In our previous blog, we went through the provisions of advance ruling under GST. We also understood that the first level of appeal for advance ruling is to be made to the Authority for Advance Ruling (AAR). However, a taxable person who is not satisfied by the advance ruling of the AAR can approach the second level i.e. the Appellate Authority for Advance Ruling i.e. the AAAR.
It is a good time to note, that appealing against the advance ruling is a new provision in GST. The previous tax regime did not have any scope for appeal against Advance Ruling at all, and the only way to contest the ruling was by going through the Division Bench of the High Court. However, this process has been made easy by the introduction of an appeal mechanism to the Appellate Authority for Advance Ruling under GST – which we will understand in this blog.
Appellate Authority for Advance Ruling Process
The following are the various provisions laid down pertaining to the procedure for advance ruling by the Appellate Authority for Advance Ruling, under GST:
Initiation of Advance Ruling Procedure by AAAR
- The initiation of the appeal to Appellate Authority for Advance Ruling can be made by the applicant or the officer who is aggrieved by any advance ruling
- Appeal against the advance ruling of the AAR, must be made within 30 days from the date of the advance ruling issued by the AAR. However, this limit is extendable by 30 days.
Advance Ruling Forms by AAAR
- The application for appealing against the advance ruling of the AAR, has to be made in Form GST ARA-02, along with the payment of fees of INR 10,000
- If the appeal is made by a GST tax officer, then Form GST ARA-03 needs to be filed. However, no fees will be applicable in this case.
Advance Ruling Purview by AAAR
The AAAR can, by order, either confirm or modify the advance ruling issued by the AAR, which is appealed against. However, if the members of the AAAR, differ in opinion on any point, then an advance ruling cannot be issued.
Post the decision of the AAAR, a copy of the advance ruling signed by the members will be sent to the applicant, the prescribed or the jurisdictional CGST / SGST officer and to the initial authority that passed the Advance Ruling i.e. the AAR.
Advance Ruling Time Limit by AAAR
An advance ruling decision by the AAAR will be given within 90 days from the date of the application.
Rectification of the Advance Ruling by AAAR
The AAAR can amend its own order to rectify any apparent mistake, if the same is noticed within 6 months from the date of the original order. The rectification of the order can be done by:
- AAAR on its own
- Prescribed or the Jurisdictional CGST / SGCT officer
However, it is to be noted that any rectification which may result in increase in tax liability or decrease in input tax credit, will be allowed only after giving a notice and an opportunity to be heard to the applicant.
Scope of the Advance Ruling by AAAR
The advance ruling decision by the Appellate Authority for Advance Ruling will be binding only on the following entities:
- Jurisdictional Tax Authorities in respect of the Applicant
However, if the law or the facts of the original advance ruling change, then the advance ruling issued by the AAAR will not apply.
Nullification of the Advance Ruling by AAAR
If it is discovered, that the appellant has obtained the advance ruling by fraud or suppression of material facts, then the Authority for Advance Ruling (AAR) or the Appellate Authority for Advance Ruling (AAAR) will declare the ruling to be void ab initio (from the beginning). All the provisions of GST, will then be applicable to the applicant as normal without any advance ruling – however, an opportunity of being heard will be given to the applicant, in such as case, post which advance ruling nullification may take place.
In conclusion, it can be said that the provisions of advance ruling under GST are bound to make life simpler for a taxable person who wants to gain clarity on the tax arrangements to be made for a particular transaction. However, the only area where currently a clarity is not available is – that there is no defined level of appeal beyond the 2nd level i.e. the Appellate Authority for Advance ruling. However, it may be expected that the process to appeal further should be similar to that in the previous tax system, and a taxable person who is not satisfied with the decision of the AAAR, may appeal against it, via a special dispensation to the Division Bench of the High Court.
On the 4th of May, 2018, the 27th GST Council meeting got underway, giving shape to the new returns filing model, which was awaited for the past several months. The new model was decided, based on the recommendations of the Group of Ministers, which had been constituted for the purpose of making the process a simplified one on the 17th of April, 2018. In addition the GST Council also did announce a few rate changes, and some structural changes in the shareholding pattern of the GSTN.Let’s go through all the major 27th GST Council meeting highlights:
27th GST Council meeting – Simplified returns
The 27th GST Council meeting introduced a simplified return filing process, major features of which are as follows:
One monthly return
All taxpayers, with a few exceptions, will have the facility to file one monthly returns, and the return filing dates will be determined in a staggered order, based on the turnover of the registered person. This has been primarily done to manage the load on the GST portal. Composition dealers and dealers with nil transactions will continue to file quarterly returns, as per the 27th GST Council meeting highlights.
