Changes in GST and Customs with effect from 01.01.2022 - www.vaithilegal.com
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Changes in GST and
Customs with effect
from 01.01.2022
www.vaithilegal.com
K.Vaitheeswaran - All Copyrights ReservedBackground
• Amendments were made through Finance Act 2021.
• Amendments were made to CGST Rules, 2017.
• Notifications have been issued notifying the effective
date of the amendments.
K.Vaitheeswaran - All Copyrights ReservedNotification No. 39/2021 – CT dated
21.12.2021 has appointed the 1st day of
January 2022 as the date on which the
provisions of Section 108, 109 and 113 to 122
of the Finance Act, 2021 shall come into
force.
K.Vaitheeswaran - All Copyrights ReservedSection 7(1)(aa)
Section 7 describes what constitutes “supply” under GST
Insertion: Activities or transactions by a person other than an individual,
to its members or constituents or vice versa for cash, deferred payment or
valuable consideration
Explanation: Notwithstanding anything contained in any law or judgment, the
person and its members or constituents shall be deemed to be two separate
persons and the supply of activities or transactions inter se shall be deemed to
take place from one such person to another
K.Vaitheeswaran - All Copyrights ReservedSection 7(1)(aa)
• Supreme Court in the case of Calcutta Club (2019) 29 GSTL 545 had held that
doctrine of mutuality continues to be applicable to incorporated and unincorporated
members’ clubs even after the 46th Amendment to the Constitution. The Court had
held that the very essence of mutuality is that a man cannot trade with himself. Club
acts as an agent of its members and there is no exchange or flow of consideration.
Service Tax and VAT cannot be levied based on the doctrine of mutuality.
• Views were being expressed that the rationale would hold good even for GST.
• Retrospective amendment to nullify the principles laid down in the decision.
• Whether amendment is adequate?
• Whether deeming fiction to create two separate persons is enough?
• Whether consideration issue is still open?
K. Vaitheeswaran - All Copyrights ReservedSection 16(2)(aa)
• Four conditions specified for ITC
Before the entitlement namely, possession of
invoice; receipt of goods or
amendment services; payment of tax;
furnishing of return.
• Insertion of clause (aa)
• Details of the invoice or debit note referred to
After the in clause (a) has been furnished by the
supplier in the statement of outward supply
amendment and such details have been communicated to
the recipient in the manner specified under
Section 37.
K.Vaitheeswaran - All Copyrights ReservedSection 16(2)(aa)
• Section 37 deals with furnishing of details of outward
supply.
• Form GSTR-1 to be filed for furnishing of details of
outward supply in terms of Rule 59.
• Furnishing of GSTR-1 by the supplier becomes a
condition for entitlement of Input Tax Credit.
• Due diligence on suppliers
• Continuous verification and follow-up by recipients required
to ensure that GSTR-1 is filed by the supplier.
• Comparison of GSTR-3B and GSTR-2A gets legal sanction.
K.Vaitheeswaran - All Copyrights ReservedSection 16(2)(aa)
• Section 43A, which provided for a new procedure was never notified.
• Even though GSTR -2 which contemplated details of inward supplies
has been kept in abeyance and GSTR-3 was never implemented, Rule
60(1) was substituted w.e.f. 01.01.2021
• Rule 60(1) provides that details of outward supply furnished by supplier
in GSTR -1 shall be made available electronically to the recipients in Part A of
Form GSTR -2A; GSTR – 4A; and GSTR – 6A, through the common portal
• If Section 16(2)(aa) is a condition for availing ITC and will come
into force from a date notified, the entire exercise of examining
GSTR – 2A for ITC eligibility for the past period becomes an illegal
exercise.
• Doctrine of impossibility and Section 16(2)(aa).
K.Vaitheeswaran - All Copyrights ReservedExplanation 1 to Section 74
• Position before the amendment
Where the notice under the same proceedings is issued to the main
person liable to pay tax and some other persons, and such proceedings
against the main person have been concluded under section 73 or
section 74, the proceedings against all the persons liable to pay penalty
under sections 122, 125, 129 and 130 are deemed to be concluded.
• Position after the amendment
Where the notice under the same proceedings is issued to the main
person liable to pay tax and some other persons, and such proceedings
against the main person have been concluded under section 73 or
section 74, the proceedings against all the persons liable to pay penalty
under sections 122 and 125 are deemed to be concluded.
K.Vaitheeswaran - All Copyrights ReservedExplanation to Section 75(12)
After the Explanation to Section 75(12)
amendment inserted – ‘For the purposes of this
sub-section, the expression "self-
assessed tax" shall include the tax
payable in respect of details of
outward supplies furnished under
section 37, but not included in the
return furnished under section 39.’
