Cgst Sixth Amendment Rules 2019

On October 9, 2019, the Government of India (GoI) has notified Sixth Amendment Rules, 2019, which have made some important changes to the existing

Central Goods and Services Rules, primarily in the following areas:

Restriction on the input tax credit to 20% in case there is a difference with details uploaded by supplier in GSTR-1
It has also notified that GSTR-3B is a return under Section 39 with retrospective effect from 01-07-2017
Communication to be issued to chargeable persons before the actual issuance of show cause notice
Other clarifications

Below are details of the latest notified amendments:

Restriction on availing input tax credit in case of difference

According to the latest notification, a new rule has been inserted related to availing input tax credit which states that in respect of invoices or debit notes where the details have not been uploaded by the supplier in GSTR-1 and there is a difference. In such cases, the

input tax credit availed shall not exceed 20% in respect of invoices or debit notes where the details have been uploaded. This means that even if the actual eligible input tax credit based on invoices received is higher, because of non-reporting or incorrect reporting by the vendors, the actual credit that can be availed is restricted to 20% of the invoices that have been uploaded by the vendor.

Suspension of Registration

To clarify the period of suspension of registration, an explanation has been inserted in Rule 21A(3). The explanation states that the registered person shall not issue a

tax invoice and, accordingly, not charge tax on supplies made by him during the suspension period. If an order for cancellation of suspension is passed and registration is restored, then the invoice for the supplies made during the period of suspension can be revised so as to make it a valid tax invoice. The details of the supplies should be filed in the first return after such revocation of suspension.

Recognising status of GSTR-3B

According to the latest notification, the government has made an amendment from 01-07-2017, recognising that Form GSTR-3B is a ‘return’ under Section 39. The notification states that wherever the time limit for filing GSTR-1 or

GSTR-2 has been extended, the return shall be furnished in the Form GSTR-3B. Also, this is to be filed through GST portal, either directly or through a Facilitation Centre notified by the Commissioner: In such cases, there will not be any requirement to file return in Form GSTR-3.

GST Practitioner

The time limit given under Rule 83A (6) for any person enrolled as a goods and services tax practitioner to pass the examination has been aligned with Rule 83(3). Thus, the time limit for this year is thirty months from the appointed date. Thus, for eligible persons like sales tax practitioners or tax return preparers or retired tax officer in a government department, the time limit for passing the examination is December 31st, 2019.

Refund

All refunds by the central Government shall be based on the concept of consolidated payment advice issued from a single authority, in accordance and with effect from the 24

th September, 2019. Consequently, rule no 91 has been amended to insert the concept of consolidated payment advice.

TRAN-I & TRAN-II extensions

Rule 117(1A) has been amended to allow:

Availment of transitional credits through Form TRAN-I till 31st December, 2019 in cases where registered persons could not submit the said declaration by the due date due to technical difficulties on the GST portal, and
Ifthe Council has made a recommendation for extension TRAN-II can be filed till 31st January, 2020.

Additional Step prior to Issuance of Show Cause Notice

New sub-rule 1(A) has been inserted in Rule 142, which provides that before the notice is served to a person chargeable with tax, interest and penalty; the proper officer shall issue a communication detailing the tax, interest and penalty ascertained by the officer, in Part A of Form GST DRC-01A. Upon receipt of such communication, the chargeable person can choose to pay the proposed dues or pay a partial amount, as may be determined by his own ascertainment or, as communicated by the proper officer under sub-rule (1A). If partial payment of the amount communicated to the person or in case he/she desires to file any submissions against the proposed liability, he may make such submission in Part B of Form GST DRC-01A. Thus, a show-cause notice will be issued after the above step is completed, to allow for the hearing of submissions before going ahead with the notice. The exact notification is posted below:

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Frequently Asked Questions

Common questions about CGST Sixth Amendment Rules 2019.

The restriction of allowing only 20% input tax credit in case of differences with the supplier's GSTR-1 is aimed at curbing the practice of claiming excess or inadmissible credit. This measure ensures that the input tax credit availed aligns with the details uploaded by the supplier, thereby enhancing compliance and preventing revenue leakage.

By recognizing GSTR-3B as a 'return' under Section 39 with retrospective effect from July 1, 2017, the government has provided legal backing to the existing practice of filing GSTR-3B as the primary return. This amendment clarifies the status of GSTR-3B and resolves any ambiguity regarding its validity as a return.

The new rule of issuing a communication (Form GST DRC-01A) before serving a show-cause notice aims to provide an opportunity for the chargeable person to pay the proposed dues or make submissions against the proposed liability. This step promotes transparency, fairness, and ensures that the person's submissions are considered before initiating further proceedings.

The amendment has extended the due date for filing TRAN-I (for availing transitional credits) till December 31, 2019, in cases where registered persons could not submit the declaration due to technical difficulties on the GST portal. Additionally, TRAN-II (for availing credits under certain circumstances) can be filed till January 31, 2020, subject to the recommendation of the GST Council.

The amendment clarifies that during the period of suspension of registration, the registered person cannot issue a tax invoice or charge tax on supplies made. However, if the suspension is revoked, the invoices issued during the suspension period can be revised to make them valid tax invoices, and the details of such supplies can be filed in the first return after revocation.

The amendment has introduced the concept of a consolidated payment advice issued from a single authority for refunds by the central government. Consequently, Rule 91 has been amended to incorporate this change, which is effective from September 24, 2019.

The amendment has aligned the time limit given under Rule 83A(6) for enrolled GST practitioners to pass the examination with the time limit mentioned in Rule 83(3). This extension ensures that eligible persons like sales tax practitioners, tax return preparers, or retired government tax officers have sufficient time (till December 31, 2019) to clear the examination.

The amendment to Rule 91, introducing the concept of a consolidated payment advice issued from a single authority for refunds by the central government, aims to streamline and standardize the refund process. This change is expected to enhance the efficiency and transparency of refund processing.

The explanation inserted in Rule 21A(3) clarifies that during the period of suspension of registration, the registered person cannot issue a tax invoice or charge tax on supplies made. However, if the suspension is revoked, the invoices issued during the suspension period can be revised to make them valid tax invoices, and the details of such supplies can be filed in the first return after revocation.

The restriction on availing input tax credit to 20% in case of differences with the supplier's GSTR-1 may have a significant impact on businesses' cash flows and working capital requirements. Businesses may need to closely monitor their vendors' compliance and reconcile any discrepancies to ensure they can claim the full eligible input tax credit.