Unidirectional flow of bills
There shall be a unidirectional flow of bills, i.e. bills may be uploaded by the seller anytime during the month, which will serve as valid documents to avail input tax credit for the buyer. The buyer too, will be able to see the uploaded invoices on a continuous basis, during a particular month. There will be no need to upload any purchase invoices as per the model suggested initially. Also, for all B2B transactions, HSN codes of 4 digits or more will need to be specified to achieve uniformity in the reporting system, as per the 27th GST Council highlights.
Simpler returns design
B2B dealers will need to fill invoice wise details of all outward supplies made by them, based on which the system will automatically calculate their tax liability. Similarly, their input tax credit will be calculated automatically by the system based on the invoices uploaded by their sellers. All this will be supported by a user-friendly interface coupled with an offline tool to upload invoices. Another major aspect of simplifying the returns process introduced by the 27th GST Council meeting was, the reduction in the content or the information required to be filled in the return forms. The details of the design of the return form, business processes and legal changes will be worked out by the appointed law committee based on these principles, as per the 27th GST Council updates.
No automatic reversal of ITC
There shall not be any automatic reversal of input tax credit from the buyer, in case the seller does not pay the tax, as was the case earlier. In case the seller defaults on the payment of tax, the recovery shall be made from the seller itself. However, as per the 27thGST Council recommendations, the option of reversal of ITC from the buyer shall also be an option available to the GST authorities, to address exceptional scenarios, such as, missing dealers, closure of business by the supplier, supplier not having adequate assets etc.
Online process for recovery and reversal
The recovery of tax or reversal of ITC shall be done through an online and automated process to reduce the human interface. The process will continue to follow the due course of issuing a notice and order, as per the updates from 27th GST Council meeting.
Supplier side control
In case a supplier has defaulted in payment of tax above a threshold amount, such a supplier will not be allowed to upload invoices and thus will not be allowed to avail any ITC. This has been introduced to avoid and to control misuse of the ITC facility. Similar safeguarding provisions have now been built in for newly registered dealers as well as per the 27th GST Council meeting updates. The GST Council has proposed setting up analytical tools to identify such transactions at the earliest, so that loss in revenue may be prevented.
Three stage transition
The following 3 stage transition to the new returns filing system was decided upon at the 27th GST Council meet:
- Stage 1 – Present system of filing GSTR 3B and GSTR 1 returns. GSTR 2 and GSTR 3 will remain suspended. This will continue for a maximum of 6 months, by which the new return filing software will be ready.
- Stage 2 – New return system will go live, with the facility for invoice – wise data upload and also facility for claiming ITC on a self-declaration basis, similar to the role of GSTR 3B currently. During this stage, the dealer will be constantly fed with information about the existing gap between ITC available, and provisional ITC being claimed.
- Stage 3 – Provisional credit will get withdrawn totally, and ITC will be limited only to the invoices uploaded by the sellers from whom the dealer has purchased goods.
GST Rates discussed at the 27th GST Council meeting
While there were no GST rate changes announced as such at the 27th GST Council meeting, there was a good deal of discussion on the following two aspects:
- Reduction of GST rates for digital transactions – Keeping in mind the need to move towards a less cash economy, the GST Council discussed a proposal to have a concession of 2% in the GST rate i.e. 1% each for CGST and SGST, for all B2C supplies in which payments are done via cheque or via digital mode. This was proposed in all cases where the overall GST rate is more than 3%, with a ceiling of INR 100 per transaction. The GST Council has recommended to set up a Group of Ministers from the State Governments to look into the proposal and make recommendations, before the next GST Council meeting, as suggested by the 27th GST Council meeting news.
- Sugar Cess over and above 5% GST and reduction in GST rates of ethanol – Keeping in mind, the record production of sugar in the current sugar season, and the consequent reduction in sugar prices, the GST Council discussed imposing a sugar cess over and above the stipulated 5% GST rate and also considered reducing the GST rate on ethanol. The proposal has come from the food ministry, which has been mulling cutting down the GST rates on ethanol to help sugar mills clear dues worth INR 19,000 crore to sugarcane farmers. However, a conclusion could not be reached, and the GST Council finally recommended to set up a Group of Ministers from the State Governments to look into the proposal and make recommendations, within a period of 2 weeks, as per the 27th GST Council news.
GSTN changes finalised at the 27th GST Council meeting
The GSTN, as one may be aware, was created as a private limited, non-profit company, with an objective to provide shared IT infrastructure and services to Centre and State governments, tax payers and other stakeholders for the implementation of GST. Currently, the Central government and State governments are holding 24.5% equity shares respectively and the remaining 51% are held by 5 non-governmental institutions namely – HDFC, HDFC Bank, ICICI Bank, NSE Strategic Investment Co and LIC Housing Finance Ltd. Majority of the GST processes including registration, return filing, tax payment, refunds processing are largely IT driven, and thus it was a given that the GSTN was handling large scale invoice level data of lakhs of business entities.
