53rd GST council meeting brings key amendments for taxpayers

New Delhi: The 53rd GST Council (GSTC) meeting took place in New Delhi on June 22, 2024, marking the first gathering of the council in nearly eight months since October 2023. Several significant amendments were introduced, aiming to provide relief to taxpayers and streamline GST processes.

Waiver of Interest and Penalty for Non-Fraud Cases

The Council has recommended the insertion of Section 128A in the Central Goods and Services Tax Act, 2017 (CGST Act, 2017). This new section provides a waiver of interest and penalties for non-fraud cases for fiscal years 2017-18, 2018-19, and 2019-20. Taxpayers who pay the full amount of tax demanded in the notice by March 31, 2025, will benefit from this waiver. This applies only to cases under Section 73 of the Act, which do not involve fraud or suppression. However, the waiver does not cover demands for erroneous refunds.

Comments: This relief has been eagerly awaited by the industry. It is suggested that the government should also provide a refund mechanism for those who have already paid interest or penalties.

Extended Time Limit for Availment of Input Tax Credit

The Council has recommended relaxing the time limit for availing Input Tax Credit (ITC) for fiscal years 2017-18 to 2020-21.

The new deadline is November 30, 2021, applied retrospectively from July 1, 2017. This means that ITC availed in any GSTR-3B filed up to November 30, 2021, will not be barred by the previous time limit under Section 16(4).

Comments: This amendment will resolve pending disputes and allow refunds for ITC that was reversed under protest by taxpayers, enabling them to file for refunds once the amendment is notified.

Clarification on Reverse Charge Mechanism Invoices

The Council clarified that for supplies received from unregistered suppliers, where the recipient pays tax under the reverse charge mechanism (RCM) and issues the invoice, the relevant financial year for calculating the time limit for availing ITC under Section 16(4) is the year in which the invoice is issued.

Comments: The time limit for issuing an invoice under Section 16(4) should be based on the date of issuance, not the fiscal year of the supply.

For example, if an invoice for a supply made in FY 2018-19 is issued in June 2024, the ITC can be availed until November 30, 2025.

No Interest on Balance in Electronic Cash Ledger

An amendment in Rule 88B of the CGST Rules, 2017, has been recommended to ensure that any amount available in the Electronic Cash Ledger on the due date of filing the GSTR-3B return, and debited while filing, will not attract interest under Section 50 for delayed filing.

Comments: Interest is already not levied when the balance is available in the Electronic Credit Ledger. This amendment aligns with various High Court judgements, including those from Jharkhand and Gujarat High Courts.

Monetary Limits for Filing Appeals

To reduce litigation, the Council has recommended setting monetary limits for filing appeals by the GST authorities. The limits are as follows:

- GST Appellate Tribunal (GSTAT): Rs. 20 lakhs

- High Court: Rs. 1 crore - Supreme Court: Rs. 2 crores

Reduced Pre-Deposit for Appeals

Amendments to Sections 107 and 112 of the CGST

Act, 2017, have been proposed to reduce the pre-deposit amounts required for filing appeals, thus mitigating the impact on working capital for businesses. These amendments signify the GST Council’s commitment to addressing taxpayer concerns and simplifying GST compliance.

The recommendations now await notification by the government.