UNIT IV
ASSESSMENT AND ADMINISTRATION OF GST
What is Return Under GST?
Every registered person paying GST is required to furnish an electronic return every calendar month. A “Tax Return” is a document that showcases the income of a registered taxpayer. Such a document needs to be filed with the tax authorities in order to pay tax to the government. The tax to be paid by a registered dealer depends upon the income declared by such a person in the tax return filed with the tax authorities.
Under the initial GST Return filing procedure, the different types of GST returns demanded the taxpayer to disclose the following details:
***Note: However, the current system of GST Return filing requires a taxpayer to update outward supplies information in GSTR 1. And then file a summary return in GSTR 3B. All the other forms like GSTR 2 and GSTR 3 have been suspended for the time being.
As mentioned above, from April 1, 2019, the incumbent government is planning to implement the new GST Return design. This simplified version of return would require the taxpayers having an annual turnover of over Rs 5 Crores to file one monthly return only. Thus, small business owners,having an annual turnover of upto Rs 5 Crores would have the option to file quarterly return.
Types Of GST Returns
1. GSTR – 1: Return for Outward Supplies
GSTR-1 is a monthly return of outward supplies undertaken by a normal registered taxpayer under GST. In other words, this monthly return showcases the sales transactions of a business in a particular month.
Who Needs To File GSTR-1?
Every normal registered taxpayer under GST is required to file GSTR-1 each month. This return showcases details of 1) invoices, 2) debit notes, 3) credit notes and 4) revised invoices issued pertaining to your outward supplies.
Due Date for Filing GSTR-1
The standard date for filing GSTR-1 is 10 days from the end of the month for which such a return is to be filed. However, the due date to file GSTR 1 can be extended for any class of persons beyond the tenth of the succeeding month by the Commissioner. The reasons for such an extension would be notified.
2. GSTR – 2: Return for Inward Supplies
GSTR-2 is a monthly return of inward supply of goods and services as agreed by the recipient of the goods and services. In other words, GSTR-2 contains details with regards to the purchases made by the recipient in a particular month. The information contained in GSTR-2 is auto-populated with the details contained in GSTR-2A.
Who Needs To File GSTR-2?
Every normal registered taxpayer under GST is required to provide details regarding inward supplies or purchases made for each month in GSTR-2. This return showcases details with regards to purchases made from registered and unregistered taxable persons, debit notes and credit notes issued with respect to the inward purchases etc.
Hence, the recipient makes use of the details auto-populated in Form GSTR-2A with details uploaded by supplier in GSTR-1. The recipient makes necessary changes if required in GSTR-2 after verifying the information auto-populated in GSTR-2A.
Due Date for Filing GSTR-2
The process of making changes and filing GSTR-2 is required to be undertaken between 11th and 15th day of the succeeding month for which return is to be filed.
3. GSTR – 2A: Read Only Document
GSTR-2A is a read only document. This document gets auto-populated once the supplier uploads the details in GSTR-1. In other words, GSTR-2A enables the recipient to verify the details uploaded by the supplier in GSTR 1. Also the recipient could accept, reject, modify or keep the invoices pending using the said details. However, such changes are made by the recipient in GSTR 2.
Who Needs To File GSTR-2A?
GSTR-2A is made available to every normal registered taxpayer filing return under GST. This is because it is a read only document that gets auto-populated with details uploaded by supplier in GSTR-1.
Due Date for Filing GSTR-2A
GSTR-2A is a read-only document used by the recipient to match the details uploaded by the supplier in GSTR-1. Thus, the recipient can accept, reject, modify or keep the invoices pending in case there is any mismatch. However, the recipient can make actual changes, if any, only in Form GSTR 2. This process of making changes and filing GSTR-2 is to be undertaken between 11th and 15th day of the month succeeding the month for which such a return is to be filed.
4. GSTR – 3B: Summary of Inward and Outward Supplies
GSTR 3B is a simplified monthly summary return of inward and outward supplies. It is a self declaration showcasing the summary of GST liabilities of the taxpayer for the tax period in question. Moreover, it helps the taxpayer to discharge the tax liabilities in a timely manner.
GSTR-3B is a form that cannot be revised. Furthermore, this form does not require the compliance of comparing invoices between supplier and purchaser. That means both the suppliers and the recipients file the GSTR-3B form separately. Therefore, such a facility does not cause delays in filing of returns which would consequently attract late fees and interest.
Who Needs To File GSTR-3B?
