Category: GST

This article delves into the intricacies of GST summons, providing a comprehensive overview of what they entail and their significance within the legal framework. It outlines the key requirements for a summons to be valid, elucidates the rights of individuals summoned under GST, and details the obligations of taxpayers when summoned. With clear explanations and practical insights, this article aims to enhance understanding of GST summons and their role in the taxation system.

What is a Summon? A summon, as per law, is a legal document issued by a court or government administrative agency, mandating a specific person’s appearance at a designated time and place before relevant authorities for a particular purpose.

Understanding GST Summons under the GST Act 2017: Under Section 70 of the GST Act 2017, the proper officer possesses the authority to summon any individual deemed necessary for providing evidence or producing documents in inquiries, akin to civil court procedures outlined in the Code of Civil Procedure, 1908. It’s crucial to note that summoning individuals under GST follows a structured legal process.

Key Matters Initiated for Inquiry: GST officers can initiate inquiries into various matters, including incorrect input tax credit claims, wrongful GST refunds, non-payment or underpayment of GST liabilities, discrepancies in GST returns, and delays in filing statutory returns.

Requirements for a Valid Summons: For a summon to be legally valid, certain prerequisites must be met, including clear indication of purpose, prior written permission from appropriate authorities, and avoidance of overuse. Additionally, summon recipients must be relevant to the inquiry, ensuring focused and justified summoning.

Rights of the Person Summoned: Individuals summoned under GST possess several rights, including the right to retract statements, the right to remain silent, and the right to cross-examine statements made by others. These rights safeguard individuals during summon proceedings and ensure fair treatment.

Duties of a Taxpayer When Summoned: Taxpayers summoned under GST have specific responsibilities, including honoring the summon, submitting requested documents, providing accurate information, and adhering to legal procedures. Fulfilling these duties is essential for smooth conduct of summon proceedings.

Considerations While Appearing Against the Summon: When appearing against a summon, individuals should be aware of the consequences of their statements, as these may be used as evidence. They should provide truthful information, avoid concealment of material facts, and ensure compliance with legal requirements and procedures.

Recent Judgments and Legal Insights: Recent judicial rulings highlight important aspects of summon procedures under GST, such as limitations on directing payment stoppages and the jurisdiction of proper officers. These insights offer valuable guidance for both taxpayers and authorities involved in summon proceedings.

Conclusion: In conclusion, understanding GST summons is paramount for both taxpayers and authorities. By adhering to legal requirements, respecting rights, and fulfilling duties, summon proceedings can be conducted effectively and fairly. This article underscores the significance of summon procedures in the GST system and emphasizes the importance of adherence to legal principles for all parties involved.

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In the multifaceted realm of taxation, grasping the intricacies of the Time of Supply (TOS) concept emerges as a fundamental pillar upon which the edifice of fiscal responsibility rests. As the linchpin for ascertaining tax liabilities pertaining to both goods and services, TOS assumes a position of paramount importance, wielding considerable influence over the accuracy of revenue assessment. This article endeavors to furnish a meticulous examination of TOS from the perspective of revenue management, traversing through the labyrinthine corridors of relevant provisions enshrined within the GST Act while elucidating its nuances through illustrative examples for enhanced comprehension.

At its core, TOS signifies the precise moment when a taxable supply is deemed to have occurred, thereby triggering the obligation to account for the associated tax liability. Its significance lies in its ability to delineate the temporal boundary within which taxable events transpire, providing tax authorities with a definitive framework for revenue estimation and collection.

Relevance and Overview of Time of Supply

Understanding TOS is crucial for calculating and discharging tax liabilities accurately. Any misstep in assessing TOS can result in revenue loss for the government. TOS is defined as the moment when the charging event occurs, triggering the tax liability. It is regulated by separate provisions for goods and services under the GST Act.

Provisions Related to Invoice for Goods and Services

The issuance of invoices holds significant importance in determining TOS. For goods, Section 31(1) mandates the issuance of tax invoices before or at the time of delivery, while Section 31(2) and Rule 47 outline similar requirements for services. Continuous supplies of goods and services have specific invoicing rules outlined in Section 31(4) and Section 31(5) respectively.

Time of Supply for Goods and Services

Under the forward charge mechanism, the liability to pay tax on goods or services arises at the time of supply. Section 12(1) and Section 13(1) of the GST Act specify the criteria for determining TOS for goods and services respectively. Additionally, provisions for determining TOS in cases of vouchers, residual scenarios, and receipt of additional amounts are outlined in Section 12(4)-(6) and Section 13(4)-(6).