Considering the nature of the functions handled by GSTN, the GST Council felt that the GSTN should be converted into a fully owned government company.
Keeping this in mind, it was decided at the 27th GST Council meeting, that the 51% held by the non-governmental institutions, worth INR 5.1 Crore, was decided to be distributed equally among the Centre and the State governments, thus taking the respective share of both bodies to 50% each. It was also decided that the GSTN board will be allowed to retain the existing staff at the existing terms and conditions for a period of up to 5 years, and shall also have the flexibility to hire people through contract on the terms and conditions similar to those used by GSTN till now, while hiring regular employees. Nevertheless, the existing financial commitments given by the Centre and the States to GSTN to share the capital costs and O&M costs of the IT systems will continue as before.
In short, the 27th GST Council meeting was a major game changer, as far as the simplified return filing process is concerned. Given the various initiatives discussed, proposed and finalised at the meeting, life for the business is surely bound to become simpler as far as GST compliance is concerned.
In our previous blog, we went through the provisions in place for the second level of appeals under GST i.e. appeals to the Appellate Tribunal. In case a person is not satisfied by the decision or the order passed by the Appellate Tribunal, he can proceed to the last two levels of appeals under GST i.e. GST appeals to High Court & Supreme Court – which we will discuss in this blog.
GST Appeals to high court & supreme court
The following questions will give you more insight on the topic of GST appeals to High Court & Supreme Court:
Who can issue GST appeal to high court?
Any taxable person who is not satisfied with the order or decision passed by the Appellate Tribunal, can issue a GST appeal to High Court, within a period of 180 days i.e. 6 months from the date of the order. However, the High Court may entertain an appeal after the expiry of 6 months, if it is satisfied that there was sufficient cause for not filing the appeal within such period. The GST appeal form to High C0urt needs to be filled accordingly.
What appeals will be allowed in the high court?
The following provisions have been laid down to define the appeals, which may be allowed in the High Court:
- Any person aggrieved by any order passed by the State Bench or Area Benches of the Appellate Tribunal may file an appeal to the High Court. The High Court may admit such an appeal, only if it is satisfied that the case involves a substantial question of law
- Where the High Court is satisfied that a substantial question of law is involved, it shall formulate that question and the appeal shall be heard only on the basis of that question. However, the respondents will be allowed to argue that the case does not involve any such question, at the hearing of the appeal
- The High Court can decide on any issue which –
- Has not been determined by the State Bench or Area Benches
- Has been wrongly determined by the State Bench or Area Benches, due to the question of law
However, appeals against orders passed by the National Bench or Regional Benches of the Tribunal will be aligned to the Supreme Court and not High Court. Also, appeals cannot be made to the High Court where two or more states OR when the State and the Centre have different views. Such cases too, will go straight to the Supreme Court. Thus the procedure of GST appeals to High Court have been well designed to account for the same.
Decisions of the high court – Points to note
As per the GST appeal procedure to High Court, the following are the provisions laid down with regards to the decisions taken:
- The appeal will be heard by a bench of at least 2 High Court Judges, and shall be decided on the basis of majority
- Where there is no majority, then one or more High Court Judges will be brought in to hear out the case. The original Judges shall state the point of law upon which they differ, and the case shall then be heard upon that point alone. Finally, the decision will be taken on a majority basis, by both the original and new set of Judges.
Who can issue GST appeal to supreme court?
Any taxable person who is not satisfied with the order or decision passed by the High Court, National Bench or Regional Benches of the Appellate Tribunal can issue a GST appeal to Supreme Court. However, as discussed above, cases where two States or State and Centre have different views, will be automatically appealed to the Supreme Court. The GST appeal form to Supreme Court needs to be filled accordingly, as per the procedure of GST appeals to Supreme Court laid down by the GST bodies.
Pre-Appeal conditions – Sums due to be paid
As per the GST appeal procedure to Supreme Court, a taxpayer who is planning to appeal to the Supreme Court must keep an important condition in mind, i.e. all sums due to the Government under order passed by the Appellate Tribunal or by the High Court need to be paid, prior to appealing to the Supreme Court. Thus GST appeals to High Court & Supreme Court are closely regulated as far as fees payable are concerned.
Thus, we have now covered all that you needed to know with regards to the 4 levels of appeals under GST, starting from First Appellate Authority, to Appellate Tribunal to GST appeals to High Court & Supreme Court. In our next blog, we will take you through the aspect of Advance Ruling – provisions for which have been laid down in the GST Act to make life simpler for the taxpayer involved in demand, recovery and appeals.