Every normal registered taxpayer filing GST Returns is required to file GSTR-3B. GSTR-3B is also filed during the tax periods for which the tax liability is zero. That is, a taxpayer needs to file a Nil Return in case there are no outward or inward transactions during a particular month.
Due Date for Filing GSTR-3B
The GSTR-3B must be submitted by the 20th of the month succeeding the tax period for which GST is filed. In case no transactions have been undertaken in a particular month, the registered person needs to file a NIL return for that period.
5. GSTR – 4: Return For Composition Dealers
GSTR-4 is a quarterly return that needs to be filed by a registered taxpayer who has signed up for the Composition Scheme. Under this scheme, small taxpayers having a turnover of upto Rs 1.5 Crores need to pay tax at a fixed rate and file quarterly return. This is unlike the normal registered dealer who files three returns every month including GSTR-1, GSTR-2 and GSTR-3B.
Who Needs To File GSTR-4?
The Composition Scheme was introduced under GST in order to reduce the compliance burden on small taxpayers. Every registered taxpayer opting for Composition Scheme is required to file quarterly return in GSTR-4.
Due Date for Filing GSTR-4
The due date for filing GSTR-4 is 18th of every month following the quarter for which such a return needs to be filed. Say for instance, Kapoor Pvt Ltd is a composition dealer who needs to file his GST return for the quarter January – March 2019. The due date for filing GSTR-4 therefore would be April 18, 2019.
6. GSTR – 5: Return For Non-Resident Taxable Persons
GSTR-5 is a monthly return filed by every non-resident taxable person. This return includes details pertaining to:
Furthermore, this is the only return to be filed by a non-resident taxable person. This means, a non-resident taxable person is not required to file any annual return.
Who Needs To File GSTR-5?
Unlike a normal registered taxpayer, a non-resident taxable person is required to File monthly return in For GSTR-5. A non-resident taxable person means a person who supplies goods or services occasionally. This person does not have a fixed place of business or residence in India. Moreover, he can supply goods or services either as a principal or an agent or in any other capacity.
Due Date for Filing GSTR-5
The details in GSTR 5 need to be filed within a time period that is earlier of:
within 20 days after the end of the calendar month or within7 days after the last date of validity of the registration
7. GSTR – 6: Return For Input Service Distributors
GSTR 6 is a monthly return that an Input Service Distributor files every calendar month. This return provides information of all the invoices on which credit has been received and are issued by an ISD. This means that it gives a summary of the total input tax credit available for distribution during a particular month. Thus, the details of the invoices that an ISD furnishes in form GSTR 6 are made available to every recipient of the credit. These details are visible to the recipient in part B of form GSTR 2A.
What is GSTR-6A?
GSTR 6A is an auto drafted, read only form. This form is generated automatically based on the details furnished by the suppliers of an ISD in form GSTR 1. This form contains details pertaining to the supplies against which credit is received for distribution. It also includes the details pertaining to the debit notes and credit notes received during the current tax period.
Due Date for Filing GSTR-6
GSTR-6 needs to be filed on the thirteenth day of the month succeeding the month for which tax is to be paid. Say for instance, Kapoor Pvt Ltd is registered as an ISD in Mumbai having branches in Mumbai, Hyderabad, Bangalore and Gurgaon. Kapoor Pvt Ltd needs to file ISD return for the month November 2018. Hence, the last date to file GSTR 6 for Kapoor Pvt Ltd is December 13, 2018.
8. GSTR – 7: Return For Taxpayers Deducting TDS
GSTR 7 is a monthly return that is required to be filed by the deductors who are required to deduct TDS under GST. Such a return consists of the details regarding:
What is GSTR-7A?
GSTR-7A is an auto-generated form. The form gets generated once the deductor furnishes details in Form GSTR-7 on the common portal. If the details furnished by the deductor are accepted by the deductee, then a TDS certificate is made available to the deductee electronically.
Due Date for Filing GSTR-7
GSTR-7 is required to be filed by the deductor within 10 days after the end of the month in which the deduction was made. For example, the due date for filing GSTR-7 for the month of June 2018 would be 10th July, 2018.
9. GSTR – 8: Return For E-Commerce Operators Collecting TCS
GSTR 8 is a monthly return furnished by every electronic commerce operator who is required to deduct Tax Collected at Source under GST. This return reflects details of the supplies made through e-commerce portal and the amount of tax collected from suppliers of goods and services. Furthermore, the operator can also make changes to the details of supplies furnished in any of the earlier period statements.