K.Vaitheeswaran - All Copyrights ReservedExplanation to Section 75(12)
• Where self assessed tax in accordance with the
return u/s 39 remains unpaid, the tax and interest
shall be recovered u/s 79
• Explanation inserted to provide that self-assessed tax
shall include tax payable in respect of details furnished
in GSTR -1 but not included in GSTR -3B
K.Vaitheeswaran - All Copyrights ReservedSection 83
Before the amendment - Where during the pendency of any proceedings
under section 62 or section 63 or section 64 or section 67 or section 73 or
section 74, the Commissioner is of the opinion that for the purpose of
protecting the interest of the Government revenue, it is necessary so to do, he
may, by order in writing attach provisionally any property, including bank
account, belonging to the taxable person in such manner as may be prescribed.
After the Amendment - “(1) Where, after the initiation of any proceeding
under Chapter XII, Chapter XIV or Chapter XV, the Commissioner is of
the opinion that for the purpose of protecting the interest of the Government
revenue it is necessary so to do, he may, by order in writing, attach
provisionally, any property, including bank account, belonging to the taxable
person or any person specified in section 122 (1A), in such manner as may
be prescribed.”
K. Vaitheeswaran - All Copyrights ReservedSection 83
• 122(1A) covers any person who retains the benefit of a
transaction covered under Section 122(1)(i)(ii), (vii),
(ix) and at whose instance such transaction is
conducted.
• This can be done after initiation of any proceeding under
Chapter XII (Assessment), Chapter XIV (inspection, search,
seizure and arrest) and Chapter XV (demands and recovery).
K.Vaitheeswaran - All Copyrights ReservedSection 107(6)
• Proviso inserted
• No appeal shall be filed against an order under sub-
section (3) of section 129, unless a sum equal to
twenty-five per cent. of the penalty has been paid by
the appellant.
• Number of instances where IGST is paid and goods are detained for
PART B of e-way bill not being filled up or for hyper-technical
reasons or even when the detaining authority questions classification
• Amendment not conducive to ease of doing business
K.Vaitheeswaran - All Copyrights ReservedSection 129(1)(a)
Before Amendment: on payment of the applicable tax and penalty
equal to one hundred per cent. of the tax payable on such goods
and, in case of exempted goods, on payment of an amount equal
to two per cent. of the value of goods or twenty-five thousand
rupees, whichever is less, where the owner of the goods comes
forward for payment of such tax and penalty
After Amendment: on payment of penalty equal to two hundred per
cent of the tax payable on such goods and, in case of exempted
goods, on payment of an amount equal to two per cent. of the value
of goods or twenty-five thousand rupees, whichever is less, where the
owner of the goods comes forward for payment of such penalty.
K.Vaitheeswaran - All Copyrights ReservedSection 129 (1) (b)
Before amendment: on payment of the applicable tax and penalty equal to
the fifty per cent. of the value of the goods reduced by the tax amount paid
thereon and, in case of exempted goods, on payment of an amount equal
to five per cent. of the value of goods or twenty five thousand rupees,
whichever is less, where the owner of the goods does not come forward for
payment of such tax and penalty
After amendment: on payment of penalty equal to fifty per cent. of the
value of the goods or two hundred per cent. of the tax payable on such
goods, whichever is higher, and in case of exempted goods, on payment of
an amount equal to five per cent. of the value of goods or twenty-five
thousand rupees, whichever is less, where the owner of the goods does not
come forward for payment of such penalty
K.Vaitheeswaran - All Copyrights ReservedSection 129
129 (2) omitted
129(3) before amendment: The proper officer detaining or seizing goods
or conveyances shall issue a notice specifying the tax and penalty payable
and thereafter, pass an order for payment of tax and penalty under clause
(a) or clause (b) or clause (c).
129(3) After Amendment: The proper officer detaining or seizing goods
or conveyance shall issue a notice within seven days of such detention
or seizure, specifying the penalty payable, and thereafter, pass an order
within a period of seven days from the date of service of such notice,
for payment of penalty under clause (a) or clause (b) of sub-section (1).”
K.Vaitheeswaran - All Copyrights ReservedSection 129(4)
Before amendment: No tax, interest or penalty shall be
determined under sub-section (3) without giving the person
concerned an opportunity of being heard.
Post Amendment: No penalty shall be determined under sub-
section (3) without giving the person concerned an opportunity of
being heard.
K.Vaitheeswaran - All Copyrights ReservedSection 129(6)
Before Amendment:
Where the person transporting any goods or the owner of the goods
fails to pay the amount of tax and penalty as provided in sub-section
(1) within 14 days of such detention or seizure, further proceedings
shall be initiated in accordance with the provisions of section 130;
Provided that where the detained or seized goods are perishable or
hazardous in nature or are likely to depreciate in value with passage
of time, the said period of 14 days may be reduced by the proper
officer.
K.Vaitheeswaran - All Copyrights ReservedSection 129(6)
After amendment:
Where the person transporting any goods or the owner of such goods fails to
pay the amount of penalty under sub-section (1) within fifteen days from
the date of receipt of the copy of the order passed under sub-section (3), the
goods or conveyance so detained or seized shall be liable to be sold or
disposed of otherwise, in such manner and within such time as may be
prescribed, to recover the penalty payable under sub-section (3): Provided that
the conveyance shall be released on payment by the transporter of penalty
under sub-section (3) or one lakh rupees, whichever is less;
Provided further that where the detained or seized goods are perishable or
hazardous in nature or are likely to depreciate in value with passage of time,
the said period of fifteen days may be reduced by the proper officer.”.
K.Vaitheeswaran - All Copyrights ReservedSection 130
• Section 130 is applicable
Before notwithstanding other provisions in
the Act
amendment • Penalty leviable is as per Section 12
• Notwithstanding clause removed & to
be replaced with “where”
After • Amount of penalty will be 100% on
amendment tax payable on goods
• Sub section (3) omitted
K. Vaitheeswaran - All Copyrights ReservedSection 151
The Commissioner or an officer
authorized by him may, by an order,
direct any person to furnish
Substitution of a new Section information relating to any matter
151 dealt with in connection with this
Act, within such time, in such form,
and in such manner, as may be
specified therein.
K. Vaitheeswaran - All Copyrights ReservedSection 152
• After amendment: No information of with respect to any
matter given for the purposes of section 150 or section 151
shall, without the previous consent in writing of the concerned
person or his authorised representative, be published in such
manner so as to enable such particulars to be identified as
referring to a particular person and no such information shall
be used for the purpose of any proceedings under this Act
without giving an opportunity of being heard to the
person concerned.
• Sub Section (2) is omitted – prior to omission, no person who is not
engaged in the collection of statistics or compilation or computerisation was
permitted to see or have access to any information or any individual return.
K. Vaitheeswaran - All Copyrights ReservedSchedule II
Paragraph 7, Schedule II has been notified to be
omitted retrospectively from 01.07.2017.
This is consequential to introduction of Section
7(1)(aa).
K. Vaitheeswaran - All Copyrights ReservedNotification No. 38/2021 – CT dated
21.12.2021 has notified the 1st day of
January 2022 as the date on which the
provisions of Rule 2(2), 2(3), 2(6)(i), 2(7)
shall come into force.
K.Vaitheeswaran - All Copyrights ReservedRule 10B
• Notification brings into effect a few provisions in the Central
Goods and Services Tax (Eighth Amendment) Rules, 2021 with
effect from 01.01.2022.
• Introduction of Rule 10B after Rule 10A.
Following registered persons shall undergo Aadhar authentication:
a. Proprietorship firm – Aadhar of Proprietor.
b. Partnership – Aadhar of Partner.
c. HUF – Aadhar of Karta.
d. Company – Aadhar of Managing Director or Whole Time
Director.
e. Trust – Aadhar of trustee.
K. Vaitheeswaran - All Copyrights ReservedRule 10B
• Purpose of Rule 10B
• For filing application of revocation of cancellation of registration in FORM
GST-31
• For filing of refund application in FORM RFD-01 under Rule 89
• For refund under Rule 96 of the integrated tax paid on goods exported out
of India
• Where Aadhar has not been assigned, taxpayer can submit the following
documents:
• Aadhar enrolment slip; and
• Bank Passbook with photograph or Voter ID or Passport or Driving License
• Provided the person undergoes Aadhar authentication within 30 days of the
allotment of Aadhar number.
K.Vaitheeswaran - All Copyrights ReservedRule 10B
• Rule 89 covers any application for refund of tax, interest,
penalty, fees, etc. or any other amount paid by any person.
• Registered persons to undergo Aadhar authentication in order
to file refunds claims under Rule 89 or for refund of IGST paid
on goods that are exported.
• Amendments are effective from 01.01.2022.
• Steps to authenticate Aadhaar to be initiated at the earliest
for assessees who claim refunds.
K. Vaitheeswaran - All Copyrights ReservedRule 23
Due to the As a result, to be
Rule 23 prescribes introduction of Rule eligible to file an
the manner to file 10B, Rule 23 is application for
application for consequently revocation of
revocation of amended to cancellation of
cancellation of accommodate Rule registration, Aadhar
registration. 10B (authentication authentication is
of Aadhar) made mandatory
K.Vaitheeswaran - All Copyrights ReservedRule 89
Rule 89 deals with
Now it is subject to the
application for refund of
fulfilment of the condition
tax, interest, penalty, fees
under Rule 10B (Aadhar
or any other amount
authentication)
K. Vaitheeswaran - All Copyrights ReservedRule 96
Aadhar authentication
Rule 96 deals with
under Rule 10B to be done
application for refund of
and then only application
IGST paid on goods
shall be deemed to have
exported outside of India
been filed.
K.Vaitheeswaran - All Copyrights ReservedGST Rate Changes Effective from 1st January, 2022
• Notification No. 14/2021 (Rate) - Central
Tax dt. 18.11.2021
• Uniform rate structure across the textile industry
at 12%
• Footwear at 12%
• Trade representations for restoration of 5% in textile
industry.
K.Vaitheeswaran - All Copyrights ReservedGST Rate Changes Effective from 1st January, 2022
• Notification No. 15/2021 (Rate) – Central Tax dt. 18.11.2021
amending Notification No. 11/2017 – CT(R)
• Entry 3(iii), (vi), (vii) (ix) and (x)- Composite supply of works
contract
• Governmental authority and governmental entity removed.
• Consequentially, conditions relevant to government entity in
the context of procurement removed.
• Huge impact since most contracts are long term and inclusive of taxes
and price is factored based on prevalent rates.
• Ideally, there must be a sunset clause or the amendment should apply
only to contracts executed after the amendment.
K.Vaitheeswaran - All Copyrights ReservedGST Rate Changes Effective from 1st January, 2022
Entry 26, Notification 11/2017 – CT(R) amended
whereby 2.5% CGST is not applicable for services by
way of job work in relation to dyeing or printing or
textile products falling under Chapter 50 to 63 in the
First Schedule to the Customs Tariff Act.
K.Vaitheeswaran - All Copyrights ReservedGST Rate Changes Effective from 1st January, 2022
Notification No. 16/2021 (Rate) – Central Tax dt. 18.11.2021 amending Notification
12/2017 – CT(R)
• Exemptions withdrawn
• Pure services; and composite supply of goods and services where goods constitute
not more than 25% value, provided to a Govt. Entity or Govt. Authority.
• Transport of passengers, with or without accompanied belongings, by – non-air
conditioned contract carriage other than radio taxi, for transportation of passengers,
excluding tourism, conducted tour, charter or hire; or stage carriage other than air
conditioned stage carriage - if such services are supplied through an electronic
commerce operator, and notified under Section 9(5).
• Service of transportation of passengers, with or without accompanied belongings, by
metered cabs or auto rickshaws (including e-rickshaws) if such services are supplied
through an electronic commerce operator, and notified under Section 9(5).
• Hail an auto/ taxi – no GST
• Book an auto/ taxi through aggregators – GST applicable
K.Vaitheeswaran - All Copyrights ReservedGST Rate Changes Effective from 1st January, 2022
• Notification No. 17/2021 (Rate) – Central Tax
dt. 18.11.2021 amends Notification No. 17/2017
CT(R)
• Scope of e-commerce operator taxation widened.
• services by way of transportation of passengers by omnibus or
any other motor vehicle.
• restaurant service other than the services supplied by
restaurant eating joints etc. located at specified premises.
K.Vaitheeswaran - All Copyrights ReservedK.Vaitheeswaran - All Copyrights Reserved
Changes Effective from 01.01.2022
• 7th edition of Harmonized System (HS) nomenclature, HS-2022
comes into force from 01.01.2022.
• 351 amendments at 6-digit level.
• Necessary changes were brought into the First Schedule of the
Customs Tariff Act through Finance Act, 2021.
• These changes are effective from 01.01.2022.
• Huge impact for certain Chapters
• Existing exemption notifications may require changes
• Issues in GST classification since Chapter Headings are from Customs Tariff.
K.Vaitheeswaran - All Copyrights ReservedChennai Office Bangalore Office
‘VENKATAGIRI’ 402, Front Wing,
Flat No.8/3 & 8/4, Ground Floor, House of Lords,
No.8 (Old No.9), Sivaprakasam Street, 15/16, St. Marks Road,
T. Nagar, Chennai - 600 017, India Bangalore – 560 001, India
Tel.: 044 - 2433 1029 / 4048
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