By definition, an advance ruling primarily means a decision provided by the adjudicating authority or the Appellate Authority to an applicant on specified matters or on specified questions, related to the supply of goods and / or services proposed to be undertaken or being undertaken by the applicant. In simple terms, an advance ruling is basically a written interpretation of tax laws, which is issued by tax authorities to corporations as well as individuals who request for clarifications related to tax. An advance ruling is mostly requested, when the taxpayer is confused about certain provisions. In this blog, we will learn in more detail about advance ruling in GST.
Why is Advance Ruling in GST necessary?
Advance Ruling in GST is deemed necessary primarily because of the following reasons:
- To provide advance certainty for tax liability, in relation to a future activity to be undertaken by the applicant
- To attract Foreign Direct Investment i.e. FDI, by clarifying taxation and showing a clearer picture of the future tax liability of the FDI. The clarity and clean taxation procedures will attract non-residents who would otherwise not want to get involved in messy tax disputes
- To reduce litigation and to reduce the cost of legal disputes
- To give decisions in a timely, transparent and inexpensive manner
When can one request for Advance Ruling?
As discussed above, any taxable person can request for an advance ruling in GST when he is confused about certain provisions. As per the provisions, advance ruling under GST is applicable on the following:
- Classification of any goods and / or services
- Applicability of a notification which affects the rate of tax
- Determination of time and value of supply of goods and / or services
- Whether ITC paid (or deemed to be paid) will be allowed
- Determination of the liability to pay tax on any goods and / or services
- Whether the applicant has to be registered under GST
- Whether any particular activity done by the applicant regarding goods and / or services will result in a supply
What are the various levels of Advance Ruling?
There will be two levels of Advance Ruling in GST:
- Authority for Advance Ruling (AAR)
- Appellate Authority for Advance Ruling (AAAR)
An advance ruling under GST will first be sent to the Authority for Advance Ruling (AAR). Any taxable person who is not satisfied with the advance ruling can appeal to the Appellate Authority for Advance Ruling (AAAR)
Advance Ruling mechanism in GST – AAR
The advance ruling mechanism in GST is initiated with the intervention of the AAR i.e. the advance ruling authority. Let’s understand in detail.
What is the composition of the AAR?
The Authority for Advance Ruling (AAR) shall comprise 1 member from CGST and 1 member from SGST / UTGST, who will be appointed by the Central and State Governments respectively.
How to apply Advance Ruling in GST?
Generally, an application for advance ruling to the advance ruling authority under GST i.e. AAR, will be done, before the start of the proposed activity. On receipt of the application, a copy will be forwarded to the prescribed officer, who will then furnish the necessary relevant records
What are the forms required for Advance Ruling by AAR?
The application for advance ruling to the advance ruling authority, has to be made in Form GST ARA-01 along with payment of fees of INR 5000.
What is the purview of the Advance Ruling rules under GST?
The advance ruling authority under GST can, by order, either admit or reject the application. However, applications may be rejected only after giving the applicant an opportunity of being heard. Also, the reasons for rejection shall need to be provided in writing.
As per the provisions, the AAR will also not allow applications in the following cases:
- When the same matter has already been decided in an earlier case for the applicant
- When the same matter is already pending in any proceedings for the applicant
What is the time limit of the Advance Ruling by AAR?
An advance ruling decision will be given within 90 days by the AAR from the date of the application, as per the advance ruling system for GST.
What is the scope of the Advance Ruling by AAR?
As per the advance ruling system for GST, the decision of the AAR will be binding only on the following entities:
- Jurisdictional Tax Authorities in respect of the Applicant
If at any point in time, the members of the AAR differ in opinion on any point, they will refer the point to the Appellate Authority of Advance Ruling (AAAR). In any case, any person who is not satisfied with the ruling of the AAR, can appeal to the AAAR, more of which we will understand in our next blog.
In our previous blog, we went through the provisions of appeals and revisions under GST, and we also understood about the 4 levels of appeals available to any taxable person, in case he is not satisfied by the decision or order passed by the Adjudicating Authority.
In this blog we will discuss about the first level i.e. appeals to GST First Appellate Authority.
Who can appeal to GST First Appellate Authority?
- Any taxable person who is not satisfied with the order passed by an adjudicating authority or officer can appeal to the GST First Appellate Authority within 3 months from the date of the order. This period is extendable up to 1 month.
- Even the Commissioner can appeal to the First Appellate Authority. To begin with, the officer will examine the order for its legality or propriety based on the appellant’s motion or on the Commissioner’s request. The Commissioner can then direct his subordinate officer to apply to the GST First Appellate Authority within 6 months from the date of the order.
- Even the authorized officer can make an application to the First Appellate Authority. In such as case, the application will be treated as an appeal made against the order.
How to file GST appeals to First Appellate Authority?
- All GST appeals to First Appellate Authority are to be made in Form GST APL-01
- Irrespective of the appellant, the GST First Appellant Authority will issue a final acknowledgement, along with an appeal number in Form GST APL-02
Special Allowances in GST appeals to First Appellate Authority
- Allowing Adjournment – The GST First Appellate Authority may adjourn the hearing of the appeal if there is sufficient cause, provided the reasons are recorded in writing. Adjournment will be allowed for a maximum of 3 times.