Due Date for Filing GSTR-8
The last date to file GSTR 8 is the 10th day of the month succeeding the month for which TCS is to be collected. Thus, the amount of tax that the operator collects also needs to be deposited by the 10th day of the following month during which such a collection is made. Furthermore, the operator is also required to file an annual statement in the prescribed format in GSTR 9B. This return needs to be filed by 31st December following the end of each financial year.
10. GSTR – 9: Annual Return For Normal Registered Taxpayer Under GST
Section 44(1) requires that:
Every registered person shall furnish electronically an annual return for every financial year in the prescribed form, except the following:
Due Date for Filing GSTR-9
Such a return needs to be furnished on or before the 31st day of December following the end of such financial year. To further add to this, Rule 80(1) of the CGST Rules, 2017 states that such registered person shall furnish an annual return electronically in Form GSTR-9. This return needs to be filed through the common portal either directly or through a Facilitation Centre notified by the Commissioner.
11. GSTR – 9A: Annual Return For Composition Dealers
GSTR 9A is the annual return that every registered person opting for composition levy needs to file every financial year. This return is in addition to the quarterly returns filed by a composition dealer during a financial year. Thus, GSTR 9A is an annual return filed by a composition dealer containing details that relate to the quarterly returns filed by him during the year. This return contains details with regards to supplies made by the taxpayer during the year under composition scheme. These details include:
Due Date for Filing GSTR-9A
The due date to file GSTR 9A is on or before December 31 succeeding the close of a particular financial year for which the return needs to be filed. For instance, Mr. Kapoor is a composition taxpayer who needs to file his annual return for the financial year 2017 – 2018. Thus, Mr. Kapoor needs to file his annual return in form GSTR 9A on or before December 31, 2019. However, this date can be extended by a proper officer through a notification.
12. GSTR – 9B: Annual Return For E-Commerce Operators Collecting TCS
Every electronic commerce operator required to collect tax at source under section 52 shall furnish annual statement in FORM GSTR -9B. This return includes all the information furnished by the e-commerce operators in the monthly returns filed during the financial year.
Due Date for Filing GSTR-9B
All the e-commerce taxpayers are required to file GSTR-9B on or before 31st December following the close of the financial year.
13. GSTR – 9C: Return For Registered Persons Getting Accounts Audited From CA
Every registered person having an aggregate turnover of more than Rs. 2 crores during a financial year must get his accounts audited by a CA or cost account. Furthermore, he needs to submit the annual return, a copy of the audited accounts and a reconciliation statement. This reconciliation statement is in Form GSTR 9C. So basically, GSTR 9C is a reconciliation statement reconciling value of supplies declared in annual return with the audited annual accounts.
Due Date for Filing GSTR-9C
The due date for filing GSTR-9C is the same as that for filing annual returns in GSTR-9. Hence, GSTR-9C shall be submitted on or before 31st December of the year subsequent to the relevant FY under audit. For instance, the due date for filing GSTR-9C for the FY 2017-2018 shall be 31st December 2018.
14. GSTR – 10: Return For Registered Person Whose GST Registration Gets Cancelled
GSTR-10 is a final return required to be filed by a registered person whose GST Registration gets cancelled. Such a registered person does not include:
Further, Form GSTR-10 is filed electronically through the common portal either directly or via a facilitation centre as prescribed by the Commissioner. The intent of filing this final return is to make sure that the taxpayer pays of any liability outstanding. This liability may include an amount equivalent to the amount that is higher of:
input tax related to stock of finished and semi-finished goods, capital goods or plant and machinery or output tax payable on such goods
Due Date for Filing GSTR-10
The registered person whose GST Registration has been cancelled is required to file final return in Form GSTR-10 within a period which is later of:
3 months from the date of cancellation or Date of order of cancellation
15. GSTR – 11: Return For UIN (Unique Identification Number) Holders
GSTR-11 is a return to be furnished by a person who has been allotted a Unique Identification Number (UIN). UIN is issued so that the registered person obtaining the same can claim refunds for GST paid on goods and services purchased by them in India.
Who Can Apply For UIN?
UIN is allotted to foreign embassies and diplomatic missions who are not required to pay taxes in India. This number is issued so that these organizations can claim a refund for the amount of tax paid to the Indian Tax Authorities. In order to claim the refund on GST paid, these organizations need to file GSTR-11.
