An Overview of Recent GST Amendments and Changes for Biz

Prime Minister of India has declared his intention to transform India into the world's third-largest economic powerhouse during the Government's upcoming tenure. Conversely, the International Monetary Fund (IMF) has cautioned that India's overall Government debt might surpass 100% of its Gross Domestic Product (GDP) in the medium term and that the country faces a significant risk to its long-term debt sustainability due to the substantial investment required to achieve India's climate change mitigation goals. Nevertheless, India perceives these risks as insignificant since most of its sovereign debt is denominated in the domestic currency and therefore carries limited exposure.

The Lok Sabha, Parliament of India, has approved three new bills pertaining to criminal legislation, specifically bills aimed at replacing the Indian Penal Code (IPC), the Indian Evidence Act, and the Code of Criminal Procedure (CrPC).

The newly enacted laws are known as the Bhartiya Nyaya Sanhita, Bhartiya Nagrik Suraksha Sanhita, and Bhartiya Sakshya Bill. These laws will supplant the age-old colonial justice system that has been in place since the British rule. The focus will now shift towards ensuring justice rather than solely emphasizing punishment.

Furthermore, the CGST (2nd Amendment) Bill of 2023 by both houses of Parliament has passed, which includes provisions to raise the age limit for appointing the President and Members (Technical/Judicial) of the proposed GST Appellate Tribunal (GSTAT). This adjustment will align the provisions with those outlined in the Tribunal Reforms Act of 2021. The President, as well as the Judicial and Technical Members of GSTAT, will hold their positions for four years or until they reach the respective ages of 70 and 67, whichever comes earlier.

Over the past five years leading up to April 2023, GST returns have increased by 65%, reaching 11.3 million, attributed to improved compliance. The count of active taxpayers under the GST system has risen from 10.6 million in April 2018 to 14 million in April 2023. According to the Ministry of Finance (MoF), the simplification of rules and procedures related to GST has resulted in a higher percentage of eligible taxpayers filing their returns.

The Central Board of Indirect Taxes and Customs (CBIC) has issued directives advising against the mechanical application of the Northern Operating System (NOS) Apex Court ruling on the secondment of manpower. As per the directive, the taxability of secondment arrangements under the GST regime may differ based on the specific nature of the contract and other terms and conditions agreed upon between the foreign company and the Indian firm.

In light of the recent cyclone, the due date for filing GSTR-3B returns has been extended until December 27, 2023, exclusively for specified districts in Tamil Nadu.

CGST Second Amendment Bill 2023

• The CGST (2nd amendment) bill, 2023 was introduced by the Central Government in the Lok Sabha on December 13, 2023.
• This bill, numbered 159 of 2023, aims to modify Section 110 of the CGST Act, 2023, which deals with the qualifications, appointment, and conditions of service for the President and Members of the Appellate Tribunal.
• The bill proposes several amendments concerning the GST Appellate Tribunal that are as follows:
• To qualify as a Judicial member of the GST Appellate Tribunal, an individual must have worked as an advocate for a minimum of 10  years and possess significant experience in handling litigation matters related to indirect taxes in the Appellate Tribunal, CESTAT, State VAT Tribunal, High Court, or Supreme Court.
• An individual who has reached the age of 50 years is considered eligible for appointment as the President or a Member of the GST Appellate Tribunal.
• The maximum age limit for the President is set at 70 years, and they may be reappointed for a duration of up to two years, as long as they do not exceed the age limit.
• For Members (either Judicial or Technical), the maximum age limit is 67 years, and they may be reappointed for a period of up to two years, subject to the age limit.
• The amendment aims to bring the provisions in line with the regulations outlined in the Tribunal Reforms Act of 2021.
• On December 19, 2023, the Lok Sabha approved the CGST (2nd Amendment) Bill, 2023, and it was subsequently passed by the Rajya Sabha on December 20, 2023.

GSTR-3B Due Date Extended for Tamil Nadu Districts

• The Central Board of Indirect Taxes and Customs (CBIC) has extended the deadline for submitting the GSTR-3B return for the month of November 2023 until December 27, 2023, specifically for certain districts in Tamil Nadu.
• Businesses registered in the districts of Chennai, Tiruvallur, Chengalpattu, and Kancheepuram in Tamil Nadu can now submit their GSTR-3B return as stipulated in Section 39(1) of the CGST Act, 2017, by December 27, 2023.
• This decision was made to tackle the challenges faced as a result of the MICHAUNG cyclone that occurred in the first week of December 2023.
• The Government of Tamil Nadu has also released a press release on December 20, 2023, to inform about this extension.
• Taxpayers in the specified districts will not be liable to pay any late fees or interest.

Companies that Second Employees from Overseas Citation of Section 74

• In a Supreme Court case (C.C., C.E. & S.T. - Bangalore (Adjudication) etc. Vs. M/s Northern Operating Systems Pvt. Ltd. - 2022 (5) TMI 967), it was ruled by the apex court that the secondment of employees from an overseas group company to NOS constituted a taxable service known as 'manpower supply,' and therefore, Service Tax was applicable.
• Various types of arrangements can exist regarding the secondment of employees from an overseas group company to an Indian entity. The tax implications for each arrangement may differ based on the specific nature of the contract and the accompanying terms and conditions.
• It is important not to apply the Supreme Court's decision in the NOS judgment mechanically to all cases. Each case needs to be thoroughly examined, taking into account its unique factual circumstances, including the contractual terms between the overseas company and the Indian entity, to determine the extent of its taxability under GST and the applicability of relevant principles.
• Furthermore, it has been made clear that Section 74(1) of the CGST Act, 2017 can only be cited when there is evidence of fraud, willful misstatement, or the deliberate suppression of facts to evade tax by the taxpayer. Merely non-payment of GST does not justify the invocation of Section 74(1) unless there is a specific element of fraud or intentional misstatement or concealment of facts to evade tax.
• Section 74(1) of the CGST Act may be cited to issue a show cause notice only in cases where the investigation reveals substantial evidence of fraud, deliberate misstatement, or the suppression of facts with intentions to evade tax by the taxpayer. This evidence should also be included as part of the show cause notice.

GST Included in MRP

On December 11, 2023, a query was raised in Parliament regarding whether retail traders are overcharging customers and manipulating GST payments to the Government by inflating bills. In response to this question, the Minister of State for Finance provided the following statements:

• The Maximum Retail Price (MRP) covers the Goods and Services Tax (GST) within it.
• According to the provided rules, the Maximum Retail Price (MRP) of pre-packaged commodities, covers all applicable taxes, including GST.
• Rule 6 of the Legal Metrology (Packaged Commodities) Rules, 2011 (amended) requires every package to prominently display the retail sale price, clearly displaying that it is the maximum retail price inclusive of all taxes.

The MRP of products comprises the GST, and there should not be any extra charges levied from the consumers.