- Allowing Additional Grounds – The First Appellate Authority can allow an appellant to go into any ground of appeal, which was not earlier specified. This will be allowed only if the First Appellate Authority feels that the omission was not wilful.
Decisions of the First Appellate Authority under GST– Points to Note
Purview of the Decision
The GST First Appellate Authority can confirm, modify or annul the original order or decision made by the adjudicating authority, but will not refer the case back to the adjudicating authority.
Communicating the Decision
The GST First Appellate Authority shall communicate the order passed to both the appellant and the adjudicating authority. A copy of the order will also be sent to the jurisdictional commissioners of CGST and SGST.
Time Limit of the Decision
The GST First Appellate Authority must pass the decision within 1 year from the date of filing the appeal. However, if the order is stayed by an order of a Court or Tribunal, the period of such stay shall be excluded from the 1 year period.
Potential Detrimental Impacts of the Decision
The GST First Appellant Authority is empowered to pass an order enhancing the fees or penalty or fine, or confiscating higher value goods, or decreasing the refund or input tax credit. However, this can be done only if the appellant has been issued a Show Cause Notice (SCN) i.e. a reasonable opportunity has been given to the appellant to show cause against the proposed detrimental order, within the specified time limits.
Revisional Authority under GST
Under GST, there is a provision kept open for revision of the orders passed by the authorities at each stage. For this purpose a special body called as the Revisional Authority is empowered. As per the rules, the Revisional Authority can, either on his own, or on the request of the Commissioner of SGST / CGST, examine the records of any proceedings.
When can revision in GST take place?
The examination for the purpose of revision can take place, if he considers that any decision taken by the subordinate officer is:
- Prejudicial to the interest of revenue
- Being taken without taking into account certain material facts (whether available or not at the time of issuance of the order)
- Not in line with an observation made by the Comptroller and Auditor General (C & AG) of India
Basis the examination, the Revisional Authority can stay the order for a time period as he deems fit. However, the person concerned will always be given an opportunity of being heard. Also, he may choose to conduct further examination as he deems fit, and can on the basis of such an examination, enhance, modify or annul the concerned decision or order.
When is revision under GST not allowed?
The Revisional Authority will not revise the order, under the following circumstances:
- If the order was already under appeal
- If 6 months have not passed from the date of the order i.e. there is still time left for an appeal
- If more than 3 years have passed after the date of the order
- If the order has already been taken for revision
In case the aggrieved tax payer is not happy with the decision of the First Appellate Authority under GST, he can progress to the next level of appeal which is the National Appellate Tribunal, which we will discuss in our next blog.
Note: This blogpost is intended for tax consultants. Business owners will also find this interesting to read.
As a tax consultant, you deal with different types of clients. For some, you provide end-to-end accounting services, while for others you must be providing services up to the extent of filing GST returns. More recently, you must have come across requests to generate and manage e-Way Bills as well from those clients to whom you provide end-to-end services.
As part of GST compliance, Tally.ERP 9 can be used to manage e-Way Bills efficiently. In this blogpost, we would like to highlight how Tally.ERP 9 can be best used to your advantage for managing e-Way Bills for all your clients easily.
Avoid repetitive work while generating e-Way Bills
Clients for whom you provide end-to-end services request you to generate e-Way Bills on a continuous basis. How will you execute these requests?
One way to do this is to visit the e-Way Bill portal, provide invoice level details and transportation level details, and generate e-Way Bills.
However, in this method, you will end up spending twice the effort. Firstly, you have to provide all the details on the portal. Secondly, you have to enter these details again in your accounting software for the purpose of bookkeeping and compliance.
Another way to generate e-Way Bills is to directly record the sales entry in Tally.ERP 9. While recording the entry, you can also provide additional details that are required to generate e-Way Bills. The transaction entry can be exported as a JSON file and uploaded on the e-Way Bill portal. The portal will generate your client’s e-Way Bill. Not only for sales, you can generate e-Way Bills even for purchases and sales returns using Tally.ERP 9.
By using Tally.ERP 9, you are avoiding the repetitive activity of entering same information twice.
You get to save time and ensure that the records reflect the same values as in the transaction information used for generating e-Way Bills. This reduces the chances of manual errors as well.
Identify transactions for generating consolidated e-Way Bills
If your client wants to dispatch multiple consignments in a single vehicle to the same State, then you can generate a single consolidated e-Way Bill. If the State, place of supply, vehicle number and mode of transport are the same, then you can generate e-Way Bills for each of the invoices individually, then combine these e-Way Bills to finally generate a single consolidated e-Way Bill with Tally.ERP 9.