The organizations that can apply for UIN include:
Due Date for Filing GSTR-11
The due date for filing GSTR-11 is 28th of the month succeeding the month in which inward supplies are received by the UIN holders. This means, GSTR-11 is not filed on a monthly basis. Rather, this form is filed on case-to-case basis as and when the supplies are made.
Assessment is calculation of tax liability of the taxpayer under GST law. It is the process of figuring out how much tax is to be paid by an individual each month.
There are various types of assessments under GST. They are as follows:
Self-Assessment
Every person who is a registered taxable person can assess his tax liability on his or her own and furnish returns for each taxation period. GST also allows self-assessment just like the other tax liability such as VAT, Excise and Service Tax under current taxation regime. Self assessment is stated under Section 59 of the GST act.
After doing self assessment , the person is required to pay tax based on this assessment.
In this regard Section 59 of the GST Act states
“Every registered person shall self-assess the taxes payable under this Act and furnish a return for each tax period as specified under section 39.”
Provisional Assessment
Under section If an assessee is unable to determine his tax liability value or rate he or she can request the officer for provisional assessment. This further gives two conditions under which this assessment is done :
a) If the taxpayer is unable to determine value due to difficulty in calculation of the transaction value or confusion regarding inclusion of certain receipts or not.
b) If the taxpayer is unable to determine the rate of tax due to difficulty in classification of goods and services or whether any notification is applicable or not.
Procedure for Provisional Assessment
a) The assessee has to request the GST officer for provisional assessments in writing.
b) Within 90 days of receipt of such request the officer will pass an order after reviewing the application. This order is for allowing a payment of tax on provisional basis or at a GST rate or value specified by him.
c) The assessee who is making payment on provisional basis has to issue a bond with a security promising to pay the difference amount between provisionally assessed tax and final assessed tax.
d) The GST officer will pass the final assessment within a period of six months from the date of order of provisional payment.
e) Provisional assessment will be followed by final assessments.
Interest Payable for Provisional Assessment
If in any case the taxpayer is liable to pay more tax after final assessment than paid at the time of provisional assessment, the person is liable to pay interest at a specified rate on such tax payments.
The interest to be paid by the taxpayer is calculated from the actual due date of tax till the actual tax payment made. The interest will be charged maximum at the rate of 18%.
Refund under Provisional Assessment
If in any case the taxpayer was liable to pay less after the final assessment than paid at the time of provisional assessment, the person will be refunded back with the same amount as well as interest will be paid on such refund under section 56. The rate of interest paid will be maximum 6%.
Time Limit for Final Assessments
The final assessment will be done within 6 months of the provisional assessment. The time limit can be extended for 6 months by the Joint or Additional Commissioner. The commissioner can even extend this time period to 4 years if required.
Scrutiny Assessment
To verify the correctness of the returns, the GST officer scrutinize it. Return is scrutinize by proper office as per the provision of section 61 of CGST Act.
In case any discrepancy found, he shall furnish the notice to the registered persons about the discrepancy and seeking the reply from the person.The person shall within 15 days from the date of the notice shall furnish the reply. The registered person may accept the discrepancy as mentioned in the notice and pay the taxes, interest and any other amount due and inform the same to proper officer. If proper office found the information is acceptable the proper office shall inform the registered person accordingly.
In case if discrepancy is not accepted by the person then he shall give explanation to the proper officer. This is not mandatory for the officer as it is not a legal or judicial proceeding. The officer for the same can ask for explanations if any discrepancies noticed. The officer can take the following actions after receiving the explanations for the same: When Explanation is Satisfactory- The officer will inform the taxpayer and no further actions will be taken in this regard. When Explanation is not Satisfactory- The taxpayer has not given the explanation within 30 days or has not rectified the discrepancies the officer may Conduct a tax audit under section 65.
Inspect and search the places of the taxpayer’s business. Start a special audit under section 66. Initiate demand and recovery provisions Send notices for outstanding demand or shortfall of when there is no willful intention of doing fraud under section 73 Send notices for outstanding demand or shortfall when there is willful intention of fraud under section 74. No order can be passed under scrutiny assessment as it is not a legal or judicial proceedin.
Best Judgment Assessment
The Assessing Officer under this assessment has an obligation to make an assessment of the total income or less of a taxpayer to the best of his judgment in the following cases.
Assessment of non-filers of returns
Under section 62, in case if a taxpayer fails to furnish the returns even after the notice under section 46, a GST officer is required to conduct an assessment. The GST officer in this case access the tax liability of the taxpayer to the best of his judgement taking into consideration all the relevant materials that are available.
