CGST Acts and CGST Rules Updated 2020-21

CGST Acts and CGST Rules Updated 2020-21

The Government on 18, 2021, has noticed Central Goods and Service Tax

(Fourth Amendment) Rules 2021. These rules introduced several amendments under the Central Goods and Services Tax (‘CGST ‘) Rules, 2017 to provide amendments in refunds, registration, and E- Way Bill (EWB) provisions. In this document, we have discussed these amendments and their implications.

The time limit for filing an application for revocation of cancellation of registration

  • Where registration is canceled by the proper officer of his own volition, then the taxpayer can file the application for revocation of cancellation of registration. Such application can be filed within 30 days from the date of service of the cancellation order.
  • Finance Act, 2021 has made amendments in the CGST Act to allow the filing of such applications even after 30 days. The below officers may allow filing such applications even after 30 days on sufficient cause being shown to them
Officer Rank Extension
Additional/Joint Commissioner 30 Days
Commissioner 30 Days (After the above period)
  • Thus, in terms of the CGST act revocation application is allowed to be filed after 30 days but up to 90 days (if approved by the above officers)
  • The above changes in the CGST Act were not carried out in the CGST Rules and on the GSTN portal. The Rules have now been amended in line with the CGST Act.
  • Notably, the approval process for allowing extension has not been incorporated on the GSTN portal and hence CBIC has laid down a manual procedure to be followed in this regard. Brief of the procedure clarified is as under:
  • The taxpayer shall send a letter/email to the proper officer for extension of the time limit by providing the grounds on which extension is sought.
  • The proper officer shall forward the application to the Jurisdictional AC/JC/Commissioner
  • AC/DC/Commissioner shall communicate where the extension is allowed
  • In case the extension is not allowed, an opportunity of being heard shall be given before taking the decision in the matter.
  • Where an extensions request is rejected, grounds of such rejection may be communicated to the taxpayer

Taxmann’s Comments

The above amendment in CSGT Rules is merely a technical change as CGST Act vide amendment through Finance Act, 2021 has already enabled the department to extend the time limit for filing the revocation of cancelation of the registration application.

We would also like to highlight that concerned taxpayers while computing the limit of 30/60/90 days one should also take note of relaxations provided by the Government in various compliances on account of the Covid-19 pandemic.

Amendments relating to E-Way Bills (EWB)

  • CGST Rules imposes a restriction on the generation of EWB where the registered person (either supplier or recipient) fails to furnish Form GSTR 3B/GSTR 1/GST CMP- 08 for two months/quarters.
  • Amendment in the CGST Rules has been made to provide that EWB shall not be allowed to be generated in respect of outward movement of goods of a registered person who has not furnished the said returns.

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Taxmann’s Comments

Currently, if the recipient of goods is not compliant in their return filings, then the supplier is not able to generate the EWB. To overcome this issue, the amendment has been made to provide that EWB not be allowed to be generated in respect of outward movements of goods of a registered person who has not complied with the said return filings

Necessary amendments in the EWB portal are awaited. We may note that in the case of Ex-works transactions recipient causes the movement of goods and thus generates the EWB. In this case, if the supplier is non-compliant with GST return filing, the recipient would not be able to generate the EWB.

Amendments in relation to Refund provisions

Few amendments have been made in the CGST Rules relating to refunds. The same is discussed in the below-mentioned paras.

The limitation period of 2 years was not excluded the period from the date of filing of refund application to date of deficiency memo [Rule 90(3)]

  • Under GST, a refund application is required to be filed within 2 years from the relevant data, and where the proper officer finds any deficiency in the said application, the law requires the applicant to file a ‘fresh refund application after rectification of such deficiencies (i.e. such application is treated is as fresh refund application)
  • The limitation period of 2 years was not excluding the time period from the date of filing the refund application till the date of the deficiency memo & thus various refund applications were getting time-barred.
  • To overcome this difficulty, the amendment has been made in the CGST Rules to provide that time period from the date of filing refund application till the date the deficiency memo shall be excluded in computing limitation period of 2 years.

Taxmann’s Comments

We may take note that the virus of Rule 90(3) is under judicial scrutiny before Judiciary. Issuance of a deficiency memo effectively results in rejection of the refund application without giving any opportunity of hearing to the applicant and thus may be said to be arbitrary, illegal, and ultra-virus in light of Article 14 and 19(1)(g) of the Constitution.

In a Petition before the Hon’ble Delhi High Court[3] argument has also been taken to exclude the time period from the date of filing refund application till the date the deficiency memo from the overall period of 2 years (same as above for which amendment has been brought). The final order of learned High Court is awaited and would be relevant for applications that are time-barred before this amendment

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