On 27, December 2022, the GST Policy Wing of CBITC (Central Board of Indirect Taxes and Customs) issued six circulars clarifying various issues like ITC Entitlement, Manner of filing applications for GST refunds by unregistered persons, Taxability of No Claim Bonus & applicability of GST e-invoicing etc.

• •  Circular No. 183/15/2022-GST Dated 27th December, 2022

Clarification to deal with the difference in Input Tax Credit (ITC) availed of in Form GSTR-3B as compared to that detailed in Form GSTR-2A for FY 2017–18 and FY 2018–19 (reg.)

Section 16 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the “CGST Act”) provides for eligibility and conditions for availing Input Tax Credit (ITC). During the first two years of GST implementation, tax officers discovered discrepancies between the amount of ITC claimed by registered persons in their Form GSTR-3B returns and the amount claimed in their Form GSTR-2A returns.

Accordingly, the Board, in the exercise of its powers conferred under Section 168(1) of the CGST Act, hereby clarifies the following:

Prior to that, the officer must verify that all invoices comply with Section 16 of the CGST Act, 2017. The officer shall also check for reversals required to be made under Section 17 and Section 18 of the CGST Act, 2017.

must ensure

The preceding circular was explained using four scenarios:

   1. Where the supplier has failed to file FORM GSTR-1 for a tax period but has filed the return in FORM GSTR-3B, due to which there is a difference in FORM GSTR-2A.

   2. When the supplier has filed both GSTR-1 and GSTR-3B, but has failed to show a particular invoice in GSTR-1, due to which there is a difference in FORM GSTR-2A.

   3. When the supplier has issued a B2C invoice instead of B2B, which was not reflected in GSTR-1, due to which there is a difference in FORM GSTR-2A.

   4. When the supplier has filed both GSTR-1 and GSTR-3B,but has entered the wrong GSTIN in GSTR-1.

In cases 1-4, the officer must ensure the conditions of Section 16(2)(C) are fulfilled:

   1. In case the difference between the ITC claimed in FORM GSTR-3B and that available in FORM GSTR 2A is less than INR 5 Lakhs - the officer shall ask the receipt to provide a certificate for the concerned supplier from the Chartered Accountant (CA) or the Cost Accountant (CMA) containing their UDIN.

   2. In case the difference between the two is more than INR 5 lakhs, the officer shall ask the recipient for a certificate from the supplier stating that supplies have been made and tax has been paid in GSTR 3B.

   3. In addition, In case 4, officer shall also reach out to the concerned jurisdiction authority whose GSTIN is mentioned in the invoice, to ensure ITC has not been availed by such person, which will be an independent action, not related to the above course laid.

It must be noted that the clarifications given hereunder are case specific and are applicable to the bona fide errors committed in reporting during FY 2017–18 and FY 2018–19.

• •  Circular No. 184/16/2022-GST Dated 27th December, 2022

Clarification to the entitlement of input tax credit where the place of supply is determined in terms of the proviso to sub-section (8) of section 12 of the Integrated Goods and Services Tax Act, 2017(reg.)

Section 12 of the IGST Act, 2017, sub-section (8), which provides for the place of supply of services by way of transportation of goods, including by mail or courier, where both the supplier and the recipient of services are in India.

Accordingly, the Board, in the exercise of its powers conferred under Section 168(1) of the CGST Act, hereby clarifies the following with an example:

If the service provider (X) located in West Bengal is exporting their services to a buyer (Y) in a foreign country (Singapore) through a transporter (Z), The transporter (Z) is a vendor from West Bengal.

Then, the GST will be levied under the IGST Act 2017, whereas the point of supply will be selected as a foreign country. As such, the services delivered by the transporter (Z) were in Singapore. This GST paid by the service provider (X) is claimable under ITC, subject to fulfillment of the conditions of Section 16 and 17 of the CGST Act, 2017.

• •  Circular No. 185/17/2022-GST Dated 27th December, 2022

Clarification with regard to applicability of provisions of section 75(2) of Central Goods and Services Tax Act, 2017 and its effect on limitation (reg.)

The notice was issued by the office under Section 74(1) of the CGST Act of 2017. The higher authorities conclude that the reason for fraud, willful misstatement, and suppression was not established and ask officers to re-determine the amount of tax payable, deeming the demand to be issued under Section 73 of the CGST Act, 2017. The time limit for issuance of the revised notice will be 2 years from the date of communication of the order of higher authorities, as the case may be.

So how much shall be recomputed for the revised notice under Section 73 of the CGST Act, 2017?

The demand would be determined again, keeping in mind the provisions of Section 73 (2) read with sub-provision (10) of Section 73. The time limit for issuance of such a revised demand notice under Section 73 will be two years and nine months from the due date of furnishing the annual return for the relevant F.Y.

If the notice under Section 74 (1) was raised after such a period, then the demand under Section 73 cannot be redetermined because of the limitation of time, and the proceedings must be withdrawn.

Furthermore, if a notice under Section 74(1) is issued for multiple F.Y., but the time limit has lapsed for one F.Y, but not for another as per Section 73, demand can only be re-determined for the F.Y. during which the time limit has not lapsed.

• •  Circular No. 186/18/2022-GST Dated 27th December, 2022

Clarification on various issue pertaining to GST(reg)

   1. Taxability of No Claim Bonus offered by Insurance companies:

        a. When an insurance company deducts the No Claim Bonus from the insurance premium that the insured person must pay, is that considered payment for agreeing to tolerate the act of not filing an insurance claim in prior years?

The policy is purchased by the policyholder to protect himself against loss or injury, and he is under no contractual obligation not to make an insurance claim during any period covered by the policy, i.e., no claim bonus. Therefore, no supply provided by the insurance company and no claim bonus can be considered as consideration for tolerating an act.

        b. Can No claim Bonus be considered as 'discount' for the purpose of Valuation of supply provided by Insurance company to insurer?

Permissible discount under Section 15(3) of CGST Act, 2017 since such disclosures are made in policy documents and on the face of the invoice. Therefore, GST shall be levied on the actual insurance premium amount payable by policyholders, as reduced by the No Claim Bonus mentioned on the invoice.

   2. Clarification on applicability of e-invoicing w.r.t an entity.

        a. Is the exemption from generating E-invoices to banks, financial companies, transporters, etc. available to all entities, or only to certain supplies only?

The exemption applies to the entire entity and is not restricted to the nature of the supply.

• •  Circular No. 18/719/2022-GST Dated 27th December, 2022

Clarification regarding the treatment of statutory dues under GST law in respect of the taxpayers for whom the proceedings have been finalised under Insolvency and Bankruptcy Code, 2016(reg.)

Clarification was provided earlier that no coercive action can be taken against the corporate debtors w.r.t. dues of prior periods prior to the commencement of the "Corporate Insolvency Resolution Process." Such debts shall be considered operational debt, and claims shall be filed before the NCLT in accordance with the provisions of the Insolvency and Bankruptcy Code), 2016.

As per Section 84 of the CGST Act, 2017, if government dues are reduced due to any other proceedings, then intimation of such a reduction of government dues is to be given to the Commissioner. It is clarified that proceedings by the IBC, NCLT, etc. shall be covered under the term "other proceedings" given in Section 84.

Clarification has been sought for the modalities for implementation of the order of adjudication authority under the IBC with respect to demands under the CGST Act, 2017.

After finalization of IBC proceedings, wherein statutory dues have been reduced, the Commissioner shall issue an intimation in Form GST DRC-25 reducing such demand to the taxable person as well as the appropriate authority with whom proceedings are pending.

• •  Circular No. 188/20/2022-GST Dated 27th December, 2022

Prescribing manner of filing an application for refund by unregistered persons (reg.)

The manner of filing the refund by an unregistered person, i.e., "contract cancelled due to non-completion or delay in construction by the builder, long-term insurance policies terminated prematurely," etc., and the time limit for the issuance of a credit note under Section 34 of the CGST Act may have lapsed.

"New functionality shall be made available on the portal for temporary registration for the purpose of applying for a refund."

An application shall be made in Form RFD-01 under the category "Refund for an Unregistered Person." The following documents must be uploaded:

a. Statement 8 under Rule 89(2) of CGST Rules, 2017

b. Certificate issued by supplier in terms of Rule 89(2)(kb)

c. Any other documents to support his claim

Separate applications shall be required for invoices issued by different suppliers, and temporary registration is required to be obtained in each state where the supplier is registered.

Time limit for application of refund:

Before completion of service, i.e., after payment of an advance or installment but before receipt of service, two years from the date of the supplier's issuance of the letter of cancellation, contract, or agreement. After completion of service or receipt of goods—2 years from the date of provision of service or receipt of goods. It must be noted that a refund shall only be granted for a proportionate amount of tax to the extent that the amount paid back by the supplier is less than the amount paid by the unregistered person. Also, Time limit to issue Credit note under Section 34 of CGST Act by the supplier, should have lapsed for filing of refund claimed by the unregistered person"