The officer can issue an assessment order within a period of five years from the date of furnishing of annual return for the financial year for which the tax has not been paid. After receiving this order , if the concerned taxpayer furnished a valid return within 30 days from the issue of assessment order, the order can be withdrawn.
In this case the taxpayer will be liable to pay late fee under section 47 and/or interest under section 50(1)
Assessment of Unregistered Person
Under section 63, if in case any taxpayer fails to obtain a GST registration or whose registration has been cancelled under section 29(2) even if he is liable to be registered and pay tax, the GST officer can process his or her tax liability to the best of his judgement. This has to be done for the relevant period for which the tax is unpaid. The officer can issue an assessment order within five years from the date specified under section 44 for furnishing annual return for the financial year for which taxes are unpaid.
Summary Assessment
This type of assessment is stated under Section 64. The authorized office is required to obtain prior permission of additional commissioner or joint commissioner to take this assessment. To protect the interest of revenue, a GST officer can proceed to assess the tax liability of a person showing a tax liability with any evidence . The officer can also issue an assessment order id he has proof that the delay in assessment can adversely affect the interest of revenue.
Functions of the GST Council seeked to include making recommendations on:
a) taxes, cesses, and surcharges levied by the Centre, States and local bodies which may be subsumed in the GST;
b) goods and services which may be subjected to or exempted from GST;
c) Model GST laws, principles of levy, apportionment of IGST and principles that govern the place of supply;
d) threshold limit of turnover below which goods and services may be exempted from GST;
e) rates including floor rates with bands of GST;
f) special rates to raise additional resources during any natural calamity;
g) special provision with respect to Arunachal Pradesh, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and
h) any other matters
TDS (SECTION 51 OF THE ACT)
Payment of TDS to Government under GST Law
TDS shall be paid within 10 days from the end of the month in which tax is deducted. The payment shall be made to the appropriate government which means:
The Central Government in case of the IGST and the CGST
The State government in case of the SGST
Mode of Payment : The deductor has to generate challan in the portal at www.gst.gov.in and deposit the tax so deducted through e-payment mode [Net Banking/Debit-Credit card/NEFT-RTGS] or OTC Mode [Cash/Cheque/DD]
TDS Returns : Deductor is required to file return electronically to Government. The return is to be filed in prescribed form and manner within ten days after end of each month – section 39(3) of CGST Act.
The prescribed form of return is GSTR-7. Offline tool is available to submit GSTR-7 return.
If there is no transaction in a particular month, the deductor is not required to file return for that month – ratio of section 39(8) of CGST Act.
Time limit for filing return can be extended by Commissioner by issuing notification – section 39(6) of CGST Act.
Extension of time limit for filing GSTR-7 return for March 20 – May 20 – Due to Covid -19 GSTR-7 return for March 20 – May 20 has been extended upto 30.06.2020 – Notification No. 35/20 -CT dated 03.04.2020
Late fee for not filing GSTR-7 return within due date– Late fee payable is Rs. 100 per day under CGST Act and Rs. 100 per day under SGST/UTGST Act (Maximum Rs. 5,000 under CGST Act and Rs. 5,000 under SGST/UTGST Act i.e. total Rs. 10,000 per return) separately – (Section 47(1) of CGST and SGST Act).
TDS Certificates : TDS certificate in form GSTR-7A to the concerned person within 5 days of depositing the tax to the government. Failure to do so will make the person liable to pay a late fee of Rs. 100 per day up to a maximum of Rs. 5000.
Refund of TDS under GST? [ Section 51(8) ] If any excess amount is deducted and paid to the government, a refund can be claimed as this is not the tax amount that the government has a right on.
However, if the deducted amount is already added to the electronic cash ledger of the supplier, the amount so added cannot be got back as a refund by the deductor. Deductee can claim a refund of tax subject to refund provisions of the act. ( Proviso to Section 51(8)
Deductee can claim credit of TDS in electronic cash register – The deductee shall claim credit, in his electronic cash ledger, of the tax deducted and reflected in the return of the deductor – section 51(5) of CGST Act.
Thus, deductee can take credit in electronic cash register only when deductor files return and not on the basis of TDS certificate.
TCS (SECTION 52 OF THE ACT)
Objective behind introduction of TCS: – refers to the Tax which is collected by the Electronic Commerce Operator when a supplier supplies some goods or services through its portal and the payment for that supply is collected by the Electronic Commerce Operator (ECO).
