Eight Recent GST updates effective from 01st Jan 2022 onwards

Introduction

As proposed in the Finance bill the GST law has brought in a few amendments as we enter this new year 2022. These amendments are to be implemented with effect from 01^st Jan, 2022 onwards. Following are the key areas of this amendments:

1. Mandatory matching of GSTR2A/GSTR2B for availment of ITC (Section 16(2)(aa))
2. The detention, seizure and confiscation of goods has also been subject to amendment (Section 73/74 and Section 129/130)
3. If GSTR3B has not been filed the department now has the power for recovery of tax (Section 75(12))
4. Supply to members now to be a part of Scope of supply (Section 7(1)(aa))
5. Power to call for information (Section 150 and 151)
6. Property and Bank Accounts taken as attachment (section 83, section 115 and section 122 (1A))
7. Aadhar authentication made mandatory (New Rule 10B inserted)
8. Non filing of GSTR3B will restrict filing of GSTR1 (Rule 59(6))

Let us understand the above in brief;

1. Mandatory matching of GSTR2A/GSTR2B for availment of ITC (Section 16(2)(aa))

ITC claims will now only be allowed when the details of such invoice or debit note have been furnished by the supplier in his GSTR-1 and subsequently, it appears in GSTR-2A/2B. Section 16(2) of the Act is being amended to insert Clause (aa) according to which a taxpayer is eligible to claim ITC only if it is communicated to him in GSTR 2A / 2B. The taxpayers are barred and can no longer claim 5% provisional ITC under the CGST Rule 36(4) and ensure every ITC value claimed was reflected in GSTR-2A/2B.

2. The detention, seizure and confiscation of goods has also been subject to amendment (Section 73/74 and Section 129/130)

Demand made under section 73/74 has been separated from demand made under Section 129 & 130 which relates to detention, seizure and confiscation of goods. Initially Section 74 stated that where the proceedings against the main person have been concluded under section 73 / 74, the proceedings against all such persons liable to pay penalty under sections 122, 125, 129 and 130 would have been deemed to be concluded. But post amendment Section 129 & Sec.130 has been removed and only proceedings under 122 & 125 would be deemed to be concluded thus resulting in proceedings of the detention, seizure & confiscation of goods and conveyances in transit (Sec.129&130) separate from the demand and recovery proceedings u/s 73& 74. Further there have been changes in the implications of penalty in case of detention of goods which are as follows;

1. Where the owner of the goods comes forward for payment
   • Upto 31.12.2021 – For Taxable Goods: Tax – 100% of Tax, Penalty – 100% of Tax
   • Upto 31.12.2021 – For Exempted Goods: 2% of value of Goods or Rs. 25,000, Less
   • w.e.f 01.01.2022- For Taxable Goods: Penalty – 200% of Tax
   • w.e.f 01.01.2022- For Exempted Goods: 2% of value of Goods or Rs. 25,000, Less (No changes)
2. Where the owner of the goods does not come forward for payment
   • Upto 31.12.2021 – For Taxable Goods: Penalty – 50% of value of Goods – Tax paid
   • Upto 31.12.2021 – For Exempted Goods: 5% of value of Goods or Rs. 25,000, Less
   • w.e.f 01.01.2022- For Taxable Goods: Penalty – 50% of value of Goods or 200% of Tax, Higher
   • w.e.f 01.01.2022- For Exempted Goods: 5% of value of Goods or Rs. 25,000, Less

3. If GSTR3B has not been filed the department now has the power for recovery of tax (Section 75(12))

Section 75(12) is inserted by which the department shall have power to recover tax where a taxpayer has furnished GSTR 1 but has failed to filed its GSTR 3B. Initially the Government could initiate Demand/ Recovery Proceedings only if liability was furnished in GSTR 3B. This gave rise to difficulty which has now been removed by insertion of Section 75(12) and any liability as furnished in GSTR 1 and not paid through GSTR 3B is liable to be recovered.

4. Supply to members now to be a part of Scope of supply (Section 7(1)(aa))

Additional new clause (aa) in sub-section (1) of Section 7 of the CGST Act which is being inserted, retrospectively with effect from the 1st July, 2017, so as to ensure levy of tax on activities or transactions involving supply of goods or services by any person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration. For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another.

5. Power to call for information (Section 150 and 151)

The Jurisdictional Commissioner is now empowered to call for Information from any Person in connection with this Act by virtue of amendment of section 150 and 151. Initially the Commissioner could ask for Information only through issue of Notification which has now been amended and the Jurisdictional Commissioner can call for Information from any Person in connection with this Act, within such time, in such form, and in such manner, as may be specified therein directly without issuance of any notification. Provided that the information so received be used in further proceedings only after giving the concerned person an opportunity of being heard.

6. Property and Bank Accounts taken as attachment (section 83, section 115 and section 122 (1A))

In case of pendency of any demand under specified sections the provision of section 83 currently allows attachment of property, including bank accounts of taxpayer. By virtue of amendment attachment of property including bank accounts shall now be allowed even on initiation of any proceedings and in accordance to section 122(1A) the beneficiary property and bank accounts can also be taken as attachment.

7. Aadhar authentication made mandatory (New Rule 10B inserted)

Aadhar authentication is mandatory for being eligible for filing refund claim and application for revocation of cancellation of registration under GST is mandatory w.e.f. January 01, 2022.

8. Non filing of GSTR3B will restrict filing of GSTR1 (Rule 59(6))

The Central Board of Indirect Taxes & Customs had issued an update dated January 3, 2022 regarding Implementation of Rule-59(6), as amended, on GST Portal.

1. As per Notification No. 35/2021 – Central Tax dated September 24, 2021, clause (a) of the sub-rule (6) of Rule 59 of CGST Rules, 2017 was amended. By way of this amendment, for the words “for preceding two months”, the words “for the preceding month” were substituted with effect from January 1, 2022. This means that from January 1, 2022 onwards, if a monthly filer has not filed the GSTR-3B for the preceding month, then such taxpayer will not be allowed to file the GSTR-1 for the subsequent month, till the GSTR-3B for the preceding month is filed.
2. This automated functionality will be implemented on the GST Portal shortly, after which the system will check the filing of preceding GSTR-3B before permitting to file GSTR-1 for the subsequent month.

To simplify the above if a taxpayer fails to file the monthly GSTR-3B say for November 2021 when he tries to file GSTR-1 for December 2021 on January 10, 2022, the system will not allow filing of GSTR-1 for December 2021, and will allow filing of GSTR-1 for December 2021 only after the filing of GSTR-3B for November 2021.

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