Blocking & Unblocking of E Way bill Facility

  1. Blocking of EWB generation facility: Blocking/unblocking of EWB generation facility has been implemented on EWB Portal from 2nd December, 2019.
    1. Meaning of blocking: The blocking of E Way Bill generation facility means disabling taxpayer from generating E Way Bill (EWB), in case of non-filing of 2 or more consecutive GSTR 3B Return on GST Portal.
      Example: Taxpayers who have not filed their GSTR-3B return for the months of September 2019 and October 2019, their EWB generation facility is blocked from 2nd December, 2019.
    2. For GSTINs whose EWB generation facility is blocked, EWB can’t be generated either by the taxpayer or by their counterparty (whether as supplier or recipient) or the transporter.
  2. Effect on already generated EWB: In case of blocked GSTINs, EWBs already generated and facilities in respect of these EWBs such as updating the vehicle or transporter details or extending the validity of EWB will not be impacted.
  3. Unblocking of EWB generation facility: The EWB generation facility would be automatically unblocked in the event of filing of their GSTR 3B return for the default period(s), reducing the default period to less than 2 consecutive tax periods. The blocking will be automatically lifted on the EWB system next day.
    1. Immediate updation of Status at EWB Portal: For immediate updation of the status the taxpayer can go to the EWB portal and select the option “Search Update Block Status”, enter their GSTIN and use Update Option to get themselves unblocked on GST portal, provided GSTR-3B return has already been filed for the default period(s).
  4. Unblocking by Tax Official: EWB generation facility can also be restored by the jurisdictional tax official on basis of manual representation by a taxpayer. The tax officials will issue a speaking order on GST Portal, for accepting or rejecting such requests of the taxpayers. In case he accepts the request, the facility will get restored.
  5. Effect on Transporter registered on EWB Portal: Transporters enrolled in EWB Portal, but not registered on GST portal will not be impacted. However, the transporters registered on GST Portal, if blocked on non-filing of two or more GSTR 3B returns, cannot use their GSTIN as Consignor, Consignee or transporter to generate EWB and update transporter details.

FAQ can be accessed via link https://tutorial.gst.gov.in/userguide/returns/index.htm#t=FAQs_unblockingewaybill.htm

Clarification regarding GST Rate on Job Work

As per recommendation of the GST council to reduce the rate of GST on Job work charges to 12% , which was 18% earlier, in the Notification No 11/2017 –Central Tax (Rate) dtd 28-06-2017 and entry was inserted w.e.f. 01-10-2019.

There were confusions amongst the taxpayers with regard to entries at items (id) & (iv) under heading 9988.

It has been clarified now that :

Entry at item (id) covers only job work services as defined in section 2 (68) of CGST Act, 2017, that is, services by way of treatment or processing undertaken by a person on goods belonging to another registered person – The GST Rate on the same is 12%

Entry at item (iv) specifically excludes the services covered by entry at item (id), and therefore, covers only such services which are carried out on physical inputs (goods) which are owned by persons other than those registered under the CGST Act.- The GST Rate on the same is 18%

A Circular (Circular No. 126/45/2019-GST) dtd 22nd Nov 2019 was issued in this regard and the same is reproduced below

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Restriction on availment of Input Tax Credit (ITC) w.e.f Oct 2019

The CBDT vide its Notification No 49/2019 has inserted a new rule – Rule 36(4) in Central Goods and Services Tax Rules,2017.

The New Rule is as follows :-

“ (4) Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37, shall not exceed 20 per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37. ”

Earlier Position of availment of ITC (before introduction of this Rule)

The Input tax Credit (ITC) on inward supplies were provisionally allowed to be claimed irrespective of the fact whether the supplier has uploaded and paid the taxes on those supplies.

(i.e.,) You can claim the Input Tax Credit (ITC) even if your supplier has not filed his GST Returns showing supplies to you and paid the taxes on the same. You got some time to check and follow up with your supplier to make him declare the invoice relating to you.

Present Position after introduction of this New Rule 36(4)

The Input Tax credit which is appearing in your GSTR 2A (Invoices uploaded by your supplier) only can be claimed in your GSTR 3B as Input Tax credit.

In respect of Invoices /Supplies received by you, but the same is not appearning in GSTR 2A (Invoices not uploaded by your supplier), you can claim ITC only to the extent of 20% on Invoices uploaded by the suppliers.