Section 52 provides for collection of tax at source in certain circumstances. The section specifically lists out the tax collecting persons who are mandated by the Central Govt to collect tax at source, the rate of collection of tax and the procedure for remittance of tax collected.
Every Electronic Commerce Operator (ECO), not being an agent, has been mandated to collect tax at source (TCS) from the net value of taxable supplies made through it by other suppliers, whenever the ECO collects the consideration on behalf of the supplier.
Rate of TCS under GST:-
Every electronic commerce operator, not being an agent, shall collect an amount calculated @ 0.5% of the net value of intra-State taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the said operator.
Note: – Sec.20 of the IGST Act provides that in case of Tax Collection at source, the operator shall collect tax at such rate not exceeding 2% as may be notified on the recommendations of the council of the net value of taxable supplies.
But at present this rate has been notified @ 1%.
Eg: – Suppose a product is sold at Rs.1000/- through an ECO by a supplier. The operator would collect tax @1% of the net value of Rs.1000/- i.e. Rs.10/- (Inter State Supply)
Deposit of TCS under GST by ECO to Government: –
The TCS amount collected by the ECO has to be remitted to the Government Treasury within 10 days after the end of the month in which the collection was made.
Eg: – If the TCS has been collected in the month of May, the amount has to be remitted into the Government Treasury on or before 10th June.
Filing of Monthly & Annual Statements by ECO: –
An electronic statement has to be filed by the ECO containing details of the outward supplies of goods and/ or services effected through it, including the supplies returned through it and the amount collected by it as TCS during the month within 10 days after the end of each month in which supplies are made. [Sub-section (4)]
Additionally, the ECO is also mandated to file an Annual Statement on or before 31st day of December following the end of the financial year. [Subsection (5)]
Rectification in Monthly Statement by ECO: –
If the ECO discovers any discrepancy on his own not being the result of any scrutiny, inspection or enforcement proceedings, he has to rectify the statement. However, the limit for rectification is earlier of the two: –
(i) Due date for filing statement for the month of September following the end of the financial year.
OR
(ii) Actual date of furnishing of relevant annual statement. Interest provisions are [Sub-section (6)]
Claim of Credit by Supplier: –
Supplier can claim credit of the TCS amount in his electronic cash ledger. This amount should reflect in the monthly statement filed by the e-commerce operator. [Sub-section (7)].
Matching of details of supplies: –
The details of the supplies, including the value of supplies, submitted by every operator in the statements will be matched with the details of supplies submitted by all such suppliers in their returns. [Sub-section (8)]
If there is any discrepancy in the value of supplies, the same would be communicated to both of them. If such discrepancy in value is not rectified within the given time, then such amount would be added to the output tax liability of such supplier succeeding the calendar month in which the discrepancy is communicated, where outward supplies furnished by operator is more than the value as shown by supplier.
The supplier will have to pay the differential amount of output tax along with interest from the date such tax was due till the date of its payment. [Subsections 9 To 11].
Notice to the Operator: –
An officer not below the rank of Deputy Commissioner can issue notice to an operator, asking him to furnish details relating to volume of the goods/services supplied, stock of goods lying in warehouses/godowns etc. [Sub-section (12)]
The operator is required to furnish such details within 15 working days. [Subsection (13)]
In case an operator fails to furnish the information, besides being liable for penal action under section 122, it shall also be liable for penalty up to 25,000. [Sub-section (14)]
Concepts relating to TCS Registration under GST: –
Section 24(x) of the CGST Act, 2017 makes it mandatory for every e-commerce operator to get registered under GST.
Similarly, section 24(ix) of the CGST Act, 2017 makes it mandatory for every person who supplies goods/services through an operator to get registered under GST.
TCS Statement under GST: –
The amount of tax collected by the operator is required to be deposited by the 10th of the following month, during which such collection is made.
The operator is also required to furnish a monthly statement in Form GSTR-8 by the 10th of the following month.
The operator is also required to file an Annual statement in prescribed form by the 31st of December following the end of every financial year.
The operator can rectify errors in the statements filed, if any, latest by the return to be filed for the month of September, following the end of every financial year.
The details furnished by the operator in GSTR-8 shall be made available electronically to each of the suppliers in Part C of FORM GSTR-2A on the common portal after the due date of filing of FORM GSTR-8.
Key Takeaways:
The concept of refund under GST relates to any amount returned by the government that was:
a) paid by the registered taxpayer either in excess or
b) was not liable to be taxed.
GST was introduced not only to get rid of blocks like double taxation and no input tax credit, but also bring about transparency and easy tax compliance.