Tally.ERP 9 makes it even easier for you. It groups invoices based on the criteria mentioned above so that you don’t have to manually select the invoices. A consolidated bill eases the life of the transporter.
Generate e-Way Bills faster for multiple invoices
Suppose you get request to generate 10 e-Way Bills from a client. It sure is a big hassle to export data of each and every invoice in JSON format and upload them individually to the portal for generating e-Way Bills.
Tally.ERP 9 makes this easier. You can export the data of all the invoices together in a single JSON file and upload the file to the e-Way Bill portal for generating e-Way Bills. This saves your time significantly and once again helps avoid manual errors.
In our previous blogs, we have taken you through the various provisions which cover the various provisions pertaining to demand, recovery and liability, when it comes to paying the unpaid tax, interest or penalty. However, any taxable person who is incorrectly facing any kind of a penalty, has an opportunity to appeal to a higher court in order to reversal the order given by a lower court, as per the GST law. If the appeal is successful, the relevant revisions are done.
In this series of blogs, we will study in detail about the various provisions related to GST appeals and revisions.
Appeals under GST – when are they invoked?
The GST law pertaining to GST appeals and revisions, primarily imposes two types of obligations – tax-related and procedure related. The taxpayers’ compliance with these obligations is verified by the proper tax officer, via audits, examinations etc. In certain cases, there are situations of actual or perceived non-compliance, which obviously leads to difference in opinion. If the difference persists, it results in a dispute, which then needs to be resolved.
To begin with, the dispute is initially resolved by a departmental officer resulting in the issue of an initial order. The order or decision is first passed by the Adjudicating Authority under GST, an entity which is considered competent to pass any order or decision under the GST Act, but does not include the Board, First Appellate Authority and the Appellate Tribunal.
However, if a taxable person is not satisfied by the decision or order passed by the Adjudicating Authority, then he can appeal to a higher court. The appeal, as discussed above will be an application to a higher court to reverse the decision of a lower court.
The following are the 4 levels of the appeal procedure in GST, as per the provisions for appeal and revision in GST:
|Appeal Level||Orders Passed By||Can Appeal To|
|1st||Adjudicating Authority||First Appellate Authority|
|2nd||First Appellate Authority||Appellate Tribunal|
|3rd||Appellate Tribunal||High Court|
|4th||High Court||Supreme Court|
Now, since India follows a dual GST structure, a natural question which arises is – should an appeal need to be made to both CGST as well as SGST / UTGST authorities. As per the provisions of GST appeals and revisions, both CGST as well as SGST / UTGST officers are empowered to pass orders, and an order passed under CGST will also be deemed to be applied to SGST / UTGST. However if an officer under CGST has passed any order, any GST appeal and revisions against that order, will lie only with the officers of CGST. The same will apply in the case or orders passed under SGST / UTGST.
Fees for filing GST appeals process
All appeals must be made by filling the prescribed GST appeal formats and by paying the required fees. The fee will be the full amount of tax, interest, fine, fee and penalty arising from the challenged order and a sum equal to 10% of the remaining amount of tax in dispute arising from the order, for which an appeal has been filed.
In cases, where an officer or the Commissioner is appealing, fees will not be applicable.
GST appeals and revisions – authorized representative
In case a person is not able to appear personally before the requisite GST appeal authority, he may assign an authorized authority to appear on his behalf. An authorized representative may be any one of the following:
- A relative
- A regular employee
- A lawyer practising in any court in India
- Any Chartered Accountant / Cost Accountant / Company Secretary, with a valid certificate of practice
- A Retired Officer of the Tax Department of any State Government or of the Excise Department whose rank was at least that of a Group B gazetted officer*
- Any tax return preparer
*Note: Retired officers cannot appear in place of the concerned person within 1 year from the date of their retirement, as per the provisions of GST appeals and revisions.
Scenarios when GST appeal cannot be filed
As per the provisions for appeals and revisions under GST, appeals cannot be made for the following decisions taken by a GST officer –
- An order to transfer the proceedings from one officer to another officer
- An order to seize or retain books of accounts and / or other documents
- An order sanctioning prosecution under the GST Act
- An order allowing payment of taxes and other amounts in instalments
Also, it may be noted that the Board or the State Government may, on the recommendation of the Council, fix minimum monetary limits for which a GST officer can approve and regulate the filing of appeals. This will avoid unnecessary litigation expenses, where the expense does not justify the amount of tax which is under dispute. In such cases also, an appeal will not be feasible.
In our previous blog, we had studied about various provisions which defined the liability to pay unpaid GST for certain business specific scenarios, such as transfers, mergers and liquidations. In this blog, we will go through some more company specific scenarios – such as when to pay GST and the associated liability in case of death, dissolution, partition, termination and reconstitution.
Liability in case of death
In case a taxable person who is liable to pay unpaid tax, interest or penalty dies, then the following provisions are to be followed to understand when to pay GST and by whom:
- If business if continued – If the business is carried on after the death of a person, by his legal heir or legal representative or any other person, then the legal heir or legal representative will be held liable for the unpaid dues
- If business is discontinued – If the business carried on by the person is discontinued, whether before or after his death, his legal heir or legal representative will be liable to pay the unpaid amount. However, the payment will be made out of the estate of the deceased, only to the extent up to which the estate is capable of meeting the unpaid tax, interest or penalty. At any point in time, the legal heir or legal representative will not be personally liable and needs to be aware about when to pay GST i.e. the pending dues.
Note: The liability in case of death will hold true if the unpaid tax, interest or penalty was determined before the death of the taxable person but is unpaid or undetermined after death.
Liability in case of partition of HUF / AOP
In case a taxable person who is liable to pay unpaid tax, interest or penalty is part of Hindu Undivided Family (HUF) or an Association of Persons (AOP), and the property of the HUF or AOP is partitioned amongst the various members or group of members, then each member or group of members, shall be jointly and severally, liable to pay the unpaid tax, interest or penalty, up to the time of the partition, and thus needs to be well informed about when to pay GST.
Note: The liability in case of partition of HUF / AOP holds true if the unpaid tax, interest or penalty was determined before the partition but is unpaid or undetermined after partition.
Liability in case of dissolution of firm
In case a taxable person who is liable to pay unpaid tax, interest or penalty is a partnership firm, and the firm is dissolved, then every person who was a partner shall be jointly and severally, liable to pay the unpaid tax, interest or penalty due from the firm, up to the time of dissolution. Such a person needs to understand the liability provisions in order to determine when to pay GST.
Note: The liability in case of dissolution of firm will hold true if the unpaid tax, interest or penalty was determined before the dissolution but is unpaid or undetermined after dissolution.
Liability in case of termination of guardianship or trust
In case a taxable person who is liable to pay unpaid tax, interest or penalty is either a guardian of a ward on whose behalf the business is carried out by him, or, is a trustee who carries on the business under a trust for a beneficiary, and the guardianship or trust is terminated, then the ward or the beneficiary shall be liable to pay the unpaid tax, interest or penalty due from the taxable person, up to the time of termination, post which the due date i.e. when to pay GST can be determined.
Note: The liability in case of termination of guardianship or trust holds true if the unpaid tax, interest or penalty was determined before the termination but is unpaid or undetermined after termination.
Liability in case of discontinuance of business by firm, HUF or AOP
In case a taxable person who is liable to pay unpaid tax, interest or penalty is either a firm or a HUF or an AOP, and the firm, HUF or AOP has decided to discontinue the business for some reason, then the following provisions are to be followed to estimate liability and understand when to pay GST:
- Tax, interest or penalty payable by such a firm, HUF or AOP, up to the date of discontinuance may be determined, as if no discontinuance had taken place
- Every person, who at the time of the discontinuance, was a partner of the firm or HUF or AOP, shall be jointly and severally, liable for the payment of unpaid tax, interest and penalty, as if he were himself a taxable person.
Note: The liability in case of discontinuance of business will hold true if the unpaid tax, interest or penalty was determined or imposed before or after the discontinuance.
Liability in case of reconstitution of firm or AOP
In certain cases, there are changes made to the constitution of a firm or an association of persons (AOP), which is known as a reconstitution. In such cases, all the partners of the firm or members of the association, who were there at the time of the reconstitution, shall be jointly and severally, liable to pay the unpaid tax, interest and penalty, as they exist either before or after the reconstitution. The liability in case of reconstitution of firm or AOP will hold true under all circumstances, and will need to be understood by all stakeholders who need to then become aware of when to pay GST.
Year-end is always a crucial period for most businesses. Most businesses will undergo a time-crunch, primarily because they need to close the books of the current financial year, and prepare themselves to start afresh from the new financial year. However, March 31st, 2018 will be more hectic compared to previous year-ends which a business would have faced, because this is the first year end in the GST era. Needless to say, the role of a tax consultant, or a tax return preparer, will become all the more important – since apart from the usual year end practices, they will also need to guide their clients for a few additional things, as they help them to file the last returns and close the books of accounts. In this blog, we will attempt to list out 10 year end tax planning tips, you can tell your client, if you are a tax consultant.
10 year end tax planning tips for your clients
- Books of Accounts – Books of Accounts should be finalized for two different periods – one pre-GST and one post-GST. Thus one finalization will be from the period 1st April, 2017 to 30th June, 2017, and another finalization will be from the period 1st July, 2017 to 31st March, 2018. Books of Accounts will thus need to be carefully closed.
