount available in electronic credit ledger to discharge his liability towards output tax in excess of 99 per cent of such tax liability wherein the value of taxable supply other than the exempt supply and zero rated supply exceeds 50 Lakhs.

The above-mentioned restriction is not applied in the following cases:

1. Where the taxpayer has paid Income Tax exceeding Rs. 1 lakh.
2. Where the taxpayer has received refund exceeding Rs. 1 Lakhs u/s 54 of the CGST Act.
3. Where the registered person has discharged his liability towards output tax through electronic cash ledger for an amount which is in excess of 1 per cent of the total output tax liability, applied cumulatively, upto the said month in the current financial year.
4. Where a person is a Government Department, Public Sector Undertaking (PSU), Local Authorities or a Statutory Body.
• The said rule will be affected from 1st January,2021

7. VALIDITY OF E WAY BILL NARROWED.

In Rule 138 of CGST Rules Sub Rule 10 is been amended. Following is the amended table for your ready reference.

Prior to this amendment one day was permitted for distance upto 100 kms but after the amendment the same has been increased to 200 kms. Therefore, we can construe that only one day validity shall be granted to cover a distance upto 200 kms which was earlier 100 kms.