To make easy tax compliance a reality, government of India took the GST process online. Right from GST registration, return filing to claiming ITC and GST refund, almost everything takes place on the GST online portal.
Talking about refund under GST, a time specific GST refund process was extremely necessary. This is because it would help businesses manage taxes. Such a process would unblock funds for working capital.
Thus, it would provide necessary pool of money for growth, modernization and expansion of businesses.
Hence, government came with a standardized process for GST refund. There are various cases resulting in accumulation of credit or payment of taxes in excess of what is due.
Such cases can occur on account of mistakes or unintentional errors by the registered taxpayers. This refund mechanism enables taxpayers to claim refunds easily under such circumstances.
It is unlike the previous indirect tax regime, that was time consuming and called for tedious manual filing of indirect tax refund.
As per the CGST act 2017, there are various situations under which a registered taxpayer can claim GST refund. Let’s have a look at situations that necessitate GST refund and the underlying provisions.
Situations That Necessitate Refund Under GST
There are various situations that require a registered taxpayer to claim GST refund from the government.
A. Export of Goods or Services and Supplies to SEZs Units and Developers
One of the major categories under which registered taxpayers can claim GST refund is zero rated supplies.
According to section 16 of the IGST Act, the term “zero rated supplies” means:
Export of goods or services or both
Supply of goods or services or both to a Special Economic Zone (SEZ) developer or unit
Furthermore, a supplier of zero rated supplies can claim ITC even for non – taxable or exempt supplies used in making such zero rated supplies.
Thus, a person claiming GST refund on account of zero rated supplies can use one of the following options to do so:
He can get a letter of undertaking (LUT) or a bond to cover the amount of IGST for the sale. Then, he can export goods without paying IGST. If he chooses this option, he can claim a refund on the ITC accumulated on account of inputs used in making such supplies.
If he cannot get a bond or an LUT, he can pay IGST when he exports. When he does that, he can claim a refund on the tax paid by using accumulated ITC.
In case of zero rated supplies, the amount of refund due to the said applicant is granted on a provisional basis. This amount equals to 90% of total amount to be claimed by the applicant.
Such an amount is sanctioned within a period of 7 days from the date of acknowledgement given by a proper officer via common portal. The acknowledgement of refund application is normally issued within 15 days from the date of receipt of application.
Furthermore, such a provisional refund is not granted to a supplier who has been prosecuted for any offence during 5 years immediately preceding the tax period.
B. Deemed Exports
Supplies are considered Deemed Exports under GST if they meet following two conditions:
Supplies include goods and not services manufactured in India. Further, the goods produced do not leave India.
Payment with regards to such supplies is received in Indian rupees or in convertible foreign exchange
Deemed exports are separate from zero rated supplies. Such exports do not form part of zero rated supplies by default.
As a result, supplies categorized as deemed exports are liable to taxes. This means that such supplies are made by paying IGST and are not supplied based on a bond or Letter of Undertaking (LUT).
Further, the refund for tax paid on supplies considered as deemed exports is claimed either by the supplier or the recipient.
However, the supplier of deemed exports can file the refund application in situations where:
a) recipient does not take the benefit of input tax credit on such supplies and
b) the recipient gives an undertaking that claims that the supplier can take such refund
There can be cases where the supplier of deemed export supplies has availed the benefit of tax credit in respect of such supplies. In such a case, the recipient of deemed export supplies can claim the refund of ITC in respect of other inputs or input services.
C. Refund of Wrongly Collected or Paid Tax
Under GST, a registered person might end up paying integrated tax in place of central tax plus state tax. Furthermore, it is is possible that he could do it the other way round – pay central tax plus state in place of integrated tax.
This is because of incorrect application of provisions relating to place of supply. In such cases, the registered person is not required to pay any interest on the amount of tax payable under any of the circumstances.
Furthermore, the GST refund claim on account of wrong payment of tax shall not be subjected to the provision of unjust enrichment.
Unjust enrichment is based on the assumption that a businessman would always shift the incidence of tax to the final consumer.
This is because GST is an indirect tax that is to be borne by the final consumer. So, to avoid such circumstances, every refund claim under GST, barring certain exceptions, need to pass the test of unjust enrichment.
Under such a test, every GST refund claim sanctioned by the proper officer is first transferred to the Consumer Welfare Fund. The claim of refund is paid to the applicant once the test of unjust enrichment is cleared.