CaseITC as per Books (Rs.)ITC as per GSTR 2A (Rs.)ITC that can be availed in GSTR 3B(Rs.)
110,00,0006,00,0007,20,000 (6L as appearing in GSTR 2A + Rs. 1.2L -20% of 6 L)
210,00,0007,00,0008,40,000 (7 L as appearing in GSTR 2A + Rs. 1.4L – 20% of 7L)
310,00,0008,50,00010,00,000 (8.5 L + 1.5L (1.7L which is 20% of 8.5 Lakhs restricted to 1.5L since total ITC is 10 Lakhs)

Note :-  To claim the entire ITC of Rs. 10 Lakhs, the minimum amount that should have been uploaded by your supplier should be Rs. 8.33 Lakhs (10 Lakhs / 1.2)

Other Important Points to be Noted

  • This restriction is applicable only in respect of Invoices,Debit-notes, which are required to be uploaded by the suppliers.
  • Full ITC can be availed in respect of IGST on Imports, RCM & Credit received from ISD (Input Service Distributors)
  • The other eligible conditions for claim of ITC should be taken care to claim the ITC.
  • The new restriction u/s. 36(4) will be applicable only in respect of invoices/debit Notes on which credit is availed after 9th Oct 2019.
  • For calculating the 20% eligibility, only eligible ITC to be taken. For example, Blocked credits under section 17(5) should not be considered for calculating 20% of the eligible credit available.
  • Credit Matching is a continuous exercise & GSTR 2A is a cumulative or year-to-date document. Ensure that this credit matching exercise is carried for the cumulative value of credits appearing in GSTR 2A after excluding credits that have already been taken up to the previous month.
  • If you are purchasing from a SME dealer (with Turnover less than 1.5 Crores), since he files his GSTR 1 on Quarterly basis, you have to wait till the quarter end to avail your ITC from such supplies. If your major portion of your purchases is from SMEs, you stand to loose because of this provision.
  • On the other hand, if you are a supplier to Large corporate houses & if you are a SME taxpayer, the Large corporate houses may prefer purchasing from dealers making monthly returns.(or) They may restrict payment of your invoice amount only to the taxable value portion of the Invoice ( and not the GST amount) which may lead to working capital problems for the SME suppliers.
  • This is like a curtain raiser for the proposed new GST Returns which are going to be applicable w.e.f 1st Apr 2020 wherein you will be allowed to claim credit only if it is uploaded by the suppliers.(Subject to option of adding missing invoices)

The following notifications are appended herewith :

  • Notification No 49/2019 – Central Tax dtd 9th Oct 2019
  • Circular No 123/42/2019-GST dtd 11th Nov 2019

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Salient features of the Latest GST Notification Nos from 44-49/2019 dtd 9th Oct 2019

  • As per GST Council decision, it was decided to continue with the existing system of filing GSTR 3B till March 2020. Notification 44/2019 prescribes the due dates for filing GSTR 3B Returns for the period from Oct’2019 to Mar’2020. GSTR 3B for these months shall be furnished on or before 20th of the month succeeding such month. The tax,penalty,Interest , if applicable shall be paid before filing the return.

 

  • As per Notification No 45/2019, in respect of tax payers whose aggregate turnover is less than 1.50 Crores shall file GSTR 1 return on quarterly basis, as follows :-
    • For the Quarter Oct-Dec 2019 – On or before 31st Jan 2020
    • For the Quarter Jan-Mar 2020 – On or before 30th April 2020 

 

  • As per Notification No 46/2019, in respect of tax payers whose aggregate turnover is more than 1.50 crores shall file GSTR 1 on a monthly basis , for the period Oct’19 to Mar’20 on or before 11th of the succeeding month.

 

  • As per the GST council decision, tax payers with aggregate turnover of less than 2 crores can file the Annual Return optionally. Notification No 47/2019 has notified that in respect of those taxpayers, if the Annual return (for 2017-18 & 2018-19) is not filed on or before due date, the same is deemed to be filed on or before the due date.

 

In our view, In the absence of clarity and to avoid future complications (Department Audt/Assessment), we suggest that the Annual return for 2017-18 & 2018-19 shall be filed voluntarily, even though it is not mandatory.

 

  • To put an end to the problem of unmatched Input Tax credits, it has been proposed that the GST Credit shall be claimed as per the invoices uploaded by the suppliers. If you are claiming those credit even if it is not uploaded by your supplier, the difference cannot exceed 20% of the Total of the invoices uploaded.

Effectively, you can claim Input Tax Credit only if it appears in GSTR-2A. In case if you are claiming in excess of the credits appearing in GSTR 2A, the same cannot exceed 20% of the credits as appearning in GSTR 2A

 

  • GSTR 3B has been notified as a Return , RETROSPECTIVELY. (i.e.,) w.e.f. 1st July 2017. Hence GSTR 3B is also considered as return now. In a recent Gujarat High Court case (AAP & Co.,) judgement was given with a decision that GSTR 3B is not a return and hence a view was taken that Input Tax Credit can be claimed at the time of filing the Annual return even though the statutory deadline has expired. Now, with this retrospective amendment, the application of the judgement stands nullified

 

  • A new Form DRC-01A has been notified for intimation by the tax authority regarding the tax,penalty,interest etc., A reply to this intimation shall be filed by the taxpayers in Form DRC-01A Part B. The Voluntary payment of taxes shall continue to be paid by using DRC-03.

The relevant notifications are attached herewith.

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