- Transitional Credit – The department is going to scrutinize all the cases of Transitional credits of old taxes paid in the previous tax regime, while migrating to the GST regime. The taxpayer who has claimed transitional credit, should ensure that the following activities are completed, as part of year end tax planning:
- Maintain copy of 6 months returns – From Jan 2017 to June 2017
- Maintain copy of GST TRAN 1 – while ensuring that the stock as per GST TRAN 1 is matching with the finalized books of accounts i.e. stock as on 30th June, 2017
- Maintain certified copy of invoices with tax paid bills
- Maintain certified copy of Stock Summary
- Check and file GST TRAN 2 before 31st March, 2018, for claiming transitional credit against the sale of stock for which tax paid documents are not available
- Verification of Purchases – Although Form GSTR 2 has been deferred for the time being, a business can still see the Form GSTR 2A in the GST portal. From the same form, one can take a stock of monthly purchases from made from registered dealers, and verify the same with records of purchases in the books. Doing this will allow businesses to take the necessary steps to reconcile the books properly, as part of year end tax planning.
- Reconciliation – This would be the right time to reconcile sales and purchases as well as the GST tax liability along with the Form GSTR 3B returns. If there are any differences, the same should be brought into the Form GSTR 3B of March 2018. One should thus reconcile the cash ledger, credit ledger and liability ledger, with the books of accounts, and ensure that all entries are completed before the year ends. At the same time, debit notes, credit notes, rate differences, discounts etc. also have to be accounted for, and the effect of these have to reflect in the returns being filed.
- Reversal of ITC – As per the Input Tax Credit rules, if the recipient does not make full payment within 180 days of the issuance of the tax invoice, then the ITC taken on that invoice is to be reversed. The ITC will be made available again, only when the payment is made. Thus ageing analysis of the debtors and creditors should be done, and all old invoices which have been issued before 1st October, 2017 should be paid before 31st of March, 2018.
- GST Turnover Check – Before the new-year starts, taxpayers will need to check their annual GST turnover in FY 2017-18. The turnover under GST, will be an integral part of year end tax planning for the business in FY 2018-19, which are as follows:
- How many digits should HSN Code have in Invoice? – Taxpayers whose turnover is above INR 1.5 Crores but below INR 5 Crores shall use 2 digit codes and the taxpayers whose turnover is above INR 5 Crores will need to use 4 digit codes. Also, taxpayers whose turnover is below INR 1.5 Crores are not required to mention HSN codes in their invoice at all.
- Whether to file Monthly or Quarterly GSTR 1 Returns? – Taxpayers whose turnover is above INR 1.5 Crores will have to file monthly GSTR 1 returns, while those taxpayers whose aggregate turnover is less than INR 1.5 Crores will have an option to file quarterly GSTR 1 returns.
- Whether to go for Composition Scheme? –In Special Category States the turnover limit for Composition Scheme is 75 lakhs, whereas in Rest of India the limit is INR 1.5 Crores. Depending on the turnover, a business may decide to go for Composition Scheme in the new financial year, in which case he will need to apply for the same in Form GST CMP 02 before 31st March, 2018. Similarly, all those who wants to cancel the registration under composition scheme will have to apply for the same in Form GST CMP 04 before 7th April.
- Cancellation of Registration – In the unlikely scenario, that a business who had taken voluntary registration under GST, does not want to continue, either because of lower turnover or closure of business, they can apply to cancel their registration
- New Series for Tax Invoice – If anyone wants to change the series for invoicing or billing in the new year, then he can do that from 1st April, 2018.
- Depreciation on Capital Assets – If ITC has been claimed on the purchase of fixed assets, or capital assets, then a business should not include the same in the cost of the asset, while calculating the value of depreciating assets.
- Anti-profiteering – As per the directives of the government and the GST Council, businesses are to compare the Gross Profits for the FY 2016-17, FY 17-18 and for the periods April 2017 to June 2017 and July 2017 to March 2018. If the gross profit ratio for March 2018 is higher, then a business will need to check whether the credit for the profit has been passed on to the customer or not.
- Important Return Filing Dates – There are various important return filing dates in April and May which businesses need to be aware of:
- 10th April – Monthly GSTR 1 to be filled by Regular Dealer for February 2018
- 18th April – GSTR 4 to be filled by Composition Dealer for Jan to March 2018
- 20th April – GSTR 3B to be filled by for March 2018
- 30th April – Quarterly GSTR 1 to be filed by Regular Dealer for Jan to March 2018
- 10th May – Monthly GSTR 1 to be filled by Regular Dealer for March 2018
Last but not the least, the e-way bill is going to be rolled out from the 1st of April, 2018. Besides all the important activities listed above for year end tax planning, tax consultants will also need to guide their clients to successfully use the right technology to generate e-way bills, and navigate the e-way bill portal without hassle, to ensure a smooth movement of goods both within and between States.