D. Refund to UN and Other Notified Agencies
As per international obligations, goods and services supplied to UN bodies and embassies may be exempted from GST. However, to make such an exemption operational, GST refund mechanism comes into play.
So, a taxable person supplying goods or services to such bodies needs to charge tax due on such supplies. Then, such a tax is remitted to the government account.
However, the UN bodies and other entities mentioned under section 55 of CGST act can claim refund of such taxes paid by them on purchases made. Such claim for refund has to be made before the expiry of six months from the last day of the quarter in which such a supply is received.
Furthermore, the amount of refund is granted by the central government as such agencies do not need state wise registration. One single registration is sufficient for them for whole of India.
E. Refund Arising on Account of Order of Appellate Authority or Court
There are cases where tax paid becomes refundable as a consequence of judgement, decree, order or direction of the appellate authority, appellate tribunal or any court. In such cases, the registered person needs to file an application for refund within 2 years from the relevant date.
As per section 54 of GCST act, relevant date means the date of communication of such judgement, decree, order or direction to a registered person.
In such cases, the documentary evidence needs to be filed in order to establish that the refund is due to the applicant.
Therefore, the registered person needs to file an application in RFD – 01. Such an application is accompanied by:
a) the reference number of the order and copy of the order passed by the proper officer or appellate authority, court or tribunal resulting in such a refund.
b) reference number of payment of amount with regards to such an appeal made by the registered person
F. Refund of Accumulated ITC on Account of Inverted Duty Structure
The applicant can apply for refund in case of inverted duty structure. Inverted duty structure refers to a scenario where the amount of credit accumulates on account of rate of tax on inputs being higher than rate of tax on output supplies.
However, following are the cases where refund of accumulated ITC in case of inverted duty structure is not allowed.
a) where output supplies are nil rated or wholly exempt
b) against supply of goods or services as may be notified by the government on the recommendations of the GST Council
Therefore, the government has notified goods and on which no refund of unutilized ITC is allowed. These are mentioned in a separate section in CGST act, 2017.
G. Refund of Tax Paid on Provisional Basis
As per section 60 of CGST act, a taxable person can request for allowing payment of tax on provisional basis. He can do so if such a person is unable to determine:
a) value of goods or services
b) rate of tax applicable on such goods or services
To allow the taxable person to pay tax on provisional basis, a proper officer needs to pass a provisional order within a period of 90 days from the date of receipt of request from the registered person.
Furthermore, the proper officer needs to pass a final assessment order within a period of 6 months from the date of receipt of provisional order mentioned above.
The registered person thus becomes entitled to claim refund after order of final assessment is passed by the proper officer.
Furthermore, he is entitled to receive interest on such a refund after the expiry of 60 days from the date of receipt of application of refund. Such an interest would be to the extent of 6%.
Lastly, registered person is required to provide reference number of the final assessment order and a copy of the said order along with application RFD – 01.
H. Refund of IGST to International Tourist
As per section 15 of IGST act, the international tourist leaving has to pay integrated tax on goods bought by him within India.
In such a circumstance, he may seek refund of integrated tax paid by him on such goods while leaving the country.
Such a refund is granted in such manner and subject to such conditions and safeguards as may be prescribed. For refund of IGST to international tourist, the term tourist means:
a) any person who is not normally resident in India and
b) who enters India for a stay of not more than six months for legitimate non – immigrant purposes
I. Refund of Excess Payment of Tax Due to Mistake or Inadvertence
There are situations when a taxpayer makes excess payment of tax either by mistake or inadvertence. Such a scenario may result in payment of tax that is more than due to the government.
This is to say that excess tax is paid which was originally not required to be paid. Hence, the excess amount of tax paid by the taxpayer needs to be refunded. The excess payment of tax maybe due to wrong mention of:
a) nature of tax (CGST/SGST/IGST)
b) GSTIN
c) tax amount
In the first two cases, the tax administration verifies whether the taxpayer’s claim is correct or not. After the proper officer is satisfied, the taxpayer files a refund application within a period prescribed by the GST law.
J. Refund of Taxes Paid on Advances Given Via Issuance of Refund Vouchers
Manufacturers demand certain amount of advance when they have to deliver goods in large quantities. Similarly, even the service providers ask for an advance before starting work on the underlying services.
At the time of receiving such advance, the manufacturer or service provider needs to issue a receipt voucher. In case the underlying order is cancelled in the near future, no tax invoice will be issued by the manufacturer or service provider.
Furthermore, the manufacturer or service provider issues a refund voucher for the advance received.
References:
