Representation on 10 issues relating to GST

The All India Federation of Tax Practitioners has made a representation to the Finance Minister, CBIC Chairman, and GST Council on numerous GST problems. It presented 39 issues that require the government’s immediate attention in order to deliver a response.

Since its formation, the AIFTP’s Indirect Tax (GST) Representation Committee has made numerous suggestions on GST Law, many of which have been approved at various times.

Since the establishment of GST four years ago, the government has made major changes from time to time, but there is still much more that can be done to simplify the complex law and make compliance easier.

The following are a few critical concerns that the government should address immediately by releasing clarifications/circulars/notifications/amendments to the law in order to make doing business easier, improve compliance, and reduce litigation.

1. ITC claim restriction u/s 16(4):

The restriction on claiming ITC for a specific year until the due date of filing the September Return for the next Financial Year should be removed and such restriction should be linked to the date of filing the annual return for the concerned financial year, as certain unclaimed/short claimed ITC is only discovered while preparing/filing the annual return.

2. Denial of ITC to the recipient under Section 16(2)(c):

Section 16(2)(c) states that no registered person is entitled to an input tax credit in respect of a supply of goods or services, or both unless the tax charged on the supply has been paid to the government, either in cash or through the use of ITC. — three
Similar protections existed in state VAT laws as well, with courts ruling that ITC could not be denied to the buyer provided there was no collusion between the buyer and the seller.

It is the government’s responsibility to collect the tax from the supplier using its apparatus. The solution is for the buyer to remit a portion of the tax as TDS to the government, and for the authorities to be attentive in collecting tax from registered persons. Genuine buyers should not be penalized on this basis. Demanding tax from the buyer would be considered double taxation.

3. Adjustment of SGST, CGST, and IGST paid under incorrect heads:

The GST law states that if SGST or CGST was paid as IGST or vice versa unintentionally or otherwise, the registered person should demand a refund and make the payment under the right head again. Practically, it is not always practicable due to a variety of technical issues. There should be a process in place that allows registered persons to make changes to their returns on their own. Many lawsuits and harassment of registered persons will be avoided because of the flexibility, which will result in no revenue loss.

If such an error occurred, the commissioner had the authority, under VAT legislation, to make the necessary adjustments at the back end based on the taxpayer’s request.

As a result, we propose that a similar capability be made available to the proper official to transfer the tax from one head to the other, rather than requiring the taxpayer to pay again and claim a refund for tax paid under the incorrect head. This will help to relieve the strain of unneeded compliance and make doing business easier.

4. Implementation of ITC:

In many circumstances of ITC use, the taxpayer was required to pay CGST even if he had SGST credit available. Because GST is a one-nation-one-tax system, SGST might be set off against COST to make doing business easier and reduce the taxpayer’s working capital requirements, with no revenue loss.

5. Allowance of ITC not appearing in GSTR-2A due to an unintended error by the supplier in declaring the supplies as 1120 instead of B2B, and reporting of ITC from prior tax years in future returns:

The recipient does not obtain credit in the following cases, even though he meets all of the requirements for ITC u/s 16, and he suffers a total loss, despite the fact that the government has collected the tax due. As a result, it is suggested that a solution be found so that the recipient can attach necessary purchase documents as evidence when filing his GSTR-3B for which the credit has been claimed, and a separate row may be added to claim such credit on the basis that the proper officer can examine such documents attached before issuing any deficiency notice/inquiry to the taxpayer to verify the credit claim.

CBDT grants further relaxation in electronic filing of Income Tax Forms 15CA/15CB

Furthermore, if a taxpayer claims ITC for previous tax years in later returns as allowed by GST rules, there is no distinct row to demonstrate the same in GSTR-3B for the succeeding period and it must be recorded in 4A. (5). We believe that adding a new row on GSTR-3B to record earlier ITCs will be beneficial to both the taxpayer and the IRS during reconciliation.

For B2B transactions, certain taxpayers are currently required to issue e-invoices. The E-Invoice Portal does not allow for the correction of any errors that may have occurred during the process of producing such an invoice. A mistake in the buyer’s GSTIN on the invoice results in the buyer being denied an ITC.