Time of Supply under Reverse Charge Mechanism

For supplies under the reverse charge mechanism, TOS is determined based on the earliest of specified dates, such as the date of receipt of goods, date of payment, or a fixed timeline from the date of issue of the invoice. Provisions for associated enterprises and illustrative examples help clarify TOS under reverse charge mechanism.

Determination of Time of Supply in Case of Tax Rate Changes

Section 14 of the GST Act outlines provisions for determining TOS in cases of changes in the tax rate for goods or services. It specifies the timeline for assessing TOS based on the issuance of invoices and receipt of payments before or after the change in tax rate.

Illustrative Examples

Illustrative examples provide practical insights into determining TOS in various scenarios, such as supplies before and after tax rate changes, continuous supplies, and receipt of advance payments.

In the realm of taxation, where precision and adherence to regulatory frameworks are paramount, the mastery of the Time of Supply (TOS) concept stands as an indispensable cornerstone for businesses seeking to maintain seamless tax compliance. Embedded within the intricate tapestry of the Goods and Services Tax (GST) Act, the principles governing TOS serve as guiding beacons, illuminating the path towards accurate assessment of tax liabilities and mitigation of potential risks associated with interest and penalty charges.

At its essence, TOS delineates the pivotal moment at which a taxable supply is deemed to have occurred, thereby triggering the obligation for businesses to account for the corresponding tax liabilities. By meticulously adhering to the provisions enshrined within the GST Act, businesses can navigate the labyrinth of TOS with confidence, ensuring that their tax obligations are fulfilled in a timely and precise manner.

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The Goods and Services Tax Network (GSTN) has unveiled a novel addition to its arsenal of digital tools: the “Electronic Credit Reversal and Reclaimed Statement,” now prominently featured on the GST portal. This innovative ledger serves a crucial function, specifically dedicated to documenting the intricacies of Input Tax Credit (ITC) reversals within the GSTR-3B filing framework, under the purview of Table 4B(2).

The introduction of this ledger signifies a concerted effort by the GSTN to enhance transparency and streamline reporting mechanisms for taxpayers grappling with the complexities of ITC management. By providing a dedicated platform to track and monitor credit reversals, businesses can navigate the labyrinth of compliance obligations with greater ease and precision.

Delving deeper into the underlying provisions of the GST law, the emergence of this electronic ledger reflects a broader commitment to bolstering the efficiency and effectiveness of the GST regime. It represents a symbiotic fusion of technological innovation and regulatory compliance, aimed at empowering taxpayers with the tools and resources necessary to navigate the intricate web of tax regulations with confidence and clarity.

Understanding the Purpose

The primary aim of introducing the Electronic Credit Reversal and Reclaimed Statement is to maintain a record of the amount of ITC reversed by registered persons, which can be reclaimed in subsequent months. This ledger facilitates accurate tracking to ensure that taxpayers do not reclaim more ITC than they have reversed, thus promoting compliance with GST rules.

Relevant Provisions of GST Law

Under Section 16(2) of the CGST Act, 2017, registered persons can avail ITC only if they satisfy certain conditions. Additionally, Rule 37 of the CGST Rules, 2017 specifies conditions for availing ITC, including the furnishing of invoice details in GSTR-1 and reflection of ITC in GSTR-2B.

Advisory by GSTN and Circulars by CBIC

The GSTN introduced a facility in November 2020 to auto-populate system-computed details in GSTR-3B from GSTR-1 and eligible ITC balances from GSTR-2B. Circular no. 170/02/2022 by CBIC emphasized the necessity of reversals of ITC in Table 4B(1) and 4B(2) of GSTR-3B, with Table 4B(1) reversals being permanent and Table 4B(2) reversals being temporary.

Functioning of the Electronic Credit Reversal and Reclaimed Statement

Reporting Opening Balance: Taxpayers must report the cumulative balance of ITC reversed in earlier months, reclaimable till GSTR-3B of July 2023, as an opening balance in the GST portal.
Automatic Calculation: For subsequent months from August 2023, the portal will calculate the closing balance of ITC reversed eligible for reclamation based on inputs from GSTR-3B filings.

Time Limit and Amendment Opportunities

Taxpayers have until 30th November 2023 to declare their opening balance for ITC reversal. They can amend this balance in the GST portal until 31st December 2023, with three opportunities provided for corrections.

Filing Return and Exceeding Balance

If the amount of reclaimed ITC exceeds the balance reflecting in the statement, the system will issue a warning message. Taxpayers can proceed with filing, but there’s a possibility of a notice from the department to explain the difference.

The Electronic Credit Reversal and Reclaimed Statement simplifies the process of tracking reversed ITC eligible for reclamation, ensuring compliance with GST regulations. By accurately reporting and reconciling ITC reversals and reclaims, taxpayers can maintain transparency and accuracy in their GST filings, thus streamlining the compliance process.

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Black money is one of the most serious question of the Country. GST being the game changer, it is expected and presumed by the expert that after rolling Out of GST, the question of Black money will surely be addressed and as a result the GST will surely succeed in span of time to curb the black money in India.

As GST will be monitored by complete online process with GSTIN (Goods And Service Tax Identification Number) which will be linked to current PAN (Permanent Account Number),lt will be difficult to escape from tracking of your transactions in any case.
Rather it can be said that the person himself will not go for practice of hiding of transactions as “if a retailer has purchased goods from a whole seller and is not showing that purchase today, then he will not be able to do so after GST. Thus, to substantiate his purchase he will have to maintain the books of sales for which proper bills will be generated. So any trader after GST will not be able to sell products or goods without bills. Once a bill exists in the system, scope for black money reduces automatically.”
The dual monitoring structure proposed within GST, involving the Centre and the states will also curb income tax evasions. So, even if one set of tax authorities overlooks or fails to detect evasion, there is the possibility that the other overseeing authority may not.

Black money in our Country Is mainly generated in three main sectors
1. Alcohol
2. Real Estate
3. PrecIous Metals
   
 

As alcohol yet to remain out of GST for some time, it will be included afterwards. But Precious Metals and Real Estate both are to be taken under GST. Real estate, a sector which absorbs and generates maximum amount of black money, the uniform tax structure will ¡mprove tax compliance by developers, local builders, property dealers, investors and occupiers. The mandatory paper trail that GST will create will go a long way in improving tax compliance.

Example:
GST rate is higher so it will increase cost for local people i.e. 5000*1896= 900 so customer will pay 5900 in place of 5750 earlier.
Post GST in long term,
Business man now have to pay Rs. 900 as GST collectted from customer, but now he can take credit of Rs. 125 of whatever as credit as it will no more goods tax or service tax, it will goods and service tax(GST). Now Businesman can pass on saving of Rs. 125 to its customer by lowering price say 4875 or it can increase its profit by Rs. 125.
This way GST will be helpful for local people.
In addition to this credit of paid can be claimed online like its, if other party paid then only you will get credit for the same. It will also help in reducing tax evasion.
Black money Generation
Let us take a look at easy generation of black money from these Sectors.
First of all the Real Estate, the sector which generate the Black Money very easily by paying partly in cash and partly in cheque. When one go to buy a property, he pays the amount in part and only duty on cheque amount to be paid. So as a resuft the flow of Black money i.e. money goes from Buyer to Seller in Cash started and the Seller uses that money to purchase Gold or other precious metals that can be easily stored and hide and the chain remain continue.

Same way Alcohol.
Take an example of Gujarat which ¡s dry state. In Gujarat use of Alcohol and trading of ¡t is not allowed. But people use it silently. So in this case generation of Bill, paying of tax, recording of transaction, flow of money etc. nothing come in limelight so it leads to Black Money Increase.
It is said that all these sectors will be given special attention and provisions that no one will be able to escape from DUAL GST STRUCTURE. Though it will not be able to remove and curb whole black money as our Human Minds are so creative that will find the ways to escape from these clumsy provisions too, but it will surely help to reduce it ten current scenario.

GST or its substitute Value Added Tax, Conceptually a destination based tax on consumption of Goods and Services  has been a global phenomenon for way too long now, We can trace it back to Year “1954” when France became the first country to introduce a comprehensive Goods and Service Tax regime in that year. Currently around 160 countries in the world have adopted GST or similar Tax Regime. The most interesting thing to note is that there are around 40 different models of GST presently in force, around the world, each having its own peculiarities.

The best way to categorize GST is by recognizing who has the power to Levy such tax in the country. On that basis there are majorly two categorization:

Single Levy
Dual Levy (As in Canada & Brazil)

Countries across the world have used GST as a tool to increase their revenue from Indirect Taxation, to increase the Tax Net and to decrease the number of Tax Evaders and simplify the Tax Ecosystem.

The most contentious issue that still needs to be to be resolved among the different governance in the world is deciding the rate at which GST should be charged in the country. While the Governments across the world aim to increase their tax revenue through GST, a higher rate will lead to tax evasion.

There have been two common factors which have been noticed worldwide wherever and whenever a Tax Structure like GST has been introduced:

Increase in inflation as GST normally is kept at Revenue Neutral Model, which is generally above the ongoing rate structure.
GDP growth at around 9%, resulting in development of the nation.

It’s a non deniable fact that the immediate impact of GST is increase in inflation, especially if the effective tax rate is higher than what prevailed before. For instance, Singapore saw a spike in inflation in 1994 when it introduced the GST but as the time sets in and the citizen/business personals get used to the phenomenon called GST it leads to a more clearer and understandable tax structure contributing to the growth of economy.

One of the successful examples of Dual GST model is Canada. Why Canada is important, because it is one country which even after strong political opposition has been successful in implementing GST. But it has not been an easy task, the Government of Canada has been pragmatic as it worked towards the reduction of GST rate couple of times, post implementation.

Most of the countries of European Union, UK, New Zealand and various other countries have been forth runner in implementing GST and are now reaping the benefits of this destination based Tax Structure.

It should be understood that throughout the world, introduction GST has never been a single event of introduction of a new tax regime, rather it is a continuous process through which governments have brought in tax reforms.

This is the question which is hovering over mind of each and every person in the country. Well there is no straight answer to that question but let’s see the measures being introduced in GST ta tackle the monster of black money.

1. Well, the most basic reason behind generation of black money is the age old system practiced in our country of “kacha bill” and “pakka bill”. The ‘kacha bill’ and ‘pakka bill’ system in our country has helped mobilize black money. GST will help put an end to this. Now, let’s see what is “kacha bill” and “pakka bill”. A kacha bill is the bill on which a consumer need not to pay tax to seller of goods i.e. kacha bill is a bill which is not a sale invoice and not a tax invoice. It is not reflected in books of traders. Since, the consumer do not want to pay tax, traders are forced to buy goods on kacha bill from whole sellers/distributors and it’s a never ending progressive chain of tax evasion.

A pakka bill is essentially either a sale invoice or tax invoice on which the buyer needs to pay tax on value of goods being purchased. Since, tax is paid, it is accounted for in financial system.

This system of kacha bill and pakka bill is dual edged sword. How? Since kacha bill is not accounted for in books of accounts of trader, he escapes from paying income tax on income generated from the transaction of sales and purchase i.e. Direct tax is avoided. Since no record of sales is made in kacha bill, no liability for paying sales tax, excise duty, octroi etc. arises i.e. Indirect Tax is avoided.

Under the GST regime, all the purchases as well as sales invoices are required to be uploaded on the GSTN site, at the end of each month. Now if a trader issues a fake invoice or if he doesn’t deposit the tax amount with the Government, the buyer of the goods will be intimated about it. Also the buyer will be denied the credit of the goods. This will make the buyer avoid such sellers. Also such cases are automatically intimated to the government. Thus, the currently untraceable transaction will get easily identified in the GST regime. Even if the transaction enters the system once, at any point in the supply chain, the government has built in business intelligence tools to catch hold of all parties in that supply chain who have not paid GST.

Also there would be a rating system, through which such traders would be rated. In case of defaults, the traders will get a bad rating. Potential buyers would not buy from traders with bad ratings. This data will also be shared with the Income tax department. All these schemes, will make it very difficult for the traders to do a black money transaction.

2. One of the important point in curbing black money is the information exchange, which, somehow is absent in various government departments whether be it Central government department and/or state government department. Lack of information exchange provides a loophole for tax evaders to file different set of tax returns, books of accounts and other related financial documents to evade tax.

Permanent account number (PAN) and Aadhar will be used more frequently, and will be required to file GST returns. This will help the taxmen track transactions more systematically. There can be more data mapping for audit by revenue authorities. Both the Central Board of Direct Taxes and the Central Board of Excise and Customs have started sharing data to monitor the flow of black money more effectively.

Thus, dual monitoring structure of GST by state as well by central government will improve inter government
and inter department co-operation leaving no space or very less space of manipulation.

GST will simplify and harmonize the indirect tax regime in the country. It will broaden the tax base and result in better tax compliance due to a robust IT infrastructure. Due to the seamless transfer of input tax credit from one state to another in the chain of value addition, there is an in-built mechanism in the design of GST that would incentivize tax compliance by traders. It is thus expected that introduction of GST will foster a common and seamless Indian market and contribute significantly to the growth of the economy and contribute towards curbing black money.