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Surge of recovery notices for erroneous refunds under rule 96(10)- What should you know as an exporter

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  In the recent days, we might have experienced surge of recovery notices citing rule 96(10) for erroneous refunds deposited under sec 54 read with rule 89 for zero rated supplies with the payment of IGST.  The context and relevant provisions and rules: Rule 86(4B)- Re-credit in electronic credit ledger if erroneous refund deposited - Where a registered person deposits the amount of erroneous refund sanctioned to him -  (a) under section 54(3) of the CGST Act, or  (b) under rule 96(3), in contravention of rule 96(10) of CGST Rules  along with interest and penalty, wherever applicable, through Form GST DRC-03, by debiting the electronic cash ledger, on his own or on being pointed out, an amount equivalent to the amount of erroneous refund deposited by the registered person shall be re-credited to the electronic credit ledger by the proper officer by an order made in form GST PMT-03A - rule 86(4B) of CGST Rules inserted w.e.f. 5-7-2022. Sec 54(3) : Subject to the provisions of sub-secti
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Mismatches between GSTR 2A vs 3B- Things to be considered before you respond to GST Notices

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  Among the discrepancies for which notices are issued by department, mismatches between GSTR 2A vs 3B tops it all. Objective of this blog is to highlight aspects that are relevant while responding to the GST Notices especially for FY 2017-18 & 2018-19. Deadline to issue the order under sec 73(10) for FY 2018-19 is 30th April 2024, thus department is rushing orders in their favor, if you fail to highlight appropriate aspects in your reply to notices issued under sec 73/74. Introduction and relevance of GSTR 2A:   The FORM GSTR 2A was not established with a defined purpose for financial years 2017-18 and 2018-19.  Provision in respect of limit of ITC on basis of GSTR-2A was introduced only on 9-10-2019, but system was not fully established for some time.   Hence, for the financial years 2017-18 and 2018-19, insistence of matching of GSTR-2A and Input Tax Credit availed by recipient was not legitimized.  Provisions applicable from 9-10-2019 till 1-1-2022:   The ITC availed by recipie
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Streamlining Investigations under GST without conflict of interest

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The Ministry of Finance, Government of India, on 30th March 2024 has issued comprehensive guidelines vide Instruction No. 01/2023-24-GST (Inv. ) for CGST field formations.  The 6 important key takeaways from the circular are:- 1.Responsibilities of (Pr.) Commissioner: Under the purview of their allocated jurisdiction, Principal Commissioners are entrusted with the task of overseeing the development, approval, and execution of intelligence, searches, and investigations. Additionally, they are responsible for coordinating with divisional formations and ensuring timely action on investigative matters. 2. Approval Process for Investigation Initiation: Investigations must receive explicit approval from the (Pr.) Commissioner before initiation, except in specific scenarios outlined by the CBIC. Situations necessitating prior written approval from the zonal Chief Commissioner include a. matters involving novel interpretations, b. large industrial houses,  c. sensitive issues, or  d. those und
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Taxpayers encouraged to quote these references against delay in processing of refunds under GST

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Over the past year, there has been an upscale in exports & the business entities are in active participation to boost the exports. The momentum of such entities is trickled by a delay in the refund under GST law. A specific reference is drawn towards the taxpayers under the state government ( TNGST) either not received their refund on time or it is paid after endless delay. Even automatic refunds under export of goods are withheld in few cases.   Refund from the goods or services exported act as a working capital for the businesses & it is the encouragement to provide to the global markets at competitive prices. Working capital is the backbone of the business & when the same is repressed for unknown factors the livelihood of the businessmen is affected which directly violates the right to life. The principle of zero rating is also defeated by loitering approval of refunds. The officer not acknowledging refund application on Form RFD 02 is evident that they sloth over the pr
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Analysis of GST order served to Biocon Ltd

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Biocon Ltd. has been imposed a penalty of around ₹ 3 crores for non-compliance with GST laws. The company has received an order of adjudication imposing a penalty of Rs 3,03,78,465 dated February 22, 2024, from the office of Deputy Commissioner of Commercial Taxes, Divisional GST Office, Bangalore, Biocon Ltd said in a regulatory filing. The demand is related to input tax credit reporting error in GST monthly returns, denial of input tax credit on sales and promotional expenditures, valuation of Corporate Guarantee & denial of exemption on export of services.  Play of provisions of GST law:  Denial of ITC on Sales:  It is to be noted that the ITC on sales can be denied only upon non-compliance with the conditions prescribed in Section 16(2) of the CGST Act, 2017 & if the sale is in the form of Gift, free samples or personal consumption.  Biocon being a bio-pharmaceutical company, supply of sample medicines to the doctors/ physicians is a common practice in industry. The interpr
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Last day to freeze your balance in Reversal and Reclaim Ledger- Things not to miss

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 As per GSTN advisory dated 29th Dec 2023, today is the last day to to amend declared opening balance for ITC reversal.  As per circular No.170/02/2022 para 4, credits that needs permanent reversals such as under Section 17 (5), rule 42 & 43 etc shall also be included in Table 4A. They have to be separately reversed under Table 4B (1). Earlier, blocked credit under Section 17 (5) would not form part of Table 4A and would be shown only in Table 4D (1). Now, even such blocked credits under Section 17 (5) shall be included in Table 4A and reversed through Table 4B (1). In other words, the practice of excluding blocked credit and claiming only eligible ITC in Table 4A can no longer be followed. Similarly, the Banking companies and Financial Institutions, who opt to avail 50 % ITC under Rule 38, shall show the entire ITC in Table 4A and show the 50 % reversal in Table 4B (1). In Table 4 B (2), all other temporary reversals, other than what is covered in 4B (1) have to be shown. Table 4D
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Relevance of Section 16(4) thinning after the introduction of Reversal & reclaim ledger and Rule 37A?

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The changes in Table 4 of the Form GSTR 3B as per notification vide 14/2022 dated 05th July 2022 has taken a new turn when the reversal reclaim ledger was introduced inserting Rule 88D of the CGST Rules, 2017. Kindly click here for the details on the ITC reversal ledger.  The question now arises is that, when there is an ITC reversal ledger, does Section 16(4) of the CGST Act, 2017 hold its validity? In order to fetch the validity let’s dive into the provisions of Section 16(4) of the CGST Act, 2017. Section 16(4) of the Act, 2017 reads as:  “A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the thirtieth day of November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier”. If the same is read with Rule 37A of the CGST Rules 2017:  “Where input tax credit has been availed by a registered per
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